Penalty: 30 penalty units.
The parts referred to in paragraph (b) are themselves mining, quarrying or prospecting rights (see paragraph (c) of the definition of
mining, quarrying or prospecting right
in subsection
995-1(1)
), and are therefore not referred to elsewhere in this Act as parts of such rights.
40-363(6)
The effect referred to in paragraphs (5)(b) and (c) must be that, for each of those entities, the following are equal:
(a)
the entity
'
s percentage interest in the project;
(b)
the reserves and resources represented by the
*
mining, quarrying or prospecting rights that the entity
*
holds relating to the project, expressed as a percentage of the reserves and resources represented by all mining, quarrying or prospecting rights that any of the entities hold relating to the project.
40-363(7)
For the purposes of subsection (6):
(a)
the reserves represented by a
*
mining, quarrying or prospecting right are taken to be the reserves, reasonably estimated using an appropriate accepted industry practice, that are expected to be extracted from the mine,
*
petroleum field or quarry to which the right relates; and
(b)
the resources represented by a mining, quarrying or prospecting right are taken to be the resources, reasonably estimated using an appropriate accepted industry practice, that are expected to be situated in the area to which the right relates (other than those resources that are reserves referred to in paragraph (a)).
History
S 40-363 inserted by No 130 of 2015, s 3 and Sch 1 item 1, applicable in relation to interest realignment arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
SECTION 40-364
Interest realignment adjustments
Effect of receiving interest realignment adjustment on assessable income
40-364(1)
If you receive an
*
interest realignment adjustment in an income year, include in your assessable income for the year an amount (the
adjustment amount
) equal to:
(a)
the amount of the adjustment; or
(b)
if the adjustment is not an amount
-
the
*
market value of the adjustment.
Effect of providing interest realignment adjustment on cost, or cost base and reduced cost base
40-364(2)
If an
*
interest realignment adjustment is provided by you or on your behalf:
(a)
include the adjustment amount in the second element of the
*
cost of a
*
mining, quarrying or prospecting right that you acquired under the
*
interest realignment arrangement to which the adjustment amount relates; or
(b)
if this Division does not apply to that right
-
include the adjustment amount in the
*
cost base and
*
reduced cost base of that right.
However, if you acquired more than one such right under the arrangement, apportion the adjustment amount between the costs, or cost bases and reduced cost bases, of those rights on a reasonable basis.
Note:
Subsections
40-77(1D)
and
(1E)
of the
Income Tax (Transitional Provisions) Act 1997
set out when this Division does not apply to the right.
Tax effects of the right to an interest realignment adjustment
40-364(3)
In calculating the
*
termination value of a
*
mining, quarrying or prospecting right that you provide under an
*
interest realignment arrangement, assume to be zero the
*
market value of any contractual right conferred by the arrangement to an
*
interest realignment adjustment to be received by you.
40-364(4)
In calculating the
*
cost of a
*
mining, quarrying or prospecting right that you receive under an
*
interest realignmentarrangement, assume to be zero the
*
market value of any contractual right conferred by the arrangement to an
*
interest realignment adjustment to be provided by you.
40-364(5)
The creation of a right to an
*
interest realignment adjustment does not cause
*
CGT event D1 or CGT event D3 to happen.
40-364(6)
Your receipt of an
*
interest realignment adjustment does not cause
*
CGT event C2 to happen in relation to the right to receive the adjustment.
Meaning of
interest realignment adjustment
40-364(7)
An
interest realignment adjustment
is an amount, or an asset (other than a
*
mining, quarrying or prospecting right), that:
(a)
is provided under an
*
interest realignment arrangement to a party to the arrangement by or on behalf of another party to the arrangement; and
(b)
is provided as an adjustment, to the parties
'
contributions of value to the project to which the arrangement relates, that arises because information that has become available since the time the arrangement took effect indicates that the other party did not make an appropriate contribution at that time.
History
S 40-364 inserted by No 130 of 2015, s 3 and Sch 1 item 1, applicable in relation to interest realignment arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
SECTION 40-365
Involuntary disposals
40-365(1)
You may exclude some or all of an amount that has been included in your assessable income for a
*
depreciating asset (the
original asset
) as a result of a
*
balancing adjustment event to the extent that you choose to treat it as an amount to be applied under subsection (5) for one or more replacement assets.
40-365(2)
You can only make this choice if you stop
*
holding the asset because:
(a)
the original asset is lost or destroyed; or
(b)
the original asset is compulsorily acquired by an
*
Australian government agency; or
(c)
the original asset is acquired by an entity (other than an Australian government agency or a
*
foreign government agency) under a power of compulsory acquisition conferred by a law covered under subsection (2A); or
(d)
you dispose of the original asset to an entity (other than a foreign government agency) in circumstances meeting all of these conditions:
(i)
the disposal takes place after a notice was served on you by or on behalf of the entity;
(ii)
the notice invited you to negotiate with the entity with a view to the entity acquiring the asset by agreement;
(iii)
the notice informed you that if the negotiations were unsuccessful, the asset would be compulsorily acquired by the entity;
(iv)
the compulsory acquisition would have been under a power of compulsory acquisition conferred by a law covered under subsection (2A); or
(e)
you dispose of land onto which the original asset was fixed to an entity (other than a foreign government agency) in circumstances meeting all of these conditions:
(i)
a mining lease was compulsorily granted over theland;
(ii)
the lease significantly affected your use of the land;
(iii)
the lease was in force just before the disposal;
(iv)
the entity to which you dispose of the land was the lessee under the lease; or
(f)
you dispose of land onto which the original asset was fixed to an entity (other than a foreign government agency) in circumstances meeting all of these conditions:
(i)
a mining lease would have been compulsorily granted over the land if you had not disposed of it;
(ii)
that lease would have significantly affected your use of the land;
(iii)
the entity to which you dispose of the land would have been the lessee under the lease.
History
S 40-365(2) amended by
No 58 of 2006
, s 3 and Sch 4 item 1, by substituting paras (c), (d), (e) and (f) for para (c), effective 22 June 2006. Act
No 58 of 2006
, s 3 and Sch 4 item 6 contains the following application provision:
6 Application
(1)
The amendments made by this Schedule apply in relation to CGT events that happen after 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999.
(2)
The amendments made by this Schedule apply in relation to balancing adjustment events that occur after 30 June 2001.
(3)
Former section
42-293
of the
Income Tax Assessment Act 1997
applies in relation to balancing adjustment events that occurred during the period:
(a)
starting just after 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999; and
(b)
ending just before 1 July 2001;
as if the amendments made by this Schedule to section 40-365 of that Act were made (with any necessary changes) to former section
42-293
.
(4)
To avoid doubt:
(a)
those necessary changes to those amendments include the following:
(i)
item 1 applies in relation to former paragraph
42-293(2)(c)
;
(ii)
references in item 1 to the original asset are taken to be references to the original plant;
(iii)
item 2 applies in relation to former section
42-293
; and
(b)
a choice under former subsection
42-293(1)
may be made after 22 June 2006 in relation to those amendments; and
(c)
the Commissioner may allow, after 22 June 2006, a further period under former subsection
42-293(3)
in relation to those amendments.
Para (c) formerly read:
(c)
you dispose of the original asset to an Australian government agency after a notice was served on you by or on behalf of the agency:
(i)
inviting you to negotiate with the agency with a view to the agency acquiring it by agreement; and
(ii)
informing you that, if the negotiations are unsuccessful, it will be compulsorily acquired by the agency.
40-365(2A)
A law is covered under this subsection if it is:
(a)
an
*
Australian law (other than Chapter
6A
of the
Corporations Act 2001
); or
(b)
a
*
foreign law (other than a foreign law corresponding to Chapter
6A
of the
Corporations Act 2001
).
History
S 40-365(2A) inserted by
No 58 of 2006
, s 3 and Sch 4 item 2, effective 22 June 2006. For application provision, see note under s 40-365(2).
40-365(3)
You can only make this choice for a replacement asset if you incur the expenditure on the replacement asset, or you start to
*
hold it:
(a)
no earlier than one year, or within a further period the Commissioner allows, before the
*
balancing adjustment event occurred; and
(b)
no later than one year, or within a further period the Commissioner allows, after the end of the income year in which the balancing adjustment event occurred.
40-365(4)
You can only make this choice for a replacement asset if:
(a)
at the end of the income year in which you incurred the expenditure on the asset, or you started to
*
hold it, you used it, or had it
*
installed ready for use, wholly for a
*
taxable purpose; and
(b)
you can deduct an amount for it.
40-365(5)
For the purposes of applying this Act to the replacement asset:
(a)
its
*
cost is reduced by the amount covered by the choice for the income year in which the asset
'
s
*
start time occurs; and
(b)
if the income year is later than the one in which the asset
'
s
*
start time occurs
-
the sum of its
*
opening adjustable value for that later year and any amount included in the second element of the asset
'
s cost for that later year is reduced by the amount covered by the choice.
History
S 40-365(5) substituted by No 119 of 2002.
40-365(6)
If you are making the choice for 2 or more replacement assets, you apportion the amount covered by the choice between those items in proportion to their
*
cost.
History
S 40-365 inserted by No 76 of 2001.
SECTION 40-370
Balancing adjustments where there has been use of different car expense methods
40-370(1)
An amount is included in your assessable income or you can deduct an amount under this section instead of section
40-285
if:
(a)
a
*
balancing adjustment event occurs for a
*
car you
*
held; and
(b)
you have deducted or can deduct an amount for the decline in value of the car for an income year under this Division; and
(c)
you chose the
"
cents per kilometre
"
method in Subdivision
28-C
for deducting your car expenses for the car for one or more other income years.
Note 1:
This means if you have only used the
"
log book
"
method since you began using the car, you calculate the assessable amount or deductible amount under section
40-285
.
Note 2:
Also, if you have only used the
"
cents per kilometre
"
method since you began using the car, no amount is assessable or deductible under this section or section
40-285
.
History
S 40-370(1) amended by No 162 of 2015, s 3 and Sch 1 items 33
-
35, by substituting para (c), omitting
"
or the
"
one-third of actual expenses
"
method
"
after
"
the
"
log book
"
method
"
from note 1 and
"
or the
"
12% of original value
"
method
"
after
"
the
"
cents per kilometre
"
method
"
from note 2, effective 30 November 2015. No 162 of 2015, s 3 and Sch 1 item 45 contains the following application provision:
45 Application of amendments
45(1)
Subject to subitems (2) and (3), the amendments made by this Schedule apply in relation to the 2015-16 income year and later income years.
…
45(3)
Despite the amendments of section
40-370
of the
Income Tax Assessment Act 1997
made by this Schedule, that section continues to apply, in relation to a balancing adjustment event, as if those amendments had not been made if:
(a)
that balancing adjustment event occurs at or after the start of the 2015-16 income year for a car you held; and
(b)
you chose the
"
12% of original value
"
method in former Subdivision 28-D of that Act for deducting your car expenses for the car for one or more earlier income years.
Para (c) formerly read:
(c)
you chose:
(i)
the
"
cents per kilometre
"
method in Subdivision
28-C
; or
(ii)
the
"
12% of original value
"
method in Subdivision
28-D
;
for deducting your car expenses for the car for one or more other income years.
40-370(2)
Work out the amount you include in your assessable income or the amount you can deduct in this way:
Method statement
Step 1.
Subtract the
*
car
'
s
*
adjustable value just before the
*
balancing adjustment event occurred from the car
'
s
*
termination value.
Step 2.
Reduce the step 1 amount by the part of the
*
car
'
s decline in value that is attributable to your using the car, or having it
*
installed ready for use, for purposes other than
*
taxable purposes. You do this by applying the formula in subsection
40-290(2)
.
Step 3.
Multiply the step 2 amount by the total number of days for which you deducted the decline in value of the
*
car under this Division.
Step 4.
Divide the step 3 amount by the total number of days you
*
held the
*
car.
Step 5.
The step 4 amount is a deduction if it is negative or it is included in your assessable income if it is positive.
40-370(3)
In working out the
*
adjustable value for the income years for which you chose the
"
cents per kilometre method
"
, assume the decline in value was calculated under this Division on the same basis as those income years when that method did not apply.
History
S 40-370(3) substituted by No 162 of 2015, s 3 and Sch 1 item 36, applicable in relation to the 2015-16 income year and later income years. S 40-370(3) formerly read:
40-370(3)
In working out the
*
adjustable value for the income years for which you chose the
"
cents per kilometre method
"
or the
"
12% of original value
"
method, you are to assume the decline in value was calculated under this Division on the same basis as those income years when those methods did not apply.
40-370(4)
In working out the reduction in step 2 for the income years for which you chose the
"
cents per kilometre method
"
, assume that:
(a)
you had not chosen that method for the
*
car; and
(b)
Division
28
(about car expenses) had not applied to the car; and
(c)
20% was the extent of your use of the car for
*
taxable purposes.
History
S 40-370(4) substituted by No 162 of 2015, s 3 and Sch 1 item 36, applicable in relation to the 2015-16 income year and later income years. S 40-370(4) formerly read:
40-370(4)
In working out the reduction in step 2 for the income years for which you chose the
"
cents per kilometre method
"
or the
"
12% of original value
"
method, you must assume that:
(a)
you had not chosen either of those methods for the
*
car; and
(b)
Division
28
(car expenses) had not applied to the car; and
(c)
you used the car for
*
taxable purposes:
(i)
to the extent of 20% if you used the
"
cents per kilometre
"
method; or
(ii)
to the extent of one-third if you used the
"
12% of original value
"
method.
History
S 40-370 inserted by No 76 of 2001.
Subdivision 40-E
-
Low-value and software development pools
History
Subdiv 40-E inserted by No 76 of 2001.
SECTION 40-420
What this Subdivision is about
You may choose to work out the decline in value of low-cost assets (assets costing less than
$
1,000) and certain other depreciating assets through a low-value pool.
You may also choose to deduct amounts for expenditure you incur on in-house software through a software development pool.
History
S 40-420 inserted by No 76 of 2001.
Operative provisions
SECTION 40-425
Allocating assets to a low-value pool
40-425(1)
You may choose to allocate a
*
low cost asset you
*
hold to a low-value pool for the income year in which you start to use it, or have it
*
installed ready for use, for a
*
taxable purpose.
40-425(2)
A
low-cost asset
is a
*
depreciating asset (except a
*
horticultural plant) whose
*
cost as at the end of the income year in which you start to use it, or have it
*
installed ready for use, for a
*
taxable purpose is less than
$
1,000.
History
S 40-425(2) amended by No 88 of 2009, s 3 and Sch 5 item 321, by substituting
"
(except a
*
horticultural plant)
"
for
"
, except a
*
horticultural plant
"
, effective 18 September 2009.
S 40-425(2) amended by No 129 of 2004.
40-425(3)
You may also choose to allocate a
*
low-value asset to a low-value pool.
40-425(4)
You cannot allocate a
*
depreciating asset to a low-value pool if:
(a)
its
*
cost does not exceed
$
300; and
(b)
you use the asset predominantly for the
*
purpose of producing assessable income that is not income from carrying on a
*
business; and
(c)
the asset is not part of a set of assets that you started to hold in that income year where the total cost of the set of assets exceeds
$
300; and
(d)
the total cost of the asset and any other identical, or substantially identical, asset that you start to hold in that income year does not exceed
$
300.
40-425(5)
A
low-value asset
is a
*
depreciating asset, except a
*
horticultural plant, you
*
hold:
(a)
if you have deducted or can deduct amounts for it under this Division for a previous income year
-
for which you used the
*
diminishing value method; and
(b)
that has an
*
opening adjustable value for the current year of less than
$
1,000 (worked out using the diminishing value method); and
(c)
that is not a
*
low-cost asset.
History
S 40-425(5) amended by No 129 of 2004.
40-425(6)
A
*
depreciating asset:
(a)
to which Division
58
(about assets previously owned by an exempt entity) applied for an entity sale situation; and
(b)
for which you used the
*
diminishing value method; and
(c)
whose
*
adjustable value as at the end of the income year before the
*
current year is less than
$
1,000;
is also a
low-value asset
.
Exception: small business entities
40-425(7)
You cannot allocate a
*
depreciating asset to a low-value pool if you deduct amounts for it under Subdivision
328-D
(about capital allowances for small business entities).
History
S 40-425(7) amended by
No 80 of 2007
, s 3 and Sch 3 items 118 and 119, by substituting
"
small business entities
"
for
"
STS taxpayers
"
, applicable in relation to the 2007-08 income year and later income years.
Exception: medium sized businesses
40-425(7A)
You cannot allocate a
*
depreciating asset to a low-value pool if the decline in value of the asset for any income year is determined by section
40-82
(about assets costing below a threshold).
History
S 40-425(7A) amended by No 22 of 2020, s 3 and Sch 1 item 7, by substituting
"
below a threshold
"
for
"
less than
$
30,000
"
, effective 25 March 2020.
S 40-425(7A) inserted by No 51 of 2019, s 3 and Sch 2 item 3, effective 1 July 2019.
Exception: R
&
D
40-425(8)
You cannot allocate a
*
depreciating asset to a low-value pool if you are entitled under section
355-100
to a
*
tax offset for a deduction under section
355-305
for the asset for an income year starting before, or at the same time as, the allocation has effect.
Note:
A similar rule applies if you deducted or could have deducted amounts under former
73BA
of the
Income Tax Assessment Act 1936
(see section
40-430
of the
Income Tax (Transitional Provisions) Act 1997
).
History
S 40-425(8) substituted by No 93 of 2011, s 3 and Sch 3 item 25, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading. S 40-425(8) formerly read:
Exception: research and development
40-425(8)
You cannot allocate a
*
depreciating asset to a low-value pool if you can deduct an amount for the asset under section
73BA
of the
Income Tax Assessment Act 1936
(or could so deduct an amount if you had not chosen a tax offset under section
73I
of that Act) for a period before, or starting at the same time as, the allocation has effect.
S 40-425(8) inserted by No 170 of 2001.
S 40-425 inserted by No 76 of 2001.
SECTION 40-430
Rules for assets in low-value pools
40-430(1)
Once you have made a choice to allocate a
*
low-cost asset to a low-value pool for an income year, you must allocate all low-cost assets you start to
*
hold in that income year or a later one to the pool.
Note 1:
This rule does not apply to low-value assets.
Note 2:
If you are a small business entity for the income year and you calculate your deductions for your depreciating assets under Subdivision
328-D
, you must deduct amounts for your depreciating assets under that Subdivision unless deductions for particular assets are specifically excluded by that Subdivision.
History
S 40-430(1) amended by
No 80 of 2007
, s 3 and Sch 3 item 120, by substituting note 2, applicable in relation to the 2007-08 income year and later income years. Note 2 formerly read:
Note 2:
If you are an STS taxpayer for the income year, you must deduct amounts for your depreciating assets under Subdivision
328-D
unless deductions for particular assets are specifically excluded by that Subdivision.
40-430(2)
Once you allocate any
*
depreciating asset to a low-value pool, it must remain in the pool.
History
S 40-430(2) renumbered from s 40-430(3) by No 41 of 2005.
S 40-430 inserted by No 76 of 2001.
SECTION 40-435
Private or exempt use of assets
40-435(1)
When you allocate a
*
depreciating asset to a low-value pool, you must make a reasonable estimate of the percentage (the
taxable use percentage
) of your use of the asset (including any past use) that will be for a
*
taxable purpose over:
(a)
for a
*
low-cost asset
-
its
*
effective life; or
(b)
for a
*
low-value asset
-
any period of its effective life that is yet to elapse at the start of the income year for which you allocate it to the pool.
History
S 40-435 amended by No 126 of 2017, s 3 and Sch 2 item 6, by inserting
"
(1)
"
before
"
When
"
, effective 1 January 2018. For application provisions, see note under s
40-27
.
40-435(2)
For the purposes of subsection (1), disregard a
*
taxable purpose that is the
*
purpose of producing assessable income:
(a)
from the use of
*
residential premises to provide residential accommodation; but
(b)
not in the course of carrying on a
*
business;
if, apart from subsections
40-25(5)
and
40-27(6)
, section
40-27
would reduce your deductions under subsection
40-25(1)
for the asset.
History
S 40-435(2) inserted by No 126 of 2017, s 3 and Sch 2 item 7, effective 1 January 2018. For application provisions, see note under s
40-27
.
History
S 40-435 inserted by No 76 of 2001.
SECTION 40-440
How you work out the decline in value of assets in low-value pools
40-440(1)
You work out the decline in value of
*
depreciating assets in a low-value pool for an income year in this way:
Step 1.
Work out the amount obtained by taking 18
¾
% of the taxable use percentage of the
*
cost of each
*
low-cost asset you allocated to the pool for that year. Add those amounts.
Step 2.
Add to the step 1 amount 18
¾
% of the taxable use percentage of any amounts included in the second element of the
*
cost for that year of:
(a) assets allocated to the pool for an earlier income year; and
(b)
*
low-value assets allocated to the pool for the
*
current year.
Step 3.
Add to the step 2 amount 37
½
% of the sum of:
(a) the
*
closing pool balance for the previous income year; and
(b) the taxable use percentage of the
*
opening adjustable values of
*
low-value assets, at the start of the income year, that you allocated to the pool for that year.
Step 4.
The result is the decline in value of the
*
depreciating assets in the pool.
40-440(2)
The
closing pool balance
of a low-value pool for an income year is the sum of:
(a)
the
*
closing pool balance of the pool for the previous income year; and
(b)
the taxable use percentage of the
*
costs of
*
low-cost assets you allocated to the pool for that year; and
(c)
the taxable use percentage of the
*
opening adjustable values of any
*
low-value assets you allocated to the pool for that year as at the start of that year; and
(d)
the taxable use percentage of any amounts included in the second element of the cost for the income year of:
(i)
assets allocated to the pool for an earlier income year; and
(ii)
low-value assets allocated to the pool for the
*
current year;
less the decline in value of the
*
depreciating assets in the pool worked out under subsection (1).
Note:
The closing pool balance may be reduced under section
40-445
if a balancing adjustment event happens.
History
S 40-440 inserted by No 76 of 2001.
SECTION 40-445
Balancing adjustment events
40-445(1)
If a
*
balancing adjustment event happens to a
*
depreciating asset in a low-value pool in an income year, the
*
closing pool balance for that year is reduced (but not below zero) by the taxable use percentage of the asset's
*
termination value.
40-445(2)
If the sum of the
*
termination values, or the part of it, applicable under subsection (1) exceeds the
*
closing pool balance of the pool for that year, the excess is included in your assessable income.
History
S 40-445 inserted by No 76 of 2001.
SECTION 40-450
Software development pools
40-450(1)
You may choose to allocate amounts of expenditure you incur on
*
in-house software in an income year to a software development pool if it is expenditure on developing, or having another entity develop, computer software.
Note:
You cannot allocate expenditure on in-house software to a software development pool if it is expenditure on acquiring computer software or a right to use computer software.
40-450(2)
Once you choose to create a software development pool for an income year, any amounts of the kind referred to in subsection (1) you incur after the pool is created (whether in that income year or a later one) must be allocated to a software development pool.
40-450(3)
However, an amount of expenditure on
*
in-house software can only be allocated to a software development pool if you intend to use the software solely for a
*
taxable purpose.
40-450(4)
You must create a separate software development pool for each income year for which you incur amounts of the kind referred to in subsection (1).
History
S 40-450 inserted by No 76 of 2001.
SECTION 40-455
40-455
How to work out your deduction
For all the expenditure on
*
in-house software in a software development pool that was incurred in a particular income year (
Year 1
), you get deductions in successive income years as follows:
|
Deductions allowed for software development pool
|
|
|
Column 1
|
Column 2
|
|
Item
|
Income year
|
Amount of expenditure you can deduct for that year
|
| 1 |
Year 1 |
Nil |
| 2 |
Year 2 |
30% |
| 3 |
Year 3 |
30% |
| 4 |
Year 4 |
30% |
| 5 |
Year 5 |
10% |
History
S 40-455 amended by No 130 of 2015, s 3 and Sch 2 item 2, by substituting the table, applicable to expenditure incurred in an income year starting on or after 1 July 2015. The table formerly read:
|
Deductions allowed for software development pool
|
|
Income year
|
Amount of expenditure you can deduct for that year
|
| Year 1 |
Nil |
|
. |
| Year 2 |
40% |
|
. |
| Year 3 |
40% |
|
. |
| Year 4 |
20% |
S 40-455 inserted by No 76 of 2001.
SECTION 40-460
Your assessable income includes consideration for pooled software
40-460(1)
If expenditure on
*
in-house software is (or was) in your software development pool, your assessable income includes any amount you
*
derive as consideration in relation to the software.
40-460(2)
However, subsection (1) does not apply if subsection
40-340(3)
(roll-over relief) applies to the change.
History
S 40-460 inserted by No 76 of 2001.
Subdivision 40-F
-
Primary production depreciating assets
History
Subdiv 40-F inserted by No 76 of 2001.
SECTION 40-510
What this Subdivision is about
You can deduct amounts for capital expenditure on depreciating assets that are water facilities, horticultural plants, fodder storage assets or fencing assets.
The amount you can deduct is equal to the asset
'
s decline in value during an income year (as measured under this Subdivision).
History
S 40-510 amended by No 67 of 2015, s 3 and Sch 2 item 4, by substituting
"
, horticultural plants, fodder storage assets or fencing assets
"
for
"
or horticultural plants
"
, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
S 40-510 amended by No 129 of 2004 and inserted by No 76 of 2001.
Operative provisions
SECTION 40-515
Water facilities, horticultural plants, fodder storage assets and fencing assets
40-515(1)
You can deduct an amount equal to the decline in value for an income year (as worked out under this Subdivision) of a
*
depreciating asset that is one of these:
(a)
a
*
water facility;
(b)
a
*
horticultural plant;
(c)
a
*
fodder storage asset;
(d)
a
*
fencing asset.
Note 1:
Sections
40-540
,
40-545
,
40-548
and
40-551
show you how to work out the decline.
Note 2:
Generally, only one taxpayer can deduct amounts for a depreciating asset. However, if you and another taxpayer jointly hold the asset, each of you deduct amounts for it: see section
40-35
.
History
S 40-515(1) amended by No 123 of 2018, s 3 and Sch 1 item 1, by substituting
"
, 40-545, 40-548 and 40-551
"
for
"
and 40-545
"
in Note 1, effective 1 January 2019 and applicable to a fodder storage asset if the asset
'
s start time occurs on or after 19 August 2018.
S 40-515(1) amended by No 67 of 2015, s 3 and Sch 2 item 6, by inserting para (c) and (d), applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
S 40-515(1) amended by No 129 of 2004.
Conditions
40-515(2)
However, the applicable condition in section
40-525
must be satisfied for the
*
depreciating asset.
Limit on deduction
40-515(3)
You cannot deduct more in total than:
(a)
for a
*
water facility
-
the amount of capital expenditure (disregarding expenditure that you cannot deduct because of section
26-100
(about water infrastructure improvement expenditure)) incurred on the facility; or
(b)
for a
*
horticultural plant
-
the amount of capital expenditure incurred on the plant; or
(c)
for a
*
fodder storage asset
-
the amount of capital expenditure incurred on the asset; or
(d)
for a
*
fencing asset
-
the amount of capital expenditure incurred on the asset.
History
S 40-515(3) amended by No 67 of 2015, s 3 and Sch 2 item 7, by inserting para (c) and (d), applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
S 40-515(3) substituted by No 88 of 2013, s 3 and Sch 3 item 5, applicable in relation to payments made on or after 1 April 2010 by the Commonwealth under a SRWUIP program. S 40-515(3) formerly read:
Limit on deduction
40-515(3)
You cannot deduct more in total than the amount of capital expenditure incurred on the
*
depreciating asset.
Reduction of deduction: water facilities, fodder storage assets and fencing assets
40-515(4)
You must reduce your deduction for a
*
water facility,
*
fodder storage asset or
*
fencing asset for an income year by the part of the decline in value of the facility or asset that is attributable to the period (if any) in the income year when it was:
(a)
not wholly used in carrying on a
*
primary production business on land in Australia; or
(b)
not wholly usedfor a
*
taxable purpose.
History
S 40-515(4) amended by No 67 of 2015, s 3 and Sch 2 items 9 and 10, by inserting
"
,
*
fodder storage asset or
*
fencing asset
"
and substituting
"
the decline in value of the facility or asset
"
for
"
the facility
'
s decline in value
"
, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
40-515(5)
Paragraph (4)(a) does not apply to a
*
water facility if the expenditure incurred on the construction, manufacture, installation or acquisition of the water facility was incurred by an
*
irrigation water provider.
History
S 40-515(5) inserted by No 23 of 2005.
Meaning of
irrigation water provider
40-515(6)
An
irrigation water provider
is an entity whose
*
business is primarily and principally the supply (otherwise than by using a
*
motor vehicle) of water to entities for use in
*
primary production businesses on land in Australia.
History
S 40-515(6) inserted by No 23 of 2005.
S 40-515 inserted by No 76 of 2001.
SECTION 40-520
Meaning of
water facility
,
horticultural plant
,
fodder storage asset
and
fencing asset
40-520(1)
A
water facility
is:
(a)
*
plant or a structural improvement, or a repair of a capital nature, or an alteration, addition or extension, to plant or a structural improvement, that is primarily and principally for the purpose of conserving or conveying water; or
(b)
a structural improvement, or a repair of a capital nature, or an alteration, addition or extension, to a structural improvement, that is reasonably incidental to conserving or conveying water.
Example:
Examples of a water facility include a dam, tank, tank stand, bore, well, irrigation channel, pipe, pump, water tower and windmill. Examples of things reasonably incidental to conserving or conveying water include a culvert, a fence to prevent live stock entering an irrigation channel and a bridge over an irrigation channel.
History
S 40-520(1) amended by No 15 of 2017, s 3 and Sch 4 item 40, by substituting
"
live stock
"
for
"
livestock
"
in the example, effective 1 April 2017.
S 40-520(1) substituted by No 23 of 2005.
40-520(2)
A
horticultural plant
is a live plant or fungus that is cultivated or propagated for any of its products or parts.
40-520(3)
A
fodder storage asset
is an asset or a structural improvement, or a repair of a capital nature, or an alteration, addition or extension, to an asset or a structural improvement, that is primarily and principally for the purpose of storing fodder.
History
S 40-520(3) inserted by No 67 of 2015, s 3 and Sch 2 item 12, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
40-520(4)
A
fencing asset
is:
(a)
an asset or a structural improvement that is a fence; or
(b)
a repair of a capital nature, or an alteration, addition or extension, to a fence.
History
S 40-520(4) inserted by No 67 of 2015, s 3 and Sch 2 item 12, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
History
S 40-520 inserted by No 76 of 2001.
SECTION 40-525
Conditions
Water facilities
40-525(1)
The capital expenditure you incurred on the construction, manufacture, installation or acquisition of the
*
water facility must have been incurred:
(a)
primarily and principally for the purpose of conserving or conveying water for use in a
*
primary production business that you conduct on land in Australia; or
(b)
for expenditure incurred by an
*
irrigation water provider
-
primarily and principally for the purpose of conserving or conveying water for use in primary production businesses conducted by other entities on land in Australia, being entities supplied with water by the irrigation water provider.
Note:
If Division
250
applies to you and an asset that is a water facility:
(a) if section
250-150
applies
-
the condition in this subsection is taken not to be satisfied for the facility to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
the condition in this subsection is taken not to be satisfied for the facility.
History
S 40-525(1) amended by No 15 of 2017, s 3 and Sch 4 item 41, by inserting
"
not
"
in para (a) of the note, effective 1 April 2017.
S 40-525(1) amended by No 67 of 2015, s 3 and Sch 2 item 13, by omitting
"
in a determination made
"
after
"
to the extent specified
"
from para (a) of the note, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
S 40-525(1) amended by
No 164 of 2007
, s 3 and Sch 1 item 46, by inserting the note at the end, effective 25 September 2007.
S 40-525(1) substituted by No 23 of 2005.
Horticultural plants
40-525(2)
One of the conditions in this table must be satisfied:
|
Conditions relating to horticultural plants
|
|
Item
|
Condition
|
| 1 |
You own the
*
horticultural plant and any holder of a lease, lesser interest or licence relating to the land does not carry on a
*
business of
*
horticulture on the land |
|
. |
| 2 |
The
*
horticultural plant is attached to land you hold under a lease, or a
*
quasi-ownership right granted by an
*
exempt Australian government agency or an
*
exempt foreign government agency, and: |
| |
(a) |
the lease or quasi-ownership right enables you to carry on a
*
business of
*
horticulture on the land; and |
| |
(b) |
any holder of a lesser interest or licence relating to the land does not carry on a
*
business of
*
horticulture on the land. |
|
. |
| 3 |
You: |
| |
(a) |
hold a licence relating to the land to which the
*
horticultural plant is attached; and |
| |
(b) |
carry on a
*
business of
*
horticulture on the land as a result of holding the licence. |
Note:
If Division
250
applies to you and an asset that is a horticultural plant:
(a) if section
250-150
applies
-
a condition in this subsection is taken not to be satisfied for the plant to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
the conditions in this subsection are taken not to be satisfied for the horticultural plant.
History
S 40-525(2) amended by No 15 of 2017, s 3 and Sch 4 item 41, by inserting
"
not
"
in para (a) of the note, effective 1 April 2017.
S 40-525(2) amended by No 67 of 2015, s 3 and Sch 2 item 13, by omitting
"
in a determination made
"
after
"
to the extent specified
"
from para (a) of the note, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
S 40-525(2) amended by
No 164 of 2007
, s 3 and Sch 1 item 47, by inserting the note at the end, effective 25 September 2007.
Fodder storage assets
40-525(3)
The capital expenditure you incurred on the construction, manufacture, installation or acquisition of the
*
fodder storage asset must have been incurred primarily and principally for use in a
*
primary production business that you conduct on land in Australia.
Note:
If Division
250
applies to you and an asset that is a fodder storage asset:
(a) if section
250-150
applies
-
the condition in this subsection is taken not to be satisfied for the asset to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
the condition in this subsection is taken not to be satisfied for the asset.
History
S 40-525(3) amended by No 15 of 2017, s 3 and Sch 4 item 41, by inserting
"
not
"
in para (a) of the note, effective 1 April 2017.
S 40-525(3) inserted by No 67 of 2015, s 3 and Sch 2 item 14, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
Former s 40-525(3) repealed by No 129 of 2004.
Fencing assets
40-525(4)
The capital expenditure you incurred on the construction, manufacture, installation or acquisition of the
*
fencing asset must have been incurred primarily and principally for use in a
*
primary production business that you conduct on land in Australia.
Note:
If Division
250
applies to you and an asset that is a fencing asset:
(a) if section
250-150
applies
-
the condition in this subsection is taken not to be satisfied for the asset to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
the condition in this subsection is taken not to be satisfied for the asset.
History
S 40-525(4) amended by No 15 of 2017, s 3 and Sch 4 item 41, by inserting
"
not
"
in para (a) of the note, effective 1 April 2017.
S 40-525(4) inserted by No 67 of 2015, s 3 and Sch 2 item 14, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
History
S 40-525 inserted by No 76 of 2001.
SECTION 40-530
When declines in value start
40-530(1)
A
*
water facility,
*
fodder storage asset or
*
fencing asset starts to decline in value in the income year in which you first incur expenditure on the facility or asset.
40-530(2)
A
*
horticultural plant starts to decline in value in:
(a)
if you are the first entity to satisfy a condition in subsection
40-525(2)
for the plant
-
the income year in which the first commercial season starts; or
(b)
if not
-
the later of the income year in which you first satisfied that condition and the income year in which the first commercial season starts.
History
S 40-530 substituted by No 67 of 2015, s 3 and Sch 2 item 15, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015. S 40-530 formerly read:
SECTION 40-530 When a water facility or horticultural plant starts to decline in value
40-530
A
*
water facility or horticultural plant starts to decline in value in the income year worked out using this table:
|
Start of decline in value
|
|
Item
|
This asset:
|
Starts to decline in value in:
|
| 1 |
A
*
water facility |
the income year in which you first incur expenditure on the facility |
|
|
| 2 |
A
*
horticultural plant |
(a) |
if you are the first entity to satisfy a condition in subsection 40-525(2) for the plant
-
the income year in which the first commercial season starts; or |
| |
|
(b) |
if not
-
the later of the income year in which you first satisfied that condition and the income year in which the first commercial season starts |
|
|
| 3 |
(Repealed by No 129 of 2004) |
|
|
S 40-530 amended by No 129 of 2004 and inserted by No 76 of 2001.
SECTION 40-535
Meaning of
horticulture
and
commercial horticulture
40-535(1)
Horticulture
includes:
(a)
propagation and cultivation of a
*
horticultural plant in any environment (whether natural or artificial); and
(b)
propagation and cultivation of seeds, bulbs, spores and similar things; and
(c)
propagation and cultivation of fungi.
40-535(2)
Use for
commercial horticulture
means use for the
*
purpose of producing assessable income in a
*
business of
*
horticulture.
History
S 40-535 inserted by No 76 of 2001.
SECTION 40-540
How you work out the decline in value for water facilities
40-540(1)
The decline in value of a
*
water facility for the income year in which you incurred the expenditure is the amount of capital expenditure you incurred on the construction, manufacture, installation or acquisition of the water facility.
40-540(2)
However, disregard expenditure that you cannot deduct because of section
26-100
(about water infrastructure improvement expenditure).
History
S 40-540 substituted by No 67 of 2015, s 3 and Sch 2 item 16, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015. S 40-540 formerly read:
SECTION 40-540 How you work out the decline in value for water facilities
40-540
You work out the decline in value of a
*
water facility for an income year in this way for the income year in which you incurred the expenditure and the 2 following years:
Expenditure
×
33
⅓
%
where:
expenditure
is the amount of capital expenditure (disregarding expenditure that you cannot deduct because of section
26-100
(about water infrastructure improvement expenditure)) you incurred on the construction, manufacture, installation or acquisition of the
*
water facility.
S 40-540 amended by No 88 of 2013, s 3 and Sch 3 item 6, by inserting
"
(disregarding expenditure that you cannot deduct because of section 26-100 (about water infrastructure improvement expenditure))
"
in the definition of
"
expenditure
"
, applicable in relation to payments made on or after 1 April 2010 by the Commonwealth under a SRWUIP program.
S 40-540 inserted by No 76 of 2001.
SECTION 40-545
How you work out the decline in value for horticultural plants
40-545(1)
The decline in value of a
*
horticultural plant for the income year in which it starts to decline in value is all of the capital expenditure attributable to the establishment of the plant if its
*
effective life is less than 3 years.
40-545(2)
You work out the decline in value for an income year of a
*
horticultural plant whose
*
effective life is 3 years or more in this way:
| |
Establishment
expenditure |
× |
Write-off days in income year
365 |
× |
Write-off rate |
|
where:
establishment expenditure
is the amount of capital expenditure incurred that is attributable to the establishment of the
*
horticultural plant.
write-off days in income year
is the number of days in the income year on which you satisfied a condition in subsection
40-525(2)
for the plant and either used it for
*
commercial horticulture or held it ready for that use.
write-off rate
is the rate shown in this table for the
*
horticultural plant according to its
*
effective life.
|
Write-off rate for horticultural plant
|
|
Item
|
Effective life of:
|
The write-off rate is:
|
| 1 |
3 to fewer than 5 years |
40% |
|
. |
| 2 |
5 to fewer than 6
⅔
years |
27% |
|
. |
| 3 |
6
⅔
to fewer than 10 years |
20% |
|
. |
| 4 |
10 to fewer than 13 years |
17% |
|
. |
| 5 |
13 to fewer than 30 years |
13% |
|
. |
| 6 |
30 years or more |
7% |
Limit on write-off days
40-545(3)
Disregard your use of the
*
horticultural plant on a day outside the period that:
(a)
starts when the plant
can
first be used for
*
commercial horticulture; and
(b)
extends for the time shown in this table (depending on the plant's
*
effective life).
|
Period after which you cannot count use of horticultural plant
|
|
Item
|
Effective life:
|
Time limit:
|
| 1 |
3 to fewer than 5 years |
2 years and 183 days |
|
. |
| 2 |
5 to fewer than 6
⅔
years |
3 years and 257 days |
|
. |
| 3 |
6
⅔
to fewer than 10 years |
5 years |
|
. |
| 4 |
10 to fewer than 13 years |
5 years and 323 days |
|
. |
| 5 |
13 to fewer than 30 years |
7 years and 253 days |
|
. |
| 6 |
30 years or more |
14 years and 105 days |
History
S 40-545 inserted by No 76 of 2001.
SECTION 40-548
40-548
How you work out the decline in value for fodder storage assets
The decline in value of a
*
fodder storage asset for the income year in which you incurred the expenditure is the amount of capital expenditure you incurred on the construction, manufacture, installation or acquisition of the fodder storage asset.
History
S 40-548 substituted by No 123 of 2018, s 3 and Sch 1 item 2, effective 1 January 2019 and applicable to a fodder storage asset if the asset
'
s start time occurs on or after 19 August 2018. S 40-548 formerly read:
SECTION 40-548 How you work out the decline in value for fodder storage assets
40-548
You work out the decline in value of a
*
fodder storage asset for an income year in this way for the income year in which you incurred the expenditure and the 2 following years:
Expenditure
×
33
⅓
%
where:
expenditure
is the amount of capital expenditure you incurred on the construction, manufacture, installation or acquisition of the
*
fodder storage asset.
S 40-548 inserted by No 67 of 2015, s 3 and Sch 2 item 17, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
40-550
(Repealed) SECTION 40-550 How you work out the decline in value for grapevines
(Repealed by No 129 of 2004)
History
S 40-550 inserted by No 76 of 2001.
SECTION 40-551
40-551
How you work out the decline in value for fencing assets
The decline in value of a
*
fencing asset for the income year in which you incurred the expenditure is the amount of capital expenditure you incurred on the construction, manufacture, installation or acquisition of the fencing asset.
History
S 40-551 inserted by No 67 of 2015, s 3 and Sch 2 item 17, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
SECTION 40-555
Amounts you cannot deduct
Water facilities
40-555(1)
You cannot deduct an amount for any income year for capital expenditure on the acquisition of a
*
water facility if any entity has deducted or can deduct an amount under this Subdivision for any income year for earlier capital expenditure on:
(a)
the construction or manufacture of the facility; or
(b)
a previous acquisition of the facility.
Note:
A depreciating asset and a repair of a capital nature or an alteration, addition or extension to that asset that is a water facility are not the same depreciating asset for the purposes of section
40-50
and this Subdivision: see section
40-53
.
History
S 40-555(1) amended by No 67 of 2015, s 3 and Sch 2 item 18, by substituting
"
entity
"
for
"
person
"
, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
S 40-555(1) amended by No 23 of 2005.
40-555(2)
(Repealed by No 23 of 2005)
Horticultural plants
40-555(3)
In working out your deduction under this Subdivision for a
*
horticultural plant, disregard expenditure incurred:
(a)
in draining swamp or low-lying land; or
(b)
in clearing land.
History
S 40-555(3) amended by No 129 of 2004.
Fodder storage assets
40-555(4)
You cannot deduct an amount for any income year for capital expenditure on the acquisition of a
*
fodder storage asset if any entity has deducted or can deduct an amount under this Subdivision for any income year for earlier capital expenditure on:
(a)
the construction or manufacture of the asset; or
(b)
a previous acquisition of the asset.
Note:
A depreciating asset and a repair of a capital nature or an alteration, addition or extension to that asset that is a fodder storage asset are not the same depreciating asset for the purposes of section
40-50
and this Subdivision: see section
40-53
.
History
S 40-555(4) inserted by No 67 of 2015, s 3 and Sch 2 item 19, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
Fencing assets
40-555(5)
You cannot deduct an amount for any income year for capital expenditure on the acquisition of a
*
fencing asset if any entity has deducted or can deduct an amount under this Subdivision for any income year for earlier capital expenditure on:
(a)
the construction or manufacture of the fencing asset; or
(b)
a previous acquisition of the fencing asset.
Note:
A depreciating asset and a repair of a capital nature or an alteration, addition or extension to that asset that is a fencing asset are not the same depreciating asset for the purposes of section
40-50
and this Subdivision: see section
40-53
.
History
S 40-555(5) inserted by No 67 of 2015, s 3 and Sch 2 item 19, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
40-555(6)
You cannot deduct an amount for any income year for capital expenditure on a
*
fencing asset to the extent that any entity has deducted or can deduct the amount under subsection
40-630(1)
(about landcare operations).
History
S 40-555(6) inserted by No 67 of 2015, s 3 and Sch 2 item 19, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
40-555(7)
You cannot deduct an amount for any income year for capital expenditure on a
*
fencing asset if the fencing asset is (or is a repair, alteration, addition or extension to):
(a)
a stockyard or pen; or
(b)
a portable fence.
History
S 40-555(7) inserted by No 67 of 2015, s 3 and Sch 2 item 19, applicable to assets that an entity starts to hold, or to expenditure an entity incurs, at or after 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015.
History
S 40-555 inserted by No 76 of 2001.
SECTION 40-560
40-560
Non-arm's length transactions
If you incurred capital expenditure under an
*
arrangement and:
(a)
there is at least one other party to the arrangement with whom you did not deal at
*
arm's length; and
(b)
apart from this section, the amount of the expenditure would be more than the
*
market value of what it was for;
the amount of expenditure you take into account under this Subdivision is that market value.
History
S 40-560 inserted by No 76 of 2001.
SECTION 40-565
Extra deduction for destruction of a horticultural plant
40-565(1)
You can deduct the amount worked out under subsection (2) for a
*
horticultural plant for an income year if its
*
effective life is 3 years or more and it is destroyed during the income year while you own it and use it for
*
commercial horticulture.
History
S 40-565(1) substituted by No 129 of 2004.
40-565(2)
Work out your deduction as follows:
Method statement
Step 1.
Work out the total of the amounts you could have deducted under this Subdivision for the
*
horticultural plant for the period:
(a) starting when the plant could first be used for
*
commercial horticulture; and
(b) ending when it was destroyed;
assuming that, during that period, you satisfied a condition in section
40-525
for the plant and used it for commercial horticulture.
Step 2.
Subtract from the capital expenditure that is attributable to the establishment of the
*
horticultural plant:
(a) the result from step 1; and
(b) any amount you received (under an insurance policy or otherwise) for the destruction.
The remaining amount (if any) is your deduction under subsection (1).
History
S 40-565(2) amended by No 129 of 2004.
40-565(3)
This deduction is in addition to any deduction for the income year under section
40-545
.
History
S 40-565(3) amended by No 129 of 2004.
S 40-565 inserted by No 76 of 2001.
SECTION 40-570
How this Subdivision applies to partners and partnerships
40-570(1)
This section applies to allocate expenditure to you for the purposes of this Subdivision if you were a partner in a partnership when it incurred capital expenditure during an income year.
40-570(2)
For the purposes of this Subdivision, you are taken to have incurred during that income year:
(a)
the amount of the expenditure that the partners agreed you should bear; or
(b)
if there was no such agreement
-
the proportion of the expenditure equal to the proportion of your individual interest in the net income or partnership loss of the partnership for that income year.
40-570(3)
Disregard this Subdivision when working out the net income or partnership loss of the partnership under section
90
of the
Income Tax Assessment Act 1936
.
History
S 40-570 inserted by No 76 of 2001.
SECTION 40-575
Getting tax information if you acquire a horticultural plant
40-575(1)
If you begin to satisfy a condition in section
40-525
for a
*
horticultural plant, you may give the last entity (if any) that satisfied such a condition for the plant a written notice requiring the entity to give you any or all of the following information:
(a)
the amount of establishment expenditure for the plant;
(b)
if the entity used the plant
'
s
*
effective life to work out the decline in value of the plant
-
its effective life and the day on which it could first be used for
*
commercial horticulture.
History
S 40-575(1) substituted by No 129 of 2004.
40-575(2)
The notice must:
(a)
be given within 60 days of your beginning to satisfy that condition; and
(b)
specify a period of at least 60 days within which the information must be given; and
(c)
set out the effect of subsection (3).
Note:
Subsections (4) and (5) explain how this subsection operates if the last owner is a partnership.
Requirement to comply with notice
40-575(3)
The entity to whom the notice is given must not intentionally refuse or fail to comply with the notice.
Penalty: 10 penalty units.
Giving the notice to a partnership
40-575(4)
If the entity to whom the notice is given is a partnership:
(a)
you may give it to the partnership by giving it to any of the partners (this does not limit how else you can give it); and
(b)
the obligation to comply with the notice is imposed on each of the partners (not on the partnership), but may be discharged by any of them.
40-575(5)
A partner must not intentionally refuse or fail to comply with that obligation, unless another partner has already complied with it.
Penalty: 10 penalty units.
Limits on giving a notice
40-575(6)
Only one notice can be given in relation to the same
*
horticultural plant.
History
S 40-575(6) amended by No 129 of 2004.
S 40-575 inserted by No 76 of 2001.
Subdivision 40-G
-
Capital expenditure of primary producers and other landholders
History
Subdiv 40-G inserted by No 76 of 2001.
SECTION 40-625
What this Subdivision is about
You can deduct amounts for capital expenditure you incur:
•
on landcare operations; or
•
on electricity connections or telephone lines.
History
S 40-625 inserted by No 76 of 2001.
Operative provisions
SECTION 40-630
Landcare operations
40-630(1)
You can deduct capital expenditure you incur at a time in an income year on a
*
landcare operation for:
(a)
land in Australia you use at the time for carrying on a
*
primary production business; or
(b)
rural land in Australia you use at the time for carrying on a
*
business for a
*
taxable purpose from the use of that land (except a business of
*
mining and quarrying operations).
Note:
If Division
250
applies to you and an asset that is land:
(a) if section
250-150
applies
-
you are taken not to be using the land for the purpose of carrying on a primary production business, or a business for the purpose of producing assessable income from the use of rural land (except a business of mining and quarrying operations), to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
you are taken not to be using the land for such a purpose.
History
S 40-630(1) amended by No 15 of 2017, s 3 and Sch 4 item 42, by substituting para (a) of the note, effective 1 April 2017. Para (a) of the note formerly read:
(a) if section 250-150 applies
-
you are taken to be using the land for the purpose of carrying on a primary production business, or a business for the purpose of producing assessable income from the use of rural land (except a business of mining and quarrying operations), to the extent specified in a determination made under subsection 250-150(3); or
S 40-630(1) amended by No 96 of 2014, s 3 and Sch 5 items 10 and 11, by omitting
"
or
*
geothermal energy extraction
"
after
"
and quarrying operations
"
from para (b) and
"
or geothermal energy extraction
"
after
"
and quarrying operations
"
from para (a) in the note, effective 30 September 2014 and applicable to expenditure incurred during the income year in which this Schedule commences or a later income year.
S 40-630(1) amended by No 84 of 2013, s 3 and Sch 3 items 10
-
11, by inserting
"
or
*
geothermal energy extraction
"
in para (b) and
"
or geothermal energy extraction
"
in the note, applicable to expenditure incurred on or after 1 July 2012.
S 40-630(1) amended by No 14 of 2012, s 3 and Sch 3 items 19 and 20, by inserting
"
and quarrying
"
in para (b) and para (a) to the note at the end, effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-630(1) amended by
No 164 of 2007
, s 3 and Sch 1 item 48, by inserting the note at the end, effective 25 September 2007.
40-630(1A)
A
*
rural land irrigation water provider can deduct capital expenditure it incurs at a time in an income year on a
*
landcare operation for:
(a)
land in Australia that other entities use at the time for carrying on
*
primary production businesses; or
(b)
rural land in Australia that other entities use at the time for carrying on
*
businesses for a
*
taxable purpose from the use of that land (except a business of
*
mining and quarrying operations);
being entities supplied with water by the rural land irrigation water provider.
History
S 40-630(1A) amended by No 96 of 2014, s 3 and Sch 5 item 12, by omitting
"
or
*
geothermal energy extraction
"
after
"
and quarrying operations
"
from para (b), effective 30 September 2014 and applicable to expenditure incurred during the income year in which this Schedule commences or a later income year.
S 40-630(1A) amended by No 84 of 2013, s 3 and Sch 3 item 12, by inserting
"
or
*
geothermal energy extraction
"
in para (b), applicable to expenditure incurred on or after 1 July 2012.
S 40-630(1A) amended by No 14 of 2012, s 3 and Sch 3 item 21, by inserting
"
and quarrying
"
in para (b), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-630(1A) inserted by No 23 of 2005.
40-630(1B)
A
rural land irrigation water provider
is:
(a)
an
*
irrigation water provider; or
(b)
an entity whose
*
business is primarily and principally the supply (otherwise than by using a
*
motor vehicle) of water to entities for use in carrying on
*
businesses (except businesses of
*
mining and quarrying operations) using rural land in Australia.
History
S 40-630(1B) amended by No 96 of 2014, s 3 and Sch 5 item 12, by omitting
"
or
*
geothermal energy extraction
"
after
"
and quarrying operations
"
from para (b), effective 30 September 2014 and applicable to expenditure incurred during the income year in which this Schedule commences or a later income year.
S 40-630(1B) amended by No 84 of 2013, s 3 and Sch 3 item 12, by inserting
"
or
*
geothermal energy extraction
"
in para (b), applicable to expenditure incurred on or after 1 July 2012.
S 40-630(1B) amended by No 14 of 2012, s 3 and Sch 3 item 21, by inserting
"
and quarrying
"
in para (b), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-630(1B) inserted by No 23 of 2005.
Exception: plant
40-630(2)
However, you cannot deduct an amount under this Subdivision for capital expenditure on
*
plant, except:
(a)
a fence erected for a purpose described in paragraph
40-635(1)(a)
or (b); or
(b)
a dam or structural improvement (except a fence) covered by paragraph (1)(c), (d), (e) or (f) of the definition of
plant
in section
45-40
.
40-630(2A)
In applying paragraph (2)(b) to capital expenditure incurred by a
*
rural land irrigation water provider on a dam or structural improvement, the requirement in paragraph
45-40(1)
(c) that the land on which the dam or structural improvement is situated be used for agricultural or pastoral operations is to be disregarded.
History
S 40-630(2A) inserted by No 23 of 2005.
Exception: deduction available under Subdivision 40-F
40-630(2B)
A
*
rural land irrigation water provider cannot deduct an amount under this Subdivision for capital expenditure if the entity can deduct an amount for that expenditure under Subdivision
40-F
.
History
S 40-630(2B) inserted by No 23 of 2005.
Exception: deduction available under Subdivision 40-J
40-630(2C)
You cannot deduct an amount under this Subdivision for capital expenditure if any entity can deduct an amount for that expenditure for any income year under Subdivision
40-J
.
History
S 40-630(2C) inserted by
No 38 of 2008
, s 3 and Sch 8 item 5, applicable to the 2007-08 income year and later income years.
Reduction of deduction
40-630(3)
You must reduce your deduction by a reasonable amount to reflect your use of the land in the income year after the time when you incurred the expenditure for a purpose other than the purpose of carrying on:
(a)
a
*
primary production business; or
(b)
a
*
business for the
*
purpose of producing assessable income from the use of rural land (except a business of
*
mining and quarrying operations).
History
S 40-630(3) amended by No 96 of 2014, s 3 and Sch 5 item 12, by omitting
"
or
*
geothermal energy extraction
"
after
"
and quarrying operations
"
from para (b), effective 30 September 2014 and applicable to expenditure incurred during the income year in which this Schedule commences or a later income year.
S 40-630(3) amended by No 84 of 2013, s 3 and Sch 3 item 12, by inserting
"
or
*
geothermal energy extraction
"
in para (b), applicable to expenditure incurred on or after 1 July 2012.
S 40-630(3) amended by No 14 of 2012, s 3 and Sch 3 item 21, by inserting
"
and quarrying
"
in para (b), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
40-630(4)
Subsection (3) does not apply to expenditure incurred by a
*
rural land irrigation water provider. Instead, a rural land irrigation water provider must reduce its deduction in relation to particular land by a reasonable amount to reflect an entity
'
s use of the land in the income year after the rural land irrigation water provider incurred the expenditure for a purpose other than a
*
taxable purpose.
History
S 40-630(4) inserted by No 23 of 2005.
S 40-630 inserted by No 76 of 2001.
SECTION 40-635
Meaning of
landcare operation
40-635(1)
Landcare operation
for land means:
(a)
erecting a fence to separate different land classes on the land in accordance with an
*
approved management plan for the land; or
(b)
erecting a fence on the land primarily and principally for the purpose of excluding animals from an area affected by land degradation:
(i)
to prevent or limit extension or worsening of land degradation in the area; and
(ii)
to help reclaim the area; or
(c)
constructing a levee or a similar improvement on the land; or
(d)
constructing drainage works on the land primarily and principally for the purpose of controlling salinity or assisting in drainage control; or
(e)
an operation primarily and principally for the purpose of:
(i)
eradicating or exterminating from the land animals that are pests; or
(ii)
eradicating, exterminating or destroying plant growth detrimental to the land; or
(iii)
preventing or fighting land degradation (except by erecting fences on the land); or
(f)
a repair of a capital nature, or an alteration, addition or extension, to an asset described in paragraph (a), (b), (c) or (d) or an extension of an operation described in paragraph (e); or
(g)
constructing a structural improvement, or a repair of a capital nature, or an alteration, addition or extension, to a structural improvement, that is reasonably incidental to an asset described in paragraph (c) or (d).
Note:
A depreciating asset and a repair of a capital nature or an alteration, addition or extension to that asset are not the same asset for the purposes of section
40-50
and this Subdivision: see section
40-53
.
History
S 40-635(1) amended by No 23 of 2005.
40-635(2)
Paragraph (1)(d) does not apply to an operation draining swamp or low-lying land.
View history note
History
S 40-635 inserted by No 76 of 2001.
SECTION 40-640
40-640
Meaning of
approved management plan
An
approved management plan
for
*
land is a plan that:
(a)
shows the different classes within the land and the location of any fencing needed to separate any of the land classes to prevent land degradation; and
(b)
describes the kind of fencing and how it will prevent land degradation; and
(c)
has been prepared by, or approved in writing as a suitable plan for the land by:
(i)
an officer of an
*
Australian government agency responsible for land conservation who has authority to do so; or
(ii)
an individual who was at the time approved as a farm consultant under this Subdivision.
History
S 40-640 inserted by No 76 of 2001.
SECTION 40-645
Electricity and telephone lines
40-645(1)
You can deduct amounts for capital expenditure you incur on
*
connecting power to land or upgrading the connection if, when you incur the expenditure:
(a)
you have an interest in the land or are a share-farmer carrying on a
*
business on the land; and
(b)
you or another entity intends to use some or all of the electricity to be supplied as a result of the expenditure in carrying on a business on the land for a
*
taxable purpose at a time when you have an interest in the land or are a share-farmer carrying on a business on the land.
40-645(2)
You can also deduct amounts for capital expenditure you incur on a telephone line on or extending to land if, when you incurred the expenditure:
(a)
a
*
primary production business was carried on the land; and
(b)
you had an interest in the land or you were a share-farmer carrying on a primary production business on the land.
40-645(3)
The amount you can deduct is 10% of the expenditure:
(a)
for the income year in which you incur it; and
(b)
for each of the next 9 income years.
Note 1:
Various provisions may reduce the amount you can deduct or stop you deducting. For example, see:
•
Division
26
(limiting deductions generally); and
•
section
40-650
(specifying expenditure you cannot deduct under this Subdivision); and
•
Division
245
(which may affect your entitlement to a deduction if your debts are forgiven).
Note 2:
If you recoup an amount of the expenditure, the amount will be included in your assessable income. See Subdivision
20-A
.
History
S 40-645(3) amended by
No 79 of 2010
, s 3 and Sch 2 items 23 and 24, by omitting
"
of this Act
"
after
"
Division 26
"
and after
"
section 40-650
"
in note 1 and omitting
"
of Schedule 2C to the
Income Tax Assessment Act 1936
"
after
"
Division 245
"
in note 1, effective 1 July 2010.
S 40-645 inserted by No 76 of 2001.
SECTION 40-650
Amounts you cannot deduct under this Subdivision
40-650(1)
You cannot deduct amounts for capital expenditure you incur on
*
connecting power to land or upgrading the connection if, during the 12 months after electricity is first supplied to the land as a result of the expenditure, no electricity supplied as a result of the expenditure is used in carrying on a
*
business on the land for a
*
taxable purpose.
40-650(2)
If you deducted an amount for any income year under this Subdivision for the expenditure, your assessment for that income year may be amended under section
170
of the
Income Tax Assessment Act 1936
to disallow the deduction.
40-650(3)
You cannot deduct an amount for capital expenditure you incur on
*
connecting power to land or upgrading the connection for:
(a)
expenditure in providing water, light or power for use on, access to or communication with the site of
*
mining and quarrying operations; or
(b)
a contribution to the cost of providing water, light or power for those operations.
History
S 40-650(3) amended by No 96 of 2014, s 3 and Sch 5 items 13 and 14, by omitting
"
or
*
geothermal energy extraction
"
after
"
and quarrying operations
"
from para (a) and
"
or that extraction
"
after
"
power for those operations
"
from para (b), effective 30 September 2014 and applicable to expenditure incurred during the income year in which this Schedule commences or a later income year.
S 40-650(3) amended by No 84 of 2013, s 3 and Sch 3 items 13
-
14, by inserting
"
or
*
geothermal energy extraction
"
in para (a) and
"
or that extraction
"
in para (b), applicable to expenditure incurred on or after 1 July 2012.
S 40-650(3) amended by No 14 of 2012, s 3 and Sch 3 item 22, by inserting
"
and quarrying
"
in para (a), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
40-650(4)
You cannot deduct an amount for any income year for your capital expenditure on a part of a telephone line if:
(a)
any entity has deducted, or can deduct, an amount for any income year for the cost of that part under a provision of this Act (except this Subdivision); or
(b)
the cost of that part has been, or must be, taken into account in working out:
(i)
the amount of any entity
'
s deduction (including a deduction for a
*
depreciating asset) for any income year under a provision of this Act (except this Subdivision); or
(ii)
the net income, or partnership loss, of a partnership under section
90
of the
Income Tax Assessment Act 1936
.
40-650(5)
However, you can deduct an amount under this Subdivision for your expenditure on a part of a telephone line even if:
(a)
an entity that worked on installing that part has deducted, or can deduct, an amount relating to that part for any income year under this Act (except this Subdivision); or
(b)
the cost of that part has been, or must be, taken into account:
(i)
in working out the amount of such an entity
'
s deduction for any income year under a provision of this Act (except this Subdivision); or
(ii)
under section
90
of the
Income Tax Assessment Act 1936
in working out the net income, or partnership loss, of a partnership that worked on installing that part.
40-650(6)
Subsection (5) has effect whether the entity did the work itself or through one or more employees or
*
agents.
40-650(7)
If you can deduct, or have deducted, an amount for any income year under section
40-645
for your expenditure:
(a)
an entity cannot deduct an amount for any income year under a provision of this Act (except this Subdivision) for the expenditure; and
(b)
the expenditure cannot be taken into account to work out the amount of an entity
'
s deduction for any income year under a provision of this Act (except this Subdivision).
40-650(8)
Subsection (7) also applies in working out the net income, or partnership loss, of a partnership under section
90
of the
Income Tax Assessment Act 1936
.
History
S 40-650 inserted by No 76 of 2001.
SECTION 40-655
Meaning of
connecting power to land or upgrading the connection
and
metering point
40-655(1)
Each of these operations is
connecting power to land or upgrading the connection
:
(a)
connecting a mains electricity cable to a
*
metering point on the land (whether or not the point from which the cable is connected is on the land);
(b)
providing or installing equipment designed to measure the amount of electricity supplied through a mains electricity cable to a metering point on the land;
(c)
providing or installing equipment for use directly in connection with the supply of electricity through a mains electricity cable to a metering point on the land;
(d)
work to increasethe amount of electricity that can be supplied through a mains electricity cable to a metering point on the land;
(e)
work to modify or replace equipment designed to measure the amount of electricity supplied through a mains electricity cable to a metering point on the land, if the modification or replacement results from increasing the amount of electricity supplied to the land;
(f)
work to modify or replace equipment for use directly in connection with the supply of electricity through a mains electricity cable to the land, if the modification or replacement results from increasing the amount of electricity supplied to the land;
(g)
work carried out as a result of a contribution to the cost of a project consisting of the connection of mains electricity facilities to that land and other land.
40-655(2)
However, an operation described in subsection (1) done in the course of replacing or relocating mains electricity cable or equipment is
connecting power to land or upgrading the connection
only if done to increase the amount of electricity that can be supplied to a
*
metering point on the land.
40-655(3)
A
metering point
on land is a point where consumption of electricity supplied to the land through a mains electricity cable is measured.
History
S 40-655 inserted by No 76 of 2001.
SECTION 40-660
40-660
Non-arm's length transactions
If you incurred capital expenditure under an
*
arrangement and:
(a)
there is at least one other party to the arrangement with whom you did not deal at
*
arm's length; and
(b)
apart from this section, the amount of the expenditure would be more than the
*
market value of what it was for;
the amount of expenditure you take into account under this Subdivision is that market value.
History
S 40-660 inserted by No 76 of 2001.
SECTION 40-665
How this Subdivision applies to partners and partnerships
40-665(1)
This section applies to allocate expenditure to you for the purposes of this Subdivision if you were a partner in a partnership when it incurred capital expenditure during an income year.
40-665(2)
For the purposes of this Subdivision, you are taken to have incurred during that income year:
(a)
the amount of the expenditure that the partners agreed you should bear; or
(b)
if there was no such agreement
-
the proportion of the expenditure equal to the proportion of your individual interest in the net income or partnership loss of the partnership for that income year.
40-665(3)
Disregard this Subdivision when working out the net income or partnership loss of the partnership under section
90
of the
Income Tax Assessment Act 1936
.
History
S 40-665(3) amended by No 119 of 2002.
S 40-665 inserted by No 76 of 2001.
SECTION 40-670
Approval of persons as farm consultants
40-670(1)
A person may be approved in writing as a farm consultant by:
(a)
the
*
Agriculture Secretary; or
(b)
an officer of the
*
Agriculture Department who has been authorised in writing by the Agriculture Secretary to approve persons as farm consultants.
Note:
This subsection also allows the approval of an individual as a farm consultant to be revoked. See subsection 33(3) of the
Acts Interpretation Act 1901
.
History
S 40-670(1) amended by No 88 of 2009, s 3 and Sch 5 items 140 to 142, by substituting
"
*
Agriculture Secretary
"
for
"
Secretary of the Department of Agriculture, Fisheries and Forestry
"
in para (a) and substituting
"
the
*
Agriculture Department
"
for
"
that Department
"
and
"
the Agriculture Secretary
"
for
"
that Secretary
"
in para (b), effective 18 September 2009.
40-670(2)
The following matters must be taken into account when deciding whether to approve a person as a farm consultant:
(a)
the person
'
s qualifications, experience and knowledge relating to
*
land conservation and farm management;
(b)
the person
'
s standing in the professional community;
(c)
any other relevant matters.
History
S 40-670 inserted by No 76 of 2001.
SECTION 40-675
40-675
Review of decisions relating to approvals
A person may apply to the
*
ART for review of a decision (as defined in the
Administrative Review Tribunal Act 2024
):
(a)
to refuse to approve the person as a farm consultant; or
(b)
to revoke the approval of the person as a farm consultant.
History
S 40-675 amended by No 38 of 2024, s 3 and Sch 1 item 64, by substituting
"
*
ART
"
for
"
*
AAT
"
and
"
Administrative Review Tribunal Act 2024
"
for
"
Administrative Appeals Tribunal Act 1975
"
, effective 14 October 2024.
S 40-675 inserted by No 76 of 2001.
Subdivision 40-H
-
Capital expenditure that is immediately deductible
History
Subdiv 40-H inserted by No 76 of 2001.
SECTION 40-725
What this Subdivision is about
You get an immediate deduction for certain capital expenditure on:
•
exploration or prospecting; and
•
rehabilitation of mining or quarrying sites; and
•
paying petroleum resource rent tax; and
•
environmental protection activities.
History
S 40-725 amended by No 96 of 2014, s 3 and Sch 1 item 17, by omitting
"
•
paying minerals resource rent tax; and
"
after
"
•
paying petroleum resource rent tax; and
"
, effective 30 September 2014. For transitional provisions see note under s
15-85
.
S 40-725 amended by No 14 of 2012, s 3 and Sch 3 item 23, by inserting
"
•
paying minerals resource rent tax; and
"
, effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-725 inserted by No 76 of 2001.
Operative provisions
SECTION 40-730
Deduction for expenditure on exploration or prospecting
40-730(1)
You can deduct expenditure you incur in an income year on
*
exploration or prospecting for
*
minerals, or quarry materials, obtainable by
*
mining and quarrying operations if, for that expenditure, you satisfy one or more of these paragraphs:
(a)
you carried on mining and quarrying operations;
(b)
it would be reasonable to conclude you proposed to carry on such operations;
(c)
you carried on a
*
business of, or a business that included, exploration or prospecting for minerals or quarry materials obtainable by such operations, and the expenditure was necessarily incurred in carrying on that business.
Note:
If Division
250
applies to you and an asset that is land:
(a) if section
250-150
applies
-
you cannot deduct expenditure you incur in relation to the land to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
you cannot deduct such expenditure.
History
S 40-730(1) amended by No 15 of 2017, s 3 and Sch 4 item 43, by substituting para (a) of the note, effective 1 April 2017. Para (a) of the note formerly read:
(a) if section 250-150 applies
-
you can deduct expenditure you incur in relation to the land to the extent specified in a determination made under subsection 250-150(3); or
S 40-730(1) amended by No 14 of 2012, s 3 and Sch 3 items 24 and 25, by inserting
"
and quarrying
"
after
"
*
mining
"
and in para (a), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-730(1) amended by
No 164 of 2007
, s 3 and Sch 1 item 49, by inserting the note at the end, effective 25 September 2007.
40-730(2)
However, you cannot deduct expenditure under subsection (1) if it is expenditure on:
(a)
development drilling for
*
petroleum; or
(b)
operations in the course of working a mining property, quarrying property or petroleum field.
40-730(2A)
(Repealed by No 96 of 2014)
History
S 40-730(2A) repealed by No 96 of 2014, s 3 and Sch 5 item 16, effective 30 September 2014 and applicable to expenditure incurred during the income year in which this Schedule commences or a later income year. S 40-730(2A) formerly read:
40-730(2A)
You can deduct expenditure you incur in an income year on
*
exploration or prospecting for
*
geothermal energy resources from which energy can be extracted by
*
geothermal energy extraction if:
(a)
you carried on geothermal energy extraction; or
(b)it would be reasonable to conclude you proposed to carry on geothermal energy extraction; or
(c)
you carried on a
*
business of, or a business that included, exploration or prospecting for geothermal energy resources from which energy can be extracted by geothermal energy extraction, and the expenditure was necessarily incurred in carrying on that business.
S 40-730(2A) inserted by No 84 of 2013, s 3 and Sch 3 item 16, applicable to expenditure incurred on or after 1 July 2012.
40-730(2B)
(Repealed by No 96 of 2014)
History
S 40-730(2B) repealed by No 96 of 2014, s 3 and Sch 5 item 16, effective 30 September 2014. S 40-730(2B) formerly read:
40-730(2B)
However, you cannot deduct expenditure under subsection (2A) if it is expenditure on:
(a)
development drilling for
*
geothermal energy resources; or
(b)
operations in the course of working a property containing geothermal energy resources.
S 40-730(2B) inserted by No 84 of 2013, s 3 and Sch 3 item 16, applicable to expenditure incurred on or after 1 July 2012.
40-730(3)
Also, you cannot deduct expenditure under subsection (1) to the extent that it forms part of the
*
cost of a
*
depreciating asset.
History
S 40-730(3) substituted by No 96 of 2014, s 3 and Sch 5 item 17, effective 30 September 2014. S 40-730(3) formerly read:
40-730(3)
You cannot deduct expenditure under subsection (1) or (2A) to the extent that it forms part of the
*
cost of a
*
depreciating asset.
S 40-730(3) amended by No 84 of 2013, s 3 and Sch 3 item 17, by substituting
"
You cannot deduct expenditure under subsection (1) or (2A)
"
for
"
Also, you cannot deduct expenditure under subsection (1)
"
, effective 28 June 2013.
Definitions
40-730(4)
Exploration or prospecting
includes:
(a)
for mining in general, and quarrying:
(i)
geological mapping, geophysical surveys, systematic search for areas containing
*
minerals (except
*
petroleum) or quarry materials, and search by drilling or other means for such minerals or materials within those areas; and
(ii)
search for ore within, or near, an ore-body or search for quarry materials by drives, shafts, cross-cuts, winzes, rises and drilling; and
(b)
for petroleum mining:
(i)
geological, geophysical and geochemical surveys; and
(ii)
exploration drilling and appraisal drilling; and
(c)
feasibility studies to evaluate the economic feasibility of mining minerals or quarry materials once they have been discovered; and
(d)
obtaining
*
mining, quarrying or prospecting information associated with the search for, and evaluation of, areas containing minerals or quarry materials.
(e)
(Repealed by No 96 of 2014)
History
S 40-730(4) amended by No 96 of 2014, s 3 and Sch 5 items 18
-
21, by omitting
"
and for
*
geothermal energy resources
"
after
"
for petroleum mining
"
from para (b),
"
, or of extracting energy from geothermal energy resources,
"
after
"
quarry materials
"
from para (c), substituting
"
materials.
"
for
"
materials; and
"
in para (d) and repealing para (e), effective 30 September 2014. Para (e) formerly read:
(e)
obtaining
*
geothermal exploration information associated with the search for, and evaluation of, areas containing geothermal energy resources.
S 40-730(4) amended by No 84 of 2013, s 3 and Sch 3 items 19
-
21, by inserting
"
and for
*
geothermal energy resources
"
in para (b),
"
, or of extracting energy from geothermal energy resources,
"
in para (c), and inserting para (e), effective 28 June 2013.
40-730(5)
Minerals
includes
*
petroleum.
40-730(6)
Petroleum
means:
(a)
any naturally occurring hydrocarbon or naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid or solid state; or
(b)
any naturally occurring mixture of:
(i)
one or more hydrocarbons, whether in a gaseous, liquid or solid state; and
(ii)
one or more of the following: hydrogen sulphide, nitrogen, helium or carbon dioxide;
whether or not that substance has been returned to a natural reservoir.
40-730(7)
Mining and quarrying operations
means:
(a)
mining operations on a mining property for extracting
*
minerals (except
*
petroleum) from their natural site; or
(b)
mining operations for the purpose of obtaining petroleum; or
(c)
quarrying operations on a quarrying property for extracting quarry materials from their natural site;
for the
*
purpose of producing assessable income.
History
S 40-730(7) amended by No 14 of 2012, s 3 and Sch 3 item 26, by inserting
"
and quarrying
"
, effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-730(7) amended by No 66 of 2003.
40-730(7A)
(Repealed by No 96 of 2014)
History
S 40-730(7A) repealed by No 96 of 2014, s 3 and Sch 5 item 22, effective 30 September 2014. S 40-730(7A) formerly read:
40-730(7A)
Geothermal energy resources
means matter occurring naturally within the Earth and containing energy as heat.
S 40-730(7A) inserted by No 84 of 2013, s 3 and Sch 3 item 22, effective 28 June 2013.
40-730(7B)
(Repealed by No 96 of 2014)
History
S 40-730(7B) repealed by No 96 of 2014, s 3 and Sch 5 item 22, effective 30 September 2014. S 40-730(7B) formerly read:
40-730(7B)
Geothermal energy extraction
means operations that are for:
(a)
the extraction of energy from
*
geothermal energy resources; and
(b)
the
*
purpose of producing assessable income.
S 40-730(7B) inserted by No 84 of 2013, s 3 and Sch 3 item 22, effective 28 June 2013.
40-730(8)
Mining, quarrying or prospecting information
is geological, geophysical or technical information that:
(a)
relates to the presence, absence or extent of deposits of
*
minerals or quarry materials in an area; or
(b)
is likely to help in determining the presence, absence or extent of such deposits in an area.
40-730(9)
(Repealed by No 96 of 2014)
History
S 40-730(9) repealed by No 96 of 2014, s 3 and Sch 5 item 22, effective 30 September 2014. S 40-730(9) formerly read:
40-730(9)
Geothermal exploration information
is geological, geophysical or technical information that:
(a)
relates to the presence, absence or extent of
*
geothermal energy resources in an area; or
(b)
is likely to help in determining the presence, absence or extent of such resources in an area.
S 40-730(9) inserted by No 84 of 2013, s 3 and Sch 3 item 23, effective 28 June 2013.
History
S 40-730 inserted by No 76 of 2001.
SECTION 40-735
Deduction for expenditure on mining site rehabilitation
40-735(1)
You can deduct for an income year expenditure you incur in that year to the extent it is on
*
mining site rehabilitation of:
(a)
a site on which you:
(i)
carried on
*
mining and quarrying operations; or
(ii)
conducted
*
exploration or prospecting; or
(iii)
conducted
*
ancillary mining activities; or
(b)
a
*
mining building site.
Note 1:
If an amount of the expenditure is recouped, the amount may be included in your assessable income: see Subdivision
20-A
.
Note 2:
If Division
250
applies to you and an asset that is land:
(a) if section
250-150
applies
-
you cannot deduct expenditure you incur in relation to the land to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
you cannot deduct such expenditure.
History
S 40-735(1) amended by No 15 of 2017, s 3 and Sch 4 item 44, by substituting para (a) of note 2, effective 1 April 2017. Para (a) of note 2 formerly read:
(a) if section 250-150 applies
-
you can deduct expenditure you incur in relation to the land to the extent specified in a determination made under subsection 250-150(3); or
S 40-735(1) amended by No 14 of 2012, s 3 and Sch 3 item 27, by inserting
"
and quarrying
"
in para (a)(i), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-735(1) amended by
No 164 of 2007
, s 3 and Sch 1 items 50 and 51, by inserting note 2 at the end, effective 25 September 2007.
40-735(2)
However, a provision of this Act (except Division
8
(which is about deductions)) that expressly prevents or restricts the operation of that Division applies in the same way to this section.
40-735(3)
However, you cannot deduct expenditure under subsection (1) to the extent that it forms part of the
*
cost of a
*
depreciating asset.
40-735(4)
Mining site rehabilitation
is an act of restoring or rehabilitating a site or part of a site to, or to a reasonable approximation of, the condition it was in before
*
mining and quarrying operations,
*
exploration or prospecting or
*
ancillary mining activities were first started on the site, whether by you or by someone else.
History
S 40-735(4) amended by No 14 of 2012, s 3 and Sch 3 item 28, by inserting
"
and quarrying
"
, effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
40-735(5)
Partly
restoring or rehabilitating such a site counts as
mining site rehabilitation
(even if you had no intention of completing the work).
40-735(6)
For a
*
mining building site, the time when
*
ancillary mining activities were first started on the site is the earliest time when the buildings, improvements or
*
depreciating assets concerned were located on the site.
History
S 40-735 inserted by No 76 of 2001.
SECTION 40-740
Meaning of
ancillary mining activities
and
mining building site
40-740(1)
Any of the following are
ancillary mining activities
:
(a)
preparing a site for you to carry on
*
mining and quarrying operations;
(b)
providing water, light or power for, access to, or communications with, a site on which you carry on, or will carry on, mining and quarrying operations;
(c)
*
minerals treatment of
*
minerals or minerals treatment of quarry materials, obtained by you in carrying on mining and quarrying operations;
(d)
storing (whether before or after minerals treatment) such minerals,
*
petroleum or quarry materials in relation to the operation of a
*
depreciating asset for use primarily and principally in treating such minerals or quarry materials;
(e)
liquefying natural gas obtained from mining and quarrying operations you carry on.
History
S 40-740(1) amended by No 14 of 2012, s 3 and Sch 3 items 29 and 30, by inserting
"
and quarrying
"
in para (a), (b), (c) and (e), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-740(1) amended by No 12 of 2012, s 3 and Sch 6 item 167, by substituting
"
*
petroleum
"
for
"
petroleum
"
in para (d), effective 21 March 2012.
40-740(2)
A
mining building site
is a site, or a part of a site, where there are
*
depreciating assets that are or were necessary for you to carry on
*
mining and quarrying operations. However, a
mining building site
does not include anything covered by the definition of
housing and welfare
.
History
S 40-740(2) amended by No 14 of 2012, s 3 and Sch 3 item 31, by inserting
"
and quarrying
"
, effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
History
S 40-740 inserted by No 76 of 2001.
SECTION 40-745
40-745
No deduction for certain expenditure
Expenditure on these things is not deductible under section
40-735
:
(a)
acquiring land or an interest in land or a right, power or privilege to do with land;
(b)
a bond or security, however described, for performing
*
mining site rehabilitation;
(c)
*
housing and welfare.
History
S 40-745 inserted by No 76 of 2001.
SECTION 40-750
Deduction for payments of petroleum resource rent tax
40-750(1)
You can deduct a payment of
*
petroleum resource rent tax, or an
*instalment of petroleum resource rent tax, that you make in an income year.
Note 1:
If an amount of the expenditure is recouped, the amount may be included in your assessable income: see Subdivision
20-A
.
Note 2:
If Division
250
applies to you and an asset:
(a) if section
250-150
applies
-
you cannot deduct expenditure you incur in relation to the asset to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
you cannot deduct such expenditure.
History
S 40-750(1) amended by No 15 of 2017, s 3 and Sch 4 item 45, by substituting para (a) of note 2, effective 1 April 2017. Para (a) of note 2 formerly read:
(a) if section 250-150 applies
-
you can deduct expenditure you incur in relation to the asset to the extent specified in a determination made under subsection 250-150(3); or
S 40-750(1) amended by
No 164 of 2007
, s 3 and Sch 1 items 52 and 53, by inserting note 2 at the end, effective 25 September 2007.
40-750(2)
You cannot deduct under subsection (1) a payment that you make under paragraph 99(c) of the
Petroleum Resource Rent Tax Assessment Act 1987
.
40-750(3)
These amounts are included in your assessable income for the income year in which they are refunded, credited, paid or applied:
(a)
an amount the Commissioner pays you in total or partial discharge of a debt of the kind referred to in subsection 47(1) of the
Petroleum Resource Rent Tax Assessment Act 1987
; or
(b)
an amount the Commissioner applies under subsection 47(2) of the
Petroleum Resource Rent Tax Assessment Act 1987
in total or partial discharge of a liability you have.
History
S 40-750 inserted by No 76 of 2001.
40-751
(Repealed) SECTION 40-751 Deduction for payments of minerals resource rent tax
(Repealed by No 96 of 2014)
History
S 40-751 repealed by No 96 of 2014, s 3 and Sch 1 item 18, effective 30 September 2014. For transitional provisions see note under s
15-85
. S 40-751 formerly read:
SECTION 40-751 Deduction for payments of minerals resource rent tax
40-751(1)
You can deduct a payment of
*
MRRT, or an instalment of MRRT payable under Division
115
in Schedule
1
to the
Taxation Administration Act 1953
, that you make in an income year.
Note:
If an amount of the expenditure is recouped, the amount may be included in your assessable income: see Subdivision
20-A
. Similarly, a refund of excess rehabilitation tax offsets you get under section
225-25
of the
Minerals Resource Rent Tax Act 2012
is assessable income: see section
15-85
.
40-751(2)
If you deduct an instalment of
*
MRRT under subsection (1), you cannot also deduct any of the following amounts when applied under Division
3
of Part
IIB
of the
Taxation Administration Act 1953
:
(a)
the amount of the payment of the instalment;
(b)
the amount of a credit arising under section
115-20
in Schedule
1
to the
Taxation Administration Act 1953
in respect of the instalment.
40-751(3)
If you deduct a payment of
*
MRRT under subsection (1), you cannot also deduct the corresponding amount applied under Division
3
of Part
IIB
of the
Taxation Administration Act 1953
.
S 40-751 inserted by No 14 of 2012, s 3 and Sch 3 item 32, effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
SECTION 40-755
Environmental protection activities
40-755(1)
You can deduct expenditure you incur in an income year for the sole or dominant purpose of carrying on
*
environmental protection activities.
Note:
If Division
250
applies to you and an asset that is land:
(a) if section
250-150
applies
-
you cannot deduct expenditure you incur in relation to the land to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
you cannot deduct such expenditure.
History
S 40-755(1) amended by No 15 of 2017, s 3 and Sch 4 item 46, by substituting para (a) of the note, effective 1 April 2017. Para (a) of the note formerly read:
(a) if section 250-150 applies
-
you can deduct expenditure you incur in relation to the land to the extent specified in a determination made under subsection 250-150(3); or
S 40-755(1) amended by
No 164 of 2007
, s 3 and Sch 1 item 54, by inserting the note at the end, effective 25 September 2007.
40-755(2)
Environmental protection activities
are any of the following activities that are carried on by or for you:
(a)
preventing, fighting or remedying:
(i)
pollution resulting, or likely to result, from
*
your earning activity; or
(ii)
pollution of or from the site of your earning activity; or
(iii)
pollution of or from a site where an entity was carrying on any
*
business that you have acquired and carry on substantially unchanged as your earning activity;
(b)
treating, cleaning up, removing or storing:
(i)
waste resulting, or likely to result, from your earning activity; or
(ii)
waste that is on or from the site of
*
your earning activity; or
(iii)
waste that is on or from a site where an entity was carrying on any business that you have acquired and carry on substantially unchanged as your earning activity.
No other activities are environmental protection activities.
40-755(3)
Your earning activity
is an activity you carried on, carry on, or propose to carry on:
(a)
for the
*
purpose of producing assessable income for an income year (except a
*
net capital gain); or
(b)
for the purpose of
*
exploration or prospecting; or
(c)
for the purpose of
*
mining site rehabilitation; or
(d)
for purposes that include one or more of those purposes.
40-755(4)
If
*
your earning activity is:
(a)
leasing a site you own; or
(b)
granting a
*
right to use a site you own or control; or
(c)
a similar activity involving a site;
that site is taken to be the site of your earning activity.
Note:
This means you can deduct your expenditure on environmental protection activities relating to the site, even if the pollution or waste is caused by another entity that uses the site.
History
S 40-755(4) amended by
No 79 of 2010
, s 3 and Sch 3 item 17, by substituting
"
*
right to use
"
for
"
right to use
"
in para (b), effective 1 July 2010.
History
S 40-755 inserted by No 76 of 2001.
SECTION 40-760
Limits on deductions from environmental protection activities
Expenditure you cannot deduct
40-760(1)
You cannot deduct an amount under section
40-755
for an income year for:
(a)
expenditure for acquiring land; or
(b)
capital expenditure for constructing a building, structure or structural improvement; or
(c)
capital expenditure for constructing an extension, alteration or improvement to a building, structure or structural improvement; or
(d)
a bond or security (however described) for performing
*
environmental protection activities; or
(e)
expenditure to the extent that you can deduct an amount for it under a provision of this Act outside this Subdivision.
Note:
You may be able to deduct expenditure described in paragraph (1)(b) or (c) under Division
43
(which deals with capital works).
40-760(2)
In particular, you cannot deduct under section
40-755
expenditure to the extent that you incur it on carrying out an activity for environmental impact assessment of your project.
40-760(3)
However, a provision of this Act (except Division
8
(which is about deductions)) that expressly prevents or restricts the operation of that Division applies in the same way to section
40-755
.
History
S 40-760 inserted by No 76 of 2001.
SECTION 40-765
40-765
Non-arm's length transactions
If you incurred capital expenditure under an
*
arrangement and:
(a)
there is at least one other party to the arrangement with whom you did not deal at
*
arm's length; and
(b)
apart from this section, the amount of the expenditure would be more than the
*
market value of what it was for;
the amount of expenditure you take into account under this Subdivision is that market value.
History
S 40-765 inserted by No 76 of 2001.
Subdivision 40-I
-
Capital expenditure that is deductible over time
History
Subdiv 40-I inserted by No 76 of 2001.
SECTION 40-825
What this Subdivision is about
You can deduct amounts for certain capital expenditure associated with projects you carry on. You deduct the amounts over the life of the project using a pool.
You can also deduct amounts for certain business related costs. You deduct these amounts over 5 years (or immediately in the case of some start-up expenses for small businesses) if the amounts are not otherwise taken into account and are not denied a deduction.
History
S 40-825 amended by No 114 of 2015, s 3 and Sch 2 item 1, by inserting
"
(or immediately in the case of some start-up expenses for small businesses)
"
, applicable in relation to assessments for the 2015-16 income year and later income years.
S 40-825 amended by No 32 of 2006, s 3 and Sch 2 item 29, by inserting
"
if the amounts are not otherwise taken into account and are not denied a deduction
"
after
"
5 years
"
, applicable to expenditure incurred on or after 1 July 2005.
S 40-825 inserted by No 76 of 2001.
Operative provisions
SECTION 40-830
Project pools
40-830(1)
You can allocate
*
project amounts to a project pool.
40-830(2)
You can deduct amounts for
*
project amounts that are allocated to the project pool.
40-830(3)
You calculate your deduction for an income year for a project pool in this way:
Pool value
×
150%
DV project pool life |
where:
DV project pool life
is:
(a)
the
*
project life of the project; or
(b)
if its project life has been recalculated
-
its most recently recalculated project life.
pool value
is:
(a)
for the first income year that a
*
project amount is allocated to the pool
-
the sum of the project amounts allocated to the pool for that year; or
(b)
for a later income year
-
the sum of the pool
'
s
*
closing pool value for the previous income year and any project amounts allocated to the pool for the later year.
Note:
The calculation is made under subsection
40-832(3)
for project amounts incurred on or after 10 May 2006 for projects that start to operate on or after that day.
History
S 40-830(3) amended by
No 55 of 2006
, s 3 and Sch 5 item 9, by inserting the note, effective 19 June 2006.
40-830(4)
If, in an income year, you abandon, sell or otherwise dispose of a project for which you have a project pool, you can deduct for that year the sum of the pool
'
s
*
closing pool value for the previous income year and any
*
project amounts allocated to the pool for the income year.
40-830(5)
Your assessable income for that income year includes any amount you receive for the abandonment, sale or other disposal.
40-830(6)
Your assessable income for an income year includes other capital amounts that you
*
derive in that year in relation to a
*
project amount allocated to your project pool or in relation to something on which the project amount is expended.
40-830(7)
The
closing pool value
of a project pool for an income year is:
(a)
for the first income year that a
*
project amount is allocated to the pool
-
the sum of the project amounts allocated to the pool for that year less the amount you could deduct for the pool for that year (apart from section
40-835
); or
(b)
for a later income year
-
the sum of the pool
'
s
*
closing pool value for the previous income year and any project amounts allocated to the pool for the later year less the amount you could deduct for the pool for the later year (apart from section
40-835
).
40-830(8)
Your deduction for an income year cannot be more than the amount of the component
"
pool value
"
in the formula in subsection (3) for that year.
History
S 40-830 inserted by No 76 of 2001.
SECTION 40-832
Project pools for post-9 May 2006 projects
40-832(1)
You calculate your deduction for an income year for a project pool in this way if the project pool contains only
*
project amounts incurred on or after 10 May 2006 for projects that start to operate on or after that day:
Pool value
×
200%
DV project pool life |
where:
DV project pool life
has the same meaning as in subsection
40-830(3).
pool value
has the same meaning as in subsection
40-830(3).
40-832(2)
If, in an income year, you abandon, sell or otherwise dispose of a project for which you have a project pool, you can deduct for that year the sum of the pool
'
s
*
closing pool value for the previous income year and any
*
project amounts allocated to the pool for the income year.
40-832(3)
Your assessable income for that income year includes any amount you receive for the abandonment, sale or other disposal.
40-832(4)
Your assessable income for an income year includes other capital amounts that you
*
derive in that year in relation to a
*
project amount allocated to your project pool or in relation to something on which the project amount is expended.
40-832(5)
Your deduction for an income year cannot be more than the amount of the component
"
pool value
"
in the formula in subsection (1) for that year.
History
S 40-832 inserted by
No 55 of 2006
, s 3 and Sch 5 item 2, effective 19 June 2006.
SECTION 40-835
40-835
Reduction of deduction
You must reduce your deduction under section
40-830
or
40-832
for an income year by a reasonable amount for the extent (if any) to which the project operates in the year for purposes other than
*
taxable purposes.
Note:
If Division
250
applies to you and an asset:
(a) if section
250-150
applies
-
you are taken not to be using the asset for taxable purposes to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
you are taken not to be using the asset for such purposes.
History
S 40-835 amended by No 15 of 2017, s 3 and Sch 4 item 47, by substituting para (a) of the note, effective 1 April 2017. Para (a) of the note formerly read:
(a) if section 250-150 applies
-
you are taken to be using the asset for taxable purposes to the extent specified in a determination made under subsection 250-150(3); or
S 40-835 amended by
No 164 of 2007
, s 3 and Sch 1 item 55, by inserting the note at the end, effective 25 September 2007.
S 40-835 amended by
No 55 of 2006
, s 3 and Sch 5 item 10, by inserting
"
or 40-832
"
after
"
section 40-830
"
, effective 19 June 2006.
S 40-835 inserted by No 76 of 2001.
SECTION 40-840
Meaning of
project amount
40-840(1)
An amount of
*
mining capital expenditure or
*
transport capital expenditure you incur is a
project amount
if:
(a)
it does not form part of the
*
cost of a
*
depreciating asset you
*
hold or held; and
(b)
you cannot deduct it under a provision of this Act outside this Subdivision; and
(c)
it is directly connected with:
(i)
for mining capital expenditure
-
carrying on the
*
mining and quarrying operations in relation to which the expenditure is incurred; or
(ii)
for transport capital expenditure
-
carrying on the
*
business in relation to which the expenditure is incurred.
History
S 40-840(1) amended by No 14 of 2012, s 3 and Sch 3 item 33, by inserting
"
and quarrying
"
in para (c)(i), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
40-840(2)
Another amount of capital expenditure you incur is also a
project amount
so far as:
(a)
it does not form part of the
*
cost of a
*
depreciating asset you
*
hold or held; and
(b)
you cannot deduct it under a provision of this Act outside this Subdivision; and
(c)
it is directly connected with a project you carry on or propose to carry on for a
*
taxable purpose; and
(d)
it is one of these:
(i)
an amount paid to create or upgrade community infrastructure for a community associated with the project; or
(ii)
an amount incurred for site preparation costs for depreciating assets (except, for
*
horticultural plants, in draining swamp or low-lying land or in clearing land); or
(iii)
an amount incurred for feasibility studies for the project; or
(iv)
an amount incurred for environmental assessments for the project; or
(v)
an amount incurred to obtain information associated with the project; or
(vi)
an amount incurred in seeking to obtain a right to
*
intellectual property; or
(vii)
an amount incurred for ornamental trees or shrubs.
History
S 40-840(2) amended by No 129 of 2004.
S 40-840 inserted by No 76 of 2001.
SECTION 40-845
40-845
Project life
You work out the
project life
of a project by estimating how long (in years, including fractions of years) it will be from when the project starts to operate until it stops operating.
History
S 40-845 inserted by No 76 of 2001.
SECTION 40-855
40-855
When you start to deduct amounts for a project pool
You start to deduct amounts for a project pool for the first income year when the project starts to operate.
History
S 40-855 inserted by No 76 of 2001.
SECTION 40-860
Meaning of
mining capital expenditure
40-860(1)
Mining capital expenditure
is capital expenditure you incur:
(a)
in carrying on
*
mining and quarrying operations; or
(b)
in preparing a site for those operations; or
(c)
on buildings or other improvements necessary for you to carry on those operations; or
(d)
in providing, or in contributing to the cost of providing:
(i)
water, light or power for use on the site of those operations; or
(ii)
access to, or communications with, the site of those operations; or
(e)
on buildings for use directly in connection with operating or maintaining
*
plant that is primarily and principally for
*
treating
*
minerals, or quarry materials, that you obtain by carrying on such operations; or
(f)
on buildings or other improvements for use directly in connection with storing minerals or quarry materials or to facilitate
*
minerals treatment of them (whether the storage happens before or after the treatment).
History
S 40-860(1) amended by No 14 of 2012, s 3 and Sch 3 item 34, by inserting
"
and quarrying
"
in para (a), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
40-860(2)
Capital expenditure you incur on
*
housing and welfare in carrying on
*
mining and quarrying operations (except quarrying operations) is also
mining capital expenditure
, but only if:
(a)
for residential accommodation
-
the accommodation is provided by you, on or adjacent to a site where you carry on those operations, for the use of:
(i)
your employees, or someone else's employees, who are employed or engaged in those operations, or in operations of yours that are connected with those operations; or
(ii)
dependants of such employees; or
(b)
for health, education, recreation or other similar facilities, or facilities for meals
-
the facilities:
(i)
are on or adjacent to a site where you carry on those operations, and are principally for the benefit of the employees or dependants covered by paragraph (a); and
(ii)
are not run for profit by any person, except in the case of facilities for meals (which may be run for profit); or
(c)
in the case of works, including works for providing water, light, power, access or communications
-
the works are carried out directly in connection with the accommodation or facilities covered by this section.
History
S 40-860(2) amended by No 14 of 2012, s 3 and Sch 3 item 35, by inserting
"
and quarrying
"
, effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
40-860(3)
However, expenditure on these is
not
mining capital expenditure
:
(a)
railway lines, roads, pipelines or other facilities, for use wholly or partly for transporting
*
minerals or quarry materials, or their products, other than facilities used for transport wholly within the site of
*
mining and quarrying operations you carry on;
(b)
works carried out in connection with, or buildings or other improvements constructed or acquired for use in connection with, establishing, operating or using a port facility or other facility for ships;
(c)
an office building that is not at or adjacent to the site of mining and quarrying operations you carry on;
(d)
*
housing and welfare in relation to quarrying operations.
History
S 40-860(3) amended by No 14 of 2012, s 3 and Sch 3 items 36 and 37, by inserting
"
and quarrying
"
in para (a) and (c), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
History
S 40-860 inserted by No 76 of 2001.
SECTION 40-865
Meaning of
transport capital expenditure
40-865(1)
Transport capital expenditure
is capital expenditure you incur, in carrying on a
*
business for a
*
taxable purpose, on:
(a)
a
*
transport facility; or
(b)
obtaining a right to construct or install a transport facility, or part of one, on land owned or leased by another entity or in an area referred to in subsection
960-505(2)
(about offshore areas and installations); or
(c)
paying compensation for any damage or loss caused by constructing or installing a transport facility or part of one; or
(d)
earthworks, bridges, tunnels or cuttings that are necessary for a transport facility.
View history note
History
S 40-865(1) amended by No 59 of 2019, s 3 and Sch 2 item 11, by omitting
"
, the Joint Petroleum Development Area
"
after
"
(about offshore areas
"
from para (b), effective 30 August 2019.
S 40-865(1) amended by No 2 of 2015, s 3 and Sch 4 item 4, by substituting
"
in an area referred to in subsection 960-505(2) (about offshore areas, the Joint Petroleum Development Area and installations)
"
for
"
in a Petroleum Act offshore area or an Installations Act adjacent area within the meaning of section 6AA of the
Income Tax Assessment Act 1936
"
in para (b), applicable to an income year, a year of income or a tax period that commences on or after 1 July 2015.
S 40-865(1) amended by No 17 of 2006, s 3 and Sch 2 item 41, by substituting
"
a Petroleum Act offshore area or an Installations Act adjacent area
"
for
"
an adjacent area
"
in para (b), applicable in relation to events that occur, and circumstances that arise, after 1 July 2008.
40-865(2)
Transport capital expenditure
also includes capital expenditure you incur, in carrying on a
*
business for a
*
taxable purpose, by way of contribution to:
(a)
someone else
'
s capital expenditure on a
*
transport facility or on anything else covered by a paragraph of subsection (1); or
(b)
an
*
exempt Australian government agency
'
s capital expenditure on railway rolling-stock.
40-865(3)
Transport capital expenditure
does
not
include expenditure on:
(a)
road vehicles or ships; or
(b)
railway rolling-stock; or
(c)
a thing covered by the definition of
housing and welfare
; or
(d)
works for providing water, light or power, in connection with a port facility or other facility for ships;
and does not include expenditure by way of contribution to that expenditure (except expenditure by way of contribution to an
*
exempt Australian government agency
'
s capital expenditure on railway rolling-stock).
History
S 40-865 inserted by No 76 of 2001.
SECTION 40-870
Meaning of
transport facility
40-870(1)
A
transport facility
is a railway, a road, a pipe-line, a port facility or other facility for ships, or another facility, that is used primarily and principally for transport of:
(a)
*
minerals or quarry materials obtained by any entity in carrying on
*
mining and quarrying operations; or
(b)
*
processed minerals produced from minerals or quarry materials.
History
S 40-870(1) amended by No 14 of 2012, s 3 and Sch 3 item 38, by inserting
"
and quarrying
"
in para (a), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
40-870(2)
However, a facility used for these is not a
transport facility
:
(a)
transport wholly within the site of
*
mining and quarrying operations;
(b)
transport of
*
petroleum:
(i)
that has been treated at a refinery; or
(ii)
that forms part of a system of reticulation to consumers; or
(iii)
to a particular consumer or consumers.
History
S 40-870(2) amended by No 14 of 2012, s 3 and Sch 3 item 38, by inserting
"
and quarrying
"
in para (a), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
History
S 40-870 inserted by No 76 of 2001.
SECTION 40-875
Meaning of
processed minerals
and
minerals treatment
40-875(1)
Processed minerals
are any of the following:
(a)
materials resulting from
*
minerals treatment of
*
minerals or quarry materials (except
*
petroleum);
(b)
materials resulting from sintering or calcining;
(c)
pellets or other agglomerated forms of iron;
(d)
alumina and blister copper.
40-875(2)
Minerals treatment
means:
(a)
cleaning, leaching, crushing, grinding, breaking, screening, grading or sizing; or
(b)
concentration by a gravity, magnetic, electrostatic or flotation process; or
(c)
any other treatment:
(i)
that is applied to
*
minerals, or to quarry materials, before that concentration; or
(ii)
for a mineral or materials not requiring that concentration, that would, if the mineral or materials had required concentration, have been applied before the concentration;
but does not include:
(d)
sintering or calcining; or
(e)
producing alumina, or pellets or other agglomerated forms of iron, or processing connected with such production.
History
S 40-875 inserted by No 76 of 2001.
SECTION 40-880
Business related costs
Object
40-880(1)
The object of this section is to make certain
*
business capital expenditure deductible over 5 years, or immediately in the case of some start-up expenses for small businesses, if:
(a)
the expenditure is not otherwise taken into account; and
(b)
a deduction is not denied by some other provision; and
(c)
the business is, was or is proposed to be carried on for a
*
taxable purpose.
Note:
If Division
250
applies to you and an asset:
(a) if section
250-150
applies
-
you cannot deduct an amount for capital expenditure you incur in relation to the asset to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
you cannot deduct an amount for such expenditure.
History
S 40-880(1) amended by No 15 of 2017, s 3 and Sch 4 item 48, by substituting para (a) of the note, effective 1 April 2017. Para (a) of the note formerly read:
(a) if section 250-150 applies
-
you can deduct an amount for capital expenditure you incur in relation to the asset to the extent specified in a determination made under subsection 250-150(3); or
S 40-880(1) amended by No 114 of 2015, s 3 and Sch 2 item 2, by inserting
"
, or immediately in the case of some start-up expenses for small businesses,
"
, applicable in relation to assessments for the 2015-16 income year and later income years.
S 40-880(1) amended by No 70 of 2015, s 3 and Sch 6 item 23, by substituting
"
carried on
"
for
"
*
carried on
"
in para (c), effective 25 June 2015.
S 40-880(1) amended by
No 164 of 2007
, s 3 and Sch 1 item 56, by inserting the note at the end, effective 25 September 2007.
Deduction
40-880(2)
You can deduct, in equal proportions over a period of 5 income years starting in the year in which you incur it, capital expenditure you incur:
(a)
in relation to your
*
business; or
(b)
in relation to a business that used to be carried on; or
(c)
in relation to a business proposed to be carried on; or
(d)
to liquidate or deregister a company of which you were a
*
member, to wind up a partnership of which you were a partner or to wind up a trust of which you were a beneficiary, that carried on a business.
History
S 40-880(2) amended by No 70 of 2015, s 3 and Sch 6 item 23, by substituting
"
carried on
"
for
"
*
carried on
"
in para (b), effective 25 June 2015.
40-880(2A)
However, you can deduct the capital expenditure in the income year in which you incur it if:
(a)
the expenditure is incurred in relation to a business that is proposed to be carried on; and
(b)
the expenditure is incurred:
(i)
in obtaining advice or services relating to the proposed structure, or proposed operation of the business; or
(ii)
in payment to an
*
Australian government agency of fees, taxes or charges relating to establishing the business or its operating structure; and
(c)
you are a
*
small business entity, or an entity covered by subsection (2B), for the income year, or both of the following apply:
(i)
you are not carrying on a
*
business in the income year;
(ii)
you are not
*
connected with, or an
*
affiliate of, another entity that carries on a business in the income year and that is neither a small business entity, nor an entity covered by subsection (2B), for the income year.
History
S 40-880(2A) amended by No 92 of 2020, s 3 and Sch 3 items 25 and 26, by inserting
"
, or an entity covered by subsection (2B),
"
in para (c) and substituting
"
neither a small business entity, nor an entity covered by subsection (2B),
"
for
"
not a small business entity
"
in para (c)(ii), effective 1 January 2021 and applicable in relation to capital expenditure incurred on or after 1 July 2020.
S 40-880(2A) inserted by No 114 of 2015, s 3 and Sch 2 item 3, applicable in relation to assessments for the 2015-16 income year and later income years.
40-880(2B)
An entity is covered by this subsection for an income year if:
(a)
the entity is not a
*
small business entity for the income year; and
(b)
the entity would be a small business entity for the income year if:
(i)
each reference in Subdivision
328-C
(about what is a small business entity) to
$
10 million were instead a reference to
$
50 million; and
(ii)
the reference in paragraph
328-110(5)(b)
to a small business entity were instead a reference to an entity covered by this subsection.
History
S 40-880(2B) inserted by No 92 of 2020, s 3 and Sch 3 item 27, effective 1 January 2021 and applicable in relation to capital expenditure incurred on or after 1 July 2020.
Limitations and exceptions
40-880(3)
You can only deduct the expenditure, for a
*
business that you carry on, used to carry on or propose to carry on, to the extent that the business is carried on, was carried on or is proposed to be carried on for a
*
taxable purpose.
History
S 40-880(3) amended by No 70 of 2015, s 3 and Sch 6 item 24, by substituting
"
carry on
"
for
"
*
carry on
"
, effective 25 June 2015.
40-880(4)
You can only deduct the expenditure, for a
*
business that another entity used to carry on or proposes to carry on, to the extent that:
(a)
the business was carried on or is proposed to be carried on for a
*
taxable purpose; and
(b)
the expenditure is in connection with:
(i)
your deriving assessable income from the business; and
(ii)
the business that was carried on or is proposed to be carried on.
History
S 40-880(4) amended by No 70 of 2015, s 3 and Sch 6 item 24, by substituting
"
carry on
"
for
"
*
carry on
"
, effective 25 June 2015.
40-880(5)
You cannot deduct anything under this section for an amount of expenditure you incur to the extent that:
(a)
it forms part of the
*
cost of a
*
depreciating asset that you
*
hold, used to hold or will hold; or
(b)
you can deduct an amount for it under a provision of this Act other than this section; or
(c)
it forms part of the cost of land; or
(d)
it is in relation to a lease or other legal or equitable right; or
(e)
it would, apart from this section, be taken into account in working out:
(i)
a profit that is included in your assessable income (for example, under section
6-5
or
15-15
); or
(ii)
a loss that you can deduct (for example, under section
8-1
or
25-40
); or
(f)
it could, apart from this section, be taken into account in working out the amount of a
*
capital gain or
*
capital loss from a
*
CGT event; or
(g)
a provision of this Act other than this section would expressly make the expenditure non-deductible if it were not of a capital nature; or
(h)
a provision of this Act other than this section expressly prevents the expenditure being taken into account as described in paragraphs (a) to (f) for a reason other than the expenditure being of a capital nature; or
(i)
it is expenditure of a private or domestic nature; or
(j)
it is incurred in relation to gaining or producing
*
exempt income or
*
non-assessable non-exempt income.
40-880(6)
The exceptions in paragraphs (5)(d) and (f) do not apply to expenditure you incur to preserve (but not enhance) the value of goodwill if the expenditure you incur is in relation to a legal or equitable right and the value to you of the right is solely attributable to the effect that the right has on goodwill.
40-880(7)
You cannot deduct an amount under paragraph (2)(c) in relation to a
*
business proposed to be carried on unless, having regard to any relevant circumstances, it is reasonable to conclude that the business is proposed to be carried on within a reasonable time.
History
S 40-880(7) amended by No 70 of 2015, s 3 and Sch 6 item 25, by substituting
"
carried on
"
for
"
*
carried on
"
, effective 25 June 2015.
40-880(8)
You cannot deduct anything under this section for an amount of expenditure that, because of a market value substitution rule, was excluded from the
*
cost of a
*
depreciating asset or the
*
cost base or
*
reduced cost base of a
*
CGT asset.
Note:
Some examples of market value substitution rules are subsection
40-180(2)
(table item 8), subsection
40-190(3)
(table item 1) and sections
40-765
and
112-20
.
40-880(9)
You cannot deduct anything under this section for an amount of expenditure you incur:
(a)
by way of returning an amount you have received (except to the extent that the amount was included in your assessable income or taken into account in working out an amount so included); or
(b)
to the extent that, for another entity, the amount is a
*
return on or of:
(i)
an
*
equity interest; or
(ii)
a
*
debt interest that is an obligation of yours.
History
S 40-880 substituted by No 32 of 2006, s 3 and Sch 2 item 30, applicable to expenditure incurred on or after 1 July 2005. S 40-880 formerly read:
SECTION 40-880 Business related costs
40-880(1)
You can deduct amounts for capital expenditure you incur that is one of these:
(a)
expenditure to establish your
*
business structure;
Example:
You incorporate a company or create some other structure, such as a partnership or trust, through which your business will be carried on. The capital expenditure you incur in doing this is covered by this paragraph.
(b)
expenditure to convert your business structure to a different structure;
Example:
Michael and Sandra operate a fish shop in partnership. They agree to incorporate their business so they dispose of the partnership assets to a company. The capital expenses of incorporating the company and of transferring the partnership assets to it are covered by this paragraph.
(c)
expenditure to raise equity for your business;
Example:
CL Ltd wishes to issue shares for business expansion. The capital expenditure it incurs to prepare and issue a prospectus for this purpose is covered by this paragraph.
(d)
expenditure to defend your business against a takeover;
Example:
MH Limited has made an offer to take over AL Limited. The capital expenditure incurred by AL Limited in complying with subsection 633(1) or 635(1) of the
Corporations Act 2001
is covered by this paragraph.
(e)
costs to your business of unsuccessfully attempting a takeover;
Example:
MGP Ltd tried unsuccessfully to take over MM Ltd. Capital expenditure incurred by MGP in complying with subsection 633(1) or 635(1) of the
Corporations Act 2001
is covered by this paragraph.
(f)
costs of liquidating a company that carried on a business and of which you are a shareholder;
(g)
costs to stop carrying on your business;
Example:
You stop carrying on your business and, in doing this, you incur legal costs in terminating the services of your employees. This expenditure is covered by this paragraph.
to the extent that the business is, was or will be carried on for a
*
taxable purpose.
History
S 40-880(1) amended by No 119 of 2002.
40-880(2)
The amount you can deduct is 20% of the expenditure:
(a)
for the income year in which you incur it; and
(b)
for each of the next 4 income years.
40-880(3)
However, you cannot deduct anything under this section for an amount of capital expenditure you incur to the extent that:
(a)
it forms part of the
*
cost of a
*
depreciating asset that you
*
hold; or
(b)
you can deduct an amount for it under a provision of thisAct outside this section; or
(c)
it forms part of the cost of land; or
(d)
it is in relation to a lease or other legal or equitable right; or
(e)
it would, apart from this section, be taken into account in working out:
(i)
a profit that is included in your assessable income (for example, under section
6-5
or
15-15
); or
(ii)
a loss that you can deduct (for example, under section
8-1
or
25-40
); or
(f)
it would, apart from this section, be taken into account in working out the amount of a
*
capital gain or
*
capital loss from a
*
CGT event; or
(g)
it is specifically made non-deductible under another provision of this Act.
History
S 40-880(3) amended by No 119 of 2002.
S 40-880 inserted by No 76 of 2001.
SECTION 40-885
40-885
Non-arm's length transactions
If you incurred capital expenditure, or received an amount, under an
*
arrangement and:
(a)
there is at least one other party to the arrangement with whom you did not deal at
*
arm's length; and
(b)
apart from this section:
(i)
the amount of the expenditure would be more than the
*
market value of what it was for; or
(ii)
the amount you received would be less than the market value of what it was for;
the amount of expenditure, or the amount received, you take into account under this Subdivision is that market value.
History
S 40-885 inserted by No 76 of 2001.
Subdivision 40-J
-
Capital expenditure for the establishment of trees in carbon sink forests
History
Subdiv 40-J inserted by
No 38 of 2008
, s 3 and Sch 8 item 6, applicable to the 2007-2008 income year and later income years.
Guide to Subdivision 40-J
SECTION 40-1000
40-1000
What this Subdivision is about
You can deduct amounts for capital expenditure incurred for establishing trees that meet the requirements for constituting a carbon sink forest.
History
S 40-1000 inserted by
No 38 of 2008
, s 3 and Sch 8 item 6, applicable to the 2007-2008 income year and later income years.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 40-1005 |
Deduction for expenditure for establishing trees in carbon sink forests |
| 40-1010 |
Expenditure for establishing trees in carbon sink forests |
| 40-1015 |
Carbon sequestration
by trees |
| 40-1020 |
Certain expenditure disregarded |
| 40-1025 |
Non-arm
'
s length transactions |
| 40-1030 |
Extra deduction for destruction of trees in carbon sink forest |
| 40-1035 |
Getting information if you acquire a carbon sink forest |
Operative provisions
SECTION 40-1005
Deduction for expenditure for establishing trees in carbon sink forests
40-1005(1)
You can deduct an amount for an income year if:
(a)
you or another entity incurred capital expenditure that is covered under section
40-1010
in relation to particular trees; and
(b)
you satisfy a condition in subsection
(5)
for the trees for at least part of the income year; and
(c)
you are carrying on a
*
business in the income year; and
(d)
you use the land occupied by the trees for the primary and principal purpose of
*
carbon sequestration by the trees (see section
40-1015
); and
(e)
your purposes in using the land occupied by the trees do not include any of the following:
(i)
felling the trees;
(ii)
using the trees for
*
commercial horticulture; and
(f)
you do not use the land in connection with:
(i)
a
*
managed investment scheme; or
(ii)
a
*
forestry managed investment scheme.
History
S 40-1005(1) substituted by
No 38 of 2008
, s 3 and Sch 8 item 12, applicable to the 2012-13 income year and later income years. S 40-1005(1) formerly read:
40-1005(1)
You can deduct an amount for an income year if:
(a)
you incur capital expenditure that is covered under section
40-1010
in relation to particular trees established in the income year; and
(b)
you satisfy a condition in subsection
(5)
for the trees when they are established.
40-1005(2)
The amount of the deduction is worked out under this formula:
Establishment
expenditure |
× |
Write-off
days in income year
365 |
× |
Write-off
rate |
where:
establishment expenditure
is the amount of expenditure mentioned in subsection
(1)
.
write-off days in income year
is the number of days in the income year:
(a)
that occur within the period:
(i)
starting on the first day of the income year in which the trees are established; and
(ii)
ending 14 years and 105 days after that day; and
(b)
on which you use the land occupied by the trees for the primary and principal purpose of
*
carbon sequestration by the trees; and
(c)
on which you satisfy a condition in subsection
(5)
for the trees.
write-off rate
is 7%.
History
S 40-1005(2) substituted by
No 38 of 2008
, s 3 and Sch 8 item 12, applicable to the 2012-13 income year and later income years. S 40-1005(2) formerly read:
40-1005(2)
The amount of the deduction is the amount of the expenditure.
40-1005(3)
You cannot deduct more in total than the amount of capital expenditure incurred for establishing the trees up to the time at which they are established.
History
S 40-1005(3) substituted by
No 38 of 2008
, s 3 and Sch 8 item 12, applicable to the 2012-13 income year and later income years. S 40-1005(3) formerly read:
40-1005(3)
You can deduct an amount for an income year if:
(a)
you incur capital expenditure in the income year or an earlier income year for establishing particular trees; and
(b)
that expenditure is not covered under section
40-1010
in relation to the trees, because some or all of the trees are established after the end of the income year; and
(c)
the trees established after the end of the income year are established within 4 months after the end of the income year; and
(d)
you could deduct the amount for the income year under subsection
(1)
in respect of the expenditure, assuming that, for the purposes of paragraphs
40-1010(1)(a)
and
(2)(a)
, the income year ended 4 months after it actually ended.
40-1005(4)
(Repealed by
No 38 of 2008
)
History
S 40-1005(4) repealed by
No 38 of 2008
, s 3 and Sch 8 item 12, applicable to the 2012-13 income year and later income years. S 40-1005(4) formerly read:
40-1005(4)
If:
(a)
you can deduct an amount for an income year under subsection (3) in relation to particular trees; and
(b)
you incur capital expenditure in the
next
income year for establishing
other
trees;
in determining whether you can deduct an amount under subsection (1) for the next income year in respect of the other trees, for the purposes of paragraph 40-1010(2)(a), disregard the trees mentioned in paragraph (a).
40-1005(5)
The conditions are as follows:
|
Conditions for deduction for establishing trees in carbon sink forest
|
|
Item
|
Condition
|
| 1 |
You own the trees and any holder of a lease, lesser interest or licence relating to the land occupied by the trees does not use the land for the primary and principal purpose of
*
carbon sequestration by the trees. |
| 2 |
The trees occupy land you hold under a lease, or a
*
quasi-ownership right granted by an
*
exempt Australian government agency or an
*
exempt foreign government agency, and:
(a) the lease or quasi-ownership right enables you to use the land for the primary and principal purpose of
*
carbon sequestration by the trees; and
(b) any holder of a lesser interest or licence relating to the land does not use the land for the primary and principal purpose of carbon sequestration by the trees. |
| 3 |
You:
(a) hold a licence relating to the land occupied by the trees; and
(b) use the land for the primary and principal purpose of
*
carbon sequestration by the trees, as a result of holding the licence. |
History
S 40-1005 inserted by
No 38 of 2008
, s 3 and Sch 8 item 6, applicable to the 2007-2008 income year and later income years.
SECTION 40-1010
Expenditure for establishing trees in carbon sink forests
40-1010(1)
Expenditure is covered under this section in relation to particular trees if:
(a)
the trees are established in an income year; and
(b)
you incur or another entity incurs the expenditure in the income year or an earlier income year for establishing the trees; and
(c)
the entity incurring the expenditure (the
establishing entity
) is carrying on a
*
business in the income year; and
(d)
the establishing entity
'
s primary and principal purpose for establishing the trees is
*
carbon sequestration by the trees (see section
40-1015
); and
(e)
the establishing entity
'
s purposes for establishing the trees do not include any of the following:
(i)
felling the trees;
(ii)
using the trees for
*
commercial horticulture; and
(f)
the establishing entity does not incur the expenditure under:
(i)
a
*
managed investment scheme; or
(ii)
a
*
forestry managed investment scheme; and
(g)
all of the conditions in subsection
(2)
are satisfied for the trees; and
(h)
the establishing entity gives the Commissioner, in accordance with subsection
(4)
, a statement that:
(i)
sets out all information necessary to determine whether all of the conditions in subsection
(2)
are satisfied for the trees; and
(ii)
is in the
*
approved form.
History
S 40-1010(1) amended by
No 38 of 2008
, s 3 and Sch 8 items 13 to 18, by inserting
"
or another entity incurs
"
after
"
you incur
"
in para (b), substituting
"
the entity incurring the expenditure (the
establishing entity
) is
"
for
"
you are
"
in para (c), substituting
"
the establishing entity
'
s
"
for
"
your
"
in para (d), substituting
"
the establishing entity
'
s
"
for
"
your
"
in para (e), substituting
"
the establishing entity does
"
for
"
you do
"
in para (f) and substituting
"
the establishing entity gives
"
for
"
you give
"
in para (h), applicable to the 2012-13 income year and later income years.
40-1010(2)
The conditions are as follows:
(a)
at the end of the income year, the trees occupy a continuous land area in Australia of 0.2 hectares or more;
(b)
at the time the trees are established, it is more likely than not that they will:
(i)
attain a crown cover of 20% or more; and
(ii)
reach a height of at least 2 metres;
(c)
on 1 January 1990, the area occupied by the trees was clear of other trees that:
(i)
attained, or were more likely than not to attain, a crown cover of 20% or more; and
(ii)
reached, or were more likely than not to reach, a height of at least 2 metres;
(d)
the establishment of the trees meets the requirements of the guidelines mentioned in subsection
(3)
.
40-1010(3)
The
*
Climate Change Minister must, by legislative instrument, make guidelines about environmental and natural resource management in relation to the establishment of trees for the purposes of
*
carbon sequestration.
40-1010(4)
The statement mentioned in paragraph
(1)(h)
is to be given to the Commissioner no later than:
(a)
if the establishing entity lodges its
*
income tax return for the income year within 5 months after the end of the income year
-
the day the establishing entity lodges that income tax return; or
(b)
otherwise
-
5 months after the end of the income year.
History
S 40-1010(4) amended by
No 38 of 2008
, s 3 and Sch 8 item 19, by substituting para (a), applicable to the 2012-13 income year and later income years. Para (a) formerly read:
(a)
if you lodge your
*
income tax return for the income year within 5 months after the end of the income year
-
the day you lodge that income tax return; or
40-1010(5)
However, expenditure is
not
covered under this section if the
*
Climate Change Secretary gives the Commissioner a notice under subsection
(6)
in relation to the trees.
40-1010(6)
The
*
Climate Change Secretary must give the Commissioner a notice in writing under this subsection if the Climate Change Secretary is satisfied that one or more of the conditions in subsection
(2)
have not been satisfied for the trees.
40-1010(7)
A person may apply to the
*
ART for review of a decision (as defined in the
Administrative Review Tribunal Act 2024
) of the
*
Climate Change Secretary to give a notice under subsection
(6)
.
History
S 40-1010(7) amended by No 38 of 2024, s 3 and Sch 1 item 64, by substituting
"
*
ART
"
for
"
*
AAT
"
and
"
Administrative Review Tribunal Act 2024
"
for
"
Administrative Appeals Tribunal Act 1975
"
, effective 14 October 2024.
40-1010(8)
The Commissioner may give the
*
Climate Change Secretary a copy of the statement mentioned in paragraph
(1)(h)
, for the purposes of subsections
(5)
,
(6)
and
(7)
.
History
S 40-1010 inserted by
No 38 of 2008
, s 3 and Sch 8 item 6, applicable to the 2007-08 income year and later income years.
SECTION 40-1015
40-1015
Carbon sequestration by trees
Carbon sequestration
by trees means the process by which trees absorb carbon dioxide from the atmosphere.
History
S 40-1015 inserted by
No 38 of 2008
, s 3 and Sch 8 item 6, applicable to the 2007-08 income year and later income years.
SECTION 40-1020
40-1020
Certain expenditure disregarded
In working out a deduction under this Subdivision in relation to the establishment of trees, disregard expenditure incurred:
(a)
in draining swamp or low-lying land; or
(b)
in clearing land.
History
S 40-1020 inserted by
No 38 of 2008
, s 3 and Sch 8 item 6, applicable to the 2007-08 income year and later income years.
SECTION 40-1025
40-1025
Non-arm
'
s length transactions
If an entity incurred capital expenditure under an
*
arrangement and:
(a)
there is at least one other party to the arrangement with whom the entity did not deal at
*
arm
'
s length; and
(b)
apart from this section, the amount of the expenditure would be more than the
*
market value of what it was for;
the amount of expenditure taken into account under this Subdivision is that market value.
History
S 40-1025 inserted by
No 38 of 2008
, s 3 and Sch 8 item 6, applicable to the 2007-08 income year and later income years.
SECTION 40-1030
Extra deduction for destruction of trees in carbon sink forest
40-1030(1)
You can deduct the amount worked out under subsection (2) for an income year if:
(a)
you or another entity incurred capital expenditure that is covered under section
40-1010
in relation to particular trees; and
(b)
you use the land occupied by the trees for the primary and principal purpose of
*
carbon sequestration by the trees; and
(c)
the trees are destroyed during the income year; and
(d)
you satisfy a condition in subsection
40-1005(5)
for the trees just before they are destroyed.
40-1030(2)
Work out the amount of the deduction as follows:
Method statement
Step 1.
Work out the total of the amounts you could have deducted under this Subdivision in relation to the trees for the period:
(a) starting on the first day of the income year in which the trees are established; and
(b) ending when the trees were destroyed;
assuming that, during that period, you satisfied a condition in the table in subsection
40-1005(5)
.
Step 2.
Subtract from the expenditure that is covered under section
40-1010
in relation to the trees:
(a) the result from step 1; and
(b) any amount you received (under an insurance policy or otherwise) for the destruction.
The remaining amount (if positive) is your deduction under subsection (1).
40-1030(3)
This deduction is in addition to any deduction for the income year under section
40-1005
.
History
S 40-1030 inserted by No 38 of 2008, s 3 and Sch 8 item 20, applicable to the 2012-13 income year and later income years.
SECTION 40-1035
Getting information if you acquire a carbon sink forest
40-1035(1)
This section applies if:
(a)
you or another entity incurred capital expenditure; and
(b)
the expenditure is covered under section
40-1010
in relation to particular trees; and
(c)
you begin to satisfy a condition in the table in subsection
40-1005(5)
for the trees.
40-1035(2)
You may give the last entity (if any) that satisfied a condition mentioned in subsection
40-1005(5)
for the trees a written notice requiring the entity to give you any or all of the following information:
(a)
the amount of the expenditure covered under section
40-1010
in relation to the trees;
(b)
the income year in which the trees were established.
40-1035(3)
The notice must:
(a)
be given within 60 days of your beginning to satisfy the condition mentioned in paragraph (1)(c); and
(b)
specify a period of at least 60 days within which the information must be given; and
(c)
set out the effect of subsection (4).
Note:
Subsections (5), (6) and (7) explain how this subsection operates if the entity to which the notice is to be given is a partnership.
Requirement to comply with notice
40-1035(4)
The entity to whom the notice is given must not intentionally refuse or fail to comply with the notice.
Penalty: 10 penalty units.
Giving the notice to a partnership
40-1035(5)
If the entity to whom the notice is given is a partnership:
(a)
you may give it to the partnership by giving it to any of the partners (this does not limit how else you can give it); and
(b)
the obligation to comply with the notice is imposed on each of the partners (not on the partnership), but may be discharged by any of them.
40-1035(6)
A partner must not intentionally refuse or fail to comply with that obligation.
Penalty: 10 penalty units.
40-1035(7)
Subsection (6) does not apply if another partner has already complied with that obligation.
Note:
A defendant bears an evidential burden in relation to the matters in subsection (7), see subsection
13.3(3)
of the
Criminal Code
.
Limits on giving a notice
40-1035(8)
Only one notice can be given in relation to the same trees.
History
S 40-1035 inserted by No 38 of 2008, s 3 and Sch 8 item 20, applicable to the 2012-13 income year and later income years.
Subdivision 40-K
-Farm-in farm-out arrangements
History
Subdiv 40-K inserted by No 130 of 2015, s 3 and Sch 1 item 10, applicable in relation to farm-in farm-out arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
Guide to Subdivision 40-K
SECTION 40-1095
What this Subdivision is about
The costs and termination values of parts of interests in mining, quarrying or prospecting rights that are transferred under farm-in farm-out arrangements are reduced by the market value of the exploration benefits conferred under the arrangements.
History
S 40-1095 inserted by No 130 of 2015, s 3 and Sch 1 item 10, applicable in relation to farm-in farm-out arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Farm-in farm-out arrangements and exploration benefits
|
| 40-1100 |
Meaning of
farm-in farm-out arrangement
and
exploration benefit
|
|
Consequences for transferors
|
| 40-1105 |
Treatment of certain exploration benefits received under farm-in farm-out arrangements |
| 40-1110 |
Cost of split interests resulting from farm-in farm-out arrangements |
| 40-1115 |
Deductions relating to receipt of exploration benefits |
| 40-1120 |
Cost base and reduced cost base of exploration benefits etc. |
| 40-1125 |
Effect of exploration benefits on the cost of mining, quarrying or prospecting information |
|
Consequences for transferees
|
| 40-1130 |
Consequences of certain exploration benefits provided under farm-in farm-out arrangements |
Farm-in farm-out arrangements and exploration benefits
SECTION 40-1100
Meaning of
farm-in farm-out arrangement
and
exploration benefit
40-1100(1)
A
farm-in farm-out arrangement
is an
*
arrangement under which:
(a)
an entity (the
transferor
) transfers, or agrees to transfer, part of the entity
'
s interest in a
*
mining, quarrying or prospecting right to another entity (the
transferee
); and
(b)
in exchange for the transfer, the transferee provides to the transferor one or more
*
exploration benefits.
40-1100(2)
The transferee provides an
exploration benefit
to the transferor if:
(a)
the transferee:
(i)
conducts
*
exploration or prospecting for
*
minerals, or quarry materials, obtainable by
*
mining and quarrying operations; or
(ii)
undertakes to conduct exploration or prospecting for minerals, or quarry materials, obtainable by mining and quarrying operations; or
(iii)
funds, on the transferor
'
s behalf, expenditure that the transferor incurs in relation to exploration or prospecting by the transferor or another entity (other than the transferee); or
(iv)
undertakes to fund, on the transferor
'
s behalf, expenditure that the transferor incurs in relation to exploration or prospecting by the transferor or another entity (other than the transferee); and
(b)
the exploration or prospecting relates to the part of the transferor
'
s interest in the
*
mining, quarrying or prospecting right that the transferor does not transfer, or agree to transfer, under the arrangement; and
(c)
in a case where the transferor conducts the exploration or prospecting
-
expenditure incurred by the transferor relating to the exploration or prospecting is:
(i)
included in the
*
cost of
*
mining, quarrying or prospecting information
*
held by the transferor; or
(ii)
included in any other
*
depreciating asset, held by the transferor, for which the decline in value is provided under section
40-80
; or
(iii)
expenditure, of a kind referred to in subsection
40-730(1)
, that meets the requirements of subsection (3) of this section; and
(d)
in a case where the transferor does not conduct the exploration or prospecting
-
were the transferor to conduct the exploration or prospecting, expenditure incurred by the transferor relating to the exploration or prospecting would:
(i)
be included in the cost of mining, quarrying or prospecting information held by the transferor; or
(ii)
be included in any other depreciating asset, held by the transferor, for which the decline in value is provided under section
40-80
; or
(iii)
be expenditure, of a kind referred to in subsection
40-730(1)
, that meets the requirements of subsection (3) of this section.
40-1100(3)
Expenditure meets the requirements of this subsection if:
(a)
for that expenditure, the transferor satisfies, or would satisfy, one or more of paragraphs
40-730(1)(a)
to (c); and
(b)
the expenditure is not of a kind referred to in subsection
40-730(2)
or
(3)
; and
(c)
the expenditure is not of a kind that another provision of this Act provides is not deductible.
History
S 40-1100 inserted by No 130 of 2015, s 3 and Sch 1 item 10, applicable in relation to farm-in farm-out arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
Consequences for transferors
SECTION 40-1105
40-1105
Treatment of certain exploration benefits received under farm-in farm-out arrangements
If, under a
*
farm-in farm-out arrangement, you receive an
*
exploration benefit in relation to the transfer of part of your interest in a
*
mining, quarrying or prospecting right, the
*
termination value of the part of the interest is reduced by the
*
market value of the exploration benefit.
History
S 40-1105 inserted by No 130 of 2015, s 3 and Sch 1 item 10, applicable in relation to farm-in farm-out arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
SECTION 40-1110
40-1110
Cost of split interests resulting from farm-in farm-out arrangements
Despite section
40-205
, if:
(a)
under a
*
farm-in farm-out arrangement, you provide a part of your interest in a
*
mining, quarrying or prospecting right; and
(b)
because of subsection
40-115(2)
, this Division applies as if you had split your interest into the part you stopped
*
holding and the rest of your interest;
then:
(c)
the first element of the
*
cost of the asset that consists of the part you stopped holding is a reasonable proportion of the amount you are taken to have paid under section
40-185
for any economic benefit involved in splitting your interest; and
(d)
the first element of the cost of the asset that consists of the rest of your interest is the sum of:
(i)
the
*
adjustable value of your interest just before it was split; and
(ii)
a reasonable proportion of the amount you are taken to have paid under section
40-185
for any economic benefit involved in splitting your interest.
History
S 40-1110 inserted by No 130 of 2015, s 3 and Sch 1 item 10, applicable in relation to farm-in farm-out arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
SECTION 40-1115
Deductions relating to receipt of exploration benefits
40-1115(1)
If:
(a)
under a
*
farm-in farm-out arrangement, you receive an
*
exploration benefit in exchange for providing a part of your interest in a
*
mining, quarrying or prospecting right; and
(b)
because of section
40-1105
, the
*
termination value of the interest you provide is reduced (including reduced to nil);
you are not entitled to a deduction under a provision of this Act in relation to your expenditure consisting of the provision of that part.
40-1115(2)
If:
(a)
under a
*
farm-in farm-out arrangement, you receive an
*
exploration benefit in exchange for providing a part of your interest in a
*
mining, quarrying or prospecting right; and
(b)
because of section
40-1105
, the
*
termination value of the interest you provide is reduced (including reduced to nil); and
(c)
the exploration benefit consists of another party to the arrangement funding on your behalf, or undertaking to fund on your behalf, expenditure that you incur in relation to exploration or prospecting;
your entitlement (if any) to a deduction under a provision of this Act in relation to that expenditure is reduced to the same extent as the extent to which the expenditure is reasonably attributable to the exploration benefit.
History
S 40-1115 inserted by No 130 of 2015, s 3 and Sch 1 item 10, applicable in relation to farm-in farm-out arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
SECTION 40-1120
40-1120
Cost base and reduced cost base of exploration benefits etc.
If:
(a)
under a
*
farm-in farm-out arrangement, you receive an
*
exploration benefit; and
(b)
the benefit involves one or more undertakings of the kinds referred to in subparagraphs
40-1100(2)(a)(ii)
and (iv);
the first element of the
*
cost base and the
*
reduced cost base of the benefit are reduced by the
*
market value of the undertakings.
History
S 40-1120 inserted by No 130 of 2015, s 3 and Sch 1 item 10, applicable in relation to farm-in farm-out arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
SECTION 40-1125
40-1125
Effect of exploration benefits on the cost of mining, quarrying or prospecting information
If:
(a)
you
*
hold a
*
depreciating asset that is
*
mining, quarrying or prospecting information; and
(b)
under a
*
farm-in farm-out arrangement, you receive an
*
exploration benefit; and
(c)
an amount or expenditure would, apart from this section, be included in the second element of the
*
cost of the asset;
do not include that amount or expenditure in the second element to the extent (if any) that it is reasonably attributable to the exploration benefit.
History
S 40-1125 inserted by No 130 of 2015, s 3 and Sch 1 item 10, applicable in relation to farm-in farm-out arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
Consequences for transferees
SECTION 40-1130
Consequences of certain exploration benefits provided under farm-in farm-out arrangements
40-1130(1)
If, under a
*
farm-in farm-out arrangement, you provide an
*
exploration benefit in relation to the transfer to you of part of another entity
'
s interest in a
*
mining, quarrying or prospecting right:
(a)
the first element of the
*
cost of the part of the interest is reduced by the
*
market value of the exploration benefit; and
(b)
if, for providing the exploration benefit, you receive a reward as a result of which an amount would, apart from this paragraph, be included in your assessable income
-
the entire amount of the reward is not assessable income and is not
*
exempt income; and
(c)
subsection
40-730(3)
does not apply in relation to expenditure that you incur under the arrangement if the reduction in market value under paragraph (a) took into account your liability to incur that expenditure.
40-1130(2)
A reduction under paragraph(1)(a) may be a reduction to nil.
History
S 40-1130 inserted by No 130 of 2015, s 3 and Sch 1 item 10, applicable in relation to farm-in farm-out arrangements entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 14 May 2013.
(Former) Division 41
-
Common rules for capital allowances
History
Div 40 substituted for former Divs 40, 41 and 42 by No 76 of 2001.
Division 41
-
Additional deduction for certain new business investment
History
Div 41 inserted by
No 31 of 2009
, s 3 and Sch 1 item 4, effective 22 May 2009.
Guide to Division 41
SECTION 41-1
What this Division is about
You may be able to deduct an amount in relation to a depreciating asset for the 2008-09, 2009-10, 2010-11 or 2011-12 income year if:
(a) you can deduct an amount for the decline in value for the asset for the relevant year under Subdivision
40-B
; and
(b) you make certain new investments in respect of the asset in the period starting on 13 December 2008 and ending on 31 December 2009; and
(c) the total of those new investments is at least
$
1000 (for small businesses) or
$
10,000 (for other businesses).
History
S 41-1 inserted by
No 31 of 2009
, s 3 and Sch 1 item 4, effective 22 May 2009.
|
TABLE OF SECTIONS
|
|
Operative provisions
|
| 41-5 |
Object of Division |
| 41-10 |
Entitlement to deduction for investment |
| 41-15 |
Amount of deduction |
| 41-20 |
Recognised new investment amount |
| 41-25 |
Investment commitment time |
| 41-30 |
First use time |
| 41-35 |
New investment threshold |
Operative provisions
SECTION 41-5
41-5
Object of Division
The object of this Division is to provide a temporary business tax break for Australian businesses using assets in Australia, with a view to encouraging business investment and economic activity.
History
S 41-5 inserted by
No 31 of 2009
, s 3 and Sch 1 item 4, effective 22 May 2009.
SECTION 41-10
Entitlement to deduction for investment
41-10(1)
You can deduct an amount for an income year in relation to an asset if:
(a)
the asset is a
*
depreciating asset, other than an intangible asset; and
(b)
you can deduct an amount under section
40-25
in relation to the asset for the income year; and
(c)
the income year is the 2008-09, 2009-10, 2010-11 or 2011-12 income year; and
(d)
the total of the
*
recognised new investment amounts for the income year in relation to the asset equals or exceeds the
*
new investment threshold for the income year in relation to the asset.
41-10(2)
Subsection
355-715(2)
(tax offset for assets used for R
&
D activities) does not apply to a deduction under subsection (1).
History
S 41-10(2) substituted by No 93 of 2011, s 3 and Sch 3 item 71, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading. S 41-10(2) formerly read:
41-10(2)
Subsection
73BA(7)
of the
Income Tax Assessment Act 1936
(deductions regarding assets used in research and development activities) does not apply to a deduction under subsection (1).
41-10(3)
For the purposes of paragraph (1)(b), in determining whether you can deduct the amount in relation to the asset under section
40-25
for the income year:
(a)
(Repealed by No 162 of 2015)
(aa)
disregard section
40-90
(reduction in cost where debt is forgiven); and
(ab)
disregard subsection
40-365(5)
(reduction in cost for replacement asset where involuntary disposal); and
(b)
disregard Subdivision
328-D
(capital allowances for small business entities); and
(c)
disregard subsection
355-715(2)
(tax offset for assets used for R
&
D activities).
History
S 41-10(3) amended by No 162 of 2015, s 3 and Sch 1 item 37, by repealing para (a), applicable in relation to the 2015-16 income year and later income years. Para (a) formerly read:
(a)
disregard section
40-55
if the asset is a
*
car for which you use the
"
12% of original value
"
method for that income year; and
S 41-10(3) amended by No 93 of 2011, s 3 and Sch 3 item 72, by substituting para (c), effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading. Para (c) formerly read:
(c)
disregard subsection
73BA(7)
of the
Income Tax Assessment Act 1936
(deductions regarding assets used in research and development activities).
Counting additional recognised new investment amounts for the purposes of meeting the threshold
41-10(4)
For the purposes of paragraph (1)(d), treat each of the following as a
*
recognised new investment amount for the income year in relation to the asset (the
relevant asset
):
(a)
a recognised new investment amount for a previous income year in relation to the relevant asset;
(b)
a recognised new investment amount for the income year or a previous income year in relation to another asset, if:
(i)
the other asset is part of a set of assets including the relevant asset; or
(ii)
the other asset is identical, or substantially identical, to the relevant asset;
(c)
a recognised new investment amount for the income year or a previous income year in relation to an asset
*
held by another entity, if:
(i)
subsection
40-35(1)
(jointly held depreciating assets) applies in relation to the relevant asset because it is your interest in an asset (the
underlying asset
); and
(ii)
the asset held by the other entity is the other entity's interest in the underlying asset.
History
S 41-10 inserted by
No 31 of 2009
, s 3 and Sch 1 item 4, effective 22 May 2009.
SECTION 41-15
Amount of deduction
41-15(1)
The amount that you can deduct is:
(a)
if the
*
new investment threshold for the income year in relation to the asset is
$
1000 (small business entities)
-
50% of the total of the
*
recognised new investment amounts for the income year in relation to the asset; or
(b)
if paragraph (a) does not apply but subsection (3), (4) or (5) applies
-
10% of that total; or
(c)
otherwise
-
the sum of:
(i)
30% of the total of the
*
recognised new investment amounts for the income year in relation to the asset that meet the condition in subsection (2); and
(ii)
10% of the total of the other recognised new investment amounts for the income year in relation to the asset.
41-15(2)
A
*
recognised new investment amount meets the condition in this subsection if:
(a)
the
*
investment commitment time for the amount occurred before 1 July 2009; and
(b)
the
*
first use time for the amount occurred before 1 July 2010.
41-15(3)
This subsection applies if the income year is the 2011-12 income year.
41-15(4)
This subsection applies if:
(a)
you can deduct the amount because of paragraph
41-10(4)(a)
; and
(b)
the
*
new investment threshold for the income year in relation to the asset exceeds the total of the
*
recognised new investment amounts for the income year in relation to the asset that meet the condition in subsection (2).
41-15(5)
This subsection applies if:
(a)
you can deduct the amount because of paragraph
41-10(4)(b) or (c)
; and
(b)
the
*
new investment threshold for the income year in relation to the asset exceeds the sum of:
(i)
the total of the
*
recognised new investment amounts for the income year in relation to the asset that meet the condition in subsection (2); and
(ii)
the total of the amounts treated under paragraph
41-10(4)(b) or (c)
(as the case requires) as recognised new investment amounts for the income year in relation to the asset that meet the condition in subsection (2).
History
S 41-15 inserted by
No 31 of 2009
, s 3 and Sch 1 item 4, effective 22 May 2009.
SECTION 41-20
Recognised new investment amount
41-20(1)
An amount is a
recognised new investment amount
for the income year in relation to the asset if:
(a)
either:
(i)
the amount is included in the first element of the asset
'
s
*
cost (worked out in accordance with Subdivision
40-C
); or
(ii)
the amount is included in the second element of the asset
'
s cost under paragraph
40-190(2)(a)
; and
(b)
the
*
investment commitment time for the amount occurs in the period:
(i)
starting at 12.01 am, by legal time in the Australian Capital Territory, on 13 December 2008; and
(ii)
ending on 31 December 2009; and
(c)
the
*
first use time for the amount occurs:
(i)
no later than the end of the income year; and
(ii)
no later than 31 December 2010; and
(d)
at the first use time for the amount, it is reasonable to conclude that you will use the asset principally in Australia for the principal purpose of carrying on a
*
business; and
(e)
if the amount is included in the first element of the asset
'
s cost
-
the first use time for the amount is the first time you or any other entity have used the asset, or have it installed ready for use, for any purpose; and
(f)
you have not been entitled to a deduction under this Division for any previous income year in relation to the amount.
History
S 41-20(1) amended by No 70 of 2015, s 3 and Sch 6 item 26, by substituting
"
carrying on
"
for
"
*
carrying on
"
in para (d), effective 25 June 2015.
41-20(2)
Treat the requirements in paragraph (1)(d) as
not
being met if, at the first use time for the amount, it is reasonable to conclude that the asset will never be located in Australia.
41-20(3)
For the purposes of paragraph (1)(e), disregard any previous use of the asset that was merely for the purposes of reasonable testing or trialling.
41-20(4)
Treat the requirements in paragraph (1)(e) as
not
being met if the amount becomes included in the first element of the asset
'
s
*
cost at a time because of paragraph
40-205(a)
(splitting depreciating assets) or
40-210(a)
(merging depreciating assets).
41-20(5)
In determining the amount of a
*
recognised new investment amount, disregard:
(a)
subsection
40-90(2)
(reduction in cost where debt is forgiven); and
(b)
paragraph
40-365(5)(a)
(reduction in cost for replacement asset where involuntary disposal).
History
S 41-20 inserted by
No 31 of 2009
, s 3 and Sch 1 item 4, effective 22 May 2009.
SECTION 41-25
Investment commitment time
41-25(1)
The
investment commitment time
for the amount is:
(a)
if the amount is included in the first element of the asset's
*
cost
-
the time at which you:
(i)
enter into a contract under which you
*
hold the asset at that time, or will hold the asset at a later time; or
(ii)
start to construct the asset; or
(iii)
start to hold the asset in some other way; or
(b)
if the amount is included in the second element of the asset's cost
-
the time at which you enter into a contract, or start construction, for the economic benefit in relation to which the amount becomes, or will become, included in that element under paragraph
40-190(2)(a)
.
Integrity rule
41-25(2)
Subsection (3) applies in relation to an amount if:
(a)
at a time, you:
(i)
enter into a contract under which you
*
hold an asset at that time, or will hold the asset at a later time; or
(ii)
start to construct an asset; or
(iii)
start to hold an asset in some other way; and
(b)
at a later time, you engage in conduct that results in you:
(i)
entering into a contract under which you hold the asset mentioned in paragraph (a) (or an identical or substantially similar asset) at that later time, or will hold that asset (or an identical or substantially similar asset) at an even later time; or
(ii)
starting to construct an asset that is identical or substantially similar to the asset mentioned in paragraph (a); or
(iii)
starting to hold the asset mentioned in paragraph (a) (or an identical or substantially similar asset) in some other way; and
(c)
you engage in that conduct for the purpose, or for purposes that include the purpose, of becoming entitled to a deduction under this Division.
41-25(3)
Despite paragraph (1)(a), the
investment commitment time
for an amount to which that paragraph would otherwise apply is the time mentioned in paragraph (2)(a).
41-25(3A)
For the purposes of paragraph (1)(a) and subsection (2), treat yourself as having started to construct an asset at a time if you first incur expenditure in respect of the construction of the asset at that time.
41-25(3B)
For the purposes of paragraph (1)(b), treat yourself as having started construction for an economic benefit at a time if you first incur expenditure in respect of the construction for the benefit at that time.
Options
41-25(4)
To avoid doubt, for the purposes of this section, you do not enter into a contract under which you
*
hold an asset merely because you acquire an option to enter into such a contract.
History
S 41-25 inserted by
No 31 of 2009
, s 3 and Sch 1 item 4, effective 22 May 2009.
SECTION 41-30
41-30
First use time
The
first use time
for the amount is:
(a)
if the amount is included in the first element of the asset's
*
cost
-
the time at which you start to use the asset, or have it
*
installed ready for use; or
(b)
if the amount is included in the second element of the asset's cost
-
the later of:
(i)
the time at which it becomes included in that element under paragraph
40-190(2)(a)
; or
(ii)
the time mentioned in paragraph (a).
History
S 41-30 inserted by
No 31 of 2009
, s 3 and Sch 1 item 4, effective 22 May 2009.
SECTION 41-35
41-35
New investment threshold
The
new investment threshold
for an income year (the
relevant income year
) in relation to an asset means:
(a)
$
1000 if you are a
*
small business entity during any of the following income years:
(i)
the income year in which occurs the
*
investment commitment time for any
*
recognised new investment amount for the asset in relation to the relevant income year;
(ii)
the income year in which occurs the
*
first use time for any such amount;
(iii)
the relevant income year; or
(b)
otherwise
-
$
10,000.
History
S 41-35 inserted by
No 31 of 2009
, s 3 and Sch 1 item 4, effective 22 May 2009.
(Repealed) Division 42
-
Depreciation of plant
History
Div 40 substituted for Divs 40, 41 and 42 by No 76 of 2001.
Division 43
-
Deductions for capital works
SECTION 43-1
What this Division is about
You can deduct certain capital expenditure on assessable income producing buildings and other capital works. This Division sets out the rules for working out those deductions.
SECTION 43-2
43-2
Key concepts used in this Division
The following graphic introduces the key concepts used in this Division and shows the relationships between them.
Subdivision 43-A
-
Key operative provisions
SECTION 43-5
What this Subdivision is about
This Subdivision contains the key operative provisions for this Division, including all of the deduction entitlement provisions. You should read all of this Subdivision to understand how this Division works.
Operative provisions
SECTION 43-10
Deductions for capital works
43-10(1)
You can deduct an amount for capital works for an income year.
43-10(2)
You can only deduct the amount if:
(a)
the capital works have a
*
construction expenditure area; and
(b)
there is a
*
pool of construction expenditure for that area; and
(c)
you use
*
your area in the income year in the way set out in Table 43-140 (Current year use).
Note 1:
The deduction is limited to capital works to which this Division applies, see section
43-20
.
Note 2:
Amongst other things, the definition of
your area
ensures that only owners and certain lessees of capital works, and certain holders of quasi-ownership rights over land on which capital works are constructed, can deduct an amount under this Division.
SECTION 43-15
Amount you can deduct
43-15(1)
The amount you can deduct is a portion of
*
your construction expenditure. However, it cannot exceed the amount of
*
undeducted construction expenditure for
*
your area.
Note:
The limit in this subsection has 2 effects:
•
It ensures that not more than 100% of your construction expenditure can be deducted.
•
It imposes a time limit on the period over which your construction expenditure can be deducted. For capital works begun before 27 February 1992, that period will be 25 years if the rate of deduction is 4% or 40 years if the rate is 2.5%. For other capital works, the period will be 25 years or 40 years or some period between 25 and 40 years depending on their use.
43-15(2)
Your deduction is calculated under section
43-210
or
43-215
.
SECTION 43-20
Capital works to which this Division applies
Buildings
43-20(1)
This Division applies to capital works being a building, or an extension, alteration or improvement to a building:
(a)
begun in Australia after 21 August 1979; or
(b)
begun outside Australia after 21 August 1990.
Note:
Section 43-80 explains when capital works begin.
Structural improvements
43-20(2)
This Division also applies to capital works (other than capital works referred to in subsection (1)) begun after 26 February 1992 that are structural improvements, or extensions, alterations or improvements to structural improvements, whether they are in or outside Australia.
43-20(3)
Some examples of structural improvements are:
(a)
sealed roads, sealed driveways, sealed car parks, sealed airport runways, bridges, pipelines, lined road tunnels, retaining walls, fences, concrete or rock dams and artificial sports fields; and
(b)
earthworks that are integral to the construction of a structural improvement (other than a structural improvement described in subsection (4)), for example, embankments, culverts and tunnels associated with a runway, road or railway.
43-20(4)
This Division does not apply to structural improvements being:
(a)
earthworks that:
(i)
are not integral to the installation or construction of a structure; and
(ii)
are permanent (assuming they are maintained in reasonably good order and condition); and
(iii)
can be economically maintained in reasonably good order and condition for an indefinite period;
for example, unlined channels, unlined basins, earth tanks and dirt tracks; or
(b)
earthworks that merely create artificial landscapes, for example, grass golf course fairways and greens, gardens, and grass sports fields.
Environment protection earthworks
43-20(5)
This Division also applies to capital works being earthworks, or extensions, alterations or improvements to earthworks, if:
(a)
they are constructed as a result of carrying out of
*
environmental protection activities; and
(b)
they can be economically maintained in reasonably good order and condition for an indefinite period; and
(c)
they are not integral to the construction of capital works; and
(d)
the expenditure on the capital works was incurred after 18 August 1992.
Note:
This subsection allows you to deduct an amount for some earthworks that are excluded by paragraph (4)(a) if the earthworks are constructed in carrying out an environmental protection activity.
History
S 43-20(5) amended by No 77 of 2001 and No 46 of 1998.
SECTION 43-25
Rate of deduction
43-25(1)
For capital works begun after 26 February 1992, there is a basic entitlement to a rate of 2.5% for parts used as described in Table 43-140 (Current year use). The rate increases to 4% for parts used as described in Table 43-145 (Use in the 4% manner).
43-25(2)
For capital works begun before 27 February 1992 and used as described in Table 43-140, the rate is:
(a)
4% if the capital works were begun after 21 August 1984 and before 16 September 1987; or
(b)
2.5% in any other case.
Note:
Section 43-80 explains when capital works begin.
SECTION 43-30
43-30
No deduction until construction is complete
You cannot deduct an amount for any period before the completion of construction of the capital works even though you used them, or part of them, before completion.
SECTION 43-35
43-35
Requirement for registration under the Industry Research and Development Act
You may deduct an amount under this Division on the basis of using capital works for the purpose of conducting
*
R
&
D activities only if:
(a)
you are registered under section
27A
(registering R
&
D activities) of the
Industry Research and Development Act 1986
for the R
&
D activities for an income year; or
(b)
if you are an
*
R
&
D partnership
-
an
*
R
&
D entity, who was a partner of the R
&
D partnership at some time while the R
&
D activities were conducted, is registered under that section for the R
&
D activities for an income year.
Note 1:
R
&
D activities must be conducted in connection with a business carried on for the purpose of producing assessable income, see section
43-195
.
Note 2:
You may still deduct an amount under this Division if you were registered for the R
&
D activities under former section
39J
(Registration of eligible companies) of the
Industry Research and Development Act 1986
(see section
355-200
of the
Income Tax (Transitional Provisions) Act 1997
).
History
S 43-35 substituted by No 93 of 2011, s 3 and Sch 3 item 26, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading. S 43-35 formerly read:
SECTION 43-35 Requirement for body corporate to be registered under the Industry Research and Development Act
43-35
A body corporate may deduct an amount under this Division on the basis of using capital works for the purpose of carrying on
*
research and development activities only if the body corporate is registered under section 39J (Registration of eligible companies) or 39P (Joint registration) of the
Industry Research and Development Act 1986
.
Note:
Research and development activities must be carried on in connection with a business carried on for the purpose of producing assessable income, see section
43-195
.
SECTION 43-40
Deduction for destruction of capital works
43-40(1)
You can deduct an amount if all or a part of
*
your area is destroyed in an income year and:
(a)
you have been allowed, or can claim, a deduction under this Division, or former Division
10C
or
10D
of Part III of the
Income Tax Assessment Act 1936
, for your area; and
(b)
there is an amount of
*
undeducted construction expenditure for your area; and
(c)
you were using your area in the way that applies to it under Table 43-140 (Current year use) immediately before the destruction or, if not, neither you nor any other entity used your area for any purpose since it was last used by you in that way.
History
S 43-40(1) amended by
No 101 of 2006
, s 3 and Sch 2 item 665, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the
CCH Australian Income Tax Legislation archive
.
43-40(2)
The deduction is allowable in the income year in which the destruction occurs, and is calculated under section
43-250
.
Note:
The effect of this provision is to allow you to deduct an amount in the income year in which the capital works are destroyed for all of your construction expenditure that has not yet been deducted. However, you must reduce the deduction by any insurance and salvage receipts.
SECTION 43-45
43-45
Certain anti-avoidance provisions
These anti-avoidance provisions:
(a)
section
51AD
(Deductions not allowable in respect of property under certain leveraged arrangements) of the
Income Tax Assessment Act 1936
;
(b)
Division 16D (Certain arrangements relating to the use of property) of Part III of that Act;
apply to your deductions under this Division for an asset as if you were the owner of the asset instead of any other person.
History
S 43-45 substituted by No 77 of 2001.
SECTION 43-50
Links and signposts to other parts of the Act
Links
43-50(1)
No part of a
*
pool of construction expenditure can be a deduction, or taken into account in working out the amount of a deduction, under a provision of this Act other than this Division.
History
S 43-50(1) amended by
No 14 of 2009
, s 3 and Sch 4 item 21, by substituting
"
a deduction
"
for
"
an allowable deduction
"
(wherever occurring), effective 26 March 2009.
43-50(2)
No part of an amount incurred by an entity in acquiring capital works for which there is a
*
pool of construction expenditure can be a deduction, or taken into account in working out the amount of a deduction, under a provision of this Act other than this Division.
History
S 43-50(2) amended by
No 14 of 2009
, s 3 and Sch 4 item 21, by substituting
"
a deduction
"
for
"
an allowable deduction
"
(wherever occurring), effective 26 March 2009.
43-50(3)
You will be taken not to be the owner of any part of capital works that are the subject of a lease to which you have chosen to apply section
104-115
(CGT event F2). The lessee or sublessee will be taken to be the owner of that part.
Note 1:
Choosing to apply section
104-115
results in the lease being treated for CGT purposes more like an outright disposal.
Note 2:
See subsection
43-180(3)
for the effect of the rule in subsection (3) of this section on the need to own 10 apartments, units or flats in an apartment building.
History
S 43-50(3) amended by No 46 of 1998.
43-50(4)
(Repealed by No 46 of 1998)
History
S 43-50(4) substituted by No 121 of 1997.
43-50(5)
(Repealed by No 46 of 1998)
Signposts
43-50(6)
There are special record-keeping rules that apply to this Division in subsection
262A(4AJA)
of the
Income Tax Assessment Act 1936
.
43-50(7)
Your deductions under this Division may be reduced if any of your commercial debts have been forgiven in the income year: see Subdivision
245-E
.
History
S 43-50(7) amended by
No 79 of 2010
, s 3 and Sch 2 item 25, by omitting
"
of Schedule 2C to the
Income Tax Assessment Act 1936
"
after
"
Subdivision 245-E
"
, effective 1 July 2010.
S 43-50(7) inserted by No 121 of 1997.
43-50(8)
Where you have had a deduction under this Division an amount may be included in your assessable income if the expenditure was financed by limited recourse debt that has terminated: see Division
243
.
History
S 43-50(8) inserted by No 72 of 2001.
SECTION 43-55
Anti-avoidance
-
arrangement etc. with tax-exempt entity
43-55(1)
You will not be allowed a deduction under this Division for an income year if the Commissioner is satisfied that:
(a)
you entered into an
*
arrangement with:
(i)
an entity to which section
50-5
,
50-10
,
50-15
,
50-25
,
50-30
,
50-40
or
50-45
(dealing with
*
exempt income) applies; or
(ii)
an STB (within the meaning of Division
1AB
of Part
III
of the
Income Tax Assessment Act 1936
) whose
*
ordinary income and
*
statutory income is exempt from income tax;
under which you were to pay an amount, or transfer property, directly or indirectly, to the entity; and
(b)
the amount of the payment or the value of the property is calculated by reference to the amount of a deduction allowable to you under this Division; and
(c)
a purpose of the arrangement that is not a merely incidental purpose is to ensure that the benefit of the deduction would pass wholly or substantially to the entity, whether directly or indirectly.
History
S 43-55(1) amended by No 96 of 2013, s 3 and Sch 1 item 26, by omitting
"
50-20,
"
after
"
50-15,
"
in para (a)(i), effective 1 January 2014.
S 43-55(1) amended by No 63 of 2005, No 101 of 2004 and No 121 of 1997.
43-55(2)
Subsection (1) applies to
*
arrangements entered into with an entity referred to in subparagraph (1)(a)(i) after 1 May 1980 that relate to deductions for
*
hotel buildings or
*
apartment buildings begun before 1 July 1997.
43-55(3)
Subsection (1) also applies to
*
arrangements entered into with an entity referred to in subparagraph (1)(a)(ii) after 30 June 1994 that relate to deductions for
*
hotel buildings or
*
apartment buildings begun before 1 July 1997.
Subdivision 43-B
-
Establishingthe deduction base
SECTION 43-60
What this Subdivision is about
This Subdivision explains the meaning of the terms
construction expenditure
,
construction expenditure area
and
pool of construction expenditure
.
SECTION 43-65
43-65
Explanatory material
Expenditure in respect of the construction of capital works is only eligible for a deduction under this Division if there is a construction expenditure area for the capital works. The area defined as the construction expenditure area may comprise the whole of the capital works or only part of them.
Whether there is a construction expenditure area for capital works and how it is identified depends on the following factors:
•
the type of expenditure incurred;
•
the time when the capital works began;
•
the area of the capital works that is to be owned, leased or held by the entity that incurred the expenditure;
•
for capital works begun before 1 July 1997, the area of the capital works that was to be used in a particular manner.
A pool of construction expenditure is that part of an amount of construction expenditure that is attributable to a particular construction expenditure area.
Operative provisions
SECTION 43-70
What is construction expenditure
?
43-70(1)
Construction expenditure
is capital expenditure incurred in respect of the construction of capital works.
43-70(2)
Construction expenditure
does not include:
(a)
expenditure on acquiring land; or
(b)
expenditure on demolishing existing structures; or
(c)
expenditure on clearing, levelling, filling, draining or otherwise preparing the construction site prior to carrying out excavation works; or
(d)
expenditure on landscaping; or
(e)
expenditure on
*
plant; or
(f)
expenditure on property for which a deduction is allowable, or would be allowable if the property were for use for the
*
purpose of producing assessable income, under:
(i)
Subdivision
40-F
(about primary production depreciating assets), Subdivision
40-G
(about capital expenditure of primary producers and other landholders), Subdivision
40-H
(about capital expenditure that is immediately deductible) or Subdivision
40-I
(about capital expenditure that is deductible over time); or
(ii)
the former Division
330
of this Act or the former Division
10
,
10AAA
or
10AA
of Part III of the
Income Tax Assessment Act 1936
(all of which dealt with mining and/or quarrying); or
(iii)
section
73A
of the
Income Tax Assessment Act 1936
(about expenditure on scientific research); or
(iv)
the former Subdivision 387-A of this Act or the former section
75D
of the
Income Tax Assessment Act 1936
(both of which allowed deductions for capital expenditure to prevent land degradation); or
(v)
the former Subdivision 387-B of this Act or the former section
75B
of the
Income Tax Assessment Act 1936
(both of which allowed deductions for capital expenditure on facilities to conserve or convey water); or
(vi)
the former Subdivision 387-G of this Act or the former section
124F
or
124JA
of the
Income Tax Assessment Act 1936
(all of which allowed deductions for capital expenditure on forestry roads and/or timber mill buildings); or
(fa)
any of these kinds of expenditure if a deduction is allowable for the expenditure, or would be allowable if property had been used for the purpose of producing assessable income:
(i)
*
mining capital expenditure or
*
transport capital expenditure;
(ii)
expenditure on a
*
forestry road in connection with carrying on a
*
timber operation for a
*
taxable purpose;
(iii)
expenditure for the construction or acquisition of a
*
timber mill building;
(iv)
expenditure on a
*
depreciating asset you can deduct under subsection
40-80(1)
(about exploration and prospecting); or
(g)
expenditure on property for which a deduction under section
355-305
or
355-520
is allowable for the property, or would be allowable if the property were for use for conducting
*
R
&
D activities; or
(h)
eligible heritage conservation expenditure within the meaning of the former Subdivision AAD of Division
17
of Part
III
of the
Income Tax Assessment Act 1936
; or
(i)
expenditure that you cannot deduct because of section
26-100
(about water infrastructure improvement expenditure).
History
S 43-70(2) amended by No 96 of 2014, s 3 and Sch 5 item 23, by omitting
"
or (1A)
"
after
"
subsection 40-80(1)
"
from para (fa)(iv), effective 30 September 2014.
S 43-70(2) amended by No 88 of 2013, s 3 and Sch 3 item 7, by inserting para (i), applicable in relation to payments made on or after 1 April 2010 by the Commonwealth under a SRWUIP program.
S 43-70(2) amended by No 84 of 2013, s 3 and Sch 3 item 24, by inserting
"
or (1A)
"
in para (fa)(iv), effective 28 June 2013.
S 43-70(2) amended by No 93 of 2011, s 3 and Sch 3 items 27 and 28, by substituting para (g) and repealing the note at the end, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading. Para (g) and the note formerly read:
(g)
expenditure on property for which a deduction is allowable, or would be allowable if the property were for use for carrying on
*
research and development activities, under section 73B,
73BA
or
73BH
of the
Income Tax Assessment Act 1936
, or would be allowable under that section of that Act if a company had not chosen a tax offset under section
73I
of that Act; or
Note:
Paragraph (2)(g) only affects buildings begun before 21 November 1987, that were acquired or constructed under contracts entered into before that date or that were intended before that date to be used exclusively for research and development activities.
S 43-70(2) amended by
No 101 of 2006
, s 3 and Sch 2 items 666 to 674, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the
CCH Australian Income Tax Legislation archive
.
S 43-70(2) amended by No 170 of 2001, No 77 of 2001, No 121 of 1997.
SECTION 43-72
Meaning of
forestry road, timber operation
and
timber mill building
43-72(1)
A
forestry road
is a road constructed primarily and principally for the purpose of providing access to an area to enable:
(a)
trees to be planted or tended in the area; or
(b)
timber felled in the area to be removed.
For this purpose, a road includes any bridge, culvert or similar work forming part of the road.
43-72(2)
A
timber operation
is:
(a)
planting or tending trees for felling; or
(b)
felling standing timber; or
(c)
removing felled timber; or
(d)
milling felled timber or processing it in another way.
43-72(3)
A
timber mill building
is a building:
(a)
for use primarily and principally:
(i)
in carrying on your
*
business of milling timber for a
*
taxable purpose; or
(ii)
as residential accommodation for your employees engaged in connection with the business, or for their dependants; and
(b)
located in a forest, and in or adjacent to the area where timber milled in the business is, or is to be, felled.
History
S 43-72 inserted by No 77 of 2001.
SECTION 43-75
Construction expenditure area
43-75(1)
The
construction expenditure area
of capital works begun after 30 June 1997 is the part of the capital works on which the
*
construction expenditure was incurred that, at the time when it was incurred by an entity, was to be owned or leased by the entity or held by the entity under a
*
quasi-ownership right over land granted by an
*
exempt Australian government agency or an
*
exempt foreign government agency.
Note:
Section 43-80 explains when capital works begin.
43-75(2)
The
construction expenditure area
of capital works begun before 1 July 1997 is the part of the capital works on which the
*
construction expenditure was incurred that:
(a)
at the time when it was incurred by an entity, was to be owned or leased by the entity or held by the entity under a
*
quasi-ownership right over land granted by an
*
exempt Australian government agency or an
*
exempt foreign government agency; and
(b)
at the time of completion of construction, was to be used in the way described in Column 3 of Table 43-90 (intended use at completion) for the time period when the capital works began as set out in Column 1.
43-75(3)
There is taken to be a
construction expenditure area
for capital works purchased by an entity from another entity if:
(a)
the capital works would have had a construction expenditure area but for the fact that the other entity did not incur capital expenditure in constructing the capital works; and
(b)
the other entity is not an
*
associate of the entity; and
(c)
the other entity constructed the capital works on land that it owned or leased in the course of a business that included the construction and sale of capital works of that kind.
Note:
Subsection (3) makes capital works purchased from a speculative builder eligible for deduction in the hands of the first and subsequent purchasers.
[
CCH Note:
S 43-75(3) does not apply to capital works being a hotel building or an apartment building begun before 1 July 1997.]
43-75(4)
The construction of the capital works must be complete before the
*
construction expenditure area is determined.
43-75(5)
Only one
*
construction expenditure area is created each time an entity constructs capital works.
Example:
An entity undertakes the construction of a building. During the course of construction, the entity makes 3 progress payments to the builder. There is still only one construction expenditure area.
43-75(6)
A separate
*
construction expenditure area will be created each time an entity undertakes the construction of capital works.
Example:
In the diagram below, area 1 relates to the original construction of a building which gives rise to one
construction expenditure area
. Area 2 is a subsequent extension of the same building which gives rise to another, while area 3 is a later renovation of the entire building which gives rise to another.
SECTION 43-80
43-80
When capital works begin
Capital works are taken to begin when the first step in the construction phase starts. For example, the pouring of foundations or sinking of pilings for a building.
Note 1:
Capital works begun after 15 September 1987 are taken to have begun before 16 September 1987 in certain circumstances. See section
43-220
.
Note 2:
The time when capital works begin is relevant for determining whether the capital works qualify for deduction, the use to which those works must be put, the rate of deduction and the calculation mechanism used. However, the time when capital works begin does not limit what qualifies as construction expenditure.
SECTION 43-85
Pools of construction expenditure
43-85(1)
A
pool of construction expenditure
is so much of the
*
construction expenditure incurred by an entity on capital works as is attributable to the
*
construction expenditure area.
43-85(2)
In applying subsection (1) in a case to which subsection 43-75(3) (dealing with purchases from speculative builders) applies, assume that the expenditure incurred by the other entity was capital expenditure, but that the limitations in subsection 43-70(2) (which sets out types of expenditure that are not
*
construction expenditure) still apply to the other entity's expenditure.
Note:
The builder's profit margin does not form part of the construction expenditure of the purchaser.
SECTION 43-90
Table of intended use at time of completion of construction
|
Column 1
|
Column 2
|
Column 3
|
|
Date capital works begin
|
Type of capital works
|
Intended use on completion
|
| Time period 1: 22/8/79 to 19/7/82 (inclusive) |
Hotel building |
For use by any entity wholly or mainly to operate a hotel, motel or guest house that has at least 10 bedrooms that are for use wholly or mainly to provide short-term accommodation for travellers. |
| |
Apartment building |
The building consisted of: |
| |
|
(a) |
at least 10 apartments, units or flats each of which was for use wholly or mainly to provide short-term accommodation for travellers; or |
| |
|
(b) |
at least 10 apartments, units or flats each of which was for use for that purpose and facilities that are wholly or mainly for use in association with providing short-term accommodation for travellers in those apartments, units or flats. |
| Time period 2: 20/7/82 to 17/7/85 (inclusive) |
Hotel building |
As for time period 1. |
| |
Apartment building |
As for time period 1. |
| |
Non-residential building |
For: |
| |
|
(a) |
use by the entity that incurred the expenditure for the
*
purpose of producing assessable income or exempt income; or |
| |
|
(b) |
disposal by that entity to another entity for use by the other entity for the purpose of producing assessable income or exempt income. |
| Time period 3: 18/7/85 to 20/11/87 (inclusive) |
Any building |
For: |
| |
|
(a) |
use by the entity that incurred the expenditure for the
*
purpose of producing assessable income or exempt income; or |
| |
|
(b) |
disposal by that entity to another entity for use by the other entity for the purpose of producing assessable income or exempt income; or |
| |
|
(c) |
use by an entity wholly or mainly for, or in association with, residential accommodation. |
| Time period 4: 21/11/87 to 26/2/92 (inclusive) |
Any building |
For: |
| |
|
(a) |
use by the entity that incurred the expenditure for the
*
purpose of producing assessable income or exempt income; or |
| |
|
(b) |
disposal by that entity to another entity for use by the other entity for the purpose of producing assessable income or exempt income; or |
| |
|
(c) |
use by an entity wholly or mainly for, or in association with, residential accommodation; or |
| |
|
(d) |
use by the entity that incurred the expenditure to carry on research and development activities (within the meaning of former section
73B
of the
Income Tax Assessment Act 1936
) by or for that entity, or for disposal by that entity to another entity for use by the other entity for carrying on research and development activities (within the meaning of that former section) by or for the other entity. |
| Time period 5: 27/2/92 to 18/8/92 (inclusive) |
Hotel building |
As for time period 1. |
| |
Apartment building |
As for time period 1. |
| |
Other buildings |
As for any building in time period 4. |
| |
Structural improvements |
As for any building in time period 4. |
| Time period 6: 19/8/92 to 30/6/97 (inclusive) |
Hotel building |
As for time period 1. |
| |
Apartment building |
As for time period 1. |
| |
Other buildings |
As for any building in time period 4. |
| |
Structural improvements |
As for any building in time period 4. |
| |
Environment protection earthworks |
As for any building in time period 4. |
Note:
There are special rules that explain or qualify the uses described in Column 3 of this Table. These rules are set out in Subdivision
43-E
(sections
43-155
to
43-195
). For example, certain facilities that are not commonly provided in a hotel, motel or guest house in Australia are taken not to be used or for use to operate a hotel, motel or guest house, see subsection
43-180(6)
.
History
S 43-90 amended by No 93 of 2011, s 3 and Sch 3 items 29 to 31, by substituting
"
research and development activities (within the meaning of former section 73B of the
Income Tax Assessment Act 1936
)
"
for
"
*
research and development activities
"
, inserting
"
(within the meaning of that former section)
"
after
"
research and development activities
"
and substituting the note, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading. The note formerly read:
Note:
There are special rules that explain or qualify the uses described in Column 3 of this Table. These rules are set out in Subdivision
43-E
(sections
43-155
to
43-195
). For example:
•
Research and development activities must be carried on in connection with a business carried on for the purpose of producing assessable income, see section
43-195
.
•
Certain facilities that are not commonly provided in a hotel, motel or guest house in Australia are taken not to be used or for use to operate a hotel, motel or guest house, see subsection
43-180(6)
.
SECTION 43-95
Meaning of
hotel building
and
apartment building
43-95(1)
A
hotel building
is:
(a)
a building begun after 21 August 1979 and before 18 July 1985, or after 26 February 1992 and before 1 July 1997, that, at the time of completion of its construction, was intended to be used in the way referred to in Column 3 of Table 43-90 (intended use at completion) for a hotel building; or
(b)
a building begun after 30 June 1997 and that, in the income year, is used in the way referred to in Column 3 (time period 2) of Table 43-145 (use in the 4% manner) for a hotel building.
43-95(2)
An
apartment building
is:
(a)
a building begun after 21 August 1979 and before 18 July 1985, or after 26 February 1992 and before 1 July 1997, that, at the time of completion of its construction, was intended to be used in the way referred to in Column 3 of Table 43-90 for an apartment building; or
(b)
a building begun after 30 June 1997 and that, in the income year, is used in the way referred to in Column 3 (time period 2) of Table 43-145 for an apartment building.
SECTION 43-100
43-100
Certificates by Industry Innovation and Science Australia
A certificate by
*
Industry Innovation and Science Australia stating that activities carried on by or for an entity were or were not
*
core R
&
D activities or
*
supporting R
&
D activities is conclusive for the purposes of this Division.
Note:
Core R
&
D activities and supporting R
&
D activities are kinds of R
&
D activities.
History
S 43-100 amended by No 101 of 2021, s 3 and Sch 1 item 3(a), by substituting
"
*
Industry Innovation and Science Australia
"
for
"
*
Innovation and Science Australia
"
, effective 11 September 2021.
S 43-100 amended by No 63 of 2016, s 3 and Sch 1 item 40(a), by substituting
"
*
Innovation and Science Australia
"
for
"
*
Innovation Australia
"
, effective 20 October 2016.
S 43-100 amended by No 93 of 2011, s 3 and Sch 3 items 32 and 33, by substituting
"
*
core R
&
D activities or
*
supporting R
&
D activities
"
for
"
*
research and development activities
"
and inserting the note at the end, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading.
S 43-100 amended by
No 164 of 2007
, s 3 and Sch 12 items 72 and 73, by substituting
"
*
Innovation Australia
"
for
"
the Industry Research and Development Board established under the
Industry Research and Development Act 1986
"
, effective 27 September 2007.
Subdivision 43-C
-
Your area and your construction expenditure
SECTION 43-105
What this Subdivision is about
This Subdivision explains
your area
and
your construction expenditure
.
SECTION 43-110
43-110
Explanatory material
You can only get a deduction under this Division for an income year if you own, lease or hold part of a construction expenditure area of capital works. The area you own, lease or hold is called
your area
.
In working out your deductions, you must identify your area for each construction expenditure area of the capital works.
Your area may comprise the whole of the construction expenditure area or part of it.
Note:
In certain circumstances the notional buyer of property is taken to be its owner (see subsection
240-20(2)
).
History
S 43-110 amended by No 72 of 2001.
Operative provisions
SECTION 43-115
Your area and your construction expenditure
-
owners
43-115(1)
Your area
is the part of the
*
construction expenditure area that you own.
43-115(2)
Your construction expenditure
is the portion of the
*
pool of construction expenditure that is attributable to your area.
SECTION 43-120
Your area and your construction expenditure
-
lessees and quasi-ownership right holders
Own expenditure
43-120(1)
Your area
is the part of the
*
construction expenditure area that you lease, or hold under a
*
quasi-ownership right over land granted by an
*
exempt Australian government agency or an
*
exempt foreign government agency, and that:
(a)
is attributable to a
*
pool of construction expenditure that you incurred; and
(b)
you have continuously leased or held since the construction was completed.
Earlier lessees' or holders' expenditure
43-120(2)
Your area
is the part of the
*
construction expenditure area that you lease, or hold under a
*
quasi-ownership right over land granted by an
*
exempt Australian government agency or an
*
exempt foreign government agency, and that:
(a)
is attributable to a
*
pool of construction expenditure incurred by another lessee or holder of a quasi-ownership right over land; and
(b)
has been continuously leased or held since the construction was completed by the lessee or holder who incurred the expenditure or an assignee of that lessee's lease or that holder's quasi-ownership right over land.
43-120(3)
Your construction expenditure
is the portion of the
*
pool of construction expenditure that is attributable to your area.
SECTION 43-125
Lessees' or right holders' pools can revert to owner
43-125(1)
An amount that relates to a
*
pool of construction expenditure that arises as a result of expenditure incurred by a lessee or a holder of a
*
quasi-ownership right over land:
(a)
can only be deducted by a lessee or a holder of a quasi-ownership right over land who satisfies subsection 43-120(1) or (2); and
(b)
cannot be deducted by the owner of the capital works while there is a lessee or a holder of a quasi-ownership right over land who satisfies that subsection.
43-125(2)
The owner of the capital works may deduct an amount that relates to that pool if there is no longer a lessee or a holder of a
*
quasi-ownership right over land who satisfies subsection 43-120(1) or (2).
SECTION 43-130
43-130
Identifying your area on acquisition or disposal
There will be a separate
*
your area at each time in an income year when you:
(a)
acquire an additional part of a
*
construction expenditure area; or
(b)
dispose of some but not all of a construction expenditure area.
Example:
You own half of a building (part A) throughout the income year, and you acquire the other half (part B) on 1 January. This section ensures that part A is your area for the entire year and that part B is your area for the second 6 months of the year.
Note:
This ensures that the same area is not counted twice in calculating your deduction. You will have to make separate deduction calculations if you have identified more than one area as your area of the capital works.
Subdivision 43-D
-
Deductible uses of capital works
SECTION 43-135
What this Subdivision is about
You can only get a deduction under this Division if you use your area in a way described in Table 43-140 or 43-145 of this Subdivision.
Using your area
SECTION 43-140
Using your area in a deductible way
43-140(1)
The following table sets out the way you must use
*
your area in an income year for a deduction to be allowed under section
43-10
(the main deduction provision). The relevant use depends on the time when the capital works began (Column 1) and the type of capital works (Column 2). Column 3 sets out the use.
TABLE 43-140
-
Current year use
|
Column 1
|
Column 2
|
Column 3
|
|
Date capital works begin
|
Type of capital works
|
Use of your area at some time in the income year
|
| Time period 1: After 30/6/97 |
Any capital works |
You use
*
your area for the purpose of: |
| |
|
(a) |
producing assessable income; or |
| |
|
(b) |
conducting
*
R
&
D activities. |
| Time period 2: 27/2/92 to 30/6/97 (inclusive) |
*
Hotel building |
You use
*
your area for the
*
purpose of producing assessable income. |
| |
*
Apartment building |
You use
*
your area for the
*
purpose of producing assessable income. |
| |
Other capital works |
You use
*
your area for the purpose of: |
| |
|
(a) |
producing assessable income; or |
| |
|
(b) |
conducting
*
R
&
D activities. |
| Time period 3: Before 27/2/92 |
*
Hotel building |
You use
*
your area for the
*
purpose of producing assessable income and: |
| |
|
(a) |
all or part of that area is used by any entity wholly or mainly to operate a hotel, motel or guest house; and |
| |
|
(b) |
that hotel, motel or guest house has at least 10 bedrooms that are used or available for use wholly to provide short-term accommodation for travellers. |
| |
*
Apartment building |
You use
*
your area for the
*
purpose of producing assessable income and: |
| |
|
(a) |
that area is, is part of or contains an apartment, unit or flat that is used or available for use by any entity wholly to provide short-term accommodation for travellers, and you own or lease at least 9 other apartments, units or flats in the building that are used or available for use by any entity wholly to provide short-term accommodation for travellers; or |
| |
|
(b) |
that area is, is part of or contains a facility that is used or available for use by any entity wholly or mainly in association with providing short-term accommodation for travellers in apartments, units or flats in the building that are used in the way described in paragraph (a). |
| |
Other capital works |
You use
*
your area for the purpose of: |
| |
|
(a) |
producing assessable income; or |
| |
|
(b) |
conducting
*
R
&
D activities. |
Note 1:
There are special rules that explain or qualify the uses described in Column 3 of this Table. These rules are set out in Subdivision
43-E
(sections
43-155
to
43-195
). For example:
•
Your area is taken to be used, for use or available for use for a purpose or in a way if it is maintained ready for use for that purpose or in that way. See section
43-160
.
•
R
&
D activities must be conducted in connection with a business carried on for the purpose of producing assessable income, see section
43-195
.
Note 2:
If Division
250
applies to you and an asset that is a capital work:
(a) if section
250-150
applies
-
you are taken not to be using the capital work for the purpose of producing assessable income, or for the purpose of conducting R
&
D activities, to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
you are taken not to be using the capital work for such a purpose.
History
S 43-140(1) amended by No 15 of 2017, s 3 and Sch 4 item 49, by substituting para (a) of note 2, effective 1 April 2017. Para (a) of note 2 formerly read:
(a) if section 250-150 applies
-
you are taken to be using the capital work for the purpose of producing assessable income, or for the purpose of conducting R
&
D activities, to the extent specified in a determination made under subsection 250-150(3); or
S 43-140(1) amended by No 93 of 2011, s 3 and Sch 3 items 34 to 36, by substituting
"
conducting
*
R
&
D activities
"
for
"
carrying on
*
research and development activities
"
(wherever occurring), substituting
"
R
&
D activities must be conducted
"
for
"
Research and development activities must be carried on
"
in note 1 and substituting
"
conducting R
&
D activities
"
for
"
carrying on research and development activities
"
in note 2, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading.
S 43-140(1) amended by
No 164 of 2007
, s 3 and Sch 1 items 57 and 58, by inserting note 2, effective 25 September 2007.
43-140(2)
This Division applies to an entity as if the entity used property for the
*
purpose of producing assessable income if the entity uses the property for:
(a)
*
environmental protection activities; or
(b)
the environmental impact assessment of a project;
unless a provision of this Act expressly provides that that use is not for the purpose of producing assessable income.
History
S 43-140(2) inserted by No 119 of 2002.
SECTION 43-145
Using your area in the 4% manner
43-145(1)
You use a part of
*
your area in the
4% manner
if you use it as described in the following Table. The relevant use depends on the time when the capital works began (Column 1) and the type of capital works (Column 2). Column 3 sets out the use.
TABLE 43-145
-
Use in the 4% manner
|
Column 1
|
Column 2
|
Column 3
|
|
Date capital works begin
|
Type of capital works
|
Use of a part of
*
your area at some time in the income year
|
| Time period 1: After 30/6/97 |
Capital works that are buildings |
You use the part of
*
your area for the
*
purpose of producing assessable income and: |
| |
|
(a) |
that part is used by any entity wholly or mainly to operate a hotel, motel or guest house; and |
| |
|
(b) |
that hotel, motel or guest house has at least 10 bedrooms that are used or available for use wholly to provide short-term accommodation for travellers. |
| |
|
You use the part of
*
your area for the
*
purpose of producing assessable income and: |
| |
|
(a) |
that part is, is part of or contains an apartment, unit or flat that is used or available for use by any entity wholly to provide short-term accommodation for travellers, and you own or lease at least 9 other apartments, units or flats in the building that are used or available for use by any entity wholly to provide short-term accommodation for travellers; or |
| |
|
(b) |
that part is, is part of or contains a facility that is used or available for use by any entity wholly or mainly in association with providing short-term accommodation for travellers in apartments, units or flats in the building that are used in the way described in paragraph (a). |
| |
|
You use the part of
*
your area for the
*
purpose of producing assessable income, and that part is used by any entity: |
| |
|
(a) |
wholly or mainly for
*
industrial activities; or |
| |
|
(b) |
to provide meal rooms, rest rooms, first aid rooms, change rooms or similar facilities that are wholly or mainly for use by: |
| |
|
|
(i) |
workers employed wholly or mainly to undertake the work directly involved in carrying out industrial activities; or |
| |
|
|
(ii) |
the immediate supervisors of those workers; or |
| |
|
(c) |
wholly or mainly as office accommodation for the immediate supervisors of those workers. |
| |
|
You use the part of
*
your area in the
*
4% build to rent manner. |
| Time period 2: 27/2/92 to 30/6/97 (inclusive) |
*
Hotel building |
You use the part of
*
your area for the
*
purpose of producing assessable income and: |
| |
|
(a) |
that part is used by any entity wholly or mainly to operate a hotel, motel or guest house; and |
| |
|
(b) |
that hotel, motel or guest house has at least 10 bedrooms that are used or available for use wholly to provide short-term accommodation for travellers. |
| |
*
Apartment building |
You use the part of
*
your area for the
*
purpose of producing assessable income and: |
| |
|
(a) |
that part is, is part of or contains an apartment, unit or flat that is used or available for use by any entity wholly to provide short-term accommodation for travellers, and you own or lease at least 9 other apartments, units or flats in the building that are used or available for use by any entity wholly to provide short-term accommodation for travellers; or |
| |
|
(b) |
that part is, is part of or contains a facility that is used or available for use by any entity wholly or mainly in association with providing short-term accommodation for travellers in apartments, units or flats in the building that are used in the way described in paragraph (a). |
| |
Other buildings |
You use the part of
*
your area for the
*
purpose of producing assessable income, and that part is used by any entity: |
| |
|
(a) |
wholly or mainly for
*
industrial activities; or |
| |
|
(b) |
to provide meal rooms, rest rooms, first aid rooms, change rooms or similar facilities that are wholly or mainly for use by: |
| |
|
|
(i) |
workers employed wholly or mainly to undertake the work directly involved in carrying out industrial activities; or |
| |
|
|
(ii) |
the immediate supervisors of those workers; or |
| |
|
(c) |
wholly or mainly as office accommodation for the immediate supervisors of those workers. |
Note:
There are special rules that explain or qualify the uses described in Column 3 of this Table. These rules are set out in Subdivision 43-E (sections 43-155 to 43-195). For example:
•
Your area is taken to be used, for use or available for use for a purpose or in a way if it is maintained ready for use for that purpose or in that way. See section
43-160
.
•
A suite of rooms in a hotel building may be treated as one bedroom, see subsection
43-180(2)
.
History
S 43-145 amended by No 138 of 2024, s 3 and Sch 1 items 5 and 6, by inserting
"
(1)
"
before
"
You use a
"
and
"
You use the part of
*
your area in the
*
4% build to rent manner.
"
in table item dealing with Time period 1: After 30/6/97, effective 1 January 2025 and applicable to capital works begun after 7:30 pm, by legal time in the Australian Capital Territory, on 9 May 2023.
43-145(2)
You use a part of
*
your area in the
4% build to rent manner
if:
(a)
you use the part of your area for the
*
purpose of producing assessable income; and
(b)
that part is, or is part of, an
*
active build to rent development area (the
eligible development
); and
(c)
if the
*
build to rent compliance period for each of the
*
dwellings in the eligible development has ended:
(i)
no other entity is using the eligible development, or any part of the eligible development, for the purpose of producing assessable income; and
(ii)
at each earlier time (if any) at which you or another entity used the eligible development, or any part of the eligible development, for the purpose of producing assessable income and at which the eligible development was an
*
active build to rent development, no other entity was using the eligible development, or any part of the eligible development, for the purpose of producing assessable income.
History
S 43-145(2) inserted by No 138 of 2024, s 3 and Sch 1 item 7, effective 1 January 2025 and applicable to capital works begun after 7:30 pm, by legal time in the Australian Capital Territory, on 9 May 2023.
43-145(3)
For the purposes of paragraph
(2)(c)
, disregard use of the eligible development, or any part of the eligible development, for the
*
purpose of producing assessable income by providing management services.
History
S 43-145(3) inserted by No 138 of 2024, s 3 and Sch 1 item 7, effective 1 January 2025 and applicable to capital works begun after 7:30 pm, by legal time in the Australian Capital Territory, on 9 May 2023.
Industrial activities
SECTION 43-150
43-150
Meaning of industrial activities
Industrial activities
means:
(a)
any of the following activities (
core activities
):
(i)
operations where manufactured items are derived from other goods even if those manufactured items are themselves used as parts or materials in the manufacture of other items;
(ii)
operations (other than packing, placing in containers or labelling) by which manufactured items are brought into or maintained in the form or condition in which they are sold or used, even if they are for sale or use as parts or materials in the manufacture of other items;
(iii)
the separation of a metal or a compound of a metal from its ore (not including crushing, grinding, breaking, screening or sizing to facilitate that separation) or the treatment or processing of a metal or a compound of a metal after its separation;
(iv)
for a metal or a compound of a metal not requiring separation
-
applying to the metal or compound a treatment or process which, if the metal or compound had required separation, would not have been applied until after the separation;
(v)
refining
*
petroleum;
(vi)
scouring or carbonising wool;
(vii)
milling timber;
(viii)
freezing primary products;
(ix)
printing, lithographing or engraving, or a similar process, in the course of carrying on a business as a publisher, printer, lithographer or engraver;
(x)
curing meat or fish;
(xi)
producing chilled or frozen meat;
(xii)
pasteurising milk;
(xiii)
canning or bottling foodstuffs;
(xiv)
producing electric current, hydraulic power, steam, compressed air or gases (other than natural gas) for the purpose of sale, or use wholly or mainly in carrying on another activity mentioned in this paragraph; or
(b)
any of the following activities:
(i)
the packing, placing in containers or labelling of any goods resulting from the carrying on of core activities;
(ii)
the disposal of waste substances resulting from the carrying on of core activities;
(iii)
the cleansing or sterilising of bottles, vats or other containers used by the entity to store goods to be used in carrying on core activities or goods resulting from the carrying on of core activities;
(iv)
the assembly, maintenance, cleansing, sterilising or repair of property used in carrying on core activities;
(v)
the storage, within premises in which core activities are carried on, or premises contiguous to those premises, of goods in carrying on core activities, goods in relation to which core activities have commenced but not finally been completed or goods resulting from core activities;
but does not include the preparation of food or drink (whether for consumption on the premises where it is prepared or elsewhere) in, or in premises occupied in connection with, a hotel, motel, boarding house, catering establishment, restaurant, cafe, milk-bar, coffee shop, retail shop or similar establishment.
History
S 43-150 amended by
No 4 of 2007
, s 3 and Sch 2 item 26, by substituting
"
*
petroleum
"
for
"
petroleum
"
in para (a)(v), effective 19 February 2006.
Build to rent developments
SECTION 43-151
Meaning of active build to rent development area
43-151(1)
An
active build to rent development area
is a part of a building comprising any of the following:
(a)
the
*
dwellings of an
*
active build to rent development;
(b)
any
*
common areas for those dwellings.
43-151(2)
An
active build to rent development
is a
*
build to rent development that has:
(a)
*
commenced to be an active build to rent development (see subsections
43-152(1)
and
(2)
); and
(b)
not
*
ceased to be an active build to rent development (see subsection
43-152(4)
).
43-151(3)
A
common area
for
*
dwellings of a
*
build to rent development is an area, facility or amenity:
(a)
intended for use for the purposes of those dwellings; or
(b)
intended for use for the purposes of those dwellings and any other dwellings in the same building.
History
S 43-151 inserted by No 138 of 2024, s 3 and Sch 1 item 9, effective 1 January 2025.
SECTION 43-152
Build to rent developments
Commencement
43-152(1)
On and after the first day on which a building has 50 or more
*
dwellings:
(a)
that satisfy subsection
43-153(1)
; and
(b)
that the owner of the dwellings chooses to form a
*
build to rent development in accordance with subsection
(6)
of this section;
those dwellings are a
build to rent development
, of the building, that
commences
to be an
*
active build to rent development on that day.
43-152(2)
Also, on and after the first day (if any):
(a)
after the most recent instance of a
*
build to rent development of a building
*
commencing to be an
*
active build to rent development; and
(b)
on which the building has 50 or more
*
dwellings:
(i)
that satisfy subsection
43-153(1)
; and
(ii)
that were not part of a build to rent development just before that day; and
(iii)
that the owner of the dwellings chooses to form a build to rent development in accordance with subsection
(6)
of this section;
those dwellings are a
build to rent development
, of the building, that
commences
to be an active build to rent development on that day unless an active build to rent development
*
expands under subsection
(3)
on that day to include the dwellings.
Expansion
43-152(3)
If a building has a
*
build to rent development (the
existing development
) that has
*
commenced to be an
*
active build to rent development, on the first day (if any) on which the building has
*
dwellings (the
new dwellings
):
(a)
that taken together with the dwellings of the existing development for which the
*
build to rent compliance period has not ended, satisfy subsection
43-153(1)
; and
(b)
that are not already a part of a build to rent development; and
(c)
that the owner of the dwellings chooses to form part of the existing development in accordance with subsection
(6)
of this section;
the existing development
expands
to comprise:
(d)
the dwellings of the existing development; and
(e)
the new dwellings.
Cessation
43-152(4)
A
*
build to rent development
ceases
to be an
*
active build to rent development if the dwellings of the active build to rent development for which the
*
build to rent compliance period has not ended cease to satisfy subsection
43-153(1)
.
Build to rent compliance period
43-152(5)
The
build to rent compliance period
for a
*
dwelling of an
*
active build to rent development is the 15 years beginning on the day after the day on which:
(a)
unless paragraph
(b)
applies
-
the development
*
commences to be an active build to rent development; or
(b)
if:
(i)
the dwelling is not part of the development when it commences to be an active build to rent development; but
(ii)
the development
*
expands to include the dwelling;
the development expands to include the dwelling.
43-152(6)
To make a choice for the purposes of paragraph
(1)(b)
, subparagraph
(2)(b)(iii)
or paragraph
(3)(c)
in respect of
*
dwellings, the owner of the dwellings must:
(a)
make the choice in the
*
approved form; and
(b)
give it to the Commissioner.
43-152(7)
The choice is taken to be made on the following day:
(a)
if:
(i)
the owner nominates a day in the choice; and
(ii)
the Commissioner receives the choice before the nominated day;
the nominated day; or
(b)
otherwise
-
the day the Commissioner receives the choice.
History
S 43-152 inserted by No 138 of 2024, s 3 and Sch 1 item 9, effective 1 January 2025.
SECTION 43-153
Build to rent developments
-
eligibility
43-153(1)
For the purposes of section
43-152
,
*
dwellings of a building satisfy this subsection at a particular time if, at that time:
(a)
each of the dwellings is:
(i)
available to the public to be tenanted by way of lease for a period of 5 years or more in accordance with any requirements determined under subsection
(1A)
; or
(ii)
being tenanted by way of lease as a result of being made available to the public to be tenanted by way of lease for a period of 5 years or more in accordance with any requirements determined under subsection
(1A)
; and
(b)
all of the dwellings are:
(i)
*
residential premises; and
(ii)
*
taxable Australian real property; and
(iii)
not
*
commercial residential premises; and
(c)
all of the dwellings and
*
common areas for the dwellings are owned by a single entity; and
(d)
the number of the dwellings that are
*
affordable dwellings is equal to or greater than:
(i)
10% of the number of the dwellings; or
(ii)
if the number of dwellings worked out under subparagraph
(i)
is not a whole number
-
that number rounded down to the nearest whole number of dwellings; and
(e)
subsection
(5)
applies to each of the affordable dwellings.
Note:
For the purposes of paragraph
(a)
, a lease is still offered to the public for a period of 5 years or more even if a prospective tenant subsequently requests and the lessor accepts a shorter lease.
43-153(1A)
For the purposes of subparagraphs
(1)(a)(i)
and
(ii)
, the Minister may, by legislative instrument, determine requirements relating to the terms of the lease.
43-153(1B)
For the purposes of subparagraphs
(1)(a)(i)
and
(ii)
, disregard a requirement determined under subsection (1A) if complying with that requirement would contravene a law of a State or Territory.
Affordable dwellings
43-153(2)
A
*
dwelling is an
affordable dwelling
if the requirements determined under subsection
(3)
in relation to the dwelling are met.
43-153(3)
For the purposes of subsection
(2)
, the Minister must, by legislative instrument, determine requirements relating to a dwelling. Without limiting this subsection, the requirements may include requirements relating to:
(a)
the rent payable under the lease for the dwelling; or
(b)
the income of the tenant or prospective tenant.
43-153(4)
A reference in paragraph
(1)(a)
to the public in relation to a lease of a
*
dwelling is taken to be a reference to a segment of the public if:
(a)
the dwelling is an
*
affordable dwelling; and
(b)
requirements determined under subsection
(3)
require that the dwelling be tenanted, or be available to be tenanted, only to that segment of the public.
43-153(5)
For the purposes of paragraph
(1)(e)
, this subsection applies in relation to an affordable dwelling (the
test dwelling
) if:
Number of comparable
non-affordable dwellings |
≥ |
Number of comparable
affordable dwellings |
where:
number of comparable affordable dwellings
means the number of the dwellings (including the test dwelling) that:
(a)
are
*
affordable dwellings; and
(b)
have the same number of bedrooms as thetest dwelling; and
(c)
have a floor area that is at least equal to the floor area of the test dwelling, but does not exceed 110% of that floor area.
number of comparable non-affordable dwellings
means the number of the dwellings that:
(a)
are not
*
affordable dwellings; and
(b)
have the same number of bedrooms as the test dwelling; and
(c)
have a floor area that is at least equal to the floor area of the test dwelling, but does not exceed 110% of that floor area.
Eligibility during construction
43-153(6)
Dwellings of a building are taken to satisfy subsection
(1)
at a particular time if:
(a)
one or more of the dwellings is not tenanted, and not available to be tenanted, at that time as mentioned in paragraph
(1)(a)
because of:
(i)
construction of an extension, alteration or improvement to any of the dwellings or the building; or
(ii)
the making of repairs to any of the dwellings or the building; and
(b)
the dwellings satisfied subsection
(1)
just before paragraph
(a)
of this subsection began to apply; and
(c)
it is reasonable to expect that the dwellings will satisfy subsection
(1)
when the construction or repairs are completed.
Commissioner
'
s discretion
43-153(7)
The Commissioner may determine that
*
dwellings of a building are taken to satisfy one or more of paragraphs
(1)(a)
,
(d)
and
(e)
(the
eligibility criteria
) at all times during a particular period, if:
(a)
the entity that owns the dwellings applies to the Commissioner in the
*
approved form; and
(b)
the Commissioner is satisfied of the following:
(i)
the dwellings did not otherwise satisfy the eligibility criteria at all times during the period due to events outside the control of the entity;
(ii)
the entity took all reasonable steps to ensure that the dwellings would satisfy the eligibility criteria as soon as practicable;
(iii)
at the time of the determination, the dwellings satisfy the eligibility criteria;
(iv)
at the time of the determination, the entity intends that each dwelling will satisfy subsection
(1)
for the remainder of its
*
build to rent compliance period.
43-153(8)
A determination made under subsection
(7)
has effect according to its terms.
History
S 43-153 inserted by No 138 of 2024, s 3 and Sch 1 item 9, effective 1 January 2025.
SECTION 43-154
Notice of events
43-154(1)
If any of the following events happen in relation to a
*
build to rent development, each entity to which subsection
(3)
applies must notify the Commissioner of the event:
(a)
the development
*
commences to be an
*
active build to rent development;
(b)
the development
*
expands;
(c)
the
*
ownership interest in the development is acquired by another entity;
(d)
the development
*
ceases to be an active build to rent development.
43-154(2)
The notice must be:
(a)
in the
*
approved form; and
(b)
given no later than 28 days after the event.
43-154(3)
This subsection applies to the following entities:
(a)
the owner of the development at the time just before the event happens;
(b)
if in the income year in which the event happens, an entity is required to notify the Commissioner under subsection
16-150(4)
in Schedule
1
to the
Taxation Administration Act 1953
of an amount to which subsection
12-450(5)
in that Schedule applies, to any extent, because of a
*
dwelling of the development
-
the entity;
(c)
if the event is the event mentioned in paragraph
(1)(c)
of this section
-
the entity that acquires the
*
ownership interest in the development.
History
S 43-154 inserted by No 138 of 2024, s 3 and Sch 1 item 9, effective 1 January 2025.
SECTION 43-154A
43-154A
References to buildings
A reference in sections
43-151
to
43-153
to a building includes a reference to any other buildings that are on the same or adjacent land.
History
S 43-154A inserted by No 138 of 2024, s 3 and Sch 1 item 9, effective 1 January 2025.
Subdivision 43-E
-
Special rules about uses
SECTION 43-155
What this Subdivision is about
This Subdivision contains special rules about uses of capital works. It is relevant to whether you can get a deduction for capital works and also to the rate of that deduction. The rules in this Subdivision affect the uses of capital works described in Tables 43-90, 43-140 and 43-145.
Operative provisions
SECTION 43-160
43-160
Your area is used for a purpose if it is maintained ready for use for the purpose
A part of
*
your area is taken to be used, for use or available for use for a particular purpose or in a particular manner at a time if, at that time:
(a)
it was maintained ready for use for that purpose or in that manner; and
(b)
it was not used or for use for any other purpose or in any other manner; and
(c)
its use or intended use for that purpose or in that manner had not been abandoned.
Note 1:
Construction must be complete before you can deduct an amount, see section
43-30
.
Note 2:
This section affects Tables
43-140
and
43-145
.
SECTION 43-165
43-165
Temporary cessation of use
A part of
*
your area is taken to be used, for use or available for use for a particular purpose or in a particular manner if its use for that purpose or in that manner temporarily ceases because of:
(a)
the construction of an extension, alteration or improvement, or the making of repairs; or
(b)
seasonal or climatic factors.
Note:
This section affects Tables
43-140
and
43-145
.
SECTION 43-170
Own use
-
capital works other than hotel and apartment buildings
43-170(1)
A part of capital works, other than a
*
hotel building or an
*
apartment building, is taken not to be used for the
*
purpose of producing assessable income if that part is for use mainly for, or in association with, residential accommodation by you or an
*
associate.
Note:
This subsection affects Tables 43-140 and
43-145
.
43-170(2)
Subsection (1) does not apply to use by an
*
associate under an
*
arrangement:
(a)
to which you and the associate are parties; and
(b)
that is of a kind that the parties could reasonably be expected to have entered into if they had been dealing with each other at
*
arm's length; and
(c)
that was not entered into for the purpose of obtaining a deduction under this Division.
History
S 43-170(2) amended by No 88 of 2013, s 3 and Sch 7 item 236, by substituting
"
*
arm's length
"
for
"
arm's length
"
in para (b), effective 28 June 2013.
43-170(3)
If property that constitutes the whole or part of capital works, other than a
*
hotel building or an
*
apartment building, is part of an individual's home, the property is taken to be used, or for use, wholly or mainly for or in association with residential accommodation.
Note:
This subsection affects Tables 43-90 and
43-140
.
SECTION 43-175
Own use
-
hotel and apartment buildings
43-175(1)
An entity is taken not to have used a bedroom in a
*
hotel building, or an apartment, unit or flat in an
*
apartment building, for the
*
purpose of producing assessable income at a time if, at that time, the bedroom, apartment, unit or flat is used, or reserved for use, by:
(a)
the entity; or
(b)
if the entity is a partnership
-
any of the partners in the partnership.
Note:
This subsection affects Tables
43-140
and
43-145
.
43-175(2)
Also, an entity is taken not to use a bedroom in a
*
hotel building, or an apartment, unit or flat in an
*
apartment building for any purpose at a time if:
(a)
at that time, a
*
right to use or a right to occupy the bedroom, apartment, unit or flat was vested in the entity; and
(b)
that right was vested in the entity because the entity was, at that time, a member of a company, a beneficiary of a trust estate or a partner in a partnership.
Note:
This subsection affects Tables
43-90
,
43-140
and
43-145
.
History
S 43-175(2) amended by
No 79 of 2010
, s 3 and Sch 3 item 18, by substituting
"
*
right to use or a right to occupy
"
for
"
right to use or occupy
"
in para (a), effective 1 July 2010.
SECTION 43-180
Special rules for hotel and apartment buildings
Rules about counting rooms or apartments etc.
43-180(1)
A bedroom in a
*
hotel building, or an apartment, unit or flat in an
*
apartment building, is taken to be used or available for use wholly for short-term accommodation for travellers in a period if it is used or available for use mainly for short-term accommodation for travellers in that period.
Note:
This subsection ensures that a limited period of non-short-term traveller accommodation use will be disregarded in counting the number of rooms provided the bedroom, apartment, unit or flat is used mainly for short-term traveller accommodation.
43-180(2)
For the purpose of counting the number of bedrooms in a
*
hotel building, if 2 or more rooms that are bedrooms or include a bedroom are for use together as a suite of rooms, the suite is taken to constitute one bedroom.
43-180(3)
Despite subsection
43-50(3)
(which treats you as not being the owner of certain capital works), you can still count an apartment, unit or flat in relation to which CGT event F2 has happened in working out whether you own or lease at least 10 apartments, units or flats in an
*
apartment building if you own or lease at least one other apartment, unit or flat in the building.
Note 1:
CGT event F2 results in a lease with a term of 50 years or more being treated for CGT purposes more like an outright disposal.
Note 2:
Subsection 43-50(3) treats you as not being the owner of capital works that are the subject of such a lease.
History
S 43-180(3) amended by No 46 of 1998.
Rules about hotel or apartment complexes
43-180(4)
A group of buildings that constitutes a complex of buildings is taken to be one
*
hotel building or
*
apartment building, and none of the buildings in the group is taken to be a separate building.
43-180(5)
The construction of a
*
hotel building or
*
apartment building is taken to be an extension of another building if, after completion of the construction, those buildings are taken to be one building under subsection (4).
Note:
Subsections (4) and (5) ensure that a hotel or apartment building that provides short-term traveller accommodation in detached buildings will be treated as a single building so that the 10 hotel room/apartment test is applied to the complex as a whole. It also has the effect that the complex as a whole must be completed before there can be a construction expenditure area.
Rules about facilities not commonly provided in Australia
43-180(6)
If a
*
hotel building contains a facility of a kind that is not commonly provided in a hotel, motel or guest house in Australia, the facility is taken not to be used or for use to operate a hotel, motel or guest house.
43-180(7)
If an
*
apartment building contains a facility of a kind that is not commonly provided in a hotel, motel or guest house in Australia, the facility is taken not to be a facility for use in association with providing short-term accommodation for travellers in apartments, units or flats.
Note:
Subsections (6) and (7) exclude areas such as casinos from the construction expenditure area of a hotel building or apartment building.
SECTION 43-185
Residential or display use
43-185(1)
A building, other than a
*
hotel building or an
*
apartment building, or an extension, alteration or improvement to such a building, begun after 19 July 1982 and before 18 July 1985 is taken not to be used for the
*
purpose of producing assessable income or exempt income if it is used or for use wholly or mainly for exhibition or display in connection with:
(a)
the sale of all or part of any building; or
(b)
the lease of all or part of any building for use wholly or mainly for or in association with residential accommodation.
Note:
Subsection (1) affects time period 2 in Table
43-90
and time period 3 in Table
43-140
.
43-185(2)
A building, other than a
*
hotel building or an
*
apartment building, begun after 19 July 1982 and before 18 July 1985 is taken not to be used for the
*
purpose of producing assessable income if it is used or available for use wholly or mainly for or in association with residential accommodation.
Note:
Subsection (2) affects time period 2 in Table
43-90
and time period 3 in Table
43-140
.
43-185(3)
A building, other than a
*
hotel building or an
*
apartment building, begun after 17 July 1985 and before 1 July 1997 is taken not to be used for the
*
purpose of producing assessable income if it is used or for use wholly or mainly for exhibition or display in connection with the sale of all or part of any building.
Note:
Subsection (3) affects time periods 2 and 3 in Table
43-140
.
SECTION 43-190
Use of facilities not commonly provided, and of certain buildings used to operate a hotel, motel or guest house
43-190(1)
A facility in a
*
hotel building or an
*
apartment building that is not commonly provided in a hotel, motel or guest house in Australia is taken not to be used, or for use, for or in association with residential accommodation if the facility is part of a building begun after 19 July 1982 and before 18 July 1985.
Note:
This subsection means that, for time period 2 in Table 43-90, a facility referred to in subsection
43-180(6)
or (7) (dealing with facilities not commonly provided in Australia) is taken to be a non-residential building if it satisfies the use test in Column 3 of that table for a building of that kind, and is therefore eligible for deduction even though it would ordinarily be taken to be used for residential accommodation.
43-190(2)
A building, other than a
*
hotel building or an
*
apartment building, begun after 19 July 1982 and before 18 July 1985 that is used, or for use, wholly or mainly for the purpose of operating a hotel, motel or guest house is taken to be used or for use wholly or mainly for, or in association with, residential accommodation.
Note:
This subsection ensures that hotels, motels and guest houses begun in the specified time period that do not satisfy the tests for hotel and apartment buildings (for example, because they had fewer than 10 bedrooms or apartments) do not qualify for a deduction under this Division.
SECTION 43-195
43-195
Use for R
&
D activities must be in connection with a business
You are taken not to use capital works for
*
R
&
D activities unless you do so in connection with a business that you carry on for the
*
purpose of producing assessable income.
Note:
This section affects Tables 43-90 and
43-140
.
History
S 43-195 amended by No 93 of 2011, s 3 and Sch 3 item 38, by substituting
"
*
R
&
D activities
"
for
"
*
research and development activites
"
, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading.
Subdivision 43-F
-
Calculation of deduction
SECTION 43-200
What this Subdivision is about
This Subdivision shows you how to calculate the amount of a deduction under section
43-10
. The calculations must be made separately for each area that is identified as your area.
There are 2 separate calculation provisions: One for capital works begun before 27 February 1992; and the other for capital works begun after 26 February 1992.
SECTION 43-205
Explanatory material
Capital works begun before 27 February 1992
The calculation for these works is based on
*
your construction expenditure and the applicable rate of deduction. There can be only one rate of deduction that applies to
*
your area. However, reductions of deductions may apply.
You must reduce your deduction for any period in the income year that you did not own
*
your area and use it in the way described in Table 43-140 (Current year use). Because there are 2 use tests in Table 43-140 for
*
hotel buildings and
*
apartment buildings (a general income producing test and a more specific hotel and short-term traveller accommodation use test), there are 2 reduction steps.
The first step reduces your deduction if part of
*
your area was not used as a
*
hotel building or
*
apartment building. The second step reduces the deduction to the extent that your area is used only partly for the
*
purpose of producing assessable income. This occurs, for example, if you
*
derive both assessable and exempt income, or if part of your area is not used to produce assessable income for all or part of the period it was used as a hotel building or apartment building.
Capital works begun after 26 February 1992
The calculation for these works is based on a portion of
*
your construction expenditure and the applicable rate of deduction. There can be 2 rates of deduction for your area depending on the way you use it.
If 2 rates apply, there will be a separate calculation for the part of
*
your area used in the way described in Table 43-140 and for the part of
*
your area used in the way described in Table 43-145 (Use in the 4% manner). A gross deduction and subsequent reduction is calculated for each.
The reduction is the same as the second reduction for capital works begun before 27 February 1992.
Operative provisions
SECTION 43-210
Deduction for capital works begun after 26 February 1992
Step 1
Calculate the amount worked out using the formula:
Portion of your CE
×
Days used
×
0.04
365 |
where:
portion of your CE
is the portion of
*
your construction expenditure that is attributable to the part of
*
your area that you used in the
*
4% manner.
days used
is the number of days in the income year that:
(a) you owned or were the lessee of that part of
*
your area and used it in the
*
4% manner; or
(b) you were the holder of that part of
*
your area under a
*
quasi-ownership right over land granted by an
*
exempt Australian government agency or an
*
exempt foreign government agency, and used that part of your area in the 4% manner.
Step 2
Reduce the Step 1 amount by the extent to which the part referred to in Step 1 was used only partly for the
*
purpose of producing assessable income.
Note:
This Step applies if:
•
part of your income from the part referred to in Step 1 is exempt income; or
•
part of the part referred to in Step 1 was not used for the purpose of producing assessable income or was not available for that use; or
•
the part of the part referred to in Step 1 was not used for such a purpose during a part of the days used period.
Step 3
Calculate the amount worked out using the formula:
| |
Portion of your CE
×
Days used
×
0.025
365 |
|
where:
portion of your CE
is the portion of
*
your construction expenditure that is attributable to the part of
*
your area that you did not use in the
*
4% manner but was used as described in Table 43-140 (Current year use).
days used
is the number of days in the income year that:
(a) you owned or were the lessee of that part of
*
your area and used it in that manner; or
(b) you were the holder of that part of
*
your area under a
*
quasi-ownership right over land granted by an
*
exempt Australian government agency or an
*
exempt foreign government agency, and used that part of your area in that manner.
Step 4
Reduce the Step 3 amount by the extent to which the part referred to in Step 3:
(a) for a
*
hotel building or
*
apartment building
-
was used only partly for the
*
purpose of producing assessable income; or
(b) for any other capital works
-
was used only partly for the purpose of
*
producing assessable income or conducting
*
R
&
D activities.
Note:
This Step applies if:
•
part of your income from the part referred to in Step 3 is exempt income; or
•
part of the part referred to in Step 3 was not used for the purpose of producing assessable income (or R
&
D activities) or was not available for that use; or
•
the part of the part referred to in Step 3 was not used for such a purpose during a part of the days used period.
Step 5
Add the Step 2 and Step 4 amounts.
Step 6
The amount of your deduction is the lesser of your Step 5 amount or the
*
undeducted construction expenditure for
*
your area.
History
S 43-210 amended by No 93 of 2011, s 3 and Sch 3 items 39 and 40, by substituting
"
conducting
*
R
&
D activities
"
for
"
carrying on
*
research and development activities
"
in step 4 and substituting
"
R
&
D activities
"
for
"
research and development activities
"
in the note to step 4, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading.
S 43-210 amended by
No 14 of 2009
, s 3 and Sch 4 item 22, by substituting
"
deduction
"
for
"
allowable deduction
"
in step 6, effective 26 March 2009.
SECTION 43-215
Deduction for capital works begun before 27 February 1992
Step 1
Calculate the amount worked out using the formula:
| |
Your CE
×
Days used
×
Applicable rate
365 |
|
where:
your CE
is
*
your construction expenditure.
days used
is the number of days in the income year that you owned or were the lessee of
*
your area and used it in the way that applies to the capital works under Table 43-140 (Current year use).
applicable rate
is:
(a) 0.04 if the capital works began after 21 August 1984 and before 16 September 1987; or
(b) 0.025 in any other case.
Note:
For the purpose of working out the applicable rate, capital works begun after 15 September 1987 are taken to have begun before 16 September 1987 in certain circumstances. See section
43-220
.
Step 2
This step applies only to
*
hotel buildings and
*
apartment buildings. Reduce the Step 1 amount by the extent to which:
(a) for a hotel building
-
any part of
*
your area was not used wholly or mainly to operate a hotel, motel or guest house; or
(b) for an apartment building
-
any part of
*
your area was not used wholly for or in association with providing short-term accommodation for travellers.
Step 3
Reduce the Step 1 or 2 amount by the extent to which:
(a) for a
*
hotel building or
*
apartment building
-
*
your area was used only partly for the
*
purpose of producing assessable income; or
(b) for any other capital works
-
*
your area was used only partly for the
*
purpose of producing assessable income or conducting
*
R
&
D activities.
Note:
This Step applies if:
•
part of your income from the capital works is exempt income; or
•
part of the capital works were not used for the purpose of producing assessable income or were not available for that use; or
•
the capital works were not used for such a purpose during a part of the days used period.
Step 4
The amount of your deduction is the lesser of your Step 3 amount or the
*
undeducted construction expenditure for
*
your area.
History
S 43-215 amended by No 93 of 2011, s 3 and Sch 3 item 41, by substituting
"
conducting
*
R
&
D activities
"
for
"
carrying on
*
research and development activities
"
in step 3, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading.
S 43-215 amended by
No 14 of 2009
, s 3 and Sch 4 item 23, by substituting
"
deduction
"
for
"
allowable deduction
"
in step 4, effective 26 March 2009.
SECTION 43-220
Capital works taken to have begun earlier for certain purposes
43-220(1)
A building, other than a
*
hotel building or an
*
apartment building, or an extension, alteration or improvement to such a building, begun after 15 September 1987 is taken to have begun before 16 September 1987 if:
(a)
the construction was under a contract that was entered into before 16 September 1987, or was under 2 or more contracts any of which was entered into before that date; or
(b)
money was borrowed for a purpose that included the purpose of financing the construction under a contract or contracts entered into before 16 September 1987 by an entity that was, or by entities each of which was, a
*
qualifying investor, and that money was used to finance the construction.
43-220(2)
An entity is a
qualifying investor
for the construction of a building if:
(a)
at the end of 15 September 1987, the entity was the owner or lessee of the land on which the building was constructed; or
(b)
the entity became the owner or lessee of the land under a contract entered into before 16 September 1987.
43-220(3)
An entity is a
qualifying investor
for the construction of an extension, alteration or improvement to a building if:
(a)
at the end of 15 September 1987, the entity was the owner or lessee of the building, or the part of the building to which the extension, alteration or improvement was made; or
(b)
the entity became the owner or lessee of the building or that part under a contract entered into before 16 September 1987.
Subdivision 43-G
-
Undeducted construction expenditure
SECTION 43-225
What this Subdivision is about
The undeducted construction expenditure for your area is the part of your construction expenditure you have left to write off. It is used to work out:
•
the number of years in which you can deduct amounts for your construction expenditure; and
•
the amount that you can deduct under section
43-40
if your area or a part is destroyed.
Operative provisions
SECTION 43-230
Calculating undeducted construction expenditure
-
common step
43-230(1)
Identify the date when the capital works began.
Note 1:
The date determines whether your calculation is to be made under section 43-235 (for post-26/2/92 expenditure) or 43-240 (for pre-27/2/92 expenditure).
Note 2:
Section 43-80 explains when capital works begin.
43-230(2)
If you are calculating a deduction under Subdivision
43-F
, identify the period (
use period
) that:
(a)
started when
*
your area, or a part of it, was first used by any entity for any purpose after completion of the relevant construction; and
(b)
ended at the end of the preceding income year or, if you acquired your area during the income year, at the end of the day before the time of the acquisition.
43-230(3)
If you are calculating a deduction under Subdivision
43-H
, identify the period (
use period
) that started at the time described in paragraph (2)(a) and ended at the time of the destruction.
SECTION 43-235
Post-26 February 1992 undeducted construction expenditure
Step 1
Calculate for each day in the use period the amount worked out using the formula:
| |
Portion of your CE
×
0.04
365 |
|
where:
portion of your CE
is the portion of
*
your construction expenditure that is attributable to the part of
*
your area that you used in the
*
4% manner.
Step 2
Calculate for each day in the use period the amount worked out using the formula:
| |
Portion of your CE
×
0.025
365 |
|
where:
portion of your CE
is the portion of
*
your construction expenditure that is attributable to the part of
*
your area that you did not use in the
*
4% manner.
Step 3
Add the aggregate of the amounts calculated under Steps 1 and 2.
Step 4
Deduct the sum of those amounts from
*
your construction expenditure. The result is the
undeducted construction expenditure
for
*
your area.
SECTION 43-237
Post-26 February 1992 undeducted construction expenditure
-
modification for active build to rent developments that have ceased
43-237(1)
This section applies if:
(a)
a part of
*
your area was an
*
active build to rent development area; and
(b)
on a day (the
cessation day
) in the income year or a prior income year, the
*
active build to rent development of the active build to rent development area
*
ceases to be an active build to rent development.
43-237(2)
Section
43-235
applies to the part as if for each day in the use period:
(a)
before the cessation day; and
(b)
that the part was an
*
active build to rent development;
you did not use the part in the
*
4% manner.
History
S 43-237 inserted by No 138 of 2024, s 3 and Sch 1 item 10, effective 1 January 2025.
SECTION 43-240
Pre-27 February 1992 undeducted construction expenditure
Step 1
Calculate for each day in the use period the amount worked out using the formula:
| |
Your CE
×
Applicable rate
365 |
|
where:
your CE
is
*
your construction expenditure.
applicable rate
is:
(a) 0.04 if the capital works began after 21 August 1984 and before 16 September 1987; or
(b) 0.025 in any other case.
Note:
For the purpose of working out the applicable rate, capital works begun after 15 September 1987 are taken to have begun before 16 September 1987 in certain circumstances. See section
43-220
.
Step 2
Deduct the sum of the amounts calculated under Step 1 from
*
your construction expenditure. The result is the
undeducted construction expenditure
for
*
your area.
Subdivision 43-H
-
Balancing deduction on destruction of capital works
SECTION 43-245
What this Subdivision is about
You may deduct an amount for the undeducted construction expenditure for your area if your area or part of it is destroyed in the circumstances described in section
43-40
.
This Subdivision shows you how to work out that deduction.
The calculations in this Subdivision are made separately for each part of the capital works that is identified as your area.
Operative provisions
SECTION 43-250
The amount of the balancing deduction
Method statement
Step 1.
Calculate the amount (if any) by which the
*
undeducted construction expenditure for the part of
*
your area that was destroyed exceeds the amounts you have received or have a right to receive for the destruction of that part.
Step 2.
Reduce the amount at Step 1 if one or more of these happened to that part of
*
your area:
(a) Step 2 or 4 in section
43-210
, or Step 2 or 3 in section
43-215
, applied to you or another person for it;
(b) you were, or another person was, not allowed a deduction for it under this Division;
(c) a deduction for it was not allowed or was reduced (for you or another person) under former Division
10C
or
10D
of Part III of the
Income Tax Assessment Act 1936
.
The reduction under this step must be reasonable.
History
S 43-250 amended by
No 101 of 2006
, s 3 and Sch 2 item 675, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the
CCH Australian Income Tax Legislation archive
.
S 43-250 substituted by No 16 of 1998.
SECTION 43-255
43-255
Amounts received or receivable
The amounts you have received or have a right to receive for the destruction of that part of
*
your area include:
(a)
an amount received under an insurance policy or otherwise for the destruction of that part; and
(b)
an amount received for disposing of property that was included in that part of your area, less any demolition expenditure incurred on the property.
SECTION 43-260
43-260
Apportioning amounts received for destruction
If an amount received or receivable in respect of the destruction of property relates to both the part of
*
your area for which you are claiming the balancing deduction and to property:
(a)
the cost of which did not form part of
*
your construction expenditure; or
(b)
that is capital works that was not part of your area;
you must apportion the amount received or receivable to the amount that is attributable to the part of your area that was destroyed. The apportionment must be reasonable.
Division 44
-
Build to rent development misuse tax
History
Div 44 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Former Div 44 repealed by No 77 of 2001, inserted by No 164 of 1999.
SECTION 44-1
What this Division is about
This Division removes certain tax concessions for build to rent developments when they cease to be active build to rent developments.
History
S 44-1 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Former s 44-1 repealed by No 77 of 2001, inserted by No 164 of 1999.
Subdivision 44-A
-
Object of this Division
History
Subdiv 44-A inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Operative provisions
SECTION 44-5
44-5
Object of this Division
The object of this Division is to remove certain tax concessions for
*
build to rent developments when they
*
cease to be
*
active build to rent developments.
History
S 44-5 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Former s 44-5 repealed by No 77 of 2001, inserted by No 164 of 1999.
Subdivision 44-B
-
Build to rent development misuse tax
History
Subdiv 44-B inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
SECTION 44-10
What this Subdivision is about
You are liable to pay a tax if a build to rent development you own ceases to be an active build to rent development. The tax is on an amount (called a build to rent misuse amount) related to past capital works deductions and withholding amounts (if any) for the active build to rent development.
History
S 44-10 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Former s 44-10 repealed by No 77 of 2001, inserted by No 164 of 1999.
Liability for tax
SECTION 44-15
44-15
Liability for tax
You are liable to pay
*
build to rent development misuse tax for an income year if you have a
*
build to rent misuse amount for the income year.
Note:
The amount of tax is set out in the
Capital Works (Build to Rent Misuse Tax) Act 2024
.
History
S 44-15 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Former s 44-15 repealed by No 77 of 2001, inserted by No 164 of 1999.
Build to rent misuse amounts
SECTION 44-20
Build to rent misuse amounts
44-20(1)
You have a
build to rent misuse amount
for an income year, equal to the amount worked under subsection
(2)
, if the amount worked out under that subsection is greater than nil.
44-20(2)
For the purposes of subsection
(1)
, the amount is the sum of:
(a)
the amount that is the sum of your
*
build to rent capital works deduction amounts, worked out under section
44-25
, for each
*
build to rent development to which subsection
(3)
of this section applies for the income year (if any); and
(b)
the amount that is 10 times the sum of your
*
build to rent withholding amounts, worked out under section
44-30
, for each build to rent development to which subsection
(3)
of this section applies for the income year (if any).
44-20(3)
For the purposes of paragraphs
(2)(a)
and
(b)
, this subsection applies to a
*
build to rent development for an income year if:
(a)
the build to rent development
*
ceases to be an
*
active build to rent development during the income year; and
(b)
you owned the
*
dwellings of the build to rent development immediately before that cessation.
History
S 44-20 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Former s 44-20 repealed by No 77 of 2001, inserted by No 164 of 1999.
SECTION 44-25
44-25
Your build to rent capital works deduction amount
Your
build to rent capital works deduction amount
, for a
*
build to rent development that
*
ceases to be an
*
active build to rent development, is the amount worked out as follows:
Method statement
Step 1.
Identify each income year in which, at any time during the year, the
*
build to rent development was an
*
active build to rent development.
Step 2.
For each of those years:
(a) identify each
*
construction expenditure area of capital works that are or include the
*
active build to rent development area of the
*
build to rent development at any time during the year; and
(b) calculate the amount worked out by the following formula for each construction expenditure area:
|
Portion of construction expenditure
×
Days used
|
| 365 |
where:
active build to rent part
, of the
*
construction expenditure area, is the part of the area that was the
*
active build to rent development area, or part of the active build to rent development area at any time during the year.
days used
is the number of days in the income year that:
(a) any entity owned or was the lessee of the
*
active build to rent part and used it in the
*
4% build to rent manner; or
(b) any entity was the holder of the active build to rent part under a
*
quasi ownership right over land granted by an
*
exempt Australian government agency or an
*
exempt foreign government agency, and used it in the 4% build to rent manner.
portion of construction expenditure
is the portion of
*
construction expenditure that is attributable to the
*
active build to rent part.
Step 3.
Reduce the Step 2 amount for each
*
construction expenditure area, for each year, by the extent to which the
*
active build to rent part was used only partly for the
*
purpose of producing assessable income in the year.
Note:
This step applies if:
(a) part of the income from the active build to rent part is exempt income; or
(b) part of the active build to rent part was not used for the purpose of producing assessable income or was not available for that use; or
(c) the active build to rent part was not used for such a purpose during a part of the days used period.
Step 4.
For each year, add up the amounts worked out under Step 3 for each
*
construction expenditure area.
Step 5.
Add up the Step 4 amounts for each year.
Step 6.
Multiply the Step 5 amount by:
(a) if
*
you are a company (other than a company in the capacity of a trustee)
-
the
*
corporate tax rate for the income year in which the
*
build to rent development
*
ceases to be an
*
active build to rent development (the
cessation year
); or
(b) in any other case
-
the maximum rate specified in the table in Part
I
of Schedule
7
to the
Income Tax Rates Act 1986
for the cessation year.
Step 7.
Your
build to rent capital works deduction amount
is the Step 6 amount multiplied by 1.08.
Note:
You can have more than one build to rent capital works deduction amount because there can be more than one build to rent development for which you have a build to rent capital works deduction amount.
History
S 44-25 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Former s 44-25 repealed by No 77 of 2001, inserted by No 164 of 1999.
SECTION 44-30
44-30
Your build to rent withholding amount
Yourbuild to rent withholding amount
, for a
*
build to rent development that
*
ceases to be an
*
active build to rent development, is the amount worked out as follows:
Method statement
Step 1.
Identify each income year in which, at any time during the year, the
*
build to rent development was an
*
active build to rent development.
Step 2.
For each of those years, identify each
*
fund payment made by the owner of the
*
active build to rent development, or each part of such a fund payment, (if any) that is referable to any of the following:
(a) a payment of rental income under a lease of a
*
dwelling of the active build to rent development;
(b) a
*
capital gain from a
*
CGT event in relation to a dwelling of the active build to rent development.
Note:
For the purposes of this step, it does not matter whether an amount must be withheld from a fund payment under Part
2-5
in Schedule
1
to the
Taxation Administration Act 1953
.
Step 3.
For each year add up the amounts of payments, or parts of payments, identified under Step 2.
Step 4.
Add up the Step 3 amounts for each year.
Step 5.
Your
build to rent withholding amount
is the Step 4 amount multiplied by 1.08.
History
S 44-30 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Former s 44-30 repealed byNo 77 of 2001, inserted by No 164 of 1999.
Subdivision 44-C
-
When tax is payable
History
Subdiv 44-C inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
SECTION 44-35
What this Subdivision is about
This Subdivision has rules about payment of build to rent development misuse tax.
History
S 44-35 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Former s 44-35 repealed byNo 77 of 2001, inserted by No 164 of 1999.
SECTION 44-40
44-40
When tax is payable
-
original assessments
Your
*
assessed build to rent development misuse tax is due and payable at the end of 21 days after the Commissioner gives you notice of the assessment of the amount of the
*
build to rent development misuse tax.
Note:
For assessments of build to rent development misuse tax, see Division
155
in Schedule
1
to the
Taxation Administration Act 1953
.
History
S 44-40 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Former s 44-40 repealed by No 77 of 2001, inserted by No 164 of 1999.
SECTION 44-45
44-45
When tax is payable
-
amended assessments
If the Commissioner amends your assessment, any extra
*
assessed build to rent development misuse tax resulting from the amendment is due and payable 21 days after the day the Commissioner gives you notice of the amended assessment.
History
S 44-45 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
SECTION 44-50
44-50
General interest charge
If an amount of
*
assessed build to rent development misuse tax that you are liable to pay remains unpaid after the time by which it is due to be paid, you are liable to pay the
*
general interest charge on the unpaid amount for each day in the period that:
(a)
begins on the day on which the amount was due to be paid; and
(b)
ends on the last day on which, at the end of the day, any of the following remains unpaid:
(i)
the assessed build to rent development misuse tax;
(ii)
general interest charge on any of the assessed build to rent development misuse tax.
Note:
The general interest charge is worked out under Part
IIA
of the
Taxation Administration Act 1953
.
History
S 44-50 inserted by No 138 of 2024, s 3 and Sch 1 item 11, effective 1 January 2025.
Division 45
-
Disposal of leases and leased plant
History
Div 45 inserted by No 169 of 1999.
SECTION 45-1
What this Division is about
This Division is designed to prevent tax being avoided through:
(a) the disposal of leased plant, or an interest in leased plant; or
(b) the disposal of a partnership interest in a partnership that leased plant; or
(c) the disposal of shares in a 100% subsidiary that leased plant;
where amounts have been deducted for the decline in value of the plant.
It includes amounts in assessable income. Any benefit received, and any reduction in a liability, is taken into account in calculating the amounts included.
Where the disposal of shares in a 100% subsidiary is involved, the companies in the former wholly-owned group may be made jointly and severally liable for tax that the former subsidiary does not pay.
History
S 45-1 amended by No 119 of 2002 and inserted by No 169 of 1999.
Operative provisions
SECTION 45-5
Disposal of leased plant or lease
45-5(1)
An amount is included in your assessable income if:
(a)
you have deducted or can deduct an amount for the decline in value of
*
plant; and
(b)
for most of the time when you
*
held the plant, you leased it to another entity; and
(c)
all or part of the lease period occurred on or after 22 February 1999; and
(d)
on or after that day, you dispose of the plant or an interest in the plant, and that disposal constitutes a
*
balancing adjustment event; and
(e)
the sum of the following amounts is
more than
the plant
'
s
*
written down value or of that part of it that is attributable to that interest:
(i)
the money you receive or are entitled to receive for the disposal;
(ii)
the amount of any reduction in a liability of yours as a result of the disposal;
(iii)
the
*
market value of any other benefit you receive or are entitled to receive as a result of the disposal.
History
S 45-5(1) amended by No 77 of 2001.
45-5(2)
The amount included is the excess referred to in paragraph (1)(e). It is included for the income year in which the disposal occurred.
Example:
Sean owns a leased asset. The asset has a written down value of
$
20,000. He has an outstanding loan for the asset of
$
60,000.
Sean sells a 50% interest in the asset to Leprechaun Pty Ltd for
$
40,000. Leprechaun agrees to take over 50% of Sean
'
s obligation to make debt service payments.
The excess referred to in paragraph
45-5(1)(e)
is:
| [
$
40,000
+
$
30,000
=
$
70,000]
−
$
10,000
=
$
60,000 |
That amount is included in Sean
'
s assessable income.
This amount would be reduced if part of it is included in Sean
'
s assessable income under another provision (see subsection
45-5(5)
).
Note 1:
There is a reduction of the amount included for certain plant acquired before 21 September 1999: see section
45-30
.
Note 2:
There is a limit on the amount included for plant for which there is a CGT exemption: see section
45-35
.
45-5(3)
An amount is also included in your assessable income if:
(a)
you have deducted or can deduct an amount for the
*
plant
'
s decline in value; and
(b)
for most of the time when you
*
held the plant, you leased it to another entity; and
(c)
all or part of the lease period occurred on or after 22 February 1999; and
(d)
on or after that day, you dispose of:
(i)
your interest in the plant, or part of it; or
(ii)
a right under, or an interest in, the lease;
and that disposal does not constitute a
*
balancing adjustment event.
History
S 45-5(3) amended by No 77 of 2001.
45-5(4)
The amount included is the sum of the following amounts:
(a)
the money you receive or are entitled to receive for the disposal;
(b)
the amount of any reduction in a liability of yours as a result of the disposal;
(c)
the
*
market value of any other benefit you receive or are entitled to receive as a result of the disposal;
It is included for the income year in which the disposal occurred.
45-5(5)
However, an amount is not included in your assessable income under this section to the extent that:
(a)
it is included in that assessable income under a provision of this Act outside this Division; or
(b)
you apply it under section
40-365
(about offsetting balancing adjustments); or
(c)
roll-over relief is available for the disposal under section
40-340
.
Note:
There are special rules for disposals between 22 February 1999 and 21 September 1999: see Division
45
of the
Income Tax (Transitional Provisions) Act 1997
.
History
S 45-5 amended by No 77 of 2001, inserted by No 169 of 1999.
SECTION 45-10
Disposal of interest in partnership
45-10(1)
An amount is included in your assessable income if:
(a)
a partnership of which you are (or were) a member has deducted or can deduct an amount for the decline in value of
*
plant; and
(b)
the deductions have been or would be reflected in your interest in the partnership net income or partnership loss; and
(c)
for most of the time when the partnership
*
held the plant, it leased it to another entity; and
(d)
all or part of the lease period occurred on or after 22 February 1999; and
(e)
on or after that day, you dispose of your interest in the plant, or part of it, and that disposal constitutes a
*
balancing adjustment event; and
(f)
the sum of the following amounts is
more than
that part of the plant
'
s
*
written down value that is attributable to that interest:
(i)
the money you receive or are entitled to receive for the disposal;
(ii)
the amount of any reduction in a liability of yours as a result of the disposal;
(iii)
the
*
market value of any other benefit you receive or are entitled to receive as a result of the disposal.
History
S 45-10(1) amended by No 77 of 2001.
45-10(2)
The amount included is the excess referred to in paragraph (1)(f). It is included for the income year in which the disposal occurred.
Example:
Chris has a 50% share in a partnership formed to lease an asset. The asset has a written down value of
$
124,000 (of which Chris
'
share is
$
62,000).
Chris assigns his partnership share to another entity for
$
34,000 plus the other entity agreeing to take over Chris
'
obligations to service his share of the partnership debt (which is
$
165,000). The total consideration is:
| $
34,000
+
$
165,000
=
$
199,000 |
The amount assessable under section
45-10
is the excess referred to in paragraph
45-10(1)(f)
, which is:
| $
199,000
−
$
62,000
=
$
137,000 |
This amount would be reduced if part of it is included in Chris
'
assessable income under another provision (see subsection
45-10(5)
).
Note 1:
There is a reduction of the amount included for certain plant acquired before 21 September 1999: see section
45-30
.
Note 2:
There is a limit on the amount included for plant for which there is a CGT exemption: see section
45-35
.
45-10(3)
An amount is also included in your assessable income if:
(a)
a partnership of which you are (or were) a member has deducted or can deduct an amount for the decline in value of
*
plant; and
(b)
the deductions have been or would be reflected in your interest in the partnership net income or partnership loss; and
(c)
for most of the time when the partnership
*
held the plant, it leased it to another entity; and
(d)
all or part of the lease period occurred on or after 22 February 1999; and
(e)
on or after that day, you dispose of:
(i)
your interest in the plant, or part of it; or
(ii)
a right under, or an interest in, the lease;
and that disposal does not constitute a
*
balancing adjustment event.
History
S 45-10(3) amended by No 77 of 2001.
45-10(4)
The amount included is the sum of the following amounts:
(a)
the money you receive or are entitled to receive for the disposal;
(b)
the amount of any reduction in a liability of yours as a result of the disposal;
(c)
the
*
market value of any other benefit you receive or are entitled to receive as a result of the disposal.
It is included for the income year in which the disposal occurred.
45-10(5)
However, an amount is not included in your assessable income under this section to the extent that:
(a)
it is included in that assessable income under a provision of this Act outside this Division; or
(b)
you apply it under section
40-365
(about offsetting balancing adjustments).
Note:
There are special rules for disposals between 22 February 1999 and 21 September 1999: see Division
45
of the
Income Tax (Transitional Provisions) Act 1997
.
History
S 45-10 amended by No 77 of 2001, inserted by No 169 of 1999.
SECTION 45-15
Disposal of shares in 100% subsidiary that leases plant
45-15(1)
A company (the
former subsidiary
) is treated as if it had disposed of
*
plant, received its
*
market value for that disposal and immediately reacquired it for the same amount if:
(a)
the former subsidiary has deducted or can deduct an amount for the decline in value of the plant; and
(b)
the former subsidiary was a
*
100% subsidiary of another company in a
*
wholly-owned group at a time when it
*
held the plant; and
(c)
for most of the time when the former subsidiary held the plant, the plant was leased to another entity; and
(d)
the main
*
business of the former subsidiary was to lease assets; and
(e)
all or part of the lease period occurred on or after 22 February 1999; and
(f)
on or after that day, the direct or indirect beneficial ownership of more than 50% of the
*
shares in the former subsidiary is acquired by an entity or entities none of which is a member of the wholly-owned group; and
(g)
the plant
'
s
*
written down value at the time of that acquisition is less than its market value at that time.
History
S 45-15(1) amended by No 119 of 2002.
45-15(2)
However, the former subsidiary is not treated as if it had disposed of
*
plant and reacquired it if the main business of each of the entities that acquired the direct or indirect beneficial ownership of
*
shares in the former subsidiary is the same as the main business of the
*
wholly-owned group of which the former subsidiary was a member.
45-15(3)
The disposal and reacquisition of the
*
plant:
(a)
is taken to have occurred when that direct or indirect beneficial ownership was acquired; and
(b)
is taken not to have affected any lease of the plant.
45-15(4)
(Repealed by No 77 of 2001)
History
S 45-15 inserted by No 169 of 1999.
SECTION 45-20
Disposal of shares in 100% subsidiary that leases plant in partnership
45-20(1)
A company (also the
former subsidiary
) is treated as if it had disposed of its interest in
*
plant, received its
*
market value for that disposal and immediately reacquired it for the same amount if:
(a)
a partnership of which the former subsidiary is (or was) a member has deducted or can deduct an amount for the decline in value of the plant; and
(b)
the former subsidiary was a
*
100% subsidiary of another company in a
*
wholly-owned group at a time when:
(i)
it was a member of that partnership; and
(ii)
the partnership
*
held the plant; and
(c)
for most of the time when the partnership held the plant, the plant was leased to another entity; and
(d)
the main
*
business of the partnership was to lease assets; and
(e)
all or part of the lease period occurred on or after 22 February 1999; and
(f)
on or after that day, the direct or indirect beneficial ownership of more than 50% of the
*
shares in the former subsidiary is acquired by an entity or entities none of which is a member of the wholly-owned group; and
(g)
the plant
'
s
*
written down value at the time of that acquisition is less than its market value at that time.
History
S 45-20(1) amended by No 119 of 2002 and No 77 of 2001.
45-20(2)
However, the former subsidiary is not treated as if it had disposed of the interest and reacquired it if the main business of each of the entities that acquired the direct or indirect beneficial ownership of
*
shares in the former subsidiary is the same as the main business of the
*
wholly-owned group of which the former subsidiary was a member.
45-20(3)
The disposal and reacquisition of the interest:
(a)
is taken to have occurred when that direct or indirect beneficial ownership was acquired; and
(b)
is taken not to have affected any lease of the plant.
45-20(4)
(Repealed by No 77 of 2001)
History
S 45-20 inserted by No 169 of 1999.
SECTION 45-25
Group members liable to pay outstanding tax
45-25(1)
The consequences specified in subsection (2) apply if:
(a)
an amount is included in the former subsidiary's assessable income for an income year because of section
45-15
or
45-20
; and
(b)
the former subsidiary is liable to pay an amount of income tax for that income year; and
(c)
the former subsidiary does not pay all of that income tax within 6 months after it became payable.
45-25(2)
The consequences are that:
(a)
the former subsidiary remains liable to pay the outstanding amount of income tax (reduced by any payments of tax imposed by the
New Business Tax System (Former Subsidiary Tax Imposition) Act 1999
); and
(b)
each company that was, just before the time when the direct or indirect beneficial ownership referred to in paragraph
45-15(1)(f)
or 45-20(1)(f) was acquired, a member of the former subsidiary's former
*
wholly-owned group, is jointly and severally liable to pay tax imposed by the
New Business Tax System (Former Subsidiary Tax Imposition) Act 1999
.
History
S 45-25 inserted by No 169 of 1999.
SECTION 45-30
Reduction for certain plant acquired before 21.9.99
45-30(1)
The amount included in your assessable income under subsection
45-5(2)
or
45-10(2)
is reduced if:
(a)
you acquired the
*
plant at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999 and you disposed of the plant or an interest in it after that time; and
(b)
the sum of the amounts (your
proceeds
) referred to in paragraph
45-5(1)(e)
or 45-10(1)(f) is more than the plant's
*
cost, or that part of it that is attributable to the interest you disposed of.
45-30(2)
The amount included is reduced by the lesser of:
(a)
the amount (if any) by which the
*
plant's
*
cost base exceeds its
*
cost, or that part of the excess that is attributable to the interest you disposed of; and
(b)
the difference between your proceeds and the plant's cost, or that part of its cost that is attributable to the interest you disposed of.
45-30(3)
However, the amount is not reduced under this section if:
(a)
the
*
plant was a
*
pre-CGT asset at the time of the
*
balancing adjustment event; or
(b)
a
*
capital gain or
*
capital loss from the plant or interest would be disregarded because of a provision listed in the table in this subsection if:
(i)
you had made the gain or loss from
*
CGT event A1; and
(ii)
that CGT event had happened at the time of the balancing adjustment event.
|
Plant for which a reduction is not made under this section
|
|
Item
|
Provision
|
Subject matter
|
| 1 |
section 118-5 |
cars, motor cycles and valour decorations |
|
. |
| 2 |
section 118-10 |
collectables and personal use assets |
|
. |
| 3 |
section 118-12 |
plant used to produce exempt income |
History
S 45-30 inserted by No 169 of 1999.
SECTION 45-35
Limit on amount included for plant for which there is a CGT exemption
45-35(1)
For
*
plant to which subsection
45-30(3)
applies there is a limit on the amount that can be included in your assessable income under subsection
45-5(2)
or
45-10(2)
.
45-35(2)
The limit for subsection
45-5(2)
is the lesser of:
(a)
the excess referred to in paragraph
45-5(1)(e)
; and
(b)
the amounts you have deducted or can deduct for the decline in value of the
*
plant or, if you disposed of an interest in the plant, so much of those amounts as is attributable to that interest.
History
S 45-35(2) amended by No 119 of 2002.
45-35(3)
The limit for subsection
45-10(2)
is the lesser of:
(a)
the excess referred to in paragraph
45-10(1)(f)
; and
(b)
that part of the amounts the partnership has deducted or can deduct for the decline in value of the
*
plant that has been or would be reflected in your interest in the partnership net income or partnership loss (your
partnership amount
) or, if you disposed of part of your interest in the plant, so much of your partnership amount as is attributable to that part of that interest.
History
S 45-35(3) amended by No 119 of 2002.
S 45-35 inserted by No 169 of 1999.
SECTION 45-40
Meaning of
plant
and
written down value
45-40(1)
Plant
includes:
(a)
articles, machinery, tools and rolling stock; and
(b)
animals used as beasts of burden or working beasts in a
*
business, other than a
*
primary production business; and
(c)
fences, dams and other structural improvements, other than those used for domestic or residential purposes, on land that is used for agricultural or pastoral operations; and
(d)
structural improvements, other than a
*
forestry road or structural improvements used for domestic or residential purposes, on land used in a business involving:
(i)
planting or tending trees in a plantation or forest that are intended to be felled; or
(ii)
felling trees in a plantation or forest; or
(iii)
transporting trees, or parts of trees, that you felled in a plantation or forest to the place where they are first to be milled or processed, or from which they are to be transported to the place where they are first to be milled or processed; and
(e)
structural improvements, other than those used for domestic or residential purposes, that are used wholly for operations (carried out in the course of a business) relating directly to:
(i)
taking or culturing pearls or pearl shell; or
(ii)
taking or catching trochus, b
ê
che-de-mer or green snails;
and that are situated at or near a port or harbour from which the business is conducted; and
(f)
structural improvements that are excluded from paragraph (c), (d) or (e) because they are used for domestic or residential purposes if they are provided for the accommodation of employees, tenants or sharefarmers who are engaged in or in connection with the activities referred to in that paragraph.
45-40(2)
Plant
also includes plumbing fixtures and fittings (including wall and floor tiles) provided by an entity mainly for:
(a)
either or both:
(i)
employees in a
*
business carried on by the entity for the
*
purpose of producing assessable income; or
(ii)
employees in a business carried on for that purpose by a company that is a member of the same
*
wholly-owned group of which the entity is a member; or
(b)
*
children of any of those employees.
45-40(3)
The
written down value
of a
*
depreciating asset is its
*
cost less the sum of:
(a)
the amounts you have deducted or can deduct for its decline in value; and
(b)
if section
40-340
applied to your acquisition of it
-
the amounts the transferor, and earlier successive transferors, deducted or can deduct for its decline in value.
History
S 45-40 inserted by No 77 of 2001.
(Repealed) Division 46
-
Software
History
Div 46 repealed by No 77 of 2001, inserted by No 39 of 1999.
PART 2-15
-
NON-ASSESSABLE INCOME
History
Pt 2-15 (heading) substituted by No 66 of 2003.
Pt 2-15 inserted by No 121 of 1997.
Division 50
-
Exempt entities
History
Div 50 inserted by No 121 of 1997.
Subdivision 50-A
-
Various exempt entities
SECTION 50-1
50-1
Entities whose ordinary income and statutory income is exempt
The total
*
ordinary income and
*
statutory income of the entities covered by the following tables is exempt from income tax. In some cases, the exemption is subject to special conditions.
Note 1:
Ordinary and statutory income that is exempt from income tax is called exempt income: see section
6-20
. The note to subsection
6-15(2)
describes some of the other consequences of it being exempt income.
Note 2:
Even if you are an exempt entity, the Commissioner can still require you to lodge an income tax return or information under section
161
of the
Income Tax Assessment Act 1936
.
Note 3:
In all cases the exemption is subject to the special condition in section
50-47
(about an entity that is an ACNC type of entity).
History
S 50-1 amended by No 124 of 2013, s 3 and Sch 11 item 1, by inserting note 3, effective 3 December 2012.
S 50-1 inserted by No 121 of 1997.
SECTION 50-5
Charity, education and science
|
Charity, education, science and religion
|
|
Item
|
Exempt entity
|
Special conditions
|
| 1.1 |
registered charity |
see sections 50-50 and 50-52 |
|
. |
| 1.2 |
(Repealed by No 169 of 2012) |
|
|
. |
| 1.3 |
scientific institution |
see section 50-55 |
|
. |
| 1.4 |
public educational institution |
see section 50-55 |
|
. |
| 1.5 |
(Repealed by No 169 of 2012) |
|
|
. |
|
1.5A |
(Repealed by No 169 of 2012) |
|
|
. |
|
1.5B |
(Repealed by No 169 of 2012) |
|
| . |
| 1.6 |
fund established to enable scientific research to be conducted by or in conjunction with a public university or public hospital |
see section 50-65 |
|
. |
| 1.7 |
society, association or club established for the encouragement of science |
see section 50-70 |
|
. |
| 1.8 |
(Repealed by
No 75 of 2010
) |
|
Note 1:
Section 50-52 has the effect that certain charities are exempt from income tax only if they are endorsed under Subdivision
50-B
.
Note 2:
Section 50-80 may affect which item a trust is covered by.
History
S 50-5 amended by
No 75 of 2010
, s 3 and Sch 5 item 11, by repealing table item 1.8, effective 1 January 2018. Table item 1.8 formerly read:
| 1.8 |
Global Carbon Capture and Storage Institute Ltd |
only amounts included in assessable income:
(a) on or after 1 July 2009; and
(b) before 1 July 2013 |
S 50-5 amended by No 96 of 2013, s 3 and Sch 1 item 27, by substituting
"
charities
"
for
"
charitable institutions, funds and trusts
"
in note 1, effective 1 January 2014.
S 50-5 amended by No 169 of 2012, s 3 and Sch 2 items 30 and 31, by substituting table item 1.1 for table items 1.1 and 1.2, and repealing table items 1.5, 1.5A and 1.5B, effective 3 December 2012. Table items 1.1, 1.2, 1.5, 1.5A and 1.5B formerly read:
| 1.1 |
charitable institution |
see sections 50-50 and 50-52 |
|
. |
| 1.2 |
religious institution |
see section 50-50 |
|
. |
| 1.5 |
fund established for public charitable purposes by will before 1 July 1997 |
see sections 50-52 and 50-57 |
|
. |
| 1.5A |
trust covered by paragraph 50-80(1)(c) |
see sections 50-52 and 50-60 |
|
. |
| 1.5B |
fund established in Australia for public charitable purposes by will or instrument of trust (and not covered by item 1.5 or 1.5A) |
see sections 50-52 and 50-60 |
S 50-5 amended by
No 75 of 2010
, s 3 and Sch 5 item 1, by inserting table item 1.8, effective 28 June 2010.
S 50-5 amended by No 179 of 1999, No 47 of 1998, inserted by No 121 of 1997.
SECTION 50-10
Community service
|
Community service
|
|
Item
|
Exempt entity
|
Special conditions
|
| 2.1 |
society, association or club established for community service purposes (except political or lobbying purposes) | see section 50-70 |
History
S 50-10 (table) amended by No 47 of 1998.
S 50-10 inserted by No 121 of 1997.
SECTION 50-15
Employees and employers
|
Employees and employers
|
|
Item
|
Exempt entity
|
Special conditions
|
| 3.1 |
(a) |
employee association; or |
the association: |
| |
(b) |
employer association |
(a) |
is registered or recognised under the
Fair Work (Registered Organisations) Act 2009
or an
*
Australian law relating to the settlement of industrial disputes; and |
| |
|
|
(b) |
is located in Australia, and incurs its expenditure and pursues its objectives principally in Australia; and |
| |
|
|
(c) |
complies with all the substantive requirements in its governing rules; and |
| |
|
|
(d) |
applies its income and assets solely for the purpose for which the association is established |
|
. |
| 3.2 |
trade union |
the trade union: |
| |
|
(a) |
is located in Australia, and incurs its expenditure and pursues its objectives principally in Australia; and |
| |
|
(b) |
complies with all the substantive requirements in its governing rules; and |
| |
|
(c) |
applies its income and assets solely for the purpose for which the trade union is established |
History
S 50-15 amended by No 124 of 2013, s 3 and Sch 11 items 36
-
37, by inserting para (c) and (d) in table item 3.1, column headed
"
Special conditions
"
and substituting the cell at table item 3.2, column headed
"
Special conditions
"
, applicable in relation to income years starting on or after 30 June 2013. The cell at table item 3.2 formerly read:
located in Australia and incurring its expenditure and pursuing its objectives principally in Australia
S 50-15 amended by No 54 of 2009, s 3 and Sch 18 item 6, by substituting
"
or recognised under the
Fair Work (Registered Organisations) Act 2009
"
for
"
under the
Workplace Relations Act 1996
"
in table item 3.1, effective 1 July 2009.
S 50-15 amended by SLI No 50 of 2006, reg 3 and Sch 51 item 4, by inserting
"
the
Workplace Relations Act 1996
or
"
after
"
under
"
inpara (a), column 3 of item 3.1 in the table, effective 27 March 2006.
S 50-15 amended by No 101 of 2004, No 47 of 1998 and inserted by No 121 of 1997.
50-20
(Repealed) SECTION 50-20 Funds contributing to other funds
(Repealed by No 96 of 2013)
History
S 50-20 repealed by No 96 of 2013, s 3 and Sch 1 item 28, effective 1 January 2014. S 50-20 formerly read:
SECTION 50-20 Funds contributing to other funds
|
Funds contributing to other funds
|
|
Item
|
Exempt entity
|
Special conditions
|
| 4.1 |
a fund that:
(a) is established by will or instrument of trust solely for a purpose referred to in paragraph (a) or (b) of the column headed
"
Recipient
"
in item 2 of the table in section 30-15; and
(b) is not a charity |
see sections 50-52 and 50-72 |
S 50-20 amended by No 169 of 2012, s 3 and Sch 2 item 32, by substituting cell at table item 4.1, column headed
"
Exempt entity
"
, effective 3 December 2012. The cell formerly read:
fund established by will or instrument of trust solely for a purpose referred to in paragraph (a) or (b) of the column headed
"
Recipient
"
in item 2 of the table in section 30-15 (and not covered by item 1.5, 1.5A or 1.5B of the table in section 50-5)
S 50-20 inserted by No 63 of 2005.
Former s 50-20 repealed by No 89 of 2000, amended by No 89 of 2000, No 47 of 1998, inserted by No 121 of 1997.
SECTION 50-25
Government
|
Government
|
|
Item
|
Exempt entity
|
Special conditions
|
| 5.1 |
(a) a municipal corporation; or |
none |
| |
(b) a
*
local governing body |
|
|
|
| 5.2 |
a public authority constituted under an
*
Australian law |
none |
|
|
| 5.3 |
a
*
constitutionally protected fund |
none |
|
|
| 5.4 |
a
*
100% subsidiary of the
*
Future Fund Board that is incorporated under an
*
Australian law |
the 100% subsidiary only undertakes investment activities that the Future Fund Board is able to undertake |
Note:
The ordinary and statutory income of a State or Territory body is exempt: see Division
1AB
of Part III of the
Income Tax Assessment Act 1936
.
History
S 50-25 (table) amended by No 40 of 2023, s 3 and Sch 2 item 1, by inserting table item 5.4, effective 1 July 2023 and applicable to assessments for the first income year commencing on or after 28 June 2023 and later income years.
S 50-25 (table) amended by
No 9 of 2007
, s 3 and Sch 1 item 8, by inserting item 5.3 at the end, applicable to the 2007-2008 income year and later years.
S 50-25 amended by No 54 of 1999.
S 50-25 inserted by No 121 of 1997.
SECTION 50-30
Health
|
Health
|
|
Item
|
Exempt entity
|
Special conditions
|
| 6.1 |
public hospital |
see section 50-55 |
|
|
| 6.2 |
hospital carried on by a society or association |
not carried on for the profit or gain of its individual members, see also section 50-55 |
|
|
| 6.3 |
private health insurer within the meaning of the
Private Health Insurance (Prudential Supervision) Act 2015 |
not carried on for the profit or gain of its individual members |
History
S 50-30 (table) amended by No 87 of 2015, s 3 and Sch 1 item 23, by substituting
"
Private Health Insurance (Prudential Supervision) Act 2015
"
for
"
Private Health Insurance Act 2007
"
in table item 6.3, effective 1 July 2015.
S 50-30 (table) amended by No 32 of 2007, s 3 and Sch 2 item 52, by substituting
"
private health insurer within the meaning of the
Private Health Insurance Act 2007
"
for
"
the following organisations registered for the purposes of the
National Health Act 1953
"
in the column headed
"
Exempt entity
"
at table item 6.3, effective 1 April 2007.
S 50-30 (table) amended by No 47 of 1998.
S 50-30 inserted by No 121 of 1997.
SECTION 50-35
Mining
|
Mining
|
|
Item
|
Exempt entity
|
Special conditions
|
| 7.1 |
(Repealed by No 41 of 2011) |
|
|
|
| 7.2 |
the British Phosphate Commissioners Banaba Contingency Fund (established on 1 June 1981) |
none |
History
S 50-35 amended by No 41 of 2011, s 3 and Sch 5 item 82, by repealing table item 7.1, effective 27 June 2011. Table item 7.1 formerly read:
| "
7.1 |
the Phosphate Mining Company of Christmas Island Limited (incorporated in the Australian Capital Territory) |
none
" |
S 50-35 inserted by No 121 of 1997.
SECTION 50-40
Primary and secondary resources, and tourism
|
Primary and secondary resources, and tourism
|
|
Item
|
Exempt entity
|
Special conditions
|
| 8.1 |
a society or association established for the purpose of promoting the development of: |
not carried on for the profit or gain of its individual members |
| |
(a) aviation; or |
|
| |
(b) tourism |
|
|
|
| 8.2 |
a society or association established for the purpose of promoting the development of any of the following Australian resources: |
not carried on for the profit or gain of its individual members |
| |
(a) agricultural resources; |
|
| |
(b) horticultural resources; |
|
| |
(c) industrial resources; |
|
| |
(d) manufacturing resources; |
|
| |
(e) pastoral resources; |
|
| |
(f) viticultural resources; |
|
| |
(g) aquacultural resources; |
|
| |
(h) fishing resources |
|
|
|
| 8.3 |
a society or association established for the purpose of promoting the development of Australian information and communications technology resources |
not carried on for the profit or gain of its individual members |
|
|
| 8.4 |
(Repealed by No 70 of 2015) |
|
History
S 50-40 amended by No 70 of 2015 (as amended by No 49 of 2019), s 3 and Sch 4 item 4, by repealing table item 8.4, effective 1 July 2025. Table item 8.4 formerly read:
| 8.4 |
Global Infrastructure Hub Ltd |
only amounts included as
*
ordinary income or
*
statutory income:
(a) on or after 24 December 2014; and
(b) before 1 July 2024 |
S 50-40 amended by No 52 of 2024, s 3 and Sch 5 item 1, by substituting
"
1 July 2024
"
for
"
1 July 2023
"
in para (b) of table item 8.4, column headed
"
Special conditions
"
, effective 1 July 2024.
S 50-40 amended by No 49 of 2019, s 3 and Sch 3 item 1, by substituting table item 8.4, column headed
"
Special conditions
"
, effective 1 July 2019. Table item 8.4, column headed
"
Special conditions
"
formerly read:
only amounts included as
*
ordinary income or
*
statutory income:
(a) on or after 24 December 2014; and
(b) before 1 July 2023
S 50-40 amended by No 84 of 2018, s 3 and Sch 4 item 3, by substituting
"
as
*
ordinary income or
*
statutory income
"
for
"
in assessable income
"
in table item 8.4, effective 1 October 2018.
S 50-40 amended by No 70 of 2015, s 3 and Sch 4 item 2, by inserting table item 8.4, effective 26 June 2015.
S 50-40 amended by No 168 of 2001, No 66 of 2000, and inserted by No 121 of 1997.
SECTION 50-45
Sports, culture and recreation
|
Sports, culture, film and recreation
|
|
Item
|
Exempt entity
|
Special conditions
|
| 9.1 |
a society, association or club established for the encouragement of: |
see section 50-70 |
| |
(a) animal racing; or |
|
| |
(b) art; or |
|
| |
(c) a game or sport; or |
|
| |
(d) literature; or |
|
| |
(e) music |
|
|
. |
| 9.2 |
a society, association or club established for musical purposes |
see section 50-70 |
|
. |
| 9.3 |
ICC Business Corporation FZ-LLC |
both of the following: |
| |
|
(a) the entity is a
*
wholly-owned subsidiary of International Cricket Council Limited; |
| |
|
(b) only amounts included as
*
ordinary income or
*
statutory income: |
| |
|
(i) on or after 1 July 2018; and |
| |
|
(ii) before 1 July 2023 |
|
|
| 9.4 |
F
é
d
é
ration Internationale de Football Association |
both of the following: |
| |
|
(a) only amounts included as
*
ordinary income or
*
statutory income: |
| |
|
(i) on or after 1 July 2020; and |
| |
|
(ii) before 1 January 2029; |
| |
|
(b) the ordinary income is
*
derived from, or the statutory income is from, activities relating to the F
é
d
é
ration Internationale de Football Association (FIFA) Women
'
s World Cup Australia New Zealand 2023 |
|
|
| 9.5 |
FWWC2023 Pty Ltd |
all of the following: |
| |
|
(a) the entity is a
*
wholly-owned subsidiary of the F
é
d
é
ration Internationale de Football Association; |
| |
|
(b) only amounts included as
*
ordinary income or
*
statutory income: |
| |
|
(i) on or after 1 July 2020; and |
| |
|
(ii) before 1 January 2029; |
| |
|
(c) the ordinary income is
*
derived from, or the statutory income is from, activities relating to the F
é
d
é
ration Internationale de Football Association (FIFA) Women
'
s World Cup Australia New Zealand 2023 |
History
S 50-45 amended by No 35 of 2022, s 3 and Sch 3 item 3, by inserting table items 9.4 and 9.5, effective 1 October 2022.
S 50-45 amended by No 84 of 2018, s 3 and Sch 4 item 4, by inserting table item 9.3, effective 1 October 2018.
S 50-45 amended by No 41 of 2011, s 3 and Sch 5 item 84, by repealing table items 9.3 and 9.4, effective 27 June 2011. Table items 9.3 and 9.4 formerly read:
| "
9.3 |
the Australian Film Finance Corporation Pty Limited (incorporated under the
Companies Act 1981
on 12 July 1988) |
none |
|
. |
| 9.4 |
the Commonwealth Games Federation |
only income
*
derived on or after 1 January 2000 and before 1 July 2007
" |
S 50-45 amended by No 65 of 2003 and No 47 of 1998 and inserted by No 121 of 1997.
SECTION 50-47
50-47
Special condition for all items
An entity that:
(a)
is covered by any item; and
(b)
is an
*
ACNC type of entity;
is not exempt from income tax unless the entity is registered under the
Australian Charities and Not-for-profits Commission Act 2012
.
History
S 50-47 inserted by No 124 of 2013, s 3 and Sch 11 item 2, effective 3 December 2012.
SECTION 50-50
Special conditions for item 1.1
50-50(1)
An entity covered by item 1.1 is not exempt from income tax unless the entity:
(a)
has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or
(b)
is an institution that meets the description and requirements in item 1 of the table in section
30-15
; or
(c)
is a prescribed institution which is located outside Australia and is exempt from income tax in the country in which it is resident; or
(d)
is a prescribed institution that has a physical presence in Australia but which incurs its expenditure and pursues its objectives principally outside Australia;
and the entity satisfies the conditions in subsection (2).
Note 1:
Certain distributions may be disregarded: see section
50-75
.
Note 2:
The entity must also meet other conditions to be exempt from income tax: see section
50-52
.
History
S 50-50(1) renumbered from s 50-50 and amended by No 124 of 2013, s 3 and Sch 11 items 38
-
40, by substituting
"
Australia;
"
for
"
Australia.
"
in para (d) and inserting
"
and the entity satisfies the conditions in subsection (2).
"
at the end, applicable in relation to income years starting on or after 30 June 2013.
S 50-50 amended by No 169 of 2012, s 3 and Sch 4 item 5, by omitting
"
or 1.2
"
after
"
1.1
"
, effective 3 December 2012.
S 50-50 amended by No 179 of 1999 and inserted by No 47 of 1998.
50-50(2)
The entity must:
(a)
comply with all the substantive requirements in its governing rules; and
(b)
apply its income and assets solely for the purpose for which the entity is established.
History
S 50-50(2) inserted by No 124 of 2013, s 3 and Sch 11 item 41, applicable in relation to income years starting on or after 30 June 2013.
SECTION 50-52
Special condition for item 1.1
50-52(1)
An entity covered by item 1.1 is not exempt from income tax unless the entity is endorsed as exempt from income tax under Subdivision
50-B
.
History
S 50-52(1) amended by No 96 of 2013, s 3 and Sch 1 item 30, by omitting
"
or 4.1
"
after
"
1.1
"
, effective 1 January 2014.
[
CCH Note:
There is no subsection 50-52(2).]
50-52(3)
This section has effect despite all the other sections of this Subdivision.
History
S 50-52 substituted by No 169 of 2012, s 3 and Sch 2 item 33, effective 3 December 2012. S 50-52 formerly read:
SECTION 50-52 Special condition for items 1.1, 1.5, 1.5A, 1.5B and 4.1
50-52(1)
An entity covered by item 1.1, 1.5, 1.5A, 1.5B or 4.1 is not exempt from income tax unless the entity is endorsed as exempt from income tax under Subdivision
50-B
.
Note:
The entity will not be exempt from income tax unless it also meets other conditions: see section
50-50
(for an entity covered by item 1.1),
50-57
(for an entity covered by item 1.5),
50-60
(for an entity covered by item 1.5A or 1.5B) or section
50-72
(for an entity covered by item 4.1).
History
S 50-52(1) amended by No 63 of 2005.
50-52(2)
(Repealed by No 95 of 2004)
50-52(3)
This section has effect despite all the other sections of this Subdivision.
Note:
This means that an entity covered both by an item other than 1.1, 1.5, 1.5A, 1.5B or 4.1 and by one of those items is not exempt from income tax unless the entity is endorsed under Subdivision
50-B
as exempt from income tax and the entity meets the requirements of whichever of sections
50-50
,
50-57
,
50-60
and
50-72
is relevant.
History
S 50-52(3) amended by No 63 of 2005 and No 95 of 2004.
S 50-52 inserted by No 179 of 1999.
SECTION 50-55
Special conditions for items 1.3, 1.4, 6.1 and 6.2
50-55(1)
An entity covered by item 1.3, 1.4, 6.1 or 6.2 is not exempt from income tax unless the entity:
(a)
has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or
(b)
is an institution that meets the description and requirements in item 1 of the table in section
30-15
; or
(c)
is a prescribed institution which is located outside Australia and is exempt from income tax in the country in which it is resident;
and the entity satisfies the conditions in subsection (2).
Note:
Certain distributions may be disregarded: see section
50-75
.
History
S 50-55(1) renumbered from s 50-55 and amended by No 124 of 2013, s 3 and Sch 11 items 42
-
44, by substituting
"
resident;
"
for
"
resident.
"
in para (c), and inserting
"
and the entity satisfies the conditions in subsection (2).
"
at the end, applicable in relation to income years starting on or after 30 June 2013.
S 50-55 amended by No 179 of 1999 and inserted by No 47 of 1998.
50-55(2)
The entity must:
(a)
comply with all the substantive requirements in its governing rules; and
(b)
apply its income and assets solely for the purpose for which the entity is established.
History
S 50-55(2) inserted by No 124 of 2013, s 3 and Sch 11 item 45, applicable in relation to income years starting on or after 30 June 2013.
50-57
(Repealed) SECTION 50-57 Special condition for item 1.5
(Repealed by No 169 of 2012)
History
S 50-57 repealed by No 169 of 2012, s 3 and Sch 2 item 34, effective 3 December 2012. S 50-57 formerly read:
SECTION 50-57 Special condition for item 1.5
50-57
A fund covered by item 1.5 is not exempt from income tax unless the fund is applied for the purpose for which it was established.
Note:
The fund must also meet another condition to be exempt from income tax: see section
50-52
.
S 50-57 inserted by No 179 of 1999.
50-60
(Repealed) SECTION 50-60 Special conditions for items 1.5A and 1.5B
(Repealed by No 169 of 2012)
History
S 50-60 repealed by No 169 of 2012, s 3 and Sch 4 item 6, effective 3 December 2012. S 50-60 formerly read:
SECTION 50-60 Special conditions for items 1.5A and 1.5B
50-60
A fund covered by item 1.5A or 1.5B is not exempt from income tax unless the fund is applied for the purposes for which it was established and:
(a)
incurs, and has at all times since 1 July 1997 incurred, its expenditure principally in Australia and pursues, and has at all times since 1 July 1997 pursued, its charitable purposes solely in Australia; or
(b)
is a fund which is referred to in a table in Subdivision
30-B
or in item 2 of the table in section
30-15
; or
(c)
distributes solely, and has at all times since 1 July 1997 distributed solely, to either or both of the following:
(i)
a charitable fund, foundation or institution which, to the best of the trustee
'
s knowledge, is located in Australia and incurs its expenditure principally in Australia and pursues its charitable purposes solely in Australia;
(ii)
a charitable fund, foundation or institution that, to the best of the trustee
'
s knowledge, meets the description and requirements in item 1 or 2 of the table in section
30-15
.
Note 1:
Certain distributions may be disregarded: see section
50-75
.
Note 2:
The fund must also meet other conditions to be exempt from income tax: see section
50-52
.
S 50-60 amended by No 63 of 2005, No 179 of 1999 and inserted by No 47 of 1998.
SECTION 50-65
Special conditions for item 1.6
50-65(1)
A fund covered by item 1.6 is not exempt from tax unless the fund is applied for the purposes for which it was established and is:
(a)
a fund that is located in, and which incurs its expenditure principally in, Australia and that is established for the purpose of enabling scientific research to be conducted principally in Australia by or in conjunction with a public university or public hospital; or
(b)
a scientific research fund that meets the description and requirements in item 1 or 2 of the table in section
30-15
;
and the fund satisfies the conditions in subsection (2).
Note:
Certain distributions may be disregarded: see section
50-75
.
History
S 50-65(1) renumbered from s 50-65 and amended by No 124 of 2013, s 3 and Sch 11 items 46
-
48, by substituting
"
section 30-15;
"
for
"
section 30-15.
"
, and inserting
"
and the fund satisfies the conditions in subsection (2).
"
at the end, applicable in relation to income years starting on or after 30 June 2013.
S 50-65 amended by No 179 of 1999 and inserted by No 47 of 1998.
50-65(2)
The fund must:
(a)
comply with all the substantive requirements in its governing rules; and
(b)
apply its income and assets solely for the purpose for which the fund is established.
History
S 50-65(2) inserted by No 124 of 2013, s 3 and Sch 11 item 49, applicable in relation to an R
&
D entity
'
s assessments for income years commencing on or after 30 June 2013.
SECTION 50-70
Special conditions for items 1.7, 2.1, 9.1 and 9.2
50-70(1)
An entity covered by item 1.7, 2.1, 9.1 or 9.2 is not exempt from tax unless the entity is a society, association or club that is not carried on for the purpose of profit or gain of its individual members and that:
(a)
has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or
(b)
is a society, association or club that meets the description and requirements in item 1 of the table in section
30-15
; or
(c)
is a prescribed society, association or club which is located outside Australia and is exempt from income tax in the country in which it is resident;
and the entity satisfies the conditions in subsection (2).
Note:
Certain distributions may be disregarded: see section
50-75
.
History
S 50-70(1) renumbered from s 50-70 and amended by No 124 of 2013, s 3 and Sch 11 items 50
-
52, by substituting
"
resident;
"
for
"
resident.
"
in para (c) and inserting
"
and the entity satisfies the conditions in subsection (2).
"
at the end, applicable in relation to income years starting on or after 30 June 2013.
S 50-70 amended by No 89 of 2000, No 179 of 1999 and inserted by No 47 of 1998.
50-70(2)
The entity must:
(a)
comply with all the substantive requirements in its governing rules; and
(b)
apply its income and assets solely for the purpose for which the entity is established.
History
S 50-70(2) inserted by No 124 of 2013, s 3 and Sch 11 item 53, applicable in relation to income years starting on or after 30 June 2013.
SECTION 50-72
Special condition for item 4.1
50-72(1)
A fund covered by item 4.1 is not exempt from income tax unless the fund:
(a)
is applied for the purposes for which it is established; and
(b)
distributes solely, and has at all times since the time mentioned in subsection (2) distributed solely, to a fund, authority or institution that:
(i)
meets the description and requirements in item 1 of the table in section
30-15
; and
(ii)
is an
*
exempt entity; and
(c)
complies with all the substantive requirements in its governing rules; and
(d)
applies its income and assets solely for the purpose for which the fund is established.
History
S 50-72(1) amended by No 124 of 2013, s 3 and Sch 11 item 54, by inserting para (c) and (d), applicable in relation to income years starting on or after 30 June 2013.
50-72(2)
The time is the start of the income year after the income year in which the
Tax Laws Amendment (2005 Measures No. 3) Act 2005
receives the Royal Assent.
History
S 50-72 inserted by No 63 of 2005.
Former s 50-72 repealed by No 89 of 2000 and inserted by No 89 of 2000.
SECTION 50-75
Certain distributions may be made overseas
50-75(1)
In determining for the purposes of this Subdivision whether an institution, fund or other body incurs its expenditure or pursues its objectives principally in Australia, distributions of any amount received by the institution, fund or other body as a gift (whether of money or other property) or by way of government grant are to be disregarded.
50-75(2)
In determining for the purposes of this Subdivision whether an institution, fund or other body incurs its expenditure or pursues its objectives principally in Australia, distributions of any amount from a fund that is referred to in a table in Subdivision
30-B
and operated by the institution, fund or other body are to be disregarded.
50-75(3)
(Repealed by No 169 of 2012)
History
S 50-75(3) repealed by No 169 of 2012, s 3 and Sch 4 item 7, effective 3 December 2012. S 50-75(3) formerly read:
50-75(3)
In determining for the purposes of section
50-60
whether a fund:
(a)
incurs, and has at all times since 1 July 1997 incurred, its expenditure principally in Australia and pursues, and has at all times since 1 July 1997, pursued its charitable purposes solely in Australia; or
(b)
distributes solely, and has at all times since 1 July 1997 distributed solely, to a charitable fund, foundation or institution described in subparagraph
50-60(c)(i) or (ii)
;
distributions of any amount received by the fund as a gift (whether of money or property) or by way of government grant are to be disregarded.
S 50-75(3) amended by No 63 of 2005.
S 50-75 inserted by No 47 of 1998.
50-80
(Repealed) SECTION 50-80 Testamentary trusts may be treated as 2 trusts
(Repealed by No 169 of 2012)
History
S 50-80 repealed by No 169 of 2012, s 3 and Sch 2 item 34, effective 3 December 2012. S 50-80 formerly read:
SECTION 50-80 Testamentary trusts may be treated as 2 trusts
50-80(1)
If:
(a)
a trust (the
existing trust
) covered by item 1.5 was in existence immediately before 1 July 1997; and
(b)
on or after 1 July 1997 one or more assets are given to the existing trust (other than in return for valuable consideration) or become part of the trust property under a will;
then, for the purposes of this Subdivision and Subdivision
50-B
, the existing trust is taken to be 2 separate trusts (the
new trust
and the
old trust
) as follows:
(c)
the new trust is taken to be a trust created after the start of 1 July 1997 that consists of so much of the trust property as consists of those assets together with any income
*
derived from those assets; and
(d)
the old trust is taken to be a trust created before 1 July 1997 that consists of the remainder of the trust property.
History
S 50-80(1) amended by No 179 of 1999.
50-80(2)
Where an asset is received in substitution for another asset, subsection (1) applies as if the substituted asset were the other asset.
S 50-80 inserted by No 47 of 1998.
Subdivision 50-B
-
Endorsing charitable entities as exempt from income tax
History
Subdiv 50-B inserted by No 179 of 1999.
SECTION 50-100
What this Subdivision is about
This Subdivision sets out rules about endorsement of charities as exempt from income tax. Such entities are only exempt from income tax if they are endorsed.
History
S 50-100 amended by No 96 of 2013 (as amended by No 70 of 2015), s 3 and Sch 1 item 31, by substituting
"
charities
"
for
"
charitable institutions and trust funds for charitable purposes
"
, effective 1 January 2014.
S 50-100 inserted by No 179 of 1999.
Endorsing charitable entities as exempt from income tax
SECTION 50-105
50-105
Endorsement by Commissioner
The Commissioner must endorse an entity as exempt from income tax if the entity:
(a)
is entitled to be endorsed as exempt from income tax; and
(b)
has applied for that endorsement in accordance with Division 426 in Schedule 1 to the
Taxation Administration Act 1953
.
Note:
For procedural rules relating to endorsement, see Division
426
in Schedule
1
to the
Taxation Administration Act 1953
.
History
S 50-105 amended by No 95 of 2004 and inserted by No 179 of 1999.
SECTION 50-110
Entitlement to endorsement
General rule
50-110(1)
An entity is entitled to be endorsed as exempt from income tax if the entity meets all the relevant requirements of this section.
Which entities are entitled to be endorsed
?
50-110(2)
To be entitled, the entity must be an entity covered by item 1.1 of the table in section
50-5
.
History
S 50-110(2) amended by No 96 of 2013, s 3 and Sch 1 item 32, by omitting
"
or item 4.1 of the table in section 50-20
"
after
"
section 50-5
"
, effective 1 January 2014.
S 50-110(2) amended by No 169 of 2012, s 3 and Sch 2 item 35, by omitting
"
, 1.5, 1.5A or 1.5B
"
after
"
1.1
"
, effective 3 December 2012.
S 50-110(2) amended by No 63 of 2005.
Requirement for ABN
50-110(3)
To be entitled, the entity must have an
*
ABN.
50-110(4)
(Repealed by No 169 of 2012)
History
S 50-110(4) repealed by No 169 of 2012, s 3 and Sch 2 item 36, effective 3 December 2012. S 50-110(4) formerly read:
50-110(4)
However, for a trust:
(a)
covered by item 1.5 of the table in section
50-5
because the trust is covered by paragraph
50-80(1)(d)
; or
(b)
covered by item 1.5A of the table in section
50-5
(because the trust is covered by paragraph
50-80(1)(c)
);
to be entitled, the existing trust mentioned in paragraph
50-80(1)(a)
must have an
*
ABN.
Requirement to meet special conditions
50-110(5)
To be entitled:
(a)
the entity must meet the relevant conditions referred to in the column headed
"
Special conditions
"
of item 1.1 of the table in section
50-5
; or
(b)
both of the following conditions must be met:
(i)
the entity must not have carried on any activities as a charity;
(ii)
there must be reasonable grounds for believing that the entity will meet the relevant conditions referred to in the column headed
"
Special conditions
"
of item 1.1 of the table.
(c)
(Repealed by No 96 of 2013)
The entity must also satisfy section
50-47
, if the entity is an
*
ACNC type of entity.
History
S 50-110(5) amended by No 96 of 2013, s 3 and Sch 1 item 33, by substituting para (a) and (b) for para (a) to (c), effective 1 January 2014. Paras (a) to (c) formerly read:
(a)
the entity must meet the relevant conditions referred to in the column headed
"
Special conditions
"
of whichever of item 1.1 of the table in section
50-5
and item 4.1 of the table in section
50-20
covers the entity; or
(b)
if item 1.1 of the table in section
50-5
covers the entity:
(i)
the entity must not have carried on any activities as a charity; and
(ii)
there must be reasonable grounds for believing that the entity will meet the relevant conditions referred to in the column headed
"
Special conditions
"
of item 1.1 of the table; or
(c)
if the entity is covered by item 4.1 of the table in section
50-20
and has not made any distributions
-
there must be reasonable grounds for believing that the entity will satisfy section
50-72
.
S 50-110(5) amended by No 124 of 2013, s 3 and Sch 11 item 3, by inserting
"
The entity must also satisfy section 50-47, if the entity is an
*
ACNC type of entity.
"
, effective 3 December 2012.
S 50-110(5) amended by No 169 of 2012, s 3 and Sch 2 items 37 and 38, by substituting
"
item 1.1
"
for
"
items 1.1, 1.5, 1.5A and 1.5B
"
in para (a) and substituting para (b), effective 3 December 2012. Para (b) formerly read:
(b)
both of the following conditions must be met:
(i)
the entity must not have carried on any activities as a charitable institution (if the entity is covered by item 1.1 of the table in section
50-5
) or for public charitable purposes (if the entity is covered by item 1.5, 1.5A or 1.5B of that table);
(ii)
there must be reasonable grounds for believing that the entity will meet the relevant conditions referred to in the column headed
"
Special conditions
"
of whichever of items 1.1, 1.5, 1.5A or 1.5B of the table in section
50-5
covers the entity; or
S 50-110(5) amended by No 63 of 2005.
50-110(6)
To avoid doubt, the condition set out in section
50-52
(requiring the entity to be endorsed under this Subdivision) is not a relevant condition for the purposes of subsection (5).
History
S 50-110 inserted by No 179 of 1999.
50-115
(Repealed) SECTION 50-115 Applying for endorsement
(Repealed by No 95 of 2004)
History
S 50-115 repealed by No 95 of 2004, s 3 and Sch 10 item 39, effective 1 July 2005. For transitional provision, see note in s 30-130. S 50-115 formerly read:
Applying for endorsement
50-115(1)
An entity may apply to the Commissioner for endorsement.
50-115(2)
The application:
(a)
must be in a form approved by the Commissioner; and
(b)
must be signed for the entity, or include the entity's
*
electronic signature if the application is
*
lodged electronically; and
(c)
must be lodged at, or posted to, an office or facility designated by the Commissioner as a receiving centre for applications of that kind; and
(d)
may be lodged electronically.
Note: The Commissioner could approve a form that is part of an application form for an ABN.
S 50-115 inserted by No 179 of 1999.
50-120
(Repealed) SECTION 50-120 Dealing with an application for endorsement
(Repealed by No 95 of 2004)
History
S 50-120 repealed by No 95 of 2004, s 3 and Sch 10 item 39, effective 1 July 2005. For transitional provision, see note in s 30-130. S 50-120 formerly read:
Dealing with an application for endorsement
50-120(1)
The Commissioner may request an applicant to give the Commissioner specified information, or a specified document, the Commissioner needs to decide whether the applicant is entitled to endorsement unless the information or document is given.
50-120(2)
After the time worked out under subsection (3), the applicant may give the Commissioner written notice that the applicant wishes to treat the application as having been refused, if the Commissioner has
not
given the applicant before that time written notice that the Commissioner endorses or refuses to endorse the applicant.
Note: Section 50-125 requires the Commissioner to give the applicant written notice if the Commissioner endorses or refuses to endorse the applicant.
50-120(3)
The time is the end of the 60th day after the application was made. However, if before that time the Commissioner requests the applicant under subsection (1) to give information or a document, the time is the later of the following (or either of them if they are the same):
(a)
the end of the 28th day after the last day on which the applicant gives the Commissioner information or a document he or she has requested;
(b)
the end of the 60th day after the application was made.
50-120(4)
If the applicant gives notice under subsection (2), section
50-135
operates as if the Commissioner had refused the application on the day on which the notice is given.
Note: Section 50-135 lets the applicant object against refusal of an application in the manner set out in Part
IVC
of the
Taxation Administration Act 1953
. That Part provides for review of the refusal objected against.
50-120(5)
The notice given by the applicant:
(a)
may be
*
lodged electronically; and
(b)
must be signed for the applicant, or include the applicant's
*
electronic signature if the application is
*
lodged electronically.
S 50-120 inserted by No 179 of 1999.
50-125
(Repealed) SECTION 50-125 Notifying outcome of application for endorsement
(Repealed by No 95 of 2004)
History
S 50-125 repealed by No 95 of 2004, s 3 and Sch 10 item 39, effective 1 July 2005. For transitional provision, see note in s 30-130. S 50-125 formerly read:
Notifying outcome of application for endorsement
50-125(1)
The Commissioner must give the applicant written notice if:
(a)
the Commissioner endorses the applicant; or
(b)
the Commissioner refuses to endorsethe applicant.
50-125(2)
The Commissioner may give the notice by way of electronic transmission. This does not limit the ways in which the Commissioner may give the notice.
S 50-125 inserted by No 179 of 1999.
50-130
(Repealed) SECTION 50-130 Date of effect of endorsement
(Repealed by No 95 of 2004)
History
S 50-130 repealed by No 95 of 2004, s 3 and Sch 10 item 39, effective 1 July 2005. For transitional provision, see note in s 30-130. S 50-130 formerly read:
Date of effect of endorsement
50-130(1)
The endorsement has effect from a date specified by the Commissioner.
50-130(2)
The date specified may be any date (including a date before the application for endorsement was made and a date before the applicant had an
*
ABN).
Note: An entity may fail to apply for endorsement by 30 June 2000. The Commissioner may endorse an application by such an entity from 1 July 2000.
S 50-130 inserted by No 179 of 1999.
50-135
(Repealed) SECTION 50-135 Review of refusal of endorsement
(Repealed by No 95 of 2004)
History
S 50-135 repealed by No 95 of 2004, s 3 and Sch 10 item 39, effective 1 July 2005. For transitional provision, see note in s 30-130. S 50-135 formerly read:
Review of refusal of endorsement
50-135
If the applicant is dissatisfied with the Commissioner's refusal to endorse the applicant in accordance with the application, the applicant may object against the refusal in the manner set out in Part
IVC
of the
Taxation Administration Act 1953
.
Note: That Part provides for review of the refusal objected against.
S 50-135 inserted by No 179 of 1999.
50-140
(Repealed) SECTION 50-140 Checking entitlement to endorsement
(Repealed by No 95 of 2004)
History
S 50-140 repealed by No 95 of 2004, s 3 and Sch 10 item 39, effective 1 July 2005. For transitional provision, see note in s 30-130. S 50-140 formerly read:
Checking entitlement to endorsement
50-140(1)
The Commissioner may request an entity that is endorsed as exempt from income tax to give the Commissioner information or a document that is relevant to the entity's entitlement to endorsement. The entity must comply with the request.
Note 1: Section 50-110 sets out the conditions for an entity to be entitled to be endorsed.
Note 2: This Act is a taxation law for the purposes of the
Taxation Administration Act 1953
. Failure to comply with this subsection is an offence against section
8C
of that Act. Also, the Commissioner may revoke the endorsement of theentity under section
50-155
if it fails to comply with this subsection.
Note 3: Section 50-150 modifies the way this subsection operates in relation to partnerships and unincorporated bodies.
50-140(2)
The request:
(a)
is to be made by notice in writing to the entity; and
(b)
may ask the entity to give the information in writing; and
(c)
must specify:
(i)
the information or document the entity is to give; and
(ii)
the period within which the entity is to give the information or document.
The period specified under subparagraph (c)(ii) must end at least 28 days after the notice is given.
50-140(3)
The Commissioner may give the notice by way of electronic transmission. This does not limit the ways in which the Commissioner may give the notice.
50-140(4)
If the request is for the entity to give information in writing, the document setting out the information:
(a)
must be given to the Commissioner; and
(b)
may be
*
lodged electronically; and
(c)
must be signed for the entity, or include the entity's
*
electronic signature if the document is lodged electronically.
S 50-140 inserted by No 179 of 1999.
50-145
(Repealed) SECTION 50-145 Telling Commissioner of loss of entitlement to endorsement
(Repealed by No 95 of 2004)
History
S 50-145 repealed by No 95 of 2004, s 3 and Sch 10 item 39, effective 1 July 2005. For transitional provision, see note in s 30-130. S 50-145 formerly read:
Telling Commissioner of loss of entitlement to endorsement
50-145(1)
Before, or as soon as practicable after, an entity that is endorsed as exempt from income tax ceases to be entitled to be endorsed, the entity must give the Commissioner written notice of the cessation.
Note 1: An entity ceases to be entitled to endorsement if it ceases to be covered by item 1.1, 1.5, 1.5A or 1.5B of the table in section
50-5
or ceases to meet the special conditions identified in the item that covers it: see section
50-110
.
Note 2: This Act is a taxation law for the purposes of the
Taxation Administration Act 1953
. Failure to comply with this subsection is an offence against section
8C
of that Act.
Note 3: Section
50-150
modifies the way this subsection operates in relation to partnerships and unincorporated bodies.
50-145(2)
The notice:
(a)
may be
*
lodged electronically; and
(b)
must be signed for the entity, or include the entity's
*
electronic signature if the document is lodged electronically.
50-145(3)
Subsection (1) does not apply to an entitlement to endorsement ceasing because the entity ceases to have an
*
ABN.
S 50-145 inserted by No 179 of 1999.
50-150
(Repealed) SECTION 50-150 Partnerships and unincorporated bodies
(Repealed by No 95 of 2004)
History
S 50-150 repealed by No 95 of 2004, s 3 and Sch 10 item 39, effective 1 July 2005. For transitional provision, see note in s 30-130. S 50-150 formerly read:
Partnerships and unincorporated bodies
50-150(1)
If, apart from this subsection, section
50-140
or
50-145
would impose an obligation on a partnership, the obligation is imposed on each partner, but may be discharged by any of the partners.
50-150(2)
If, apart from this subsection, section
50-140
or
50-145
would impose an obligation on an unincorporated association or body, the obligation is imposed on each member of the committee of management of the association or body, but may be discharged by any of the members of the committee.
50-150(3)
In a prosecution of a person for an offence against section
8C
of the
Taxation Administration Act 1953
because of subsection (1) or (2), it is a defence if the person proves that the person:
(a)
did not aid, abet, counsel or procure the act or omission because of which the offence is 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, the act or omission because of which the offence is taken to have been committed.
S 50-150 inserted by No 179 of 1999.
50-155
(Repealed) SECTION 50-155 Revoking endorsement
(Repealed by No 95 of 2004)
History
S 50-155 repealed by No 95 of 2004, s 3 and Sch 10 item 39, effective 1 July 2005. For transitional provision, see note in s 30-130. S 50-155 formerly read:
Revoking endorsement
50-155(1)
The Commissioner may revoke the endorsement of an entity as exempt from income tax if:
(a)
the entity is not entitled to be endorsed as exempt from income tax; or
(b)
the Commissioner has requested the entity under section
50-140
to provide information or a document that is relevant to its entitlement to endorsement and the entity has not provided the requested information or document within the time specified in the request.
Note: Section 50-110 sets out the conditions for an entity to be entitled to be endorsed.
50-155(2)
The revocation has effect from a day specified by the Commissioner (which may be a day before the Commissioner decided to revoke the endorsement).
50-155(3)
However, if the Commissioner revokes the endorsement because the entity is not entitled to it, the Commissioner must not specify a day before the day on which the entity first ceased to be entitled.
50-155(4)
The Commissioner must give the entity written notice if the Commissioner revokes its endorsement.
50-155(5)
The Commissioner may give the notice by way of electronic transmission. This does not limit the ways in which the Commissioner may give the notice.
S 50-155 inserted by No 179 of 1999.
50-160
(Repealed) SECTION 50-160 Review of revocation of endorsement
(Repealed by No 95 of 2004)
History
S 50-160 repealed by No 95 of 2004, s 3 and Sch 10 item 39, effective 1 July 2005. For transitional provision, see note in s 30-130. S 50-160 formerly read:
Review of revocation of endorsement
50-160
If the entity is dissatisfied with the revocation of its endorsement as exempt from income tax, the entity may object against the revocation in the manner set out in Part
IVC
of the
Taxation Administration Act 1953
.
Note: That Part provides for review of the revocation objected against.
S 50-160 inserted by No 179 of 1999.
Division 51
-
Exempt amounts
History
Div 51 inserted by No 121 of 1997.
SECTION 51-1
51-1
Amounts of ordinary income and statutory income that are exempt
The amounts of
*
ordinary income and
*
statutory income covered by the following tables are exempt from income tax. In some cases, the exemption is subject to exceptions or special conditions, or both.
Note 1:
Ordinary and statutory income that is exempt from income tax is called exempt income: see section
6-20
. The note to subsection 6-15(2) describes some of the other consequences of it being exempt income.
Note 2:
Even if an exempt payment is made to you, the Commissioner can still require you to lodge an income tax return or information under section
161
of the
Income Tax Assessment Act 1936
.
History
S 51-1 inserted by No 121 of 1997.
SECTION 51-5
Defence
|
Defence
|
|
Item
|
If you are:
|
…
the following amounts are exempt from income tax:
|
…
subject to these exceptions and special conditions:
|
| 1.1 |
a member of the Defence Force |
(a) |
payments of allowances or bounty of a kind prescribed in the regulations; and |
none |
| |
|
|
(b) |
the
*
market value of rations and quarters supplied to you without charge |
|
|
. |
| 1.1A |
a member of the Defence Force |
compensation payments for loss of deployment allowance for warlike service |
see section 51-32 |
|
. |
| 1.2 |
a recipient of a payment in respect of a member of the Defence Force |
payments of allowances or bounty of a kind prescribed in the regulations |
none |
|
. |
| 1.4 |
a member of: |
pay and allowances as a member |
except pay and allowances for continuous full time service |
| |
(a) |
the Naval Reserve; or |
|
|
|
| |
(b) |
the Army Reserve; or |
|
|
|
| |
(c) |
the Air Force Reserve |
|
|
|
|
. |
| 1.5 |
a former member of: |
compensation payments for loss of pay and/or allowances as a member |
see section 51-33 |
| |
(a) |
the Naval Reserve; or |
|
|
|
| |
(b) |
the Army Reserve; or |
|
|
|
| |
(c) |
the Air Force Reserve |
|
|
|
|
. |
| 1.6 |
a recipient of an ex-gratia payment from the Commonwealth known as the F-111 Deseal/Reseal Ex-gratia Lump Sum Payment |
the ex-gratia payment |
none |
|
. |
| 1.7 |
a recipient of a reparation payment or an additional payment from the Commonwealth in relation to a recommendation by the Defence Force Ombudsman performing a function conferred by a prescribed provision of regulations made under the
Ombudsman Act 1976 |
the reparation payment or additional payment |
none |
Note:
Reparation payments referred to in item 1.7 relate to abuse in the Defence Force.
History
S 51-5 amended by No 18 of 2020, s 3 and Sch 1 items 24 and 25, by substituting
"
a prescribed provision of regulations made under the
Ombudsman Act 1976
"
for
"
section 14 or 14B of the
Ombudsman Regulations 2017
"
and substituting
"
referred to in item 1.7
"
for
"
under section 14 or 14B of the
Ombudsman Regulations 2017
"
in the note, effective 6 September 2020.
S 51-5 amended by No 124 of 2018, s 3 and Sch 4 items 3 and 4, by substituting table item 1.7 and inserting the note at the end of the section, effective 1 January 2019 and applicable in relation to the 2017-18 income year and later income years. Table item 1.7 formerly read:
| 1.7 |
a recipient of a payment from the Commonwealth under the Defence Abuse Reparation Scheme |
the payment |
none |
S 51-5 amended by No 124 of 2013, s 3 and Sch 8 item 2, by inserting table item 1.7, applicable in relation to the 2012-13 income year and later income years.
S 51-5 amended by
No 58 of 2006
, s 3 and Sch 1 item 2, by inserting table item 1.6, applicable in relation to the 2005/2006 income year and later income years.
S 51-5 amended by No 65 of 2003 and No 10 of 2001 and inserted by No 121 of 1997.
SECTION 51-10
Education and training
|
Education and training
|
|
Item
|
If you are:
|
…
the following amounts are exempt from income tax:
|
…
subject to these exceptions and special conditions:
|
|
2.1A |
a full-time student at a school, college or university |
a scholarship, bursary, educational allowance or educational assistance |
see section 51-35 |
|
. |
|
2.1B |
(a) |
a student; or |
a payment under a Commonwealth scheme for assistance of: |
see section 51-40 |
| |
(b) |
a recipient of a payment in respect of a student |
(a) |
secondary education; or |
|
| |
|
|
(b) |
the education of isolated children |
|
|
. |
| 2.1 |
a recipient of a grant made by the Australian-American Educational Foundation |
the grant |
the grant is from funds made available to the Foundation under the agreement establishing it |
|
. |
| 2.2 |
an employer |
payments under the CRAFT Scheme (the Commonwealth Rebate for Apprentice Full-Time Training Scheme) |
each payment is for an apprentice who most recently started work with you before 1 January 1998 |
|
. |
| 2.3 |
a recipient of a scholarship known as a Commonwealth Trade Learning Scholarship |
the scholarship |
none |
|
. |
| 2.4 |
a recipient of a payment known as the Apprenticeship Wage Top-Up |
the payment |
none |
|
. |
| 2.5 |
a recipient of:
(a) a research fellowship under the Endeavour Awards; or
(b) an Endeavour Executive Award |
the fellowship or award |
none |
|
. |
| 2.6 |
a recipient of a bonus for early completion of an apprenticeship |
so much of the bonus as does not exceed
$
1,000 |
see section 51-42 |
|
. |
| 2.7 |
a recipient of a payment under the program known as Skills for Sustainability for Australian Apprentices |
the payment |
none |
|
. |
| 2.8 |
a recipient of a payment under the program known as Tools for Your Trade (within the program known as the Australian Apprenticeships Incentives Program) |
the payment |
none |
|
. |
| 2.9 |
(Repealed by No 55 of 2016) |
|
|
History
S 51-10 amended by No 55 of 2016, s 3 and Sch 3 item 17, by repealing table item 2.9, effective 1 July 2017. Table item 2.9 formerly read:
| 2.9 |
a recipient of a
*
HECS-HELP benefit |
the benefit |
none |
S 51-10 amended by
No 75 of 2010
, s 3 and Sch 3 item 2, by inserting table item 2.9, applicable to assessments for: (a) the 2008-09 income year; and (b) later income years.
S 51-10 amended by
No 52 of 2009
, s 3 and Sch 1 item 2, by inserting items 2.7 and 2.8 at the end of the table, applicable to assessments for the 2009-10 income year and later income years.
S 51-10 amended by No 38 of 2008, s 3 and Sch 5 item 2, by inserting table item 2.6, applicable to assessments for the 2007-08 income year and later income years.
S 51-10 amended by No 38 of 2008, s 3 and Sch 4 item 4, by inserting table item 2.5, applicable in relation to fellowships and awards received in the 2007-08 income year and later income years.
S 51-10 amended by No 114 of 2007, s 3 and Sch 1 item 2, by inserting item 2.4 at the end of the table, applicable to assessments for the 2007-08 income year and later income years.
S 51-10 amended by No 66 of 2005, No 54 of 1999, No 16 of 1998 and inserted by No 121 of 1997.
51-15
(Repealed) SECTION 51-15 Vice-regal representatives
(Repealed by No 57 of 2001)
History
S 51-15 inserted by No 121 of 1997.
51-25
(Repealed) SECTION 51-25 Mining
(Repealed by No 66 of 2003)
History
S 51-25 inserted by No 121 of 1997.
SECTION 51-30
Welfare
|
Welfare
|
|
Item
|
If you are:
|
…
the following amounts are exempt from income tax:
|
…
subject to these exceptions and special conditions:
|
| 5.1 |
an individual in receipt of periodic payments in the nature of maintenance |
the payments |
see section
51-50 |
|
|
| 5.1A |
(Repealed by No 31 of 2011) |
|
|
| 5.1B |
(Repealed by No 31 of 2011) |
|
|
| 5.1C |
(Repealed by No 85 of 2013) |
|
|
| 5.2 |
an individual in receipt of an ex-gratia payment from the Commonwealth known as disaster recovery payment for special category visa (subclass 444) holders for a disaster:
(a) that occurred in Australia during the 2014-15
*
financial year or a later financial year; and
(b) for which a determination under section
1061L
of the
Social Security Act 1991
has been made |
the payment |
|
|
|
| 5.3 |
(Repealed by No 85 of 2013) |
|
|
| 5.4 |
(Repealed by No 85 of 2013) |
|
|
| 5.5 |
an individual in receipt of a payment under the program established by the Commonwealth and known as the Support for Australia
'
s Thalidomide Survivors program |
the payment |
none |
|
|
| 5.6 |
an individual in receipt of a payment from the Thalidomide Australia Fixed Trust |
the payment |
the payment must be:
(a) made to you, or applied for your benefit, as a beneficiary of the Trust; or
(b) made to you in respect of a beneficiary of the Trust |
History
S 51-30 amended by No 61 of 2021, s 3 and Sch 3 item 2, by inserting table item 5.6, effective 1 July 2021 and applicable to assessments for the 2021-22 income year and later income years.
S 51-30 amended by No 85 of 2013, s 3 and Sch 2 item 8, by repealing table items 5.3 and 5.4, effective 1 July 2017. Table items 5.3 and 5.4 formerly read:
| 5.3 |
an individual in receipt of an ex-gratia payment from the Commonwealth known as assistance for New Zealand non-protected special category visa holders for a disaster:
(a) that occurred in Australia during the 2012-13
*
financial year; and
(b) that the
*
Emergency Management Minister has declared to be a major disaster for the purposes of the Australian Government Disaster Recovery Payment |
the payment |
the payment must be claimed:
(a) after 24 August 2012; and
(b) before 1 January 2014;
and the Minister must make the declaration before 1 July 2013 |
|
|
| 5.4 |
an individual in receipt of an ex-gratia payment from the Commonwealth known as Disaster Income Recovery Subsidy for a disaster occurring during the period:
(a) starting on 3 January 2013; and
(b) ending on 30 September 2013 |
the payment |
the payment must be claimed:
(a) after 3 January 2013; and
(b) before 1 April 2014 |
S 51-30 amended by No 25 of 2017, s 3 and Sch 4 item 5, by inserting table item 5.2, effective 5 April 2017.
S 51-30 amended by No 85 of 2013, s 3 and Sch 2 item 6, by repealing table item 5.2, effective 1 July 2016. Table item 5.2 formerly read:
| 5.2 |
an individual in receipt of an ex-gratia payment from the Commonwealth known as assistance for New Zealand non-protected special category visa holders for a disaster:
(a) that occurred in Australia during the 2011-12
*
financial year; and
(b) that the
*
Emergency Management Minister has declared to be a major disaster for the purposes of the Australian Government Disaster Recovery Payment |
the payment |
the payment must be claimed:
(a) after 5 February 2012; and
(b) before 1 December 2012;
and the Minister must make the declaration before 1 June 2012 |
S 51-30 amended by No 50 of 2011, s 3 and Sch 4 item 11, by repealing table item 5.5, effective 1 July 2014. Table item 5.5 formerly read:
| 5.5 |
an individual in receipt of an ex-gratia thalidomide payment from the Commonwealth |
the payment |
none |
S 51-30 amended by No 31 of 2011, s 3 and Sch 1 item 4, by repealing table items 5.1A and 5.1B, effective 1 July 2014. Table items 5.1A and 5.1B formerly read:
| 5.1A |
an individual in receipt of an ex-gratia payment from the Commonwealth known as Disaster Income Recovery Subsidy for:
(a) the floods that occurred in Australia during the period starting on 29 November 2010; or
(b) Cyclone Yasi the payment the payment must be claimed:
(a) after 9 January 2011; and
(b) before 1 March 2011 |
|
|
| 5.1B |
an individual in receipt of an ex-gratia payment from the Commonwealth known as assistance for New Zealand non-protected special category visa holders for a disaster that occurred in Australia during the 2010-11
*
financial year the payment the payment must be claimed:
(a) after 30 January 2011; and
(b) before 1 August 2011 |
S 51-30 amended by No 119 of 2013, s 3 and Sch 2 item 1, by substituting table item 5.4, effective 29 June 2013. Table item 5.4 formerly read:
| 5.4 |
an individual in receipt of an ex-gratia payment from the Commonwealth known as Disaster Income Recovery Subsidy for the floods that occurred in Queensland during the period starting on 21 January 2013 |
the payment |
the payment must be claimed:
(a) after 20 January 2013; and
(b) before 5 August 2013 |
S 51-30 amended by No 85 of 2013, s 3 and Sch 2 item 2, by substituting table items 5.2 to 5.4 for table item 5.1C, effective 28 June 2013. Table item 5.1C formerly read:
| 5.1C |
an individual in receipt of an ex-gratia payment from the Commonwealth known as assistance for New Zealand non-protected special category visa holders for the floods that occurred in New South Wales and Queensland in January, February and March 2012 |
the payment |
the payment must be claimed:
(a) after 5 February 2012; and
(b) before 7 August 2012 |
S 51-30 amended by No 71 of 2012, s 3 and Sch 3 item 2, by inserting table item 5.1C, effective 27 June 2012.
S 51-30 amended by No 19 of 2010, s 3 and Sch 5 item 5, by repealing table item 5.4, effective 1 July 2011. Table item 5.4 formerly read:
| 5.4 |
an individual in receipt of an ex-gratia payment from the Commonwealth known as Income Recovery Subsidy for the North Western Queensland floods of January and February 2009 |
the payment |
the payment must be claimed:
(a) after 24 February 2009; and
(b) before 13 April 2009. |
S 51-30 amended by
No 14 of 2009
, s 3 and Sch 5 item 6, by repealing table items 5.2 and 5.3, effective 1 July 2011. Table items 5.2 and 5.3 formerly read:
| 5.2 |
an individual in receipt of an ex-gratia payment from the Commonwealth known as Income Recovery Subsidy for the Victorian bushfires of January and February 2009 |
the payment |
the payment must be claimed:
(a) after 28 January 2009; and
(b) before 13 May 2009 |
|
|
| 5.3 |
an individual in receipt of an ex-gratia payment from the Commonwealth known as Income Recovery Subsidy for the North Queensland floods of January and February 2009 |
the payment |
the payment must be claimed:
(a) after 30 January 2009; and
(b) before 13 May 2009 |
S 51-30 amended by No 50 of 2011, s 3 and Sch 4 item 2, by inserting table items 5.5 and 5.6, effective 27 June 2011. No 50 of 2011, s 3 and Sch 4 item 3 contains the following application provisions:
3 Application of amendments
(1)
The amendments made by items 1 and 2 of this Schedule in relation to ex-gratia thalidomide payments apply to assessments for the 2010-11 and 2011-12 income years.
(2)
The amendments made by items 1 and 2 of this Schedule in relation to payments from the Thalidomide Australia Fixed Trust apply to assessments for the 2010-11 income year and later income years.
S 51-30 amended by No 31 of 2011, s 3 and Sch 1 item 2, by inserting table items 5.1A and 5.1B, effective 25 May 2011.
S 51-30 amended by No 19 of 2010, s 3 and Sch 5 item 3, by inserting table item 5.4 at the end, applicable in relation to the 2008-09 income year.
S 51-30 amended by
No 14 of 2009
, s 3 and Sch 5 item 3, by inserting table items 5.2 and 5.3 at the end of the table, applicable in relation to the 2008-09 income year.
S 51-30 amended by
No 97 of 2008
, s 3 and Sch 3 item 70, by repealingformer table items 5.2 and 5.3, effective 3 October 2008. The table items formerly read:
5.2 ... a person who pays or is liable to pay rent ... rent subsidy payments under the Mortgage and Rent Relief Scheme by an
*
Australian government agency ... none
5.3 ... a recipient of an open employment incentive bonus ... payments under Part VIIIA of the
Handicapped Persons Assistance Act 1974
... none
S 51-30 inserted by No 121 of 1997.
SECTION 51-32
Compensation payments for loss of tax exempt payments
51-32(1)
A compensation payment for the loss of pay or an allowance for your warlike service is exempt from income tax if:
(a)
the compensation payment is made under the
Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988
in respect of an injury (as defined in that Act) you suffered; and
(b)
you suffered your injury while covered by a certificate in force under paragraph
23AD(1)(a)
of the
Income Tax Assessment Act 1936
; and
(c)
your injury or disease caused the loss of your pay or allowance; and
(d)
your pay or allowance was payable under the
Defence Act 1903
or under a determination under that Act.
History
S 51-32(1) amended by No 108 of 2017, s 3 and Sch 3 item 12, by substituting
"
Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988
"
for
"
Safety, Rehabilitation and Compensation Act 1988
"
in para (a), effective 12 October 2017.
51-32(2)
A compensation payment for the loss of pay or an allowance for your warlike service is exempt from income tax if:
(a)
the compensation payment is made under the
Military Rehabilitation and Compensation Act 2004
in respect of a service injury or disease (as defined in that Act); and
(b)
you sustained your service injury or contracted your service disease, or your service injury or disease was aggravated or materially contributed to, while covered by a certificate in force under paragraph
23AD(1)(a)
of the
Income Tax Assessment Act 1936
; and
(c)
your injury or disease caused the loss of your pay or allowance; and
(d)
your pay or allowance was payable under the
Defence Act 1903
or under a determination under that Act.
51-32(3)
Subsections (4) and (5) apply to:
(a)
a deployment allowance; or
(b)
some other allowance that is exempt from income tax specified in writing by the
*
Defence Minister for the purposes of this subsection;
that is payable under a determination under the
Defence Act 1903
for your non-warlike service.
History
S 51-32(3) amended by No 88 of 2009, s 3 and Sch 5 items 143 and 144, by substituting
"
*
Defence Minister
"
for
"
Minister administering section 1 of the
Defence Act 1903
"
in para (b) and substituting
"
the
Defence Act 1903
"
for
"
that Act
"
, effective 18 September 2009.
51-32(4)
A compensation payment for the loss of the allowance is exempt from income tax if:
(a)
the compensation payment is made under the
Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988
in respect of an injury (as defined in that Act) you suffered; and
(b)
your injury caused the loss of your allowance.
History
S 51-32(4) amended by No 108 of 2017, s 3 and Sch 3 item 12, by substituting
"
Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988
"
for
"
Safety, Rehabilitation and Compensation Act 1988
"
in para (a), effective 12 October 2017.
51-32(5)
A compensation payment for the loss of the allowance is exempt from income tax if:
(a)
the compensation payment is made under the
Military Rehabilitation and Compensation Act 2004
in respect of a service injury or disease (as defined in that Act); and
(b)
your injury or disease caused the loss of your allowance.
History
S 51-32 substituted by No 52 of 2004, s 3 and Sch 4 item 10, applicable to assessments for the 2004-05 income year and later income years.
Act No 52 of 2004, s 3 and Sch 4 item 14, contained the following application provision:
14(3)
Subsections 51-32(1) and (4) and 51-33(1) of the
Income Tax Assessment Act 1997
, substituted by item 10, apply to assessments for the 1996-97 income year and later income years.
Act No 52 of 2004, s 3 and Sch 4 item 15, contained the following provision:
Amendment of assessments
15
Section 170 of the
Income Tax Assessment Act 1936
does not prevent the amendment of an assessment made before the commencement of this item for the purposes of giving effect to subsections 51-32(1) and (4) and 51-33(1) of the
Income Tax Assessment Act 1997
substituted by item 10.
S 51-32 formerly read:
Compensation payments for loss of deployment allowance for warlike service
51-32
A compensation payment for the loss of your deployment allowance for warlike service is exempt from income tax if:
(a)
the payment is made under the
Safety, Rehabilitation and Compensation Act 1988
in respect of an injury (as defined in that Act) you suffered; and
(b)
you suffered your injury while covered by a certificate in force under paragraph 23AD(1)(a) of the
Income Tax Assessment Act 1936
; and
(c)
your injury caused the loss of your deployment allowance; and
(d)
your deployment allowance was payable under a determination under the
Defence Act 1903
.
S 51-32 inserted by No 65 of 2003.
SECTION 51-33
Compensation payments for loss of pay and/or allowances as a Defence reservist
51-33(1)
A compensation payment for the loss of your pay or an allowance is exempt from income tax if:
(a)
the compensation payment is made under the
Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988
in respect of an injury (as defined in that Act) you suffered; and
(b)
you suffered your injury while serving as a member of the Naval Reserve, Army Reserve or Air Force Reserve (but not while on continuous full time service); and
(c)
your pay or allowance was payable for service of a kind described in paragraph (b).
History
S 51-33(1) amended by No 108 of 2017, s 3 and Sch 3 item 12, by substituting
"
Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988
"
for
"
Safety, Rehabilitation and Compensation Act 1988
"
in para (a), effective 12 October 2017.
51-33(2)
A compensation payment for the loss of your pay or an allowance is exempt from income tax if:
(a)
the compensation payment is made under the
Military Rehabilitation and Compensation Act 2004
in respect of a service injury or disease (as defined in that Act); and
(b)
you sustained your service injury or contracted your service disease, or your service injury or disease was aggravated or materially contributed to, while serving as a member of the Naval Reserve, Army Reserve or Air Force Reserve; and
(c)
your pay or allowance was payable for service of a kind described in paragraph (b); and
(d)
the compensation payment is worked out by reference to your normal earnings (as defined in that Act) as a part-time Reservist (as defined in that Act).
History
S 51-33 substituted by No 52 of 2004, s 3 and Sch 4 item 10, applicable to assessments for the 2004-05 year of income and later years of income.
Act No 52 of 2004, s 3 and Sch 4 item 14, contained the following application provision:
14(3)
Subsections 51-32(1) and (4) and 51-33(1) of the
Income Tax Assessment Act 1997
, substituted by item 10, apply to assessments for the 1996-97 income year and later income years.
Act No 52 of 2004, s 3 and Sch 4 item 15, contained the following provision:
Amendment of assessments
15
Section 170 of the
Income Tax Assessment Act 1936
does not prevent the amendment of an assessment made before the commencement of this item for the purposes of giving effect to subsections 51-32(1) and (4) and 51-33(1) of the
Income Tax Assessment Act 1997
substituted by item 10.
S 51-33 formerly read:
Compensation payments for loss of pay and/or allowances as a Defence reservist
51-33
A compensation payment for the loss of your pay and/or allowances is exempt form income tax if:
(a)
the payment is made under the
Safety, Rehabilitation and Compensation Act 1988
in respect of an injury (as defined in that Act) you suffered; and
(b)
you suffered your injury while serving as a member of the Naval Reserve, Army Reserve or Air Force Reserve (but not while on continuous full time service); and
(c)
your injury was the sole or dominant reason for you stopping being a member of that Reserve; and
(d)
your pay and/or allowances were payable for service of a kind described in paragraph (b).
S 51-33 inserted by No 65 of 2003.
SECTION 51-35
51-35
Payments to a full-time student at a school, college or university
The following payments made to or on behalf of a full-time student at a school, college or university are
not
exempt from income tax under item 2.1A of the table in section 51-10:
(a)
a payment by the Commonwealth for assistance for secondary education or in connection with education of isolated children;
(b)
a
*
Commonwealth education or training payment;
(c)
a payment by an entity or authority on the condition that the student will (or will if required) become, or continue to be, an employee of the entity or authority;
(d)
a payment by an entity or authority on the condition that the student will (or will if required) enter into, or continue to be a party to, a contract with the entity or authority that is wholly or principally for the labour of the student;
(e)
a payment under a scholarship where the scholarship is not provided principally for educational purposes;
(f)
an education entry payment under Part 2.13A of the
Social Security Act 1991
.
Note:
The whole or part of a Commonwealth education or training payment may be exempt under Subdivision
52-E
or
52-F
.
History
S 51-35 amended by No 184 of 2007, s 3 and Sch 3 item 2, by substituting
"
52-E or 52-F
"
for
"
52-F
"
in the note, applicable in relation to a payment made on or after 1 January 2008.
S 51-35 amended by
No 58 of 2006
, s 3 and Sch 7 item 189, by substituting paras (c) and (d), effective 5 July 1999. Paras (c) and (d) formerly read:
(c)
a payment by a person or an authority on the condition that the student will (or will if required) become, or continue to be, an employee of the person or authority;
(d)
a payment by a person or an authority on the condition that the student will (or will if required) enter into, or continue to be a party to, a contract with the person or authority that is wholly or principally for the labour of the student;
S 51-35 inserted by No 54 of 1999.
SECTION 51-40
51-40
Payments to a secondary student
The following payments made to or on behalf of a student are
not
exempt from income tax under item 2.1B of the table in section
51-10
:
(a)
a
*
Commonwealth education or training payment;
(b)
an education entry payment under Part 2.13A of the
Social Security Act 1991
.
Note:
The whole or part of a Commonwealth education or training payment may be exempt under Subdivision
52-E
or
52-F
.
History
S 51-40 amended by No 184 of 2007, s 3 and Sch 3 item 3, by substituting
"
52-E or 52-F
"
for
"
52-F
"
, applicable in relation to a payment made on or after 1 January 2008.
S 51-40 inserted by No 54 of 1999.
SECTION 51-42
Bonuses for early completion of an apprenticeship
51-42(1)
The bonus must be provided under a scheme provided by a State or Territory, and the scheme must be specified in the regulations for the purposes of this section.
51-42(2)
The apprenticeship:
(a)
must be for an occupation of a kind specified in the regulations; and
(b)
must be completed within a time frame specified in the regulations for apprenticeships of that kind.
History
S 51-42 inserted by
No 38 of 2008
, s 3 and Sch 5 item 3, applicable to assessments for the 2007-08 income year and later income years.
SECTION 51-43
Income collected or derived by copyright collecting society
51-43(1)
This section applies to a
*
copyright collecting society if Division
6
of Part
III
of the
Income Tax Assessment Act 1936
applies to the income of the society.
51-43(2)
The following are exempt from income tax:
(a)
*
royalties, and interest on royalties, collected or
*
derived by the society in an income year;
(b)
any other amounts, relating to copyright, that are:
(i)
derived by the society in an income year; and
(ii)
prescribed by the regulations for the purposes of this paragraph;
(c)
other
*
ordinary income and
*
statutory income derived by the society in an income year, to the extent that it does not exceed the lesser of:
(i)
5% of the total amount of the
*
ordinary income and
*
statutory income collected and derived by the society in the income year; and
(ii)
$
5 million or such other amount as is prescribed by the regulations for the purposes of this subparagraph.
History
S 51-43 substituted by No 126 of 2009, s 3 and Sch 1 item 8, effective 9 June 2010, and applicable to the 2009/10 income year and later income years.
No 126 of 2009, s 3 and Sch 1 item 9 contains the following transitional provision:
9 Transitional
-
regulations
9(1)
Regulations:
(a)
made for the purposes of paragraph (b) of the definition of
copyright income
in subsection
995-1(1)
of the
Income Tax Assessment Act 1997
; and
(b)
in force just before the commencement of this item;
have effect, from that commencement, as if they had been made for the purposes of paragraph 51-43(2)(b) of that Act, as substituted.
9(2)
Regulations:
(a)
made for the purposes of subparagraph 51-43(2)(b)(ii) of the
Income Tax Assessment Act 1997
; and
(b)
in force just before the commencement of this item;
have effect, from that commencement, as if they had been made for the purposes of subparagraph 51-43(2)(c)(ii) of that Act, as substituted.
S 51-43 formerly read:
SECTION 51-43 Income collected or derived by a copyright collecting society
51-43(1)
This section applies to a
*
copyright collecting society if Division 6 of Part III of the
Income Tax Assessment Act 1936
applies to the income of the society.
51-43(2)
The following are exempt from income tax:
(a)
*
copyright income collected or
*
derived by the society in an income year;
(b)
*
non-copyright income derived by the society in an income year to the extent that it does not exceed the lesser of:
(i)
5% of the total amount of the copyright income and non-copyright income collected and derived by the society in the income year; and
(ii)
$
5 million or such other amount as is prescribed by the regulations for the purposes of this subparagraph.
S 51-43 inserted by No 23 of 2005, s 3 and Sch 2 item 6, applicable to copyright income, and non-copyright income, collected or derived by a copyright collecting society on or after 1 July 2002, unless the society has made an election in accordance with section
410-1
of the
Income Tax (Transitional Provisions) Act 1997
. If the society has made an election, then from 1 July 2004, the amendment applies to all copyright income, and non-copyright income, collected or derived by the society on or after 1 July 2004.
SECTION 51-45
Income collected or derived by resale royalty collecting society
51-45(1)
This section applies to the
*
resale royalty collecting society if Division
6
of Part
III
of the
Income Tax Assessment Act 1936
applies to the income of the society.
51-45(2)
The following are exempt from income tax:
(a)
*
resale royalties, and interest on resale royalties, collected or
*
derived by the society in an income year;
(b)
any other amounts, relating to
*
resale royalty rights, that are:
(i)
derived by the society in an income year; and
(ii)
prescribed by the regulations for the purposes of this paragraph;
(c)
other
*
ordinary income and
*
statutory income derived by the society in an income year, to the extent that it does not exceed the lesser of:
(i)
5% of the total amount of the ordinary income and statutory income collected and derived by the society in the income year; and
(ii)
$
5 million or such other amount as is prescribed by the regulations for the purposes of this subparagraph.
History
S 51-45 inserted by No 126 of 2009, s 3 and Sch 1 item 8, effective 9 June 2010, and applicable to the 2009/10 income year and later income years.
51-48
(Repealed) SECTION 51-48 Taxable amounts relating to franchise fees windfall tax
(Repealed by No 66 of 2003)
History
S 51-48 inserted by No 134 of 1997.
51-49
(Repealed) SECTION 51-49 Taxable amounts relating to Commonwealth places windfall tax
(Repealed by No 66 of 2003)
History
S 51-49 inserted by No 23 of 1998.
SECTION 51-50
Maintenance payments to a spouse or child
51-50(1)
This section sets out the conditions on which a periodic payment, in the nature of maintenance, that:
(a)
is made by an individual (the
maintenance payer
); or
(b)
is attributable to a payment made by an individual (also the
maintenance payer
);
is exempt from income tax under item 5.1 of the table in section 51-30.
51-50(2)
The maintenance payment is exempt from income tax only if it is made:
(a)
to an individual who is or has been the maintenance payer's
*
spouse; or
(b)
to or for the benefit of an individual who is or has been:
(i)
a
*
child of the maintenance payer; or
(ii)
a child who is or has been a child of an individual who is or has been a
*
spouse of the maintenance payer.
51-50(3)
The maintenance payment is
not
exempt if, in order to make it or a payment to which it is attributable, the maintenance payer:
(a)
divested any income-producing assets; or
(b)
diverted
*
ordinary income or
*
statutory income upon which the maintenance payer would otherwise have been liable to income tax.
History
S 51-50 inserted by No 121 of 1997.
SECTION 51-52
Income derived from eligible venture capital investments by ESVCLPs
General
51-52(1)
An entity's share of income derived from an
*
eligible venture capital investment is exempt from income tax if:
(a)
the entity is a partner in a
*
limited partnership; and
(b)
the partnership made the investment; and
(c)
the investment meets all of the
*
additional investment requirements for ESVCLPs for the investment; and
(d)
when the partnership made the investment, the partnership was an
*
early stage venture capital limited partnership that was
*
unconditionally registered; and
(e)
when the income was derived, the partnership:
(i)
owned the investment; and
(ii)
was an early stage venture capital limited partnership that was unconditionally registered.
Partners in AFOFs
51-52(2)
An entity's share of income derived from an
*
eligible venture capital investment is exempt from income tax if:
(a)
the entity is a partner in an
*
AFOF; and
(b)
the AFOF is a partner in a partnership that made the investment; and
(c)
when the partnership made the investment, the partnership was an
*
early stage venture capital limited partnership that was
*
unconditionally registered; and
(d)
the investment meets all of the
*
additional investment requirements for ESVCLPs for the investment; and
(e)
when the income was derived, the partnership:
(i)
owned the investment; and
(ii)
was an early stage venture capital limited partnership that was unconditionally registered.
Residency requirements for general partners
51-52(3)
However, if the entity is a
*
general partner in the partnership, this section does not apply to the entity unless the entity is:
(a)
an Australian resident; or
(b)
a resident of a foreign country in respect of which a double tax agreement (as defined in Part
X
of the
Income Tax Assessment Act 1936
) is in force that is an agreement of a kind referred to in subparagraph (b)(i), (ia), (ii), (iii), (iv) or (v) of that definition.
51-52(4)
For the purposes of this section, the place of residence of a
*
general partner in a
*
limited partnership:
(a)
that is a company or limited partnership; and
(b)
that is not an Australian resident;
is the place in which the general partner has its central management and control.
Beneficiaries
'
shares of capital gains made by unit trusts
51-52(5)
For the purposes of this section, an entity's share of income derived from an
*
eligible venture capital investment that is an investment in a unit trust includes any present entitlement of the entity, as a beneficiary, to a share of an amount included in the assessable income of the unit trust under section
102-5
.
Carried interests
51-52(6)
This section does not apply to an entity's share of income derived from an
*
eligible venture capital investment to the extent that the income is a payment of a
*
carried interest of a
*
general partner in an
*
ESVCLP or an
*
AFOF.
History
S 51-52 inserted by
No 78 of 2007
, s 3 and Sch 8 item 105, applicable to assessments for the 2007-2008 year of income and later years of income.
SECTION 51-54
Gain or profit from disposal of eligible venture capital investments
Partners in VCLPs and ESVCLPs
51-54(1)
An entity
'
s share of any gain or profit made from the disposal or other realisation of an
*
eligible venture capital investment is exempt from income tax if:
(a)
it is made by a
*
VCLP, or an
*
ESVCLP, that is
*
unconditionally registered; and
(b)
were that disposal or other realisation to be a
*
disposal of a
*
CGT asset, the entity
'
s share of any
*
capital gain or
*
capital loss would be disregarded under section
118-405
or
118-407
.
History
S 51-54(1) amended by
No 78 of 2007
, s 3 and Sch 8 items 106 to 108, by inserting
"
, or an
*
ESVCLP,
"
after
"
*
VCLP
"
in para (a) and inserting
"
or 118-407
"
at the end of para (b), applicable to assessments for the 2007-2008 year of income and later years of income.
51-54(1A)
An entity
'
s share of any gain or profit made:
(a)
by an
*
ESVCLP that is
*
unconditionally registered; and
(b)
from the disposal or other realisation of an
*
eligible venture capital investment;
is exempt from income tax to the extent that, were that disposal or other realisation to be a
*
disposal of a
*
CGT asset, the equivalent
*
capital gain arising from the
*
CGT event would be disregarded because of a partial exemption from the CGT event under section
118-408
.
History
S 51-54(1A) inserted by No 54 of 2016, s 3 and Sch 2 item 8, applicable in relation to the 2016-17 income year and later income years.
Partners in AFOFs
51-54(2)
An entity
'
s share of any gain or profit made from the disposal or other realisation of an
*
eligible venture capital investment is exempt from income tax if:
(a)
it is made by:
(i)
an
*
AFOF that is
*
unconditionally registered; or
(ii)
a
*
VCLP, or an
*
ESVCLP, that is unconditionally registered and in which an AFOF that is
*
unconditionally registered is a partner; and
(b)
were that disposal or other realisation to be a
*
disposal of a
*
CGT asset, the entity
'
s share of any
*
capital gain or
*
capital loss would be disregarded under section
118-410
.
History
S 51-54(2) amended by
No 78 of 2007
, s 3 and Sch 8 item 109, by inserting
"
, or an
*
ESVCLP,
"
after
"
*
VCLP
"
in para (a)(ii), applicable to assessments for the 2007-2008 year of income and later years of income.
Eligible venture capital investors
51-54(3)
Any gain or profit made from the disposal or other realisation of an
*
eligible venture capital investment is exempt from income tax if:
(a)
you are an
*
eligible venture capital investor; and
(b)
were that disposal or other realisation to be a
*
disposal of a
*
CGT asset, any
*
capital gain or
*
capital loss would be disregarded under section
118-415
.
History
S 51-54 inserted by No 136 of 2002.
SECTION 51-55
51-55
Gain or profit from disposal of venture capital equity
Any gain or profit made from the disposal or other realisation of
*
venture capital equity in a
*
resident investment vehicle is exempt from income tax if:
(a)
it is made by a
*
venture capital entity or a
*
limited partnership referred to in subsection
118-515(2)
; and
(b)
if that disposal or other realisation were a
*
disposal of a
*
CGT asset, any
*
capital gain or
*
capital loss would be disregarded under Subdivision
118-G
.
History
S 51-55 inserted by No 165 of 1999.
SECTION 51-57
Interest on judgment debt relating to personal injury
51-57(1)
An amount paid by way of interest on a judgment debt, whether payable under an
*
Australian law, or otherwise, is exempt from income tax if:
(a)
the judgment debt arose from a judgment (the
original judgment
) given by, or entered in, a court for an award of damages for personal injury; and
(b)
the amount is in respect of the whole or any part of the period:
(i)
beginning at the time of the original judgment, or, if the judgment debt is taken to have arisen at an earlier time, at that earlier time; and
(ii)
ending when the original judgment is finalised.
History
S 51-57(1) amended by
No 143 of 2007
, s 3 and Sch 7 item 35, by substituting
"
an
*
Australian law
"
for
"
a law of the Commonwealth, a State or Territory
"
, effective 24 September 2007.
51-57(2)
For the purposes of subsection (1), an original judgment is
finalised
at whichever of the following times is applicable:
(a)
if the period for lodging an appeal against either the original judgment or a subsequent related judgment ends without an appeal being lodged
-
the end of the period;
(b)
if an appeal from either the original judgment or a subsequent related judgment is lodged and final judgment on the appeal is given by, or entered in, a court
-
when the final judgment takes effect;
(c)
if an appeal from either the original judgment or a subsequent related judgment is lodged but is settled or discontinued
-
when the settlement or discontinuance takes effect.
51-57(3)
For the purposes of paragraph (2)(b), a judgment is a
final judgment
if:
(a)
no appeal lies against the judgment; or
(b)
leave to appeal against the judgment has been refused.
History
S 51-57 (renumbered from s 51-55 by No 136 of 2002) and inserted by No 58 of 2000.
SECTION 51-60
Prime Minister
'
s Prizes
51-60(1)
To the extent that the Prime Minister
'
s Prize for Australian History would otherwise be assessable income, it is exempt from income tax.
51-60(2)
To the extent that the Prime Minister
'
s Prize for Science would otherwise be assessable income, it is exempt from income tax.
51-60(3)
To the extent that a Prime Minister
'
s Literary Award would otherwise be assessable income, it is exempt from income tax.
History
S 51-60(3) inserted by
No 32 of 2008
, s 3 and Sch 2 item 2, applicable to assessments for the 2007-08 income year and later income years.
S 51-60 inserted by
No 164 of 2007
, s 3 and Sch 5 item 2, applicable to assessments for the 2006-07 income year and later income years.
History
Archived:
Former s 51-60 repealed as inoperative by
No 101 of 2006
, s 3 and Sch 1 item 230, effective 14 September 2006. For
application and savings provisions
and for former wording see the
CCH Australian Income Tax Legislation archive
.
51-65
(Repealed) SECTION 51-65 Government co-contribution towards low income earner
'
s superannuation
(Repealed by No 15 of 2007)
History
S 51-65 repealed by No 15 of 2007, s 3 and Sch 1 item 181, applicable to the 2007-2008 income year and later years. S 51-65 formerly read:
SECTION 51-65 Government co-contribution towards low income earner
'
s superannuation
51-65
The following are exempt from income tax:
(a)
a Government co-contribution in respect of you under the
Superannuation (Government Co-contribution for Low Income Earners) Act 2003
that is paid to you, or to your legal personal representative;
(b)
a payment to you, or to your legal personal representative, of the balance of an account under the
Small Superannuation Accounts Act 1995
to the extent to which the balance represents a Government co-contribution or co-contributions in respect of you under the
Superannuation (Government Co-contribution for Low Income Earners) Act 2003
.
Note:
A Government co-contribution in respect of you paid to another person (such as the trustee of a complying superannuation fund) would not be income of yours according to ordinary concepts.
S 51-65 inserted by No 111 of 2003.
SECTION 51-100
Shipping
51-100(1)
An entity
'
s
*
ordinary income
*
derived during an income year (the
present year),
or
*
statutory income for the present year, is exempt from income tax to the extent that it is from
*
shipping activities that:
(a)
relate to a vessel for which the entity has a
*
shipping exempt income certificate for the present year; and
(b)
take place on a day (a
certified day
) to which the certificate applies.
Note:
For the days to which the certificate applies, see subsection 8(5) of the
Shipping Reform (Tax Incentives) Act 2012.
51-100(2)
Subsection (1) does not apply to
*
ordinary income
*
derived from, or
*
statutory income from,
*
incidental shipping activities relating to the vessel if:
Total incidental shipping income
>
0.25% of total core shipping income
where:
total core shipping income
means the sum of the entity
'
s:
(a)
*
ordinary income
*
derived from
*
core shipping activities relating to the vessel on the certified days (see paragraph (1)(b)); and
(b)
*
statutory income from those activities on those days.
total incidental shipping income
means the sum of the entity
'
s:
(a)
*
ordinary income
*
derived from
*
incidental shipping activities relating to the vessel on the certified days (see paragraph (1)(b)); and
(b)
*
statutory income from those activities on those days.
History
S 51-100 inserted by No 57 of 2012, s 3 and Sch 1 item 4, applicable in relation to shipping activities that take place on or after 1 July 2012.
SECTION 51-105
51-105
Shipping activities
Shipping activities
are
*
core shipping activities or
*
incidental shipping activities.
History
S 51-105 inserted by No 57 of 2012, s 3 and Sch 1 item 4, applicable in relation to shipping activities that take place on or after 1 July 2012.
SECTION 51-110
Core shipping activities
51-110(1)
Core shipping activities
are activities directly involved in operating a vessel to carry
*
shipping cargo or
*
shipping passengers for consideration.
51-110(2)
Without limiting subsection (1),
core shipping activities
include the following:
(a)
carrying the
*
shipping cargo or
*
shipping passengers on the vessel;
(b)
crewing the vessel;
(c)
carrying goods on board for the operation of the vessel (including for the enjoyment of shipping passengers);
(d)
providing the containers that carry shipping cargo on the vessel;
(e)
loading shipping cargo onto, and unloading it from, the vessel;
(f)
repacking shipping cargo to be carried on the vessel;
(g)
providing temporary storage for shipping cargo just before or after its carriage on the vessel;
(h)
providing space on board the vessel for carrying shipping cargo or shipping passengers;
(i)
activities generating onboard income from shipping passengers of the vessel;
(j)
providing shore excursions to shipping passengers of the vessel;
(k)
transporting shipping cargo, or shipping passengers, between the vessel and the shore;
(l)
providing administration and insurance services that are directly related to carrying shipping cargo or shipping passengers on the vessel;
(m)
onboard selling of tickets on behalf of other entities to shipping passengers of the vessel;
(n)
onboard advertising to shipping passengers of the vessel;
(o)
providing quay-side services to shipping passengers that:
(i)
are similar to those provided on the vessel; and
(ii)
are provided from a floor area that does not exceed that from which similar services are provided on the vessel;
(p)
providing car parking to individuals while they are shipping passengers on the vessel;
(q)
making contracts solely to reduce the risk of financial loss from currency exchange rate fluctuations that directly relate to the operation of the vessel;
(r)
an activity specified in regulations made for the purposes of this paragraph.
51-110(3)
Despite subsections (1) and (2),
core shipping activities
do not include an activity specified in regulations made for the purposes of this subsection.
History
S 51-110 inserted by No 57 of 2012, s 3 and Sch 1 item 4, applicable in relation to shipping activities that take place on or after 1 July 2012.
SECTION 51-115
51-115
Incidental shipping activities
Incidental shipping activities
are activities incidental to
*
core shipping activities.
History
S 51-115 inserted by No 57 of 2012, s 3 and Sch 1 item 4, applicable in relation to shipping activities that take place on or after 1 July 2012.
SECTION 51-120
51-120
Interest on unclaimed money and property
The following amounts are exempt from income tax:
(a)
an amount of interest paid under paragraph
69(7AA)(b)
of the
Banking Act 1959
;
Note:
An amount of interest paid under paragraph
69(7AA)(a)
of the
Banking Act 1959
is not ordinary income or statutory income.
(b)
an amount of interest paid under subsection
1341(3A)
of the
Corporations Act 2001
;
(c)
-
(d)
(Repealed by No 70 of 2015)
(e)
an amount of interest paid under paragraph 216(7A)(b) of the
Life Insurance Act 1995
.
Note:
An amount of interest paid under paragraph 216(7A)(a) of the
Life Insurance Act 1995
is not ordinary income or statutory income.
Note:
For interest paid under the
Superannuation (Unclaimed Money and Lost Members) Act 1999
, see subsections
307-142(3B)
and
(3C)
.
History
S 51-120 amended by No 70 of 2015, s 3 and Sch 1 item 70, by repealing para (c) and (d), effective 1 July 2015. Para (c) and (d) formerly read:
(c)
an amount of interest paid under subsection
51C(1A)
of the
First Home Saver Accounts Act 2008
;
(d)
an amount an
*
FHSA provider contributes or pays under paragraph
51C(2)(b)
of the
First Home Saver Accounts Act 2008
because it receives an amount under subsection 51C(1A);
S 51-120 inserted by No 88 of 2013, s 3 and Sch 1 item 34, effective 1 July 2013.
SECTION 51-125
2018 storms
-
relief payments
51-125(1)
A payment is exempt from income tax if the payment:
(a)
is made to a primary producer for the purposes of an agreement covered by subsection (2); and
(b)
relates to storm damage sustained by the primary producer on or around 25 October 2018.
51-125(2)
An agreement is covered by this subsection if:
(a)
the parties to the agreement are the Commonwealth and the Foundation for Rural and Regional Renewal; and
(b)
the objective of the agreement is principally to assist primary producers affected by storms that occurred on or around 25 October 2018.
Note:
Payments may be made to primary producers by the Foundation for Rural and Regional Renewal, or by other entities on behalf of the Foundation.
History
S 51-125 inserted by No 30 of 2019, s 3 and Sch 2 item 2, effective 1 July 2019 and applicable to assessments for the 2018-19 income year and later income years.
Division 52
-
Certain pensions, benefits and allowances are exempt from income tax
History
Div 52 inserted by No 121 of 1997.
SECTION 52-1
What this Division is about
Certain payments made under various Acts are wholly or partly exempt from income tax. This Division tells you if a payment is exempt and how much is exempt.
History
S 52-1 inserted by No 121 of 1997.
Subdivision 52-A
-
Exempt payments under the Social Security Act 1991
SECTION 52-5
What this Subdivision is about
This Subdivision tells you:
(a) the payments under the
Social Security Act 1991
that are wholly or partly exempt from income tax; and
(b) any special circumstances, conditions or exceptions that apply to a payment in order for it to be exempt; and
(c) how to work out how much of a payment is exempt.
History
S 52-5 inserted by No 121 of 1997.
Operative provisions
SECTION 52-10
How much of a social security payment is exempt
?
52-10(1)
The table in this section tells you about the income tax treatment of social security payments, other than payments of:
(a)
pension bonus and pension bonus bereavement payment; or
(aa)
child disability assistance; or
(ab)
carer supplement; or
(ac)
one-off energy assistance payment under the
Social Security Act 1991
; or
(ad)
first 2020 economic support payment under the
Social Security Act 1991
; or
(ae)
second 2020 economic support payment under the
Social Security Act 1991
; or
(af)
additional economic support payment 2020 under the
Social Security Act 1991
; or
(ag)
additional economic support payment 2021 under the
Social Security Act 1991
; or
(b)
(Repealed by No 12 of 2012)
(ba)
(Repealed by No 107 of 2020)
(baa)
(Repealed by No 107 of 2020)
(bab)
(Repealed by No 107 of 2020)
(bb)
payments under a scheme referred to in subsection
(1CB)
; or
(c)
one-off payment to carers (carer payment related); or
(d)
one-off payment to carers (carer allowance related); or
(e)
2005 one-off payment to carers (carer payment related); or
(f)
2005 one-off payment to carers (carer service pension related); or
(g)
2005 one-off payment to carers (carer allowance related); or
(h)
2006 one-off payment to carers (carer payment related); or
(i)
2006 one-off payment to carers (wife pension related); or
(j)
2006 one-off payment to carers (partner service pension related); or
(k)
2006 one-off payment to carers (carer service pension related); or
(l)
2006 one-off payment to carers (carer allowance related); or
(m)
2007 one-off payment to carers (carer payment related); or
(n)
2007 one-off payment to carers (wife pension related); or
(o)
2007 one-off payment to carers (partner service pension related); or
(p)
2007 one-off payment to carers (carer service pension related); or
(q)
2007 one-off payment to carers (carer allowance related); or
(r)
2008 one-off payment to carers (carer payment related); or
(s)
2008 one-off payment to carers (wife pension related); or
(t)
2008 one-off payment to carers (partner service pension related); or
(u)
2008 one-off payment to carers (carer service pension related); or
(v)
2008 one-off payment to carers (carer allowance related); or
(w)
payments under a scheme referred to in subsection
(1E)
; or
(wa)
payments under the
Social Security Act 1991
referred to in subsection
(1EA)
; or
(wb)
(Repealed by No 55 of 2016)
(x)
economic security strategy payment under the
Social Security Act 1991
; or
(y)
training and learning bonus under the
Social Security Act 1991
; or
(z)
(Repealed by No 13 of 2014)
(za)
education entry payment supplement under the
Social Security Act 1991
; or
(zb)
clean energy payments under the
Social Security Act 1991
; or
(zc)
2022 cost of living payment under the
Social Security Act 1991
.
Note:
Section
52-40
sets out the provisions of the
Social Security Act 1991
under which the payments are made.
History
S 52-10(1) amended by No 14 of 2022, s 3 and Sch 8 item 2, by inserting para (zc), effective 1 April 2022.
S 52-10(1) amended by No 107 of 2020, s 3 and Sch 3 item 3, by repealing para (ba), (baa) and (bab), effective 27 November 2020. Para (ba), (baa) and (bab) formerly read:
(ba)
2006 one-off payment to older Australians; or
(baa)
2007 one-off payment to older Australians; or
(bab)
2008 one-off payment to older Australians; or
S 52-10(1) amended by No 97 of 2020, s 3 and Sch 1 item 30, by inserting para (af) and (ag), effective 14 November 2020.
S 52-10(1) amended by No 22 of 2020, s 3 and Sch 4 item 14, by inserting para (ad) and (ae), effective 25 March 2020.
S 52-10(1) amended by No 46 of 2017, s 3 and Sch 1 item 11, by inserting para (ac), effective 19 June 2017.
S 52-10(1) amended by No 55 of 2016, s 3 and Sch 4 item 10, by repealing para (wb), effective 1 January 2017. Para (wb) formerly read:
(wb)
job commitment bonus under the
Social Security Act 1991
; or
S 52-10(1) amended by No 96 of 2014, s 3 and Sch 8 items 16 and 17, by substituting
"
1991
.
"
for
"
1991
; or
"
in para (zb) and repealing para (zc), effective 31 December 2016. Para (zc) formerly read:
(zc)
income support bonus under the
Social Security Act 1991
.
S 52-10(1) amended by No 35 of 2014, s 3 and Sch 1 item 10, by inserting para (wb), effective 1 July 2014.
S 52-10(1) amended by No 13 of 2014, s 3 and Sch 2 item 38, by repealing para (z), applicable in relation to payments made after 1 July 2014, other than any such payment that relates to a day before 1 July 2014. Para (z) formerly read:
(z)
farmers hardship bonus under the
Social Security Act 1991
; or
S 52-10(1) amended by No 5 of 2013, s 3 and Sch 1 item 15, by inserting para (zc), effective 5 March 2013.
S 52-10(1) amended by No 12 of 2012, s 3 and Sch 6 item 119, by repealing para (b), effective 21 March 2012. Para (b) formerly read:
(b)
one-off payment to the aged; or
S 52-10(1) amended by No 141 of 2011, s 3 and Sch 10 item 4, by inserting para (zb), effective 14 May 2012.
S 52-10(1) amended by No 93 of 2010, s 3 and Sch 2 item 56, by inserting para (wa), effective 1 July 2010.
S 52-10(1) amended by No 35 of 2009, s 3 and Sch 1 item 14, by inserting para (ab), effective 27 May 2009.
S 52-10(1) amended by No 4 of 2009, s 3 and Sch 5 item 11, by inserting paras (y) to (za), effective 18 February 2009.
S 52-10(1) amended by No 131 of 2008, s 3 and Sch 5 item 6, by inserting para (x) before the note, effective 1 December 2008.
S 52-10(1) amended by No 19 of 2008, s 3 and Sch 3 item 15, by substituting paras (r) to (w) for para (r), effective 26 May 2008. Para (r) formerly read:
(r)
payments under a scheme referred to in subsection (1E).
S 52-10(1) amended by No 19 of 2008, s 3 and Sch 1 item 18, by inserting paragraph (bab), effective 26 May 2008.
S 52-10(1) amended by No 183 of 2007, s 3 and Sch 1 item 3, by inserting
"
and pension bonus bereavement payment
"
after
"
bonus
"
in para (a), effective 1 January 2008.
S 52-10(1) amended by No 182 of 2007, s 3 and Sch 1 item 16, by inserting para (aa), effective 1 October 2007.
S 52-10(1) amended by No 66 of 2006, s 3 and Sch 1 items 18 and 19, by inserting para (baa) and substituting
"
a scheme
"
for
"
the scheme
"
in para (bb), and by Sch 3 item 14, by substituting para (m) to (r) for para (m), effective 11 May 2007. Para (m) formerly read:
(m)
payments under the schemes referred to in subsections (1E), (1F) and (1G).
S 52-10(1) amended by No 41 of 2006, s 3 and Sch 3 item 14, by substituting para (h) and inserting para (i) to (m), effective 22 May 2006. Para (h) formerly read:
(h)
payments under the schemes referred to in subsections (1E) and (1F).
S 52-10(1) amended by No 41 of 2006, s 3 and Sch 1 item 10, by inserting para (ba) and (bb), effective 22 May 2006.
S 52-10(1) amended by No 55 of 2005 (as amended by No 41 of 2018), No 60 of 2004, No 43 of 2001 and No 67 of 1998.
52-10(1A)
Payments of pension bonus and pension bonus bereavement payment under Part
2.2A
of the
Social Security Act 1991
are exempt from income tax.
History
S 52-10(1A) amended by No 183 of 2007, s 3 and Sch 1 item 4, by inserting
"
and pension bonus bereavement payment
"
after
"
bonus
"
, effective 1 January 2008.
S 52-10(1A) inserted by No 67 of 1998.
52-10(1AA)
Child disability assistance under Part
2.19AA
of the
Social Security Act 1991
is exempt from income tax.
History
S 52-10(1AA) inserted by No 182 of 2007, s 3 and Sch 1 item 17, effective 1 October 2007.
52-10(1AB)
Carer supplement under Part
2.19B
of the
Social Security Act 1991
is exempt from income tax.
History
S 52-10(1AB) inserted by No 35 of 2009, s 3 and Sch 1 item 15, effective 27 May 2009.
52-10(1AC)
One-off energy assistance payments under Part
2.6
of the
Social Security Act 1991
are exempt from income tax.
History
S 52-10(1AC) inserted by No 46 of 2017, s 3 and Sch 1 item 12, effective 19 June 2017.
52-10(1AD)
One-off energy assistance payments under Part
2.6A
of the
Social Security Act 1991
are exempt from income tax.
History
S 52-10(1AD) inserted by No 28 of 2019, s 3 and Sch 1 item 10, effective 6 April 2019.
52-10(1B)
The following payments are exempt from income tax:
(a)
first 2020 economic support payments under Division
1
of Part
2.6B
of the
Social Security Act 1991
;
(b)
second 2020 economic support payments under Division
2
of Part
2.6B
of the
Social Security Act 1991
.
History
S 52-10(1B) inserted by No 22 of 2020, s 3 and Sch 4 item 15, effective 25 March 2020.
Former s 52-10(1B) repealed by No 12 of 2012, s 3 and Sch 6 item 120, effective 21 March 2012. S 52-10(1B) formerly read:
52-10(1B)
One-off payment to the aged under Division 1 of Part 2.2B of the
Social Security Act 1991
is exempt from income tax.
Former s 52-10(1B) amended by No 19 of 2008, s 3 and Sch 1 item 19, by inserting
"
Division 1 of
"
after
"
aged under
"
, effective 26 May 2008.
Former s 52-10(1B) inserted by No 43 of 2001.
52-10(1C)
The following payments are exempt from income tax:
(a)
additional economic support payment 2020 under Division
1
of Part
2.6C
of the
Social Security Act 1991
;
(b)
additional economic support payment 2021 under Division
2
of Part
2.6C
of the Social Security Act 1991.
History
S 52-10(1C) inserted by No 97 of 2020, s 3 and Sch 1 item 31, effective 14 November 2020.
Former s 52-10(1C) repealed by No 12 of 2012, s 3 and Sch 6 item 120, effective 21 March 2012. S 52-10(1C) formerly read:
52-10(1C)
Payments made by the Commonwealth and known as the one-off payment to the aged are exempt from income tax.
Former s 52-10(1C) inserted by No 44 of 2001.
52-10(1CA)
2022 cost of living payment under Division
1
of Part
2.6D
of the
Social Security Act 1991
is exempt from income tax.
History
S 52-10(1CA) inserted by No 14 of 2022, s 3 and Sch 8 item 3, effective 1 April 2022.
Former s 52-10(1CA) repealed by No 107 of 2020, s 3 and Sch 3 item 4, effective 27 November 2020. S 52-10(1CA) formerly read:
52-10(1CA)
The following payments under the
Social Security Act 1991
are exempt from income tax:
(a)
2006 one-off payment to older Australians (see Division 2 of Part 2.2B of that Act);
(b)
2007 one-off payment to older Australians (see Division 3 of Part 2.2B of that Act);
(c)
2008 one-off payment to older Australians (see Division 4 of Part 2.2B of that Act).
Former s 52-10(1CA) substituted for s 52-10(1CA) and (1CAA) by No 19 of 2008, s 3 and Sch 1 item 20, effective 26 May 2008. S 52-10(1CA) formerly read:
52-10(1CA)
Payments of 2006 one-off payment to older Australians under Part 2.2C of the
Social Security Act 1991
are exempt from income tax.
Former s 52-10(1CA) inserted by No 41 of 2006, s 3 and Sch 1 item 11, effective 22 May 2006.
52-10(1CAA)
(Repealed by No 19 of 2008)
History
S 52-10(1CA) substituted for s 52-10(1CA) and (1CAA) by No 19 of 2008, s 3 and Sch 1 item 20, effective 26 May 2008. S 52-10(1CAA) formerly read:
52-10(1CAA)
Payments of 2007 one-off payment to older Australians under Part 2.2D of the
Social Security Act 1991
are exempt from income tax.
S 52-10(1CAA) inserted by No 66 of 2007, s 3 and Sch 1 item 20, effective 11 May 2007.
52-10(1CB)
Payments to older Australians under the following schemes are exempt from income tax:
(a)
a scheme determined under item 1 of Schedule 2 to the
Social Security and Veterans
'
Entitlements Legislation Amendment (One-off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006
;
(b)
a scheme determined under item 1 of Schedule 2 to the
Social Security and Veterans
'
Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007
;
(c)
a scheme determined under item 1 of Schedule 2 to the
Social Security and Veterans
'
Entitlements Legislation Amendment (One-off Payments and Other Budget Measures) Act 2008
.
History
S 52-10(1CB) amended by No 19 of 2008, s 3 and Sch 1 item 21, by inserting para (c) at the end, effective 26 May 2008.
S 52-10(1CB) substituted by No 66 of 2007, s 3 and Sch 1 item 21, effective 11 May 2007. S 52-10(1CB) formerly read:
52-10(1CB)
Payments to older Australians under the scheme determined under item 1 of Schedule 2 to the
Social Security and Veterans
'
Entitlements Legislation Amendment (One-off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006
are exempt from income tax.
S 52-10(1CB) inserted by No 41 of 2006, s 3 and Sch 1 item 11, effective 22 May 2006.
52-10(1D)
The following payments under the
Social Security Act 1991
are exempt from income tax:
(a)
one-off payment to carers (carer payment related) (see Division
1
of Part
2.5A
of that Act);
(b)
one-off payment to carers (carer allowance related) (see Division
1
of Part
2.19A
of that Act);
(c)
2005 one-off payment to carers (carer payment related) (see Division
2
of Part
2.5A
of that Act);
(d)
2005 one-off payment to carers (carer service pension related) (see Division
3
of Part
2.5A
of that Act);
(e)
2005 one-off payment to carers (carer allowance related) (see Division
2
of Part
2.19A
of that Act);
(f)
2006 one-off payment to carers (carer payment related) (see Division
4
of Part
2.5A
of that Act);
(g)
2006 one-off payment to carers (wife pension related) (see Division
5
of Part
2.5A
of that Act);
(h)
2006 one-off payment to carers (partner service pension related) (see Division
6
of Part
2.5A
of that Act);
(i)
2006 one-off payment to carers (carer service pension related) (see Division
7
of Part
2.5A
of that Act); or
(j)
2006 one-off payment to carers (carer allowance related) (see Division
3
of Part
2.19A
of that Act);
(k)
2007 one-off payment to carers (carer payment related) (see Division
8
of Part
2.5A
of that Act);
(l)
2007 one-off payment to carers (wife pension related) (see Division
9
of Part
2.5A
of that Act);
(m)
2007 one-off payment to carers (partner service pension related) (see Division
10
of Part
2.5A
of that Act);
(n)
2007 one-off payment to carers (carer service pension related) (see Division
11
of Part
2.5A
of that Act);
(o)
2007 one-off payment to carers (carer allowance related) (see Division
4
of Part
2.19A
of that Act);
(p)
2008 one-off payment to carers (carer payment related) (see Division
12
of Part
2.5A
of that Act);
(q)
2008 one-off payment to carers (wife pension related) (see Division
13
of Part
2.5A
of that Act);
(r)
2008 one-off payment to carers (partner service pension related) (see Division
14
of Part
2.5A
of that Act);
(s)
2008 one-off payment to carers (carer service pension related) (see Division
15
of Part
2.5A
of that Act);
(t)
2008 one-off payment to carers (carer allowance related) (see Division
5
of Part
2.19A
of that Act).
History
S 52-10(1D) amended by No 19 of 2008, s 3 and Sch 3 items 16 to 31, by substituting
"
Division 1 of Part 2.5A
"
for
"
Part 2.5A
"
in para (a),
"
Division 1 of Part 2.19A
"
for
"
Part 2.19A
"
in para (b),
"
Division 2 of Part 2.5A
"
for
"
Part 2.5B
"
in para (c),
"
Division 3 of Part 2.5A
"
for
"
Part 2.5C
"
in para (d),
"
Division 2 of Part 2.19A
"
for
"
Part 2.19B
"
in para (e),
"
Division 4 of Part 2.5A
"
for
"
Part 2.5D
"
in para (f),
"
Division 5 of Part 2.5A
"
for
"
Part 2.5E
"
in para (g),
"
Division 6 of Part 2.5A
"
for
"
Part 2.5F
"
in para (h),
"
Division 7 of Part 2.5A
"
for
"
Part 2.5G
"
in para (i),
"
Division 3 of Part 2.19A
"
for
"
Part 2.19C
"
in para (j),
"
Division 8 of Part 2.5A
"
for
"
Part 2.5H
"
in para (k),
"
Division 9 of Part 2.5A
"
for
"
Part 2.5J
"
in para (l),
"
Division 10 of Part 2.5A
"
for
"
Part 2.5K
"
in para (m),
"
Division 11 of Part 2.5A
"
for
"
Part 2.5L
"
in para (n) and
"
Division 4 of Part 2.19A
"
for
"
Part 2.19D
"
in para (o) and inserting paras (p) to (t) at the end, effective 26 May 2008.
S 52-10(1D) amended by No 66 of 2007, s 3 and Sch 3 item 15, by inserting para (k) to (o), effective 11 May 2007.
S 52-10(1D) amended by No 41 of 2006, s 3 and Sch 3 item 15, by inserting para (f) to (j), effective 22 May 2006.
S 52-10(1D) substituted by No 55 of 2005 (as amended by No 41 of 2018) and inserted by No 60 of 2004.
52-10(1E)
Payments to carers under the following schemes are exempt from income tax:
(a)
a scheme determined under Schedule 3 to the
Family Assistance Legislation Amendment (More Help for Families
-
One-off Payments) Act 2004
;
(b)
a scheme determined under Schedule 2 to the
Social Security Legislation Amendment (One-off Payments for Carers) Act 2005
;
(c)
a scheme determined under Schedule 4 to the
Social Security and Veterans
'
Entitlements Legislation Amendment (One-off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006
;
(d)
a scheme determined under Schedule 4 to the
Social Security and Veterans
'
Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007
;
(e)
a scheme determined under Schedule 4 to the
Social Security and Veterans
'
Entitlements Legislation Amendment (One-off Payments and Other Budget Measures) Act 2008
.
History
S 52-10(1E) amended by No 19 of 2008, s 3 and Sch 3 item 32, by inserting para (e) at the end, effective 26 May 2008.
S 52-10(1E) substituted for s 52-10(1E) to (1G) by No 66 of 2007, s 3 and Sch 1 item 16, effective 11 May 2007. S 52-10(1E) formerly read:
52-10(1E)
Payments to carers under the scheme determined under Schedule 3 to the
Family Assistance Legislation Amendment (More Help for Families
-
One-off Payments) Act 2004
are exempt from income tax.
S 52-10(1E) inserted by No 60 of 2004.
52-10(1EA)
(Repealed by No 128 of 2015)
History
S 52-10(1EA) repealed by No 128 of 2015, s 3 and Sch 1 item 31, effective 1 July 2017. S 52-10(1EA) formerly read:
52-10(1EA)
The following payments under the
Social Security Act 1991
are exempt from income tax:
(a)
voluntary income management incentive payment (see Part 2.25D of that Act);
(b)
matched savings scheme (income management) payment (see Part 2.25E of that Act).
S 52-10(1EA) inserted by No 93 of 2010, s 3 and Sch 2 item 57, effective 1 July 2010.
52-10(1EB)
(Repealed by No 55 of 2016)
History
S 52-10(1EB) repealed by No 55 of 2016, s 3 and Sch 4 item 11, effective 1 January 2017. No 55 of 2016, s 3 and Sch 4 item 13(6) contains the following saving and transitional provision:
13 Saving and transitional provisions
…
(6)
Despite the amendments, subsection
52-10(1EB)
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to payments of job commitment bonus made before, on or after that commencement.
S 52-10(1EB) formerly read:
52-10(1EB)
Job commitment bonus under the
Social Security Act 1991
is exempt from income tax.
S 52-10(1EB) inserted by No 35 of 2014, s 3 and Sch 1 item 11, effective 1 July 2014.
52-10(1F)
Economic security strategy payment under the
Social Security Act 1991
is exempt from income tax.
History
S 52-10(1F) inserted by No 131 of 2008, s 3 and Sch 5 item 7, effective 1 December 2008.
S 52-10(1E) substituted for s 52-10(1E) to (1G) by No 66 of 2007, s 3 and Sch 1 item 16, effective 11 May 2007. Former s 52-10(1F) formerly read:
52-10(1F)
Payments to carers under the scheme determined under Schedule 2 to the
Social Security Legislation Amendment (One-off Payments for Carers) Act 2005
are exempt from income tax.
Former s 52-10(1F) inserted by No 55 of 2005 (as amended by No 41 of 2018).
52-10(1G)
Training and learning bonus under the
Social Security Act 1991
is exempt from income tax.
History
S 52-10(1G) inserted by No 4 of 2009, s 3 and Sch 5 item 12, effective 18 February 2009.
S 52-10(1E) substituted for s 52-10(1E) to (1G) by No 66 of 2007, s 3 and Sch 1 item 16, effective 11 May 2007. Former s 52-10(1G) formerly read:
52-10(1G)
Payments to carers under the scheme determined under Schedule 4 to the
Social Security and Veterans
'
Entitlements Legislation Amendment (One-off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006
are exempt from income tax.
Former s 52-10(1G) inserted by No 41 of 2006, s 3 and Sch 3 item 16, effective 22 May 2006.
52-10(1H)
(Repealed by No 13 of 2014)
History
S 52-10(1H) repealed by No 13 of 2014, s 3 and Sch 2 item 39, applicable in relation to payments made after 1 July 2014, other than any such payment that relates to a day before 1 July 2014. S 52-10(1H) formerly read:
52-10(1H)
Farmers hardship bonus under the
Social Security Act 1991
is exempt from income tax.
S 52-10(1H) inserted by No 4 of 2009, s 3 and Sch 5 item 12, effective 18 February 2009.
52-10(1J)
Education entry payment supplement under the
Social Security Act 1991
is exempt from income tax.
History
S 52-10(1J) inserted by No 4 of 2009, s 3 and Sch 5 item 12, effective 18 February 2009.
52-10(1K)
Australian Victim of Terrorism Overseas Payment under Part
2.24AA
the
Social Security Act 1991
is exempt from income tax.
History
S 52-10(1K) inserted by No 106 of 2012, s 3 and Sch 1 item 17, effective 22 January 2013.
52-10(1L)
Clean energy payments under the
Social Security Act 1991
are exempt from income tax.
History
S 52-10(1L) inserted by No 141 of 2011, s 3 and Sch 10 item 5, effective 14 May 2012.
52-10(1M)
(Repealed by No 96 of 2014)
History
S 52-10(1M) repealed by No 96 of 2014, s 3 and Sch 8 item 18, effective 31 December 2016. No 96 of 2014, s 3 and Sch 8 item 26 contains the following saving provision:
26 Saving provisions
…
26(3)
Despite the amendment made by item 18, subsection
52-10(1M)
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to payments of income support bonus made before, on or after that commencement under the
Social Security Act 1991
.
…
S 52-10(1M) formerly read:
52-10(1M)
Income support bonus under the
Social Security Act 1991
is exempt from income tax
S 52-10(1M) inserted by No 5 of 2013, s 3 and Sch 1 item 16, effective 5 March 2013.
52-10(2)
Expressions used in this Subdivision that are also used in the
Social Security Act 1991
have the same meaning as in that Act.
52-10(3)
Ordinary payment
means a payment other than a payment made because of a person
'
s death.
|
Income tax treatment of social security payments
|
|
Item
|
Payment
|
Case 1
|
Case 2
|
Case 3
|
Case 4
|
|
1.1 |
Advance pharmaceutical supplement
|
Exempt |
Exempt |
Not applicable |
Not applicable |
|
|
|
2.1 |
Age pension
|
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt |
Exempt up to the tax-free amount (see section
52-25
) |
|
|
|
2AA.1 |
Australian Government Disaster Recovery Payment
|
Exempt |
Exempt |
Not applicable |
Not applicable |
|
|
|
2A.1 |
Austudy payment
|
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt |
Exempt up to the tax-free amount (see section
52-30
) |
|
|
| 3.1 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 3A.1 |
Carer allowance
|
Exempt |
Exempt |
Exempt |
Exempt |
|
|
|
4.1 |
Carer payment:
you are pension age or over |
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt, but if it is made under section
236A
of the
Social Security Act 1991
, exempt only up to the tax-free amount (see section
52-35
) |
Exempt up to the tax-free amount if it is made under section
239
of the
Social Security Act 1991
(see section
52-25
) |
|
|
|
4.2 |
Carer payment:
the care receiver or any of the care receivers is pension age or over |
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt, but if it is made under section
236A
of the
Social Security Act 1991
, exempt only up to the tax-free amount (see section
52-35
) |
Exempt up to the tax-free amount if it is made under section
239
of the
Social Security Act 1991
(see section
52-25
) |
|
|
|
4.3 |
Carer payment:
both you and the care receiver or all of the care receivers are under pension age |
Exempt |
Exempt |
Exempt, but if it is made under section
236A
of the
Social Security Act 1991
, exempt only up to the tax-free amount (see section
52-35
) |
Exempt up to the tax-free amount if it is made under section
239
of the
Social Security Act 1991
(see section
52-25
) |
|
|
|
4.4 |
Carer payment:
you are under pension age and any of the care receivers has died |
Exempt |
Exempt |
Exempt, but if it is made under section
236A
of the
Social Security Act 1991
, exempt only up to the tax-free amount (see section
52-35
) |
Exempt up to the tax-free amount if it is made under section
239
of the
Social Security Act 1991
(see section
52-25
) |
|
|
|
5.1 |
Crisis payment
|
Exempt |
Exempt |
Not applicable |
Not applicable |
|
|
|
6.1 |
Disability support pension:
you are pension age or over |
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt |
Exempt up to the tax-free amount (see section
52-25
) |
|
|
|
6.2 |
Disability support pension:
you are under pension age |
Exempt |
Exempt |
Exempt |
Exempt up to the tax-free amount (see section
52-25
) |
|
|
7.1
| (Repealed by
No 97 of 2008
) |
|
|
|
|
|
|
7.2 |
(Repealed by
No 97 of 2008
) |
|
|
|
|
|
|
8.1 |
(Repealed by No 82 of 2006) |
|
|
|
|
|
|
9.1 |
Double orphan pension
|
Exempt |
Exempt |
Exempt |
Not applicable |
|
|
| 10.1 |
(Repealed by No 64 of 2008) |
|
|
|
|
|
| 11.1 |
(Omitted by No 83 of 1999) |
|
|
|
|
|
| 12.1 |
(Omitted by No 83 of 1999) |
|
|
|
|
|
| 13.1 |
(Omitted by No 83 of 1999) |
|
|
|
|
|
| 13A.1 |
Fares allowance
|
Exempt |
Exempt |
Not applicable |
Not applicable |
|
|
| 14.1 |
Jobseeker payment
|
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt |
Exempt up to the tax-free amount (see section
52-30
) |
|
|
| 14.2 |
(Omitted by No 83 of 1999) |
|
|
|
|
|
| 15.1 |
(Repealed by No 107 of 2020) |
|
|
|
|
|
| 16.1 |
(Repealed by No 107 of 2020) |
|
|
|
|
|
| 17.1 |
(Repealed by No 107 of 2020) |
|
|
|
|
|
| 18.1 |
Mobility allowance
|
Exempt |
Exempt |
Not applicable |
Not applicable |
|
|
| 19.1 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 20.1 |
(Omitted by No 197 of 1997) |
|
|
|
|
|
| 21.1 |
(Omitted by No 197 of 1997) |
|
|
|
|
|
| 21A.1 |
Parenting payment (benefit PP (partnered))
|
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount is exempt (see section
52-15
) |
Exempt |
Exempt up to the tax-free amount (see section
52-30
) |
|
|
| 21A.2 |
(Omitted by No 83 of 1999) |
|
|
|
|
|
| 21A.3 |
Parenting payment (pension PP (single))
|
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount is exempt (see section
52-15
) |
Exempt |
Not applicable |
|
|
| 22.1 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 22A.1 |
Pensioner education supplement
|
Exempt |
Exempt |
Not applicable |
Not applicable |
|
|
| 22B.1 |
Energy supplement under Part 2.25B of the
Social Security Act 1991
|
Exempt |
Exempt |
Not applicable |
Not applicable |
|
|
| 22C.1 |
Quarterly pension supplement
|
Exempt |
Exempt |
Not applicable |
Not applicable |
|
|
| 23.1 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 24.1 |
(Omitted by No 197 of 1997) |
|
|
|
|
|
| 25.1 |
Special benefit
|
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt |
Exempt up to the tax-free amount (see section
52-30
) |
|
|
| 26.1 |
Special needs age pension
|
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt |
Exempt up to the tax-free amount (see section
52-25
) |
|
|
| 27.1 |
Special needs disability support pension:
you are pension age or over |
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt |
Exempt up to the tax-free amount (see section
52-25
) |
|
|
| 27.2 |
Special needs disability support pension:
you are under pension age |
Exempt |
Exempt |
Exempt |
Exempt up to the tax-free amount (see section
52-25
) |
|
|
| 28.1 |
(Omitted by No 197 of 1997) |
|
|
|
|
|
| 29.1 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 30.1 |
Special needs wife pension:
you are pension age or over |
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt |
Exempt up to the tax-free amount (see section
52-25
) |
|
|
| 30.2 |
Special needs wife pension:
your partner is pension age or over |
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt |
Exempt up to the tax-free amount (see section
52-25
) |
|
|
| 30.3 |
Special needs wife pension:
both you and your partner are under pension age |
Exempt |
Exempt |
Exempt |
Exempt up to the tax-free amount (see section
52-25
) |
|
|
| 30.4 |
Special needs wife pension:
you are under pension age and your partner has died |
Exempt |
Exempt |
Exempt |
Exempt up to the tax-free amount (see section
52-25
) |
|
|
| 31.1 |
Telephone allowance
|
Exempt |
Exempt |
Not applicable |
Not applicable |
|
|
| 31A.1 |
Utilities allowance
|
Exempt |
Exempt |
Not applicable |
Not applicable |
|
|
| 32.1 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 33.1 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 34.1 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 34.2 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 34.3 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 34.4 |
(Repealed by No 26 of 2018) |
|
|
|
|
|
| 35.1 |
Youth allowance
|
Supplementary amount is exempt (see section
52-15
) |
Supplementary amount, and tax-free amount, are exempt (see sections
52-15
and
52-20
) |
Exempt |
Exempt up to the tax-free amount (see section
52-30
) |
Note:
A reference in this table to jobseeker payment or youth allowance includes a reference to farm household allowance under the
Farm Household Support Act 2014
(see Part 5 of that Act). Other payments referred to in this table (such as advance pharmaceutical supplement) might also be payable to a person who is receiving farm household allowance.
History
S 52-10(3) (table) amended by No 26 of 2018, s 3 and Sch 7 item 2, by repealing table item 22.1, effective 1 January 2022. For saving provision, see note under s
52-30(1)
. Table item 22.1 formerly read:
| 22.1 |
Partner allowance
|
Supplementary amount is exempt (see section 52-15) |
Supplementary amount is exempt (see section 52-15) |
Exempt |
Exempt up to the tax-free amount (see section 52-30) |
S 52-10(3) (table) amended by No 26 of 2018, s 3 and Sch 6 item 6, by repealing table item 32.1, effective 1 January 2022. For saving provision, see note under s
52-15
. Table item 32.1 formerly read:
| 32.1 |
Widow allowance
|
Supplementary amount is exempt (see section 52-15) |
Supplementary amount is exempt (see section 52-15) |
Not applicable |
Not applicable |
S 52-10(3) (table) amended by No 107 of 2020, s 3 and Sch 3 item 5, by repealing table items 15.1, 16.1 and 17.1, effective 27 November 2020. Table items 15.1, 16.1 and 17.1 formerly read:
| 15.1 |
Mature age allowance (paid under Part 2.12A)
|
Supplementary amount is exempt (see section 52-15) |
Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20) |
Exempt |
Exempt up to the tax-free amount (see section 52-25) |
|
|
| 16.1 |
Mature age allowance (paid under Part 2.12B)
|
Supplementary amount is exempt (see section 52-15) |
Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20) |
Exempt |
Exempt up to the tax-free amount (see section 52-30) |
|
|
| 17.1 |
Mature age partner allowance
|
Supplementary amount is exempt (see section 52-15) |
Supplementary amount is exempt (see section 52-15) |
Exempt |
Exempt up to the tax-free amount (see section 52-25) |
S 52-10(3) (table) amended by No 26 of 2018, s 3 and Sch 5 item 35, by repealing table item 23.1, effective 20 September 2020. For saving provision, see note under s
52-20(3)
. Table item 23.1 formerly read:
| 23.1 |
Sickness allowance
|
Supplementary amount is exempt (see section 52-15) |
Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20) |
Exempt |
Exempt up to the tax-free amount (see section 52-30) |
S 52-10(3) (table) amended by No 26 of 2018, s 3 and Sch 4 item 1, by repealing table item 3.1, effective 20 March 2020. No 26 of 2018, s 3 and Sch 4 item 106 contains the following saving provision:
106 Saving provision
-
Income Tax Assessment Act 1997
106
Despite the amendments made by this Schedule, item 3.1 of the table in section
52-10
and section
52-15
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to a payment of bereavement allowance under Part
2.7
of the
Social Security Act 1991
before, on or after that commencement.
Table item 3.1 formerly read:
|
3.1 |
Bereavement allowance
|
Supplementary amount is exempt (see section 52-15) |
Supplementary amount is exempt (see section 52-15) |
Exempt |
Not applicable |
S 52-10(3) (table) amended by No 26 of 2018, s 3 and Sch 3 item 5, by repealing table items 34.1 to 34.4, effective 20 March 2020. For saving provision, see note under s
52-25(1)
. Table items 34.1 to 34.4 formerly read:
| 34.1 |
Wife pension:
you are pension age or over |
Supplementary amount is exempt (see section 52-15) |
Supplementary amount is exempt (see section 52-15) |
Exempt |
Exempt up to the tax-free amount (see section 52-25) |
| 34.2 |
Wife pension:
your partner is pension age or over |
Supplementary amount is exempt (see section 52-15) |
Supplementary amount is exempt (see section 52-15) |
Exempt |
Exempt up to the tax-free amount (see section 52-25) |
| 34.3 |
Wife pension:
both you and your partner are under pension age |
Exempt |
Exempt |
Exempt |
Exempt up to the tax-free amount (see section 52-25) |
| 34.4 |
Wife pension:
you are under pension age and your partner has died |
Exempt |
Exempt |
Exempt |
Exempt up to the tax-free amount (see section 52-25) |
S 52-10(3) (table) amended by No 26 of 2018, s 3 and Sch 2 item 3, by repealing table items 29.1 and 33.1, effective 20 March 2020. For saving provision, see note under s
52-15
. Table items 29.1 and 33.1 formerly read:
| 29.1 |
Special needs widow B pension
|
Supplementary amount is exempt (see section 52-15) |
Supplementary amount is exempt (see section 52-15) |
Not applicable |
Not applicable |
| 33.1 |
Widow B pension
|
Supplementary amount is exempt (see section 52-15) |
Supplementary amount is exempt (see section 52-15) |
Exempt |
Not applicable |
S 52-10(3) (table) amended by No 26 of 2018, s 3 and Sch 1 items 14
-
16, by inserting table item 14.1, repealing table item 19.1 and substituting
"
jobseeker payment
"
for
"
newstart allowance
"
in the note, effective 20 March 2020. No 26 of 2018, s 3 and Sch 1 item 345 contains the following saving provision:
345 Saving provision
-
Income Tax Assessment Act 1997
345
Despite the amendments made by this Part, item 19.1 of the table in section
52-10
and sections
52-15
and
52-30
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to a payment of newstart allowance under Part
2.12
of the
Social Security Act 1991
before, on or after that commencement.
Table item 19.1 formerly read:
| 19.1 |
Newstart allowance
|
Supplementary amount is exempt (see section 52-15) |
Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20) |
Exempt |
Exempt up to the tax-free amount (see section 52-30) |
S 52-10(3) (table) amended by No 91 of 2015, s 3 and Sch 1 item 49, by substituting
"
Energy supplement under Part 2.25B of the
Social Security Act 1991
"
for
"
Seniors supplement
"
in table item 22B.1, effective 20 June 2015. No 91 of 2015, s 3 and Sch 1 item 53 contains the following saving provision:
53 Saving provision
Despite the amendments of sections
52-10
and
52-65
of the
Income Tax Assessment Act 1997
, item 22B.1 of the table in section
52-10
of that Act, and item 16A.1 of the table in section
52-65
of that Act, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to a payment of seniors supplement made before, on or after that commencement.
S 52-10(3) amended by No 13 of 2014, s 3 and Sch 2 item 40, by inserting a note, applicable in relation to payments made after 1 July 2014, other than any such payment that relates to a day before 1 July 2014.
S 52-10(3) (table) amended by No 49 of 2012, s 3 and Sch 4 items 10 and 11, by inserting
"
except in relation to table item 3A.1 (carer allowance),
"
in the explanation of the table and substituting
"
Exempt
"
for
"
Not applicable
"
in table item 3A.1, effective 1 July 2012.
S 52-10(3) (table) amended by No 60 of 2009, s 3 and Sch 4 item 35, by substituting table items 22B.1 and 22C.1 for table item 22B.1, effective 20 September 2009. Table item 22B.1 formerly read:
22B.1 ...
Seniors concession allowance
... Exempt ... Exempt ... Not applicable ... Not applicable
S 52-10(3) (table) amended by
No 97 of 2008
, s 3 and Sch 3 item 71, by repealing table items 7.1 and 7.2, effective 3 October 2008. Table items 7.1 and 7.2 formerly read:
7.1 ...
Disability wage supplement:
you are pension age or over ... Supplementary amount is exempt (see section 52-15) ... Supplementary amount, and tax-free amount, are exempt (see sections 52-15 and 52-20) ... Exempt ... Exempt up to the tax-free amount (see section 52-25)
7.2 ...
Disability wage supplement:
you are under pension age ... Exempt ... Exempt ... Exempt ... Exempt up to the tax-free amount (see section 52-25)
S 52-10(3) (table) amended by No 64 of 2008, s 3 and Sch 1 item 1, by repealing table item 10.1, effective 1 July 2008. Table item 10.1 formerly read:
10.1 ...
Employment entry payment
... Exempt ... Exempt ... Not applicable ... Not applicable
S 52-10(3) (table) amended by No 82 of 2006, s 3 and Sch 4 items 6 and 7, by inserting table item 2AA.1 and repealing table item 8.1, effective 1 December 2006. Table item 8.1 formerly read:
8.1 ...
Disaster relief payment
... Exempt ... Exempt ... Not applicable ... Not applicable
S 52-10(3) amended by No 132 of 2004, No 152 of 1999, No 83 of 1999, No 13 of 1999, No 93 of 1998, No 45 of 1998, No 197 of 1997 and No 202 of 1997.
History
S 52-10 inserted by No 121 of 1997.
SECTION 52-15
52-15
Supplementary amounts of payments
You work out the
supplementary amount
of a social security payment using the following table:
|
Supplementary amount of a social security payment
|
|
Item
|
For this category of social security payment:
|
the
supplementary amount
is the total of:
|
| 1 |
Age pension
Carer payment
Special benefit
Special needs age pension
Special needs disability support pension
Special needs wife pension |
(a) so much of the payment as is included by way of rent assistance; and
(b) so much of the payment as is included by way of remote area allowance; and
(c) so much of the payment as is included by way of pharmaceutical allowance; and
(d) so much of the payment as is included by way of tax-exempt pension supplement; and
(e) so much of the payment as is included by way of energy supplement |
|
. |
| 2 |
Disability support pension |
(a) so much of the payment as is included by way of rent assistance; and
(b) so much of the payment as is included by way of remote area allowance; and
(c) so much of the payment as is included by way of pharmaceutical allowance; and
(d) so much of the payment as is included by way of incentive allowance; and
(e) so much of the payment as is included by way of language, literacy and numeracy supplement; and
(f) so much of the payment as is included by way of tax-exempt pension supplement; and
(g) so much of the payment as is included by way of energy supplement |
|
. |
| 3 |
Jobseeker payment
Parenting payment (benefit (PP partnered))
Parenting payment (pension (PP single))
Youth allowance |
(a) so much of the payment as is included by way of rent assistance; and
(b) so much of the payment as is included by way of remote area allowance; and
(c) so much of the payment as is included by way of pharmaceutical allowance; and
(d) so much of the payment as is included by way of language, literacy and numeracy supplement; and
(e) so much of the payment as is included by way of tax-exempt pension supplement; and
(f) so much of the payment as is included by way of energy supplement |
|
. |
| 4 |
Austudy payment |
(a) so much of the payment as is included by way of rent assistance; and
(b) so much of the payment as is included by way of remote area allowance; and
(c) so much of the payment as is included by way of pharmaceutical allowance; and
(d) so much of the payment as is included by way of tax-exempt pension supplement; and
(e) so much of the payment as is included by way of energy supplement |
Note:
A reference in this table to jobseeker payment or youth allowance includes a reference to farm household allowance under the
Farm Household Support Act 2014
(see Part 5 of that Act).
History
S 52-15 amended by No 26 of 2018, s 3 and Sch 7 item 3, by omitting
"
Partner allowance
"
after
"
Parenting payment (pension (PP single))
"
from table item 3, effective 1 January 2022. For saving provision, see note under s
52-30(1)
.
S 52-15 amended by No 26 of 2018, s 3 and Sch 6 item 7, by omitting
"
Widow allowance
"
before
"
Youth allowance
"
from table item 3, effective 1 January 2022. No 26 of 2018, s 3 and Sch 6 item 65 contains the following saving provision:
65 Saving provision
-
Income Tax Assessment Act 1997
65
Despite the amendments made by this Part, item 32.1 of the table in section
52-10
and section
52-15
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to a payment of widow allowance under Part
2.8A
of the
Social Security Act 1991
before, on or after that commencement.
S 52-15 amended by No 26 of 2018, s 3 and Sch 5 item 36, by omitting
"
Sickness allowance
"
after
"
Carer payment
"
from table item 1, effective 20 September 2020. For saving provision, see note under s
52-20(3)
.
S 52-15 amended by No 26 of 2018, s 3 and Sch 4 item 2, by omitting
"
Bereavement allowance
"
after
"
Age pension
"
from table item 1, effective 20 March 2020. For saving provision, see note under s
52-10
.
S 52-15 amended by No 26 of 2018, s 3 and Sch 3 item 6, by omitting
"
Wife pension
"
after
"
Special needs wife pension
"
from table item 1, effective 20 March 2020. For saving provision, see note under s
52-25(1)
.
S 52-15 amended by No 26 of 2018, s 3 and Sch 2 items 4 and 5, by omitting
"
Special needs widow B pension
"
after
"
Special needs disability support pension
"
and
"
Widow B pension
"
after
"
Special needs wife pension
"
from table item 1, effective 20 March 2020. No 26 of 2018, s 3 and Sch 2 item 84 contains the following saving provision:
84 Saving provision
-
Income Tax Assessment Act 1997
84
Despite the amendments made by this Schedule, items 29.1 and 33.1 of the table in section
52-10
and section
52-15
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to a payment of widow B pension under Part
2.8
, or special needs widow B pension under Part
2.16
, of the
Social Security Act 1991
before, on or after that commencement.
S 52-15 amended by No 26 of 2018, s 3 and Sch 1 items 17 and 18, by substituting
"
Jobseeker payment
"
for
"
Newstart allowance
"
in table item 3 and
"
jobseeker payment
"
for
"
newstart allowance
"
in the note, effective 20 March 2020. For saving provision, see note under s
52-10
.
S 52-15 amended by No 122 of 2014, s 3 and Sch 1 item 289, by substituting
"
energy supplement
"
for
"
clean energy supplement
"
in table items 1, 2, 3 and 4, column headed
"
the
supplementary amount
is the total of:
"
, effective 20 September 2014. No 122 of 2014, s 3 and Sch 1 item 294(1) contains the following transitional provision:
294 Transitional provisions
(1)
Items 1, 2, 3 and 4 of the table in section
52-15
of the
Income Tax Assessment Act 1997
apply on and after the commencement of this item as if a reference in those items to energy supplement included a reference to clean energy supplement.
…
S 52-15 amended by No 13 of 2014, s 3 and Sch 2 item 41, by inserting a note, applicable in relation to payments made after 1 July 2014, other than any such payment that relates to a day before 1 July 2014.
S 52-15 amended by No 141 of 2011, s 3 and Sch 10 items 6 to 9, by inserting para (e) at the end of the cell at table item 1, para (g) at the end of the cell at table item 2, para (f) at the end of the cell at table item 3, and para (e) at the end of the cell at table item 4, under the column headed
"
the
supplementary amount
is the total of:
"
, effective 14 May 2012.
S 52-15 amended by No 60 of 2009, s 3 and Sch 4 item 36, by substituting the table, effective 20 September 2009. The table formerly read:
|
Supplementary amount of a social security payment
|
|
Item
|
For this category of social security payment:
|
the
supplementary amount
is the total of:
|
| 1 |
Age pension
Bereavement allowance |
(a) |
so much of the payment as is included by way of rental assistance; and |
| |
Carer payment |
(b) |
so much of the payment as is included by way of remote area allowance; and |
| |
Mature age allowance (paid under Part 2.12A) |
(c) |
so much of the payment as is included by way of pharmaceutical allowance |
| |
Mature age partner allowance |
|
|
| |
Sickness allowance |
|
|
| |
Special benefit |
|
|
| |
Special needs age pension |
|
|
| |
Special needs disability support pension |
|
|
| |
Special needs widow B pension |
|
|
| |
Special needs wife pension |
|
|
| |
Widow B pension |
|
|
| |
Wife pension |
|
|
|
. |
| 2 |
Disability support pension |
(a) |
so much of the payment as is included by way of rental assistance; and |
| |
|
(b) |
so much of the payment as is included by way of remote area allowance; and |
| |
|
(c) |
so much of the payment as is included by way of pharmaceutical allowance; and |
| |
|
(d) |
so much of the payment as is included by way of incentive allowance; and |
| |
|
(e) |
so much of the payment as is included by way of language, literacy and numeracy supplement |
|
. |
| 3 |
Mature age allowance (paid under Part 2.12B) |
(a) |
so much of the payment as is included by way of rental assistance; and |
| |
Newstart allowance |
(b) |
so much of the payment as is included by way of remote area allowance; and |
| |
Parenting payment (benefit (PP partnered)) |
(c) |
so much of the payment as is included by way of pharmaceutical allowance; and |
| |
Parenting payment (pension (PP single))
Partner allowance
Widow allowance |
(d) |
so much of the payment as is included by way of language, literacy and numeracy supplement |
| |
Youth allowance |
|
|
|
. |
| 4 |
Austudy payment |
(a) |
so much of the payment as is included by way of rental assistance; and |
| |
|
(b) |
so much of the payment as is included by way of remote area allowance; and |
| |
|
(c) |
so much of the payment as is included by way of pharmaceutical allowance |
S 52-15 amended by
No 97 of 2008
, s 3 and Sch 3 item 72, by omitting
"
Disability wage supplement
"
from table item 1, effective 3 October 2008.
S 52-15 amended by
No 38 of 2008
, s 3 and Sch 12 item 1, by substituting table item 4, column headed
"
the
supplementary amount
is the total of:
"
, applicable to assessments for the 2007-08 income year and later income years. The item cell formerly read:
(a) so much of the payment as is included by way of remote area allowance; and
(b) so much of the payment as is included by way of pharmaceutical allowance
S 52-15 substituted by No 35 of 2003 and amended by No 83 of 1999, No 13 of 1999, No 45 of 1998, No 197 of 1997 and inserted by No 121 of 1997.
SECTION 52-20
Tax-free amount of an ordinary payment after the death of your partner
52-20(1)
You work out under this section the
*
tax-free amount of an
*
ordinary payment made under the
Social Security Act 1991
after the death of your partner if:
(a)
you do not qualify for payments under a
*
bereavement Subdivision; and
(b)
the ordinary payment became due to you during the bereavement period.
Note:
For the provisions of the
Social Security Act 1991
that tell you if you qualify for payments under a bereavement Subdivision: see subsection (3).
History
S 52-20(1) amended by No 132 of 1998.
52-20(2)
This is how to work out the
tax-free amount
:
Method statement
Step 1.
Work out the
*
supplementary amount of the payment.
Note: The supplementary amount is also exempt and is worked out under section 52-15.
Step 2.
Subtract the
*
supplementary amount from the amount of the payment.
Step 3.
Work out what would have been the amount of the payment if your partner had not died.
Step 4.
Work out what would have been the
*
supplementary amount of the payment if your partner had not died.
Step 5.
Subtract the amount at Step 4 from the amount at Step 3.
Step 6.
Subtract the amount at Step 5 from the amount at Step 2: the result is the
tax-free amount
.
52-20(3)
This table sets out:
(a)
the Subdivisions of the
Social Security Act 1991
that are
bereavement Subdivisions
; and
(b)
the provision of that Act that tells you if you qualify for payments under the relevant bereavement Subdivision.
|
Bereavement Subdivisions
|
|
Item
|
For this bereavement Subdivision:
|
This provision tells you if you qualify for payments under it:
|
| 1 |
Subdivision A of Division 9 of Part 2.2 |
paragraph 82(1)(e) |
|
. |
| 2 |
Subdivision A of Division 10 of Part 2.3 |
paragraph 146F(1)(e) |
|
. |
| 3 |
Subdivision B of Division 9 of Part 2.5 |
paragraph 237(1)(e) |
|
. |
| 4 |
(Omitted by No 197 of 1997) |
|
|
. |
| 5 |
(Repealed by No 26 of 2018) |
|
|
. |
| 5A |
Division
10
of Part
2.11 |
subsection
567(1)
or section
567FA |
|
. |
| 5B |
Division 10 of Part 2.11A |
paragraph 592(1)(f) |
|
. |
| 6 |
Division
9
of Part
2.12 |
subsection
660LA(1)
or section
660LH |
|
. |
| 7 |
(Repealed by No 107 of 2020) |
|
|
. |
| 8 |
(Repealed by No 107 of 2020) |
|
|
. |
| 9 |
(Repealed by No 26 of 2018) |
|
|
. |
| 10 |
Subdivision AA of Division 9 of Part 2.15 |
paragraph 768A(1)(f) |
|
. |
| 11 |
Subdivision A of Division 10 of Part 2.16 |
paragraph 822(1)(e) |
History
S 52-20(3) amended by No 107 of 2020, s 3 and Sch 3 item 6, by repealing table items 7 and 8, effective 27 November 2020. Table items 7 and 8 formerly read:
| 7 |
Subdivision A of Division 11 of Part 2.12A |
paragraph 660XKA(1)(e) |
|
. |
| 8 |
Subdivision C of Division 11 of Part 2.12B |
paragraph 660YKC(1)(e) |
S 52-20(3) amended by No 26 of 2018, s 3 and Sch 5 item 37, by repealing table items 5 and 9, effective 20 September 2020. No 26 of 2018, s 3 and Sch 5 item 141 contains the following saving provision:
141 Saving provision
-
Income Tax Assessment Act 1997
141
Despite the amendments made by this Part, item 23.1 of the table in section
52-10
and sections
52-15
,
52-20
and
52-30
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to a payment of sickness allowance under Part
2.14
of the
Social Security Act 1991
before, on or after that commencement.
Table items 5 and 9 formerly read:
| 5 |
Subdivision A of Division 10 of Part 2.9 |
paragraph 469(1)(e) |
| 9 |
Subdivision AA of Division 9 of Part 2.14 |
paragraph 728PA(1)(f) |
S 52-20(3) amended by No 26 of 2018, s 3 and Sch 4 items 3
-
5, by substituting
"
subsection 567(1) or section 567FA
"
for
"
paragraph 567(1)(f)
"
in table item 5A, omitting
"
Subdivision AA of
"
before
"
Division 9 of Part 2.12
"
from table item 6 and substituting
"
subsection 660LA(1) or section 660LH
"
for
"
paragraph 660LA(1)(f)
"
in table item 6, effective 20 March 2020.
S 52-20(3) amended by No 45 of 1998 and No 197 of 1997.
History
S 52-20 inserted by No 121 of 1997.
SECTION 52-25
Tax-free amount of certain bereavement lump sum payments
52-25(1)
This section applies if a lump sum of any of these categories of social security payments becomes due to you because of your partner
'
s death.
|
Category of social security payment
|
| Age pension |
| Carer payment |
| Disability support pension |
| Special needs age pension |
| Special needs disability support pension |
| Special needs wife pension |
History
S 52-25(1) amended by No 107 of 2020, s 3 and Sch 3 item 7, by omitting
"
Mature age allowance (paid under Part 2.12A)
"
after
"
Disability support pension
"
and
"
Mature age partner allowance
"
before
"
Special needs age pension
"
from the table, effective 27 November 2020.
S 52-25(1) amended by No 26 of 2018, s 3 and Sch 3 item 7, by omitting
"
Wife pension
"
after
"
Special needs wife pension
"
from the table, effective 20 March 2020. No 26 of 2018, s 3 and Sch 3 item 102 contains the following saving provision:
102 Saving provision
-
Income Tax Assessment Act 1997
102
Despite the amendments made by this Schedule, items 34.1 to 34.4 of the table in section
52-10
and sections
52-15
and
52-25
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to a payment of wife pension under Part
2.4
of the
Social Security Act 1991
before, on or after that commencement.
S 52-25(1) amended by
No 97 of 2008
, s 3 and Sch 3 item 73, by repealing the table item dealing with
"
disability wage supplement
"
, effective 3 October 2008. The table item formerly read:
Disability wage supplement
S 52-25(1) amended by No 13 of 1999 and No 197 of 1997.
52-25(2)
The total of the following are exempt up to the
*
tax-free amount:
(a)
the lump sum payment;
(b)
all other payments that become due to you under the
Social Security Act 1991
during the bereavement lump sum period.
History
S 52-25(2) amended by No 132 of 1998.
52-25(3)
This is how to work out the
tax-free amount
:
Method statement
Step 1.
Work out the payments under the
Social Security Act 1991
that would have become due to you during the bereavement lump sum period if:
(a) your partner had not died; and
(b) your partner had been under
*
pension age; and
(c) immediately before your partner died, you and your partner had been neither an illness separated couple nor a respite care couple.
Step 2.
Work out how much of those payments would have been exempt in those circumstances.
Step 3.
Work out the payments under the
Social Security Act 1991
or Part III of the
Veterans
'
Entitlements Act 1986
that would have become due to your partner during the bereavement lump sum period if:
(a) your partner had not died; and
(b) immediately before your partner died, you and your partner were neither an illness separated couple nor a respite care couple;
even if the payments would not have been exempt.
Step 4.
Total the payments worked out at Steps 2 and 3: the result is the
tax-free amount
.
Example:
You are receiving a disability support pension of
$
300 a fortnight and a pharmaceutical allowance of
$
5 a fortnight. You are over pension age. Your partner is receiving a jobseeker payment of
$
250 a fortnight and rent assistance of
$
75 a fortnight.
Your partner dies. Seven instalments are due to you during the bereavement lump sum period. You work out the tax-free amount as follows:
Step 1: The instalments that would have become due to you during the bereavement lump sum period are:
$
300
+
$
5 =
$
305
The total for the period is
$
2,135.
Step 2: The exempt component of each instalment is
$
5. The total for the 7 instalments is
$
35.
Step 3: The instalments that would have become due to your partner during the same period are:
$
250
+
$
75 =
$
325
The total for the period is
$
2,275.
Step 4: The tax-free amount is:
$
35
+
$
2,275 =
$
2,310
History
S 52-25(3) amended by No 26 of 2018, s 3 and Sch 7 item 4, by substituting
"
jobseeker payment
"
for
"
partner allowance
"
in the example, effective 1 January 2022.
S 52-25(3) amended by No 94 of 2019, s 3 and Sch 1 item 4, by substituting
"
*
pension age
"
for
"
pension age
"
in para (b) of method statement, step 1, effective 29 October 2019.
S 52-25(3) amended by No 60 of 2009, s 3 and Sch 4 item 37, by substituting
"
rent assistance
"
for
"
rental assistance
"
in the example, effective 20 September 2009.
S 52-25(3) amended by No 132 of 1998.
S 52-25 inserted by No 121 of 1997.
SECTION 52-30
Tax-free amount of certain other bereavement lump sum payments
52-30(1)
This section applies if a lump sum of any of these categories of social security payments becomes due to you because of your partner
'
s death.
|
Category of social security payment
|
| Austudy payment |
| Jobseeker payment |
| Parenting payment (benefit PP (partnered)) |
| Special benefit |
| Youth allowance |
Note:
A reference in this table to jobseeker payment or youth allowance includes a reference to farm household allowance under the
Farm Household Support Act 2014
(see Part 5 of that Act).
History
S 52-30(1) amended by No 26 of 2018, s 3 and Sch 7 item 5, by omitting
"
Partner allowance
"
after
"
Parenting payment (benefit PP (partnered))
"
from the table, effective 1 January 2022. No 26 of 2018, s 3 and Sch 7 item 70 contains the following saving provision:
70 Saving provision
-
Income Tax Assessment Act 1997
70
Despite the amendments made by this Schedule, item 22.1 of the table in section
52-10
and sections
52-15
and
52-30
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to a payment of partner allowance under Part
2.15A
of the
Social Security Act 1991
before, on or after that commencement.
S 52-30(1) amended by No 107 of 2020, s 3 and Sch 3 item 8, by omitting
"
Mature age allowance (paid under Part 2.12B)
"
after
"
Jobseeker payment
"
from the table, effective 27 November 2020.
S 52-30(1) amended by No 26 of 2018, s 3 and Sch 5 item 38, by omitting
"
Sickness allowance
"
after
"
Partner allowance
"
from the table, effective 20 September 2020. For saving provision, see note under s
52-20(3)
.
S 52-30(1) amended by No 26 of 2018, s 3 and Sch 1 items 19
-
21, by inserting
"
Jobseeker payment
"
in the table, omitting
"
Newstart allowance
"
after
"
Mature age allowance (paid under Part 2.12B)
"
from the table and substituting
"
jobseeker payment
"
for
"
newstart allowance
"
in the note, effective 20 March 2020. For saving provision, see note under s
52-10
.
S 52-30(1) amended by No 13 of 2014, s 3 and Sch 2 item 42, by inserting a note, applicable in relation to payments made after 1 July 2014, other than any such payment that relates to a day before 1 July 2014.
S 52-30(1) amended by No 45 of 1998 and No 197 of 1997.
52-30(2)
The total of the following are exempt up to the
*
tax-free amount:
(a)
the lump sum payment;
(b)
all other payments that become due to you under the
Social Security Act 1991
during the bereavement lump sum period.
History
S 52-30(2) amended by No 132 of 1998.
52-30(3)
This is how to work out the
tax-free amount
:
Method statement
Step 1.
Work out the payments under the
Social Security Act 1991
that would have become due to you during the bereavement lump sum period if:
(a) your partner had not died; and
(b) your partner had been under
*
pension age; and
(c) immediately before your partner died, you and your partner had been neither an illness separated couple nor a respite care couple.
Step 2.
Work out how much of those payments would have been exempt in those circumstances.
Step 3.
Work out the payments under the
Social Security Act 1991
that would have become due to your partner during the bereavement lump sum period if your partner had not died, even if the payments would not have been exempt.
Step 4.
Total the payments worked out at Steps 2 and 3: the result is the
tax-free amount
.
History
S 52-30(3) amended by No 94 of 2019, s 3 and Sch 1 item 5, by substituting
"
*
pension age
"
for
"
pension age
"
in para (b) of method statement, step 1, effective 29 October 2019.
S 52-30(3) amended by No 132 of 1998.
S 52-30 inserted by No 121 of 1997.
SECTION 52-35
Tax-free amount of a lump sum payment made because of the death of a person you are caring for
52-35(1)
This section applies if a lump sum payment becomes due to you under section 236A of the
Social Security Act 1991
because of the death of the care receiver or any of the care receivers.
History
S 52-35(1) substituted by No 13 of 1999, amended by No 13 of 1999.
52-35(2)
The total of the following are exempt up to the
*
tax-free amount:
(a)
the lump sum payment;
(b)
all other payments that become due to you under the
Social Security Act 1991
during the bereavement lump sum period.
History
S 52-35(2) amended by No 132 of 1998.
52-35(3)
This is how to work out the
tax-free amount
:Method statement
Step 1.
Work out the payments under the
Social Security Act 1991
that would have become due to you during the bereavement lump sum period if:
(a) the care receiver had not died; and
(b) the care receiver had been under
*
pension age.
Step 2.
Work out how much of those payments would have been exempt in those circumstances.
Step 3.
Work out the payments under the
Social Security Act 1991
that would have become due to the care receiver during the bereavement lump sum period if the care receiver had not died, even if the payments would not have been exempt.
Step 4.
Total the payments worked out at Steps 2 and 3: the result is the
tax-free amount
.
History
S 52-35(3) amended by No 94 of 2019, s 3 and Sch 1 item 6, by substituting
"
*
pension age
"
for
"
pension age
"
in para (b) of method statement, step 1, effective 29 October 2019.
S 52-35(3) substituted by No 13 of 1999, amended by No 13 of 1999 and No 132 of 1998.
S 52-35 inserted by No 121 of 1997.
SECTION 52-40
52-40
Provisions of the Social Security Act 1991 under which payments are made
This table lists the provisions of the
Social Security Act 1991
under which social security payments are made that are wholly or partly exempt from income tax under this Subdivision.
|
Provisions under which social security payments are made
|
|
Item
|
Category of social security payment
|
Ordinary payment
|
Payment made because of a person
'
s death (unless covered by next column)
|
Lump sum payment made because of your partner
'
s death
|
| 1A |
2020 economic support payment |
Part
2.6B |
Not applicable |
Not applicable |
|
|
| 1AA |
2022 cost of living payment |
Part
2.6D |
Not applicable |
Not applicable |
|
|
| 1B |
Additional economic support payment 2020 or additional economic support payment 2021 |
Part
2.6C |
Not applicable |
Not applicable |
|
|
| 1 |
Advance pharmaceutical supplement |
Part
2.23 |
Not applicable |
Not applicable |
|
|
| 2 |
Age pension |
Part
2.2 |
Sections
83
,
86
and
91 |
Section
84 |
|
|
| 2AA |
Australian Government Disaster Recovery Payment |
Part
2.24 |
Not applicable |
Not applicable |
|
|
| 2AB |
Australian Victim of Terrorism Overseas Payment |
Part
2.24AA |
Not applicable |
Not applicable |
|
|
| 2A |
Austudy payment | Part
2.11A |
Section
592A |
Section
592B |
|
|
| 3 |
(Repealed by No 26 of 2018) |
|
|
|
|
| 3A |
Carer allowance |
Part
2.19 |
Sections
992K
and
992M |
Not applicable |
|
|
| 4 |
Carer payment |
Part
2.5 |
Sections
236A
,
238
,
241
and
246 |
Section
239 |
|
|
| 4A |
Clean energy payment |
Part
2.18A |
Not applicable |
Not applicable |
|
|
| 5 |
Crisis payment |
Part
2.23A |
Not applicable |
Not applicable |
|
|
| 6 |
Disability support pension |
Part
2.3 |
Sections
146G
,
146K
and
146Q |
Section
146H |
|
|
| 7 |
(Repealed by
No 97 of 2008
) |
|
|
|
|
| 8 |
(Repealed by No 82 of 2006) |
|
|
|
|
| 9 |
Double orphan pension |
Part
2.20 |
Sections
1034
and
1034A |
Not applicable |
|
|
| 10 |
(Repealed by No 64 of 2008) |
|
|
|
|
| 11
-
13 |
(Omitted by No 83 of 1999) |
|
|
|
|
| 13A |
Fares allowance |
Part
2.26 |
Not applicable |
Not applicable |
|
|
| 14 |
Jobseeker payment |
Part
2.12 |
Section
660LB |
Sections
660LC
and
660LH |
|
|
| 14.1
-
14.2 |
(Omitted by No 83 of 1999) |
|
|
|
|
| 15 |
(Repealed by No 107 of 2020) |
|
|
|
|
| 16 |
(Repealed by No 107 of 2020) |
|
|
|
|
| 17 |
(Repealed by No 107 of 2020) |
|
|
|
|
| 18 |
Mobility allowance |
Part
2.21 |
Not applicable |
Not applicable |
|
|
| 19 |
(Repealed by No 26 of 2018) |
|
|
|
|
| 20 |
One-off energy assistance payment |
Part
2.6
or
2.6A |
Not applicable |
Not applicable |
|
|
| 21 |
(Omitted by No 197 of 1997) |
|
|
|
|
| 21A |
Parenting payment (benefit PP (partnered)) |
Part
2.10 |
Sections
513A
and
514B |
Section
514C |
|
|
| 21B |
(Omitted by No 83 of 1999) |
|
|
|
|
| 21C |
Parenting payment (pension PP (single)) |
Part
2.10 |
Section
513 |
Not applicable |
|
|
| 22 |
(Repealed by No 26 of 2018) |
|
|
|
. |
| 22A |
Pensioner education supplement |
Part
2.24A |
Not applicable |
Not applicable |
|
|
| 22B |
Energy supplement |
Part
2.25B |
Not applicable |
Not applicable |
|
|
| 22C |
Quarterly pension supplement |
Part
2.25C |
Not applicable |
Not applicable |
|
|
| 23 |
(Repealed by No 26 of 2018) |
|
|
|
|
| 24 |
(Omitted by No 197 of 1997) |
|
|
|
|
| 25 |
Special benefit |
Part
2.15 |
Section
768B |
Section
768C |
|
|
| 26 |
Special needs age pension |
Section
772 |
Sections
823
,
826
and
830 |
Section
824 |
|
|
| 27 |
Special needs disability support pension |
Section
773 |
Sections
823
,
826
and
830 |
Section
824 |
|
|
| 28 |
(Omitted by No 197 of 1997) |
|
|
|
|
| 29 |
(Repealed by No 26 of 2018) |
|
|
|
|
| 30 |
Special needs wife pension |
Section
774 |
Sections
823
,
826
and
830 |
Section
824 |
|
|
| 31 |
Telephone allowance |
Part
2.25 |
Not applicable |
Not applicable |
|
|
| 31A |
Utilities allowance |
Part
2.25A |
Not applicable |
Not applicable |
|
|
| 32 |
(Repealed by No 26 of 2018) |
|
|
|
|
| 33 |
(Repealed by No 26 of 2018) |
|
|
|
|
| 34 |
(Repealed by No 26 of 2018) |
|
|
|
|
| 35 |
Youth allowance |
Part
2.11 |
Section
567A |
Sections
567B
and
567FA |
History
S 52-40 (table) amended by No 14 of 2022, s 3 and Sch 8 item 4, by inserting table item 1AA, effective 1 April 2022.
S 52-40 (table) amended by No 26 of 2018, s 3 and Sch 7 item 6, by repealing table item 22, effective 1 January 2022. Table item 22 formerly read:
| 22 |
Partner allowance |
Part 2.15A |
Section 771NW |
Section 771NX |
S 52-40 (table) amended by No 26 of 2018, s 3 and Sch 6 item 8, by repealing table item 32, effective 1 January 2022. Table item 32 formerly read:
| 32 |
Widow allowance |
Part 2.8A |
Not applicable |
Not applicable |
S 52-40 (table) amended by No 107 of 2020, s 3 and Sch 3 item 9, by repealing table items 15 to 17, effective 27 November 2020. Table items 15 to 17 formerly read:
| 15 |
Mature age allowance (paid under Part 2.12A) |
Part 2.12A |
Sections 660XKB, 660XKE and 660XKG |
Section 660XKC |
|
. |
| 16 |
Mature age allowance (paid under Part 2.12B) |
Part 2.12B |
Section 660YKD |
Section 660YKE |
|
. |
| 17 |
Mature age partner allowance |
Part 2.12A |
Sections 660XKK and 660XKM |
Section 660XKL |
S 52-40 (table) amended by No 97 of 2020, s 3 and Sch 1 item 32, by inserting table item 1B, effective 14 November 2020.
S 52-40 (table) amended by No 26 of 2018, s 3 and Sch 5 item 39, by repealing table item 23, effective 20 September 2020. Table item 23 formerly read:
| 23 |
Sickness allowance |
Part 2.14 |
Section 728PB |
Section 728PC |
S 52-40 (table) amended by No 22 of 2020, s 3 and Sch 4 item 16, by inserting table item 1A, effective 25 March 2020.
S 52-40 (table) amended by No 26 of 2018, s 3 and Sch 4 items 6 and 7, by repealing table item 3 and substituting
"
Sections 567B and 567FA
"
for
"
Section 567B
"
in table item 35, effective 20 March 2020. Table item 3 formerly read:
| 3 |
Bereavement allowance |
Part 2.7 |
Section 359 |
Not applicable |
S 52-40 (table) amended by No 26 of 2018, s 3 and Sch 3 item 8, by repealing table item 34, effective 20 March 2020. Table item 34 formerly read:
| 34 |
Wife pension |
Part 2.4 |
Sections 189 and 191 |
Section 190 |
S 52-40 (table) amended by No 26 of 2018, s 3 and Sch 2 item 6, by repealing table items 29 and 33, effective 20 March 2020. Table items 29 and 33 formerly read:
| 29 |
Special needs widow B pension |
Section 778 |
Not applicable |
Not applicable |
| 33 |
Widow B pension |
Part 2.8 |
Section 407 |
Not applicable |
S 52-40 (table) amended by No 26 of 2018, s 3 and Sch 1 items 22 and 23, by inserting table item 14 and repealing table item 19, effective 20 March 2020. Table item 19 formerly read:
| 19 |
Newstart allowance |
Part 2.12 |
Section 660LB |
Section 660LC |
S 52-40 (table) amended by No 28 of 2019, s 3 and Sch 1 item 11, by inserting
"
or 2.6A
"
in table item 20, column headed
"
Ordinary payment
"
, effective 6 April 2019.
S 52-40 (table) amended by No 46 of 2017, s 3 and Sch 1 item 13, by inserting table item 20, effective 19 June 2017.
S 52-40 (table) amended by No 55 of 2016, s 3 and Sch 4 item 12, by repealing table item 14, effective 1 January 2017. Table item 14 formerly read:
| 14 |
Job commitment bonus |
Part 2.16A |
Not applicable |
Not applicable |
S 52-40 (table) amended by No 91 of 2015, s 3 and Sch 1 item 50, by substituting
"
Energy supplement
"
for
"
Seniors supplement
"
in table item 22B, effective 20 June 2015.
S 52-40 (table) amended by No 35 of 2014, s 3 and Sch 1 item 12, by inserting table item 14, effective 1 July 2014.
S 52-40 (table) amended by No 106 of 2012, s 3 and Sch 1 item 18, by inserting table item 2AB, effective 22 January 2013.
S 52-40 (table) amended by No 141 of 2011, s 3 and Sch 10 item 10, by inserting table item 4A, effective 14 May 2012.
S 52-40 (table) amended by No 60 of 2009, s 3 and Sch 4 item 38, by substituting table items 22B and 22C for table item 22B, effective 20 September 2009. Table item 22B formerly read:
22B ... Seniors concession allowance ... Part 2.25B ... Not applicable ... Not applicable
S 52-40 (table) amended by
No 97 of 2008
, s 3 and Sch 3 item 74, by repealing table item 7, effective 3 October 2008. Table item 7 formerly read:
7 ... Disability wage supplement ... Part 2.9 ... Sections 470, 473, 475 and 476 ... Section 471
S 52-40 (table) amended by No 64 of 2008, s 3 and Sch 1 item 2, by repealing table item 10, effective 1 July 2008. Table item 10 formerly read:
10 ... Employment entry payment ... Part 2.13 ... Not applicable ... Not applicable
S 52-40 (table) amended by No 82 of 2006, s 3 and Sch 4 items 8 and 9, by inserting table item 2AA and repealing table item 8, effective 1 December 2006. Table item 8 formerly read:
8 ... Disaster relief payment ... Part 2.24 ... Not applicable ... Not applicable
S 52-40 amended by No 132 of 2004, No 35 of 2003, No 83, No 152 and No 13 of 1999, No 93 and No 45 of 1998, No 202 and No 197 of 1997, and inserted by No 121 of 1997.
Subdivision 52-B
-
Exempt payments under the Veterans
'
Entitlements Act 1986
Guide to Subdivision 52-B
SECTION 52-60
What this Subdivision is about
This Subdivision tells you:
(a) the payments under the
Veterans
'
Entitlements Act 1986
that are wholly or partly exempt from income tax; and
(b) any special circumstances, conditions or exceptions that apply to a payment in order for it to be exempt; and
(c) how to work out how much of a payment is exempt.
History
S 52-60 amended by No 101 of 2003 and inserted by No 121 of 1997.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 52-65 |
How much of a veterans
'
affairs payment is exempt
?
|
| 52-70 |
Supplementary amounts of payments |
| 52-75 |
Provisions of the
Veterans
'
Entitlements Act 1986
under which payments are made |
Operative provisions
SECTION 52-65
How much of a veterans
'
affairs payment is exempt
?
52-65(1)
The table in this section tells you about the income tax treatment of veterans
'
affairs payments, other than:
(a)
payments of pension bonus or pension bonus bereavement payment; or
(b)
clean energy payments; or
(ba)
clean energy payments under the scheme prepared under Part VII (about educating veterans
'
children) of the
Veterans
'
Entitlements Act 1986
; or
(bb)
(Repealed by No 12 of 2012)
(c)
one-off energy assistance payments under the
Veterans
'
Entitlements Act 1986
; or
(d)
first 2020 economic support payments under the
Veterans
'
Entitlements Act 1986
; or
(da)
second 2020 economic support payments under the
Veterans
'
Entitlements Act 1986
; or
(db)
payments of additional economic support payment 2020 under the
Veterans
'
Entitlements Act 1986
; or
(dc)
payments of additional economic support payment 2021 under the
Veterans
'
Entitlements Act 1986
; or
(e)
a prisoner of war recognition supplement under Part VIB of the
Veterans
'
Entitlements Act 1986
; or
(f)
a 2022 cost of living payment under the
Veterans
'
Entitlements Act 1986
.
Note:
Section
52-75
sets out the provisions of the
Veterans
'
Entitlements Act 1986
under which the payments are made.
[
CCH Note:
S 52-65(1) will be amended by No 17 of 2025, s 3 and Sch 8 item 39, by repealing para (ba) and (e), effective 1 July 2026. No 17 of 2025, s 3 and Sch 8 item 52 contain the following saving provisions:
52 Saving provisions
(1)
Paragraph
52-65(1)(ba)
of the
Income Tax Assessment Act 1997
and subsection
52-65(1G)
of that Act, as in force immediately before the day this item commences, continue to apply on and after that day in relation to a clean energy payment that is made before, on or after that day under the scheme prepared under Part VII of the
Veterans
'
Entitlements Act 1986
.
(2)
Paragraph
52-65(1)(e)
of the
Income Tax Assessment Act 1997
and subsection
52-65(1F)
of that Act, as in force immediately before the day this item commences, continue to apply on and after that day in relation to a payment of a prisoner of war recognition supplement under Part VIB of the
Veterans
'
Entitlements Act 1986
made before, on or after that day.
(3)
Item 5.1 of the table in section
52-65
of the
Income Tax Assessment Act 1997
, as in force immediately before the day this item commences, continues to apply on and after that day in relation to a payment of decoration allowance made before, on or after that day.
(4)
Item 15.1 of the table in section
52-65
of the
Income Tax Assessment Act 1997
, as in force immediately before the day this item commences, continues to apply on and after that day in relation to a payment of a section
99
funeral benefit made before, on or after that day.
(5)
Item 16.1 of the table in section
52-65
of the
Income Tax Assessment Act 1997
, as in force immediately before the day this item commences, continues to apply on and after that day in relation to a payment of a section
100
funeral benefit made before, on or after that day.
(6)
Item 20.1 of the table in section
52-65
of the
Income Tax Assessment Act 1997
, as in force immediately before the day this item commences, continues to apply on and after that day in relation to a payment of travelling expenses made before, on or after that day.
(7)
Item 22.1 of the table in section
52-65
of the
Income Tax Assessment Act 1997
, as in force immediately before the day this item commences, continues to apply on and after that day in relation to a payment of Victoria Cross allowance made before, on or after that day.
(8)
Subparagraph
52-145(1)(b)(iii)
of the
Income Tax Assessment Act 1997
, as in force immediately before the day this item commences, continues to apply on and after that day in relation to a payment of an allowance or reimbursement under the scheme known as the Veterans
'
Children Education Scheme.
]
History
S 52-65(1) amended by No 14 of 2022, s 3 and Sch 8 item 5, by inserting para (f), effective 1 April 2022.
S 52-65(1) amended by No 142 of 2021, s 3 and Sch 1 item 16, by substituting
"
or pension bonus bereavement payment
"
for
"
, pension bonus bereavement payment, DFISA bonus or DFISA bonus bereavement payment
"
in para(a), effective 1 January 2022.
S 52-65(1) amended by No 97 of 2020, s 3 and Sch 1 item 33, by inserting para (db) and (dc), effective 14 November 2020.
S 52-65(1) amended by No 22 of 2020, s 3 and Sch 4 item 17, by inserting para (d) and (da), effective 25 March 2020.
S 52-65(1) amended by No 128 of 2017, s 3 and Sch 8 item 13, by repealing para (d) and (da), effective 1 December 2017. Para (d) and (da) formerly read:
(d)
economic security strategy payment under the
Veterans
'
Entitlements Act 1986
; or
(da)
ETR payments under the
Veterans
'
Entitlements Act 1986
; or
S 52-65(1) amended by No 46 of 2017, s 3 and Sch 1 item 14, by inserting para (c), effective 19 June 2017.
S 52-65(1) amended by No 96 of 2014, s 3 and Sch 8 item 19, by repealing para (c), effective 31 December 2016. Para (c) formerly read:
(c)
payments of income support bonus under the scheme prepared under Part VII (about educating veterans
'
children) of the
Veterans
'
Entitlements Act 1986
; or
S 52-65(1) amended by No 5 of 2013, s 3 and Sch 1 item 17, by inserting para (c), effective 5 March 2013.
S 52-65(1) amended by No 58 of 2012, s 3 and Sch 4 item 4, by inserting para (ba), applicable in relation to payments made in the 2011-12 income year or a later income year.
S 52-65(1) amended by No 50 of 2012, s 3 and Sch 3 item 5, by inserting para (da), effective 27 May 2012.
S 52-65(1) amended by No 12 of 2012, s 3 and Sch 6 item 121, by repealing para (bb) and (c), effective 21 March 2012. Para (bb) and (c) formerly read:
(bb)
2008 one-off payment to older Australians; or
(c)
payments under a scheme referred to in subsection (1C); or
S 52-65(1) amended by No 141 of 2011, s 3 and Sch 10 item 11, by inserting para (b), effective 14 May 2012.
S 52-65(1) amended by No 95 of 2011, s 3 and Sch 1 item 8, by inserting para (e), effective 20 September 2011.
S 52-65(1) amended by No 131 of 2008, s 3 and Sch 5 item 8, by inserting para (d) before the note, effective 1 December 2008.
S 52-65(1) amended by
No 97 of 2008
, s 3 and Sch 3 item 75, by repealing former para (b) and para (ba), effective 3 October 2008. Paras (b) and (ba) formerly read:
(b)
2006 one-off payment to older Australians; or
(ba)
2007 one-off payment to older Australians; or
S 52-65(1) amended by No 19 of 2008, s 3 and Sch 1 item 22, by inserting para (bb), effective 26 May 2008.
S 52-65(1) amended by No 183 of 2007, s 3 and Sch 1 item 5, by substituting
"
, pension bonus bereavement payment, DFISA bonus or DFISA bonus bereavement payment
"
for
"
or DFISA bonus
"
in para (a), effective 1 January 2008.
S 52-65(1) amended by No 66 of 2007, s 3 and Sch 1 items 22 and 23, by inserting para (ba) and substituting
"
a scheme
"
for
"
the scheme
"
in para (c), effective 11 May 2007.
S 52-65(1) (except the note) substituted by No 41 of 2006, s 3 and Sch 1 item 12, effective 22 May 2006. S 52-65(1) formerly read:
52-65(1)
The table in this section tells you about the income tax treatment of veterans
'
affairs payments (other than payments of pension bonus or DFISA bonus).
S 52-65(1) amended by No 100 of 2004 and No 67 of 1998.
52-65(1A)
Payments of pension bonus and pension bonus bereavement payment under Part IIIAB of the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
History
S 52-65(1A) substituted by No 142 of 2021, s 3 and Sch 1 item 17, effective 1 January 2022. No 142 of 2021, s 3 and Sch 1 item 20 contain the following saving provisions:
20 Saving provisions
(1)
Subsection
52-65(1A)
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to a payment of DFISA bonus or DFISA bonus bereavement payment under Part VIIAB of the
Veterans
'
Entitlements Act 1986
made before, on or after the commencement of this item.
(2)
Item 5A.1 of the table in section
52-65
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to a payment of Defence Force Income Support Allowance made before, on or after the commencement of this item.
S 52-65(1A) formerly read:
52-65(1A)
The following payments under the
Veterans
'
Entitlements Act 1986
are exempt from income tax:
(a)
pension bonus and pension bonus bereavement payment under Part IIIAB;
(b)
DFISA bonus and DFISA bonus bereavement payment under Part VIIAB.
S 52-65(1A) substituted by No 183 of 2007, s 3 and Sch 1 item 6, effective 1 January 2008. S 52-65(1A) formerly read:
52-65(1A)
Payments of pension bonus under Part IIIAB or DFISA bonus under Part VIIAB of the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
S 52-65(1A) amended by No 100 of 2004 and inserted by No 67 of 1998.
52-65(1B)
(Repealed by No 12 of 2012)
History
S 52-65(1B) repealed by No 12 of 2012, s 3 and Sch 6 item 122, effective 21 March 2012. S 52-65(1B) formerly read:
52-65(1B)
Payments of 2008 one-off payment to older Australians under Part VIIF of the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
S 52-65(1B) substituted by
No 97 of 2008
, s 3 and Sch 3 item 76, effective 3 October 2008. S 52-65(1B) formerly read:
52-65(1B)
The following one-off payments under the
Veterans
'
Entitlements Act 1986
are exempt from income tax:
(a)
2006 one-off payment to older Australians under Part VIID;
(b)
2007 one-off payment to older Australians under Part VIIE;
(c)
2008 one-off payment to older Australians under Part VIIF.
S 52-65(1B) substituted for s 52-65(1B) and (1BA) by No 19 of 2008, s 3 and Sch 1 item 23, effective 26 May 2008. S 52-65(1B) formerly read:
52-65(1B)
Payments of 2006 one-off payment to older Australians under Part VIID of the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
S 52-65(1B) inserted by No 41 of 2006, s 3 and Sch 1 item 13, effective 22 May 2006.
52-65(1BA)
(Repealed by No 19 of 2008)
History
S 52-65(1B) substituted for s 52-65(1B) and (1BA) by No 19 of 2008, s 3 and Sch 1 item 23, effective 26 May 2008. S 52-65(1BA) formerly read:
52-65(1BA)
Payments of 2007 one-off payment to older Australians under Part VIIE of the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
S 52-65(1BA) inserted by No 66 of 2007, s 3 and Sch 1 item 24, effective 11 May 2007.
52-65(1C)
(Repealed by No 12 of 2012)
History
S 52-65(1C) repealed by No 12 of 2012, s 3 and Sch 6 item 122, effective 21 March 2012. S 52-65(1C) formerly read:
52-65(1C)
Payments to older Australians under a scheme determined under item 2 of Schedule 2 to the
Social Security and Veterans
'
Entitlements Legislation Amendment (One-off Payments and Other Budget Measures) Act 2008
are exempt from income tax.
S 52-65(1C) substituted by
No 97 of 2008
, s 3 and Sch 3 item 77, effective 3 October 2008. S 52-65(1C) formerly read:
52-65(1C)
Payments to older Australians under the following schemes are exempt from income tax:
(a)
a scheme determined under item 2 of Schedule 2 to the
Social Security and Veterans
'
Entitlements Legislation Amendment (One-off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006
;
(b)
a scheme determined under item 2 of Schedule 2 to the
Social Security and Veterans
'
Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007
;
(c)
a scheme determined under item 2 of Schedule 2 to the
Social Security and Veterans
'
Entitlements Legislation Amendment (One-off Payments and Other Budget Measures) Act 2008
.
S 52-65(1C) amended by No 19 of 2008, s 3 and Sch 1 item 24, by inserting para (c) at the end, effective 26 May 2008.
S 52-65(1C) substituted by No 66 of 2007, s 3 and Sch 1 item 25, effective 11 May 2007. S 52-65(1C) formerly read:
52-65(1C)
Payments to older Australians under the scheme determined under item 2 of Schedule 2 to the
Social Security and Veterans
'
Entitlements Legislation Amendment (One-off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006
are exempt from income tax.
S 52-65(1C) inserted by No 41 of 2006, s 3 and Sch 1 item 13, effective 22 May 2006.
52-65(1D)
(Repealed by No 128 of 2017)
History
S 52-65(1D) repealed by No 128 of 2017, s 3 and Sch 8 item 14, effective 1 December 2017. S 52-65(1D) formerly read:
52-65(1D)
Economic security strategy payment under the
Veterans
'
Entitlements Act 1986
is exempt from income tax.
S 52-65(1D) inserted by No 131 of 2008, s 3 and Sch 5 item 9, effective 1 December 2008.
52-65(1E)
A lump sum payment under section 198N of the
Veterans
'
Entitlements Act 1986
is exempt from income tax.
History
S 52-65(1E) inserted by No 80 of 2009, s 3 and Sch 1 item 14, effective 10 September 2009.
52-65(1F)
A prisoner of war recognition supplement under Part VIB of the
Veterans
'
Entitlements Act 1986
is exempt from income tax.
[
CCH Note:
S 52-65(1F) will be repealed by No 17 of 2025, s 3 and Sch 8 item 40, effective 1 July 2026. For saving provisions, see note under s
52-65(1)
.]
History
S 52-65(1F) inserted by No 95 of 2011, s 3 and Sch 1 item 9, effective 20 September 2011.
52-65(1G)
The following are exempt from income tax:
(a)
clean energy payments under the
Veterans
'
Entitlements Act 1986
;
(b)
clean energy payments under the scheme prepared under Part VII (about educating veterans
'
children) of that Act.
Note:
The supplementary amount of each other payment under the scheme mentioned in paragraph (b) is also exempt from income tax (see section
52-140
).
[
CCH Note:
Despite amendments made by No 128 of 2017 related to the removal of spent veterans
'
affairs payments, subsection
52-65(1G)
, as in force immediately before 1 December 2017, continues to apply on and after 1 December 2017 in relation to a payment of clean energy advance under the
Veterans
'
Entitlements Act 1986
made before, on or after 1 December 2017.]
[
CCH Note:
S 52-65(1G) will be substituted by No 17 of 2025, s 3 and Sch 8 item 40, effective 1 July 2026. For saving provisions, see note under s
52-65(1)
. S 52-65(1G) will read:
52-65(1G)
Clean energy payments under the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
]
History
S 52-65(1G) substituted by No 58 of 2012, s 3 and Sch 4 item 5, applicable in relation to payments made in the 2011-12 income year or a later income year. S 52-65(1G) formerly read:
52-65(1G)
Clean energy payments under the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
S 52-65(1G) inserted by No 141 of 2011, s 3 and Sch 10 item 12, effective 14 May 2012.
52-65(1GA)
One-off energy assistance payments under Part IIIF of the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
History
S 52-65(1GA) inserted by No 46 of 2017, s 3 and Sch 1 item 15, effective 19 June 2017.
52-65(1H)
One-off energy assistance payments under Part IIIG of the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
History
S 52-65(1H) inserted by No 28 of 2019, s 3 and Sch 1 item 12, effective 6 April 2019.
S 52-65(1H) repealed by No 128 of 2017, s 3 and Sch 8 item 14, effective 1 December 2017. S 52-65(1H) formerly read:
52-65(1H)
ETR payments under Part VIIH of the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
S 52-65(1H) inserted by No 50 of 2012, s 3 and Sch 3 item 6, effective 27 May 2012.
[
CCH Note:
Despite amendments made by No 128 of 2017 related to the removal of spent veterans
'
affairs payments, subsection 52-65(1H), as in force immediately before 1 December 2017, continues to apply on and after 1 December 2017 in relation to an ETR payment made before, on or after 1 December 2017.]
52-65(1J)
The following payments are exempt from income tax:
(a)
first 2020 economic support payments under Division 1 of Part IIIH of the
Veterans
'
Entitlements Act 1986
;
(b)
second 2020 economic support payments under Division 2 of Part IIIH of the
Veterans
'
Entitlements Act 1986
History
S 52-65(1J) inserted by No 22 of 2020, s 3 and Sch 4 item 18, effective 25 March 2020.
52-65(1K)
The following payments are exempt from income tax:
(a)
additional economic support payment 2020 under Division 1 of Part IIIJ of the
Veterans
'
Entitlements Act 1986
;
(b)
additional economic support payment 2021 under Division 2 of Part IIIJ of the
Veterans
'
Entitlements Act 1986
.
History
S 52-65(1K) inserted by No 97 of 2020, s 3 and Sch 1 item 34, effective 14 November 2020.
Former s 52-65(1K) repealed by No 96 of 2014, s 3 and Sch 8 item 20, effective 31 December 2016. No 96 of 2014, s 3 and Sch 8 item 26 contains the following saving provision:
Part 3
-
Saving provisions
26 Saving provisions
…
26(4)
Despite the amendment made by item 20, subsection
52-65(1K)
of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to payments of income support bonus made before, on or after that commencement under the scheme prepared under Part VII of the
Veterans
'
Entitlements Act 1986
.
…
Former s 52-65(1K) formerly read:
52-65(1K)
Payments of income support bonus under the scheme prepared under Part VII (about educating veterans
'
children) of the
Veterans
'
Entitlements Act 1986
are exempt from income tax.
Former s 52-65(1K) inserted by No 5 of 2013, s 3 and Sch 1 item 18, effective 5 March 2013.
52-65(1L)
2022 cost of living payment under Division 1 of Part IIIK of the
Veterans
'
Entitlements Act 1986
is exempt from income tax.
History
S 52-65(1L) inserted by No 14 of 2022, s 3 and Sch 8 item 6, effective 1 April 2022.
52-65(2)
Expressions (except
"
pension age
"
) used in this Subdivision that are also used in the
Veterans
'
Entitlements Act 1986
have the same meaning as in that Act.
Note:
Pension age
has the meaning given by subsection
23(1)
of the
Social Security Act 1991
: see subsection
995-1(1)
.
History
S 52-65(2) amended by No 94 of 2019, s 3 and Sch 1 item 7, by inserting the note, effective 29 October 2019.
52-65(3)
(Repealed by No 94 of 2019)
History
S 52-65(3) repealed by No 94 of 2019, s 3 and Sch 1 item 8, effective 29 October 2019. S 52-65(3) formerly read:
52-65(3)
Pension age
has the meaning given by subsection 23(1) of the
Social Security Act 1991
.
52-65(4)
Ordinary payment
means a payment other than a payment made because of a person
'
s death.
|
Income tax treatment of veterans
'
affairs payments
|
|
Item
|
Category of veterans
'
affairs payment
|
Ordinary payment
|
Payment made because of a person
'
s death
|
| 1.1 |
Age service pension
| Supplementary amount is exempt (see section
52-70
) |
Exempt |
|
|
| 2.1 |
Attendant allowance
|
Exempt |
Not applicable |
|
|
| 3.1 |
Carer service pension:
unless covered by item 3.2 or 3.3 |
Supplementary amount is exempt (see section
52-70
) |
Exempt |
|
|
| 3.2 |
Carer service pension:
both you and your partner are under pension age and your partner is receiving an invalidity service pension |
Exempt |
Exempt |
|
|
| 3.3 |
Carer service pension:
you are under pension age, your partner has died and was receiving an invalidity service pension at death |
Exempt |
Exempt |
|
|
| 4.1 |
Clothing allowance
|
Exempt |
Not applicable |
|
|
| 5.1 |
Decoration allowance
|
Exempt |
Not applicable |
|
|
| 5A.1 |
(Repealed by No 142 of 2021) |
|
|
|
|
| 6.1 |
Income support supplement:
unless covered by item 6.2, 6.3, 6.4 or 6.5 |
Supplementary amount is exempt (see section
52-70
) |
Exempt |
|
|
| 6.2 |
Income support supplement:
you are under pension age and receiving the supplement on the grounds of permanent incapacity |
Exempt |
Exempt |
|
|
| 6.3 |
Income support supplement:
both you and the severely handicapped person you are caring for are under pension age and you are receiving the supplement for providing constant care for that person |
Exempt |
Exempt |
|
|
| 6.4 |
Income support supplement:
both you and your partner are under pension age and your partner is an invalidity service pensioner or a disability support pensioner |
Exempt |
Exempt |
|
|
| 6.5 |
Income support supplement:
both you and your partner are under pension age and your partner is receiving the supplement on the grounds of permanent incapacity |
Exempt |
Exempt |
|
|
| 7.1 |
Invalidity service pension:
you are pension age or over |
Supplementary amount is exempt (see section
52-70
) |
Exempt |
|
|
| 7.2 |
Invalidity service pension:
you are under pension age |
Exempt |
Exempt |
|
|
| 8.1 |
Loss of earnings allowance
|
Exempt |
Not applicable |
|
|
| 9.1 |
Partner service pension:
unless covered by item 9.2 or 9.3 |
Supplementary amount is exempt (see section
52-70
) |
Exempt |
|
|
| 9.2 |
Partner service pension:
both you and your partner are under pension age and your partner is receiving an invalidity service pension |
Exempt |
Exempt |
|
|
| 9.3 |
Partner service pension:
you are under pension age, your partner has died and was receiving an invalidity service pension at death |
Exempt |
Exempt |
|
|
| 10.1 |
Pension for defence-caused death or incapacity
|
Exempt |
Not applicable |
|
|
| 11.1 |
Pension for war-caused death or incapacity
|
Exempt |
Not applicable |
|
|
| 12.1 |
Quarterly pension supplement
|
Exempt |
Not applicable |
|
|
| 13.1 |
Recreation transport allowance
|
Exempt |
Not applicable |
|
|
| 14.1 |
Section 98A Bereavement payment
|
Not applicable |
Exempt |
|
|
| 14.2 |
Section 98AA Bereavement payment
|
Not applicable |
Exempt |
|
|
| 15.1 |
Section 99 funeral benefit
|
Not applicable |
Exempt |
|
|
| 16.1 |
Section 100 funeral benefit
|
Not applicable |
Exempt |
|
|
| 16A.1 |
Energy supplement under Part VIIAD of the
Veterans
'
Entitlements Act 1986
|
Exempt |
Not applicable |
|
|
| 17.1 |
Special assistance
|
Exempt |
Not applicable |
|
|
| 18.1 |
(Repealed by No 81 of 2009) |
|
|
|
|
| 19.1 |
(Repealed by No 95 of 2011) |
|
|
|
|
| 20.1 |
Travelling expenses
|
Exempt |
Not applicable |
|
|
| 20A.1 |
(Repealed by No 81 of 2009) |
|
|
|
|
| 21.1 |
Vehicle Assistance Scheme
|
Exempt |
Not applicable |
|
|
| 21AA.1 |
Veteran payment
|
Supplementary amount is exempt (see section
52-70
) |
Exempt |
|
|
| 21A.1 |
Veterans supplement
|
Exempt |
Not applicable |
|
|
| 22.1 |
Victoria Cross allowance
|
Exempt |
Not applicable |
[
CCH Note:
S 52-65 (table) will be amended by No 17 of 2025, s 3 and Sch 8 item 41, by repealing table items 5.1, 15.1, 16.1, 20.1 and 22.1, effective 1 July 2026. For saving provisions, see note under s
52-65(1)
.]
History
S 52-65 (table) amended by No 142 of 2021, s 3 and Sch 1 item 18, by repealing table item 5A.1, effective 1 January 2022. For saving provisions, see note under s
52-65(1A)
. Table item 5A.1 formerly read:
| 5A.1 |
Defence Force Income Support Allowance
: the whole of the social security pension, or the whole of the social security benefit, that is also payable to you on the day this allowance is payable to you is exempt from income tax under section 52-10 |
Exempt |
Not applicable |
S 52-65 (table) amended by No 17 of 2018, s 3 and Sch 2 item 47, by inserting table item 21AA.1, effective 1 May 2018.
S 52-65 (table) amended by No 91 of 2015, s 3 and Sch 1 item 51, by substituting
"
Energy supplement under Part VIIAD of the
Veterans
'
Entitlements Act 1986
"
for
"
Seniors supplement
"
in table item 16A.1, effective 20 June 2015. For saving provision, see note under s
52-10
.
S 52-65 (table) amended by No 95 of 2011, s 3 and Sch 3 item 1, by repealing table item 19.1, effective 20 September 2011. No 95 of 2011, s 3 and Sch 3 item 15 contains the following transitional provision:
15 Transitional
(1)
Despite the amendment made by item 1, table item 19.1 in section 52-65 of the
Income Tax Assessment Act 1997
(as in force immediately before the commencement of this item) continues to apply on and after that commencement in relation to payments of temporary incapacity allowance made before, on or after that commencement.
...
Table item 19.1 formerly read:
19.1 ...
Temporary incapacity allowance
... Exempt ... Not applicable
S 52-65 (table) amended by No 81 of 2009, s 3 and Sch 4 items 54 to 58, by substituting table items 12.1 and 16A.1, repealing table items 18.1 and 20A.1 and inserting table item 21A.1, effective 20 September 2009.
Application and savings provisions
Act No 81 of 2009, Sch 4 item 212(2), reads:
"
Despite the amendment made by item 54, table item 12.1 (as in force immediately before 20 September 2009) continues to apply on and after that commencement in relation to payments of pharmaceutical allowance made before, on or after that commencement.
"
Act No 81 of 2009, Sch 4 item 209(3) reads:
"
Despite the amendment made by item 55, table item 16A.1 (as in force immediately before 20 September 2009) continues to apply on and after that commencement in relation to payments of seniors concession allowance made before, on or after that commencement.
"
Act No 81 of 2009, Sch 4 item 211(3) reads:
"
Despite the amendment made by item 56, table item 18.1 (as in force immediately before 20 September 2009) continues to apply on and after that commencement in relation to payments of telephone allowance made before, on or after that commencement.
"
Act No 81 of 2009, Sch 4 item 210(3) reads:
"
Despite the amendment made by item 57, table item 20A.1 (as in force immediately before 20 September 2009) continues to apply on and after that commencement in relation to payments of utilities allowance made before, on or after that commencement.
"
Table items 12.1, 16A.1, 18.1 and 20A.1 formerly read:
12.1 ...
Pharmaceutical allowance
... Exempt ... Not applicable
16A.1 ...
Seniors concession allowance
... Exempt ... Not applicable
18.1 ...
Telephone allowance
... Exempt ... Not applicable
20A.1 ...
Utilities allowance
... Exempt ... Not applicable
S 52-65 (table) amended by No 48 of 2008, s 3 and Sch 3 item 1, by inserting table item 14.2, applicable in relation to bereavement payments received during the 2008-09 income year and later income years.
S 52-65 (table) amended by No 89 of 2007, s 3 and Sch 5 item 1, by substituting table item 5A.1, effective 1 July 2007. The item formerly read:
5A.1 ...
Defence Force Income Support Allowance:
the social security pension or social security benefit that is also payable to you on the day this allowance is payable to you is exempt from income tax under section 52-10 ... Exempt ... Not applicable
S 52-65 (table) amended by No 132 of 2004 and No 100 of 2004.
S 52-65 inserted by No 121 of 1997.
SECTION 52-70
52-70
Supplementary amounts of payments
The
supplementary amount
of a veterans
'
affairs payment is the total of:
(a)
so much of the payment as is included by way of rent assistance; and
(b)
so much of the payment as is included by way of an additional amount for each of your dependent
*
children; and
(c)
so much of the payment as is included by way of remote area allowance; and
(d)
so much of the payment as is equal to the tax-exempt pension supplement for the payment; and
(e)
so much of the payment as is included by way of energy supplement.
History
S 52-70 amended by No 122 of 2014, s 3 and Sch 1 item 290, by substituting
"
energy supplement
"
for
"
clean energy supplement
"
in para (e), effective 20 September 2014. No 122 of 2014, s 3 and Sch 1 item 294(2) contains the following transitional provision:
294 Transitional provisions
…
(2)
Paragraphs
52-70(e)
,
52-132(c)
and
52-140(3)(c)
of the
Income Tax Assessment Act 1997
apply on and after the commencement of this item as if a reference in those paragraphs to energy supplement included a reference to clean energy supplement.
…
S 52-70 amended by No 141 of 2011, s 3 and Sch 10 item 13, by inserting para (e), effective 14 May 2012.
S 52-70 amended by No 81 of 2009, s 3 and Sch 4 item 59, by inserting para (d), effective 20 September 2009.
S 52-70 amended by No 60 of 2009, s 3 and Sch 4 item 39, by substituting
"
rent assistance
"
for
"
rental assistance
"
in para (a), effective 20 September 2009.
S 52-70 amended by No 45 of 1998, inserted by No 121 of 1997.
SECTION 52-75
52-75
Provisions of the Veterans
'
Entitlements Act 1986 under which payments are made
This table lists the provisions of the
Veterans
'
Entitlements Act 1986
under which veterans
'
affairs payments are made that are wholly or partly exempt from income tax under this Subdivision.
|
Provisions under which veterans
'
affairs payments are made
|
|
Item
|
Category of veterans
'
affairs payment
|
Ordinary payment
|
Payment made because of a person
'
s death
|
| 1A |
2020 economic support payment |
Part IIIH |
Not applicable |
|
. |
| 1AA |
2022 cost of living payment |
Part IIIK |
Not applicable |
|
. |
| 1B |
Additional economic support payment 2020 or additional economic support payment 2021 |
Part IIIJ |
Not applicable |
|
. |
| 1C |
(Repealed by No 12 of 2012) |
|
|
|
. |
| 1 |
Age service pension |
Division 3 of Part III |
Division 12A of Part IIIB |
|
. |
| 2 |
Attendant allowance |
Section 98 |
Not applicable |
|
. |
| 3 |
Carer service pension |
Division 6 of Part III |
Division 12A of Part IIIB |
|
. |
| 3A |
Clean energy payment |
Part IIIE |
Not applicable |
|
. |
| 3B |
Clean energy payment under Veterans
'
Children Education Scheme |
Part VII |
Not applicable |
|
. |
| 4 |
Clothing allowance |
Section 97 |
Not applicable |
|
. |
| 5 |
Decoration allowance |
Section 102 |
Not applicable |
|
. |
| 5A |
(Repealed by No 142 of 2021) |
|
|
|
. |
| 5B
-
5C |
(Repealed by 128 of 2017) |
|
|
|
. |
| 5D |
(Repealed by No 96 of 2014) |
|
|
|
. |
| 6 |
Income support supplement |
Part IIIA |
Division 12A of Part IIIB |
|
. |
| 7 |
Invalidity service pension |
Division 4 of Part III |
Division 12A of Part IIIB |
|
. |
| 8 |
Loss of earnings allowance |
Section 108 |
Not applicable |
|
. |
| 8A |
One-off energy assistance payment |
Part IIIF or IIIG |
Not applicable |
|
. |
| 9 |
Partner service pension |
Division 5 of Part III |
Division 12A of Part IIIB |
|
. |
| 10 |
Pension for defence-caused death or incapacity |
Part IV |
Not applicable |
|
. |
| 11 |
Pension for war-caused death or incapacity |
Part II |
Not applicable |
|
. |
| 12 |
Quarterly pension supplement |
Part IIID |
Not applicable |
|
. |
| 12A |
Prisoner of war recognition supplement |
Part VIB |
Not applicable |
|
. |
| 13 |
Recreation transport allowance |
Section 104 |
Not applicable |
|
. |
| 14 |
Section 98A Bereavement payment |
Not applicable |
Section 98A |
|
. |
| 14A |
Section 98AA Bereavement payment |
Not applicable |
Section 98AA |
|
. |
| 15 |
Section 99 funeral benefit |
Not applicable |
Section 99 |
|
. |
| 16 |
Section 100 funeral benefit |
Not applicable |
Section 100 |
|
. |
| 16A |
Energy supplement |
Part VIIAD |
Not applicable |
|
. |
| 17 |
Special assistance |
Section 106 |
Not applicable |
|
. |
| 18 |
(Repealed by No 81 of 2009) |
|
|
|
. |
| 19 |
(Repealed by No 95 of 2011) |
|
|
|
. |
| 20 |
Travelling expenses |
Section 110 |
Not applicable |
|
. |
| 20A |
(Repealed by No 81 of 2009) |
|
|
|
. |
| 21 |
Vehicle Assistance Scheme |
Section 105 |
Not applicable |
|
. |
| 21AA |
Veteran payment |
Section 45SB |
Section 45SB |
|
. |
| 21A |
Veterans supplement |
Part VIIA |
Not applicable |
|
. |
| 22 |
Victoria Cross allowance |
Section 103 |
Not applicable |
[
CCH Note:
S 52-75 will be amended by No 17 of 2025, s 3 and Sch 8 item 42, by repealing table items 3B, 5, 12A, 15, 16, 20 and 22, effective 1 July 2026.]
History
S 52-75 amended by No 14 of 2022, s 3 and Sch 8 item 7, by inserting table item 1AA, effective 1 April 2022.
S 52-75 amended by No 142 of 2021, s 3 and Sch 1 item 19, by repealing table item 5A, effective 1 January 2022. Table item 5A formerly read:
| 5A |
Defence Force Income Support Allowance
|
Part VIIAB |
Not applicable |
S 52-75 amended by No 97 of 2020, s 3 and Sch 1 item 35, by inserting table item 1B, effective 14 November 2020.
S 52-75 amended by No 22 of 2020, s 3 and Sch 4 item 19, by inserting table item 1A, effective 25 March 2020.
S 52-75 amended by No 28 of 2019, s 3 and Sch 1 item 13, by inserting
"
or IIIG
"
in table item 8A, column headed
"
Ordinary payment
"
, effective 6 April 2019.
S 52-75 amended by No 17 of 2018, s 3 and Sch 2 item 48, by inserting table item 21AA, effective 1 May 2018.
S 52-75 amended by No 128 of 2017, s 3 and Sch 8 item 15, by repealing table items 5B and 5C, effective 1 December 2017. Table items 5B and 5C formerly read:
| 5B |
Economic security strategy payment |
Part VIIG |
Not applicable |
|
. |
| 5C |
ETR payment |
Part VIIH |
Not applicable |
S 52-75 amended by No 46 of 2017, s 3 and Sch 1 item 16, by inserting table item 8A, effective 19 June 2017.
S 52-75 amended by No 96 of 2014, s 3 and Sch 8 item 21, by repealing table item 5D, effective 31 December 2016. Table item 5D formerly read:
| 5D |
Income support bonus under Veterans
'
Children Education Scheme |
Part VII |
Not applicable |
S 52-75 amended by No 91 of 2015, s 3 and Sch 1 item 52, by substituting
"
Energy supplement
"
for
"
Seniors supplement
"
in table item 16A, effective 20 June 2015.
S 52-75 amended by No 5 of 2013, s 3 and Sch 1 item 19, by inserting table item 5D, effective 5 March 2013.
S 52-75 amended by No 58 of 2012, s 3 and Sch 4 item 6, by inserting table item 3B, applicable in relation to payments made in the 2011-12 income year or a later income year.
S 52-75 amended by No 50 of 2012, s 3 and Sch 3 item 7, by inserting table item 5C, effective 27 May 2012.
S 52-75 amended by No 12 of 2012, s 3 and Sch 6 items 123
-
128, by repealing table item 1C, substituting
"
Division 12A of Part IIIB
"
for
"
Parts III and IIIA
"
in table items 1, 3, 7 and 9, column headed
"
Payment made because of a person
'
s death
"
, and
"
Division 12A of Part IIIB
"
for
"
Parts III and IIIB
"
in table item 6, column headed
"
Payment made because of a person
'
s death
"
, effective 21 March 2012. Table item 1C formerly read:
| 1C |
2008 one-off payment to older Australians |
Part VIIF |
Not applicable |
S 52-75 amended by No 141 of 2011, s 3 and Sch 10 item 14, by inserting table item 3A, effective 14 May 2012.
S 52-75 amended by No 95 of 2011, s 3 and Sch 3 item 2, by repealing table item 19, effective 20 September 2011. Table item 19 formerly read:
19 ... Temporary incapacity allowance ... Section 107 ... Not applicable
S 52-75 amended by No 95 of 2011, s 3 and Sch 1 item 10, by inserting table item 12A, effective 20 September 2011.
S 52-75 amended by No 81 of 2009, s 3 and Sch 4, items 60 to 64, by substituting table items 12 and 16A, repealing table items 18 and 20A and inserting table item 21A, effective 20 September 2009. Table items 12, 16A, 18 and 20A formerly read:
12 ... Pharmaceutical allowance ... Part VIIA ... Not applicable
16A ... Seniors concession allowance ... Part VIIAD ... Not applicable
18 ... Telephone allowance ... Part VIIB ... Not applicable
20A ... Utilities allowance ... Part VIIAC ... Not applicable
S 52-75 amended by No 131 of 2008, s 3 and Sch 5 item 10, by inserting table item 5B, effective 1 December 2008.
S 52-75 amended by
No 97 of 2008
, s 3 and Sch 3 item 78, by repealing table items 1A and 1B, effective 3 October 2008. The items formerly read:
1A ... 2006 one-off payment to older Australians ... Part VIID ... Not applicable
1B ... 2007 one-off payment to older Australians ... Part VIIE ... Not applicable
S 52-75 amended by No 48 of 2008, s 3 and Sch 3 item 2, by inserting table item 14A, applicable in relation to bereavement payments received during the 2008-09 income year and later income years.
S 52-75 amended by No 19 of 2008, s 3 and Sch 1 item 25, by inserting table item 1C, effective 26 May 2008.
S 52-75 amended by No 66 of 2007, s 3 and Sch 1 item 26, by inserting table item 1B, effective 11 May 2007.
S 52-75 amended by No 41 of 2006, s 3 and Sch 1 item 14, by inserting table item 1A, effective 22 May 2006.
S 52-75 amended by No 132 of 2004, No 100 of 2004, No 101 of 2003 and inserted by No 121 of 1997.
Subdivision 52-C
-
Exempt payments made because of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986
SECTION 52-100
What this Subdivision is about
This Subdivision tells you:
(a) the payments made because of the
Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986
that are wholly or partly exempt from income tax; and
(b) any special circumstances, conditions or exceptions that apply to a payment in order for it to be exempt; and
(c) how to work out how much of a payment is exempt.
History
S 52-100 inserted by No 121 of 1997.
Operative provisions
SECTION 52-105
Supplementary amount of a payment made under the
Repatriation Act 1920
is exempt
52-105(1)
The
*
supplementary amount of a payment made to you is exempt from income tax if:
(a)
you are a
*
parent of a
*
member of the Forces who has died (but you are neither a widow nor a woman divorced or deserted by her husband) and you are of
*
pension age or over; or
(b)
you are the mother of a
*
member of the Forces who has died and you are also a widow, or divorced or deserted by your husband;
and the payment is covered by subsection (2).
History
S 52-105(1) amended by No 144 of 2008, s 3 and Sch 14 item 60, by substituting
"
*
parent
"
for
"
parent
"
in para (a), applicable:
(a) in relation to the 2009
-
2010 income year and later income years; and
(b) to the extent to which the amendments affect the
Fringe Benefits Tax Assessment Act 1986
-
in relation to the FBT year starting on 1 April 2009 and later FBT years.
52-105(2)
The payment must be made in circumstances that are a prescribed case under:
(a)
Table A in Schedule 3 to the
Repatriation Act 1920
; or
(b)
that Table as applying because of the
Repatriation (Far East Strategic Reserve) Act 1956
; or
(c)that Table as applying because of the
Repatriation (Special Overseas Service) Act 1962
; or
(d)
that Table as applying because of the
Interim Forces Benefits Act 1947
;
as in force because of subsection 4(6) of the
Veterans
'
Entitlements (Transitional Provisions and Consequential Amendments) Act 1986
.
52-105(3)
The
supplementary amount
is the total of:
(a)
so much of the payment as is included by way of rental assistance; and
(b)
so much of the payment as is included by way of an additional amount for each of your dependent
*
children; and
(c)
so much of the payment as is included by way of remote area allowance.
52-105(4)
Member of the Forces
has the same meaning as in the Act referred to in the relevant paragraph of subsection (2).
52-105(5)
Expressions (except
pension age
) used in this Subdivision that are also used in the
Veterans
'
Entitlements Act 1986
have the same meaning as in that Act.
Note:
Pension age
has the meaning given by subsection
23(1)
of the
Social Security Act 1991
: see subsection
995-1(1)
.
History
S 52-105(5) amended by No 94 of 2019, s 3 and Sch 1 item 9, by inserting the note, effective 29 October 2019.
52-105(6)
(Repealed by No 94 of 2019)
History
S 52-105(6) repealed by No 94 of 2019, s 3 and Sch 1 item 10, effective 29 October 2019. S 52-105(6) formerly read:
52-105(6)
Pension age
has the meaning given by subsection 23(1) of the
Social Security Act 1991
.
History
S 52-105 inserted by No 121 of 1997.
SECTION 52-110
52-110
Other exempt payments
Payments (except those covered by section 52-105) made because of subsection 4(6) of the
Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986
are exempt from income tax.
History
S 52-110 inserted by No 121 of 1997.
Subdivision 52-CA
-
Exempt payments under the
Military Rehabilitation and Compensation Act 2004
History
Subdiv 52-CA inserted by No 52 of 2004.
SECTION 52-112
What this Subdivision is about
This Subdivision tells you:
(a) the payments under the
Military Rehabilitation and Compensation Act 2004
that are wholly or partly exempt from income tax; and
(b) any special circumstances, conditions or exceptions that apply to a payment in order for it to be exempt; and
(c) how to work out how much of a payment is exempt.
History
S 52-112 inserted by No 52 of 2004.
Operative provisions
SECTION 52-114
How much of a payment under the Military Rehabilitation and Compensation Act is exempt
?
52-114(1)
The table in this section tells you about the income tax treatment of payments under the
Military Rehabilitation and Compensation Act 2004
. References in the table to provisions are to provisions of that Act.
52-114(2)
Expressions used in this Subdivision that are also used in the
Military Rehabilitation and Compensation Act 2004
have the same meanings as in that Act.
52-114(3)
Ordinary payment
means a payment other than a payment made because of a person
'
s death.
|
Income tax treatment of Military Rehabilitation and Compensation Act payments
|
|
Item
|
Category of payment and provision under which it is paid
|
Ordinary payment
|
Payment because of a person
'
s death
|
| 1 |
Alterations to aids and appliances relating to rehabilitation (section 57) |
Exempt |
Not applicable |
| 2 |
Compensation for journey and accommodation costs (sections 47, 290, 291 and 297 and subsection 328(4)) |
Exempt |
Not applicable |
| 3 |
Compensation for permanent impairment (sections 68, 71, 75 and 80) |
Exempt |
Exempt |
| 4 |
Compensation for financial advice or legal advice (sections 81, 205 and 239) |
Exempt |
Not applicable |
| 5 |
Compensation for incapacity for Permanent Forces member or continuous full-time Reservist (section 85) |
See section 51-32 |
Exempt |
| 6 |
Compensation for incapacity for part-time Reservists (section 86) |
See section 51-33 |
Exempt |
| 7 |
Compensation by way of Special Rate Disability Pension (section 200) |
Exempt |
Not applicable |
| 8 |
Compensation under the Motor Vehicle Compensation Scheme (section 212) |
Exempt |
Not applicable |
| 9 |
Compensation for household services and attendant care services (sections 214 and 217) |
Exempt |
Not applicable |
| 10 |
MRCA supplement (sections 221, 245 and 300) |
Exempt |
Not applicable |
| 11 |
Compensation for loss or damage to medical aids (section 226) |
Exempt |
Not applicable |
| 12 |
Compensation for a wholly dependent partner for a member
'
s death (section 233) |
Not applicable |
Exempt |
| 13 |
Continuing permanent impairment and incapacity etc. compensation for a wholly dependent partner (subparagraphs 242(1)(a)(i) and (iii)) |
Not applicable |
Exempt |
| 14 |
Compensation for eligible young persons who were dependent on deceased member (section 253) |
Not applicable |
Exempt |
| 15 |
Continuing permanent impairment and incapacity etc. compensation for eligible young persons (subparagraphs 255(1)(c)(i) and (iii)) |
Not applicable |
Exempt |
| 16 |
Education and training, or a payment, under the education scheme for certain eligible young persons (section 258) |
Exempt if:
(a) provided for or made to a person under 16; or
(b) a clean energy payment |
Exempt |
| 16A |
(Repealed by No 96 of 2014) |
|
|
| 17 |
Compensation for other persons who were dependent on deceased member (section 262) |
Not applicable |
Exempt |
| 18 |
Compensation for cost of a funeral (section 266) |
Not applicable |
Exempt |
| 19 |
Compensation for treatment costs (sections 288A, 288B and 288C) |
Exempt |
Not applicable |
| 20 |
(Repealed by No 81 of 2009) |
|
|
| 21 |
Special assistance (section 424) |
Exempt |
Exempt |
| 22 |
Clean energy payment (sections 83A, 209A and 238A) |
Exempt |
Not applicable |
Note:
The supplementary amount of a payment covered by item 16 of the table made to a person aged 16 or over is also exempt from income tax (see section
52-140
).
[
CCH Note:
S 52-114 (table) will be amended by No 17 of 2025, s 3 and Sch 8 items 43
-
49, by inserting
"
, 291A
"
after
"
291
"
in table item 2, table item 9A after table item 9, table items 11A and 11B after table item 11, substituting
"
, (iii) and (iv)
"
for
"
and (iii)
"
in table items 13 and 15,
"
sections 266, 268AA, 268AB and 268AC
"
for
"
section 266
"
in table item 18 and inserting table item 18A and
"
, 220D
"
after
"
209A
"
in table item 22 , effective 1 July 2026 and applicable in relation to the 2026-27 income year and later income years. Table items 9A, 11A, 11B and 18A will read:
| 9A |
Additional Disablement Amount (section
220A
) |
Exempt |
Not applicable |
| 11A |
Victoria Cross allowance (section
230A
) |
Exempt |
Not applicable |
| 11A |
Decoration allowance (section
230C
) |
Exempt |
Not applicable |
| 18A |
Compensation relating to prisoners of war (sections
268AJ
and
268AM
) |
Exempt |
Not applicable |
]
History
S 52-114 (table) amended by No 122 of 2019, s 3 and Sch 1 item 25, by substituting
"
(sections 288A, 288B and 288C)
"
for
"
(sections 271, 272 and 273)
"
in table item 19, effective 12 December 2019.
S 52-114 (table) amended by No 128 of 2017, s 3 and Sch 8 item 26, by omitting
"
and Part 5A of Chapter 11
"
from table item 22, effective 1 December 2017. No 128 of 2017, s 3 and Sch 8 item 27 contains the following saving provision:
27 Saving provisions
…
27(3)
Despite the amendments made by item 22 in section 52-114 of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to a payment of clean energy advance under Part 5A of Chapter 11 of the
Military Rehabilitation and Compensation Act 2004
made before, on or after that commencement.
S 52-114 (table) amended by No 96 of 2014, s 3 and Sch 8 item 22, by repealing table item 16A, effective 31 December 2016. No 96 of 2014, s 3 and Sch 8 item 26 contains the following saving provision:
Part 3
-
Saving provisions
26 Saving provisions
…
26(5)
Despite the amendment made by item 22, item 16A of the table in section 52-114 of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to payments of income support bonus made before, on or after that commencement under the scheme determined under section 258 of the
Military Rehabilitation and Compensation Act 2004
.
…
Table item 16A formerly read:
| "
16A |
Income support bonus under the education scheme for certain eligible young persons (section 258) |
Exempt |
Not applicable
" |
S 52-114 (table) amended by No 99 of 2013, s 3 and Sch 5 item 48, by inserting
"
or legal advice
"
in table item 4, effective 1 July 2013.
S 52-114 (table) amended by No 5 of 2013, s 3 and Sch 1 item 20, by inserting table item 16A, effective 5 March 2013.
S 52-114 (table) amended by No 58 of 2012, s 3 and Sch 4 items 7 and 8, by substituting table item 16 and inserting the note at the end, applicable in relation to payments made in the 2011-12 income year or a later income year. Table item 16 formerly read:
| "
16 |
Education and training, or a payment, under the education scheme for certain eligible young persons (section 258) |
Exempt if provided for or made to a person under 16 |
Exempt
" |
S 52-114 (table) amended by No 141 of 2011, s 3 and Sch 10 item 15, by inserting table item 22, effective 14 May 2012.
S 52-114 (table) amended by No 81 of 2009, s 3 and Sch 4 items 65to 67, by substituting
"
MRCA supplement
"
for
"
Telephone allowance
"
and
"
, 245 and 300
"
for
"
and 245
"
in table item 10 and repealing table item 20, effective 20 September 2009.
Application and savings provision
Act No 81 of 2009, Sch 4 item 214(4) reads:
"
Despite the amendments, table items 10 and 20 (as in force immediately before 20 September 2009) continue to apply on and after that commencement in relation to payments of telephone allowance or pharmaceutical allowance made before, on or after that commencement.
"
Table item 20 formerly read:
20 ... Pharmaceutical allowance (section 300) ... Exempt ... Not applicable
S 52-114 inserted by No 52 of 2004.
Subdivision 52-CB
-
Exempt payments under the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006
History
Subdiv 52-CB heading substituted by No 59 of 2017, s 3 and Sch 1 item 28, effective 1 July 2017. The heading formerly read:
Subdivision 52-CB
-
Exempt payments under the Australian Participants in British Nuclear Tests (Treatment) Act 2006
Subdiv 52-CB inserted by No 136 of 2006, s 3 and Sch 1 item 6, applicable to assessments for the 2006-07 year of income and later years of income.
SECTION 52-117
Payments of travelling expenses and pharmaceutical supplement are exempt
52-117(1)
A payment made to you under Part 3 (travelling expenses) of the
Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006
is exempt from income tax.
History
S 52-117 amended by No 59 of 2017, s 3 and Sch 1 items 30
-
32, by inserting
"
(1)
"
before
"
A
"
,
"
(travelling expenses)
"
and
"
and British Commonwealth Occupation Force
"
, effective 1 July 2017.
52-117(2)
A payment of pharmaceutical supplement made to you under Part 3A of the
Australian Participants in British Nuclear Tests and British
Commonwealth Occupation Force (Treatment) Act 2006
is exempt from income tax.
History
S 52-117(2) inserted by No 59 of 2017, s 3 and Sch 1 item 33, effective 1 July 2017.
History
S 52-117 inserted by No 136 of 2006, s 3 and Sch 1 item 6, applicable to assessments for the 2006-07 year of income and later years of income.
Subdivision 52-CC
-
Exempt payments under the Treatment Benefits (Special Access) Act 2019
History
Subdiv 52-CC inserted by No 42 of 2019, s 3 and Sch 2 item 11, effective 6 April 2019 and applicable to assessments for the 2019-20 year of income and later years of income.
SECTION 52-120
Payments of travelling expenses and pharmaceutical supplement are exempt
52-120(1)
A payment made to you under Part 3 (travelling expenses) of the
Treatment Benefits (Special Access) Act 2019
is exempt from income tax.
52-120(2)
A payment of pharmaceutical supplement made to you under Part 4 of the
Treatment Benefits (Special Access) Act 2019
is exempt from income tax.
History
S 52-120 inserted by No 42 of 2019, s 3 and Sch 2 item 11, effective 6 April 2019 and applicable to assessments for the 2019-20 year of income and later years of income.
(Repealed) Subdivision 52-D
-
Exempt payments made by the Commonwealth to reimburse certain expenditure
History
Subdiv 52-D repealed by No 105 of 2013, s 3 and Sch 2 item 23, effective 1 July 2013. No 105 of 2013, s 3 and Sch 2 item 28(3) contains the following saving provision:
(3)
Despite the amendments made by items 23, 25 and 26, Subdivision 52-D and section
61-210
of the
Income Tax Assessment Act 1997
(as in force immediately before the commencement of those items) continue to apply on and after that commencement in relation to payments made under Division 26 of the
Private Health Insurance Act 2007
before, on or after that commencement.
Subdiv 52-D heading substituted by No 128 of 1998.
52-120
(Repealed) SECTION 52-120 Child care assistance and child care rebate are exempt
(Repealed by No 83 of 1999)
History
S 52-120 inserted by No 196 of 1997.
52-125
(Repealed) SECTION 52-125 Private health insurance incentive payments are exempt
(Repealed by No 105 of 2013)
History
S 52-125 repealed by No 105 of 2013, s 3 and Sch 2 item 23, effective 1 July 2013. For saving provision see note under Subdiv
52-D
heading. S 52-125 formerly read:
SECTION 52-125 Private health insurance incentive payments are exempt
52-125
A payment made to you under Division 26 of the
Private Health Insurance Act 2007
is exempt from income tax.
S 52-125 amended by No 32 of 2007, s 3 and Sch 3 item 8 by substituting
"
Division 26 of the
Private Health Insurance Act 2007
"
for
"
Chapter 2 of the
Private Health Insurance Incentives Act 1998
"
, effective 1 July 2007.
S 52-125 inserted by No 128 of 1998.
Subdivision 52-E
-
Exempt payments under the ABSTUDY scheme
History
Subdiv 52-E inserted by No 184 of 2007, s 3 and Sch 3 item 4, applicable in relation to a payment made on or after 1 January 2008.
Former Subdiv 52-E repealed by No 66 of 2003 and inserted by No 60 of 1999.
Guide to Subdivision 52-E
SECTION 52-130
52-130
What this Subdivision is about
This Subdivision tells you:
(a) the payments under the ABSTUDY scheme that are wholly or partly exempt from income tax; and
(b) any special circumstances, conditions or exceptions that apply to a payment in order for it to be exempt; and
(c) how to work out how much of a payment is exempt.
History
S 52-130 inserted by No 184 of 2007, s 3 and Sch 3 item 4, applicable in relation to a payment made on or after 1 January 2008.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 52-131 |
Payments under ABSTUDY scheme |
| 52-132 |
Supplementary amount of payment |
| 52-133 |
Tax free amount of ordinary payment on death of partner if no bereavement payment payable |
| 52-134 |
Tax-free amount if you receive a bereavement lump sum payment |
Operative provisions
SECTION 52-131
Payments under ABSTUDY scheme
52-131(1)
This section tells you about the income tax treatment of a payment under the ABSTUDY scheme made in respect of a period commencing at a time when you were at least 16 years old.
Note:
The whole of a payment made under the ABSTUDY scheme in respect of a period commencing at a time when you are under 16 years old may be exempt under section
51-10
.
52-131(2)
The following payments made to you under the ABSTUDY scheme are exempt from income tax:
(a)
a crisis payment;
(b)
a clean energy payment;
(c)
a first 2020 economic support payment;
(d)
a second 2020 economic support payment;
(e)
a 2022 cost of living payment.
History
S 52-131(2) amended by No 14 of 2022, s 3 and Sch 8 item 8, by inserting para (e), effective 1 April 2022.
S 52-131(2) substituted by No 22 of 2020, s 3 and Sch 4 item 20, effective 25 March 2020. S 52-131(2) formerly read:
52-131(2)
A crisis payment, or clean energy payment, made to you under the ABSTUDY scheme is exempt from income tax.
S 52-131(2) amended by No 58 of 2012, s 3 and Sch 4 item 9, by inserting
"
, or clean energy payment,
"
, applicable in relation to payments made in the 2011-12 income year or a later income year.
52-131(3)
If:
(a)
an
*
ordinary payment becomes due to you; and
(b)
the payment is not covered by subsection
(4)
or
(6)
;
the
*
supplementary amount of the ordinary payment is exempt from income tax.
Note:
To work out the supplementary amount of the ordinary payment, see section
52-132
.
52-131(4)
If:
(a)
your partner dies; and
(b)
you do not qualify for a payment under the ABSTUDY scheme in respect of that death; and
(c)
an
*
ordinary payment becomes due to you during the bereavement period;
the
*
supplementary amount and the
*
tax-free amount of the ordinary payment are exempt from income tax.
Note 1:
To work out the supplementary amount of the ordinary payment, see section
52-132
.
Note 2:
To work out the tax-free amount of the ordinary payment, see section
52-133
.
52-131(5)
If a payment becomes due to you under the ABSTUDY scheme because of a person
'
s death (except a lump sum payment because of your partner
'
s death), the payment is exempt from income tax.
52-131(6)
If:
(a)
your partner dies; and
(b)
a lump sum payment under the ABSTUDY scheme becomes due to you because of your partner
'
s death;
the total of the following are exempt from income tax up to the
*
tax free amount:
(c)
the lump sum payment; and
(d)
all other payments that become due to you under the ABSTUDY scheme during the bereavement lump sum period.
Note:
To work out the tax-free amount, see section
52-134
.
52-131(7)
ABSTUDY scheme
means the scheme known as ABSTUDY.
52-131(8)
Ordinary payment
means a payment under the ABSTUDY scheme, other than:
(a)
a crisis payment; or
(aa)
a clean energy payment; or
(ab)
a first 2020 economic support payment; or
(ac)
a second 2020 economic support payment; or
(ad)
a 2022 cost of living payment; or
(b)
a payment made because of a person
'
s death.
History
S 52-131(8) amended by No 14 of 2022, s 3 and Sch 8 item 9, by inserting para (ad), effective 1 April 2022.
S 52-131(8) amended by No 22 of 2020, s 3 and Sch 4 item 21, by inserting para (ab) and (ac), effective 25 March 2020.
S 52-131(8) amended by No 58 of 2012, s 3 and Sch 4 item 10, by inserting para (aa), applicable in relation to payments made in the 2011-12 income year or a later income year.
52-131(9)
The following expressions used in this Subdivision have the same meaning as in the ABSTUDY Policy Manual:
(a)
bereavement lump sum period;
(b)
bereavement period;
(c)
illness separated couple;
(d)
lump sum payment;
(e)
partner;
(f)
pension age;
(g)
respite care couple.
Note:
In 2009, the ABSTUDY Policy Manual was accessible through the website of the Department administered by the Student Assistance Minister.
History
S 52-131(9) amended by No 15 of 2017, s 3 and Sch 4 item 50, by substituting
"
Student Assistance Minister
"
for
"
Education Minister
"
in the note, effective 1 April 2017.
S 52-131(9) amended by No 110 of 2014, s 3 and Sch 5 item 29, by substituting
"
Department administered by the Education Minister
"
for
"
Education Department
"
in the note, effective 16 October 2014. For transitional provisions see note under s
30-80(1)
.
S 52-131(9) amended by No 88 of 2009, s 3 and Sch 5 item 145, by substituting the note, effective 18 September 2009. The note formerly read:
Note:
In 2007, the ABSTUDY Policy Manual was accessible through the website of the Department of Education, Science and Training.
History
S 52-131 inserted by No 184 of 2007, s 3 and Sch 3 item 4, applicable in relation to a payment made on or after 1 January 2008.
SECTION 52-132
52-132
Supplementary amount of payment
The
*
supplementary amount of a payment is the total of:
(a)
so much of the payment as is included to assist you with, or to reimburse you for, the costs of any one or more of the following:
(i)
rent;
(ii)
living in a remote area;
(iii)
commencing employment;
(iv)
travel to, or participation in, courses, interviews, education or training;
(v)
a child or children wholly or substantially dependent on you;
(vi)
telephone bills;
(vii)
living away from your usual residence;
(viii)
maintaining your usual residence while living away from that residence;
(ix)
accommodation, books or equipment;
(x)
(Repealed by No 56 of 2010)
(xi)
discharging a compulsory repayment amount (within the meaning of the
Higher Education Support Act 2003
);
(xia)
discharging a compulsory VETSL repayment amount (within the meaning of the
VET Student Loans Act 2016
);
(xii)
transport in travelling to undertake education or training, or to visit your usual residence when undertaking education or training away from that residence;
(xiii)
if you are disabled
-
acquiring any special equipment, services or transport as a result of the disability;
(xiv)
anything that would otherwise prevent you from beginning, continuing or completing any education or training; and
(b)
so much of the payment as is included by way of pharmaceutical allowance; and
(c)
so much of the payment as is included by way of energy supplement.
History
S 52-132 amended by No 116 of 2018, s 3 and Sch 1 item 30, by inserting para (a)(xia), effective 1 July 2019.
S 52-132 amended by No 122 of 2014, s 3 and Sch 1 item 291, by substituting
"
energy supplement
"
for
"
clean energy supplement
"
in para (c), effective 20 September 2014. For transitional provision see note under s
52-70
.
S 52-132 amended by No 58 of 2012, s 3 and Sch 4 item 11, by inserting para (c), applicable in relation to payments made in the 2011-12 income year or a later income year.
S 52-132 amended by No 56 of 2010, s 3 and Sch 6 item 24, by repealing para (a)(x), applicable in relation to payments received on or after 3 June 2010. Para (a)(x) formerly read:
(x)
discharging a HEC assessment of debt (within the meaning of Chapter 4 of the
Higher Education Funding Act 1988
);
S 52-132 inserted by No 184 of 2007, s 3 and Sch 3 item 4, applicable in relation to a payment made on or after 1 January 2008.
SECTION 52-133
52-133
Tax-free amount of ordinary payment on death of partner if no bereavement payment payable
This is how to work out the
tax-free amount
of an
*
ordinary payment for the purposes of subsection
52-131(4)
:
Method statement
Step 1.
Work out the
*
supplementary amount of the payment.
Note:
The supplementary amount is also exempt and is worked out under section
52-132
.
Step 2.
Subtract the
*
supplementary amount from the amount of the payment.
Step 3.
Work out what would have been the amount of the payment if your partner had not died.
Step 4.
Work out what would have been the
*
supplementary amount of the payment if your partner had not died.
Step 5.
Subtract the amount at Step 4 from the amount at Step 3.
Step 6.
Subtract the amount at Step 5 from the amount at Step 2: the result is the
tax-free amount
.
History
S 52-133 inserted by No 184 of 2007, s 3 and Sch 3 item 4, applicable in relation to a payment made on or after 1 January 2008.
SECTION 52-134
52-134
Tax-free amount if you receive a bereavement lump sum payment
This is how to work out the
tax-free amount
for the purposes of subsection
52-131(6)
:
Method statement
Step 1.
Work out the payments under the ABSTUDY scheme that would have become due to you during the bereavement lump sum period if:
(a) your partner had not died; and
(b) your partner had been under pension age; and
(c) immediately before your partner died, you and your partner had been neither an illness separated couple nor a respite care couple.
Step 2.
Work out how much of those payments would have been exempt in those circumstances.
Step 3.
Work out the payments under the ABSTUDY scheme or the
Social Security Act 1991
that would have become due to your partner during the bereavement lump sum period if your partner had not died, even if the payments would not have been exempt.
Step 4.
Total the payments worked out at Steps 2 and 3: the result is the
tax-free amount
.
History
S 52-134 inserted by No 184 of 2007, s 3 and Sch 3 item 4, applicable in relation to a payment made on or after 1 January 2008.
Subdivision 52-F
-
Exemption of Commonwealth education or training payments
History
Subdiv 52-F inserted by No 54 of 1999.
SECTION 52-140
Supplementary amount of a Commonwealth education or training payment is exempt
52-140(1)
This section tells you about the income tax treatment of a
*
Commonwealth education or training payment (other than a payment to or on behalf of a student under the scheme known as ABSTUDY).
Note:
The income tax treatment of payments under the scheme known as ABSTUDY is dealt with in Subdivision
52-E
.
History
S 52-140(1) amended by No 184 of 2007, s 3 and Sch 3 items 5 and 6, by inserting
"
(other than a payment to or on behalf of a student under the scheme known as ABSTUDY)
"
and inserting the note at the end, applicable in relation to a payment made on or after 1 January 2008.
52-140(2)
The
*
supplementary amount of the payment is exempt from income tax.
52-140(3)
The
supplementary amount
is the total of:
(a)
so much of the payment as is included to assist you with, or to reimburse you for, the costs of any one or more of the following:
(i)
rent;
(ii)
living in a remote area;
(iii)
commencing employment;
(iv)
travel to, or participation in, courses, interviews, education or training;
(v)
a child or children wholly or substantially dependent on you;
(vi)
telephone bills;
(vii)
living away from your usual residence;
(viii)
maintaining your usual residence while living away from that residence;
(ix)
accommodation, books or equipment;
(x)
(Repealed by No 56 of 2010)
(xa)
discharging a compulsory repayment amount (within the meaning of the
Higher Education Support Act 2003
);
(xb)
discharging a compulsory VETSL repayment amount (within the meaning of the
VET Student Loans Act 2016
);
(xi)
transport in travelling to undertake education or training, or to visit your usual residence when undertaking education or training away from that residence;
(xii)
if you are disabled
-
acquiring any special equipment, services or transport as a result of the disability;
(xiii)
anything that would otherwise prevent you from beginning, continuing or completing any education or training; and
(b)
so much of the payment as is included by way of pharmaceutical allowance; and
(c)
so much of the payment as is included by way of energy supplement.
History
S 52-140(3) amended by No 116 of 2018, s 3 and Sch 1 item 31, by inserting para (a)(xb), effective 1 July 2019.
S 52-140(3) amended by No 122 of 2014, s 3 and Sch 1 item 292, by substituting
"
energy supplement
"
for
"
clean energy supplement
"
in para (c), effective 20 September 2014. For transitional provision see note under s
52-70
.
S 52-140(3) amended by No 58 of 2012, s 3 and Sch 4 item 12, by inserting para (c), applicable in relation to payments made in the 2011-12 income year or a later income year.
S 52-140(3) amended by No 56 of 2010, s 3 and Sch 6 item 25, by repealing para (a)(x), applicable in relation to payments received on or after 3 June 2010. Para (a)(x) formerly read:
(x)
discharging a HEC assessment debt (within the meaning of Chapter 4 of the
Higher Education Funding Act 1988
);
S 52-140(3) amended by No 150 of 2003.
S 52-140 inserted by No 54 of 1999.
SECTION 52-145
Meaning of Commonwealth education or training payment
52-145(1)
A
Commonwealth education or trainingpayment
is a payment by the Commonwealth, or in connection with a payment by the Commonwealth, of an allowance or reimbursement:
(a)
to or on behalf of a participant in a
*
Commonwealth labour market program; or
(b)
to or on behalf of a student under:
(i)
the scheme known as ABSTUDY; or
(ii)
the scheme known as the Assistance for Isolated Children Scheme; or
(iii)
the scheme known as the Veterans
'
Children Education Scheme; or
(iiia)
the scheme under section 258 of the
Military Rehabilitation and Compensation Act 2004
to provide education and training; or
(iv)
the scheme known as youth allowance; or
(v)
the scheme known as austudy payment;
in respect of a period commencing at a time when the student was at least 16 years old.
[
CCH Note:
S 52-145(1) will be amended by No 17 of 2025, s 3 and Sch 8 item 50, by repealing para (b)(iii), effective 1 July 2026. For saving provisions, see note under s
52-65(1)
.]
History
S 52-145(1) amended by No 52 of 2004 and No 54 of 1999.
52-145(2)
A
Commonwealth labour market program
is a program administered by the Commonwealth under which:
(a)
unemployed persons are given training in skills to improve their employment prospects; or
(b)
unemployed persons are assisted in obtaining employment or to become self-employed; or
(c)
employed persons are given training in skills and other assistance to aid them in continuing to be employed by their current employer or in obtaining other employment.
History
S 52-145 inserted by No 54 of 1999.
Subdivision 52-G
-
Exempt payments under the A New Tax System (Family Assistance) (Administration) Act 1999
History
Subdiv 52-G inserted by No 83 of 1999.
SECTION 52-150
52-150
Family assistance payments are exempt
A payment of child care subsidy, additional child care subsidy, family tax benefit, stillborn baby payment, economic security strategy payment to families, back to school bonus, single income family bonus, clean energy advance, single income family supplement, ETR payment, first 2020 economic support payment, second 2020 economic support payment, additional economic support payment 2020 or additional economic support payment 2021 made to you under the
A New Tax System (Family Assistance) (Administration) Act 1999
is exempt from income tax.
History
S 52-150 amended by No 97 of 2020, s 3 and Sch 1 item 36, by substituting
"
, second 2020 economic support payment, additional economic support payment 2020 or additional economic support payment 2021
"
for
"
or second 2020 economic support payment
"
, effective 14 November 2020.
S 52-150 amended by No 22 of 2020, s 3 and Sch 4 item 22, by substituting
"
, ETR payment, first 2020 economic support payment or second 2020 economic support payment
"
for
"
or ETR payment
"
, effective 25 March 2020.
S 52-150 amended by No 22 of 2017, s 3 and Sch 2 item 8, by substituting
"
subsidy, additional child care subsidy
"
for
"
benefit, child care rebate
"
, effective 2 July 2018.
S 52-150 amended by No 96 of 2014, s 3 and Sch 9 item 22, by substituting
"
or ETR payment
"
for
"
, ETR payment or schoolkids bonus
"
, effective 31 December 2016. No 96 of 2014, s 3 and Sch 9 item 24 contains the following saving provision:
Part 2
-
Saving provisions
24 Saving provisions
…
24(2)
Despite the amendment made by item 22, section 52-150 of the
Income Tax Assessment Act 1997
, as in force immediately before the commencement of that item, continues to apply on and after that commencement in relation to payments of schoolkids bonus made before, on or after that commencement.
…
S 52-150 amended by No 70 of 2013, s 3 and Sch 2A item 47, by substituting
"
stillborn baby payment
"
for
"
baby bonus
"
, effective 1 March 2014. Despite the amendment made, section 52-150 of the
Income Tax Assessment Act 1997
(as in force immediately before 1 March 2014) continues to apply on and after 1 March 2014 in relation to payments of baby bonus made before, on or after 1 March 2014.
S 52-150 amended by No 49 of 2012, s 3 and Sch 1 item 47, by omitting
"
maternity immunisation allowance,
"
after
"
baby bonus,
"
, effective 1 July 2012. No 49 of 2012, s 3 and Sch 1 item 52 contains the following application and transitional provision:
52 Application and transitional provisions
…
52(4)
Despite the amendment made by item 47, section 52-150 of the
Income Tax Assessment Act 1997
(as in force immediately before 1 July 2012) continues to apply on and after 1 July 2012 in relation to payments of maternity immunisation allowance made before, on or after 1 July 2012.
…
S 52-150 amended by No 50 of 2012, s 3 and Sch 3 item 8, by substituting
"
, single income family supplement, ETR payment or schoolkids bonus
"
for
"
or single income family supplement
"
, effective 27 May 2012.
S 52-150 amended by No 141 of 2011 (as amended by No 12 of 2012), s 3 and Sch 10 item 16, by substituting
"
, single income family bonus, clean energy advance or single income family supplement
"
for
"
or single income family bonus
"
, effective 14 May 2012.
S 52-150 renumbered from s 52-150(1) and amended by No 12 of 2012, s 3 and Sch 6 items 129
-
130, by omitting
"
one-off payment to families,
"
after
"
maternity immunisation allowance,
"
, effective 21 March 2012.
S 52-150(1) amended by No 50 of 2009, s 3 and Sch 1 item 41, by substituting
"
child care rebate
"
for
"
child care tax rebate
"
, effective 24 June 2009.
S 52-150(1) amended by No 4 of 2009, s 3 and Sch 5 item 13, by substituting
"
, economic security strategy payment to families, back to school bonus or single income family bonus
"
for
"
or economic security strategy payment to families
"
, effective 18 February 2009.
S 52-150(1) amended by No 131 of 2008, s 3 and Sch 5 item 11, by substituting
"
, one-off payment to families or economic security strategy payment to families
"
for
"
or one-off payment to families
"
, effective 1 December 2008.
S 52-150(1) amended by
No 97 of 2008
, s 3 and Sch 3 item 79, by omitting
"
maternity allowance, maternity payment,
"
after
"
family tax benefit,
"
, effective 3 October 2008.
S 52-150(1) amended by No 113 of 2007, s 3 and Sch 1 item 21, by inserting
"
child care tax rebate,
"
after
"
child care benefit,
"
, effective 1 July 2007.
S 52-150(1) amended by No 82 of 2007, s 3 and Sch 6 item 40, by inserting
"
baby bonus,
"
effective 1 July 2007.
52-150(2)
(Repealed by No 12 of 2012)
History
S 52-150(2) repealed by No 12 of 2012, s 3 and Sch 6 item 131, effective 21 March 2012. S 52-150(2) formerly read:
52-150(2)
Payments to families under the scheme determined under Schedule 3 to the
Family Assistance Legislation Amendment (More Help for Families
-
One-off Payments) Act 2004
are exempt from income tax.
History
S 52-150 amended by No 60 of 2004, No 59 of 2004 and inserted by No 83 of 1999.
Subdivision 52-H
-
Other exempt payments
History
Subdiv 52-H inserted by No 131 of 2008, s 3 and Sch 5 item 12, effective 1 December 2008.
SECTION 52-160
52-160
Economic security strategy payments are exempt
Payments under the scheme determined under Schedule 4 to the
Social Security and Other Legislation Amendment (Economic Security Strategy) Act 2008
are exempt from income tax.
History
S 52-160 inserted by No 131 of 2008, s 3 and Sch 5 item 12, effective 1 December 2008.
SECTION 52-162
52-162
ETR payments are exempt
Payments under the scheme determined under Part 2 of Schedule 1 to the
Family Assistance and Other Legislation Amendment (Schoolkids Bonus Budget Measures) Act 2012
are exempt from income tax.
History
S 52-162 inserted by No 50 of 2012, s 3 and Sch 3 item 9, effective 27 May 2012.
SECTION 52-165
52-165
Household stimulus payments are exempt
Payments under the scheme determined under Schedule 4 to the
Household Stimulus Package Act (No 2) 2009
are exempt from income tax.
History
S 52-165 amended by No 25 of 2009, s 3 and Sch 1 item 10, by substituting
"
Act (No 2) 2009
"
for
"
Act 2009
"
, effective 18 February 2009.
S 52-165 inserted by No 4 of 2009, s 3 and Sch 5 item 14, effective 18 February 2009.
SECTION 52-170
52-170
Outer Regional and Remote payments under the Helping Children with Autism package are exempt
Payments known as Outer Regional and Remote payments under the Helping Children with Autism package are exempt from income tax.
History
S 52-170 inserted by No 118 of 2009, s 3 and Sch 3 item 2, applicable in relation to payments made in:
(a) the 2008-09 income year; and
(b) later income years.
SECTION 52-172
52-172
Outer Regional and Remote payments under the Better Start for Children with Disability initiative are exempt
Payments known as Outer Regional and Remote payments under the Better Start for Children with Disability initiative are exempt from income tax.
History
S 52-172 inserted by No 129 of 2011, s 3 and Sch 1 item 2, applicable in relation to payments made in: (a) the 2011-12 income year; and (b) later income years.
SECTION 52-175
52-175
Continence aids payments are exempt
Payments under the scheme known as the Continence Aids Payment Scheme are exempt from income tax.
History
S 52-175 inserted by No 118 of 2009, s 3 and Sch 4 item 2, applicable in relation to payments made in:
(a) the 2010-11 income year; and
(b) later income years.
SECTION 52-180
52-180
National Disability Insurance Scheme amounts are exempt
An
*
NDIS amount
*
derived by a participant (within the meaning of the
National Disability Insurance Scheme Act 2013
) is exempt from income tax.
History
S 52-180 inserted by No 44 of 2013, s 3 and Sch 3 item 5, applicable to assessments for the 2013-14 income year and later income years.
SECTION 52-185
52-185
Acute support packages are exempt
Payments under an instrument made under any of the following are exempt from income tax:
(a)
section 268B of the
Military Rehabilitation and Compensation Act 2004
;
(b)
section 41B of the
Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988
;
(c)
section 115S of the
Veterans
'
Entitlements Act 1986
.
History
S 52-185 inserted by No 40 of 2022, s 3 and Sch 1 item 26, effective 14 October 2022 and applicable to assessments for the 2022-23 income year and later income years.
Division 53
-
Various exempt payments
History
Div 53 inserted by No 121 of 1997.
Guide to Division 53
SECTION 53-1
What this Division is about
This Division tells you:
(a) about various payments that are wholly or partly exempt from income tax; and
(b) any special conditions that apply to a payment in order for it to be exempt; and
(c) how to work out how much of a payment is exempt.
History
S 53-1 inserted by No 121 of 1997.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 53-10 |
Exemption of various types of payments |
| 53-15 |
(Repealed by No 13 of 2014) |
| 53-20 |
Exemption of similar Australian and United Kingdom veterans
'
payments |
| 53-25 |
Coronavirus economic response payment |
| 53-30 |
Territories Stolen Generations Redress Scheme payments are exempt |
Operative provisions
SECTION 53-10
53-10
Exemption of various types of payments
This table tells you about the income tax treatment of various types of payments.
|
Exemption of various payments
|
|
Item
|
This type of payment:
|
…
made under:
|
…
is exempt subject to these exceptions and special conditions:
|
| 1 |
Carer adjustment payment
|
The power of the Commonwealth to make ex-gratia payments |
None |
|
. |
| 1A |
(Repealed by No 13 of 2014) |
|
|
|
. |
| 2 |
Disability services payment
|
Part III of the former
Disability Services Act 1986 |
None |
|
. |
| 3
-
4 |
(Repealed by No 13 of 2014) |
|
|
|
. |
| 4A |
(Repealed by No 97 of 2008) |
|
|
|
. |
| 4B |
(Repealed by No 109 of 2014) |
|
|
|
. |
| 4C |
Tobacco industry exit grant
|
The program known as the Tobacco Growers Adjustment Assistance Programme 2006 |
As a condition of receiving the grant, you entered into an undertaking not to become the owner or operator of any agricultural
*
enterprise within 5 years after receiving the grant |
|
. |
| 4D |
(Repealed by No 13 of 2014) |
|
|
|
. |
| 5 |
Wounds and disability pension
|
Not applicable |
The payment must be: |
| |
|
|
(a) |
of a kind specified in section 641 of the Income Tax (Earnings and Pensions) Act 2003 of the United Kingdom; and |
| |
|
|
(b) |
similar in nature to payments that are exempt under Division 52 or this Division |
History
S 53-10 amended by No 103 of 2023, s 3 and Sch 2 item 10, by inserting
"
former
"
in table item 2, effective 1 January 2024.
S 53-10 amended by No 109 of 2014, s 3 and Sch 10 items 24 and 25, by repealing table item 4B and note 2, effective 17 October 2014. For transitional provision see note under s
15-65
. Table item 4B and note 2 formerly read:
| 4B |
Sugar industry exit grant
|
The program known as the Sugar Industry Reform Program |
As a condition of receiving the grant, you entered into an undertaking not to become the owner or operator of any agricultural
*
enterprise within 5 years after receiving the grant |
Note 2:
A sugar industry exit grant referred to in table item 4B is included in assessable income if the recipient becomes the owner or operator of an agricultural enterprise (except a sugar industry enterprise) within 5 years after receiving the grant: see subsection
15-65(2)
.
S 53-10 amended by No 13 of 2014, s 3 and Sch 2 item 149, by repealing table item 4D, effective 1 October 2014. Table item 4D formerly read:
| 4D |
Transitional Farm Family Payment or Interim Farm Household Allowance
|
The program known as the Transitional Farm Family Payment program or as the Interim Farm Household |
Only so much of the payment as is included:
(a) in lieu of clean energy advance; or
(b) by way of energy supplement;
is exempt |
History
S 53-10 amended by No 122 of 2014, s 3 and Sch 1 item 293, by substituting
"
energy supplement
"
for
"
clean energy supplement
"
in table item 4D, column headed
"
... is exempt subject to these exceptions and special conditions:
"
, effective 20 September 2014. No 122 of 2014, s 3 and Sch 1 item 294(3) contains the following transitional provision:
294 Transitional provisions
…
294(3)
Item 4D of the table in section
53-10
of the
Income Tax Assessment Act 1997
applies on and after the commencement of this item as if a reference in that item to energy supplement included a reference to clean energy supplement.
S 53-10 amended by No 13 of 2014, s 3 and Sch 2 items 43 and 44, by repealing table items 1A, 3, and 4, and note 1, applicable in relation to payments made after 1 July 2014, other than any such payment that relates to a day before 1 July 2014. The table items and note 1 formerly read:
| 1A |
Clean energy advance
|
The
Farm Household Support Act 1992 |
None |
|
. |
| 3 |
Exceptional circumstances relief payment or farm help income support:
payment made other than because of a person
'
s death |
The
Farm Household Support Act 1992 |
Only the supplementary amount is exempt (see section 53-15) |
|
. |
| 4 |
Exceptional circumstances relief payment or farm help income support:
payment made because of a person
'
s death |
Paragraph 49(b) of the
Farm Household Support Act 1992 |
None |
Note 1:
References in this section to exceptional circumstances relief payment also cover amounts paid as drought relief payment
-
see item 4 of Schedule 3 to the
Farm Household Support Amendment (Restart and Exceptional Circumstances) Act 1997
.
S 53-10 amended by No 13 of 2013, s 3 and Sch 2 item 144, by substituting table item 4D, effective 26 February 2014. Table item 4D formerly read:
| 4D |
Transitional Farm Family Payment
|
The program known as the Transitional Farm Family Payment program |
Only so much of the payment as is included:
(a) in lieu of clean energy advance; or
(b) by way of clean energy supplement;
is exempt |
S 53-10 amended by No 58 of 2012, s 3 and Sch 4 item 13, by inserting table item 4D, applicable in relation to payments made in the 2012-13 income year or a later income year.
S 53-10 amended by No 12 of 2012, s 3 and Sch 6 item 183, by substituting
"
section 641 of the Income Tax (Earnings and Pensions) Act 2003 of the United Kingdom
"
for
"
subsection 315(2) of the Income and Corporation Taxes Act 1988 of the United Kingdom
"
in para (a) of the cell at table item 5, column headed
"
... is exempt subject to these exceptions and special conditions:
"
, effective 21 March 2012.
S 53-10 (table) amended by No 141 of 2011, s 3 and Sch 10 item 17, by inserting table item 1A, effective 14 May 2012.
S 53-10 (table) amended by
No 97 of 2008
, s 3 and Sch 3 item 80, by repealing table item 4A, effective 3 October 2008. The item formerly read:
4A ...
Farm household support payment made by way of a grant of financial assistance
... The
Farm Household Support Act 1992
... Only the supplementary amount is exempt (see section 53-15)
S 53-10 (table) amended by No 38 of 2008, s 3 and Sch 13 item 2, by substituting table items 1 and 2 for table item 1, applicable to assessments for the 2007-08 income year and later years. Table item 1 formerly read:
1...
Disability services payment
... Part III of the
Disability Services Act 1986
... None
S 53-10 (table) amended by No 38 of 2008, s 3 and Sch 10 item 3, by inserting table item 4C, applicable to tobacco industry exit grants received in the 2006-07 income year and later income years.
S 53-10 (table) amended by No 20 of 2004 and No 144 of 2000.
S 53-10 amended by No 13 of 1999, No 102 of 1998, No 179 of 1997, inserted by No 121 of 1997.
53-15
(Repealed) SECTION 53-15 Supplementary amount of exceptional circumstances relief payment or farm help income support
(Repealed by No 13 of 2014)
History
S 53-15 repealed by No 13 of 2014, s 3 and Sch 2 item 45, applicable in relation to payments made after 1 July 2014, other than any such payment that relates to a day before 1 July 2014. S 53-15 formerly read:
SECTION 53-15
SECTION 53-15 Supplementary amount of exceptional circumstances relief payment or farm help income support
53-15
The
supplementary amount
of an exceptional circumstances relief payment or a payment of farm help income support is the total of:
(a)
so much of the payment as is included by way of rent assistance; and
(b)
so much of the payment as would have been included by way of remote area allowance if it had been a payment of newstart allowance under the
Social Security Act 1991
instead of an exceptional circumstances relief payment or a payment of farm help income support; and
(c)
for an exceptional circumstances relief payment
-
so much of the payment as is included by way of clean energy supplement, worked out as if the payment were the applicable payment of youth allowance, or newstart allowance, referred to in paragraph 24A(1)(a) of the
Farm Household Support Act 1992
.
History
S 53-15 amended by No 58 of 2012, s 3 and Sch 4 item 14, by inserting para (c), applicable in relation to payments made in the 2011-12 income year or a later income year.
S 53-15 amended by No 60 of 2009, s 3 and Sch 4 item 40, by substituting
"
rent assistance
"
for
"
rental assistance
"
in para (a), effective 20 September 2009.
S 53-15(1) renumbered to s 53-15 by
No 97 of 2008
, s 3 and Sch 3 item 81, effective 3 October 2008.
S 53-15(1) amended by No 144 of 2000, No 83 of 1999, No 93 of 1998 and No 179 of 1997.
53-15(2)
(Repealed by
No 97 of 2008
)
History
S 53-15(2) repealed by
No 97 of 2008
, s 3 and Sch 3 item 82, effective 3 October 2008. S 53-15(2) formerly read:
53-15(2)
The
supplementary amount
of a farm household support payment to a person is the total of:
(a)
so much of the payment as is included by way of rental assistance; and
(b)
so much of the payment as would have been included by way of remote area allowance if it had been a payment of newstart allowance under the
Social Security Act 1991
or of youth training allowance under the
Student and Youth Assistance Act 1973
.
History
S 53-15(2) inserted by No 102 of 1998.
S 53-15 inserted by No 121 of 1997.
SECTION 53-20
53-20
Exemption of similar Australian and United Kingdom veterans' payments
The following payments made by the Government of Australia, or the Government of the United Kingdom, are exempt from income tax:
(a)
payments similar to payments under the
Veterans' Entitlements Act 1986
that are exempt under Subdivision
52-B
;
(b)
payments similar to payments that are made because of the
Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986
and are exempt under Subdivision
52-C
.
History
S 53-20 inserted by No 121 of 1997.
SECTION 53-25
53-25
Coronavirus economic response payment
A payment is exempt from income tax if:
(a)
the payment is paid in accordance with rules made under the
Coronavirus Economic Response Package (Payments and Benefits) Act 2020
; and
(b)
those rules state that the payment is exempt from income tax.
History
S 53-25 inserted by No 38 of 2020, s 3 and Sch 2 item 5, effective 9 April 2020.
Former s 53-25 repealed by
No 97 of 2008
, s 3 and Sch 3 item 83, effective 3 October 2008. S 53-25 formerly read:
SECTION 53-25 Amounts of farm household support converted into grants
53-25
An amount of farm household support that was converted into a grant under section 54A of the
Farm Household Support Act 1992
is exempt from income tax.
Former s 53-25 amended by No 144 of 2000 and inserted by No 102 of 1998.
SECTION 53-30
53-30
Territories Stolen Generations Redress Scheme payments are exempt
Payments under the scheme known as the Territories Stolen Generations Redress Scheme are exempt from income tax.
History
S 53-30 inserted by No 141 of 2021, s 3 and Sch 1 item 2, effective 1 January 2022 and applicable to assessments for the 2021-22 income year and later income years.
Division 54
-
Exemption for certain payments made under structured settlements and structured orders
History
Div 54 inserted by No 139 of 2002.
Guide to Division 54
SECTION 54-1
What this Division is about
Certain annuities and lump sums provided under structured settlements and structured orders are exempt from income tax. This Division tells you what a structured settlement is and what a structured order is, and when such an annuity or lump sum is exempt.
History
S 54-1 inserted by No 139 of 2002.
Subdivision 54-A
-
Definitions
History
Subdiv 54-A inserted by No 139 of 2002.
Operative provisions
SECTION 54-5
54-5
Definitions
In this Division:
date of the settlement or order
:
(a)
for a
*
structured settlement, means:
(i)
the date on which the agreement that is the structured settlement was entered into; or
(ii)
if that agreement depends, for its effectiveness, on being approved (however described) by an order of a court, or on being embodied in a consent order made by a court, the date on which that order was made; and
(b)
for a
*
structured order, means the date on which the order was made.
personal injury annuity
means an
*
annuity:
(a)
that is purchased under the terms of a
*
structured settlement as mentioned in paragraph
54-10(1)(e)
; or
(b)
that is purchased under the terms of a
*
structured order as mentioned in paragraph
54-10(1A)(e)
.
personal injury lump sum
means a lump sum:
(a)
that is purchased under the terms of a
*
structured settlement as mentioned in paragraph
54-10(1)(e)
; or
(b)
that is purchased under the terms of a
*
structured order as mentioned in paragraph
54-10(1A)(e)
.
History
S 54-5 inserted by No 139 of 2002.
SECTION 54-10
Meaning of
structured settlement
and
structured order
54-10(1)
A
structured settlement
is a settlement of a claim that satisfies the following conditions:
(a)
the claim:
(i)
is for compensation or damages for, or in respect of, personal injury suffered by a person (the
injured person
); and
(ii)
is made by the injured person or by his or her
*
legal personal representative;
(b)
the claim is based on the commission of a wrong, or on a right created by statute;
(c)
the claim is made against a person (the
defendant
) and satisfies the following conditions:
(i)
the claim is not made against the defendant in his or her capacity as an employer, or
*
associate of an employer, of the injured person;
(ii)
the claim is not made under a
*
workers
'
compensation law, and is not made as an alternative to a claim under such a law;
(d)
the settlement takes the form of a written agreement between the parties to the claim (whether or not that agreement is approved by an order of a court, or is embodied in a consent order made by a court);
(e)
under the terms of the settlement, some or all of the compensation or damages is to be used by the defendant (or by a person with whom the defendant has insurance against the liability to which the claim relates) to purchase from one or more
*
life insurance companies or
*
State insurers:
(i)
an
*
annuity or annuities to be paid to the injured person, or to a trustee for the benefit of the injured person; or
(ii)
such an annuity or annuities, together with one or more lump sums that are also to be paid to the injured person, or to a trustee for the benefit of the injured person.
History
S 54-10(1) amended by No 88 of 2009, s 3 and Sch 5 item 322, by substituting
"
*
State insurers
"
for
"
State insurers
"
in para (e), effective 18 September 2009.
54-10(1A)
A
structured order
is an order of a court that satisfies the following conditions:
(a)
the order is made in respect of a claim that:
(i)
is for compensation or damages for, or in respect of, personal injury suffered by a person (the
injured person
); and
(ii)
is made by the injured person or by his or her
*
legal personal representative;
(b)
the order is not an order approving or endorsing an agreement as mentioned in paragraph (1)(d);
(c)
the claim is based on the commission of a wrong, or on a right created by statute;
(d)
the claim is made against a person (the
defendant
) and satisfies the following conditions:
(i)
the claim is not made against the defendant in his or her capacity as an
*
employer, or
*
associate of an employer, of the injured person;
(ii)
the claim is not made under a
*
workers
'
compensation law, and is not made as an alternative to a claim under such a law;
(e)
under the terms of the order, some or all of the compensation or damages is to be used by the defendant (or by a person with whom the defendant has insurance against the liability to which the claim relates) to purchase from one or more
*
life insurance companies or
*
State insurers:
(i)
an
*
annuity or annuities to be paid to the injured person, or to a trustee for the benefit of the injured person; or
(ii)
such an annuity or annuities, together with one or more lump sums that are also to be paid to the injured person, or to a trustee for the benefit of the injured person.
History
S 54-10(1A) amended by No 88 of 2009, s 3 and Sch 5 item 322, by substituting
"
*
State insurers
"
for
"
State insurers
"
in para (e), effective 18 September 2009.
54-10(2)
(Repealed by No 88 of 2009)
History
S 54-10(2) repealed by No 88 of 2009, s 3 and Sch 5 item 323, effective 18 September 2009. S 54-10(2) formerly read:
54-10(2)
For the purposes of paragraphs (1)(e) and (1A)(e), a
State insurer
is a body that carries on State insurance, within the meaning of paragraph 51(xiv) of the Constitution.
54-10(3)
If a claim is both:
(a)
for compensation or damages for personal injury suffered by a person; and
(b)
for some other remedy (for example, compensation or damages for loss of, or damage to, property);
this section applies to the claim, but only to the extent that it relates to the compensation or damages referred to in paragraph (a), and only to annuities or lump sums that, in the settlement agreement, or in the order, are identified as being solely in payment of that compensation or those damages.
History
S 54-10 inserted by No 139 of 2002.
Subdivision 54-B
-
Tax exemption for personal injury annuities
History
Subdiv 54-B inserted by No 139 of 2002.
Operative provisions
SECTION 54-15
54-15
Personal injury annuity exemption for injured person
A payment of a
*
personal injury annuity that is made to the
*
injured person is exempt from income tax if the conditions in this Subdivision are satisfied.
Note:
Section 54-70 provides a tax exemption if the payment is instead made to the trustee of a trust.
History
S 54-15 inserted by No 139 of 2002.
SECTION 54-20
54-20
Lump sum compensation etc. would not have been assessable
If the compensation or damages that were used to purchase the
*
annuity had instead been paid to the
*
injured person in a single lump sum on the
*
date of the settlement or order, the compensation or damages would not have been assessable income.
Note:
Paragraph
118-37(1)(b)
disregards a capital gain or capital loss that arises from compensation or damages the injured person receives for any wrong he or she suffers personally.
History
S 54-20 inserted by No 139 of 2002.
SECTION 54-25
54-25
Requirements of the annuity instrument
The
*
annuity instrument must:
(a)
identify the
*
structured settlement or
*
structured order under which the
*
annuity is provided; and
(b)
only allow for payments of the annuity to be made to:
(i)
the injured person; or
(ii)
a trustee of a trust of which the injured person is the beneficiary; or
(iii)
a reversionary beneficiary, or the injured person
'
s estate, in accordance with section 54-35; and
(c)
contain a statement to the effect that the annuity cannot be assigned, and cannot be commuted except as mentioned in section 54-35.
Note:
Division 2A of Part 10 of the
Life Insurance Act 1995
makes a purported assignment or commutation that is contrary to paragraph (c) ineffective.
History
S 54-25 inserted by No 139 of 2002.
SECTION 54-30
Requirements for payments of the annuity
54-30(1)
The
*
annuity instrument must provide that payments of the
*
annuity are to be made at least annually:
(a)
over a period of at least 10 years during the life of the
*
injured person; or
(b)
for the life of the injured person.
54-30(2)
The
*
annuity instrument must specify:
(a)
the date of the first payment of the
*
annuity; and
(b)
if the annuity instrument specifies a period of years
-
the date of the last payment in that period; and
(c)
the amount of each periodic payment of the annuity.
54-30(3)
The
*
annuity instrument may only allow the amount of a payment to be varied by increasing the amount:
(a)
in order to maintain its real value:
(i)
by indexation by reference to increases in the
*
All Groups Consumer Price Index number; or
(ii)
by indexation by reference to increases in the full-time adult average weekly ordinary time earnings, published by the Australian Statistician; or
(b)
by a percentage specified in the annuity instrument.
54-30(4)
The
*
annuity instrument may only allow the amount of a particular payment to be varied:
(a)
by only one of the methods referred to in subsection (3); or
(b)
by whichever of 2 or more of those methods would result in the biggest or smallest increase.
54-30(5)
A reference in this section to specifying a date or percentage requires an actual date or figure to be specified, not merely a method of determining a date or figure.
Example:
Under subsection (2),
"
13 September 2002
"
would be allowed, but
"
The date on which the annuitant finishes university
"
would not be allowed.
History
S 54-30 inserted by No 139 of 2002.
SECTION 54-35
Payments during the guarantee period on the death of the injured person
54-35(1)
This section applies if the
*
annuity instrument provides for payments to be made to the
*
injured person during any part of the period ending 10 years after the
*
date of the settlement or order (whether the
*
annuity is expressed to be for the life of the person or for a period of years).
54-35(2)
The
*
annuity instrument may specify a period (the
guarantee period
) of up to 10 years after the
*
date of the settlement or order, during which, if the
*
injured person dies, the payments (the
remaining payments
) for the remainder of the guarantee period that would have been paid to the injured person are to be paid instead to:
(a)
the injured person
'
s estate; or
(b)
a reversionary beneficiary.
Note:
For tax exemptions in this situation, see sections 54-65 and 54-70.
54-35(3)
If the
*
annuity instrument provides for the remaining payments to be made to a reversionary beneficiary, the instrument must:
(a)
name the beneficiary; and
(b)
allow the beneficiary to choose either:
(i)
to be paid the amounts of the remaining payments when the injured person would have received them; or
(ii)
to commute those payments into a lump sum worked out under subsection (5).
54-35(4)
The
*
injured person
'
s estate may only be paid the lump sum worked out under subsection (5) (and not the periodic payments).
54-35(5)
The amount of the lump sum under subparagraph (3)(b)(ii) or subsection (4) is the
*
policy termination value of the
*
life insurance policy that is the
*
annuity instrument, as calculated by an
*
actuary as at the date of the injured person
'
s death. In making this calculation, the following are to be disregarded:
(a)
any payments of the annuity due to be made after the end of the guarantee period;
(b)
any
*
structured settlement lump sums that are also provided for by that policy.
54-35(6)
In this section:
pay to a person
includes pay to the trustee of a trust of which the person is the beneficiary.
pay to the injured person
'
s estate
includes pay to the trustee of a trust established by the
*
injured person
'
s will.
History
S 54-35 inserted by No 139 of 2002.
SECTION 54-40
Requirement for minimum monthly level of support
54-40(1)
Either:
(a)
the
*
annuity instrument must provide; or
(b)
if there is more than one
*
annuity provided under the
*
structured settlement or
*
structured order
-
the annuity instruments for all of those annuities that satisfy the other conditions in this Subdivision, taken as a whole, must provide;
that at least once a month for the life of the
*
injured person, he or she is to be paid an amount that equals or exceeds the minimum monthly level of support.
54-40(2)
The
minimum monthly level of support
means:
(a)
for the year starting on the
*
date of the settlement or order
-
one twelfth of the amount that is, on that date, the sum of:
(i)
the maximum basic rate of age pension payable to a person in accordance with item 1 of Table B in point 1064-B1 of Pension Rate Calculator A in section 1064 of the
Social Security Act 1991
; and
(ii)
the amount of a person
'
s pension supplement, worked out (using that maximum basic rate) in accordance with Module BA of that Pension Rate Calculator; and
(b)
for any subsequent year starting on an anniversary of the date of the settlement or order:
(i)
if the indexation factor for the year (see subsection (3)) is greater than 1
-
the amount worked out under subsection (4); or
(ii)
otherwise
-
the minimum monthly level of support for the previous year.
Note:
In working out the rate and amount that count for the purposes of paragraph (a), the effect of the indexation provisions in sections 1191 to 1195 of the
Social Security Act 1991
must be taken into account. The indexed figures are available from the Department administered by the Minister administering the
Human Services (Centrelink) Act 1997
.
History
S 54-40(2) amended by No 32 of 2011, s 3 and Sch 4 item 285, by substituting
"
the Department administered by the Minister administering the
Human Services (Centrelink) Act 1997
"
for
"
Centrelink
"
in the note at the end, effective 1 July 2011. No 32 of 2011, s 3 and Sch 5 item 1 contains the following transitional provisions:
1 Transitional regulations
(1)
The Governor-General may make regulations in relation to transitional matters arising out of the amendments made by this Act.
(2)
Regulations that are made:
(a)
under subitem (1); and
(b)
within 6 months after the commencement of this item;
may be expressed to take effect at a time that is earlier than the time when the regulations are made. The time must not be earlier than the commencement of this item.
(3)
Subitem (2) has effect despite section
12
of the
Legislative Instruments Act 2003
.
54-40(3)
The
indexation factor
for a year is to be worked out on the anniversary of the
*
date of the settlement or order in accordance with the formula:
| |
Most recently published
*
All Groups
Consumer Price Index number for a
*
quarter
*
All Groups Consumer Price Index number
for the same
*
quarter in the base year |
|
where:
base year
means:
(a)
if there have been one or more previous years for which the indexation factor was greater than 1
-
the year ending immediately before the most recent year for which the indexation factor was greater than 1; or
(b)
otherwise
-
the year ending immediately before the
*
date of the settlement or order.
Note:
This has effect subject to subsection (6).
54-40(4)
If the indexation factor for a year is greater than 1, then the minimum monthly level of support for the year is the amount worked out in accordance with the following formula:
| |
Indexation factor
for the year |
× |
Minimum monthly level of support
for the previous year |
|
54-40(5)
The results under subsections (3) and (4) must be rounded to 3 decimal places (rounding up if the fourth decimal place is 5 or more).
54-40(6)
The indexation factor for a year must be worked out by reference to figures for the same
*
quarter (for example, the March quarter) as has been used in previous years, even if, on the anniversary of the
*
date of the settlement or order, the
*
All Groups Consumer Price Index number for that quarter has not yet been published. If this happens, the calculation must be made as soon as practicable after the number for that quarter is published.
54-40(7)
In this section:
pay to a person
includes pay to the trustee of a trust of which the person is the beneficiary.
History
S 54-40 inserted by No 139 of 2002.
Subdivision 54-C
-
Tax exemption for personal injury lump sums
History
Subdiv 54-C inserted by No 139 of 2002.
Operative provisions
SECTION 54-45
54-45
Personal injury lump sum exemption for injured person
A payment of a
*
personal injury lump sum that is made to the
*
injured person is exempt from income tax if:
(a)
there is at least one
*
personal injury annuity (provided under the same
*
structured settlement or
*
structured order) that satisfies the conditions in Subdivision
54-B
; and
(b)
the other conditions in this Subdivision are satisfied.
Note:
Section 54-70 provides a tax exemption if the payment is instead made to the trustee of a trust.
History
S 54-45 inserted by No 139 of 2002.
SECTION 54-50
54-50
Lump sum compensation would not have been assessable
If the compensation or damages that were used to purchase the
*
personal injury lump sum had instead been paid to the
*
injured person on the
*
date of the settlement or order, the compensation or damages would not have been assessable income.
Note:
Paragraph
118-37(1)(b)
disregards a capital gain or capital loss that arises from compensation or damages the injured person receives for any wrong he or she suffers personally.
History
S 54-50 inserted by No 139 of 2002.
SECTION 54-55
54-55
Requirements of the instrument under which the lump sum is paid
The instrument under which the
*
personal injury lump sum is paid must:
(a)
identify the
*
structured settlement or
*
structured order under which the lump sum is provided; and
(b)
only allow for the payment of the lump sum to be made to:
(i)
the
*
injured person; or
(ii)
a trustee of a trust of which the injured person is the beneficiary; and
(c)
contain a statement to the effect that the right to receive the lump sum cannot be assigned, and cannot be commuted or otherwise cashed-out early.
Note:
Division 2A of Part 10 of the
Life Insurance Act 1995
makes a purported assignment or commutation (or cashing-out) that is contrary to paragraph (c) ineffective.
History
S 54-55 inserted by No 139 of 2002.
SECTION 54-60
Requirements for payments of the lump sum
54-60(1)
The instrument under which the
*
personal injury lump sum is paid must specify the date and amount of the payment of the lump sum.
54-60(2)
The instrument may only allow the amount of the payment to be varied by increasing the amount:
(a)
in order to maintain its real value:
(i)
by indexation by reference to increases in the
*
All Groups Consumer Price Index number; or
(ii)
by indexation by reference to increases in the full-time adult average weekly ordinary time earnings, published by the Australian Statistician; or
(b)
by a percentage specified in the instrument.
54-60(3)
The instrument may only allow the amount of the payment to be varied:
(a)
by only one of the methods referred to in subsection (2); or
(b)
by whichever of 2 or more of those methods would result in the biggest or smallest increase.
54-60(4)
A reference in this section to specifying a date or percentage requires an actual date or figure to be specified, not merely a method of determining a date or figure.
Example:
Under subsection (1),
"
13 September 2002
"
would be allowed, but
"
The date on which the annuitant finishes university
"
would not be allowed.
History
S 54-60 inserted by No 139 of 2002.
Subdivision 54-D
-
Miscellaneous
History
Subdiv 54-D inserted by No 139 of 2002.
Operative provisions
SECTION 54-65
54-65
Exemption for certain payments to reversionary beneficiaries
A payment that is made to the reversionary beneficiary of a
*
personal injury annuity for which there is a
*
guarantee period is exempt from income tax if:
(a)
the payment is a periodic or lump sum payment made in accordance with subsection
54-35(3)
; and
(b)
either:
(i)
if subparagraph
54-35(3)(b)
(i) applies
-
the payment; or
(ii)
if subparagraph
54-35(3)(b)
(ii) applies
-
each of the payments taken into account in working out the amount of the lump sum under subsection
54-35(5)
;
would be exempt from income tax under this Division if the
*
injured person were still alive and the payment, or each of the payments, were instead made to the injured person.
History
S 54-65 inserted by No 139 of 2002.
SECTION 54-70
Special provisions about trusts
54-70(1)
A payment of a
*
personal injury annuity or a
*
personal injury lump sum to the trustee of a trust is exempt from income tax for the trustee if:
(a)
the beneficiary of the trust is the
*
injured person; and
(b)
because of Subdivision
54-B
or
54-C
, the payment would have been exempt from income tax if it had been made directly to the beneficiary.
54-70(2)
A payment made in accordance with paragraph
54-35(3)(b)
to the trustee of a trust is exempt from income tax for the trustee if:
(a)
the beneficiary of the trust is the reversionary beneficiary; and
(b)
because of section
54-65
, the payment would have been exempt from income tax if it had been made directly to the beneficiary.
54-70(3)
A payment of a lump sum in accordance with subsection
54-35(4)
to the trustee of a trust is exempt from income tax for the trustee.
54-70(4)
If a payment is exempt from income tax for a trustee because of this section, the payment is also exempt from income tax for a beneficiary, or the beneficiary, of the trust, even if the trustee:
(a)
pays all or part of the payment to the beneficiary; or
(b)
applies all or part of the payment for the benefit of the beneficiary.
History
S 54-70 inserted by No 139 of 2002.
SECTION 54-75
Minister to arrange for review and report
54-75(1)
The Minister must cause a person to review, and to report to the Minister in writing about, the operation of the following provisions (the
structured settlements and orders provisions
):
(a)
the other provisions of this Division;
(b)
Division 2A of Part 10 of the
Life Insurance Act 1995
.
54-75(2)
The person must be someone who, in the Minister
'
s opinion, is suitably qualified and appropriate to conduct the review.
54-75(3)
The review and report must relate to the period beginning when this Division commences and ending after 4 years and 6 months.
54-75(4)
The person must give the report to the Minister as soon as practicable, and in any event within 6 months, after the end of that period.
54-75(5)
The report may include suggestions for changes to the structured settlements and orders provisions that, in the person
'
s opinion, are needed to overcome, or would help overcome, problems identified during the review and set out in the report.
54-75(6)
The person must provide a reasonable opportunity for members of the public to make submissions to him or her about matters to which the review relates.
54-75(7)
The Minister must cause a copy of the report to be laid before each House of the Parliament within 15 sitting days of that House after the Minister receives the report.
History
S 54-75 inserted by No 139 of 2002.
Division 55
-
Payments that are not exempt from income tax
History
Div 55 inserted by No 121 of 1997.
SECTION 55-1
What this Division is about
A variety of payments are not exempt from income tax even though they are similar in nature to payments that are wholly or partly exempt under this Part.
History
S 55-1 inserted by No 121 of 1997.
Operative provisions
SECTION 55-5
Occupational superannuation payments
55-5(1)
This Part does not exempt from income tax any amount or pension paid under the following provisions or Acts, or under schemes established under any of them:
(a)
Defence Force Retirement and Death Benefits Act 1973
;
(b)
Defence Forces Retirement Benefits Act 1948
;
(c)
Military Superannuation and Benefits Act 1991
;
(ca)
Australian Defence Force Superannuation Act 2015
;
(cb)
Australian Defence Force Cover Act 2015
;
(d)
Papua New Guinea (Staffing Assistance) Act 1973
;
(e)
Parliamentary Contributory Superannuation Act 1948
;
(f)
section 10 of the
Superannuation (Pension Increases) Act 1971
;
(g)
section 9 or 14 of the
Superannuation Act (No 2) 1956
;
(h)
subsection 8(1) of the
Superannuation Act 1948
;
(i)
Superannuation Act 1922
;
(j)
Superannuation Act 1976
;
(k)
Superannuation Act 1990
;
(l)
Superannuation Act 2005
.
History
S 55-5(1) amended by No 120 of 2015, s 3 and Sch 1 item 54, by inserting para (ca) and (cb), effective 11 September 2015.
S 55-5(1) amended by No 81 of 2005.
55-5(2)
This section operates despite anything contained in any other provision of this Part.
History
S 55-5 inserted by No 121 of 1997.
SECTION 55-10
55-10
Education entry payments
This Part does not exempt from income tax an education entry payment under Part 2.13A of the
Social Security Act 1991
.
History
S 55-10 inserted by No 121 of 1997.
Division 58
-
Capital allowances for depreciating assets previously owned by an exempt entity
History
Div 58 substituted by No 77 of 2001, inserted by No 93 of 1999.
SECTION 58-1
What this Division is about
This Division sets out special rules that apply in calculating deductions for the decline in value of depreciating assets and balancing adjustments for assets previously owned by an exempt entity if the assets:
•
continue to be owned by that entity after the entity becomes taxable; or
•
are acquired from that entity, in connection with the acquisition of a business, by a purchaser that is a taxable entity.
There is a choice of 2 methods for each depreciating asset:
•
the notional written down value method; and
•
the undeducted pre-existing audited book value method.
History
S 58-1 substituted by No 77 of 2001.
Subdivision 58-A
-
Application
History
Subdiv 58-A substituted by No 77 of 2001.
SECTION 58-5
Application of Division
58-5(1)
This Division applies in 2 situations.
Entity sale
58-5(2)
The first (an
entity sale situation
) is where:
(a)
at a particular time on or after 1 July 2001, an entity is an
*
exempt entity; and
(b)
just after that time, the entity's
*
ordinary income or
*
statutory income becomes to any extent assessable income.
History
S 58-5(2) amended by
No 78 of 2007
, s 3 and Sch 7 item 2, by substituting
"
*
exempt entity
"
for
"
exempt entity
"
in para (a), effective 1 July 2005.
58-5(3)
In an entity sale situation:
(a)
the entity is a
transition entity
; and
(b)
the time when the entity's
*
ordinary income or
*
statutory income becomes to that extent assessable is the
transition time
; and
(c)
the income year in which the
*
transition time occurs is the
transition year
for the entity; and
(d)
the
*
depreciating assets the
*
transition entity
*
held just before the transition time are
privatised assets
.
Asset sale
58-5(4)
The second (an
asset sale situation
) is where:
(a)
at a particular time on or after 1 July 2001, an entity (the
purchaser
) whose
*
ordinary income or statutory income is to any extent assessable acquires a
*
depreciating asset from the Commonwealth, a State, a Territory or an
*
exempt entity; and
(b)
the asset is acquired in connection with the acquisition of a
*
business from the Commonwealth, the State, the Territory or the exempt entity.
History
S 58-5(4) amended by
No 78 of 2007
, s 3 and Sch 7 items 3 and 4, by inserting
"
the Commonwealth, a State, a Territory or
"
before
"
an
*
exempt entity
"
in para (a) and inserting
"
the Commonwealth, the State, the Territory or
"
before
"
the exempt entity
"
in para (b), effective 1 July 2005.
58-5(5)
In an asset sale situation:
(a)
the Commonwealth, the State, the Territory or the
*
exempt entity is the
tax exempt vendor
; and
(b)
the time when the
*
depreciating asset is acquired is the
acquisition time
; and
(c)
the income year in which the
*
acquisition time occurs is the
acquisition year
; and
(d)
each
*
depreciating asset the purchaser acquires from the
*
tax exempt vendor at the acquisition time is a
privatised asset
.
History
S 58-5(5) amended by
No 78 of 2007
, s 3 and Sch 7 item 5, by inserting
"
the Commonwealth, the State, the Territory or
"
before
"
the
*
exempt entity
"
in para (a), effective 1 July 2005.
History
S 58-5 substituted by No 77 of 2001.
SECTION 58-10
When an asset is acquired in connection with the acquisition of a business
58-10(1)
A
*
depreciating asset is taken to be acquired in connection with the acquisition of a
*
business from the Commonwealth, the State, the Territory or the
*
exempt entity if and only if:
(a)
the asset was used by the Commonwealth, the State, the Territory or the exempt entity in carrying on a business and the purchaser or another entity uses the asset in carrying on the business; or
(b)
subsection (2) applies.
History
S 58-10(1) amended by
No 78 of 2007
, s 3 and Sch 7 items 6 and 7, by inserting
"
the Commonwealth, the State, the Territory or
"
before
"
the
*
exempt entity
"
and substituting para (a), effective 1 July 2005. Para (a) formerly read:
(a)
the asset was used by the exempt entity in carrying on a business and the purchaser or another person uses the asset in carrying on the business; or
58-10(2)
This subsection applies if:
(a)
the asset was used by the Commonwealth, the State, the Territory or the
*
exempt entity in performing functions, or engaging in activities, that did not constitute the carrying on of a
*
business by the Commonwealth, the State, the Territory or the exempt entity and the asset is used by the purchaser or another entity in performing those functions or engaging in those activities as part of carrying on a business; or
(b)
all of these subparagraphs apply:
(i)
the acquisition by the purchaser of the asset was connected with the acquisition of another asset by the purchaser or another entity from the Commonwealth, the State, the Territory or the exempt entity or from an
*
associate of the Commonwealth, the State, the Territory or the exempt entity;
(ii)
ownership of the other asset gives the purchaser or other entity a right, or imposes on the purchaser or other entity an obligation, to perform functions or engage in activities as part of the carrying on of a business or confers on the purchaser or other entity a commercial advantage or opportunity in connection with performing functions or engaging in activities as part of the carrying on of a business;
(iii)
the asset is used by the purchaser or other entity in performing those functions or engaging in those activities under the right or obligation or in taking the benefit of the advantage or opportunity; or
(c)
the asset was acquired by the purchaser under an
*
arrangement under which the purchaser or another entity acquired another asset from the Commonwealth, the State, the Territory or the exempt entity or from an associate of the Commonwealth, the State, the Territory or the exempt entity and:
(i)
the other asset is taken by paragraph (1)(a), or by paragraph (a) or (b) of this subsection; or
(ii)
where the other asset is not a depreciating asset, it would, if it were a depreciating asset, be taken by paragraph (1)(a), or by paragraph (a) or (b) of this subsection;
to be acquired in connection with the acquisition of a business from the Commonwealth, the State, the Territory or the exempt entity.
History
S 58-10(2) amended by
No 78 of 2007
, s 3 and Sch 7 items 8 to 12, by substituting para (a), substituting
"
entity from the Commonwealth, the State, the Territory or the exempt entity or from an
*
associate of the Commonwealth, the State, the Territory or the exempt entity
"
for
"
person from the exempt entity or from an
*
associate of the exempt entity
"
in para (b)(i), substituting
"
entity
"
for
"
person
"
(wherever occurring) in para (b)(ii) and (iii), substituting
"
entity acquired another asset from the Commonwealth, the State, the Territory or the exempt entity or from an associate of the Commonwealth, the State, the Territory or the exempt entity
"
for
"
person acquired another asset from the exempt entity or from an associate of the exempt entity
"
in para (c) and inserting
"
the Commonwealth, the State, the Territory or
"
before
"
the exempt entity
"
(last occurring) in para (c), effective 1 July 2005. Para (a) formerly read:
(a)
the asset was used by the
*
exempt entity in performing functions, or engaging in activities, that did not constitute the carrying on of a
*
business by the exempt entity and the asset is used by the purchaser or another person in performing those functions or engaging in those activities as part of carrying on a business; or
58-10(3)
Paragraphs (2)(a), (b) and (c) do not apply if the asset is used by the purchaser solely to
*
derive assessable income from the provision of office or residential accommodation.
History
S 58-10 substituted by No 77 of 2001.
Subdivision 58-B
-
Calculating decline in value of privatised assets under Division 40
History
Subdiv 58-B substituted by No 77 of 2001.
SECTION 58-60
58-60
Purpose of rules in this Subdivision
This Subdivision sets out rules that affect the way in which the
*
transition entity or the purchaser work out the decline in value of, and balancing adjustments for,
*
privatised assets under Division
40
after the
*
transition time or the
*
acquisition time.
History
S 58-60 substituted by No 77 of 2001.
SECTION 58-65
Choice of method to work out cost of privatised asset
58-65(1)
The
*
transition entity or the purchaser has a choice to work out the first element of the
*
cost of each
*
privatised asset.
58-65(2)
The choice is to use either:
(a)
the
*
notional written down value of the asset; or
(b)
the
*
undeducted pre-existing audited book value (if any) of the asset.
58-65(3)
The choice must be made:
(a)
for the
*
transition entity
-
by the day on which the transition entity lodges its
*
income tax return for the
*
transition year; or
(b)
for the purchaser
-
by the day on which the purchaser lodges the purchaser's income tax return for the
*
acquisition year;
or within a further period allowed by the Commissioner.
58-65(4)
The choice, once made, cannot be changed.
History
S 58-65 substituted by No 77 of 2001.
SECTION 58-70
Application of Division 40
Application of Division 40
58-70(1)
The
*
transition entity and the purchaser work out the decline in value of, and the effect of a
*
balancing adjustment event occurring for, each
*
privatised asset using Division
40
(Capital allowances) as if the asset had been acquired under a contract entered into on or after 1 July 2001.
Entity sale situation
58-70(2)
Division
40
applies to a
*
privatised asset
*
held by the
*
transition entity as if the asset had not been used, or
*
installed ready for use, for any purpose before the
*
transition time.
58-70(3)
The first element of the
*
cost to the
*
transition entity at the
*
transition time is the
*
notional written down value of the asset or the
*
undeducted pre-existing audited book value of the asset (depending on the choice made for the asset).
58-70(4)
No amount incurred before the
*
transition time is included in the second element of the
*
cost of a
*
privatised asset.
Asset sale situation
58-70(5)
The first element of the
*
cost of a
*
privatised asset to the purchaser at the
*
acquisition time is the sum of:
(a)
the
*
notional written down value of the asset or the
*
undeducted pre-existing audited book value of the asset (depending on the choice made for the asset); and
(b)
the amount of any incidental costs to the purchaser in acquiring the asset.
History
S 58-70 substituted by No 77 of 2001.
SECTION 58-75
Meaning of
notional written down value
58-75(1)
The
notional written down value
of a
*
privatised asset is its
*
adjustable value in the hands of:
(a)
the
*
transition entity just before the
*
transition time; or
(b)
the
*
tax exempt vendor just before the
*
acquisition time;
worked out using the assumptions in this section.
Application of Division 40
58-75(2)
Assume that Division
40
had always applied to work out the decline in value of the
*
privatised asset.
Use for taxable purposes
58-75(3)
Assume that, in applying Division
40
to the
*
privatised asset, it had always been used by the
*
transition entity or the
*
tax exempt vendor wholly for
*
taxable purposes.
Cost and acquisition time: exempt Australian government agency
58-75(4)
If the
*
transition entity or the
*
tax exempt vendor was an
*
exempt Australian government agency just before the
*
transition time and had acquired the
*
privatised asset from another exempt Australian government agency:
(a)
assume that the transition entity or tax exempt vendor acquired it at the time when it was acquired or constructed by the other exempt Australian government agency and that the first element of its
*
cost to the transition entity or tax exempt vendor is the amount that was its cost to the other exempt Australian government agency; or
(b)
if it had, before its acquisition by the transition entity or tax exempt vendor, been successively
*
held by 2 or more exempt Australian government agencies
-
assume that:
(i)
the transition entity or tax exempt vendor acquired it at the time when it was acquired or constructed by the first of those exempt Australian government agencies that owned it; and
(ii)
the first element of its cost to the transition entity or tax exempt vendor is the sum of the amount that was the first element of its cost to the first of those exempt Australian government agencies that owned it and any amount included in the second element of its cost for that first agency or a later successive agency.
Effective life
58-75(5)
Assume that:
(a)
the
*
transition entity or the
*
tax exempt vendor had chosen to use an
*
effective life determined by the Commissioner for the
*
privatised asset as in force at the
*
transition time or the
*
acquisition time; and
(b)
subsection
40-95(2)
did not apply.
58-75(5A)
Assume that section
40-102
did not apply to a
*
privatised asset unless all of the following are satisfied:
(a)
it is an entity sale situation within the meaning of section
58-5
;
(b)
a
*
capped life applies to the asset under subsection
40-102(4)
or (5) at both the asset
'
s
*
start time and the
*
transition time;
(c)
the
*
transition entity chooses, for the purposes of this section, to have section
40-102
apply to the asset.
If section
40-102
is to be applied to the asset, disregard paragraphs
40-102(2)(a)
and (b) and assume that the relevant time for the purposes of the application of that section to the asset were the transition time.
History
S 58-75(5A) inserted by No 53 of 2002.
58-75(6)
Assume also that section
40-110
(about recalculating effective life) did not apply.
History
S 58-75 substituted by No 77 of 2001.
SECTION 58-80
Meaning of
undeducted pre-existing audited book value
58-80(1)
The
undeducted pre-existing audited book value
of a
*
privatised asset is its
*
adjustable value in the hands of:
(a)
the
*
transition entity just before the
*
transition time; or
(b)
the
*
tax exempt vendor just before the
*
acquisition time;
worked out using the assumptions in this section.
Application of Division 40
58-80(2)
Assume that Division
40
had always applied to work out the decline in value of the
*
privatised asset.
Use for taxable purposes
58-80(3)
Assume that, in applying Division
40
to the
*
privatised asset, it had always been used by the
*
transition entity or the
*
tax exempt vendor wholly for
*
taxable purposes.
Cost
58-80(4)
Assume that:
(a)
the first element of the
*
privatised asset's
*
cost to the
*
transition entity or the
*
tax exempt vendor is its
*
pre-existing audited book value as at the latest time (the
test time
) at which it had a pre-existing audited book value; and
(b)
no amount was included in the second element of the asset's cost before the test time; and
(c)
any amount included in the second element of the asset's cost after the test time had been incurred by the transition entity or the tax exempt vendor.
Acquisition time
58-80(5)
Assume that the
*
transition entity or the
*
tax exempt vendor had acquired the
*
privatised asset at the test time.
Effective life
58-80(6)
Assume that:
(a)
the
*
transition entity or the
*
tax exempt vendor had chosen to use an
*
effective life determined by the Commissioner for the
*
privatised asset as in force at the
*
transition time or the
*
acquisition time; and
(b)
subsection
40-95(2)
did not apply.
Note:
Section 40-102 does not apply to a privatised asset for the purposes of this section.
History
S 58-80(6) amended by No 53 of 2002.
58-80(7)
Assume also that section
40-110
(about recalculating effective life) did not apply.
History
S 58-80 substituted by No 77 of 2001.
SECTION 58-85
Pre-existing audited book value of depreciating asset
58-85(1)
A
*
privatised asset has a
pre-existing audited book value
if:
(a)
a balance sheet, as at the end of an annual accounting period (the
balance date
), that was prepared as part of the final accounts of the Commonwealth, a State, a Territory or an
*
exempt entity for that period showed the asset as an asset of the relevant entity and specified a value for it; and
(b)
a qualified independent auditor who was engaged, or was required by law, to undertake an audit of those accounts had prepared and signed, before 4 August 1997, a final audit report on those accounts; and
(c)
the report did not state that the auditor was not satisfied that the specified value fairly represented the value of the asset.
The asset is taken to have had a
pre-existing audited book value
at the balance date of an amount equal to the specified value.
History
S 58-85(1) amended by
No 78 of 2007
, s 3 and Sch 7 item 13, by substituting para (a), effective 1 July 2005. Para (a) formerly read:
(a)
a balance sheet, as at the end of an annual accounting period (the
balance date
), that was prepared as part of an
*
exempt entity's final accounts for that period showed the asset as an asset of the exempt entity and specified a value for it; and
58-85(2)
If a balance sheet did not specify a value for the asset but specified a total value for 2 or more assets including the asset, the balance sheet is taken to have specified as the value of the asset so much of that total value as is reasonably attributable to the asset.
History
S 58-85 substituted by No 77 of 2001.
SECTION 58-90
Method and effective life for transition entity
58-90(1)
The
*
transition entity must, in working out the decline in value of a
*
privatised asset, use the
*
diminishing value method or the
*
prime cost method for the asset that it used to work out the
*
notional written down value, or the
*
undeducted pre-existing audited book value, of the asset.
58-90(2)
In working out the decline in value of a
*
privatised asset held by a
*
transition entity:
(a)
if section
40-102
applied to the asset for the purposes of subsection
58-75(5A)
-
section
40-102
applies to the asset and applies as if the relevant time for the asset for the purposes of that section were the
*
transition time; or
(b)
if section
40-102
did not apply to the asset for the purposes of subsection
58-75(5A)
or section
58-80
-
section
40-102
does not apply to the asset.
History
S 58-90(2) inserted by No 53 of 2002.
S 58-90 substituted by No 77 of 2001.
Division 59
-
Particular amounts of non-assessable non-exempt income
History
Div 59 inserted by No 66 of 2003.
SECTION 59-1
What this Division is about
This Division details particular amounts that are non-assessable non-exempt income.
History
S 59-1 inserted by No 66 of 2003.
Operative provisions
59-5
(Repealed) SECTION 59-5 Bonus payments made to certain older Australians
(Repealed by No 145 of 2010)
History
S 59-5 repealed by No 145 of 2010, s 3 and Sch 2 item 37, effective 17 December 2010. S 59-5 formerly read:
SECTION 59-5 Bonus payments made to certain older Australians
59-5
A payment made to you under the
A New Tax System (Bonuses for Older Australians) Act 1999
is not assessable income and is not
*
exempt income.
S 59-5 inserted by No 66 of 2003.
SECTION 59-10
59-10
Compensation under firearms surrender arrangements
A payment made to you by way of compensation under
*
firearms surrender arrangements for any loss of business is not assessable income and is not
*
exempt income.
History
S 59-10 inserted by No 66 of 2003.
SECTION 59-15
Mining payments
59-15(1)
These are not assessable income and are not
*
exempt income:
(a)
a
*
mining payment made to a
*
distributing body;
(b)
a mining payment made to one or more
*
Indigenous persons, or applied for their benefit.
History
S 59-15(1) amended by No 84 of 2013, s 3 and Sch 1 item 21, by substituting
"
*
Indigenous persons
"
for
"
*
Aboriginals
"
in para (b), effective 28 June 2013.
59-15(2)
A payment:
(a)
made to a
*
distributing body; or
(b)
made to one or more
*
Indigenous persons, or applied for their benefit;
is not assessable income and is not
*
exempt income if the payment is made by a
*
distributing body out of a
*
mining payment that it has received.
History
S 59-15(2) amended by No 84 of 2013, s 3 and Sch 1 item 21, by substituting
"
*
Indigenous persons
"
for
"
*
Aboriginals
"
in para (b), effective 28 June 2013.
59-15(3)
A payment made to a
*
distributing body by another distributing body, out of a
*
mining payment received by the other distributing body, is taken to be a mining payment for the purposes of:
(a)
any further applications of subsection (2); and
(b)
any further applications of this subsection.
59-15(4)
Subsection (2) does not apply to a payment by a
*
distributing body for the purposes of meeting its administrative costs.
59-15(5)
This section does not apply to an amount paid to or applied for the benefit of a person if it is remuneration or consideration for goods or services provided by that person.
History
S 59-15 inserted by No 66 of 2003.
SECTION 59-20
59-20
Taxable amounts relating to franchise fees windfall tax
Taxable amounts on which tax is imposed by the
Franchise Fees Windfall Tax (Imposition) Act 1997
are not assessable income and are not
*
exempt income.
History
S 59-20 inserted by No 66 of 2003.
SECTION 59-25
59-25
Taxable amounts relating to Commonwealth places windfall tax
Taxable amounts on which tax is imposed by the
Commonwealth Places Windfall Tax (Imposition) Act 1998
are not assessable income and are not
*
exempt income.
History
S 59-25 inserted by No 66 of 2003.
SECTION 59-30
Amounts you must repay
59-30(1)
An amount you receive is not assessable income and is not
*
exempt income for an income year if:
(a)
you must repay it; and
(b)
you repay it in a later income year; and
(c)
you cannot deduct the repayment for any income year.
59-30(2)
It does not matter if:
(a)
you received the amount as part of a larger amount; or
(b)
the obligation to repay existed when you received the amount or it came into existence later.
59-30(3)
This section does not apply to an amount you must repay because you received a lump sum as compensation or damages for a wrong or injury you suffered in your occupation.
History
S 59-30 inserted by No 66 of 2003.
SECTION 59-35
59-35
Amounts that would be mutual receipts but for prohibition on distributions to members or issue of MCIs
An amount of
*
ordinary income of an entity is not assessable income and not
*
exempt income if:
(a)
the amount would be a mutual receipt, but for:
(i)
the entity
'
s constituent document preventing the entity from making any
*
distribution, whether in money, property or otherwise, to its members; or
(ii)
the entity
'
s constituent document providing for the entity to issue MCIs (within the meaning of the
Corporations Act 2001
) or to pay
*
dividends in respect of MCIs; or
(iii)
the entity having issued one or more MCIs (within the meaning of the
Corporations Act 2001
) or having paid dividends in respect of one or more MCIs; and
(b)
apart from this section, the amount would be assessable income only because of section
6-5
.
History
S 59-35 amended by No 37 of 2019, s 3 and Sch 2 item 20, by substituting para (a), effective 6 April 2019. Para (a) formerly read:
(a)
the amount would be a mutual receipt, but for the entity's constituent document preventing the entity from making any
*
distribution, whether in money, property or otherwise, to its members; and
S 59-35 inserted by No 13 of 2006, s 3 and Sch 2 item 3, applicable in relation to income years commencing on or after 1 July 2000.
SECTION 59-40
Issue of rights
59-40(1)
The
*
market value, as at the time of issue (the
issue time
), of rights issued to you:
(a)
by a company to
*
acquire
*
shares in that company; or
(b)
by a trustee of a unit trust to acquire units in that trust;
is not assessable income and is not
*
exempt income as at the issue time if the conditions in subsection (2) are satisfied.
59-40(2)
The conditions are as follows:
(a)
at the issue time, you must already own
*
shares in the company or units in the unit trust (the
original interests
);
(b)
the rights must be issued to you because of your ownership of the original interests;
(c)
the original interests and the rights must not be
*
revenue assets or
*
trading stock at the issue time;
(d)
if you acquired a beneficial interest in the rights under an
*
employee share scheme
-
neither Subdivision
83A-B
nor
83A-C
(about employee share schemes) applies to the beneficial interest;
(e)
the original interests and the rights must not be
*
traditional securities;
(f)
the original interests must not be
*
convertible interests.
History
S 59-40(2) amended by No 133 of 2009, s 3 and Sch 1 item 24, by substituting para (d), applicable in relation to the ESS interests mentioned in subsections
83A-5(1)
and
(2)
of the
Income Tax (Transitional Provisions) Act 1997
. Para (d) formerly read:
(d)
the rights must not have been acquired (within the meaning of section
139G
of the
Income Tax Assessment Act 1936
) under an
*
employee share scheme;
S 59-40 inserted by
No 91 of 2008
, s 3 and Sch 1 item 2, effective 20 September 2008 and applicable to rights issued on or after 1 July 2001.
59-45
(Repealed) SECTION 59-45 Tax bonus for the 2007-08 income year
(Repealed by No 32 of 2014)
History
S 59-45 repealed by No 32 of 2014, s 3 and Sch 1 item 6, effective 1 July 2016. S 59-45 formerly read:
SECTION 59-45 Tax bonus for the 2007-08 income year
59-45
A tax bonus paid in accordance with the
Tax Bonus for Working Australians Act (No 2) 2009
is not assessable income and is not
*
exempt income.
S 59-45 inserted by No 6 of 2009, s 3 and Sch 1 item 3, effective 18 February 2009.
SECTION 59-50
Native title benefits
59-50(1)
To the extent that a
*
native title benefit would otherwise be included in your assessable income, it is not assessable income and is not
*
exempt income if you are an
*
Indigenous person or an
*
Indigenous holding entity.
59-50(2)
To the extent that an amount, or other benefit, arising directly or indirectly from a
*
native title benefit would otherwise be included in your assessable income, it is not assessable income and is not
*
exempt income if you are an
*
Indigenous person or an
*
Indigenous holding entity.
59-50(3)
Neither subsection (1) nor (2) applies to an amount, or benefit, to the extent that it:
(a)
is for the purposes of meeting the provider
'
s administrative costs; or
(b)
is remuneration or consideration for the provision of goods or services.
59-50(4)
Subsection (2) does not apply to an amount, or benefit, to the extent that it arises directly or indirectly:
(a)
from so much of:
(i)
the
*
native title benefit; or
(ii)
an amount, or benefit, arising directly or indirectly from the native title benefit;
as is not
*
non-assessable non-exempt income of an entity because of this section; or
(b)
from an entity investing any or all of:
(i)
the native title benefit; or
(ii)
an amount, or benefit, arising directly or indirectly from the native title benefit.
59-50(5)
A
native title benefit
is an amount, or
*
non-cash benefit, that:
(a)
arises under:
(i)
an agreement made under an Act of the Commonwealth, a State or a Territory, or under an instrument made under such an Act; or
(ii)
an ancillary agreement to such an agreement;
to the extent that the amount or benefit relates to an act that would extinguish
*
native title or that would otherwise be wholly or partly inconsistent with the continued existence, enjoyment orexercise of native title; or
(b)
is compensation determined in accordance with Division 5 of Part 2 of the
Native Title Act 1993
.
Note 1:
Agreements that can be covered by paragraph (a) include:
(a) indigenous land use agreements (within the meaning of the
Native Title Act 1993
); and
(b) an agreement of the kind mentioned in paragraph 31(1)(b) of that Act; and
(c) recognition and settlement agreements (within the meaning of the
Traditional Owner Settlement Act 2010
(Vic.)).
Note 2:
Paragraph (a) does not require a determination of native title under the
Native Title Act 1993
.
59-50(6)
An
Indigenous holding entity
is:
(a)
a
*
distributing body; or
(b)
a trust, if the beneficiaries of the trust can only be
*
Indigenous persons or Indigenous holding entities; or
(c)
a
*
registered charity.
History
S 59-50 amended by No 124 of 2013, s 3 and Sch 12 items 5
-
6, by substituting
"
Indigenous holding entities
"
for
"
distributing bodies
"
in para (b) and inserting para (c), applicable in relation to income years starting on or after 1 July 2008.
S 59-50 inserted by No 84 of 2013, s 3 and Sch 1 item 3, applicable in relation to income years starting on or after 1 July 2008.
Former s 59-50 repealed by No 42 of 2009, s 3 and Sch 8 item 4, effective 1 July 2011. S 59-50 formerly read:
SECTION 59-50 Clean-up and Restoration Grants for 2009 Victorian bushfires
59-50
The following payments administered by the Rural Finance Corporation of Victoria in relation to the Victorian bushfires of 2009 are not assessable income and are not
*
exempt income:
(a)
Clean-up and Restoration Grants for primary producers;
(b)
Clean-up and Restoration Grants for small businesses.
S 59-50 inserted by No 42 of 2009, s 3 and Sch 8 item 2, applicable in relation to: (a) the 2008-09 income year; and (b) the 2009-10 income year.
SECTION 59-55
2019-20 bushfires
-
payments for volunteer work with fire services
59-55(1)
A payment to an individual is not assessable income and is not
*
exempt income if:
(a)
the purpose of the payment is to compensate the individual for the loss of income as a result of the individual performing volunteer work with a fire service (however described) of a State or Territory; and
(b)
the work is performed during the 2019-20 income year; and
(c)
the payment is made by a State or Territory and is covered by an agreement between the Commonwealth and that State or Territory; and
(d)
the payment is made on or after 1 January 2020.
59-55(2)
However, this section does not apply to:
(a)
a payment received in the individual
'
s capacity as an employee or contractor (including a payment of an entitlement to paid leave); or
(b)
a workers
'
compensation payment.
History
S 59-55 inserted by No 1 of 2020, s 3 and Sch 1 item 2, effective 14 February 2020 and applicable in relation to the 2019-20 income year and later income years.
Former s 59-55 repealed by No 31 of 2011, s 3 and Sch 2 item 5, effective 1 July 2014. S 59-55 formerly read:
SECTION 59-55 2010-11 floods
-
recovery grants for small businesses and primary producers
59-55
Payments under the Natural Disaster Relief and Recovery Arrangements (set out in a determination made by the Minister for Local Government, Territories and Roads on 21 February 2007) are not assessable income and are not
*
exempt income, if:
(a)
the payments are part of a Category C measure (within the meaning of the determination); and
(b)
the Category C measure relates to the floods that occurred in Australia during the period that:
(i)
occurred during the 2010-11
*
financial year; and
(ii)
started on 29 November 2010; and
(c)
the payments are:
(i)
recovery grants for small businesses; or
(ii)
recovery grants for primary producers.
Former s 59-55 inserted by No 31 of 2011, s 3 and Sch 2 item 2, effective 25 May 2011.
SECTION 59-60
2019-20 bushfires
-
disaster relief payments and non-cash benefits
59-60(1)
A payment made to an entity, or a
*
non-cash benefit provided to an entity, to the extent it would otherwise be assessable income of the entity, is not assessable income and is not
*
exempt income if:
(a)
the payment has been made or the benefit provided directly as a result of the bushfires commencing in Australia in the 2019-20 financial year; and
(b)
the purpose of the payment or benefit is to provide the entity with relief from, or assist the entity in recovering from, the effects of the bushfires; and
(c)
the payment is made, or the benefit is provided, by:
(i)
the Commonwealth; or
(ii)
a State or Territory; or
(iii)
a municipal corporation; or
(iv)
a
*
local governing body.
Note:
Payments covered by this subsection would include Disaster Recovery Allowance paid under the
Social Security Act 1991
and payments made under disaster recovery funding arrangements made by or on behalf of the Commonwealth.
59-60(2)
A payment made to an entity, or a
*
non-cash benefit provided to an entity, to the extent it would otherwise be assessable income of the entity, is also not assessable income and is not
*
exempt income if:
(a)
the payment or benefit relates to the bushfires commencing in Australia in the 2019-20 financial year; and
(b)
the payment or benefit is of a kind prescribed by the regulations for the purposes of this subsection.
59-60(3)
However, this section does not apply to:
(a)
a payment or benefit received in an individual
'
s capacity as an employee or contractor (including a payment of an entitlement to paid leave); or
(b)
a workers
'
compensation payment; or
(c)
a payment of compensation or damages made to an entity as a result of an order of a court or tribunal or settlement of a claim.
History
S 59-60 inserted by No 1 of 2020, s 3 and Sch 1 item 2, effective 14 February 2020 and applicable in relation to the 2019-20 income year and later income years.
Former s 59-60 repealed by No 31 of 2011, s 3 and Sch 2 item 5, effective 1 July 2014. S 59-60 formerly read:
SECTION 59-60 Cyclone Yasi
-
recovery grants for small businesses and primary producers
59-60
Payments under the Natural Disaster Relief and Recovery Arrangements (set out in a determination made by the Minister for Local Government, Territories and Roads on 21 February 2007) are not assessable income and are not
*
exempt income, if:
(a)
the payments are part of a Category C measure (within the meaning of the determination); and
(b)
the Category C measure relates to Cyclone Yasi; and
(c)
the payments are:
(i)
recovery grants for small businesses; or
(ii)
recovery grants for primary producers.
Former s 59-60 inserted by No 31 of 2011, s 3 and Sch 2 item 2, effective 25 May 2011.
SECTION 59-65
Water infrastructure improvement payments
59-65(1)
A
*
SRWUIP payment, in respect of a
*
SRWUIP program, to an entity that is a participant in the program is not assessable income and is not
*
exempt income if:
(a)
the entity has made a choice under subsection (2) for the program; and
(b)
if the payment is an
*
indirect SRWUIP payment
-
the entity
*
derives the payment because it owns an asset (otherwise than under a
*
financial arrangement) to which the program relates.
Note:
One of the requirements for a SRWUIP payment is for the SRWUIP program to be on the published list of SRWUIP programs for the day the payment is made (see subsection
59-67(5)
).
59-65(2)
An entity may make a choice for a
*
SRWUIP program under this subsection if, in an income year:
(a)
the entity
*
derives a
*
SRWUIP payment in respect of the program but has
not
, in an earlier income year:
(i)
derived a SRWUIP payment in respect of the program; or
(ii)
incurred
*
SRWUIP expenditure in respect of the program; or
(b)
the entity incurs SRWUIP expenditure in respect of the program but has
not
, in an earlier income year:
(i)
derived a SRWUIP payment in respect of the program; or
(ii)
incurred SRWUIP expenditure in respect of the program.
Disregard subsection
26-100(3)
(about expenditure that is never SRWUIP expenditure) for the purposes of this subsection.
59-65(3)
The choice must be:
(a)
made in the
*
approved form; and
(b)
made:
(i)
unless subparagraph (ii) or (iii) applies
-
on or before the day the entity lodges its
*
income tax return for the income year; or
(ii)
if the Commissioner makes an assessment of the entity
'
s taxable income for the income year before the entity lodges its income tax return for the income year, and subparagraph (iii) does not apply
-
on or before the day the Commissioner makes that assessment; or
(iii)
within such further time as the Commissioner allows.
The choice cannot be revoked.
Integrity rule
59-65(4)
Subsection (1) does not apply if, at the time the entity
*
derives the
*
SRWUIP payment in respect of a
*
SRWUIP program, it is reasonable to conclude that:
(a)
the entity will not incur expenditure at least equal to the payment on works required by the program; and
(b)
despite not incurring such expenditure, the entity will comply with the program because an
*
associate of the entity will incur expenditure on those works; and
(c)
the associate has not made, and will not make, a choice under subsection (2) for the program.
History
S 59-65 inserted by No 88 of 2013, s 3 and Sch 3 item 8, applicable in relation to payments made on or after 1 April 2010 by the Commonwealth under a SRWUIP program. No 88 of 2013, s 3 and Sch 3 item 19 contains the following transitional provision:
19 Transitional provision
-
time for making choices
(1)
This item applies if, apart from this item, a choice under subsection 59-65(2) of the
Income Tax Assessment Act 1997
must be made on or before the day this Schedule commences.
(2)
Despite paragraph 59-65(3)(b) of that Act, the choice must be made and given to the Commissioner:
(a)
within the 2 year period starting at that commencement; or
(b)
within such further time as the Commissioner allows.
Note:
The requirements for making the choice must still be satisfied (see subsection 59-65(2) of that Act). This item does not change the income years referred to in that subsection.
SECTION 59-67
Meaning of
SRWUIP program, SRWUIP payment, direct SRWUIP payment
and
indirect SRWUIP payment
59-67(1)
A
SRWUIP program
is a program under the program administered by the Commonwealth known as the Sustainable Rural Water Use and Infrastructure program.
59-67(2)
A
SRWUIP payment
, in respect of a
*
SRWUIP program, is:
(a)
a
*
direct SRWUIP payment in respect of the program; or
(b)
an
*
indirect SRWUIP payment in respect of the program.
59-67(3)
A
direct SRWUIP payment
is a payment by the Commonwealth to a participant in a
*
SRWUIP program to the extent that it is made under that program.
59-67(4)
An
indirect SRWUIP payment
is a payment to a participant in a
*
SRWUIP program to the extent that it is reasonably attributable to a payment by the Commonwealth under that program.
59-67(5)
For the purposes of subsections (3) and (4), treat a payment as being made under a
*
SRWUIP program only if that SRWUIP program is on the published list of SRWUIP programs (see section
59-70
) for the day the payment is made.
59-67(6)
However, treat a payment as if it had never been made under a
*
SRWUIP program to the extent that the Commonwealth seeks to recover the payment.
Example:
The Commonwealth seeks to recover half of a payment made under a SRWUIP program. The remaining half is still a payment made under the SRWUIP program.
History
S 59-67 inserted by No 88 of 2013, s 3 and Sch 3 item 8, applicable in relation to payments made on or after 1 April 2010 by the Commonwealth under a SRWUIP program.
SECTION 59-70
List of SRWUIP programs
59-70(1)
The
*
Water Secretary must keep a list of
*
SRWUIP programs. The list must:
(a)
specify the days for which each program is on the list; and
(b)
be published on the
*
Water Department
'
s website.
Example:
A program could be listed for each day on or after 1 July 2011.
Entering SRWUIP programs on the list
59-70(2)
The
*
Water Secretary must enter on the list each
*
SRWUIP program (and its days) in accordance with a direction under subsection (3).
59-70(3)
The Minister and the
*
Water Minister may jointly direct the
*
Water Secretary to enter a program (and its days) on the list only if the Water Minister has notified the Minister in writing that the Water Minister is satisfied that the program:
(a)
is a
*
SRWUIP program; and
(b)
will generate efficiencies in water use through infrastructure improvements.
59-70(4)
A direction under subsection (3) must be in writing and specify the days for which the
*
SRWUIP program is to be on the list. Some or all of those days may be before the day the direction is given.
Changing the days for which a SRWUIP program is listed
59-70(5)
The Minister and the
*
Water Minister may jointly direct the
*
Water Secretary to change the list to specify:
(a)
additional days (including days before the day the direction is given) for which a
*
SRWUIP program is on the list; or
(b)
the final day (which must be after the day the direction is given) for which a SRWUIP program is on the list.
The
*
Water Secretary must change the list accordingly.
59-70(6)
A direction under subsection (5) must be in writing.
Giving directions
59-70(7)
The Minister and the
*
Water Minister must have regard to the policies and budgetary priorities of the Commonwealth Government in deciding whether to give a direction under subsection (3) or (5).
History
S 59-70 inserted by No 88 of 2013, s 3 and Sch 3 item 8, applicable in relation to payments made on or after 1 April 2010 by the Commonwealth under a SRWUIP program.
SECTION 59-75
59-75
Commissioner to be kept informed
The
*
Water Secretary must notify the Commissioner about each payment described in subsection
59-67(6)
that the Commonwealth seeks to recover.
History
S 59-75 inserted by No 88 of 2013, s 3 and Sch 3 item 8, applicable in relation to payments made on or after 1 April 2010 by the Commonwealth under a SRWUIP program.
SECTION 59-80
59-80
Amending assessments
Section
170
of the
Income Tax Assessment Act 1936
does not prevent the amendment of an assessment for the purpose of giving effect to an outcome that is consequential on any or all of the following events:
(a)
the inclusion of a
*
SRWUIP program on the published list of SRWUIP programs (see section
59-70
);
(b)
the publication of a change to a SRWUIP program
'
s listing on the published list of SRWUIP programs;
(c)
the Commonwealth seeking to recover a payment described in subsection
59-67(6)
;
(d)
the making of a choice under subsection
59-65(2)
;
(e)
the event that causes subsection
26-100(3)
to treat expenditure as if it had never been
*
SRWUIP expenditure;
if the amendment is made at any time during the period of 2 years starting immediately after that event.
Note:
Section
170
of the
Income Tax Assessment Act 1936
specifies the usual period within which assessments may be amended.
History
S 59-80 inserted by No 88 of 2013, s 3 and Sch 3 item 8, applicable in relation to payments made on or after 1 April 2010 by the Commonwealth under a SRWUIP program.
SECTION 59-85
59-85
2019 floods
-
recovery grants for small businesses, primary producers and non-profit organisations
A payment is not assessable income and is not
*
exempt income if:
(a)
for the purposes of the Disaster Recovery Funding Arrangements 2018 (set out in a determination made by the Minister for Law Enforcement and Cyber Security on 5 June 2018), the payment is a recovery grant made to a small business, primary producer or non-profit organisation as part of a Category C or Category D measure; and
(b)
the payment relates to floods commencing in Australia in the period between 25 January 2019 and 28 February 2019.
History
S 59-85 inserted by No 30 of 2019, s 3 and Sch 1 item 2, effective 1 July 2019 and applicable to assessments for the 2018-19 income year and later income years.
SECTION 59-86
2019 floods
-
on-farm grant program for primary producers
59-86(1)
A payment is not assessable income and is not
*
exempt income if:
(a)
for the purposes of an agreement covered by subsection (2), the payment is a grant made to a primary producer; and
(b)
the grant is for replacing or repairing farm infrastructure, restocking, replanting, or a similar purpose.
59-86(2)
An agreement is covered by this subsection if:
(a)
the agreement is entered into in the period between 1 February 2019 and 1 July 2019; and
(b)
the parties to the agreement are the Commonwealth and a State or Territory; and
(c)
the objective of the agreement is principally to assist primary producers impacted by floods commencing in Australia in the period between 25 January 2019 and 28 February 2019.
History
S 59-86 inserted by No 30 of 2019, s 3 and Sch 1 item 2, effective 1 July 2019 and applicable to assessments for the 2018-19 income year and later income years.
SECTION 59-90
59-90
Cash flow boost
A cash flow boost paid in accordance with the
Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020
is not assessable income and is not
*
exempt income.
History
S 59-90 inserted by No 22 of 2020, s 3 and Sch 3 item 2, effective 24 March 2020.
SECTION 59-95
59-95
Coronavirus economic response payment
A payment is not assessable income and is not
*
exempt income if:
(a)
the payment is paid in accordance with rules made under the
Coronavirus Economic Response Package (Payments and Benefits) Act 2020
; and
(b)
those rules state that the payment is not assessable income and is not exempt income.
History
S 59-95 inserted by No 38 of 2020, s 3 and Sch 2 item 6, effective 9 April 2020.
SECTION 59-96
59-96
COVID-19 disaster payment
A payment an individual receives is not assessable income and is not
*
exempt income if it is a COVID-19 disaster payment (within the meaning of the
COVID-19 Disaster Payment (Funding Arrangements) Act 2021
).
History
S 59-96 inserted by No 79 of 2021, s 3 and Sch 5 item 2, effective 11 August 2021 and applicable to assessments for the 2020-21 income year and later income years.
SECTION 59-97
State and Territory grants to small business relating to the recovery from the coronavirus known as COVID-19
59-97(1)
A payment an entity receives is not assessable income and is not
*
exempt income if:
(a)
the entity receives the payment under a grant program administered by:
(i)
a State or a Territory; or
(ii)
an authority of a State or a Territory; and
(b)
the grant program is declared under subsection
(3)
to be an eligible program (whether this declaration is made before, on or after the day the entity receives the payment); and
(c)
the entity receives the payment in the 2020-21 or 2021-22
*
financial year; and
(d)
the entity is a
*
small business entity, or an entity covered by subsection
(2)
, for the income year in which the entity receives the payment.
History
S 59-97(1) amended by No 71 of 2021, s 3 and Sch 1 item 1, by inserting
"
or 2021-22
"
in para (c), effective 1 July 2021 and applicable: (a) to a payment an entity receives in the 2020-21 or 2021-22 financial year; and (b) in relation to the income year in which the entity receives the payment and later income years.
59-97(2)
An entity is covered by this subsection for an income year if:
(a)
the entity is not a
*
small business entity for the income year; and
(b)
the entity would be a small business entity for the income year if:
(i)
each reference in Subdivision
328-C
(about what is a small business entity) to
$
10 million were instead a reference to
$
50 million; and
(ii)
the reference in paragraph
328-110(5)(b)
to a small business entity were instead a reference to an entity covered by this subsection.
59-97(3)
The Minister must, by legislative instrument, declare a grant program to be an eligible program if the Minister is satisfied that:
(a)
the program was first publicly announced on or after 13 September 2020 by the State, Territory or authority that is administering it; and
(b)
the program is, in effect, responding to economic impacts of the coronavirus known as COVID-19; and
(c)
the program is, in effect, directed at supporting businesses:
(i)
who are the subject of a public health directive applying to a geographical area in which the businesses operate; and
(ii)
whose operations have been significantly disrupted as a result of the public health directive; and
(d)
the State, Territory or authority has requested the program to be declared to be an eligible program under this subsection.
History
S 59-97 inserted by No 118 of 2020, s 3 and Sch 1 item 2, effective 12 December 2020 and applicable in relation to the 2020-21 income year and later income years.
SECTION 59-98
Commonwealth small business support payments relating to the coronavirus known as COVID-19
59-98(1)
A payment an entity receives is not assessable income and is not
*
exempt income if:
(a)
the entity receives the payment under a program administered by the Commonwealth or an authority of the Commonwealth; and
(b)
the program is declared under subsection
(2)
to be an eligible program (whether this declaration is made before, on or after the day the entity receives the payment); and
(c)
the entity receives the payment in the 2021-22
*
financial year; and
(d)
the entity is a
*
small business entity, or an entity covered by subsection
59-97(2)
, for the income year in which the entity receives the payment.
59-98(2)
For the purposes of paragraph
(1)(b)
, the Minister may, by legislative instrument, declare a program to be an eligible program if the Minister is satisfied that the program is, in effect:
(a)
responding to economic impacts of the coronavirus known as COVID-19; and
(b)
directed at supporting
*
businesses the operations of which have been significantly disrupted as a result of a public health directive.
History
S 59-98 inserted by No 79 of 2021, s 3 and Sch 3 item 2, effective 11 August 2021 and applicable to assessments for income years ending on or after 1 July 2021.
SECTION 59-99
59-99
2021 floods and storms
-
recovery grants
A payment is not assessable income and is not
*
exempt income if:
(a)
for the purposes of the Disaster Recovery Funding Arrangements 2018 (set out in a determination made by the Minister for Law Enforcement and Cyber Security on 5 June 2018), the payment is a recovery grant made to a small business or primary producer as part of a Category D measure; and
(b)
the payment relates to:
(i)
floods commencing in Australia as a consequence of rainfall events occurring in the period between 19 February 2021 and 31 March 2021; or
(ii)
storms occurring in Australia in that period.
History
S 59-99 inserted by No 61 of 2021, s 3 and Sch 4 item 2, effective 1 July 2021 and applicable to assessments for the 2020-2021 income year and later income years.
SECTION 59-100
Refund of large-scale generation shortfall charge
59-100(1)
A payment to an entity under section 98 of the
Renewable Energy (Electricity) Act 2000
is not assessable income and is not
*
exempt income.
59-100(2)
Disregard subsection
(1)
for the purposes of determining whether an entity can deduct expenditure that it incurs in relation to large-scale generation certificates (within the meaning of the
Renewable Energy (Electricity) Act 2000)
.
History
S 59-100 inserted by No 111 of 2021, s 3 and Sch 1 item 2, effective 1 October 2021 and applicable to payments made on or after 1 January 2019.
SECTION 59-105
59-105
Cyclone Seroja
-
recovery grants
A payment is not assessable income and is not
*
exempt income if:
(a)
for the purposes of the Disaster Recovery Funding Arrangements 2018 (set out in a determination made by the Minister for Law Enforcement and Cyber Security on 5 June 2018), the payment is a recovery grant made to a small business or primary producer as part of a Category C measure; and
(b)
the payment relates to Cyclone Seroja.
History
S 59-105 inserted by No 35 of 2022, s 3 and Sch 1 item 2, effective 1 October 2022 and applicable to assessments for the 2021-2022 income year and later income years.
PART 2-20
-
TAX OFFSETS
History
Pt 2-20 inserted by No 56 of 1997 .
Division 61
-
Generally applicable tax offsets
History
Div 61 inserted by No 56 of 1997.
Subdivision 61-A
-
Dependant (invalid and carer) tax offset
History
Subdiv 61-A inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
Former Subdiv 61-A repealed by No 60 of 1999, inserted by No 47 of 1998.
Guide to Subdivision 61-A
SECTION 61-1
61-1
What this Subdivision is about
You are entitled to a tax offset for an income year if you maintain certain dependants who are unable to work.
History
S 61-1 inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Object of this Subdivision
|
| 61-5 |
Object of this Subdivision |
|
Entitlement to the dependant (invalid and carer) tax offset
|
| 61-10 |
Who is entitled to the tax offset |
| 61-15 |
Cases involving more than one spouse |
| 61-20 |
Exceeding the income limit for family tax benefit (Part B) |
| 61-25 |
Eligibility for family tax benefit (Part B) without shared care |
|
Amount of the dependant (invalid and carer) tax offset
|
| 61-30 |
Amount of the dependant (invalid and carer) tax offset |
| 61-35 |
Families with shared care percentages |
| 61-40 |
Reduced amounts of dependant (invalid and carer) tax offset |
| 61-45 |
Reductions to take account of the other individual
'
s income |
Object of this Subdivision
SECTION 61-5
61-5
Object of this Subdivision
The object of this Subdivision is to provide a
*
tax offset to assist with the maintenance of certain types of dependants who are genuinely unable to work because of invalidity, or because of their care obligations.
History
S 61-5 inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
Entitlement to the dependant (invalid and carer) tax offset
SECTION 61-10
Who is entitled to the tax offset
61-10(1)
You are entitled to a
*
tax offset for an income year if:
(a)
during the year you contribute to the maintenance of another individual who:
(i)
is your
*
spouse; or
(ii)
is your
*
parent or your spouse
'
s parent; or
(iii)
is aged 16 years or over, and is your
*
child, brother or sister or a brother or sister of your spouse; and
(b)
during the year, the other individual meets the requirements of one or more of subsections (2), (3) and (4); and
(c)
during the year:
(i)
the other individual is an Australian resident; or
(ii)
if the other individual is your spouse or your child
-
you had a domicile in Australia.
(d)
-
(e)
(Repealed by No 70 of 2015)
History
S 61-10(1) amended by No 70 of 2015, s 3 and Sch 2 items 27
-
29, by substituting
"
Australia.
"
for
"
Australia; and
"
in para (c)(ii), repealing para (d), (e) and the note, applicable in relation to assessments for the 2014-15 income year and later income years. Para (d), (e) and the note formerly read:
(d)
you are not entitled to a rebate of tax under section
159J
(rebates for dependants) of the
Income Tax Assessment Act 1936
in respect of the other individual for the year; and
(e)
you are not entitled to a rebate of tax under section
159L
(rebates for housekeepers) of the
Income Tax Assessment Act 1936
in respect of the other individual for the year.
Note:
To be entitled to a rebate under section
159J
or
159L
of the
Income Tax Assessment Act 1936
, you must also be entitled to either or both of the following:
(a) a rebate under section
23AB
(service with an armed force under the control of the United Nations), section
79A
(residents of isolated areas) or section
79B
(members of Defence Force serving overseas) of that Act;
(b) a rebate under subsection
159J(2)
of that Act in respect of a spouse born before 1 July 1952.
61-10(2)
The other individual meets the requirements of this subsection if he or she is being paid:
(a)
a disability support pension or a special needs disability support pension under the
Social Security Act 1991
; or
(b)
an invalidity service pension under the
Veterans
'
Entitlements Act 1986
.
61-10(3)
The other individual meets the requirements of this subsection if he or she:
(a)
is your
*
spouse or parent, or your spouse
'
s parent; and
(b)
is being paid a carer allowance or carer payment under the
Social Security Act 1991
in relation to provision of care to a person who:
(i)
is your
*
child, brother or sister, or the brother or sister of your spouse; and
(ii)
is aged 16 years or over.
61-10(4)
The other individual meets the requirements of this subsection if he or she is your
*
spouse or parent, or your spouse
'
s parent, and is wholly engaged in providing care to an individual who:
(a)
is your
*
child, brother or sister, or the brother or sister of your spouse; and
(b)
is aged16 years or over; and
(c)
is being paid:
(i)
a disability support pension or a special needs disability support pension under the
Social Security Act 1991
; or
(ii)
an invalidity service pension under the
Veterans
'
Entitlements Act 1986
.
61-10(5)
You may be entitled to more than one
*
tax offset for the year under subsection (1) if:
(a)
you contributed to the maintenance of more than one other individual (none of whom are your
*
spouse) during the year; or
(b)
you had different
*
spouses at different times during the year.
Note 1:
If paragraph (b) applies, the amount of the tax offset in relation to each spouse would be only part of the full amount: see section
61-40
.
Note 2:
Section
960-255
may be relevant to determining relationships for the purposes of this section.
History
S 61-10 inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
SECTION 61-15
Cases involving more than one spouse
61-15(1)
Despite paragraph
61-10(1)(a)
, if, during a period comprising some or all of the year, there are 2 or more individuals who are your
*
spouse, you are taken, for the purposes of section
61-10
, only to contribute to the maintenance of the spouse with whom you reside during that period.
61-15(2)
Despite paragraph
61-10(1)(a)
and subsection (1) of this section, if, during a period comprising some or all of the year:
(a)
you reside with 2 or more individuals who are your
*
spouse; or
(b)
2 or more individuals are your
*
spouse but you reside with none of them;
you are taken, for the purposes of section
61-10
, only to contribute to the maintenance of whichever of those individuals in relation to whom you are entitled to the smaller, or smallest, amount (including a nil amount) of tax offset under this Subdivision in relation to that period.
61-15(3)
(Repealed by No 70 of 2015)
History
S 61-15(3) repealed by No 70 of 2015, s 3 and Sch 2 item 34, applicable in relation to assessments for the 2012-13 income year and later income years. S 61-15(3) formerly read:
61-15(3)
If, but for this subsection, subsection (2) would apply in relation to more than one other individual, that paragraph is taken to apply only in relation to one of those other individuals.
History
S 61-15 inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
SECTION 61-20
Exceeding the income limit for family tax benefit (Part B)
61-20(1)
Despite section
61-10
, you are not entitled to a
*
tax offset for an income year if the sum of:
(a)
your
*
adjusted taxable income for offsets for the year; and
(b)
if you had a
*
spouse for the whole or part of the year, and your spouse was not the other individual referred to in subsection
61-10(1)
-
the spouse
'
s adjusted taxable income for offsets for the year;
is more than the amount specified in subclause
28B(1)
of Schedule
1
to the
A New Tax System (Family Assistance) Act 1999
, as indexed under Part
2
of Schedule
4
to that Act.
[
CCH Note:
The Dependant (Invalid and Carer) Tax Offset (DICTO) is not available to a taxpayer whose adjusted taxable income (ATI) exceeds the income limit for family assistance purposes. The ATI threshold for 2025/26 is
$
120,007. The ATI thresholds for previous years are:
| 2014/15 |
150,000 |
| 2015/16 |
100,000 |
| 2016/17 |
100,000 |
| 2017/18 |
100,000 |
| 2018/19 |
100,000 |
| 2019/20 |
100,000 |
| 2020/21 |
100,000 |
| 2021/22 |
100,900 |
| 2022/23 |
104,432 |
| 2023/24 |
112,578 |
| 2024/25 |
117,194] |
61-20(2)
However, if you had a
*
spouse for only part of the year, the spouse
'
s
*
adjusted taxable income for offsets for the year is taken, for the purposes of paragraph
(1)(b)
, to be this amount:
Spouse
'
s adjusted taxable
income for offsets |
× |
Number of days on which you
had a spouse during the year
Number of days in the year |
61-20(3)
If you had a different
*
spouse during different parts of the year, include the
*
adjusted taxable income for offsets of each spouse under paragraph
(1)(b)
and subsection
(2)
.
History
S 61-20 inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
SECTION 61-25
61-25
Eligibility for family tax benefit (Part B) without shared care
Despite section
61-10
, you are not entitled to a
*
tax offset in relation to another individual for an income year if:
(a)
your entitlement to the tax offset would, apart from this section, be based on the other individual being your spouse during the year; and
(b)
during the whole of the year:
(i)
you, or your
*
spouse while being your partner (within the meaning of the
A New Tax System (Family Assistance) Act 1999
), is eligible for family tax benefit at the Part B rate (within the meaning of that Act); and
(ii)
clause
31
of Schedule
1
to that Act does not apply in respect of the Part B rate.
Note:
Clause
31
of Schedule
1
to the
A New Tax System (Family Assistance) Act 1999
reduces the standard rate for the family tax benefit to take account of shared care percentages.
History
S 61-25 amended by No 70 of 2015, s 3 and Sch 2 item 35, by inserting the note, applicable in relation to assessments for the 2012-13 income year and later income years.
S 61-25 inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
Amount of the dependant (invalid and carer) tax offset
SECTION 61-30
61-30
Amount of the dependant (invalid and carer) tax offset
The amount of the
*
tax offset to which you are entitled in relation to another individual under section
61-10
for an income year is
$
2,423. The amount is indexed annually.
Note 1:
Subdivision
960-M
shows you how to index amounts.
Note 2:
The amount of the tax offset may be reduced by the application, in order, of sections
61-35
to
61-45
.
[
CCH Note:
The Dependant (Invalid and Carer) Tax Offset (DICTO) is
$
3,396 for the 2025/26 income year and is indexed annually. The offset reduces by
$
1 for every
$
4 by which the dependant
'
s adjusted taxable income (ATI) exceeds
$
282.
The amounts of DICTO for previous years are:
| 2012/13 |
2,423 |
| 2013/14 |
2,471 |
| 2014/15 |
2,535 |
| 2015/16 |
2,588 |
| 2016/17 |
2,627 |
| 2017/18 |
2,666 |
| 2018/19 |
2,717 |
| 2019/20 |
2,766 |
| 2021/22 |
2,833 |
| 2022/23 |
2,943 |
| 2023/24 |
3,152 |
| 2024/25 |
3,300] |
History
S 61-30 inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
SECTION 61-35
Families with shared care percentages
61-35(1)
The amount of the
*
tax offset under section
61-30
in relation to the other individual for the year is reduced by the amount worked out under subsection (2) of this section if:
(a)
your entitlement to the tax offset is based on the other individual being your spouse during the year; and
(b)
during a period (the
shared care period
) comprising the whole or part of the year:
(i)
you, or your
*
spouse while being your partner (within the meaning of the
A New Tax System (Family Assistance) Act 1999
), was eligible for family tax benefit at the Part B rate within the meaning of that Act; and
(ii)
clause
31
of Schedule
1
to that Act applied in respect of that Part B rate because you, or your spouse, had a shared care percentage for an FTB child (within the meaning of that Act).
61-35(2)
The reduction is worked out as follows:
Shared care rate
Non-shared care rate |
× |
Unaltered offset amount |
× |
Number of days in
the shared care period
Number of days in
the year |
where:
non-shared care rate
is the rate that would be the standard rate in relation to you or your
*
spouse under clause
30
of Schedule
1
to the
A New Tax System (Family Assistance) Act 1999
if:
(a)
clause
31
of that Schedule did not apply; and
(b)
the FTB child in relation to whom the standard rate was determined under clause
31
of that Schedule was the only FTB child of you or your spouse, as the case requires.
shared care rate
is the standard rate in relation to you or your
*
spouse worked out under clause
31
of Schedule
1
to the
A New Tax System (Family Assistance) Act 1999
.
unaltered offset amount
is what would, but for this section, be the amount of your
*
tax offset in relation to the other individual under section
61-10
for the year.
History
S 61-35 inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
SECTION 61-40
Reduced amounts of dependant (invalid and carer) tax offset
61-40(1)
The amount of the
*
tax offset under sections
61-30
and
61-35
in relation to the other individual for the year is reduced by the amount in accordance with subsection (2) of this section if one or more of the following applies:
(a)
you contribute to the maintenance of the other individual during part only of the year;
(b)
during the whole or part of the year, 2 or more individuals contribute to the maintenance of the other individual;
(c)
the other individual is an individual of a kind referred to in subparagraph
61-10(1)(a)(i)
,
(ii)
or
(iii)
during part only of the year;
(d)
paragraph
61-10(1)(b)
applies to the other individual during part only of the year;
(e)
paragraph
61-10(1)(c)
applies during part only of the year;
(f)
the other individual is your spouse, and, during part of the year:
(i)
you, or your
*
spouse while being your partner (within the meaning of the
A New Tax System (Family Assistance) Act 1999
), is eligible for family tax benefit at the Part B rate (within the meaning of that Act); and
(ii)
clause
31
of Schedule
1
to that Act does not apply in respect of the Part B rate;
(g)
the other individual is your spouse, and, during part of the year, parental leave pay is payable under the
Paid Parental Leave Act 2010
to you, or to your spouse while being your partner (within the meaning of that Act).
History
S 61-40(1) amended by No 70 of 2015, s 3 and Sch 2 item 36, by inserting
"
the other individual is your spouse, and,
"
in para (f), applicable in relation to assessments for the 2012-13 income year and later income years.
61-40(2)
The amount of the tax offset under sections
61-30
and
61-35
is reduced to an amount that, in the Commissioner
'
s opinion, is a reasonable apportionment in the circumstances, having regard to the applicable matters referred to in paragraphs (1)(a) to (g).
History
S 61-40(2) amended by No 70 of 2015, s 3 and Sch 2 item 37, by substituting
"
is a reasonable apportionment
"
for
"
is reasonable
"
, applicable in relation to assessments for the 2012-13 income year and later income years.
61-40(3)
If paragraph (1)(f) or (g) applies, the Commissioner is not to consider the part of the year covered by that paragraph.
History
S 61-40 inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
SECTION 61-45
61-45
Reductions to take account of the other individual
'
s income
The amount of the
*
tax offset under sections
61-30
to
61-40
in relation to the other individual for the year is reduced by
$
1 for every
$
4 by which the following exceeds
$
282:
(a)
if you contribute to the maintenance of the other individual for the whole of the year
-
the other individual
'
s
*
adjusted taxable income for offsets for the year;
(b)
if paragraph (a) does not apply
-
the other individual
'
s
*
adjusted taxable income for offsets for that part of the year during which you contribute to the maintenance of the other individual.
History
S 61-45 inserted by No 85 of 2013, s 3 and Sch 7 item 1, applicable to assessments for the 2012-13 income year and later income years.
Subdivision 61-D
-
Low Income tax offset
History
Subdiv 61-D heading substituted by No 92 of 2020 (as amended by No 72 of 2021), s 3 and Sch 1 item 25, effective 1 July 2022 and applicable in relation to assessments for the 2022-23 income year or a later income year. The heading formerly read:
Subdivision 61-D
-
Low and Middle Income tax offset and Low Income tax offset
Subdiv 61-D inserted by No 47 of 2018, s 3 and Sch 1 item 1, effective 1 July 2018.
Guide to Subdivision 61-D
SECTION 61-100
What this Subdivision is about
You may be entitled to a tax offset if you:
(a) are a lower-income earner; or
(b) are the trustee of a trust who is liable to be assessed in respect of a share of the trust
'
s net income to which a beneficiary is presently entitled.
History
S 61-100 inserted by No 47 of 2018, s 3 and Sch 1 item 1, effective 1 July 2018.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 61-105 |
(Repealed by No 92 of 2020) |
| 61-107 |
(Repealed by No 92 of 2020) |
| 61-110 |
Entitlement to the Low Income tax offset |
| 61-115 |
Amount of the Low Income tax offset |
Operative provisions
61-105
(Repealed) SECTION 61-105 Entitlement to the Low and Middle Income tax offset
(Repealed by No 92 of 2020)
History
S 61-105 repealed by No 92 of 2020 (as amended by No 72 of 2021), s 3 and Sch 1 item 26, effective 1 July 2022 and applicable in relation to assessments for the 2022-23 income year or a later income year. S 61-105 formerly read:
SECTION 61-105 Entitlement to the Low and Middle Income tax offset
61-105(1)
You are entitled to a
*
tax offset for the 2018-19, 2019-20, 2020-21 or 2021-22 income year if:
(a)
you are an individual who is an Australian resident at any time during the income year; and
(b)
your taxable income for the income year does not exceed
$
126,000.
History
S 61-105(1) amended by No 52 of 2019, s 3 and Sch 1 item 1, by substituting
"
$
126,000
"
for
"
$
125,333
"
in para (b), effective 6 July 2019 and applicable in relation to assessments for the 2018-19, 2019-20, 2020-21 or 2021-22 income year.
61-105(2)
You are entitled to a
*
tax offset for the 2018-19, 2019-20, 2020-21 or 2021-22 income year if:
(a)
for the income year, you are a trustee who is liable to be assessed under section 98 of the
Income Tax Assessment Act 1936
in respect of a share of the
*
net income of a trust; and
(b)
the beneficiary who is presently entitled to that share is an individual who is an Australian resident at any time during the income year; and
(c)
that share does not exceed
$
126,000.
History
S 61-105(2) amended by No 52 of 2019, s 3 and Sch 1 item 1, by substituting
"
$
126,000
"
for
"
$
125,333
"
in para (c), effective 6 July 2019 and applicable in relation to assessments for the 2018-19, 2019-20, 2020-21 or 2021-22 income year.
61-105(3)
If you are entitled to a
*
tax offset under subsection
(2)
, you are entitled to a separate tax offset for each beneficiary who is presently entitled to a share for which subsection (2) is satisfied.
Note:
This section will be repealed on 1 July 2022 by the
Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020
.
History
S 61-105(3) amended by No 14 of 2022, s 3 and Sch 6 item 1, by substituting the note, effective 1 April 2022. The note formerly read:
Note:
This section will be repealed on 1 July 2024 by the
Treasury Laws Amendment (Personal Income Tax Plan) Act 2018
.
S 61-105 inserted by No 47 of 2018, s 3 and Sch 1 item 1, effective 1 July 2018.
61-107
(Repealed) SECTION 61-107 Amount of the Low and Middle Income tax offset
(Repealed by No 92 of 2020)
History
S 61-107 repealed by No 92 of 2020 (as amended by No 72 of 2021), s 3 and Sch 1 item 26, effective 1 July 2022 and applicable in relation to assessments for the 2022-23 income year or a later income year. S 61-107 formerly read:
SECTION 61-107 Amount of the Low and Middle Income tax offset
General rule
61-107(1)
The amount of your
*
tax offset is set out in the following table in respect of the following income (your
relevant income
):
(a)
if you are an individual
-
your taxable income for the income year;
(b)
if you are a trustee
-
the amount of the share of
*
net income referred to in subsection 61-105(2).
|
Amount of your tax offset
|
|
Item
|
If your relevant income:
|
The amount of your tax offset is:
|
| 1 |
does not exceed
$
37,000 |
$
255 |
| 2 |
exceeds
$
37,000 but is not more than
$
48,000 |
$
255, plus an amount equal to 7.5% of the excess |
| 3 |
exceeds
$
48,000 but is not more than
$
90,000 |
$
1,080 |
| 4 |
exceeds
$
90,000 but is not more than
$
126,000 |
$
1,080, less an amount equal to 3% of the excess |
Note:
This section will be repealed on 1 July 2022 by the
Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020
.
History
S 61-107(1) amended by No 14 of 2022, s 3 and Sch 6 item 2, by substituting the note, effective 1 April 2022. The note formerly read:
Note:
This section will be repealed on 1 July 2024 by the
Treasury Laws Amendment (Personal Income Tax Plan) Act 2018
.
S 61-107(1) amended by No 52 of 2019, s 3 and Sch 1 item 2, by substituting the table, effective 6 July 2019 and applicable in relation to assessments for the 2018-19, 2019-20, 2020-21 or 2021-22 income year. The table formerly read:
|
Amount of your tax offset
|
|
Item
|
If your relevant income:
|
The amount of your tax offset is:
|
| 1 |
does not exceed
$
37,000 |
$
200 |
| 2 |
exceeds
$
37,000 but is not more than
$
48,000 |
$
200, plus an amount equal to 3% of the excess |
| 3 |
exceeds
$
48,000 but is not more than
$
90,000 |
$
530 |
| 4 |
exceeds
$
90,000 but is not more than
$
125,333 |
$
530, less an amount equal to 1.5% of the excess |
61-107(1A)
The amount of your
*
tax offset is increased by
$
420 if:
(a)
the income year is the 2021-22 income year; and
(b)
your relevant income is not
$
126,000.
History
S 61-107(1A) inserted by No 14 of 2022, s 3 and Sch 6 item 3, effective 1 April 2022.
If you are less than 18 years of age
61-107(2)
Despite subsections (1) and (1A), the amount of your
*
tax offset for the income year cannot exceed a cap if:
(a)
you are an individual who is a prescribed person in relation to the income year for the purposes of Division 6AA of Part III of the
Income Tax Assessment Act 1936
; and
(b)
part (the
excluded part
) of your basic income tax liability for the income year is attributable to your eligible taxable income (within the meaning of section 102AD of that Act).
The cap is an amount equal to the remaining part of your basic income tax liability for the income year.
Note:
Division 6AA (including section 102AD) is about income that particular kinds of children derive from particular sources.
History
S 61-107(2) amended by No 14 of 2022, s 3 and Sch 6 item 4, by substituting
"
Despite subsections (1) and (1A)
"
for
"
Despite subsection (1)
"
, effective 1 April 2022.
61-107(3)
When working out the remaining part of your basic income tax liability, if you are also entitled to a
*
tax offset under section 160AAA of the
Income Tax Assessment Act 1936
, treat that tax offset as having been applied, to the extent possible, against the excluded part of your basic income tax liability.
Note:
That tax offset is for individuals eligible for certain benefits.
If you are a trustee and the beneficiary is less than 18 years of age
61-107(4)
Despite subsections
(1)
and
(1A)
, the amount of your
*
tax offset for the income year cannot exceed a cap if:
(a)
you are a trustee; and
(b)
the beneficiary who is presently entitled to the share of
*
net income to which the tax offset relates is a prescribed person in relation to the income year for the purposes of Division
6AA
of Part
III
of the
Income Tax Assessment Act 1936
; and
(c)
part of your basic income tax liability for the income year is attributable to the portion of that share to which that Division applies.
The cap is an amount equal to the part of your basic income tax liability attributable to the remaining portion of that share.
Note 1:
Division
6AA
is about income that particular kinds of children derive from particular sources.
Note 2:
To work out the portion of that share to which Division
6AA
applies, see section
102AG
of the
Income Tax Assessment Act 1936
.
History
S 61-107(4) amended by No 14 of 2022, s 3 and Sch 6 item 4, by substituting
"
Despite subsections (1) and (1A)
"
for
"
Despite subsection (1)
"
, effective 1 April 2022.
S 61-107 inserted by No 47 of 2018, s 3 and Sch 1 item 1, effective 1 July 2018.
SECTION 61-110
Entitlement to the Low Income tax offset
61-110(1)
You are entitled to a
*
tax offset for the 2020-21 income year or a later income year if:
(a)
you are an individual who is an Australian resident at any time during the income year; and
(b)
your taxable income for the income year does not exceed
$
66,667.
History
S 61-110(1) amended by No 92 of 2020, s 3 and Sch 1 item 19, by substituting
"
the 2020-21 income year or a later income year
"
for
"
the 2022-23 income year or a later income year
"
, effective 15 October 2020 and applicable in relation to assessments for the 2020-21 income year or a later income year.
61-110(2)
You are entitled to a
*
tax offset for the 2020-21 income year or a later income year if:
(a)
for the income year, you are a trustee who is liable to be assessed under section
98
of the
Income Tax Assessment Act 1936
in respect of a share of the
*
net income of a trust; and
(b)
the beneficiary who is presently entitled to that share is an individual who is an Australian resident at any time during the income year; and
(c)
that share does not exceed
$
66,667.
[
CCH Note:
S 61-110(2) will be amended by No 47 of 2018, s 3 and Sch 1 item 19, by substituting
"
an income year
"
for
"
the 2022-23 income year or a later income year
"
, effective 1 July 2024 and applicable in relation to assessments for the 2022-23 income year or a later income year.]
History
S 61-110(2) amended by No 92 of 2020, s 3 and Sch 1 item 19, by substituting
"
the 2020-21 income year or a later income year
"
for
"
the 2022-23 income year or a later income year
"
, effective 15 October 2020 and applicable in relation to assessments for the 2020-21 income year or a later income year.
61-110(3)
If you are entitled to a
*
tax offset under subsection (2), you are entitled to a separate tax offset for each beneficiary who is presently entitled to a share for which subsection (2) is satisfied.
History
S 61-110 inserted by No 47 of 2018, s 3 and Sch 1 item 1, effective 1 July 2018.
SECTION 61-115
Amount of the Low Income tax offset
General rule
61-115(1)
The amount of your
*
tax offset is set out in the following table in respect of the following income (your
relevant income
):
(a)
if you are an individual
-
your taxable income for the income year;
(b)
if you are a trustee
-
the amount of the share of
*
net income referred to in subsection
61-110(2)
.
|
Amount of your tax offset
|
|
Item
|
If your relevant income:
|
The amount of your tax offset is:
|
| 1 |
does not exceed
$
37,500 |
$
700 |
| 2 |
exceeds
$
37,500 but is not more than
$
45,000 |
$
700, less an amount equal to 5% of the excess |
| 3 |
exceeds
$
45,000 but is not more than
$
66,667 |
$
325, less an amount equal to 1.5% of the excess |
History
S 61-115(1) amended by No 52 of 2019, s 3 and Sch 1 item 3, by substituting the table, effective 6 July 2019. The table formerly read:
|
Amount of your tax offset
|
|
Item
|
If your relevant income:
|
The amount of your tax offset is:
|
| 1 |
does not exceed
$
37,000 |
$
645 |
| 2 |
exceeds
$
37,000 but is not more than
$
41,000 |
$
645, less an amount equal to 6.5% of the excess |
| 3 |
exceeds
$
41,000 but is not more than
$
66,667 |
$
385, less an amount equal to 1.5% of the excess |
If you are less than 18 years of age
61-115(2)
Despite subsection (1), the amount of your
*
tax offset for the income year cannot exceed a cap if:
(a)
you are an individual who is a prescribed person in relation to the income year for the purposes of Division
6AA
of Part
III
of the
Income Tax Assessment Act 1936
; and
(b)
part (the
excluded part
) of your basic income tax liability for the income year is attributable to your eligible taxable income (within the meaning of section
102AD
of that Act).
The cap is an amount equal to the remaining part of your basic income tax liability for the income year.
Note:
Division
6AA
(including section
102AD
) is about income that particular kinds of children derive from particular sources.
61-115(3)
When working out the remaining part of your basic income tax liability, if you are also entitled to a
*
tax offset under section
160AAA
of the
Income Tax Assessment Act 1936
, treat that tax offset as having been applied, to the extent possible, against the excluded part of your basic income tax liability.
Note:
That tax offset is for individuals eligible for certain benefits.
If you are a trustee and the beneficiary is less than 18 years of age
61-115(4)
Despite subsection (1), the amount of your
*
tax offset for the income year cannot exceed a cap if:
(a)
you are a trustee; and
(b)
the beneficiary who is presently entitled to the share of
*
net income to which the tax offset relates is a prescribed person in relation to the income year for the purposes of Division
6AA
of Part
III
of the
Income Tax Assessment Act 1936
; and
(c)
part of your basic income tax liability for the income year is attributable to the portion of that share to which that Division applies.
The cap is an amount equal to the part of your basic income tax liability attributable to the remaining portion of that share.
Note 1:
Division
6AA
is about income that particular kinds of children derive from particular sources.
Note 2:
To work out the portion of that share to which Division
6AA
applies, see section
102AG
of the
Income Tax Assessment Act 1936
.
History
S 61-115 inserted by No 47 of 2018, s 3 and Sch 1 item 1, effective 1 July 2018.
Subdivision 61-G
-
Private health insurance offset complementary to Part 2-2 of the Private Health Insurance Act 2007
History
Subdiv 61-G substituted for Subdiv 61-H by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years.
History
Archived:
Former Subdiv 61-G repealed as inoperative by
No 101 of 2006
, s 3 and Sch 1 item 231, effective 14 September 2006. For
application and savings provisions
and for former wording see the
CCH Australian Income Tax Legislation archive
.
Guide to Subdivision 61-G
SECTION 61-200
61-200
What this Subdivision is about
You can choose to claim a tax offset for a premium, or an amount in respect of a premium, paid under a private health insurance policy instead of having the premium reduced under Division 23 of the
Private Health Insurance Act 2007
.
History
S 61-200 amended by No 105 of 2013, s 3 and Sch 2 item 24, by omitting
"
or receiving a payment under Division 26 of that Act
"
after
"
Private Health Insurance Act 2007
"
, effective 1 July 2013.
S 61-200 inserted by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 61-205 |
Entitlement to the private health insurance tax offset |
| 61-210 |
Amount of the private health insurance tax offset |
| 61-215 |
Reallocation of the private health insurance tax offset between spouses |
| 61-220 |
(Repealed by No 26 of 2012) |
Operative provisions
SECTION 61-205
Entitlement to the private health insurance tax offset
61-205(1)
You are entitled to a
*
tax offset for the 2012-13 income year or a later income year if:
(a)
a premium, or an amount in respect of a premium, was paid by you or another entity during the income year under a
*
complying health insurance policy in respect of a period (the
premium period
); and
(b)
you are a
*
PHIIB in respect of the premium or amount; and
(c)
each person insured under the policy during the premium period is, for the whole of the time that he or she is insured under the policy during the premium period:
(i)
an eligible person (within the meaning of section 3 of the
Health Insurance Act 1973
); or
(ii)
treated as such because of section 6, 6A or 7 of that Act.
History
S 61-205(1) substituted by No 26 of 2012, s 3 and Sch 1 item 3, applicable in relation to premiums, and amounts in respect of premiums, paid on and after 1 July 2012. S 61-205(1) formerly read:
61-205(1)
If you are an individual (other than an individual in the capacity of an employer), you are entitled to a
*
tax offset for the 2007-08 income year or a later income year if:
(a)
a premium, or an amount in respect of a premium, was paid by you, or by your employer as a
*
fringe benefit for you, under a complying private health insurance policy (within the meaning of the
Private Health Insurance Act 2007
), on or after 1 July 2007; and
(b)
the premium, or amount in respect of a premium, was paid during the income year; and
(c)
each person insured under the complying health insurance policy during the period covered by the premium or amount is, for the whole of the time that he or she is insured under the policy during that period, an eligible person within the meaning of section 3 of the
Health Insurance Act 1973
, or treated as such because of section 6, 6A or 7 of that Act.
61-205(2)
You are also entitled to the
*
tax offset if:
(a)
you are a trustee who is liable to be assessed under section
98
of the
Income Tax Assessment Act 1936
in respect of a share of the net income of a trust estate; and
(b)
the beneficiary who is presently entitled to the share of the income of the trust estate would be entitled to the tax offset because of subsection (1).
61-205(3)
(Repealed by No 26 of 2012)
History
S 61-205(3) repealed by No 26 of 2012, s 3 and Sch 1 item 4, applicable in relation to premiums, and amounts in respect of premiums, paid on and after 1 July 2012. S 61-205(3) formerly read:
61-205(3)
However, you are not entitled to the
*
tax offset in respect of the payment of any premium, or any amount in respect of a premium, if:
(a)
you have received an amount under Division 26 of the
Private Health Insurance Act 2007
in relation to the payment; or
(b)
the premium, or the amount in respect of a premium, was less than it would otherwise have been because of the operation of Division 23 of that Act.
Note:
In certain circumstances you can get a refund of the tax offset under Division 67.
History
S 61-205 inserted by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years.
SECTION 61-210
Amount of the private health insurance tax offset
61-210(1)
The amount of the
*
tax offset is your
*
share of the PHII benefit in respect of the premium or amount.
Reduction because PHII benefit received in another form
61-210(2)
Subsections (3), (4) and (5) apply if the amount of the premium was reduced because of the operation or purported operation of Division 23 of the
Private Health Insurance Act 2007
.
History
S 61-210(2) substituted by No 105 of 2013, s 3 and Sch 2 item 25, effective 1 July 2013. For saving provision see note under Subdiv
52-D
heading. S 61-210(2) formerly read:
Reduction because PHII benefit received in other forms
61-210(2)
Subsections (3), (4) and (5) apply if any of the following paragraphs apply:
(a)
the amount of the premium was reduced because of the operation or purported operation of Division 23 of the
Private Health Insurance Act 2007
;
(b)
a payment was made to a person because of the operation or purported operation of Division 26 of the
Private Health Insurance Act 2007
in relation to the premium.
History
S 61-210(2) substituted by No 105 of 2013. For saving provision see note under Subdiv
52-D
heading. S 61-210(2) formerly read:
Reduction because PHII benefit received in other forms
61-210(2)
Subsections (3), (4) and (5) apply if any of the following paragraphs apply:
(a)
the amount of the premium was reduced because of the operation or purported operation of Division 23 of the
Private Health Insurance Act 2007
;
(b)
a payment was made to a person because of the operation or purported operation of Division 26 of the
Private Health Insurance Act 2007
in relation to the premium.
61-210(3)
Divide the total of the reduction by the number of persons who are
*
PHIIBs in respect of the premium or amount.
History
S 61-210(3) amended by No 105 of 2013, s 3 and Sch 2 item 26, by omitting
"
(if any) and payment (if any)
"
after
"
the reduction
"
, effective 1 July 2013. For saving provision see note under Subdiv
52-D
heading.
61-210(4)
Reduce your
*
tax offset under subsection (1) to nil if the amount worked out under subsection (3) equals or exceeds your
*
share of the PHII benefit in respect of the premium or amount.
Note:
If the amount worked out under subsection (3) exceeds your share of the PHII benefit, you are liable to pay the excess to the Commonwealth. See section 282-18 of the
Private Health Insurance Act 2007
(Liability for excess private health insurance premium reduction or refund).
61-210(5)
Otherwise, reduce your
*
tax offset under subsection (1) by the amount worked out under subsection (3).
History
S 61-210 substituted by No 26 of 2012, s 3 and Sch 1 item 5, applicable in relation to premiums, and amounts in respect of premiums, paid on and after 1 July 2012. S 61-210 formerly read:
SECTION 61-210 Amount of the private health insurance tax offset
61-210(1)
The amount of the
*
tax offset for an income year is the sum of:
(a)
30% of the amount of the premium, or of the amount in respect of a premium, paid by you, or by your employer as a
*
fringe benefit for you, under the policy in respect of days in the income year on which no person covered by the policy was aged 65 years or over; and
(b)
35% of the amount of the premium, or of the amount in respect of a premium, paid by you, or by your employer as a fringe benefit for you, under the policy in respect of days in the income year on which:
(i)
at least one person covered by the policy was aged 65 years or over; and
(ii)
no person covered by the policy was aged 70 years or over; and
(c)
40% of the amount of the premium, or of the amount in respect of a premium, paid by you, or by your employer as a fringe benefit for you, under the policy in respect of days in the income year on which at least one person covered by the policy was aged 70 years or over.
61-210(2)
However, if, before 1 January 1999, a person was registered, or eligible to be registered, under the
Private Health Insurance Incentives Act 1997
in respect of the policy for the income year, the amount of the
*
tax offset for the income year is the greater of:
(a)
the amount worked out under subsection (1); and
(b)
the
*
incentive amount for the policy for the income year.
61-210(3)
If, because of the operation of Division 23 of the
Private Health Insurance Act 2007
, an amount paid by you, or by your employer as a
*
fringe benefit for you, under a policy was less than the amount that would otherwise have been payable, the
*
tax offset in respect of the amount paid is reduced by the amount of the difference.
S 61-210 inserted by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years.
SECTION 61-215
Reallocation of the private health insurance tax offset between spouses
61-215(1)
You can make a choice under this section in relation to the income year if:
(a)
you are a
*
PHIIB in respect of the premium or amount; and
(b)
on the last day of the income year, you are married (within the meaning of the
A New Tax System (Medicare Levy Surcharge
-
Fringe Benefits) Act 1999
; and
(c)
the individual to whom you are married is also a PHIIB in respect of the premium or amount; and
(d)
the individual to whom you are married has
not
made a choice under this section in relation to the income year.
Note:
If you make a choice under this section, you might be liable to pay an amount under section 282-18 of the
Private Health Insurance Act 2007
(Liability for excess private health insurance premium reduction or refund).
61-215(2)
If you make a choice under this section in relation to the income year:
(a)
the amount (if any) of the
*
tax offset for the income year under section
61-205
in respect of the premium or amount of the individual to whom you are married is reduced to nil; and
(b)
your tax offset for the income year under that section in respect of the premium or amount is increased by that amount.
61-215(3)
A choice under this section in relation to the income year can only be made in your
*
income tax return for the income year.
61-215(4)
A choice under this section in relation to an income year has effect for all premiums, or amounts in respect of premiums, paid during the income year.
History
S 61-215 substituted by No 26 of 2012, s 3 and Sch 1 item 5, applicable in relation to premiums, and amounts in respect of premiums, paid on and after 1 July 2012. No 26 of 2012, s 3 and Sch 1 item 48(2) contains the following application provision:
48 Application
…
(2)
To avoid doubt, a choice under section 61-215 of the
Income Tax Assessment Act 1997
, as substituted, does not have effect for a premium, or an amount in respect of a premium, paid before 1 July 2012.
S 61-215 formerly read:
SECTION 61-215 Tax offset after a person 65 years or over ceases to be covered by policy
61-215(1)
If:
(a)
at any time, the amount of a
*
tax offset in respect of premiums payable under an insurance policy (the
original policy
) was 35% or 40% of the premiums payable under the policy because a person aged 65 years or over (the
entitling person
) was insured under the original policy; and
(b)
at that time, another person (other than a dependent child) was insured under the original policy; and
(c)
the entitling person subsequently ceases to be insured under the policy;
subsections
61-210(1)
and
(2)
apply in relation to a complying health insurance policy (whether or not the original policy) under which the other person is insured (other than for the purposes of working out the
*
incentive amount) as if:
(d)
the entitling person were also insured under that policy; and
(e)
the entitling person were the same age as the age at which he or she ceased to be insured under the original policy.
61-215(2)
Subsection (1) ceases to apply if a person (other than a dependent child) who was not insured under the original policy at the time the entitling person ceased to be insured under it becomes insured under the complying health insurance policy.
61-215(3)
Subsection (1) does not apply if its application would result in the amount of the
*
tax offset under subsection
61-210(1)
or
(2)
being less than it would otherwise have been.
61-215(4)
Paragraph (1)(a) applies in relation to an amount of a
*
tax offset that is 35% or 40% of the premiums payable under an insurance policy whether the tax offset was available under this Subdivision or Subdivision
61-H
as in force before 1 July 2007.
61-215(5)
In this section:
complying health insurance policy
has the same meaning as in the
Private Health Insurance Act 2007
.
dependent child
:
(a)
has the meaning given in the
Private Health Insurance Act 2007
; and
(b)
in paragraph (1)(b), in relation to a time before 1 July 2007, includes a dependent child within the meaning of the
Private Health Insurance Incentives Act 1998
.
S 61-215 inserted by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years.
61-220
(Repealed) SECTION 61-220 How to work out the incentive amount
(Repealed by No 26 of 2012)
History
S 61-220 repealed by No 26 of 2012, s 3 and Sch 1 item 5, applicable in relation to premiums, and amounts in respect of premiums, paid on and after 1 July 2012. S 61-220 formerly read:
SECTION 61-220 How to work out the incentive amount
61-220(1)
The
incentive amount
for a complying private health insurance policy (within the meaning of the
Private Health Insurance Act 2007
) for an income year is the amount worked out under this table:
|
Incentive amount
|
|
Item
|
Number and kinds of people covered by the policy
|
Policy covers
*
hospital treatment but not
*
general treatment
|
Policy covers
*
general treatment but not
*
hospital treatment
|
Policy covers
*
hospital treatment and
*
general treatment
|
| 1 |
3 or more people |
$
350 |
$
100 |
$
450 |
|
|
| 2 |
One dependent child and one other person |
$
350 |
$
100 |
$
450 |
|
|
| 3 |
2 people neither of whom is a dependent child |
$
200 |
$
50 |
$
250 |
|
|
| 4 |
One person |
$
100 |
$
25 |
$
125 |
61-220(2)
If the amount of the premium, or the amount in respect of a premium, paid by you, or by your employer as a
*
fringe benefit for you, under the policy is for part only of the income year, the
incentive amount
is worked out using this formula:
| Amount worked out under subsection (1)
x |
Number of days in that part
of the income year
365 |
S 61-220 inserted by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years.
(Repealed) Subdivision 61-H
-
Private health insurance offset complementary to Private Health Insurance Incentives Act 1998
History
Subdiv 61-G substituted for Subdiv 61-H by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years.
Subdiv 61-H inserted by No 128 of 1998.
61-330
(Repealed) SECTION 61-330 What this Subdivision is about
(Repealed by No 32 of 2007)
History
S 61-330 repealed by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years. S 61-330 formerly read:
SECTION 61-330 What this Subdivision is about
You can choose to claim a tax offset for a premium, or an amount in respect of a premium, paid under a private health insurance policy instead of receiving a payment under Chapter 2 of the
Private Health Insurance Incentives Act 1998
S 61-330 inserted by No 128 of 1998.
(Repealed) Operative provisions
61-335
(Repealed) SECTION 61-335 Entitlement to the private health insurance tax offset
(Repealed by No 32 of 2007)
History
S 61-335 repealed by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years. S 61-335 formerly read:
SECTION 61-335 Entitlement to the private health insurance tax offset
61-335(1)
If you are an individual (other than an individual in the capacity of an employer), you are entitled to a
*
tax offset for the 1998-99 income year or a later income year if the conditions in subsections (2) and (3) are satisfied.
61-335(2)
A premium, or an amount in respect of a premium, was paid by you, or by your employer as a
*
fringe benefit for you, whether before or after the commencement of this Subdivision, under an appropriate private health insurance policy (within the meaning of the
Private Health Insurance Incentives Act 1998
) for the 1998-99 income year or a later income year.
61-335(3)
The premium, or amount in respect of a premium, was paid during the income year or, for the 1998-99 income year, before or during that year.
61-335(4)
You are also entitled to the
*
tax offset if:
(a)
you are a trustee who is liable to be assessed under section
98
of the
Income Tax Assessment Act 1936
in respect of a share of the net income of a trust estate; and
(b)
the beneficiary who is presently entitled to the share of the income of the trust estate would be entitled to the tax offset because of subsection (1).
61-335(5)
However, you are not entitled to the
*
tax offset in respect of the payment of any premium, or any amount in respect of a premium, if:
(a)
you have received an amount under Chapter 2 of the
Private Health Insurance Incentives Act 1998
in relation to the payment; or
(b)
the premium, or the amount in respect of a premium, was less than it would otherwise have been because of the operation of Chapter 3 of that Act.
Note:
In certain circumstances you can get a refund of the tax offset under Division
67
.
History
S 61-335(5) amended by No 79 of 2000.
61-335(6)
(Repealed by No 79 of 2000)
S 61-335 inserted by No 128 of 1998.
61-340
(Repealed) SECTION 61-340 Amount of the private health insurance tax offset
(Repealed by No 32 of 2007)
History
S 61-340 repealed by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years. S 61-340 formerly read:
SECTION 61-340 Amount of the private health insurance tax offset
61-340(1)
The amount of the
*
tax offset for a premium, or an amount in respect of a premium, paid under a policy for the 1998-99 income year depends upon whether or not a person was registered, or eligible to apply for registration, before 1 January 1999 under the
Private Health Insurance Incentives Act 1997
in respect of the policy for the income year.
61-340(2)
If no person was so registered or eligible to apply for registration, the amount of the
*
tax offset is 30% of the premium, or of the amount in respect of a premium, paid by you, or by your employer as a
*
fringe benefit for you, under the policy for the income year.
61-340(3)
If a person was so registered or eligible to apply for registration, the amount of the
*
tax offset is the greater of the amount worked out under paragraph (a) and the amount worked out under paragraph (b):
(a)
30% of:
(i)
the amount of the premium, or the amount in respect of a premium, paid by you, or by your employer as a
*
fringe benefit for you, under the policy for the income year; or
(ii)
if, because of the operation of the
Private Health Insurance Incentives Act 1997
, that amount was less than the amount that would otherwise have been payable
-
the amount that would otherwise have been payable; and
(b)
the incentive amount for the policy for the income year.
61-340(4)
The amount of the
*
tax offset for a premium, or an amount in respect of a premium, paid under a policy for a later income year depends upon whether or not a person was registered, or eligible to apply for registration, before 1 January 1999 under the
Private Health Insurance Incentives Act 1997
in respect of the policy for the 1998-99 income year.
61-340(5)
If no person was so registered or eligible to apply for registration, the amount of the
*
tax offset is the sum of the following amounts:
(a)
30% of the amount of the premium, or of the amount in respect of a premium, paid by you, or by your employer as a
*
fringe benefit for you, under the policy in respect of days in the later income year on which no person covered by the policy was aged 65 years or over;
(b)
35% of the amount of the premium, or of the amount in respect of a premium, paid by you, or by your employer as a
*
fringe benefit for you, under the policy in respect of days in the later income year on which:
(i)
at least one person covered by the policy was aged 65 years or over; and
(ii)
no person covered by the policy was aged 70 years or over;
(c)
40% of the amount of the premium, or of the amount in respect of a premium, paid by you, or by your employer as a
*
fringe benefit for you, under the policy in respect of days in the later income year on which at least one person covered by the policy was aged 70 years or over.
History
S 61-340(5) substituted by No 9 of 2005.
61-340(6)
If a person was so registered or eligible to apply for registration, the amount of the
*
tax offset is the greater of:
(a)
the sum of the amounts referred to in paragraphs (5)(a), (b) and (c); and
(b)
the incentive amount for the policy for the later income year.
History
S 61-340(6) substituted by No 9 of 2005.
61-340(7)
In working out an amount of a
*
tax offset for an amount paid by you, or by your employer as a
*
fringe benefit for you, under a policy, disregard any part of the amount paid that relates to a period before 1 January 1999.
61-340(8)
If, because of the operation of the
Private Health Insurance Incentives Act 1997
, an amount paid by you, or by your employer as a
*
fringe benefit for you, under a policy for a period after 31 December 1998 was less than the amount that would otherwise have been payable, the
*
tax offset in respect of the amount paid is reduced by the amount of the difference.
S 61-340 inserted by No 128 of 1998.
61-342
(Repealed) SECTION 61-342 Saving provision where a person 65 years or over ceases to be covered by policy
(Repealed by No 32 of 2007)
History
S 61-342 repealed by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years. S 61-342 formerly read:
SECTION 61-342 Saving provision where a person 65 years or over ceases to be covered by policy
61-342(1)
This section applies to a person (the
first person
) at a particular time (the
relevant time
) if:
(a)
at any time before the relevant time, the first person was covered by an appropriate private health insurance policy (the
original policy
), other than as a dependent child; and
(b)
at any time when the person was so covered, the amount of the
*
tax offset under section
61-340
was 35% or 40% of the amount of premium payable under the original policy because of the age of another person (the
entitling person
) covered by the policy; and
(c)
before the relevant time, the entitling person ceased to be covered by the original policy.
61-342(2)
If, at the relevant time:
(a)
the first person is covered by an appropriate private health insurance policy (which may be either the original policy or another policy); and
(b)
each other person (if any) covered, since the entitling person ceased to be covered by the original policy, by an appropriate private health insurance policy that also covered the first person:
(i)
is or was covered as a dependent child; or
(ii)
is a person who was covered by the original policy immediately before that cessation;
subsections
61-340(5)
and
(6)
are taken to apply (other than for the purposes of working out the incentive amount) as if the entitling person:
(c)
were covered by the policy mentioned in paragraph (a); and
(d)
were the same age as at that cessation.
61-342(3)
Subsection (2) does not apply if its application would result in the amount of the
*
tax offset under subsection
61-340(5)
or
(6)
being less than it would otherwise have been.
61-342(4)
In this section:
dependent child
has the same meaning as in the
Private Health Insurance Incentives Act 1998
.
S 61-342 inserted by No 9 of 2005.
61-345
(Repealed) SECTION 61-345 How to work out the incentive amount
(Repealed by No 32 of 2007)
History
S 61-345 repealed by No 32 of 2007, s 3 and Sch 3 item 9, applicable in relation to the 2007-2008 income year and later income years. S 61-345 formerly read:
SECTION 61-345 How to work out the incentive amount
61-345(1)
The
incentive amount
for an appropriate private health insurance policy for an income year is worked out in accordance with the following table:
|
Incentive amounts
|
|
Item
|
Number and kinds of people covered by the policy
|
Policy provides
*
hospital cover but not
*
ancillary cover
|
Policy provides
*
ancillary cover but not
*
hospital cover
|
Policy provides
*
combined cover
|
| 1 |
3 or more people |
$
350 |
$
100 |
$
450 |
|
. |
| 2 |
One dependent child and one other person |
$
350 |
$
100 |
$
450 |
|
. |
| 3 |
2 people neither of whom is a dependent child |
$
200 |
$
50 |
$
250 |
|
. |
| 4 |
One person |
$
100 |
$
25 |
$
125 |
61-345(2)
If the amount of the premium, or the amount in respect of a premium, paid by you, or by your employer as a
*
fringe benefit for you, under the appropriate private health insurance policy is for part only of the income year, the
incentive amount
is worked out using the following formula:
| |
Incentive amount
from subsection (1) |
× |
Number of days in that part
of the income year
365 |
|
S 61-345 inserted by No 128 of 1998.
(Repealed) Subdivision 61-I
-
First child tax offset (baby bonus)
History
Subdiv 61-I repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019.
Subdivision 61-I inserted by No 32 of 2002.
61-350
(Repealed) SECTION 61-350 What this Subdivision is about
(Repealed by No 49 of 2019)
History
S 61-350 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-350 formerly read:
SECTION 61-350 What this Subdivision is about
You are entitled to a tax offset for your first child, for income years up to and including the year the child turns 5, if you meet certain conditions.
The amount of the offset is usually based on your tax liability in the year before you became responsible for the child, and on a comparison between your taxable income in that year and the year you are claiming for. However, if you are a low income taxpayer, a minimum offset will generally be available.
Instead of claiming the offset yourself, you may transfer your entitlement to your spouse.
If you are entitled to a tax offset because you adopt a child, you might also be entitled to an offset if the child was in your care before the adoption.
S 61-350 amended by No 23 of 2005 and inserted by No 32 of 2002.
(Repealed) Entitlement to a first child tax offset
61-355
(Repealed) SECTION 61-355 Who is entitled to a tax offset under this section
(Repealed by No 49 of 2019)
History
S 61-355 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-355 formerly read:
SECTION 61-355 Who is entitled to a tax offset under this section
61-355(1)
You are entitled to a
*
tax offset for a child for an income year if you meet the conditions in subsection (3) at any time in the income year.
Note:
If you are entitled to a tax offset because you adopt a child, you might also be entitled to an offset if the child was in your care before the adoption (see section 61-440).
History
S 61-355(1) amended by No 23 of 2005.
61-355(2)
To meet those conditions for a child at a given time is to have a
primary entitlement
to the
*
tax offset for the child at that time.
61-355(3)
The conditions are that:
(a)
you have had a
*
child event (see section 61-360) in relation to the child (whether or not in the income year); and
(b)
section 61-365 (first child only) does not prevent you from having a
*
primary entitlement to the offset for the child; and
(c)
at the time:
(i)
the child is less than 5; and
(ii)
you are
*
legally responsible for the child; and
(iii)
the child is in your care; and
(iv)
you are an Australian resident; and
(v)
section 61-370 (another carer) does not prevent you from having a primary entitlement to the offset for the child; and
(vi)
if section 61-375 (selection rules) applies
-
you are selected by subsection (3) of that section.
S 61-355 inserted by No 32 of 2002.
61-360
(Repealed) SECTION 61-360 What is a child event
?
(Repealed by No 49 of 2019)
History
S 61-360 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-360 formerly read:
SECTION 61-360 What is a child event
?
61-360
You have a
child event
at a particular time (the
event time
) if:
(a)
you become
*
legally responsible for a child at the event time; and
Example:
Giving birth is generally an example of becoming legally responsible for a child.
(b)
the event time is on or after 1 July 2001 and before 1 July 2004; and
(c)
you are an Australian resident at the event time; and
(d)
you were not legally responsible for the child at any time before 1 July 2001; and
(e)
there is no other person who is also legally responsible for the child at the event time and who was legally responsible for the child at any time before 1 July 2001.
S 61-360 amended by No 59 of 2004 and inserted by No 32 of 2002.
61-365
(Repealed) SECTION 61-365 First child only
(Repealed by No 49 of 2019)
History
S 61-365 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-365 formerly read:
SECTION 61-365 First child only
61-365
You cannot have a
*
primary entitlement to a
*
tax offset under section 61-355 for a child if:
(a)
you have had a
*
child event in relation to another child that was earlier than the child event you had for the first-mentioned child; and
(b)
you meet, or met at any time, the conditions in subparagraphs 61-355(3)(c)(i) to (iv) for that other child.
S 61-365 amended by No 23 of 2005 and inserted by No 32 of 2002.
61-370
(Repealed) SECTION 61-370 Another carer with entitlement for another child
(Repealed by No 49 of 2019)
History
S 61-370 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-370 formerly read:
SECTION 61-370 Another carer with entitlement for another child
61-370
You cannot have a
*
primary entitlement to a
*
tax offset under section 61-355 for a child at a time if:
(a)
at that time:
(i)
another person is
*
legally responsible for the child; and
(ii)
the child is in the other person
'
s care; and
(b)
the other person has, or had at any time, a primary entitlement to a tax offset for another child.
S 61-370 amended by No 23 of 2005 and inserted by No 32 of 2002.
61-375
(Repealed) SECTION 61-375 Selection rules
(Repealed by No 49 of 2019)
History
S 61-375 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-375 formerly read:
SECTION 61-375 Selection rules
61-375(1)
This section applies if the conditions in subsection 61-355(3) (other than subparagraph (c)(vi)) are met by more than one person at the same time in relation to the same child.
61-375(2)
Only one of those persons can have a
*
primary entitlement to a
*
tax offset under section 61-355 for the child at that time.
History
S 61-375(2) amended by No 23 of 2005.
61-375(3)
The person who gets the
*
primary entitlement to the offset at that time isselected in the following order of priority:
(a)
the natural mother;
(b)
if only one is the adoptive mother
-
the adoptive mother;
(c)
if only one is a woman
-
the woman;
(d)
the natural father;
(e)
if only one is the adoptive father
-
the adoptive father;
(f)
the person determined by the Commissioner, having regard to:
(i)
any agreement between the persons; and
(ii)
any other matters that the Commissioner considers relevant.
S 61-375 inserted by No 32 of 2002.
61-380
(Repealed) SECTION 61-380 Special rules for death of first child
(Repealed by No 49 of 2019)
History
S 61-380 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-380 formerly read:
SECTION 61-380 Special rules for death of first child
Child dies aged less than 5
61-380(1)
This section applies if your
*
primary entitlement to a
*
tax offset under section 61-355 for a child ends because the child dies aged less than 5.
History
S 61-380(1) amended by No 23 of 2005.
Special extension of time in year of death
61-380(2)
Your
*
primary entitlement is extended until the end of the income year in which the death occurred.
Limit on application of first child only rule
61-380(3)
Section 61-365 does not prevent you from having a
*
primary entitlement to a
*
tax offset for another child after the end of the income year in which the death occurred.
S 61-380 inserted by No 32 of 2002.
(Repealed) Transferring an entitlement
61-385
(Repealed) SECTION 61-385 You may transfer your entitlement to a tax offset
(Repealed by No 49 of 2019)
History
S 61-385 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-385 formerly read:
SECTION 61-385 You may transfer your entitlement to a tax offset
61-385(1)
If you are entitled to a
*
tax offset for a child for an income year under section 61-355 or 61-440, you may transfer that entitlement to another person.
History
S 61-385(1) amended by No 23 of 2005.
61-385(1A)
However, if you are entitled to a
*
tax offset for a child for a particular income year under both of sections 61-355 and 61-440, you may only transfer one of those entitlements to another person if you also transfer the other entitlement to the same person.
History
S 61-385(1A) inserted by No 23 of 2005.
61-385(2)
A transfer has effect only if:
(a)
the transferee was your
*
spouse at all times when you had a
*
primary entitlement for the child for the income year; and
(b)
the transferee does not have a primary entitlement for that, or another, child for any time during the income year; and
(c)
you have not already claimed the
*
tax offset for the income year; and
(d)
you make the transfer after the end of the income year; and
(e)
the transfer is in the
*
approved form.
S 61-385 inserted by No 32 of 2002.
61-390
(Repealed) SECTION 61-390 Transfer is irrevocable
(Repealed by No 49 of 2019)
History
S 61-390 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-390 formerly read:
SECTION 61-390 Transfer is irrevocable
61-390
A transfer cannot be changed or revoked.
S 61-390 inserted by No 32 of 2002.
61-395
(Repealed) SECTION 61-395 Transferor is not entitled to tax offset
(Repealed by No 49 of 2019)
History
S 61-395 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July2019. S 61-395 formerly read:
SECTION 61-395 Transferor is not entitled to tax offset
61-395
You are no longer yourself entitled to a
*
tax offset for a child for an income year if you transfer the entitlement under section 61-385 for that income year.
S 61-395 inserted by No 32 of 2002.
61-400
(Repealed) SECTION 61-400 Transferee is entitled to tax offset
(Repealed by No 49 of 2019)
History
S 61-400 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-400 formerly read:
SECTION 61-400 Transferee is entitled to tax offset
61-400
If an entitlement to a
*
tax offset is transferred under section 61-385, the transferee is entitled to the offset for the income year.
S 61-400 inserted by No 32 of 2002.
(Repealed) Claiming a first child tax offset
61-405
(Repealed) SECTION 61-405 How to claim a tax offset for a child
(Repealed by No 49 of 2019)
History
S 61-405 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-405 formerly read:
SECTION 61-405 How to claim a tax offset for a child
61-405
If you are entitled under this Subdivision to a
*
tax offset for an income year, you may claim the offset only:
(a)
in the
*
income tax return you give the Commissioner, before 1 July 2014, for the income year for which you are entitled to the offset; or
(b)
if you are not required to give the Commissioner a return for the income year
-
in the
*
approved form given to the Commissioner before 1 July 2014.
S 61-405 amended by No 97 of 2008, s 3 and Sch 3 item 84, by substituting
"
*
income tax return
"
for
"
return
"
in para (a), effective 3 October 2008.
S 61-405 amended by No 59 of 2004 and inserted by No 32 of 2002.
61-410
(Repealed) SECTION 61-410 Claim is irrevocable
(Repealed by No 49 of 2019)
History
S 61-410 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-410 formerly read:
SECTION 61-410 Claim is irrevocable
61-410
A claim for a
*
tax offset under this Subdivision cannot be revoked.
S 61-410 inserted by No 32 of 2002.
(Repealed) Amount of a first child tax offset
61-415
(Repealed) SECTION 61-415 Formula for working out amount of tax offset
(Repealed by No 49 of 2019)
History
S 61-415 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-415 formerly read:
SECTION 61-415 Formula for working out amount of tax offset
61-415
The amount of your
*
tax offset under sections 61-355 and 61-440 for an income year is the amount (rounded up to the nearest whole dollar) worked out using the formula:
| |
Entitlement amount |
× |
Total of the entitlement days
365 |
|
where:
entitlement amount
has the meaning given by section 61-420.
total of the entitlement days
has the meaning given by section 61-425.
S 61-415 amended by No 23 of 2005 and inserted by No 32 of 2002.
61-420
(Repealed) SECTION 61-420 Component of formula
-
entitlement amount
(Repealed by No 49 of 2019)
History
S 61-420 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-420 formerly read:
SECTION 61-420 Component of formula
-
entitlement amount
61-420(1)
In section 61-415, the
entitlement amount
is the amount (rounded up to the nearest whole dollar) worked out using the formula:
where:
base amount
is the lesser of:
(a)
one-fifth of your basic income tax liability for your
*
base year (as worked out in step 2 of the method statement in subsection 4-10(3)); and
(b)
$
2,500.
61-420(2)
However, if:
(a)
the current income year is not your
*
base year; and
(b)
your taxable income for the current income year is not more than
$
25,000; and
(c)
the amount worked out under subsection (1) is less than
$
500;
then the
entitlement amount
is
$
500.
61-420(3)
If the amount worked out under subsection (1) is negative, then, unless subsection (2) applies, the
entitlement amount
is nil.
S 61-420 inserted by No 32 of 2002.
61-425
(Repealed) SECTION 61-425 Component of formula
-
total of the entitlement days
(Repealed by No 49 of 2019)
History
S 61-425 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-425 formerly read:
SECTION 61-425 Component of formula
-
total of the entitlement days
61-425(1)
In section 61-415, the
total of the entitlement days
is the total number of days for which the primary person (see subsection (3)) had a
*
primary entitlement to a
*
tax offset under either or both of sections 61-355 and 61-440 for the child for the income year.
History
S 61-425(1) amended by No 23 of 2005.
61-425(2)
In addition, if:
(a)
the relevant
*
child event happened in the primary person
'
s
*
base year; and
(b)
the primary person did not transfer the entitlement under section 61-385 for the primary person
'
s base year; and
(c)
the relevant child turns 5 during the income year;
the
total of the entitlement days
also includes the number of days in the base year for which the primary person had a primary entitlement to a
*
tax offset under either or both of sections 61-355 and 61-440 for the child.
History
S 61-425(2) amended by No 23 of 2005.
61-425(3)
In this section, the
primary person
is:
(a)
if you are claiming the offset as a person who has a
*
primary entitlement to the offset for the child
-
you; or
(b)
if you are claiming the offset as a transferee under section 61-400
-
the transferor.
S 61-425 inserted by No 32 of 2002.
61-430
(Repealed) SECTION 61-430 What is your base year
?
(Repealed by No 49 of 2019)
History
S 61-430 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-430 formerly read:
SECTION 61-430 What is your base year
?
Primary entitlement
61-430(1)
Your
base year
for an entitlement to a
*
tax offset for a child under section 61-355 is:
(a)
if you were an Australian resident at any time in the income year just before the income year in which the
*
child event for the child happened (the
event year
)
-
the income year just before the event year; and
(b)
otherwise
-
the event year.
Note:
If a child is in your care before you adopt the child, your base year can instead be the year the child was first in your care or the year before that (see section 61-450).
History
S 61-430(1) amended by No 23 of 2005.
61-430(2)
If paragraph (1)(a) applies to you, you may choose the event year to be your base year, in the
*
approved form. A choice cannot be revoked.
61-430(3)
A choice cannot be made:
(a)
after you have claimed the
*
tax offset under section 61-355 for any income year; or
(b)
after you have transferred your entitlement to the tax offset under section 61-355 for any income year.
History
S 61-430(3) substituted by No 23 of 2005.
Transferred entitlement
61-430(4)
Your
base year
for an entitlement transferred to you under section 61-385 is the income year before the first income year for which the entitlement for the child was transferred to you.
S 61-430 inserted by No 32 of 2002.
(Repealed) Additional tax offset if a child is in your care before you legally adopt the child
61-440
(Repealed) SECTION 61-440 Additional tax offset if a child is in your care before you legally adopt the child
(Repealed by No 49 of 2019)
History
S 61-440 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-440 formerly read:
SECTION 61-440 Additional tax offset if a child is in your care before you legally adopt the child
61-440(1)
You are entitled to a
*
tax offset for a child for an income year if:
(a)
you meet the conditions in paragraph (3)(a) at any time in the income year; and
(b)
you meet the conditions in paragraphs (3)(b), (c) and (d).
Note:
You are not entitled to a tax offset under this section if section 61-455 applies to you.
61-440(2)
To meet those conditions for a child at a given time is to have a
primary entitlement
to the
*
tax offset for the child at that time.
61-440(3)
The conditions are that:
(a)
at the time:
(i)
the child is less than 5; and
(ii)
the child is in your care (but you are not legally responsible for the child); and
(iii)
you are an Australian resident; and
(b)
you meet the conditions in subsection 61-355(3) in relation to the child in that year or a later income year; and
(c)
you have become legally responsible for the child by adopting the child; and
(d)
the time is on or after 1 July 2001 and before 1 July 2004.
Note:
See section 61-445 for when a child is first in your care.
S 61-440 inserted by No 23 of 2005.
61-445
(Repealed) SECTION 61-445 When a child is first in your care
(Repealed by No 49 of 2019)
History
S 61-445 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-445 formerly read:
SECTION 61-445 When a child is first in your care
61-445
For the purposes of sections 61-440 and 61-450, a child is first in your care on the date evidenced in writing by a court or relevant department of the relevant State or Territory.
S 61-445 inserted by No 23 of 2005.
61-450
(Repealed) SECTION 61-450 What is your base year if a child is in your care before you legally adopt the child
?
(Repealed by No 49 of 2019)
History
S 61-450 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-450 formerly read:
SECTION 61-450 What is your base year if a child is in your care before you legally adopt the child
?
Your base year can relate to a year during which a child was in your care before you adopted the child
61-450(1)
This section defines your
base year
if you are entitled to a
*
tax offset for a child under section 61-440 (which is where a child is in your care before you legally adopt the child).
Primary entitlement
61-450(2)
Your
base year
for a
*
tax offset under sections 61-355 and 61-440 is:
(a)
if you were an Australian resident at any time in the income year (the
previous income year
) just before the income year in which the child was first in your care
-
the later of the following years:
(i)
the previous income year;
(ii)
the income year commencing on 1 July 2000; and
(b)
otherwise
-
the later of the following years:
(i)
the earliest income year in which you were an Australian resident and the child was in your care;
(ii)
the income year commencing on 1 July 2001.
Note:
See section 61-445 for when a child is first in your care.
61-450(3)
If paragraph (2)(a) applies to you, you may choose, in the
*
approved form, the later of the following years to be your base year:
(a)
the year the child was first in your care;
(b)
the income year commencing on 1 July 2001.
A choice cannot be revoked.
61-450(4)
A choice cannot be made:
(a)
after you have claimed the
*
tax offset under section 61-440 for any income year; or
(b)
after you have transferred your entitlement to the tax offset under section 61-440 for any income year.
Transferred entitlement
61-450(5)
Your
base year
for an entitlement transferred to you under section 61-385 is the income year before the first income year for which the entitlement for the child was transferred to you.
S 61-450 inserted by No 23 of 2005.
61-455
(Repealed) SECTION 61-455 Old Subdivision applies if you would be worse off
(Repealed by No 49 of 2019)
History
S 61-455 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-455 formerly read:
SECTION 61-455 Old Subdivision applies if you would be worse off
61-455
This Subdivision as in force on 30 June 2004 (instead of this Subdivision as amended by Schedule 10 to the
Tax Laws Amendment (2004 Measures No 6) Act 2005
) continues to apply to you if the amount of all
*
tax offsets to which you would be entitled under this Subdivision as in force on that date is more than the amount of all tax offsets to which you would be entitled under the amended Subdivision.
Note:
The effect of this is that:
(a) you are only entitled to a tax offset in respect of days for which you are legally responsible for the child (and not days during which the child is in your care); and
(b) your base year is the income year in which the child event happened or the year before.
S 61-455 inserted by No 23 of 2005.
(Repealed) Subdivision 61-IA
-
Child care tax offset
History
Subdiv 61-IA repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019.
Subdiv 61-IA inserted by No 160 of 2005.
61-460
(Repealed) SECTION 61-460 What this Subdivision is about
(Repealed by No 49 of 2019)
History
S 61-460 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-460 formerly read:
SECTION 61-460 What this Subdivision is about
You are entitled to a tax offset for an income year for child care fees if you meet certain conditions.
The amount of the offset is 30% of the difference between the amounts for each child, in the previous year, of child care fees incurred and child care benefit entitlement. This is subject to an indexed cap of
$
4,000 per child.
If the amount of the tax offset exceeds the amount of your income tax liability, the excess may be transferred to your spouse as a tax offset.
S 61-460 inserted by No 160 of 2005.
(Repealed) Operative provisions
61-465
(Repealed) SECTION 61-465 Object of this Subdivision
(Repealed by No 49 of 2019)
History
S 61-465 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-465 formerly read:
SECTION 61-465 Object of this Subdivision
61-465
The object of this Subdivision is to provide a
*
tax offset to assist families with the cost of child care.
S 61-465 inserted by No 160 of 2005.
(Repealed) Entitlement to the child care tax offset
61-470
(Repealed) SECTION 61-470 Who is entitled to the tax offset
(Repealed by No 49 of 2019)
History
History
S 61-470(3) amended by No 13 of 2006.
S 61-470 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-470 formerly read:
SECTION 61-470 Who is entitled to the tax offset
61-470(1)
You are entitled to a
*
tax offset for an income year ending before 1 July 2007 (the
child care offset year
) for
*
approved child care provided in the previous income year (the
child care base year
) if:
(a)
you are an individual; and
(b)
there is at least 1
*
child care base week for you and a particular child in the child care base year.
Example:
If there is at least 1 child care base week for you and a child in the 2004-2005 income year (the child care base year), you are entitled to a tax offset for the child for the 2005-2006 income year (the child care offset year).
History
S 61-470(1) amended by No 113 of 2007, s 3 and Sch 1 item 22, by inserting
"
ending before 1 July 2007
"
after
"
for an income year
"
, effective 1 July 2007.
61-470(2)
A week is a
child care base week
for you and a particular child in the child care base year if:
(a)
the week starts on a Monday in the child care base year (whether or not it finishes in the child care base year); and
(b)
you are
*
entitled to child care benefit for
*
approved child care provided for the child in the week; and
(c)
one or more of the following limits applies under Subdivision G of Division 4 of Part 3 of the
A New Tax System (Family Assistance) Act 1999
to your
*
entitlement to child care benefit for that week:
(i)
the 50 hour limit (see section 54 of that Act);
(ii)
the more than 50 hour limit (see section 55 of that Act);
(iii)
the 24 hour care limit for a particular session (or sessions) of care (see section 56 of that Act).
Note:
If one of the paragraph (c) limits applies, you satisfy the paragraph (c) condition even if you have not used approved child care for the child during the week up to the full extent of the limit.
61-470(3)
If you are
*
entitled to child care benefit subject to a limit of only 24 hours for a week under subsection 53(3) of the
A New Tax System (Family Assistance) Act 1999
, the condition mentioned in paragraph (2)(c) is not satisfied for the week.
History
S 61-470(3) amended by No 13 of 2006, s 3 and Sch 3 item 1, by substituting
"
24
"
for
"
20
"
, applicable in relation to assessments for income years that start on or after 1 July 2007.
61-470(4)
The 50 hour limit is taken, for the purposes of paragraph (2)(c), to apply to your entitlement for child care benefit for the week if it would have applied but for the fact that you failed to meet the requirements of paragraph 17A(1)(b) of the
A New Tax System (Family Assistance) Act 1999
in relation to the week.
S 61-470(4) inserted by No 13 of 2006, s 3 and Sch 3 item 2, applicable in relation to assessments for income years that start on or after 1 July 2007.
S 61-470 inserted by No 160 of 2005.
61-475
(Repealed) SECTION 61-475 Meaning of approved child care
(Repealed by No 49 of 2019)
History
S 61-475 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-475 formerly read:
SECTION 61-475 Meaning of
approved child care
61-475(1)
Approved child care
, for a particular child, is careprovided for the child by a child care service that is approved under section 195 of the
A New Tax System (Family Assistance) (Administration) Act 1999
.
61-475(2)
Approved child care
is also taken to have been provided by such a child care service for the child during a period of absence from care if section 10 or 10A of the
A New Tax System (Family Assistance) Act 1999
applies to the period of absence.
Note:
If a child is absent from care during a period for which child care fees are incurred for the child, but neither of sections 10 or 10A of the
A New Tax System (Family Assistance) Act 1999
apply to the period of absence,
approved child care
would not be taken to have been provided for the child. As a result, child care fees incurred for the child during the period would not count as
approved child care fees
for which the child care tax offset is payable (see sections 61-485 and 61-490).
S 61-475 inserted by No 160 of 2005.
61-480
(Repealed) SECTION 61-480 Meaning of entitled to child care benefit and entitlement to child care benefit
(Repealed by No 49 of 2019)
History
S 61-480 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-480 formerly read:
SECTION 61-480 Meaning of
entitled to child care benefit
and
entitlement to child care benefit
61-480(1)
You are
entitled to child care benefit
for
*
approved child care for a child as provided in this section, and not otherwise. The amount of your
entitlement to child care benefit
for the care is as provided in this section, and not otherwise.
Note:
Child care benefit is a benefit provided for by the
A New Tax System (Family Assistance) Act 1999
.
General rule
-
actual determination of entitlement must have been made
61-480(2)
You are only entitled to child care benefit for the care if you are so entitled because of a determination made under section 51B or 52E of the
A New Tax System (Family Assistance) (Administration) Act 1999
. The amount of your entitlement to child care benefit for the care is the amount worked out under that Act by reference to that determination.
Entitlement based on fee reductions under a determination of conditional entitlement
61-480(3)
However, if:
(a)
a determination (the
conditional determination
) has been made under section 50F of the
A New Tax System (Family Assistance) (Administration) Act 1999
that you are conditionally eligible for child care benefit by fee reduction for the care; and
(b)
under section 219A of that Act as it applies in relation to the determination, fees for the care have been reduced;
you are, subject to subsections (4) and (5), taken to be entitled to child care benefit for the care. The amount of your entitlement to child care benefit for the care is the amount of the reduction.
61-480(4)
Despite subsection (3), if:
(a)
a determination (the
final determination
) is subsequently made under section 51B of the
A New Tax System (Family Assistance) (Administration) Act 1999
of your entitlement to be paid child care benefit by fee reduction for the care; and
(b)
the amount (the
final determination amount
) of your entitlement to child care benefit for the care, as worked out by reference to the final determination, differs from the amount of the reduction referred to in paragraph (3)(b);
the amount of your entitlement to child care benefit for the care is taken to be, and always to have been, the final determination amount.
61-480(5)
Despite subsection (3), if a determination is subsequently made under section 51C of the
A New Tax System (Family Assistance) (Administration) Act 1999
that you are not entitled to be paid child care benefit by fee reduction for the care, you are taken not to be, and never to have been, entitled to be paid any child care benefit for the care.
Entitlement does not end with receipt
61-480(6)
Inapplying this Act at a particular time in relation to yourself and the care, the fact that you have, by that time, received some or all of your entitlement to child care benefit for the care does not mean that you are no longer to be regarded as being entitled to child care benefit for the care.
Later determinations, variations and substitutions to be taken into account
61-480(7)
If, after applying this Act at a particular time in relation to yourself and the care, a determination mentioned in this section is made or varied, or is set aside and a new determination substituted, the question of your entitlement to child care benefit for the care is to be redetermined taking account of the making, variation or substitution.
S 61-480 inserted by No 160 of 2005.
(Repealed) Amount of the child care tax offset
61-485
(Repealed) SECTION 61-485 Amount of the child care tax offset
(Repealed by No 49 of 2019)
History
S 61-485 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-485 formerly read:
SECTION 61-485 Amount of the child care tax offset
61-485
The amount of your
*
tax offset for a child care offset year is worked out in this way:
Method statement
Step 1.
For each child in relation to whom you are entitled to the
*
tax offset for the child care offset year, work out amounts in accordance with steps 2, 3 and 4.
Step 2.
Work out the total amount of your
*
approved child care fees for the child in each
*
child care base week for you and the child in the child care base year.
Step 3.
Work out the total amount of your
*
entitlement to child care benefit for
*
approved child care for the child in each
*
child care base week for you and the child in the child care base year.
Step 4.
Work out the lesser of the following amounts (the
child offset
) for the child:
(a) the amount worked out using the formula:
| 30%
×
(Step 2 amount
−
Step 3 amount) |
(b) the
*
child care offset limit for the child care base year.
Step 5.
Total the child offsets for each of those children. The result is the amount of your
*
tax offset for the child care offset year.
S 61-485 inserted by No 160 of 2005.
61-490
(Repealed) SECTION 61-490 Component of formula
-
approved child care fees
(Repealed by No 49 of 2019)
History
S 61-490 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-490 formerly read:
SECTION 61-490 Component of formula
-
approved child care fees
General rule
-
approved child care fees for a child care base week for you and a child
61-490(1)
The amount of your
approved child care fees
for a child for a
*
child care base week for you and the child is the amount of fees for
*
approved child care for the child during the week that are incurred by:
(a)
you; or
(b)
your partner, within the meaning of the
A New Tax System (Family Assistance) Act 1999
, during the week.
Subject to subsection (2), it does not matter whether you are
*
entitled to child care benefit for all of that care.
Special rule if the week is also a child care base week for your partner and the child
61-490(2)
If the
*
child care base week is also a child care base week for your partner and the child, your approved child care fees for the week do not include any fees incurred by your partner for
*
approved child care, for the child in the week, for which you are not
*
entitled to child care benefit.
If fee reduction applies, count unreduced amount of fees
61-490(3)
If fees for
*
approved child care have been reduced under section 219A of the
A New Tax System (Family Assistance) (Administration) Act 1999
, then for this section, a reference to the fees incurred for the care is taken to be a reference to the fees that would have been incurred for the care if they had not been so reduced.
S 61-490 inserted by No 160 of 2005.
61-495
(Repealed) SECTION 61-495 Component of formula
-
child care offset limit
(Repealed by No 49 of 2019)
History
S 61-495 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-495 formerly read:
SECTION 61-495 Component of formula
-
child care offset limit
61-495(1)
The
child care offset limit
for the 2004-2005 child care base year is
$
4,000. The limit is indexed annually.
Note:
Subdivision 960-M shows you how to index amounts.
61-495(2)
In applying the indexation formula in subsection 960-275(1) to determine the child care offset limit for the 2005-2006 child care base year or a later child care base year, the relevant financial year is the child care base year rather than the child care offset year for which the offset is being calculated.
S 61-495 inserted by No 160 of 2005.
(Repealed) Transfer of entitlement to unused balance of child care tax offset
61-496
(Repealed) SECTION 61-496 Entitlement to transfer
(Repealed by No 49 of 2019)
History
History
S 61-496 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-496 formerly read:
SECTION 61-496 Entitlementto transfer
61-496(1)
You may transfer your entitlement to so much of your
*
tax offset as is equal to the excess to the individual who was your
*
spouse as at the last day of the child care offset year.
Note:
The excess part of a tax offset is worked out under Division 63.
61-496(2)
If you make a transfer:
(a)
the transferee is entitled to the transferred part of the
*
tax offset for the child care offset year; and
(b)
you are no longer entitled to the transferred part of the tax offset.
61-496(3)
A transfer cannot be revoked.
61-496(4)
If you die during the child care offset year, the reference to your
*
spouse in subsection (1) is taken to be a reference to your spouse just before your death.
S 61-496 substituted by
No 58 of 2006
, s 3 and Sch 7 item 62, applicable to assessments for the 2006-07 income year and later income years. S 61-496 formerly read:
SECTION 61-496 ENTITLEMENT TO TRANSFER
61-496(1)
This section applies if the amount of
*
tax offset for a child care offset year to which you are entitled under section
61-470
exceeds the amount of income tax that you would have to pay for the year if:
(a)
you had not got the tax offset; and
(b)
you had not got any tax offsets that are of a higher priority under subsection
65-25(2)
.
61-496(2)
You may transfer your entitlements to so much of the
*
tax offset as is equal to the excess to an individual who was your
*
spouse on the last day of the child care offset year, subject to subsection (5).
61-496(3)
If you make a transfer:
(a)
the transferee is entitled to so much of the
*
tax offset for the child care offset year as is equal to the excess; and
(b)
you are no longer entitled to so much of the tax offset as is equal to the excess.
61-496(4)
A transfer cannot be revoked.
61-496(5)
If you die during the child care offset year, the reference to your
*
spouse in subsection (2) is taken to be a reference to your spouse just before your death.
S 61-496 inserted by No 160 of 2005.
61-497
(Repealed) SECTION 61-497 Form of transfer
(Repealed by No 49 of 2019)
History
History
S 61-497(1) amended by
No 58 of 2006
.
S 61-497 repealed by No 49 of 2019, s 3 and Sch 4 item 76, effective 1 July 2019. S 61-497 formerly read:
SECTION 61-497 Form of transfer
61-497(1)
A transfer has effect only if you have applied for it in the
*
approved form.
History
S 61-497(1) amended by
No 58 of 2006
, s 3 and Sch 7 item 63, by substituting
"
you have applied for it
"
for
"
it is
"
, applicable to assessments for the 2006-07 income year and later income years.
61-497(2)
The
*
approved form must require the inclusion of:
(a)
your
*
tax file number; and
(b)
the tax file number of the transferee; and
(c)
the transferee
'
s signed consent to:
(i)
the transfer; and
(ii)
the disclosure of his or her tax file number in the form.
61-497(3)
Subsection (2) does not limit what may be required by the
*
approved form.
S 61-497 inserted by No 160 of 2005.
(Repealed) Subdivision 61-J
-
25% entrepreneurs
'
tax offset
History
Subdiv 61-J repealed by No 23 of 2012, s 3 and Sch 1 item 3, applicable in relation to the 2012-13 income year and later income years. Subdiv 61-J formerly read:
Subdivision 61-J
-
25% entrepreneurs
'
tax offset
SECTION 61-500 What this Subdivision is about
This Subdivision provides a 25% tax offset on your income tax liability related to the business income of a small business entity with aggregated turnover of less than
$
75,000.
Your entitlement to the offset varies depending on what kind of entity you are. The amount of your offset varies depending on:
(a) whether your aggregated turnover is
$
50,000 or less or is more than
$
50,000; and
(b) if you are an individual
-
whether you (and your spouse, if you have a spouse) have significant income from sources other than your small business.
You may be entitled to more than 1 tax offset. For example, if you are an individual running your own small business, you may be entitled to a tax offset under section
61-505
. If you are also a beneficiary of a trust that is a small business entity, you may be entitled to a tax offset under section
61-520
.
History
S 61-500 amended by No 56 of 2010, s 3 and Sch 4 item 1, by substituting the para beginning with
"
Your entitlement
"
, applicable in relation to assessments for income years that commence on or after 1 July 2009. The para formerly read:
Your entitlement to the offset varies depending on what kind of entity you are. The amount of your offset varies depending on whether your aggregated turnover is
$
50,000 or less or is more than
$
50,000.
S 61-500 amended by
No 80 of 2007
, s 3 and Sch 3 items 121 to 124, by substituting
"
small business entity with aggregated turnover
"
for
"
business in the simplified tax system with annual group turnover
"
, substituting
"
your aggregated turnover
"
for
"
the annual group turnover
"
, substituting
"
individual running your own small business
"
for
"
individual STS taxpayer running your own business
"
and substituting
"
a small business entity
"
for
"
an STS taxpayer
"
, applicable in relation to the 2007-08 income year and later income years.
S 61-500 inserted by No 41 of 2005.
Operative provisions
SECTION 61-505 25% entrepreneurs
'
tax offset: individual or company
Entitlement
61-505(1)
You are entitled to a
*
tax offset for an income year if:
(a)
you are an individual or a company; and
(b)
you are a
*
small business entity for the year; and
(c)
your
*
aggregated turnover for the year is less than
$
75,000; and
(d)
you have
*
net small business income for the year.
History
S 61-505(1) amended by
No 80 of 2007
, s 3 and Sch 3 items 125 to 127, by substituting
"
a
*
small business entity
"
for
"
an
*
STS taxpayer
"
in para (b), substituting
"
*
aggregated turnover
"
for
"
*
STS group turnover
"
in para (c) and substituting
"
*
net small business income
"
for
"
*
net STS income
"
in para (d), applicable in relation to the 2007-08 income year and later income years.
Amount
61-505(2)
The amount of your
*
tax offset is worked out in this way:
Method statement
Step 1:
Work out your taxable income for the income year.
Step 2:
Work out 25% of your basic income tax liability for the year (as worked out in step 2 of the method statement in subsection
4-10(3)
).
Step 3:
Work out the percentage (the
small business percentage
) using the formula:
| |
Your
*
net small business
income for the year
Your taxable income for the year |
× |
100 |
If that percentage is more than 100%, the small business percentage is 100%.
Step 4:
If your
*
aggregated turnover for the year is
$
50,000 or less, multiply the amount at step 2 by the small business percentage: the result is the amount of your
*
tax offset.
Note:
If you are an individual, section
61-523
may reduce the amount of the tax offset.
Step 5:
If your
*
aggregated turnover for the year is more than
$
50,000, work out the fraction (the
small business phase-out fraction
) using the formula:
| |
$
75,000
−
Your
*
aggregated turnover for the year
|
| |
$
25,000 |
The amount of your
*
tax offset is worked out using the formula:
| |
Step 2 amount
×
Small business percentage
×
Small business phase-out fraction |
Note:
If you are an individual, section
61-523
may reduce the amount of the tax offset.
Example:
A company runs a local sports business. The company is a small business entity for the year. The company
'
s aggregated turnover for the year is
$
50,000, the company
'
s net small business income for the year is
$
40,000 and the company
'
s taxable income for the year is
$
80,000.
The company is entitled to a tax offset.
The amount of the offset is worked out in this way:
The step 1 amount is
$
80,000.
The step 2 amount is
$
6,000: 25% of the company
'
s basic income tax liability of
$
24,000 (
$
80,000 multiplied by the 30% company tax rate).
The step 3 small business percentage is:
$
40,000
$
80,000 |
× |
100 |
= |
50% |
The amount of the company
'
s tax offset (step 4) is:
History
S 61-505(2) amended by No 56 of 2010, s 3 and Sch 4 items 2 and 3, by inserting the note at the end of steps 4 and 5 of the method statement, applicable in relation to assessments for income years that commence on or after 1 July 2009.
S 61-505(2) amended by
No 80 of 2007
, s 3 and Sch 3 items 128 to 132, by substituting steps 3, 4 and 5 of the method statement, substituting
"
a small business entity
"
for
"
an STS taxpayer
"
in the example, substituting
"
aggregated turnover
"
for
"
STS group turnover
"
in the example, substituting
"
net small business income
"
for
"
net STS income
"
in the example and substituting
"
small business percentage
"
for
"
STS percentage
"
in the example, applicable in relation to the 2007-08 income year and later income years. Steps 3, 4 and 5 of the method statement formerly read:
Step 3: ... Work out the percentage (the
STS percentage
) using the formula:
Your
*
net STS income for the year
Your taxable income for the year
|
× |
100 |
If that percentage is more than 100%, the STS percentage is 100%.
Step 4: ... If your
*
STS group turnover for the year is
$
50,000 or less, multiply the amount at step 2 by the STS percentage: the result is the amount of your
*
tax offset.
Step 5: ... If your
*
STS group turnover for the year is more than
$
50,000, work out the fraction (the
STS phase-out fraction
) using the formula:
$
75,000
−
Your
*
STS group turnover for the year
$
25,000 |
The amount of your
*
tax offset is worked out using the formula:
| Step 2 amount |
× |
STS
percentage |
× |
STS
phase-out
fraction |
History
S 61-505 inserted by No 41 of 2005.
SECTION 61-510 25% entrepreneurs
'
tax offset: partner in a partnership
Entitlement
61-510(1)
You are entitled to a
*
tax offset for an income year if:
(a)
you are a partner in a partnership during the year; and
(b)
the partnership is a
*
small business entity for the year; and
(c)
the partnership
'
s
*
aggregated turnover for the year is less than
$
75,000; and
(d)
the partnership has
*
net small business income for the year; and
(e)
your assessable income for the year includes a share (
your net small business income share
) of that net small business income.
History
S 61-510(1) amended by
No 80 of 2007
, s 3 and Sch 3 items 133 to 136, by substituting
"
a
*
small business entity
"
for
"
an
*
STS taxpayer
"
in para (b), substituting
"
*
aggregated turnover
"
for
"
*
STS group turnover
"
in para (c), substituting
"
*
net small business income
"
for
"
*
net STS income
"
in para (d) and substituting all the words after
"
a share
"
in para (e), applicable in relation to the 2007-08 income year and later income years. The words after
"
a share
"
in para (e) formerly read:
(
your net STS income share
) of that net income.
Amount
61-510(2)
The amount of your
*
tax offset is worked out in this way:
Method statement
Step 1:
Work out your taxable income for the income year.
Step 2:
Work out 25% of your basic income tax liability for the year (as worked out in step 2 of the method statement in subsection
4-10(3)
).
Step 3:
Work out the percentage (the
small business percentage
) using the formula:
| |
Your net small business income
share
Your taxable income for the year |
× |
100 |
If that percentage is more than 100%, the small business percentage is 100%.
Step 4:
If the partnership
'
s
*
aggregated turnover for the year is
$
50,000 or less, multiply the amount at step 2 by the small business percentage: the result is the amount of your
*
tax offset.
Note:
If you are an individual, section
61-523
may reduce the amount of the tax offset.
Step 5:
If the partnership
'
s
*
aggregated turnover for the year is more than
$
50,000, work out the fraction (the
small business phase-out fraction
) using the formula:
| |
$
75,000
−
The partnership
'
s
*
aggregated turnover
for the year
|
| |
$
25,000 |
The amount of your
*
tax offset is worked out using the formula:
| |
Step 2 amount
×
Small business percentage
×
Small business phase-out fraction |
Note:
If you are an individual, section
61-523
may reduce the amount of the tax offset.
History
S 61-510(2) amended by No 56 of 2010, s 3 and Sch 4 items 4 and 5, by inserting the note at the end of steps 4 and 5 of the method statement, applicable in relation to assessments for income years that commence on or after 1 July 2009.
S 61-510(2) amended by
No 80 of 2007
, s 3 and Sch 3 item 137, by substituting steps 3 , 4 and 5 of the method statement, applicable in relation to the 2007-08 income year and later income years. Steps 3, 4 and 5 of the method statement formerly read:
Step 3: ... Work out the percentage (the
STS percentage
) using the formula:
Your net STS income share
Your taxable income for the year
|
× |
100 |
If that percentage is more than 100%, the STS percentage is 100%.
Step 4: ... If the partnership
'
s
*
STS group turnover for the year is
$
50,000 or less, multiply the amount at step 2 by the STS percentage: the result is the amount of your
*
tax offset.
Step 5: ... If the partnership
'
s
*
STS group turnover for the year is more than
$
50,000, work out the fraction (the
STS phase-out fraction
) using the formula:
| |
$
75,000 |
− |
The partnership
'
s
*
STS
group turnover
for the year |
|
| |
$
25,000 |
|
The amount of your
*
tax offset is worked out using the formula:
| Step 2 amount |
× |
STS
percentage |
× |
STS
phase-out
fraction |
History
S 61-510 inserted by No 41 of 2005.
SECTION 61-515 25% entrepreneurs
'
tax offset: trustee of a trust
Entitlement
61-515(1)
You are entitled to a
*
tax offset for an income year if:
(a)
you are a trustee of a trust during the year; and
(b)
the trust is a
*
small business entity for the year; and
(c)
the trust
'
s
*
aggregated turnover for the year is less than
$
75,000; and
(d)
the trust has
*
net small business income for the year; and
(e)
you are liable to be assessed under section
98
,
99
or
99A
of the
Income Tax Assessment Act 1936
on a share (
your net small business income share
) of that net small business income.
History
S 61-515(1) amended by
No 80 of 2007
, s 3 and Sch 3 items 138 to 141, by substituting
"
a
*
small business entity
"
for
"
an
*
STS taxpayer
"
in para (b), substituting
"
*
aggregated turnover
"
for
"
*
STS group turnover
"
in para (c), substituting
"
*
net small business income
"
for
"
*
net STS income
"
in para (d) and substituting all the words after
"
a share
"
in para (e), applicable in relation to the 2007-08 income year and later income years. The words after
"
a share
"
in para (e) formerly read:
(
your net STS income share
) of that net STS income
Amount
61-515(2)
The amount of your
*
tax offset is worked out in this way:
Method statement
Step 1:
Work out the
*
net income of the trust for the income year.
Step 2:
Work out 25% of the amount of income tax you are liable to pay for the year on that
*
net income (apart from any
*
tax offsets).
Step 3:
Work out the percentage (the
small business percentage
) using the formula:
Your net small business
income share
The
*
net income of the trust
for the year |
× |
100 |
If that percentage is more than 100%, the small business percentage is 100%.
Step 4:
If the trust
'
s
*
aggregated turnover for the year is
$
50,000 or less, multiply the amount at step 2 by the small business percentage: the result is the amount of your
*
tax offset.
Step 5:
If the trust
'
s
*
aggregated turnover for the year is more than
$
50,000, work out the fraction (the
small business phase-out fraction
) using the formula:
| |
$
75,000
−
The trust
'
s
*
aggregated turnover for
the year
|
| |
$
25,000 |
The amount of your
*
tax offset is worked out using the formula:
| |
Step 2 amount
×
Small business percentage
×
Small business phase-out fraction |
History
S 61-515(2) amended by
No 80 of 2007
, s 3 and Sch 3 item 142, by substituting steps 3, 4 and 5 of the method statement, applicable in relation to the 2007-08 income year and later income years. Steps 3, 4 and 5 formerly read:
Step 3: ... Work out the percentage (the
STS percentage
) using the formula:
Your net STS income share
The
*
net income of the trust for the year |
× |
100 |
If that percentage is more than 100%, the STS percentage is 100%.
Step 4: ... If the trust
'
s
*
STS group turnover for the year is
$
50,000 or less, multiply the amount at step 2 by the STS percentage: the result is the amount of your
*
tax offset.
Step 5: ... If the trust
'
s
*
STS group turnover for the year is more than
$
50,000, work out the fraction (the
STS phase-out fraction
) using the formula:
| |
$
75,000 |
− |
The trust
'
s
*
STS group
turnover for the year |
|
| |
$
25,000 |
|
The amount of your
*
tax offset is worked out using the formula:
| Step 2 amount |
× |
STS
percentage |
× |
STS
phase-out
fraction |
History
S 61-515 inserted by No 41 of 2005.
SECTION 61-520 25% entrepreneurs
'
tax offset: beneficiary of a trust
Entitlement
61-520(1)
You are entitled to a
*
tax offset for an income year if:
(a)
you are a beneficiary of a trust during the year; and
(b)
the trust is a
*
small business entity for the year; and
(c)
the trust
'
s
*
aggregated turnover for the year is less than
$
75,000; and
(d)
the trust has
*
net small business income for the year; and
(e)
your assessable income for the year includes a share (
your net small business income share
) of that net small business income.
History
S 61-520(1) amended by
No 80 of 2007
, s 3 and Sch 3 items 143 to 146, by substituting
"
a
*
small business entity
"
for
"
an
*
STS taxpayer
"
in para (b), substituting
"
*
aggregated turnover
"
for
"
*
STS group turnover
"
in para (c), substituting
"
*
net small business income
"
for
"
*
net STS income
"
in para (d) and substituting all the words after
"
a share
"
in para (e), applicable in relation to the 2007-08 income year and later income years. The words after
"
a share
"
in para (e) formerly read:
(
your net STS income share
) of that net STS income.
Amount
61-520(2)
The amount of your
*
tax offset is worked out in this way:
Method statement
Step 1:
Work out your taxable income for the income year.
Step 2:
Work out 25% of your basic income tax liability for the year (as worked out in step 2 of the method statement in subsection
4-10(3)
).
Step 3:
Work out the percentage (the
small business percentage
) using the formula:
Your net small business
income share
Your taxable income
for the year
|
× |
100 |
If that percentage is more than 100%, the small business percentage is 100%.
Step 4:
If the trust
'
s
*
aggregated turnover for the year is
$
50,000 or less, multiply the amount at step 2 by the small business percentage: the result is the amount of your
*
tax offset.
Note:
If you are an individual, section
61-523
may reduce the amount of the tax offset.
Step 5:
If the trust
'
s
*
aggregated turnover for the year is more than
$
50,000, work out the fraction (the
small business phase-out fraction
) using the formula:
| |
$
75,000 |
− |
The trust
'
s
*
aggregated
turnover for the year |
|
| |
$
25,000 |
|
The amount of your
*
tax offset is worked out using the formula:
| Step 2 amount |
× |
Small business
percentage |
× |
Small business
phase-out
fraction |
|
Note:
If you are an individual, section
61-523
may reduce the amount of the tax offset.
History
S 61-520(2) amended by No 56 of 2010, s 3 and Sch 4 items 6 and 7, by inserting the note at the end of steps 4 and 5 of the method statement, applicable in relation to assessments for income years that commence on or after 1 July 2009.
S 61-520(2) amended by
No 80 of 2007
, s 3 and Sch 3 item 147, by substituting steps 3, 4 and 5 of the method statement, applicable in relation to the 2007-08 income year and later income years. Steps 3, 4 and 5 of the method statement formerly read:
Step 3: ... Work out the percentage (the
STS percentage
) using the formula:
Your net STS income share
Your taxable income for the year |
× |
100 |
If that percentage is more than 100%, the STS percentage is 100%.
Step 4: ... If the trust
'
s
*
STS group turnover for the year is
$
50,000 or less, multiply the amount at step 2 by the STS percentage: the result is the amount of your
*
tax offset.
Step 5: ... If the trust
'
s
*
STS group turnover for the year is more than
$
50,000, work out the fraction (the
STS phase-out fraction
) using the formula:
| |
$
75,000 |
− |
The trust
'
s
*
STS group
turnover for the year |
|
| |
$
25,000 |
|
The amount of your
*
tax offset is worked out using the formula:
| Step 2 amount |
× |
STS
percentage |
× |
STS
phase-out
fraction |
|
History
S 61-520 inserted by No 41 of 2005.
SECTION 61-523
SECTION 61-523 25% entrepreneur
'
s tax offset
-
reduction for non-small business income
61-523
Reduce the amount of your
*
tax offset worked out under subsection
61-505(2)
,
61-510(2)
or
61-520(2)
by the amount worked out using the following formula (but not below nil), if:
(a)
you are an individual; and
(b)
the amount worked out using the formula is greater than nil:
| |
Non-ETO small business
income for the income year |
−
Threshold amount |
|
| |
5 |
|
where:
non-ETO small business income
for the income year is worked out by:
(a)
adding up the following:
(i)
your taxable income for the year;
(ii)
your
*
reportable fringe benefits total for the year;
(iii)your
*
reportable superannuation contributions (if any) for the year;
(iv)
your
*
total net investment loss for the year; and
(b)
subtracting:
(i)
in a case covered by subsection
61-505(2)
-
your
*
net small business income for the year; or
(ii)
in a case covered by subsection
61-510(2)
or
61-520(2)
-
your net small business income share for the year (within the meaning of paragraph
61-510(1)(e)
or
61-520(1)(e)
, whichever is applicable); and
(c)
adding the following in relation to each individual (if any) who, on the last day of the year, is your
*
spouse:
(i)
your spouse
'
s taxable income for the year;
(ii)
your spouse
'
s reportable fringe benefits total for the year;
(iii)
your spouse
'
s reportable superannuation contributions (if any) for the year;
(iv)
your spouse
'
s total net investments loss for the year.
Note:
ETO is short for 25% entrepreneurs
'
tax offset.
threshold amount
means:
(a)
$
120,000 if:
(i)
on any day during the income year, you have a dependant (within the meaning of the definition of
dependant
in subsection
159P(4)
of the
Income Tax Assessment Act 1936
, disregarding paragraph (a) (spouse) of that definition); or
(ii)
on the last day of the income year, you have a
*
spouse; or
(b)
otherwise
-
$
70,000.
History
S 61-523 inserted by No 56 of 2010, s 3 and Sch 4 item 8, applicable in relation to assessments for income years that commence on or after 1 July 2009.
SECTION 61-525 Meaning of
net small business income
and
small business entity turnover
Net small business income
61-525(1)
An entity
'
s
net small business income
for an income year is the amount by which the entity
'
s
*
small business entity turnover for the year is more than the sum of the entity
'
s deductions attributable to that turnover.
Small business entity turnover
61-525(2)
An entity
'
s
small business entity turnover
for an income year is the total
*
ordinary income that the entity
*
derives in the income year in the ordinary course of carrying on a
*
business.
61-525(3)
In working out an entity
'
s
*
small business entity turnover for an income year, do not include any amount that is
*
non-assessable non-exempt income under section
17-5
(which is about GST).
History
S 61-525 substituted by
No 80 of 2007
, s 3 and Sch 3 item 148, applicable in relation to the 2007-08 income year and later income years. S 61-525 formerly read:
SECTION 61-525 Meaning of
net STS income
and
STS annual turnover
Net STS income
61-525(1)
An entity
'
s
net STS income
for an income year is the amount by which the entity
'
s
*
STS annual turnover for the year is more than the sum of the entity
'
s deductions attributable to that turnover.
STS annual turnover
61-525(2)
An entity
'
s
STS annual turnover
for an income year is the sum of the
*
value of the business supplies the entity made in the year.
61-525(3)
To the extent that the
*
taxable supplies an entity makes in an income year includes
*
gambling supplies, use an amount equal to 11 times the entity
'
s
*
global GST amount for those supplies rather than the
*
value of the business supplies in working out the entity
'
s
*
STS annual turnover.
61-525(4)
In working out the
*
value of the business supplies made by an entity, disregard:
(a)
any
*
supply made to the extent that the consideration for the supply is a payment or a supply by an insurer in settlement of a claim under an insurance policy; and
(b)
to the extent that a supply is constituted by a loan
-
any repayment of principal, and any obligation to repay principal.
S 61-525 inserted by No 41 of 2005.
Subdiv 61-J inserted by No 41 of 2005.
(Repealed) Subdivision 61-K
-
Mature age worker tax offset
History
Subdiv 61-K repealed by No 20 of 2015, s 3 and Sch 1 item 2, applicable to assessments for the 2014-15 income year and later income years.
Subdiv 61-K inserted by No 77 of 2005.
61-550
(Repealed) SECTION 61-550 What this Subdivision is about
(Repealed by No 20 of 2015)
History
S 61-550 repealed by No 20 of 2015, s 3 and Sch 1 item 2, applicable to assessments for the 2014-15 income year and later income years. S 61-550 formerly read:
SECTION 61-550 What this Subdivision is about
You may get a tax offset under this Subdivision if you are an Australian resident individual who was born on or before 30 June 1957 and who has worked during the current year.
The amount of the offset depends on the amount of your net income from working, but is up to a maximum of
$
500. (Basically, your net income from working is the total of amounts of assessable income that are mainly a reward for your personal efforts or skills, less any relevant deductions.)
S 61-550 amended by No 184 of 2012, s 3 and Sch 2 item 1, by substituting
"
was born on or before 30 June 1957 and who has worked during the current
"
for
"
is aged 55 or over at the end of the income year and who has worked during the
"
, applicable to assessments for the 2012-13 income year and later income years.
S 61-550 inserted by No 77 of 2005.
(Repealed) Operative provisions
61-555
(Repealed) SECTION61-555 Object of this Subdivision
(Repealed by No 20 of 2015)
History
S 61-555 repealed by No 20 of 2015, s 3 and Sch 1 item 2, applicable to assessments for the 2014-15 income year and later income years. S 61-555 formerly read:
SECTION 61-555 Object of this Subdivision
61-555
The object of this Subdivision is to provide a
*
tax offset (subject to certain income conditions) as an incentive to Australians born on or before 30 June 1957 to remain in work.
S 61-555 amended by No 184 of 2012, s 3 and Sch 2 item 2, by substituting
"
born on or before 30 June 1957
"
for
"
aged 55 or over
"
, applicable to assessments for the 2012-13 income year and later income years.
S 61-555 inserted by No 77 of 2005.
61-560
(Repealed) SECTION 61-560 Entitlement to the mature age worker tax offset
(Repealed by No 20 of 2015)
History
S 61-560 repealed by No 20 of 2015, s 3 and Sch 1 item 2, applicable to assessments for the 2014-15 income year and later income years. S 61-560 formerly read:
SECTION 61-560 Entitlement to the mature age worker tax offset
61-560
You are entitled to a
*
tax offset for an income year if you are an Australian resident individual who was born on or before 30 June 1957.
Note:
However, the amount of the tax offset is nil if you have no net income from working or your net income from working is over
$
63,000 (or
$
58,000 for the 2004-2005 income year).
S 61-560 amended by No 184 of 2012, s 3 and Sch 2 item 3, by substituting
"
was born on or before 30 June 1957
"
for
"
is aged 55 or over at the end of the income year
"
, applicable to assessments for the 2012-13 income year and later income years.
S 61-560 amended by
No 143 of 2007
, s 3 and Sch 7 item 36, by substituting
"
you have
"
for
"
have you
"
in the note, effective 24 September 2007.
S 61-560 inserted by No 77 of 2005.
61-565
(Repealed) SECTION 61-565 The amount of the tax offset
(Repealed by No 20 of 2015)
History
S 61-565 repealed by No 20 of 2015, s 3 and Sch 1 item 2, applicable to assessments for the 2014-15 income year and later income years. S 61-565 formerly read:
SECTION 61-565 The amount of the tax offset
61-565(1)
If your
*
net income from working for the income year is equal to or less than
$
53,000, the amount of the
*
tax offset is the lesser of the amount worked out under the following formula and
$
500:
| |
5%
×
Your net income from working for the year |
61-565(2)
If your
*
net income from working for the income year is greater than
$
53,000, the amount of the
*
tax offset is the amount worked out under the following formula (but not below nil):
Special rule for the 2004-2005 income year
61-565(3)
For the 2004-2005 income year, references in subsections (1) and (2) to
$
53,000 are taken instead to be references to
$
48,000.
S 61-565 inserted by No 77 of 2005.
61-570
(Repealed) SECTION 61-570 Definition of net income from working
(Repealed by No 20 of 2015)
History
S 61-570(3) amended by No 118 of 2013, s 3 and Sch 1 item 18, by substituting
"
any
*
excess concessional contributions you have
"
for
"
any contributions disregarded under section 292-467 for you
"
, effective 29 June 2013. For application, transitional and saving provisions see note under Div
291
heading.
S 61-570(3) inserted by No 75 of 2012.
Subdivision 61-L
-
Tax offset for Medicare levy surcharge (lump sum payments in arrears)
History
Subdiv 61-L inserted by
No 80 of 2006
, s 3 and Sch 6 item 4, effective 30 June 2006.
Guide to Subdivision 61-L
SECTION 61-575
61-575
What this Subdivision is about
You may get a tax offset under this Subdivision if:
(a) Medicare levy surcharge is payable by you for the current year; and
(b) a substantial lump sum was paid to you in the current year; and
(c) the lump sum accrued in whole or in part in a previous year.
The amount of the offset is the amount of additional Medicare levy surcharge payable by you for the current year because of your lump sums and your spouse
'
s lump sums.
Alternatively, you may get a tax offset under this Subdivision if your spouse gets a tax offset under this Subdivision. The amount of the offset is the amount of additional Medicare levy surcharge payable by you for the current year because of your spouse
'
s lump sums.
History
S 61-575 inserted by
No 80 of 2006
, s 3 and Sch 6 item 4, effective 30 June 2006.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 61-580 |
Entitlement to a tax offset |
| 61-585 |
The amount of a tax offset |
| 61-590 |
Definition of
MLS lump sums
|
Operative provisions
SECTION 61-580
Entitlement to a tax offset
Tax offset for MLS lump sums paid to you
61-580(1)
You are entitled to a
*
tax offset for the
*
current year if:
(a)
you are an individual; and
(b)
*
Medicare levy surcharge is payable by you for the current year because of:
(i)
section
8B
,
8C
or
8D
of the
Medicare Levy Act 1986
; or
(ii)
the
A New Tax System (Medicare Levy Surcharge
-
Fringe Benefits) Act 1999
; and
(c)
your assessable income or
*
exempt foreign employment income for the current year includes one or more
*
MLS lump sums paid to you; and
(d)
the total of the MLS lump sums paid to you is greater than or equal to one-eleventh of the total of the following amounts:
(i)
your normal taxable income (within the meaning of section
159ZR
of the
Income Tax Assessment Act 1936
) for the current year, disregarding your
*
assessable FHSS released amount for the current year;
(ii)
your exempt foreign employment income for the current year;
(iii)
your
*
reportable fringe benefits total for the current year;
(iv)
the amounts that would be included in your assessable income for the current year if, and only if, subsection
271-105(1)
(family trust distribution tax) in Schedule
2F
to the
Income Tax Assessment Act 1936
were ignored;
(v)
your
*
reportable superannuation contributions for the current year;
(vi)
your
*
total net investment loss for the current year.
Note:
The test in paragraph (d) is similar to the 10% test in paragraph
159ZRA(1)(b)
of the
Income Tax Assessment Act 1936
, which also deals with a tax offset for lump sum payments in arrears.
History
S 61-580(1) amended by No 132 of 2017, s 3 and Sch 1 item 28, by inserting
"
, disregarding your
*
assessable FHSS released amount for the current year
"
in para (d)(i), effective 1 July 2018.
S 61-580(1) amended by No 27 of 2009, s 3 and Sch 3 item 45, by inserting para (d)(v) and (vi), applicable in relation to income years starting on or after 1 July 2009.
Tax offset for MLS lump sums paid to your spouse
61-580(2)
You are also entitled to a
*
tax offset for the
*
current year if:
(a)
during all or part of the current year, you were married to an individual (within the meaning of section
3
of the
Medicare Levy Act 1986
or section
7
of the
A New Tax System (Medicare Levy Surcharge
-
Fringe Benefits) Act 1999
); and
(b)
the individual is entitled to a tax offset for the current year under subsection (1); and
(c)
*
Medicare levy surcharge is payable by you for the current year because of:
(i)
section
8D
of the
Medicare Levy Act 1986
; or
(ii)
Division
4
of Part
3
of the
A New Tax System (Medicare Levy Surcharge
-
Fringe Benefits) Act 1999
;
(which are about Medicare Levy surcharge for individuals who are married); and
(d)
you are not entitled to a tax offset for the current year under subsection (1); and
(e)
less of the Medicare levy surcharge referred to in paragraph (c) would be payable by you for the current year if the
*
MLS lump sums paid to the individual referred to in paragraph (a) were disregarded.
History
S 61-580 inserted by
No 80 of 2006
, s 3 and Sch 6 item 4, effective 30 June 2006.
SECTION 61-585
The amount of a tax offset
61-585(1)
The amount of a
*
tax offset under subsection 61-580(1) is the amount worked out using the following formula:
| Total Medicare levy surcharge |
− |
Total non-arrears Medicare levy surcharge |
where:
total Medicare levy surcharge
means the total of the
*
Medicare levy surcharge referred to in paragraph
61-580(1)(b)
that is payable by you for the
*
current year.
total non-arrears Medicare levy surcharge
means the amount that would be the total Medicare levy surcharge if the
*
MLS lump sums paid to you (and the MLS lump sumps paid to the individual referred to in paragraph
61-580(2)(a)
) were disregarded.
61-585(2)
The amount of a
*
tax offset under subsection
61-580(2)
is the amount worked out using the following formula:
| Total family Medicare levy surcharge |
− |
Total non-arrears family Medicare levy surcharge |
where:
total family Medicare levy surcharge
means the total of the
*
Medicare levy surcharge referred to in paragraph
61-580(2)(c)
that is payable by you for the
*
current year.
total non-arrears family Medicare levy surcharge
means the amount that would be the total family Medicare levy surcharge if the
*
MLS lump sums referred to in paragraph
61-580(2)(e)
were disregarded.
History
S 61-585 inserted by
No 80 of 2006
, s 3 and Sch 6 item 4, effective 30 June 2006.
SECTION 61-590
61-590
Definition of
MLS lump sums
Both of the following are
MLS lump sums
paid to an individual:
(a)
a lump sum payment of eligible income (within the meaning of section
159ZR
of the
Income Tax Assessment Act 1936
) that is included in the individual
'
s assessable income for the
*
current year (but only to the extent that it accrued in an earlier income year);
(b)
a lump sum payment that is included in the individual
'
s
*
exempt foreign employment income for the current year (but only to the extent that it accrued during a period ending more than 12 months before the date on which it was paid).
History
S 61-590 inserted by
No 80 of 2006
, s 3 and Sch 6 item 4, effective 30 June 2006.
(Repealed) Subdivision 61-M
-
Education expenses tax offset
History
Subdiv 61-M repealed by No 109 of 2014, s 3 and Sch 10 item 13, effective 17 October 2014.
Subdiv 61-M inserted by No 141 of 2008, s 3 and Sch 1 item 3, applicable to the 2008-2009 income year and later years.
(Repealed) Guide to Subdivision 61-M
61-600
(Repealed) SECTION 61-600 What this Subdivision is about
(Repealed by No 109 of 2014)
History
S 61-600 repealed by No 109 of 2014, s 3 and Sch 10 item 13, effective 17 October 2014. S 61-600 formerly read:
SECTION 61-600 What this Subdivision is about
You may get a refundable tax offset for education expenses incurred for a school student in your care, or for yourself if you are an independent student.
There is a limit on the amount of the tax offset.
Education expenses over the limit can be taken into account in the next year of income.
This tax offset is only available for income years ending before 1 July 2011.
S 61-600 amended by No 50 of 2012, s 3 and Sch 3 item 10, by inserting
"
This tax offset is only available for income years ending before 1 July 2011.
"
, effective 27 May 2012.
S 61-600 inserted by No 141 of 2008, s 3and Sch 1 item 3, applicable to the 2008-2009 income year and later years.
(Repealed) Entitlement to education expenses tax offset
61-610
(Repealed) SECTION 61-610 Entitlement to education expenses tax offset
(Repealed by No 109 of 2014)
History
S 61-610 repealed by No 109 of 2014, s 3 and Sch 10 item 13, effective 17 October 2014. S 61-610 formerly read:
SECTION 61-610 Entitlement to education expenses tax offset
Entitlement in respect of another individual
61-610(1)
You are entitled to a
*
tax offset for an income year ending before 1 July 2011 if:
(a)
you satisfy subsection
61-620(1)
,
(2)
,
(3)
or
(4)
on a day in the income year for an individual; and
(b)
the individual satisfies the schooling requirement in section
61-630
on that day; and
(c)
an expense covered by section
61-640
for the individual
'
s education is incurred on that day.
History
S 61-610(1) amended by No 50 of 2012, s 3 and Sch 3 item 11, by inserting
"
ending before 1 July 2011
"
, applicable to assessments for the 2011-2012 income year and later income years.
Entitlement for independent students
61-610(2)
You are also entitled to a
*
tax offset for an income year ending before 1 July 2011 if:
(a)
on a day in the income year you are receiving:
(i)
payments under a prescribed educational scheme (within the meaning of the
Social Security Act 1991
); or
(ii)
a social security pension (within the meaning of that Act); or
(iii)
a social security benefit (within the meaning of that Act); or
(iv)
payments under a program included in the programs known as Labour Market Programs; and
(b)
an independence requirement (however described) that you satisfy is relevant to the amount of the payment; and
(c)
on that day you are:
(i)
an Australian resident (within the meaning of the
Social Security Act 1991
) or a special category visa holder (within the meaning of the
Migration Act 1958
); and
(ii)
residing in Australia; and
(d)
you are aged under 25 on that day; and
(e)
you satisfy the schooling requirement in section
61-630
on that day; and
(f)
another individual or entity is not entitled to a tax offset for the income year for that day in respect of you under subsection (1); and
(g)
an expense covered by section
61-640
for your education is incurred on that day.
History
S 61-610(2) amended by No 50 of 2012, s 3 and Sch 3 item 11, by inserting
"
ending before 1 July 2011
"
, applicable to assessments for the 2011-2012 income year and later income years.
S 61-610 inserted by No 141 of 2008, s 3 and Sch 1 item 3, applicable to the 2008-2009 income year and later years.
61-620
(Repealed) SECTION 61-620 Eligibility in respect of another individual
(Repealed by No 109 of 2014)
History
S 61-620 repealed by No 109 of 2014, s 3 and Sch 10 item 13, effective 17 October 2014. S 61-620 formerly read:
SECTION 61-620 Eligibility in respect of another individual
You are entitled to Family Tax Benefit (Part A)
61-620(1)
You satisfy this section on a day in an income year for an individual if:
(a)
you are entitled to be paid family tax benefit for the individual in relation to that day under the
A New Tax System (Family Assistance) (Administration) Act 1999
; and
(b)
your daily rate of family tax benefit for that day consists of, or includes, a Part A rate worked out under Part
2
or
3
of Schedule
1
to the
A New Tax System (Family Assistance) Act 1999
that is greater than nil.
You care for an individual entitled to certain payments
61-620(2)
You satisfy this section on a day in an income year for an individual if:
(a)
one or more of the following:
(i)
payments under a prescribed educational scheme (within the meaning of the
Social Security Act 1991
); or
(ii)
a social security pension (within the meaning of that Act); or
(iii)
a social security benefit (within the meaning of that Act); or
(iv)
payments under a program included in the programs known as Labour Market Programs;
is received on that day by the individual, or by you or another person on the individual
'
s behalf; and
(b)
the individual would be your FTB child (within the meaning of Subdivision
A
of Division
1
of Part
3
of the
A New Tax System (Family Assistance) Act 1999
) on that day if that payment were disregarded.
Approved care organisation
61-620(3)
An approved care organisation (within the meaning of the
A New Tax System (Family Assistance) Act 1999
) satisfies this section on a day in an income year for an individual if the approved care organisation is entitled, under the
A New Tax System (Family Assistance) (Administration) Act 1999
, to be paid family tax benefit for that individual on that day.
Individual finishing full-time schooling
-
cut-out amount disregarded
61-620(4)
You satisfy this section on a day in an income year for an individual if:
(a)
the individual satisfies the schooling requirement in section
61-630
on that day; and
(b)
during the income year, the individual ceased to be covered by either subsection
61-630(2)
or
(4)
; and
(c)
the individual was not covered by either of those subsections at the end of the year of income; and
(d)
the Commissioner is of the opinion that you would satisfy one or more of subsections (1), (2) and (3) for the individual on that day if:
(i)
paragraph (a) of item 2 of the table in subsection
22A(1)
of the
A New Tax System (Family Assistance) Act 1999
(which deals with the cut-out amount) were disregarded; or
(ii)
for approved care organisations (within the meaning of the
A New Tax System (Family Assistance) Act 1999
)
-
paragraph (a) of item 2 of the table in subsection
35(1)
of that Act (which also deals with the cut-out amount) were disregarded.
S 61-620 inserted by No 141 of 2008, s 3 and Sch 1 item 3, applicable to the 2008-2009 income year and later years.
61-630
(Repealed) SECTION 61-630 Schooling requirement
(Repealed by No 109 of 2014)
History
S 61-630 repealed by No 109 of 2014, s 3 and Sch 10 item 13, effective 17 October 2014. S 61-630 formerly read:
SECTION 61-630 Schooling requirement
61-630(1)
An individual satisfies the schooling requirement in this section on every day in a 6 month period beginning on 1 July or 1 January if there is at least one day in that 6 month period on which the individual:
(a)
is covered by subsection (2) or (4); and
(b)
attended the course of study or instruction, or received the home schooling, referred to in that subsection.
Primary school student
61-630(2)
An individual is covered by this section if the individual is a student enrolled or registered:
(a)
in a course of study or instruction that is a primary course within the meaning of the
*
GST Act; or
(b)
with the education authority of the State or Territory in which the individual resides as a home schooled student (however described) allocated to the primary level of education; or
(c)
in a course of study or instruction to which subsection (3) applies.
61-630(3)
The
*
Education Minister may, by legislative instrument, determine that a course of study or instruction is a course to which this subsection applies.
History
S 61-630(3) amended by No 88 of 2009, s 3 and Sch 5 item 146, by substituting
"
*
Education Minister
"
for
"
Minister administering the
Student Assistance Act 1973
(the
Education Minister
)
"
, effective 18 September 2009.
Secondary school student
61-630(4)
An individual is covered by this section if the individual is a student enrolled or registered:
(a)
in a course of study or instruction that is a secondary course within the meaning of the
*
GST Act; or
(b)
with the education authority of the State or Territory in which the individual resides as a home schooled student (however described) allocated to the secondary level of education; or
(c)
in a course of study or instruction to which subsection (5) applies.
61-630(5)
The
*
Education Minister may, by legislative instrument, determine that a course of study or instruction is a course to which this subsection applies.
History
S 61-630(5) amended by No 88 of 2009, s 3 and Sch 5 item 147, by substituting
"
*
Education Minister
"
for
"
Education Minister
"
, effective 18 September 2009.
S 61-630 inserted by No 141 of 2008, s 3 and Sch 1 item 3, applicable to the 2008-09 income year and later years.
61-640
(Repealed) SECTION 61-640 Education expenses
(Repealed by No 109 of 2014)
History
S 61-640 repealed by No 109 of 2014, s 3 and Sch 10 item 13, effective 17 October 2014. S 61-640 formerly read:
SECTION 61-640 Education expenses
61-640(1)
An expense incurred on a day is covered for you by this section if:
(a)
the expense is incurred by:
(i)
you; or
(ii)
your partner (within the meaning of the
Social Security Act 1991
); and
(b)
the expense directly relates to the education of:
(i)
one or more individuals in relation to whom paragraphs
61-610(1)(a)
and (b) are satisfied on the day; or
(ii)
if you are covered by paragraphs
61-610(2)(a)
, (b), (c), (d), (e) and (f) on the day
-
yourself; and
(c)
the expense is of a kind mentioned in subsection (4).
61-640(2)
However, an expense is not covered by this section to the extent that the expense:
(a)
is deductible under this Act; or
(b)
is subject to a
*
tax offset under this Act (other than this Subdivision); or
(c)
is covered by a payment or property you receive, or are entitled to receive, as reimbursement or payment of your expenses under a benefit, grant or subsidy:
(i)
the provision of which was authorised under a
*
Commonwealth law or an instrument of a legislative character made under a Commonwealth law; or
(ii)
to which paragraph (3)(a) applies.
61-640(3)
The regulations may provide the following:
(a)
that a benefit, grant or subsidy is a benefit, grant or subsidy to which this paragraph applies;
(b)
that an expense of a particular kind is not an expense covered by this section.
61-640(4)
The expenses are those mentioned in column 3 of an item in the following table relating to a thing mentioned in column 2 of that item.
|
Item
|
Thing to which expense relates
|
Kind of expense
|
| 1 |
Computer for:
(a) home use (including, in the case of an individual who has no home, use in a setting that equates to a residential setting for the person); or
(b) use in an educational institution in place of paper based educational material |
(a) cost of acquiring (whether by way of purchase, lease, hire or hire-purchase); and
(b) cost of repairing; and
(c) costs associated with running. |
| 2 |
Computer-related equipment for a use referred to in item 1, including:
(a) printers; and
(b) disability aids |
(a) cost of acquiring (whether by way of purchase, lease, hire or hire-purchase); and
(b) cost of repairing; and
(c) costs associated with running. |
| 3 |
Home internet connection |
(a) cost of establishing; and
(b) cost of maintaining. |
| 4 |
Item of computer software |
cost of acquiring (whether by way of purchase, lease, hire or hire-purchase). |
| 5 |
School textbooks, other paper based school learning material and stationery |
cost of acquiring (whether by way of purchase, lease, hire or hire-purchase). |
| 6 |
A tool of trade |
cost of acquiring (whether by way of purchase, lease, hire or hire-purchase). |
| 7 |
Clothing (including hats) and footwear that is required or approved by a primary or secondary school to be worn as its school uniform |
cost of acquiring (whether by way of purchase, hire or hire-purchase). |
History
S 61-640(4) amended by No 61 of 2011, s 3 and Sch 7 item 1, by inserting table item 7, applicable to expenses incurred on or after 1 July 2011.
S 61-640 inserted by No 141 of 2008, s 3 and Sch 1 item 3, applicable to the 2008-09 income year and later years.
(Repealed) Amount of education expenses tax offset
61-650
(Repealed) SECTION 61-650 Amount of education expenses tax offset
(Repealed by No 109 of 2014)
History
S 61-650 repealed by No 109 of 2014, s 3 and Sch 10 item 13, effective 17 October 2014. S 61-650 formerly read:
SECTION 61-650 Amount of education expenses tax offset
61-650(1)
The amount of your
*
tax offset for an income year (the
current year
) is the amount (rounded up to the nearest whole dollar) that is the lesser of:
(a)
one half of the sum of:
(i)
all of the expenses covered for you by section
61-640
for the current year; and
(ii)
your expenses covered by section
61-680
(about excess education expenses) for the income year ending immediately before the currentyear; and
(b)
your offset limit under section
61-660
for the current year.
Effect of shared care arrangements
61-650(2)
If:
(a)
on a particular day, you and your partner (within the meaning of the
Social Security Act 1991
) (your
partner
) satisfy subsection
61-620(1)
for an individual; and
(b)
a determination has been made under section
28
or
29
of the
A New Tax System (Family Assistance) Act 1999
of your percentage, and of your partner
'
s percentage, of the family tax benefit for the individual for a period that includes that day; and
(c)
an expense covered for you by section
61-640
was incurred on that day;
for the purposes of subparagraph (1)(a)(i) you and your partner may each count only a portion of the expense corresponding to your percentage.
61-650(3)
If:
(a)
on a particular day, you are a member of a couple (within the meaning of the
Social Security Act 1991
); and
(b)
both you and your partner (within the meaning of that Act) (your
partner
) satisfy subsection
61-620(2)
or
(4)
for one or more individuals on that day; and
(c)
an expense covered for you by section
61-640
was incurred on that day;
for the purposes of subparagraph (1)(a)(i) the expense only counts as follows:
(d)
if you and your partner have made a written agreement nominating one of you as the member who can claim the offset under this Subdivision in respect of the individual or individuals for a period including that day:
(i)
the nominated member may count the whole of each expense covered for you by section
61-640
incurred on that day; and
(ii)
the other member must not count any of the expense; or
(e)
if paragraph (d) does not apply
-
you and your partner may each count only half of the expense.
S 61-650 inserted by No 141 of 2008, s 3 and Sch 1 item 3, applicable to the 2008-09 income year and later years.
61-660
(Repealed) SECTION 61-660 Education expenses tax offset limit
(Repealed by No 109 of 2014)
History
S 61-660 repealed by No 109 of 2014, s 3 and Sch 10 item 13, effective 17 October 2014. S 61-660 formerly read:
SECTION 61-660 Education expenses tax offset limit
61-660(1)
Your offset limit is:
(a)
if you satisfy paragraphs
61-610(1)(a)
, (b) and (c) for one or more individuals in the current year
-
the sum of the amounts worked out under the method statement for each such individual; and
(b)
if you are an independent student covered by subsection
61-610(2)
-
the amount worked out for yourself under the method statement.
Method statement
Step 1.
Start with this amount:
(a) for an individual who satisfies the schooling requirement in subsection
61-630(4)
(for secondary school students) on a day in the current year
-
$
750; or
(b) if paragraph (a) does not apply and the individual satisfies the schooling requirement in subsection
61-630(2)
(for primary school students) on a day in the current year
-
$
375.
Note:
The effect of step 1 is that the secondary school student starting amount applies for the whole year where an individual completes primary school in the first half of the financial year and starts secondary school in the second half of the financial year.
Step 2.
Add up the number of days in the current year on which:
(a) paragraphs
61-610(1)(a)
and (b) are satisfied for you and the individual; or
Note:
There are modifications to step 2(a) in section
61-670
.
(b) if you are an independent student covered by subsection
61-610(2)
-
paragraphs
61-610(2)(a)
, (b), (c), (d), (e) and (f) apply to you.
Step 3.
Divide the result of step 2 by the number of days in the current year. Round the result to 2 decimal places (rounding up if the third decimal place is 5 or more).
Step 4.
Multiply the result from step 1 by the result from step 3.
61-660(2)
The amounts specified in step 1 of the method statement in subsection (1) are indexed annually.
Note:
Subdivision
960-M
shows you how to index amounts.
S 61-660 inserted by No 141 of 2008, s 3 and Sch 1 item 3, applicable to the 2008-09 income year and later years.
61-670
(Repealed) SECTION 61-670 Shared care
(Repealed by No 109 of 2014)
History
S 61-670 repealed by No 109 of 2014, s 3 and Sch 10 item 13, effective 17 October 2014. S 61-670 formerly read:
SECTION 61-670 Shared care
61-670(1)
This section modifies the operation of step 2 of the method statement in subsection
61-660(1)
.
Modification for shared care determinations
61-670(2)
If:
(a)
on a particular day, you satisfy subsection
61-620(1)
for an individual; and
(b)
a determination has been made under section
28
or
29
of the
A New Tax System (Family Assistance) Act 1999
of your percentage of the family tax benefit for the individual for a period that includes that day; and
(c)
step 2 applies to that day;
only a portion of that day corresponding to that percentage may be counted for the purposes of step 2.
61-670(3)
If:
(a)
on a particular day, you satisfy subsection
61-620(1)
for an individual: and
(b)
you have a shared care percentage under section
59
of the
A New Tax System (Family Assistance) Act 1999
for the individual for a period that includes that day; and
(c)
step 2 (including that step as affected by subsection (2)) applies to that day;
only a portion of that day (or only a portion of the portion referred to in subsection (2)) corresponding to the shared care percentage may be counted for the purposes of step 2 (or that step as affected by subsection (2)).
Modification for members of a couple
61-670(4)
If:
(a)
on a particular day, you are a member of a couple (within the meaning of the
Social Security Act 1991
); and
(b)
both you and your partner (within the meaning of that Act) (your
partner
) satisfy subsection
61-620(2)
or (4) for one or more individuals on that day; and
(c)
step 2 applies to that day;
for the purposes of step 2 the day only counts as follows:
(d)
if you and your partner have made a written agreement nominating one of you as the member who can claim the offset under this Subdivision in respect of the individual or individuals for that period:
(i)
the nominated member may, subject to subsection (5), count the whole of each day in the period for each such individual; and
(ii)
the other member must not count any days in the period for each such individual; or
(e)
if paragraph (d) does not apply
-
only half of each day in the period may, subject to subsection (5), be counted.
Modification for individuals not members of a couple
61-670(5)
If you and one or more other entities (other than your partner (within the meaning of the
Social Security Act 1991
)) each satisfy subsection
61-620(2)
or
(4)
for an individual on a day, you may only count for the purposes of step 2 (or that step as affected by subsection (4)) a portion of that day that is reasonable having regard to:
(a)
the objects of this subsection; and
(b)
the living arrangements of the individual.
61-670(6)
The objects of subsection (5) are:
(a)
to determine the extent to which the individual was in your care on a day; and
(b)
to prevent double counting in distributing the tax offset under this Subdivision between you and others who share the care of the individual.
S 61-670 inserted by No 141 of 2008, s 3 and Sch 1 item 3, applicable to the 2008-09 income year and later years.
61-680
(Repealed) SECTION 61-680 Excess education expenses
(Repealed by No 109 of 2014)
History
S 61-680 repealed by No 109 of 2014, s 3 and Sch 10 item 13, effective 17 October 2014. S 61-680 formerly read:
SECTION 61-680 Excess education expenses
61-680(1)
You have an amount covered by this section from an income year if the amount worked out under paragraph
61-650(1)(a)
for the year exceeds your offset limit for the year under section
61-660
.
61-680(2)
The amount that is covered by this section is the lesser of:
(a)
all of the expenses covered for you by section
61-640
for the year that can be counted for the purposes of subparagraph
61-650(1)(a)(i)
; and
(b)
twice the amount of the excess.
Note:
The excess is worked out by comparing half of the education expenses to the offset limit (see section
61-650
). Paragraph (b) doubles any excess so that the excess expenses have their original value and can be counted in full the next year.
Example:
A family with one child in full-time secondary schooling has incurred education expenses of
$
2,000 in an income year. Under section
61-650
, these expenses are halved (
$
1,000) and then compared to the offset limit (
$
750). The excess of
$
250 is doubled under subsection (2) to restore it to the original expense amount. In the next year, the family can count this
$
500 of expenses towards the offset.
S 61-680 inserted by No 141 of 2008, s 3 and Sch 1 item 3, applicable to the 2008-09 income year and later years.
Subdivision 61-N
-
Seafarer tax offset
History
Subdiv 61-N inserted by No 57 of 2012, s 3 and Sch 3 item 2, effective 21 June 2012.
Guide to Subdivision 61-N
SECTION 61-695
61-695
What this Subdivision is about
A company may get a refundable tax offset for withholding payments made to Australian seafarers for overseas voyages if:
(a) the voyage is made by a vessel for which the company, or another entity, has a certificate under the
Shipping Reform (Tax Incentives) Act 2012;
and
(b) the company employs or engages the seafarer on such voyages for at least 91 days in the income year.
History
S 61-695 inserted by No 57 of 2012, s 3 and Sch 3 item 2, effective 21 June 2012.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 61-700 |
Object of this Subdivision |
| 61-705 |
Who is entitled to the seafarer tax offset |
| 61-710 |
Amount of the seafarer tax offset |
Operative provisions
SECTION 61-700
61-700
Object of this Subdivision
The object of this Subdivision is to stimulate opportunities for Australian seafarers to:
(a)
be employed or engaged on overseas voyages; and
(b)
acquire maritime skills.
History
S 61-700 inserted by No 57 of 2012, s 3 and Sch 3 item 2, effective 21 June 2012.
SECTION 61-705
Who is entitled to the seafarer tax offset
61-705(1)
A company is entitled to a
*
tax offset for an income year if:
(a)
the company is a corporation to which paragraph 51(xx) of the Constitution applies; and
(b)
there is at least one individual in respect of whom the company has 91 days or morein the income year that qualify for the tax offset as mentioned in subsection (2).
61-705(2)
A particular day qualifies for the
*
tax offset under this Subdivision for a company for an individual if:
(a)
on the day, the individual is an Australian resident who:
(i)
is employed by the company; or
(ii)
performs work or services under an
*
arrangement under which the company makes, at any time, a payment that is a
*
withholding payment covered by subsection
12-60(1)
in Schedule
1
to the
Taxation Administration Act 1953
(about labour hire arrangements); and
(b)
on the day, the individual is so employed, or performs the work or services, on a voyage of a vessel as master, deck officer, integrated rating, steward or engineer; and
(c)
the company, or another entity, has a certificate for the vessel that applies to the day under Part 2 of the
Shipping Reform (Tax Incentives) Act 2012
; and
(d)
in the course of the voyage, the vessel travels between:
(i)
a port in Australia and a port outside Australia; or
(ii)
a port in Australia and a place in the waters of the sea above the continental shelf of a country other than Australia; or
(iii)
a port outside Australia and a place in the waters of the sea above the continental shelf of Australia; or
(iv)
a place in the waters of the sea above the continental shelf of Australia and a place in the waters of the sea above the continental shelf of a country other than Australia; or
(v)
ports outside Australia; or
(vi)
places beyond the continental shelf of Australia;
whether or not the ship travels between 2 or more ports in Australia in the course of the voyage.
Note 1:
An entity may be entitled to a certificate for a vessel under Part 2 of the
Shipping Reform (Tax Incentives) Act 2012
if it meets the requirements (relating to such things as tonnage, registration and usage) in that Act.
Note 2:
An entity cannot be entitled to a certificate for a vessel under Part 2 of that Act for a day before 1 July 2012: see paragraph 8(4)(b) of that Act.
61-705(3)
For the purposes of paragraph (2)(b), the voyage of a vessel is taken to:
(a)
start on the earliest day on which one or more of the following occurs:
(i)
*
shipping cargo to be carried on the voyage, or any part of the voyage, is first loaded into the vessel;
(ii)
*
shipping passengers to be carried on the voyage, or any part of the voyage, first board the vessel;
(iii)
the voyage begins; and
(b)
end on the latest day on which any of the following occurs:
(i)
all shipping cargo carried on the voyage, or any part of the voyage, is completely unloaded from the vessel;
(ii)
all shipping passengers carried on the voyage, or any part of the voyage, finally disembark from the vessel;
(iii)
the voyage ends.
History
S 61-705 inserted by No 57 of 2012, s 3 and Sch 3 item 2, effective 21 June 2012.
SECTION 61-710
61-710
Amount of the seafarer tax offset
The amount of the company
'
s
*
tax offset for the income year is the amount (rounded up to the nearest whole dollar) worked out using the formula:
Gross payment amounts
×
30%
where:
gross payment amounts
means the total amount of
*
withholding payments covered by section
12-35
or subsection
12-60(1)
in Schedule
1
to the
Taxation Administration Act 1953
payable by the company in the income year:
(a)
to individuals in respect of whom the company has 91 days or more in the income year that qualify for the offset as mentioned in subsection
61-705(2)
; and
(b)
in respect of any of the following:
(i)
the employment of, or the work or services performed by, such individuals in relation to which the company so qualifies for the offset;
(ii)
leave accrued by such individuals during such employment, work or services;
(iii)
training of such individuals that relates to such employment, work or services.
History
S 61-710 inserted by No 57 of 2012, s 3 and Sch 3 item 2, effective 21 June 2012.
Subdivision 61-P
-
ESVCLP tax offset
History
Subdiv 61-P inserted by No 54 of 2016, s 3 and Sch 2 item 2, applicable in relation to contributions made on or after 1 July 2016 to an ESVCLP that became registered, under subsection
13-1(1A)
of the
Venture Capital Act 2002
, on or after 7 December 2015 (whether or not it was conditionally registered, under subsection
13-5(1A)
of that Act, before that day). No 54 of 2016, s 3 and Sch 2 item 5 contains the following provision:
5 Contributions made to ESVCLPs in previous income years
5
Subdivision 61-P of the
Income Tax Assessment Act 1997
as added by this Part, and item 4 of this Part, apply in relation to the first income year starting on or after 1 July 2016 (the
initial income year
) as if:
(a)
any contribution that a limited partner of an ESVCLP made to the ESVCLP during an earlier income year were made during the initial income year; and
(b)
any eligible venture capital investments made by the ESVCLP:
(i)
during an earlier income year; and
(ii)
after the first contribution made by the partner to the ESVCLP;
were made during the initial income year.
Guide to Subdivision 61-P
SECTION 61-750
What this Subdivision is about
A limited partner in an ESVCLP may be entitled to a tax offset for investing in the ESVCLP.
History
S 61-750 inserted by No 54 of 2016, s 3 and Sch 2 item 2, applicable in relation to contributions made on or after 1 July 2016 to an ESVCLP that became registered, under subsection
13-1(1A)
of the
Venture Capital Act 2002
, on or after 7 December 2015 (whether or not it was conditionally registered, under subsection
13-5(1A)
of that Act, before that day). See note under Subdiv
61-P
heading.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 61-755 |
Object of this Subdivision |
| 61-760 |
Who is entitled to the ESVCLP tax offset |
| 61-765 |
Amount of the ESVCLP tax offset
-
general case |
| 61-770 |
Amount of the ESVCLP tax offset
-
members of trusts or partnerships |
| 61-775 |
Amount of the ESVCLP tax offset
-
trustees |
Operative provisions
SECTION 61-755
61-755
Object of this Subdivision
The object of this Subdivision is to encourage new investment in early stage venture capital by providing investors with a
*
tax offset to reduce the effective cost of such investments.
History
S 61-755 inserted by No 54 of 2016, s 3 and Sch 2 item 2, applicable in relation to contributions made on or after 1 July 2016 to an ESVCLP that became registered, under subsection
13-1(1A)
of the
Venture Capital Act 2002
, on or after 7 December 2015 (whether or not it was conditionally registered, under subsection
13-5(1A)
of that Act, before that day). See note under Subdiv
61-P
heading.
SECTION 61-760
Who is entitled to the ESVCLP tax offset
General case
61-760(1)
A
*
limited partner of an
*
ESVCLP is entitled to a
*
tax offset for an income year if:
(a)
the partner contributes to the ESVCLP during the income year; and
(b)
the partner is not a trust or partnership.
Members of trusts or partnerships
61-760(2)
A
*
member of a trust or partnership is entitled to a
*
tax offset for an income year if the trust or partnership would be entitled to a tax offset, under this section, for the income year if it were an individual.
Trustees
61-760(3)
A trustee of a trust is entitled to a
*
tax offset for an income year if:
(a)
the trust would be entitled to a tax offset, under this section, for the income year if it were an individual; and
(b)
in a case where the trustee has determinedpercentages under subsection
61-770(2)
in relation to the
*
members of the trust
-
the sum of those percentages is not 100%; and
(c)
the trustee is liable to be assessed or has been assessed, and is liable to pay
*
tax, on a share of, or all or a part of, the trust
'
s
*
net income under section
98
,
99
or
99A
of the
Income Tax Assessment Act 1936
for that income year.
History
S 61-760 inserted by No 54 of 2016, s 3 and Sch 2 item 2, applicable in relation to contributions made on or after 1 July 2016 to an ESVCLP that became registered, under subsection
13-1(1A)
of the
Venture Capital Act 2002
, on or after 7 December 2015 (whether or not it was conditionally registered, under subsection
13-5(1A)
of that Act, before that day). See note under Subdiv
61-P
heading.
SECTION 61-765
Amount of the ESVCLP tax offset
-
general case
61-765(1)
If subsection
61-760(1)
applies, the amount of the
*
tax offset for the income year is 10% of the lesser of:
(a)
the sum of the amounts the partner contributes to the
*
ESVCLP during the income year, reduced by any amounts excluded under subsection (2); and
(b)
the amount (the
investment related amount
) worked out under subsection (3).
61-765(2)
The following amounts are excluded for the purposes of paragraph (1)(a) in relation to the income year:
(a)
any parts of a contribution the partner made to the
*
ESVCLP that the ESVCLP is, or will become, obliged to repay to the partner, whether or not:
(i)
the obligation arises during the income year; or
(ii)
the obligation arises only when the partner requests repayment;
(b)
any parts of a contribution the partner made to the ESVCLP that, during the income year, are repaid to the partner within 12 months after the contribution was made;
(c)
any parts of a contribution the partner made to the ESVCLP to the extent that they comprise a commitment to provide money or property in the future.
61-765(3)
Work out the investment related amount as follows:
Partner
'
s share
×
Sum of eligible venture capital investments
where:
partner
'
s share
is the partner
'
s share of the capital of the
*
ESVCLP at the end of the income year, expressed as a percentage of the entire capital of the ESVCLP.
sum of eligible venture capital investments
is the sum of:
(a)
all the amounts of the
*
eligible venture capital investments made by the
*
ESVCLP during the period starting at the start of the income year and ending 2 months after the end of the income year; and
(b)
all the incidental costs, incurred during that period, of making those investments; and
(c)
all the administrative expenses, incurred during that period, associated with those investments.
61-765(4)
For the purposes of paragraph (a) of the definition of
sum of eligible venture capital investments
in subsection (3), disregard the amounts of any
*
eligible venture capital investments that were taken into account in working out the amount of a
*
tax offset under this Subdivision for a preceding income year.
History
S 61-765 inserted by No 54 of 2016, s 3 and Sch 2 item 2, applicable in relation to contributions made on or after 1 July 2016 to an ESVCLP that became registered, under subsection
13-1(1A)
of the
Venture Capital Act 2002
, on or after 7 December 2015 (whether or not it was conditionally registered, under subsection
13-5(1A)
of that Act, before that day). See note under Subdiv
61-P
heading.
SECTION 61-770
Amount of the ESVCLP tax offset
-
members of trusts or partnerships
61-770(1)
If subsection
61-760(2)
applies, the amount of the
*
member
'
s
*
tax offset for the income year is as follows:
Determined share of notional tax offset
×
Notional tax offset amount
where:
determined share of notional tax offset
is the percentage determined under subsection (2) for the
*
member.
notional tax offset amount
is what would, under section
61-765
, have been the amount of the trust
'
s or partnership
'
s
*
tax offset (the
notional tax offset
) if the trust or partnership had been an individual.
61-770(2)
The trustee or partnership may determine the percentage of the notional tax offset that is the
*
member
'
s share of the notional tax offset.
61-770(3)
If, under the terms and conditions under which the trust or partnership operates, the
*
member would be entitled to a fixed proportion of any
*
capital gain from a
*
disposal:
(a)
relating to the trust or partnership; and
(b)
of investments made as a result of the contributions that gave rise to the notional tax offset; and
(c)
happening at the end of the income year to which the notional tax offset relates;
the percentage determined under subsection (2) must be equivalent to that fixed proportion, and a determination of any other percentage has no effect.
History
S 61-770(3) substituted by No 8 of 2020, s 3 and Sch 2 item 4, effective 1 April 2020 and applicable in relation to income years commencing on or after 1 July 2018. S 61-770(3) formerly read:
61-770(3)
If, under the terms and conditions under which the trust or partnership operates, the
*
member would be entitled to a fixed proportion of any
*
capital gain from a
*
disposal, were the disposal to happen in relation to trust or partnership, of investments made as a result of contributions that gave rise to the notional tax offset:
(a)
the percentage determined under subsection (2) must be equivalent to that fixed proportion at the end of the income year to which the notional tax offset relates; and
(b)
a determination of any other percentage has no effect.
61-770(4)
The trustee or partnership must give the
*
member written notice of the determination. The notice:
(a)
must enable the member to work out the amount of the member
'
s
*
tax offset by including enough information to enable the member to work out the member
'
s share of the notional tax offset; and
(b)
must be given to the member within 3 months after the end of the income year, or within such further time as the Commissioner allows.
61-770(5)
The sum of all the percentages determined under subsection (2) in relation to the
*
members of the trust or partnership must not exceed 100%.
History
S 61-770 inserted by No 54 of 2016, s 3 and Sch 2 item 2, applicable in relation to contributions made on or after 1 July 2016 to an ESVCLP that became registered, under subsection
13-1(1A)
of the
Venture Capital Act 2002
, on or after 7 December 2015 (whether or not it was conditionally registered, under subsection
13-5(1A)
of that Act, before that day). See note under Subdiv
61-P
heading.
SECTION 61-775
61-775
Amount of the ESVCLP tax offset
-
trustees
If subsection
61-760(3)
applies, the amount of the
*
tax offset for the income year is the difference between:
(a)
what would, under section
61-765
, have been the amount of the tax offset to which the trust would have been entitled if it had been an individual; and
(b)
if
*
members of the trust are entitled to tax offsets under subsection
61-760(2)
arising from the same contributions from which the trustee
'
s entitlement arises under subsection
61-760(3)
-
the sum of the amounts, under section
61-770
, of those tax offsets.
History
S 61-775 inserted by No 54 of 2016, s 3 and Sch 2 item 2, applicable in relation to contributions made on or after 1 July 2016 to an ESVCLP that became registered, under subsection
13-1(1A)
of the
Venture Capital Act 2002
, on or after 7 December 2015 (whether or not it was conditionally registered, under subsection
13-5(1A)
of that Act, before that day). See note under Subdiv
61-P
heading.
Division 63
-
Common rules for tax offsets
History
Div 63 inserted by
No 58 of 2006
, s 3 and Sch 7 item 64, applicable to assessments for the 2006-07 income year and later income years.
Guide to Division 63
SECTION 63-1
What this Division is about
This Division sets out some rules that are common to all tax offsets.
History
S 63-1 inserted by
No 58 of 2006
, s 3 and Sch 7 item 64, applicable to assessments for the 2006-07 income year and later income years.
TABLE OF SECTIONS
TABLE OF SECTIONS
| 63-10 |
Priority rules |
SECTION 63-10
Priority rules
63-10(1)
If you have one or more
*
tax offsets for an income year, apply them against your basic income tax liability in the order shown in the table. To the extent that an amount of a tax offset remains, the table tells you what happens to it.
|
Order of applying tax offsets
|
|
Item
|
Tax offset
|
What happens to any excess
|
| 5 |
*
Tax offset under section 160AAAA of the
Income Tax Assessment Act 1936
(tax offset for low income aged persons and pensioners) |
Your entitlement to it is transferred in accordance with regulations made under that Act |
| 10 |
*
Tax offset under section 160AAAB of the
Income Tax Assessment Act 1936
(tax offset for low income aged persons and pensioners
-
trustee assessed under section 98) |
Your entitlement to it is transferred in accordance with regulations made under that Act |
| 15 |
*
Tax offset under section 160AAA of the
Income Tax Assessment Act 1936
(tax offset in respect of certain benefits) |
Your entitlement to it is transferred in accordance with regulations made under that Act |
| 17 |
(Repealed by No 92 of 2020) |
|
| 20 |
Any
*
tax offset not covered by another item in this table |
You cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year |
| 21 |
*
Tax offset under Subdivision 301-F (veterans
'
superannuation (invalidity pension) tax offset) |
Apply it against your liability (if any) to pay
*
Medicare levy for the income year.
To the extent that an amount of it remains, apply it against your liability (if any) to pay
*
Medicare levy (fringe benefits) surcharge for the income year.
To the extent that an amount of it remains, you cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year |
| 22 |
*
Tax offset for
*
foreign income tax under Division 770 |
Apply it against your liability (if any) to pay
*
Medicare levy for the income year.
To the extent that an amount of it remains, apply it against your liability (if any) to pay
*
Medicare levy (fringe benefits) surcharge for the income year.
To the extent that an amount of it remains, you cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year |
| 25 |
(Repealed by No 49 of 2019) |
|
| 30 |
Landcare and water facility
*
tax offset under the former Subdivision 388-A |
You may carry it forward to a later income year (under Division 65) |
| 32 |
ESVCLP
*
tax offset under Subdivision 61-P |
You may carry it forward to a later income year (under Division 65) |
| 33 |
*
Tax offset under Subdivision 360-A (about early stage investors in innovation companies) |
You may carry it forward to a later income year (under Division 65) |
| 35 |
A
*
tax offset under Division 355 (about R
&
D) that is not covered by section 67-30 |
You may carry it forward to a later income year (under Division 65) |
| 40 |
*
Tax offset that is subject to the refundable tax offset rules (see Division 67) |
You can get a refund of the remaining amount |
| 45 |
*
Tax offset arising from payment of
*
franking deficit tax (see section 205-70) |
You may carry it forward to a later income year (under section 205-70) |
Note 1:
Section
13-1
lists tax offsets.
Note 2:
Former Division
388
was repealed by the
New Business Tax System (Capital Allowances
-
Transitional and Consequential) Act 2001
.
Note 3:
(Repealed by
No 143 of 2007
)
Note 4:
The remaining amount of a carry forward tax offset may be reduced by section
65-30
or
65-35
to take account of net exempt income.
Note 5:
Tax offsets mentioned in items 5 and 10 are more commonly referred to as the Senior Australians Tax Offset.
History
S 63-10(1) amended by No 29 of 2023, s 3 and Sch 9 item 6, by inserting table item 21, effective 24 June 2023.
S 63-10(1) amended by No 92 of 2020, s 3 and Sch 1 items 20 and 21, by repealing table item 17 and notes 6 and 7, effective 15 October 2020 and applicable in relation to assessments for the 2020-21 income year or a later income year. Table item 17 and notes 6 and 7 formerly read:
| 17 |
*
Tax offset under section
159N
of the
Income Tax Assessment Act 1936
(rebate for certain low-income taxpayers) |
You cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year |
Note 6:
Rules about applying the rebate for certain low-income taxpayers are set out in subsection 159N(4) of the
Income Tax Assessment Act 1936
.
Note 7:
Item 17 of the table will be repealed on 1 July 2024 by the
Treasury Laws Amendment (Personal Income Tax Plan) Act 2018
.
S 63-10(1) amended by No 49 of 2019, s 3 and Sch 4 item 77, by repealing table item 25, effective 1 July 2019. Table item 25 formerly read:
| 25 |
Child care
*
tax offset under Subdivision 61-IA |
You may transfer your entitlement to it to your
*
spouse (under sections 61-496 and 61-497) |
S 63-10(1) amended by No 47 of 2018, s 3 and Sch 1 item 7, by inserting note 7, effective 1 July 2018.
S 63-10(1) amended by No 54 of 2016, s 3 and Sch 2 item 3, by inserting table item 32, applicable in relation to contributions made on or after 1 July 2016 to an ESVCLP that became registered, under subsection
13-1(1A)
of the
Venture Capital Act 2002
, on or after 7 December 2015 (whether or not it was conditionally registered, under subsection
13-5(1A)
of that Act, before that day).
S 63-10(1) amended by No 54 of 2016, s 3 and Sch 1 item 13, by inserting table item 33, applicable in relation to equity interests issued on or after 1 July 2016.
S 63-10(1) amended by No 159 of 2011, s 3 and Sch 3 items 20 and 21, by inserting
"
and pensioners
"
in table items 5 and 10, column headed
"
Tax offset
"
, and substituting
"
benefits
"
for
"
pensions
"
in table item 15, column headed
"
Tax offset
"
, applicable to the 2012-13 year of income and later years of income.
S 63-10(1) amended by No 12 of 2012, s 3 and Sch 6 item 235, by substituting
"
Apply it against your liability (if any) to pay
*
Medicare levy for the income year. To the extent that an amount of it remains, apply it against your liability (if any) to pay
*
Medicare levy (fringe benefits) surcharge for the income year. To the extent that an amount of it remains, you cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year
"
for
"
You cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year
"
in the cell at table item 22, column headed
"
What happens to any excess
"
, applicable to income years starting on or after 1 July 2008.
S 63-10(1) amended by No 93 of 2011, s 3 and Sch 3 item 1, by inserting table item 35, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading.
S 63-10(1) amended by No 43 of 2011, s 3 and Sch 2 items 4 and 5, by inserting table item 17 and note 6 at the end, applicable to assessments for the 2011-12 income year and later income years.
S 63-10(1) amended by
No 164 of 2007
, s 3 and Sch 10 item 11, by substituting
"
(see Division 67)
"
for
"
in Division 67
"
in table item 40, effective 25 September 2007.
S 63-10(1) amended by
No 143 of 2007
, s 3 and Sch 1 items 143 to 145, by inserting table item 22, repealing table item 35 and repealing Note 3, applicable in relation to income years, statutory accounting periods and notional accounting periods starting on or after the first 1 July that occurs after 24 September 2007. For savings provisions, see note under
Div 770 heading
. Table item 35 and Note 3 formerly read:
35 ... Foreign tax credit under Division 18 of Part III of the
Income Tax Assessment Act 1936
... You may carry it forward to a later income year (under section 160AFE of that Act)
Note 3:
Section
160AFE
of the
Income Tax Assessment Act 1936
also affects how much of a foreign tax credit can be applied against your basic income tax liability.
63-10(2)
Within each item, apply the tax offsets in the order in which they arose.
Note:
This would be relevant if you have carry forward tax offsets of the same category for different income years.
History
S 63-10 inserted by
No 58 of 2006
, s 3 and Sch 7 item 64, applicable to assessments for the 2006-07 income year and later income years.
Division 65
-
Tax offset carry forward rules
History
Div 65 inserted by No 91 of 1998.
SECTION 65-10
What this Division is about
This Division sets out the rules about carrying forward excess tax offsets to later income years.
You can only carry forward certain tax offsets.
Before you can apply a tax offset to reduce the amount of income tax that you will pay in a later year, you must apply it to reduce certain amounts of net exempt income.
The same rules that prevent companies from utilising certain losses of earlier income years prevent companies from applying tax offsets that they have carried forward.
History
S 65-10 amended by No 88 of 2013, s 3 and Sch 6 item 15, by substituting
"
utilising certain losses of earlier income years
"
for
"
using certain losses that are carried forward
"
, effective 29 June 2013.
S 65-10 amended by
No 97 of 2008
, s 3 and Sch 3 item 85, by substituting
"
income years
"
for
"
years of income
"
, effective 3 October 2008.
S 65-10 inserted by No 91 of 1998.
Operative provisions
65-20
(Repealed) SECTION 65-20 Which tax offsets this Division applies to
(Repealed by
No 58 of 2006
)
History
S 65-20 repealed by
No 58 of 2006
, s 3 and Sch 7 item 65, applicable to assessments for the 2006-07 income year and later income years. S 65-20 formerly read:
SECTION 65-20 WHICH TAX OFFSETS THIS DIVISION APPLIES TO
65-20
This Division only applies to a
*
tax offset if it is stated to be subject to the tax offset carry forward rules.
Note:
The only tax offset that is subject to these rules is the landcare and water facility tax offset under the former Subdivision
388-A
.
S 65-20 amended by No 77 of 2001 and inserted by No 91 of 1998.
65-25
(Repealed) SECTION 65-25 When you can carry forward a tax offset
(Repealed by
No 58 of 2006
)
History
S 65-25 repealed by
No 58 of 2006
, s 3 and Sch 7 item 65, applicable to assessments for the 2006-07 income year and later income years. S 65-25 formerly read:
SECTION 65-25 When you can carry forward a tax offset
65-25(1)
You can carry forward a
*
tax offset if the amount of the tax offset exceeds the amount of income tax that you would have to pay if:
(a)
you had not got the tax offset; and
(b)
you had not got any
*
tax offsets that are of a higher priority.
Note:
Section 65-35 explains how to apply tax offsets that are carried forward.
65-25(2)
The following table sets out the order of priority for
*
tax offsets (with the highest priority shown first):
|
Priority of tax offsets (highest to lowest)
|
|
Item
|
Tax offset
|
Relevant provision
|
| 1A |
*
tax offsets that are subject to the refundable tax offset rules |
Division 67 |
|
. |
| 1 |
foreign tax credits |
section 160AFE of the
Income Tax Assessment Act 1936 |
|
. |
| 2 |
landcare and water facility tax offset |
the former Subdivision 388-A |
|
. |
| 2A |
child care tax offset |
Subdivision 61-IA |
|
. |
| 3 |
all other tax offsets |
listed in section 13-1 |
Note:
Division
388
was repealed by the
New Business Tax System (Capital Allowances
-
Transitional Provisions and Consequential Amendments) Act 2001
.
History
S 65-25(2) amended by No 160 of 2005 and No 66 of 2003.
S 65-25 amended by No 77 of 2001, No 128 of 1998 and inserted by No 91 of 1998.
SECTION 65-30
Amount carried forward
65-30(1)
The amount of the
*
tax offset that is carried forward is the amount of the excess worked out under Division
63
.
65-30(2)
However, reduce the
*
tax offset by the amount worked out by multiplying your
*
net exempt income by:
(a)
if you are a base rate entity (within the meaning of the
Income Tax Rates Act 1986
) for the income year
-
0.25; or
(b)
otherwise
-
0.3;
if you have a taxable income for the income year.
History
S 65-30(2) amended by No 41 of 2017 (as amended by No 134 of 2018), s 3 and Sch 5 item 21, by substituting
"
0.25
"
for
"
0.26
"
in para (a), effective 1 July 2021.
S 65-30(2) amended by No 41 of 2017 (as amended by No 134 of 2018), s 3 and Sch 5 item 19, by substituting
"
0.26
"
for
"
0.275
"
in para (a), effective 1 July 2020.
S 65-30(2) amended by No 41 of 2017, s 3 and Sch 5 item 6, by substituting
"
base rate entity (within the meaning of the
Income Tax Rates Act 1986
)
"
for
"
*
small business entity
"
in para (a), effective 1 July 2017.
S 65-30(2) amended by No 41 of 2017, s 3 and Sch 5 item 1, by substituting
"
0.275
"
for
"
0.285
"
in para (a), effective 1 July 2016.
History
S 65-30 substituted by No 66 of 2015, s 3 and Sch 1 item 9, applicable to assessments for years of income starting on or after 1 July 2015. S 65-30 formerly read:
SECTION 65-30 Amount carried forward
65-30
The amount of the
*
tax offset that is carried forward is the amount of the excess worked out under Division 63. However, if you have a taxable income for the income year, reduce the tax offset by the following amount:
| *
Net exempt income
×
0.3 |
S 65-30 amended by
No 58 of 2006
, s 3 and Sch 7 item 66, by substituting
"
Division 63
"
for
"
subsection 65-25(1)
"
, applicable to assessments for the 2006-07 income year and later income years.
S 65-30 amended by No 66 of 2003 and inserted by No 91 of 1998.
SECTION 65-35
How to apply carried forward tax offsets
65-35(1)
A
*
tax offset that you have carried forward decreases the amount of income tax that you would otherwise have to pay under section
4-10
in a later income year.
65-35(2)
You apply a
*
tax offset that is carried forward to a later year in accordance with the priorities set out in Division
63
as if it were a tax offset for that later year.
History
S 65-35(2) substituted by
No 58 of 2006
, s 3 and Sch 7 item 67, applicable to assessments for the 2006-07 income year and later income years. S 65-35(2) formerly read:
65-35(2)
You must apply
*
tax offsets that are carried forward in the priority order, applying the lowest priority tax offset first, and you must apply tax offsets of a particular type in the order in which you became entitled to them.
65-35(3)
Before you apply a
*
tax offset to reduce the amount of income tax that you pay in a later income year in which you have a taxable income, you must apply it to reduce to nil any
*
net exempt income for:
(a)
that later income year; or
(b)
any income year after the year in which the tax offset arose and before the later income year in which you had a taxable income but did not apply the tax offset to reduce the amount of income tax you had to pay.
Note:
Paragraph (b) would apply to cases such as where your taxable income was below your tax-free threshold or where you had other tax offsets that reduced your income tax to nil.
History
S 65-35(3) amended by No 66 of 2015, s 3 and Sch 1 item 10, by omitting
"
In reducing net exempt income, each 30 cents of tax offset reduces the net exempt income by
$
1.
"
before the note, applicable to assessments for years of income starting on or after 1 July 2015.
S 65-35(3) amended by No 66 of 2003.
65-35(3A)
In reducing
*
net exempt income for an income year under subsection (3):
(a)
if you were a base rate entity (within the meaning of the
Income Tax Rates Act 1986
) for the year
-
each 25 cents of
*
tax offset reduces the net exempt income by
$
1; or
(b)
otherwise
-
each 30 cents of tax offset reduces the net exempt income by
$
1.
History
S 65-35(3A) amended by No 41 of 2017 (as amended by No 134 of 2018), s 3 and Sch 5 item 22, by substituting
"
25
"
for
"
26
"
in para (a), effective 1 July 2021.
S 65-35(3A) amended by No 41 of 2017 (as amended by No 134 of 2018), s 3 and Sch 5 item 20, by substituting
"
26
"
for
"
27.5
"
in para (a), effective 1 July 2020.
S 65-35(3A) amended by No 41 of 2017, s 3 and Sch 5 item 7, by substituting
"
base rate entity (within the meaning of the
Income Tax Rates Act 1986
)
"
for
"
*
small business entity
"
in para (a), effective 1 July 2017.
S 65-35(3A) amended by No 41 of 2017, s 3 and Sch 5 item 2, by substituting
"
27.5
"
for
"
28.5
"
in para (a), effective 1 July 2016.
S 65-35(3A) inserted by No 66 of 2015, s 3 and Sch 1 item 11, applicable to assessments for years of income starting on or after 1 July 2015.
65-35(4)
You can only apply a
*
tax offset that you have carried forward to the extent that it has not already been applied.
Note:
Section
65-40
contains special restrictions on applying carried forward tax offsets.
History
S 65-35 inserted by No 91 of 1998.
SECTION 65-40
When a company cannot apply a tax offset
65-40(1)
In working out its
*
tax offset for the
*
current year, a company cannot apply a
*
tax offset it has carried forward if, assuming:
(a)
the tax offset were a
*
tax loss of the company forthe income year in which it became entitled to the tax offset; and
(b)
section
165-20
(deducting part of a tax loss) were disregarded;
Subdivision 165-A would prevent the company from deducting it for the current year.
Note:
Subdivision
165-A
deals with the deductibility of a company's tax loss for an earlier income year if there has been a change in the ownership or control of the company in the loss year or the income year.
65-40(2)
If subsection (1) prevents the company from applying the
*
tax offset, it can apply the
part
of the tax offset that it is reasonable to consider relates to a
part
of the income year in which it became entitled to the tax offset, but only if, assuming that part of that income year had been treated as the whole of it, the company would have been entitled to apply the tax offset.
History
S 65-40 inserted by No 91 of 1998.
SECTION 65-50
Effect of bankruptcy
65-50(1)
If during the
*
current year:
(a)
you became bankrupt; or
(b)
you were released from debts under a law relating to bankruptcy;
you cannot apply a
*
tax offset that you have carried forward from an earlier income year in working out the tax offset for the current year or a later income year.
65-50(2)
Subsection (1) applies even though your bankruptcy is annulled if:
(a)
the annulment happens under section 74 of the
Bankruptcy Act 1966
because your creditors have accepted your proposal for a composition or scheme of arrangement; and
(b)
under the composition or scheme of arrangement concerned, you were, will be or may be released from debts from which you would have been released if instead you had been discharged from the bankruptcy.
History
S 65-50 inserted by No 16 of 1999.
SECTION 65-55
Deduction for amounts paid for debts incurred before bankruptcy
65-55(1)
If:
(a)
you pay an amount in the
*
current year for a debt that you incurred in an earlier income year; and
(b)
you have a
*
tax offset referred to in section
65-50
for that earlier income year;
you can deduct the amount paid, but only to the extent that it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in calculating the amount of the tax offset.
65-55(2)
The total of the following amounts cannot exceed the total of the expenditure that the Commissioner is satisfied was taken into account in calculating the amount of the
*
tax offset that you are unable to apply because of section
66-50
:
(a)
your deductions under subsection (1) for amounts paid in the
*
current year or an earlier income year for debts incurred in the income year for which you have the tax offset; and
(b)
the expenditure that the Commissioner is satisfied was taken into account in calculating any amounts of the tax offset that, apart from section 65-50, would have been applied in reducing your
*
net exempt income for the current year or earlier income years.
History
S 65-55 inserted by No 16 of 1999.
Division 67
-
Refundable tax offset rules
History
Div 67 substituted by No 79 of 2000, inserted by No 128 of 1998.
SECTION 67-10
67-10
What this Division is about
If your total tax offsets exceed your basic income tax liability, and some of those offsets are subject to the refundable tax offset rules, you may get a refund instead of paying income tax (see section
63-10
). This Division tells you which tax offsets are subject to the refundable tax offset rules.
History
S 67-10 substituted by
No 164 of 2007
, s 3 and Sch 10 item 12, effective 25 September 2007. S 67-10 formerly read:
SECTION 67-10 What this Division is about
This Division sets out the rules about refunds of tax offsets
S 67-10 substituted by No 79 of 2000, inserted by No 128 of 1998.
Operative provisions
SECTION 67-20
67-20
Which tax offsets this Division applies to
This Division only applies to a
*
tax offset if it is stated to be subject to the refundable tax offset rules.
History
S 67-20 substituted by No 79 of 2000, inserted by No 128 of 1998.
SECTION 67-23
67-23
Refundable tax offsets
The following
*
tax offsets are subject to the refundable tax offset rules:
|
Refundable tax offsets
|
|
Item
|
Subject matter
|
Tax offset
|
| 3 |
*
principal beneficiary of a
*
special disability trust |
the
*
tax offset available under subsection
95AB(5)
of the
Income Tax Assessment Act 1936 |
| 5 |
private health insurance |
private health insurance tax offsets under Subdivision
61-G
, other than those arising under subsection
61-205(2) |
| 10 |
(Repealed by No 49 of 2019) |
|
| 12 |
(Repealed by No 109 of 2014) |
|
| 13 |
seafarers |
the
*
tax offset available under Subdivision
61-N |
| 13A |
(Repealed by No 96 of 2014) |
|
| 14 |
corporate losses |
*
loss carry back tax offset under Division
160 |
| 14A |
attribution managed investment trusts
-
foreign resident member |
the
*
tax offset available under section
276-110 |
| 15 |
no-TFN contributions income |
the
*
tax offset available under Subdivision
295-J |
| 20 |
films |
the
*
tax offsets available under Division
376 |
| 21 |
*
digital games |
the
*
tax offsets available under Division
378 |
| 23 |
National Rental Affordability Scheme |
the
*
tax offsets available under Division
380 |
| 24 |
(Repealed by No 83 of 2014) |
|
| 25 |
(Repealed by No 84 of 2013) |
|
| 27 |
junior minerals exploration incentive |
the
*
tax offset available under Subdivision
418-B |
| 28 |
critical minerals production incentive |
the
*
CMPTI tax offset (see Division
419
) |
| 29 |
hydrogen production incentive |
the
*
tax offset available under Division
421 |
| 30 |
life insurance company
'
s subsidiary joining consolidated group |
the
*
tax offset available under subsection
713-545(5) |
| 35 |
(Repealed by No 93 of 2011) |
|
Note 1:
Subsection
61-205(2)
of this Act deals with tax offsets for trustees who are assessed and liable to pay tax under section
98
of the
Income Tax Assessment Act 1936
.
Note 2:
For the tax offsets available under Division
207
and Subdivision
210-H
(franked distributions), see section
67-25
.
Note 3:
For the tax offsets available under Division
355
(about R
&
D), see section
67-30
.
History
S 67-23 amended by No 9 of 2025, s 3 and Sch 1 item 2, by inserting table item 29, effective 1 January 2026.
S 67-23 amended by No 9 of 2025, s 3 and Sch 2 item 13, by inserting table item 28, effective 1 April 2025.
S 67-23 amended by No 29 of 2023, s 3 and Sch 1 item 1, by inserting table item 21, effective 1 July 2023 and applicable in relation to expenditure incurred on or after 1 July 2022.
S 67-23 amended by No 92 of 2020, s 3 and Sch 2 item 1, by inserting table item 14, effective 1 January 2021.
S 67-23 amended by No 49 of 2019, s 3 and Sch 4 item 78, by repealing table item 10, effective 1 July 2019. Table item 10 formerly read:
| 10 |
children |
first child tax offsets under Subdivision 61-I |
S 67-23 amended by No 15 of 2018, s 3 and Sch 1 item 12, by substituting
"
junior minerals exploration incentive
"
for
"
exploration development incentive
"
in table item 27, effective 1 April 2018. For application and transitional provisions, see note under Subdiv
418-DA
heading.
S 67-23 amended by No 53 of 2016, s 3 and Sch 6 item 22, by inserting table item 14A, effective 5 May 2016. For application provision, see note under Div
276
heading.
S 67-23 amended by No 21 of 2015, s 3 and Sch 6 item 1, by inserting table item 23, applicable in relation to the 2015-16, 2016-17 and 2017-18 income years, but not in relation to any later income years.
S 67-23 amended by No 109 of 2014, s 3 and Sch 10 item 14, by repealing table item 12, effective 17 October 2014. Table item 12 formerly read:
| 12 |
education expenses |
the
*
tax offset available under Subdivision 61-M for income years ending before 1 July 2011 |
S 67-23 amended by No 96 of 2014, s 3 and Sch 2 item 20, by repealing table item 13A, effective 30 September 2014 and applicable to assessments for the income year before the income year in which this Schedule commences, for the income year in which this Schedule commences and for later income years. For transitional and saving provision see note under Div
160
heading. Table item 13A formerly read:
| 13A |
corporate losses |
*
loss carry back tax offset under Division 160 |
S 67-23 amended by No 83 of 2014, s 3 and Sch 3 item 3, by repealing table item 24, effective 18 July 2014. No 83 of 2014, s 3 and Sch 3 items 6 and 7 contain the following application and transitional provision:
6 Application of amendments
6
The amendments made by this Schedule apply to assessments for the 2014-15 income year and later income years.
Note:
The provisions of the
Income Tax Assessment Act 1997
repealed by this Schedule will continue to apply to assessments for the 2012-13 and 2013-14 income years.
7 Transitional
-
timing relating to 2013-14 income year
7
The following provisions of the
Income Tax Assessment Act 1997
:
(a)
subparagraph
385-175(1)(e)(ii)
;
(b)
subparagraph
385-190(1)(c)(ii)
;
apply for the purposes of assessments for the 2013-14 income year as if those provisions referred to 30 June 2014 rather than 30 June 2015.
Table item 24 formerly read:
| 24 |
conservation tillage |
the
*
tax offset available under Subdivision
385-J |
S 67-23 amended by No 118 of 2013, s 3 and Sch 1 item 41, by repealing table item 14, effective 29 June 2013. For application, transitional and saving provisions see note under Div
291
heading. Table item 14 formerly read:
| 14 |
refunded
*
excess concessional contributions |
the
*
tax offset available under paragraph 292-467(2)(b) |
S 67-23 amended by No 88 of 2013, s 3 and Sch 5 item 1, by inserting table item 13A, effective 29 June 2013.
S 67-23 amended by No 84 of 2013, s 3 and Sch 8 item 28, by repealing table item 25, effective 28 June 2013. Table item 25 formerly read:
| 25 |
National Urban Water and Desalination Plan |
urban water tax offset under Subdivision 402-W |
S 67-23 amended by No 75 of 2012, s 3 and Sch 4 item 7, by inserting table item 14, applicable in relation to excess concessional contributions for the financial year beginning on 1 July 2011 and later financial years.
S 67-23 amended by No 57 of 2012, s 3 and Sch 3 item 3, by inserting table item 13, effective 21 June 2012.
S 67-23 amended by No 50 of 2012, s 3 and Sch 3 item 13, by inserting
"
for income years ending before 1 July 2011
"
in table item 12, effective 27 May 2012.
S 67-23 amended by No 132 of 2011, s 3 and Sch 2 item 9, by inserting table item 24, effective 2 April 2012.
S 67-23 amended by No 93 of 2011, s 3 and Sch 3 items 2 and 3, by repealing table item 35 and inserting note 3 at the end, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading. Table item 35 formerly read:
| 35 |
research and development |
the
*
tax offset available under section 73I of the
Income Tax Assessment Act 1936 |
S 67-23 amended by No 90 of 2010, s 3 and Sch 4 item 5, by inserting table item 3, applicable to assessments for the 2008-09 income year and later income years.
S 67-23 amended by No 56 of 2010, s 3 and Sch 6 item 131, by inserting table item 23, applicable to tax offsets for the 2008-09 income year and later income years.
S 67-23 amended by No 56 of 2010, s 3 and Sch 6 item 129, by inserting table item 12, applicable to tax offsets for the 2009/10 income year and later income years.
S 67-23 inserted by No 42 of 2009, s 3 and Sch 4 item 3, effective 23 June 2009.
SECTION 67-25
Refundable tax offsets
-
franked distributions
67-25(1)
*
Tax offsets available under Division
207
(which sets out the effects of receiving a
*
franked distribution) or Subdivision
210-H
(which sets out the effects of receiving a
*
distribution
*
franked with a venture capital credit) are subject to the refundable tax offset rules, unless otherwise stated in this section.
History
S 67-25(1) to (1E) substituted for s 67-25(1) to (1C) by No 66 of 2003.
S 67-25(1) amended by No 57 of 2002.
67-25(1A)
Where the trustee of a
*
non-complying superannuation fund or a
*
non-complying approved deposit fund is entitled to a
*
tax offset under Division
207
because a
*
franked distribution is made to, or
*
flows indirectly to, the trustee, the tax offset is not subject to the refundable tax offset rules.
History
S 67-25(1A) amended by
No 9 of 2007
, s 3 and Sch 10 item 1, by substituting
"
*
non-complying approved deposit fund
"
for
"
*
non-complying ADF
"
, effective 15 March 2007.
S 67-25(1) to (1E) substituted for s 67-25(1) to (1C) by No 66 of 2003.
S 67-25(1A) inserted by No 57 of 2002.
67-25(1B)
If:
(a)
the trustee of a trust to whom a
*
franked distribution
*
flows indirectly under subsection
207-50(4)
is entitled to a
*
tax offset under Division
207
for an income year because of the distribution; and
(b)
the trustee is liable to be assessed under section
98
or
99A
of the
Income Tax Assessment Act 1936
on a share of, or all or a part of, the trust
'
s
*
net income for that income year;
the tax offset is not subject to the refundable tax offset rules.
History
S 67-25(1B) substituted by No 83 of 2004, s 3 and Sch 10 item 23, applicable to events that occur on or after 1 July 2002, subject to the rules on the application of Part 3-6 of the
Income Tax Assessment Act 1997
set out in the
Income Tax (Transitional Provisions) Act 1997
. S 67-25(1B) formerly read:
67-25(1B)
Where:
(a)
a trustee is entitled to a
*
tax offset under Division
207
because a
*
franked distribution
*
flows indirectly to the trustee in circumstances described in subsection
207-35(4)
(which deals with trustees who are liable to be assessed on the net income of a trust under section 98, 99 or 99A of the
Income Tax Assessment Act 1936
); and
(b)
the trustee is liable to be assessed under section 98 or 99A of the
Income Tax Assessment Act 1936
on a share of the net income of the trust estate that is, in whole or in part, attributable to the distribution;
the tax offset is not subject to the refundable tax offset rules.
S 67-25(1) to (1E) substituted for s 67-25(1) to (1C) by No 66 of 2003.
S 67-25(1B) inserted by No 57 of 2002.
67-25(1C)
Where a
*
corporate tax entity is entitled to a
*
tax offset under Division
207
because a
*
franked distribution is made to the entity, the tax offset is not subject to the refundable tax offset rules unless:
(a)
the entity is an
*
exempt institution that is eligible for a refund; or
(b)
the entity is a
*
life insurance company and the
*
membership interest on which the distribution was made was not held by the company on behalf of its shareholders at any time during the period:
(i)
starting at the beginning of the income year of the company in which the distribution is made; and
(ii)ending when the distribution is made.
History
S 67-25(1) to (1E) substituted for s 67-25(1) to (1C) by No 66 of 2003.
S 67-25(1C) inserted by No 57 of 2002.
67-25(1D)
Where a
*
corporate tax entity is entitled to a
*
tax offset under Division
207
because a
*
franked distribution
*
flows indirectly to the entity, the tax offset is not subject to the refundable tax offset rules unless:
(a)
the entity is an
*
exempt institution that is eligible for a refund; or
(b)
the entity is a
*
life insurance company and the company
'
s interest in the
*
membership interest on which the distribution was made was not held by the company on behalf of its shareholders at any time during the period:
(i)
starting at the beginning of the income year of the company in which the distribution is made; and
(ii)
ending when the distribution is made.
History
S 67-25(1) to (1E) substituted for s 67-25(1) to (1C) by No 66 of 2003.
67-25(1DA)
A
*
tax offset is not subject to the refundable tax offset rules if:
(a)
an entity is entitled to the tax offset under Division
207
because a
*
franked distribution is made, or
*
flows indirectly, to the entity; and
(b)
the entity is a foreign resident and carries on business in Australia at or through a permanent establishment of the entity in Australia, being a permanent establishment within the meaning of:
(i)
a double tax agreement (as defined in Part
X
of the
Income Tax Assessment Act 1936
) that relates to a foreign country and affects the entity; or
(ii)
subsection
6(1)
of that Act, if there is no such agreement; and
(c)
the distribution is attributable to the permanent establishment.
History
S 67-25(1DA) inserted by No 64 of 2005.
67-25(1E)
Where a
*
corporate tax entity is entitled to a
*
tax offset under Subdivision
210-H
because a
*
distribution
*
franked with a venture capital credit is made to the entity, the tax offset is not subject to the refundable tax offset rules unless:
(a)
the entity is a
*
life insurance company; and
(b)
the
*
membership interest on which the distribution was made was not held by the company on behalf of its shareholders at any time during the period:
(i)
starting at the beginning of the income year of the company in which the distribution is made; and
(ii)
ending when the distribution is made.
History
S 67-25(1) to (1E) substituted for s 67-25(1) to (1C) by No 66 of 2003.
67-25(2)
(Repealed by No 42 of 2009)
History
S 67-25(2) repealed by No 42 of 2009, s 3 and Sch 4 item 6, effective 23 June 2009. S 67-25(2) formerly read:
Private health insurance
67-25(2)
Private health insurance tax offsets under Subdivision
61-G
, except those arising under subsection
61-205(2)
, are subject to the refundable tax offset rules.
Note:
Subsection
61-205(2)
deals with tax offsets for trustees who are assessed and liable to pay tax under section
98
of the
Income Tax Assessment Act 1936
.
S 67-25(2) substituted by No 32 of 2007, s 3 and Sch 3 item 9B, effective 1 July 2007. S 67-25(2) formerly read:
67-25(2)
Private health insurance tax offsets under Subdivision
61-H
, except those arising under subsection
61-335(4)
, are subject to the refundable tax offset rules.
Note:
Subsection 61-335(4) deals with tax offsets for trustees who are assessed and liable to pay tax under section
98
of the
Income Tax Assessment Act 1936
.
S 67-25(2) amended by No 66 of 2003.
67-25(2A)
(Repealed by No 42 of 2009)
History
S 67-25(2A) repealed by No 42 of 2009, s 3 and Sch 4 item 6, effective 23 June 2009. S 67-25(2A) formerly read:
Films
67-25(2A)
The
*
tax offsets available under Division
376
are subject to the refundable tax offset rules.
S 67-25(2A) amended by
No 164 of 2007
, s 3 and Sch 10 item 13, by substituting
"
The
*
tax offsets available under Division 376 are
"
for
"
The
*
tax offset available under Division 376 is
"
, effective 25 September 2007.
S 67-25(2A) inserted by No 27 of 2002.
67-25(2B)
(Repealed by No 42 of 2009)
History
S 67-25(2B) repealed by No 42 of 2009, s 3 and Sch 4 item 6, effective 23 June 2009. S 67-25(2B) formerly read:
National Rental Affordability Scheme
67-25(2B)
The
*
tax offsets available under Division
380
are subject to the refundable tax offset rules.
S 67-25(2B) inserted by No 130 of 2008, s 3 and Sch 1 item 5, applicable to assessments for the 2008-09 income year and later income years.
67-25(3)
(Repealed by No 42 of 2009)
History
S 67-25(3) repealed by No 42 of 2009, s 3 and Sch 4 item 6, effective 23 June 2009. S 67-25(3) formerly read:
Research and development
67-25(3)
The tax offset available under section
73I
of the
Income Tax Assessment Act 1936
(research and development) is subject to the refundable tax offset rules.
S 67-25(3) inserted by No 170 of 2001.
67-25(4)
(Repealed by No 42 of 2009)
History
S 67-25(4) repealed by No 42 of 2009, s 3 and Sch 4 item 6, effective 23 June 2009. S 67-25(4) formerly read:
First child
67-25(4)
First child tax offsets under Subdivision
61-I
are subject to the refundable tax offset rules.
S 67-25(4) inserted by No 32 of 2002.
67-25(5)
(Repealed by No 42 of 2009)
History
S 67-25(5) repealed by No 42 of 2009, s 3 and Sch 4 item 6, effective 23 June 2009. S 67-25(5) formerly read:
Life insurance company
'
s subsidiary joining consolidated group
67-25(5)
The
*
tax offset available under subsection
713-545(5)
is subject to the refundable tax offset rules.
S 67-25(5) inserted by No 41 of 2005.
67-25(6)
(Repealed by No 42 of 2009)
History
S 67-25(6) repealed by No 42 of 2009, s 3 and Sch 4 item 6, effective 23 June 2009. S 67-25(6) formerly read:
Tax offset in respect of no-TFN contributions income
67-25(6)
The
*
tax offset available under Subdivision
295-J
is subject to the refundable tax offset rules.
S 67-25(6) inserted by
No 9 of 2007
, s 3 and Sch 1 item 9, applicable to the 2007-2008 income year and later years.
67-25(7)
(Repealed by No 56 of 2010)
History
S 67-25(7) repealed by No 56 of 2010, s 3 and Sch 6 item 133, applicable to tax offsets for the 2009/10 income year and later income years. S 67-25(7) formerly read:
Education expenses tax offset
67-25(7)
The
*
tax offset available under Subdivision 61-M is subject to the refundable tax offset rules.
S 67-25(7) inserted by No 141 of 2008, s 3 and Sch 1 item 4, applicable to the 2008-2009 income year and later years.
S 67-25 substituted by No 79 of 2000 and inserted by No 128 of 1998.
SECTION 67-30
Refundable tax offsets
-
R
&
D
67-30(1)
A
*
tax offset to which an
*
R
&
D entity is entitled under section
355-100
(about R
&
D) for an income year is subject to the refundable tax offset rules if the amount of the tax offset is worked out in accordance with item 1 of the table in subsection
355-100(1)
(disregarding subsection
355-100(3)
).
Note:
Otherwise, the tax offset will be a non-refundable tax offset (see item 35 of the table in subsection
63-10(1)
).
History
S 67-30(1) amended by No 92 of 2020, s 3 and Sch 4 items 1 and 2, by substituting
"
if the amount of the tax offset is worked out in accordance with item 1 of the table in subsection 355-100(1) (disregarding subsection 355-100(3))
"
for
"
if all or part of the amount of the tax offset is worked out using the percentage in item 1 of the table in subsection 355-100(1)
"
and the note for notes 1 and 2, effective 1 January 2021 and applicable in relation to assessments for income years commencing on or after 1 July 2021. Notes 1 and 2 formerly read:
Note 1:
Otherwise, the tax offset will be a non-refundable tax offset (see item 35 of the table in subsection 63-10(1)).
Note 2:
This subsection can apply to an entitlement under any subsection of section 355-100.
S 67-30(1) amended by No 13 of 2015, s 3 and Sch 1 items 1 and 2, by inserting
"
all or part of
"
and substituting note 2, applicable in relation to an R
&
D entity
'
s assessments for income years commencing on or after 1 July 2014. Note 2 formerly read:
Note 2:
This subsection can apply to an entitlement under subsection
355-100(1)
or
(2)
.
67-30(2)
Without limiting its effect apart from this subsection, subsection (1) also has the effect it would have if:
(a)
subsection (3) had not been enacted; and
(b)
the reference in subsection (1) to an
*
R
&
D entity were, by express provision, confined to an R
&
D entity that:
(i)
is a
*
constitutional corporation; or
(ii)
has its registered office (within the meaning of the
Corporations Act 2001
) or principal place of business (within the meaning of that Act) located in a Territory.
67-30(3)
Without limiting its effect apart from this subsection, subsection (1) also has the effect it would have if:
(a)
subsection (2) had not been enacted; and
(b)
this Act applied so that
*
tax offsets under section
355-100
could only be worked out in respect of
*
R
&
D activities conducted or to be conducted:
(i)
solely in a Territory; or
(ii)
solely outside of Australia; or
(iii)
solely in a Territory and outside of Australia; or
(iv)
for the dominant purpose of supporting
*
core R
&
D activities conducted, or to be conducted, solely in a Territory.
History
S 67-30 inserted by No 93 of 2011, s 3 and Sch 3 item 4, effective 8 September 2011. For application, savings and transitional provisions see note under Div
355
heading.
Former s 67-30 repealed by
No 58 of 2006
, s 3 and Sch 7 item 68, applicable to assessments for the 2006-07 income year and later income years. S 67-30 formerly read:
SECTION 67-30 When you can get a refund of a tax offset
67-30
You can get a refund of
*
tax offsets that are subject to the refundable tax offset rules if the total of those offsets exceeds the amount of income tax that you would have to pay if you had not got those tax offsets and any tax offset under section
205-70
(but had got all your other tax offsets).
Former s 67-30 amended by No 23 of 2005, substituted by No 79 of 2000 and inserted by No 128 of 1998.
SECTION 67-35
67-35
Amount of refund
(Repealed by
No 58 of 2006
)
History
S 67-35 repealed by
No 58 of 2006
, s 3 and Sch 7 item 68, applicable to assessments for the 2006-07 income year and later income years. S 67-35 formerly read:
SECTION 67-35 Amount of refund
67-35
The amount of the refund of
*
tax offsets is the amount of the excess referred to in section
67-30
.
S 67-35 inserted by No 79 of 2000.
PART 2-25
-
TRADING STOCK
History
Pt 2-25 inserted by No 121 of 1997.
Division 70
-
Trading stock
History
Div 70 inserted by No 121 of 1997.
SECTION 70-1
What this Division is about
This Division deals with amounts you can deduct, and amounts included in your assessable income, because of these situations:
•
you acquire an item of trading stock;
•
you carry on a business and hold trading stock at the start or the end of the income year;
•
you dispose of an item of trading stock outside the ordinary course of business, or it ceases to be trading stock in certain other circumstances.
History
S 70-1 inserted by No 121 of 1997.
SECTION 70-5
70-5
The 3 key features of tax accounting for trading stock
The purpose of income tax accounting for trading stock is to produce an overall result that (apart from concessions) properly reflects your activities with your trading stock during the income year.
There are 3 key features:
(1)
You bring your gross outgoings and earnings to account, not your net profits and losses on disposal of trading stock.
(2)
Those outgoings and earnings are on revenue account, not capital account. As a result:
(a)
the gross outgoings are usually deductible as general deductions under section
8-1
(when the trading stock becomes trading stock on hand); and
(b)
the gross earnings are usually assessable as ordinary income under section
6-5
(when the trading stock stops being trading stock on hand).
(3)
You must bring to account any difference between the value of your trading stock on hand at the start and at the end of the income year. This is done in such a way that, in effect:
(a)
you account for the value of your trading stock as assessable income; and
(b)
you carry that value over as a corresponding deduction for the next income year.
Note:
You may not have to bring to account that difference if you are a small business entity: see Division
328
.
History
S 70-5 amended by
No 80 of 2007
, s 3 and Sch 3 item 149, by substituting
"
a small business entity
"
for
"
an STS taxpayer
"
in the note, applicable in relation to the 2007-08 income year and later income years.
S 70-5 amended by No 78 of 2001, inserted by No 121 of 1997.
Subdivision 70-A
-
What is trading stock
SECTION 70-10
Meaning of
trading stock
70-10(1)
Trading stock
includes:
(a)
anything produced, manufactured or acquired that is held for purposes of manufacture, sale or exchange in the ordinary course of a
*
business; and
(b)
*
live stock.
History
S 70-10(1) renumbered from s 70-10 and amended by No 71 of 2012, s 3 and Sch 2 items 1 to 3, by substituting
"
*
live stock.
"
for
"
*
live stock;
"
in para (b) and omitting
"
but does not include a
*
Division 230 financial arrangement.
"
from the end of the subsection, applicable in relation to CGT assets owned after 7.30 pm, by legal time in the Australian Capital Territory, on 10 May 2011 (the
budget time
). However, the amendments do not apply in relation to a CGT asset owned by an entity after the budget time if, just before the budget time, the entity owned and held the CGT asset as trading stock.
70-10(2)
Trading stock
does not include:
(a)
a
*
Division 230 financial arrangement; or
(b)
a
*
CGT asset covered by section
275-105
that:
(i)
is owned by a
*
complying superannuation entity; or
(ii)
is a
*
complying superannuation asset of a
*
life insurance company.
History
S 70-10(2) amended by No 64 of 2020, s 3 and Sch 3 item 77, by substituting
"
*
complying superannuation entity
"
for
"
*
complying superannuation fund, a
*
complying approved deposit fund or a
*
pooled superannuation trust
"
in para (b)(i), effective 1 July 2020.
S 70-10(2) amended by No 70 of 2015, s 3 and Sch 1 item 189, by substituting
"
superannuation
"
for
"
superannuation/FHSA
"
in para (b)(ii), effective 1 July 2015.
S 70-10(2) inserted by No 71 of 2012, s 3 and Sch 2 item 4, applicable in relation to CGT assets owned after 7.30 pm, by legal time in the Australian Capital Territory, on 10 May 2011 (the
budget time
). However, the amendments do not apply in relation to a CGT asset owned by an entity after the budget time if, just before the budget time, the entity owned and held the CGT asset as trading stock.
Note 1:
Shares in a PDF are not trading stock. See section
124ZO
of the
Income Tax Assessment Act 1936
.
Note 2:
If a company becomes a PDF, its shares are taken not to have been trading stock before it became a PDF. See section
124ZQ
of the
Income Tax Assessment Act 1936
.
History
S 70-10 substituted by
No 15 of 2009
, s 3 and Sch 1 item 68, effective 26 March 2009. For application and transitional provisions see note under Div
230
heading. S 70-10 formerly read:
Meaning of
trading stock
70-10
Trading stock
includes:
(a)
anything produced, manufactured or acquired that is held for purposes of manufacture, sale or exchange in the ordinary course of a
*
business; and
(b)
*
live stock.
Note 1:
Shares in a PDF are
not
trading stock. See section
124ZO
of the
Income Tax Assessment Act 1936
.
Note 2:
If a company becomes a PDF, its shares are taken not to have been trading stock before it became a PDF. See section
124ZQ
of the
Income Tax Assessment Act 1936
.
S 70-10 inserted by No 121 of 1997.
SECTION 70-12
70-12
Registered emissions units
A
*
registered emissions unit is not
*
trading stock.
History
S 70-12 inserted by No 132 of 2011, s 3 and Sch 2 item 10, effective 2 April 2012.
Subdivision 70-B
-
Acquiring trading stock
SECTION 70-15
In which income year do you deduct an outgoing for trading stock
?
70-15(1)
This section tells you in which income year to deduct under section 8-1 (about general deductions) an outgoing incurred in connection with acquiring an item of
*
trading stock. (The outgoing must be deductible under that section.)
70-15(2)
If the item becomes part of your
*
trading stock on hand before or during the income year in which you incur the outgoing, deduct it in that income year.
70-15(3)
Otherwise, deduct the outgoing in the first income year:
(a)
during which the item becomes part of your
*
trading stock on hand; or
(b)
for which an amount is included in your assessable income in connection with the disposal of that item.
Note:
You can deduct your capital costs of acquiring land carrying trees or of acquiring a right to fell trees, to the extent that the trees are felled for sale, or for use in manufacture, by you. (This is because the trees will then usually become your trading stock.) See section
70-120
.
History
S 70-15(3) amended by No 41 of 2005.
S 70-15 amended by No 78 of 2001 and inserted by No 121 of 1997.
SECTION 70-20
70-20
Non-arm
'
s length transactions
If:
(a)
you incur an outgoing that is directly attributable to your buying or obtaining delivery of an item of your
*
trading stock; and
(b)
you and the seller of the item did not deal with each other at
*
arm
'
s length; and
(c)
the amount of the outgoing is greater than the
*
market value of what the outgoing is for;
the amount of the outgoing is instead taken to be that market value. This has effect for the purposes of applying this Act to you and also to the seller.
Note:
This section also affects the value of the item of trading stock at the end of an income year if you value it at its cost under section
70-45
(Value of trading stock at end of income year).
History
S 70-20 amended by No 101 of 2013, s 3 and Sch 2 items 24 and 25, by substituting
"
Note
"
for
"
Note 1
"
and repealing Note 2, applicable: (a) in respect of tax other than withholding tax
-
in relation to income years starting on or after the date mentioned in subsection
815-15(2)
of the
Income Tax (Transitional Provisions) Act 1997
, as inserted; and (b) in respect of withholding tax
-
in relation to income derived, or taken to be derived, in income years starting on or after that date. Note 2 formerly read:
Note 2:
This section is disregarded in applying Division 13 (about transfer-pricing arrangements) of Part III of the
Income Tax Assessment Act 1936
.
S 70-20 amended by No 88 of 2013, s 3 and Sch 7 item 236, by substituting
"
*
arm's length
"
for
"
arm's length
"
in para (b), effective 28 June 2013.
S 70-20 inserted by No 121 of 1997.
SECTION 70-25
70-25
Cost of trading stock is not a capital outgoing
An outgoing you incur in connection with acquiring an item of
*
trading stock is not an outgoing of capital or of a capital nature.
Note:
This means that paragraph
8-1(2)(a)
does not prevent the outgoing from being a general deduction under section
8-1
.
History
S 70-25 inserted by No 121 of 1997.
SECTION 70-30
Starting to hold as trading stock an item you already own
70-30(1)
If you start holding as
*
trading stock an item you already own, but do not hold as trading stock, you are treated as if:
(a)
just before it became trading stock, you had sold the item to someone else (at
*
arm
'
s length) for whichever of these amounts you elect:
•
its cost (as worked out under subsection (3) or (4));
•
its
*
market value just before it became trading stock; and
(b)
you had immediately bought it back for the same amount.
Example:
You start holding a depreciating asset as part of your trading stock. You are treated as having sold it just before that time, and immediately bought it back, for its cost or market value, whichever you elect. (Subdivision 40-D provides for the consequences of selling depreciating assets.)
The same amount is normally a general deduction under section
8-1
as an outgoing in connection with acquiring trading stock. The amount is also taken into account in working out the item
'
s cost for the purposes of section 70-45 (about valuing trading stock at the end of the income year).
Note:
Depending on how you elect under paragraph (1)(a), the sale may or may not give rise to a capital gain or a capital loss for the purposes of Parts 3-1 and 3-3 (about CGT). It does not if you elect to be treated as having sold the item for what would have been its cost: see subsection
118-25(2)
. However, it can if you elect market value.
History
S 70-30(1) amended by No 88 of 2013, s 3 and Sch 7 item 236, by substituting
"
*
arm's length
"
for
"
arm's length
"
in para (a), effective 28 June 2013.
S 70-30(1) amended by No 77 of 2001 and No 46 of 1998.
History
S 70-30(1) amended by No 88 of 2013, No 77 of 2001 and No 46 of 1998.
When you must make the election
70-30(2)
You must make the election by the time you lodge your
*
income tax return for the income year in which you start holding the item as
*
trading stock. (If you do not make the election by then because you do not realise until later that you started to hold the item as trading stock, you must make the election as soon as is reasonable after realising that.)
However, the Commissioner can allow you to make it later (in either case).
How to work out the item
'
s cost
70-30(3)
The item
'
s cost is what would have been its cost for the purposes of section 70-45 (about valuing trading stock at the end of the income year) if it had been your
*
trading stock ever since you last acquired it. In working that out, disregard section
70-55
(about acquiring live stock by natural increase).
70-30(4)
However, if you last acquired the item for no consideration, its cost is worked out using this table:
|
Cost of item acquired for no consideration
|
|
Item
|
In this case:
|
The cost is:
|
| 1 |
you acquired the item during or after the 1998
-
99 income year, and the acquisition involved a
*
CGT event |
the item
'
s
*
market value when you last acquired it |
|
. |
| 2 |
you acquired the item before or during the 1997
-
98 income year, and the acquisition involved a disposal of the item to you within the meaning of former Part IIIA (Capital gains and capital losses) of the
Income Tax Assessment Act 1936 |
the item
'
s
*
market value when you last acquired it |
|
. |
| 3 |
your acquisition of the item involved the item:
(a) devolving to you as someone
'
s
*
legal personal representative; or
(b)
*
passing to you as a beneficiary in someone
'
s estate;
and, if a
*
CGT event had happened in relation to the item just before you started holding it as
*
trading stock, a
*
capital gain or
*
capital loss could have resulted that would have been taken into account in working out your
*
net capital gain or
*
net capital loss for the income year of the event |
(a) if the person died during or after his or her 1998
-
99 income year
-
the dead person
'
s
*
cost base for the item just before his or her death; or
(b) if the person died before or during his or her 1997
-
98 income year
-
the dead person
'
s indexed cost base (within the meaning of former Part IIIA (Capital gains and capital losses) of the
Income Tax Assessment Act 1936
) for the item just before his or her death (but worked out disregarding former section 160ZG (which affects the indexed cost base for a non-listed personal use asset) of that Act) |
|
. |
| 4 |
any other case where you last acquired the item for no consideration |
a nil amount |
History
S 70-30(4) amended by
No 101 of 2006
, s 3 and Sch 2 items 676 to 678, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the
CCH Australian Income Tax Legislation archive
.
S 70-30(4) substituted by No 46 of 1998.
Exceptions
70-30(5)
Subsection (1) does not apply if you start holding any of the following as
*
trading stock because they are severed from land:
(a)
standing or growing crops;
(b)
crop-stools;
(c)
trees planted and tended for sale.
(This does not prevent subsection (1) from applying to a severed item that you later start holding as trading stock.)
History
S 70-30(5) amended by No 12 of 2012, s 3 and Sch 6 item 37, by substituting
"
trading stock
"
for
"
*
trading stock
"
(second occurring), effective 21 March 2012.
70-30(6)
Subsection (1) does not apply if:
(a)
you start holding an item as
*
trading stock; and
(b)
immediately before you started holding the item as trading stock, you
*
held the item as a
*
registered emissions unit.
History
S 70-30(6) inserted by No 132 of 2011, s 3 and Sch 2 item 11, effective 2 April 2012.
Note:
A transaction that this section treats as having occurred is disregarded for the purposes of these provisions of the
Income Tax Assessment Act 1936
:
•
subsection 47A(10) (which treats certain benefits as dividends paid by a CFC)
•
paragraph 103A(3A)(c) (which affects whether a company is a public company for an income year).
History
S 70-30 inserted by No 121 of 1997.
Subdivision 70-C
-
Accounting for trading stock you hold at the start or end of the income year
General rules
SECTION 70-35
You include the value of your trading stock in working out your assessable income and deductions
70-35(1)
If you carry on a
*
business, you compare:
(a)
the
*
value of all your
*
trading stock on hand at the start of the income year; and
(b)
the
*
value of all your trading stock on hand at the end of the income year.
Note:
You may not need to do this stocktaking if you are a small business entity: see Division
328
.
History
S 70-35(1) amended by No 12 of 2012, s 3 and Sch 6 item 38, by substituting
"
trading stock
"
for
"
*
trading stock
"
in para (b), effective 21 March 2012.
S 70-35(1) amended by
No 80 of 2007
, s 3 and Sch 3 item 150, by substituting
"
a small business entity
"
for
"
an STS taxpayer
"
in the note, applicable in relation to the 2007-08 income year and later income years.
S 70-35(1) amended by No 78 of 2001.
70-35(2)
Your assessable income includes any excess of the
*
value at the
end
of the income year over the value at the
start
of the income year.
70-35(3)
On the other hand, you can deduct any excess of the
*
value at the
start
of the income year over the value at the
end
of the income year.
History
S 70-35 inserted by No 121 of 1997.
SECTION 70-40
Value of trading stock at start of income year
70-40(1)
The
value
of an item of
*
trading stock on hand at the start of an income year is the same amount at which it was taken into account under this Division or Subdivision
328-E
(about trading stock for small business entities) at the end of the last income year.
History
S 70-40(1) amended by
No 80 of 2007
, s 3 and Sch 3 item 151, by substituting
"
small business entities
"
for
"
STS taxpayers
"
, applicable in relation to the 2007-08 income year and later income years.
S 70-40(1) amended by No 78 of 2001.
70-40(2)
The
value
of the item is a nil amount if the item was not taken into account under this Division or Subdivision
328-E
(about trading stock for small business entities) at the end of the last income year.
History
Archived:
S 70-40(2) (notes 1 and 2) repealed as inoperative by
No 101 of 2006
, s 3 and Sch 1 item 232, effective 14 September 2006. For
application and savings provisions
and for former wording see the
CCH Australian Income Tax Legislation archive
.
History
S 70-40(2) amended by
No 80 of 2007
, s 3 and Sch 3 item 151, by substituting
"
small business entities
"
for
"
STS taxpayers
"
, applicable in relation to the 2007-08 income year and later income years.
S 70-40(2) amended by No 119 of 2002 and No 78 of 2001.
S 70-40 inserted by No 121 of 1997.
SECTION 70-45
Value of trading stock at end of income year
70-45(1)
You must elect to
value
each item of
*
trading stock on hand at the end of an income year at:
(a)
its
*
cost; or
(b)
its market selling value; or
(c)
its replacement value.
Note:
An item
'
s market selling value at a particular time may not be the same as its market value.
History
S 70-45(1) amended by No 176 of 1999.
70-45(1A)
In working out the
*
cost, market selling value or replacement value of an item of
*
trading stock (other than an item the
*
supply of which cannot be a
*
taxable supply) at the end of an income year, disregard an amount equal to the amount of the
*
input tax credit (if any) to which you would be entitled if:
(a)
you had
*
acquired the item at that time; and
(b)
the acquisition had been solely for a
*
creditable purpose; and
Note:
Some assets, such as shares, cannot be the subject of a taxable supply.
History
S 70-45(1A) inserted by No 176 of 1999.
70-45(2)
The rest of this Subdivision deals with cases where the normal operation of this section is modified, or where a different valuation method may or must be used. The table sets out other cases where that happens because of provisions outside this Subdivision.
|
Rules about the value of trading stock
|
|
Item
|
For this situation:
|
See:
|
| 1 |
(Repealed by No 23 of 2005) |
|
|
. |
| 2 |
In working out the attributable income of a non-resident trust estate, trading stock is taken to be valued at cost. |
Section 102AAY of the
Income Tax Assessment Act 1936 |
|
. |
| 3 |
In working out the attributable income of a controlled foreign corporation, the corporation must value at cost. |
Section 397 of the
Income Tax Assessment Act 1936 |
|
. |
| 4 |
Some anti-avoidance provisions reduce the amount that is taken to be the cost of an item of trading stock. |
Subsections 52A(7), 82KH(1N), 82KL(6) and 100A(6B) of the
Income Tax Assessment Act 1936 |
|
. |
| 5 |
The value of the item at the end of an income year may be the same as at the start of the year for a small business entity |
Subdivision 328-E of this Act |
|
. |
| 6 |
The hybrid mismatch rules disallow an amount of a deduction for an outgoing incurred in connection with acquiring an item of
*
trading stock |
Section 832-60 of this Act |
History
S 70-45(2) amended by No 84 of 2018, s 3 and Sch 1 item 9, by inserting item 6 at the end of the table, effective 1 October 2018 and applicable to assessments for income years starting on or after 1 January 2019.
S 70-45(2) amended by
No 80 of 2007
, s 3 and Sch 3 item 152, by substituting
"
a small business entity
"
for
"
an STS taxpayer
"
in table item 5, applicable in relation to the 2007-08 income year and later income years.
S 70-45(2) amended by No 23 of 2005.
S 70-45 amended by No 78 of 2001 and inserted by No 121 of 1997.
Special valuation rules
SECTION 70-50
70-50
Valuation if trading stock obsolete etc.
You may elect to
value
an item of your
*
trading stock below all the values in section
70-45
if:
(a)
that is warranted because of obsolescence or any other special circumstances relating to that item; and
(b)
the value you elect is reasonable.
History
S 70-50 inserted by No 121 of 1997.
SECTION 70-55
Working out the cost of natural increase of live stock
70-55(1)
The
cost
of an animal you hold as
*
live stock that you acquired by natural increase is whichever of these you elect:
(a)
the actual cost of the animal;
(b)
the cost prescribed by the regulations for each animal in the applicable class of live stock.
70-55(2)
However, if you incur a service fee for insemination and, as a result, acquire a horse by natural increase, its
cost
is the greater of:
(a)
the amount worked out under subsection (1); and
(b)
the part of the service fee that is attributable to your acquiring the horse.
70-55(3)
An election under this section must be made by the time you lodge your
*
income tax return for the income year in which you acquired the animal. However, the Commissioner can allow you to make it later.
History
S 70-55 inserted by No 121 of 1997.
SECTION 70-60
Valuation of horse breeding stock
70-60(1)
For a horse at least 3 years old that you acquired under a contract and hold for breeding, you can elect a
value
other than the values in section
70-45
.
70-60(2)
The
value
you can elect for the horse at the end of the income year is worked out using the table:
|
Value of horse breeding stock
|
|
If the horse is:
|
…
you can value it at this amount:
|
| female 12 years or over |
$
1 |
|
. |
| any other horse |
the
*
horse opening value less the
*
horse reduction amount (see section 70-65) |
70-60(3)
However, if the value worked out under subsection (2) would be less than
$
1, you must elect the
value
of
$
1.
70-60(4)
A horse's age is to be measured in whole years as at the end of the relevant income year. The age of a horse not born on 1 August is determined as if the horse had been born on the last 1 August before it was actually born.
History
S 70-60 inserted by No 121 of 1997.
SECTION 70-65
Working out the horse opening value and the horse reduction amount
70-65(1)
The
horse opening value
is:
(a)
if the horse has been your
*
live stock ever since the start of the income year
-
its
*
value as
*
trading stock at the start of the income year; or
(b)
otherwise
-
the horse's base amount (see subsection (3)).
70-65(2)
The
horse reduction amount
is worked out as follows:
(a)
for female horses under 12 years of age:
Base amount
Reduction factor
|
× |
Breeding days
Days in income year |
(b)
for any male horse:
| Base amount |
× |
Nominated
percentage |
× |
Breeding days
Days in income year |
70-65(3)
In this section:
base amount
is the lesser of:
(a)
the horse's
*
cost; and
(b)
the horse's
*
adjustable value when it most recently became your
*
live stock.
breeding days
is the number of whole days in the income year since you most recently began to hold the horse for breeding.
nominated percentage
is any percentage, up to 25%, you nominate when you make the election in section
70-60
.
reduction factor
is the greater of:
(a)
3; and
(b)
the difference between 12 and the horse's age when you most recently began to hold it for breeding.
History
S 70-65 amended by No 77 of 2001, inserted by No 121 of 1997.
70-70
(Repealed) SECTION 70-70 Valuing interests in FIFs
(Repealed by No 114 of 2010)
History
S 70-70 repealed by No 114 of 2010, s 3 and Sch 1 item 47, applicable in relation to the 2010-11 year of income for a taxpayer and later years of income. S 70-70 formerly read:
SECTION 70-70 Valuing interests in FIFs
70-70(1)
You must
value
at its cost an item of your
*
trading stock that is an interest in a
*
foreign investment fund (a
*
FIF).
Note:
For special rules about valuing an interest in a FIF that was an item of your trading stock on hand at the start of the 1991-92 income year, see section
70-70
of the
Income Tax (Transitional Provisions) Act 1997
.
70-70(2)
However, you may elect to value all your interests in
*
FIFs at their
*
market value instead. If you make this election, then for the income year of the election, and for all later income years, you must
value
at their market value all your interests in FIFs.
70-70(3)
You can only make this election
before
you lodge your
*
income tax return for the
first
income year in which a
*
notional accounting period of any
*
FIF you have an interest in ends.
S 70-70 inserted by No 121 of 1997.
Subdivision 70-D
-
Assessable income arising from disposals of trading stock and certain other assets
SECTION 70-75
What this Subdivision is about
Your assessable income includes the market value of an item of trading stock if you dispose of it outside the ordinary course of business or it ceases to be trading stock in certain other circumstances.
This Subdivision treats certain other assets in the same way as trading stock.
History
S 70-75 inserted by No 121 of 1997.
SECTION 70-80
Why the rules in this Subdivision are necessary
70-80(1)
When you dispose of an item of your trading stock in the ordinary course of business, what you get for it is included in your assessable income (under section
6-5
) as ordinary income.
Note:
An incorporated body is treated as disposing of an item of its trading stock in the ordinary course of business if the body ceases to exist and disposes of the asset to a company that has not significantly different ownership: see Division
620
.
History
S 70-80(1) amended by No 12 of 2012, s 3 and Sch 2 item 19, by inserting the note at the end, effective 21 March 2012.
70-80(2)
If an item stops being your trading stock for certain other reasons, an amount is generally included in your assessable income to balance the reduction in trading stock on hand, which is a transaction on revenue account.
70-80(3)
The other reasons for an item to stop being your trading stock are:
(a)
you dispose of it outside the ordinary course of business; or
(b)
interests in it change; or
(c)
you die; or
(d)
you stop holding it as trading stock.
History
S 70-80(3) amended by No 12 of 2012, s 3 and Sch 6 item 63, by substituting
"
business
"
for
"
*
business
"
in para (a), effective 21 March 2012.
History
S 70-80 inserted by No 121 of 1997.
Operative provisions
SECTION 70-85
70-85
Application of this Subdivision to certain other assets
This Subdivision (except section
70-115
) applies to certain assets of a
*
business as if they were
*
trading stock on hand of the entity that carries on that business. The assets are:
(a)
standing or growing crops; and
(b)
crop-stools; and
(c)
trees planted and tended for sale.
Note:
Section 70-115 assesses insurance or indemnity amounts for lost trading stock.
History
S 70-85 inserted by No 121 of 1997.
SECTION 70-90
Assessable income on disposal of trading stock outside the ordinary course of business
70-90(1)
If you dispose of an item of your
*
trading stock outside the ordinary course of a
*
business:
(a)
that you are carrying on; and
(b)
of which the item is an asset;
your assessable income includes the
*
market value of the item on the day of the disposal.
70-90(1A)
If the disposal is the giving of a gift of property by you for which a valuation under section
30-212
is obtained, you may choose that the
*
market value is replaced with the value of the property as determined under the valuation. You can only make this choice if the valuation was made no more than 90 days before or after the disposal.
History
S 70-90(1A) inserted by No 58 of 2000.
70-90(2)
Any amount that you actually receive for the disposal is not included in your assessable income (nor is it
*
exempt income).
Note 1:
In the case of an asset covered by section
70-85
(which applies this Subdivision to certain other assets), the disposal will usually involve disposing of the land of which the asset forms part.
Note 2:
For certain disposals of live stock by primary producers, special rules apply: see Subdivision
385-E
.
Note 3:
If the disposal is by way of gift, you may be able to deduct the gift: see Division 30 (Gifts).
Note 4:
If the disposal is of trees, you can deduct the relevant portion of your capital costs of acquiring the land carrying the trees or of acquiring a right to fell the trees: see section
70-120
.
Note 5:
This section and section
70-95
also apply to disposals of certain items on hand at the end of 1996-97 that are not trading stock but were trading stock as defined in the
Income Tax Assessment Act 1936
: see section
70-10
of the
Income Tax (Transitional Provisions) Act 1997
.
History
S 70-90 Note 5 inserted by No 16 of 1998.
S 70-90 inserted by No 121 of 1997.
SECTION 70-95
70-95
Purchase price is taken to be market value
If an entity disposes of an item of the entity
'
s
*
trading stock outside the ordinary course of
*
business, the entity acquiring the item is treated as having bought it for the amount included in the disposing entity
'
s assessable income under section
70-90
.
History
S 70-95 amended by No 58 of 2000 and inserted by No 121 of 1997.
SECTION 70-100
Notional disposal when you stop holding an item as trading stock
70-100(1)
An item of
*
trading stock is treated as having been disposed of outside the ordinary course of
*
business if it stops being trading stock on hand of an entity (the
transferor
) and, immediately afterwards:
(a)
the transferor is not the item
'
s sole owner; but
(b)
an entity that owned the item (alone or with others) immediately beforehand still has an interest in the item.
Example:
A grocer decides to take her daughters into partnership with her. Her trading stock becomes part of the partnership assets, owned by the partners equally. As a result, it becomes trading stock on hand of the partnership instead of the grocer. This section treats the grocer as having disposed of the trading stock to the partnership outside the ordinary course of her business.
Note:
If the transferor
is
the item
'
s sole owner after it stops being trading stock on hand of the transferor, section
70-110
applies instead of this section.
70-100(2)
As a result, the transferor
'
s assessable income includes the
*
market value of the item on the day it stops being
*
trading stock on hand of the transferor.
70-100(3)
The entity or entities (the
transferee
) that own the item immediately
after
it stops being
*
trading stock on hand of the transferor are treated as having bought the item for the same value on that day.
Election to treat item as disposed of at closing value
70-100(4)
However, an election can be made to treat the item as having been disposed of for what would have been its
*
value as
*
trading stock of the
transferor
on hand at the end of an income year ending on that day.
70-100(5)
If this election is made, this
*
value is included in the transferor
'
s assessable income for the income year that includes that day. The transferee is treated as having bought the item for the same value on that day.
70-100(6)
This election can only be made if:
(a)
immediately
after
the item stops being
*
trading stock on hand of the transferor, it is an asset of a
*
business carried on by the transferee; and
(b)
immediately
after
the item stops being trading stock on hand of the transferor, the entities that owned it immediately beforehand have (between them) interests in the item whose total value is at least 25% of the item
'
s
*
market value on that day; and
(c)
the
*
value elected is
less than
that market value; and
(d)
the item is not a thing in action.
History
S 70-100(6) amended by No 12 of 2012, s 3 and Sch 6 item 39, by substituting
"
trading stock
"
for
"
*
trading stock
"
in para (b), effective 21 March 2012.
70-100(7)
Also, the election can only be made before 1 September following the end of the
*
financial year in which the item stops being
*
trading stock on hand of the transferor. However, the Commissioner can allow the election to be made later.
70-100(8)
An election must be in writing and signed by or on behalf of each of:
(a)
the entities that own the item immediately before it stops being
*
trading stock on hand of the transferor; and
(b)
the entities that own it immediately afterwards.
70-100(9)
If a person whose signature is required for the election has died, the
*
legal personal representative of that person
'
s estate may sign instead.
When election has no effect
70-100(10)
An election has no effect if:
(a)
the item stops being
*
trading stock on hand of the transferor outside the course of ordinary family or commercial dealing; and
(b)
the
*
consideration receivable by the transferor (or by any of the entities constituting the transferor) substantially exceeds what would reasonably be expected to be the consideration receivable by the entity concerned if the
*
market value of the item immediately before it stops being trading stock on hand of the transferor were the
*
value elected under subsection (4).
Note:
Section
960-255
may be relevant to determining family relationships for the purposes of paragraph (10)(a).
History
S 70-100(10) amended by No 12 of 2012, s 3 and Sch 6 item 39, by substituting
"
trading stock
"
for
"
*
trading stock
"
in para (b), effective 21 March 2012.
S 70-100(10) amended by No 144 of 2008, s 3 and Sch 14 item 61, by inserting the note at the end, applicable:
(a) in relation to the 2009
-
2010 income year and later income years; and
(b) to the extent to which the amendments affect the
Fringe Benefits Tax Assessment Act 1986
-
in relation to the FBT year starting on 1 April 2009 and later FBT years.
S 70-100(10) amended by No 54 of 1999.
70-100(11)
Consideration receivable
by an entity means so much of the value of any benefit as it is reasonable to expect that the entity will obtain in connection with the item ceasing to be
*
trading stock on hand of the transferor.
History
S 70-100 inserted by No 121 of 1997.
SECTION 70-105
Death of owner
70-105(1)
When you die, your assessable income up to the time of your death includes the
*
market value at that time of the
*
trading stock of your
*
business (if any).
Note:
In the case of trees, you can deduct the relevant portion of your capital costs of acquiring the land carrying the trees or of acquiring a right to fell the trees: see section
70-120
.
70-105(2)
The entity on which the
*
trading stock devolves is treated as having bought it for its
*
market value at that time.
History
S 70-105(2) amended by
No 58 of 2006
, s 3 and Sch 7 item 70, by substituting
"
entity on which
"
for
"
person on whom
"
, effective 22 June 2006.
70-105(3)
However, your
*
legal personal representative can elect to have included in your assessable income (instead of the
*
market value) the amount that would have been the
*
value of the
*
trading stock at the end of an income year ending on the day of your death.
70-105(4)
In the case of an asset covered by section
70-85
(which applies this Subdivision to certain other assets), your
*
legal personal representative can elect to have a nil amount included in your assessable income (instead of the
*
market value).
70-105(5)
Your
*
legal personal representative can make an election only if:
(a)
the
*
business is carried on after your death; and
(b)
the
*
trading stock continues to be held as trading stock of that business, or the asset continues to be held as an asset of that business, as appropriate.
70-105(6)
If an election is made, the entity on which the
*
trading stock devolves is treated as having bought it for the amount referred to in subsection (3) or (4).
History
S 70-105(6) amended by
No 58 of 2006
, s 3 and Sch 7 item 70, by substituting
"
entity on which
"
for
"
person on whom, effective 22 June 2006.
70-105(7)
An election can only be made on or before the day when your
*
legal personal representative lodges your
*
income tax return for the period up to your death. However, the Commissioner can allow it to be made later.
History
S 70-105 inserted by No 121 of 1997.
SECTION 70-110
You stop holding an item as trading stock but still own it
70-110(1)
If you stop holding an item as
*
trading stock, but still own it, you are treated as if:
(a)
just before it stopped being trading stock, you had sold it to someone else (at
*
arm
'
s length and in the ordinary course of business) for its
*
cost; and
(b)
you had immediately bought it back for the same amount.
Example 1:
You are a sheep grazier and take a sheep from your stock to slaughter for personal consumption. You are treated as having sold it for its cost. This amount is assessable income, just like the proceeds of sale of any of your trading stock.
Although you are also treated as having bought the sheep for the same amount, it would not be deductible because the sheep is for personal consumption.
Example 2:
You stop holding an item as trading stock and begin to use it as a depreciating asset for the purpose of producing your assessable income. You are treated as having sold it for its cost. This amount is assessable income, just like the proceeds of sale of any of your trading stock.
You are also treated as having bought the item for the same amount, which is relevant to working out the item
'
s cost for capital allowance purposes (see Subdivision
40-C
) and the item
'
s cost base for CGT purposes (see Division
110
).
History
S 70-110(1) amended by No 88 of 2013, s 3 and Sch 7 item 236, by substituting
"
*
arm's length
"
for
"
arm's length
"
in para (a), effective 28 June 2013.
S 70-110(1) renumbered from s 70-110 by No 132 of 2011, s 3 and Sch 2 item 12, effective 2 April 2012.
S 70-110(1) (formerly s 70-110) amended by No 77 of 2001, No 54 of 1999 and inserted by No 121 of 1997.
70-110(2)
This section does not apply if:
(a)
you stop holding an item as
*
trading stock; and
(b)
immediately after you stopped holding the item as trading stock, you start to
*
hold the item as a
*
registered emissions unit.
History
S 70-110(2) inserted by No 132 of 2011, s 3 and Sch 2 item 13, effective 2 April 2012.
Note:
A transaction that this section treats as having occurred is disregarded for the purposes of these provisions of the
Income Tax Assessment Act 1936
:
•
subsection 47A(10) (which treats certain benefits as dividends paid by a CFC)
•
paragraph 103A(3A)(c) (which affects whether a company is a public company for an income year).
SECTION 70-115
70-115
Compensation for lost trading stock
Your assessable income includes an amount that:
(a)
you receive by way of insurance or indemnity for a loss of
*
trading stock; and
(b)
is not assessable as
*
ordinary income under section 6-5.
History
S 70-115 inserted by No 121 of 1997.
Subdivision 70-E
-
Miscellaneous
SECTION 70-120
Deducting capital costs of acquiring trees
70-120(1)
This section gives you deductions for your capital costs of acquiring land carrying trees or of acquiring a right to fell trees.
Note:
This section is included in this Division because:
•
trees felled for sale, or for use in manufacture, by you will usually become your trading stock; and
•
before they are felled, the trees are covered by sections
70-90
and
70-105
becauseof section
70-85
.
Land carrying trees
70-120(2)
You can deduct the amount you paid to acquire land carrying trees if:
(a)
some or all of the trees are felled during the income year for sale, or for use in manufacture, by you for the
*
purpose of producing assessable income; or
(b)
some or all of the trees are felled during the income year under a right you granted to another entity in consideration of payments as or by way of
*
royalty; or
(c)
the
*
market value of some or all of the trees is included in your assessable income for the income year by section
70-90
(because you disposed of the trees outside the ordinary course of
*
business) or section
70-105
(because of your death).
(It does not matter when you acquired the land.)
Note:
The market value of trees is
not
included in your assessable income for the income year by section
70-105
(because of your death) if your legal personal representative elects under subsection 70-105(4) to have a nil amount included instead.
History
S 70-120(2) amended by No 176 of 1999.
Right to fell trees
70-120(3)
You can deduct the amount you paid to acquire a right to fell trees if:
(a)
some or all of the trees are felled during the income year for sale, or for use in manufacture, by you for the
*
purpose of producing assessable income; or
(b)
some or all of the trees are felled during the income year under a right you granted to another entity in consideration of payments as or by way of
*
royalty.
(It does not matter when you acquired the right.)
History
S 70-120(3) amended by No 176 of 1999.
How much you can deduct for costs of acquiring land or right
70-120(4)
You can deduct for the income year so much of the amount you paid as is attributable to the trees covered by a paragraph of subsection (2) or (3).
History
S 70-120(4) amended by No 176 of 1999.
70-120(5)
If you can deduct an amount because of paragraph (2)(c), you can also deduct for the income year so much of any other capital expenditure you incurred as is attributable to acquiring the trees covered by that paragraph (except so far as you have deducted it, or can deduct it, for any income year under a provision of this Act outside this section).
No deduction for carbon sink forests
70-120(5A)
You cannot deduct under this section so much of an amount you paid or incurred as is attributable to the establishment of trees for which any entity has deducted, or can deduct, an amount for any income year under Subdivision
40-J
.
History
S 70-120(5A) inserted by
No 38 of 2008
, s 3 and Sch 8 item 7, applicable to the 2007-08 income year and later income years.
Non-arm's length transactions
70-120(6)
If:
(a)
you can deduct an amount under this section for expenditure incurred in connection with a transaction; and
(b)
the parties to the transaction did not deal with each other at
*
arm's length; and
(c)
the amount of the expenditure is greater than the
*
market value of what the expenditure is for;
the amount of the expenditure is instead taken to be that market value. This has effect for the purposes of working out what you can deduct under this section.
History
S 70-120(6) amended by No 88 of 2013, s 3 and Sch 7 item 236, by substituting
"
*
arm's length
"
for
"
arm's length
"
in para (b), effective 28 June 2013.
History
S 70-120 inserted by No 121 of 1997.
PART 2-40
-
RULES AFFECTING EMPLOYEES AND OTHER TAXPAYERS RECEIVING PAYG WITHHOLDING PAYMENTS
History
Part 2-40 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Division 80
-
General rules
History
Div 80 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 80-1
80-1
What this Division is about
This Division sets out rules that apply throughout the Part. The rules are about holding an office, the termination of employment, the transfer of property and receiving and making payments.
History
S 80-1 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Operative provisions
SECTION 80-5
80-5
Holding of an office
If a person holds (or has held) an office, this Part applies to the person in the same way as it would apply if the person were (or had been) employed.
History
S 80-5 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 80-10
80-10
Application to the termination of employment
For the purposes of this Part, treat the termination of employment as including:
(a)
retirement from employment; and
(b)
the cessation of employment because of death.
History
S 80-10 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 80-15
Transfer of property
80-15(1)
Any of the following payments covered by this Part (but no others covered by this Part) can be or include a transfer of property:
(a)
an
*
employment termination payment;
(b)
a
*
genuine redundancy payment;
(c)
an
*
early retirement scheme payment;
(d)
a payment covered by Subdivision
83-D
(Foreign termination payments);
(e)
a payment that would be an employment termination payment but for paragraph
82-130(1)(b)
(see Subdivision
83-E
).
Note:
An unused annual leave payment or an unused long service leave payment cannot include a transfer of property.
History
S 80-15(1) amended by No 15 of 2007, s 3 and Sch 3 item 8, by inserting
"
be or
"
after
"
can
"
, applicable to the 2007-2008 income year and later years.
80-15(2)
The amount of the payment is or includes the
*
market value of the property.
History
S 80-15(2) substituted by No 15 of 2007, s 3 and Sch 3 item 9, applicable to the 2007-2008 income year and later years. S 80-15(2) formerly read:
80-15(2)
If it does, the amount of the payment includes the
*
market value of the property.
80-15(3)
The
*
market value is reduced by the value of any consideration given for the transfer ofthe property.
History
S 80-15 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 80-20
Payments for your benefit or at your direction or request
80-20(1)
This section applies for the purposes of:
(a)
determining whether Division
82
or
83
applies to a payment; and
(b)
determining whether a payment mentioned in Division
82
or
83
is made to you, or received by you.
80-20(2)
A payment is treated as being made to you, or received by you, if it is made:
(a)
for your benefit; or
(b)
to another person or to an entity at your direction or request.
History
S 80-20 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Division 82
-
Employment termination payments
History
Div 82 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Guide to Division 82
SECTION 82-1
82-1
What this Division is about
This Division tells you how employment termination payments are treated for the purpose of income tax.
History
S 82-1 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Subdivision 82-A
-
Employment termination payments: life benefits
History
Subdiv 82-A inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Guide to Subdivision 82-A
SECTION 82-5
82-5
What this Subdivision is about
If you receive a life benefit termination payment, part of the payment may be tax free (the tax free component).
You are entitled to a tax offset on the remaining part of the payment (the taxable component), subject to limitations.
The extent of your entitlement to the offset depends on your age in the year you receive the offset, on the total amount of payments you receive in the same year, and on the total amount of payments you receive in consequence of the same employment termination.
History
S 82-5 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 82-10 |
Taxation of life benefit termination payments |
Operative provisions
SECTION 82-10
Taxation of life benefit termination payments
Tax free component
82-10(1)
The
*
tax free component of a
*
life benefit termination payment you receive is not assessable income and is not
*
exempt income.
Taxable component
82-10(2)
The
*
taxable component of the payment is assessable income.
82-10(3)
You are entitled to a
*
tax offset that ensures that the rate of income tax on the amount mentioned in subsection (4) does not exceed:
(a)
if you are your
*
preservation age or older on the last day of the income year in which you receive the payment
-
15%; or
(b)
otherwise
-
30%.
Note:
The remainder of the taxable component is taxed at the top marginal rate in accordance with the
Income Tax Rates Act 1986
.
82-10(4)
The amount is so much of the
*
taxable component of the payment as does not exceed the smallest of the following:
(a)
the
*
ETP cap amount reduced (but not below zero) by:
(i)
if the payment is a payment of a kind referred to in subsection (6) (an
excluded payment
)
-
the amount worked out under this subsection for each
*
life benefit termination payment you have received earlier in the income year to the extent that it is an excluded payment; or
(ii)
if the payment is not an excluded payment
-
the amount worked out under this subsection for each life benefit termination payment you have received earlier in the income year;
(b)
the ETP cap amount reduced (but not below zero) by:
(i)
if the payment is an excluded payment
-
the amount worked out under this subsection for each life benefit termination payment you have received earlier in consequence of the same employment termination (whether in the income year or an earlier income year) to the extent that it is an excluded payment; or
(ii)
if the payment is not an excluded payment
-
the amount worked out under this subsection for each life benefit termination payment you have received earlier in consequence of the same employment termination (whether in the income year or an earlier income year);
(c)
if the payment is not an excluded payment
-
$
180,000, reduced (but not below zero) by your taxable income for the income year in which the payment is made.
Note 1:
For the
ETP cap amount
, see section
82-160
.
Note 2:
If you have also received a death benefit termination payment in the same income year, your entitlement to a tax offset under this section is not affected by your entitlement (if any) to a tax concession for the death benefit termination payment (under section
82-65
or
82-70
).
Note 3:
Certain other life benefit termination payments made before 1 July 2012 may be treated as earlier payments under paragraph (4)(b): see section
82-10H
of the
Income Tax (Transitional Provisions) Act 1997
.
History
S 82-10(4) substituted by No 58 of 2012, s 3 and Sch 5 item 1, applicable in relation to life benefit termination payments received on or after 1 July 2012. S 82-10(4) formerly read:
82-10(4)
The amount is so much of the
*
taxable component of the payment as does not exceed the
lesser
of:
(a)
the
*
ETP cap amount, reduced (but not below zero) by the amount worked out under this subsection for each
*
life benefit termination payment you have received earlier in the income year; and
(b)
the ETP cap amount, reduced (but not below zero) by the amount worked out under this subsection for each life benefit termination payment you have received earlier in consequence of the same employment termination, whether in the income year or an earlier income year.
Note 1:
For the ETP cap amount, see section
82-160
.
Note 2:
If you have also received a death benefit termination payment in the same income year, your entitlement to a tax offset under this section is not affected by your entitlement (if any) to a tax concession for the death benefit termination payment (under section
82-65
or
82-70
).
Note 3:
Certain other life benefit termination payments made before 1 July 2012 may be treated as earlier payments under paragraph (4)(b): see section
82-10H
of the
Income Tax (Transitional Provisions) Act 1997
.
82-10(5)
In working out, for the purposes of paragraph (4)(c), your taxable income for the income year, disregard:
(a)
the taxable component of the payment; and
(b)
the taxable component of each
*
life benefit termination payment you receive later in the income year.
History
S 82-10(5) inserted by No 58 of 2012, s 3 and Sch 5 item 1, applicable in relation to life benefit termination payments received on or after 1 July 2012.
82-10(6)
Paragraph (4)(c) does not apply in relation to
*
life benefit termination payments:
(a)
that are
*
genuine redundancy payments, or that would be genuine redundancy payments but for paragraph
83-175(2)(a)
; or
(b)
that are
*
early retirement scheme payments; or
(c)
that include
*
invalidity segments, or what would be invalidity segments included in such payments but for paragraph
82-150(1)(c)
; or
(d)
that:
(i)
are paid in connection with a genuine dispute; and
(ii)
are principally compensation for personal injury, unfair dismissal, harassment, discrimination or a matter prescribed by the regulations; and
(iii)
exceed the amount that could, at the time of the termination of your employment, reasonably be expected to be received by you in consequence of the voluntary termination of your employment.
History
S 82-10(6) inserted by No 58 of 2012, s 3 and Sch 5 item 1, applicable in relation to life benefit termination payments received on or after 1 July 2012.
82-10(7)
If the payment is partly an excluded payment:
(a)
subsection (4) applies as if the payment were 2 payments as follows:
(i)
first, a payment consisting only of the part of the payment that is an excluded payment;
(ii)
second, another payment, made immediately after the first payment, consisting only of the part of the payment that is not an excluded payment; and
(b)
subsection (4) applies to the second payment as if a reference in subsection (5) to the taxable component of a payment were a reference to so much of the taxable component as relates to the part of the payment that is not an excluded payment.
History
S 82-10(7) inserted by No 58 of 2012, s 3 and Sch 5 item 1, applicable in relation to life benefit termination payments received on or after 1 July 2012.
82-10(8)
Despite subsections (4) and (7), the amount mentioned in subsection (4) in relation to the payment must not exceed either of the following:
(a)
the
*
ETP cap amount reduced (but not below zero) by the amount worked out under subsection (4) for each
*
life benefit termination payment you have received earlier in the income year;
(b)
the ETP cap amount reduced (but not below zero) by the amount worked out under subsection (4) for each life benefit termination payment you have received earlier in consequence of the same employment termination (whether in the income year or an earlier income year).
History
S 82-10(8) inserted by No 58 of 2012, s 3 and Sch 5 item 1, applicable in relation to life benefit termination payments received on or after 1 July 2012.
History
S 82-10 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Subdivision 82-B
-
Employment termination payments: death benefits
History
Subdiv 82-B inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Guide to Subdivision 82-B
SECTION 82-60
82-60
What this Subdivision is about
If you receive a death benefit termination payment after the death of a person, part of the payment may be tax free (the tax free component).
You are entitled to a tax offset on the remaining part of the payment (the taxable component), subject to limitations.
The extent of your entitlement to the offset depends on whether or not you were a death benefits dependant of the deceased, and on the total amount of payments you receive in consequence of the same employment termination.
If a death benefit termination payment is payable to the trustee of the estate of the deceased for the benefit of another person, the payment is taxed in the hands of the trustee in the same way as it would be taxed if it had been paid directly to the other person.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 82-65 |
Death benefits for dependants |
| 82-70 |
Death benefits for non-dependants |
| 82-75 |
Death benefits paid to trustee of deceased estate |
History
S 82-60 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Operative provisions
SECTION 82-65
Death benefits for dependants
Tax free component
82-65(1)
The
*
tax free component of a
*
death benefit termination payment that you receive after the death of a person of whom you are a
*
death benefits dependant is not assessable income and is not
*
exempt income.
Taxable component
82-65(2)
If you receive a
*
death benefit termination payment after the death of a person of whom you are a
*
death benefits dependant:
(a)
the part of the
*
taxable component of the payment mentioned in subsection (3) is not assessable income and is not
*
exempt income; and
(b)
the remainder of the taxable component (if any) of the payment is assessable income.
Note:
The remainder of the taxable component is taxed at the top marginal rate in accordance with the
Income Tax Rates Act 1986
.
82-65(3)
The amount is so much of the
*
taxable component of the payment as does not exceed the
*
ETP cap amount.
Note:
For the ETP cap amount, see section
82-160
.
82-65(4)
The
*
ETP cap amount is reduced (but not below zero) by the amount worked out under subsection (3) for each
*
death benefit termination payment (if any) you have received earlier in consequence of the same employment termination, whether in the income year or an earlier income year.
Note 1:
See subsection
82-75(2)
for the tax treatment of any amount by which you may have benefited from an employment termination payment to the trustee of the estate of the deceased.
Note 2:
If you have also received a life benefit termination payment in the same income year, your entitlement to a tax concession under this section is not affected by your entitlement (if any) to an offset for the life benefit termination payment (under section
82-10
).
History
S 82-65 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 82-70
Death benefits for non-dependants
Tax free component
82-70(1)
The
*
tax free component of a
*
death benefit termination payment that you receive after the death of a person of whom you are
not
a
*
death benefits dependant is not assessable income and is not
*
exempt income.
Taxable component
82-70(2)
If you receive a
*
death benefit termination payment after the death of a person of whom you are
not
a
*
death benefits dependant, the
*
taxable component of the payment is assessable income.
82-70(3)
You are entitled to a
*
tax offset that ensures that the rate of income tax on the amount mentioned in subsection (4) does not exceed 30%.
Note:
The remainder of the taxable component is taxed at the top marginal rate in accordance with the
Income Tax Rates Act 1986
.
82-70(4)
The amount is so much of the
*
taxable component of the payment as does not exceed the
*
ETP cap amount.
Note:
For the ETP cap amount, see section
82-160
.
82-70(5)
The
*
ETP cap amount is reduced (but not below zero) by the amount worked out under subsection (4) for each
*
death benefit termination payment (if any) you have received earlier in consequence of the same employment termination, whether in the income year or an earlier income year.
Note 1:
See subsection
82-75(3)
for the tax treatment of any amount by which you may have benefited from an employment termination payment to the trustee of the estate of the deceased.
Note 2:
If you have also received a life benefit termination payment in the same income year, your entitlement to a tax offset under this section is not affected by your entitlement (if any) to an offset for the life benefit termination payment (under section
82-10
).
History
S 82-70 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 82-75
Death benefits paid to trustee of deceased estate
82-75(1)
This section applies to you if:
(a)
you are the trustee of a deceased estate; and
(b)
a
*
death benefit termination payment is made to you in your capacity as trustee.
Note:
See also subsection
101A(3)
of the
Income Tax Assessment Act 1936
.
Dependants of deceased benefit from payment
82-75(2)
To the extent that 1 or more beneficiaries of the estate who were
*
death benefits dependants of the deceased have benefited, or may be expected to benefit, from the payment:
(a)
the payment is treated as if it had been made to you as a person who was a death benefits dependant of the deceased; and
(b)
the payment is taken to be income to which no beneficiary is presently entitled.
Note:
Section
82-65
deals with the taxation of employment termination payments made to persons who are death benefits dependants of deceased persons.
Non-dependants of deceased benefit from payment
82-75(3)
To the extent that 1 or more beneficiaries of the estate who were
not
*
death benefits dependants of the deceased have benefited, or may be expected to benefit, from the payment:
(a)
the payment is treated as if it had been made to you as a person who was
not
a death benefits dependant of the deceased; and
(b)
the payment is taken to be income to which no beneficiary is presently entitled.
Note:
Section
82-70
deals with the taxation of employment termination payments made to persons who are
not
death benefits dependants of deceased persons.
History
S 82-75 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Subdivision 82-C
-
Key concepts
History
Subdiv 82-C inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Guide to Subdivision 82-C
SECTION 82-125
What this Subdivision is about
This Subdivision defines an
employment termination payment
as a payment made in consequence of the termination of a person
'
s employment that is received no later than 12 months after the termination (though the 12 month restriction is relaxed in some circumstances).
An employment termination payment can be a life benefit termination payment (received by the person whose employment is terminated) or a death benefit termination payment (received by another person after the death of a person whose employment is terminated).
Certain types of payments are declared not to be employment termination payments.
Various other terms used in describing the taxation treatment of employment termination payments are defined in the Subdivision.
History
S 82-125 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 82-130 |
What is an
employment termination payment
? |
| 82-135 |
Payments that are not
employment termination payments
|
| 82-140 |
Tax free component
of an employment termination payment |
| 82-145 |
Taxable component
of an employment termination payment |
| 82-150 |
What is an
invalidity segment
of an employment termination payment
? |
| 82-155 |
What is a
pre-July 83 segment
of an employment termination payment
? |
| 82-160 |
What is the
ETP cap amount
? |
Operative provisions
SECTION 82-130
What is an
employment termination payment
?
82-130(1)
A payment is an
employment termination payment
if:
(a)
it is received by you:
(i)
in consequence of the termination of your employment; or
(ii)
after another person
'
s death, in consequence of the termination of the other person
'
s employment; and
(b)
it is received no later than 12 months after that termination (but see subsection (4)); and
(c)
it is
not
a payment mentioned in section
82-135
.
Note 1:
If a payment would be an employment termination payment but for paragraph (b), see subsection (4) and section
83-295
.
Note 2:
The holding of an office is treated as employment for this Part: see section
80-5
. Also, the termination of employment is treated as including the termination of employment by retirement or by death: see section
80-10
.
Types of employment termination payment
82-130(2)
A
life benefit termination payment
is an
*
employment termination payment to which subparagraph (1)(a)(i) applies.
82-130(3)
A
death benefit termination payment
is an
*
employment termination payment to which subparagraph (1)(a)(ii) applies.
Exemption from 12 month rule
82-130(4)
Paragraph (1)(b) does not apply to you if:
(a)
you are covered by a determination under subsection (5) or (7); or
(b)
the payment is a
*
genuine redundancy payment or an
*
early retirement scheme payment.
Note:
The part of a genuine redundancy payment or an early retirement scheme payment worked out under section
83-170
is not an employment termination payment: see section
82-135
.
82-130(5)
The Commissioner may determine, in writing, that paragraph (1)(b) does not apply to you if the Commissioner considers the time between the employment termination and the payment to be reasonable, having regard to the following:
(a)
the circumstances of the employment termination, including any dispute in relation to the termination;
(b)
the circumstances of the payment;
(c)
the circumstances of the person making the payment;
(d)
any other relevant circumstances.
82-130(6)
A determination under subsection (5) is not a legislative instrument.
82-130(7)
The Commissioner may, by legislative instrument, determine that paragraph (1)(b) does not apply to either or both of the following, as specified in the determination:
(a)
a class of payments;
(b)
a class of recipients of payments.
[
CCH Note 1:
The Commissioner has made
"
Employment Termination Payments Redundancy Trusts (12 month rule) Determination 2009
"
, effective 13 March 2009, which reads:
3. Application
This determination applies to a payment received after 30 June 2007 by a person if the payment is received from a redundancy trust:
(a)
either
(i)
in consequence of the termination of that person
'
s employment, or
(ii)
after another person
'
s death, in consequence of the termination of that other person
'
s employment; and
(b)
more than 12 months after that termination; and
(c)
is not a payment under section
82-135
of the
Income Tax Assessment Act 1997
.
In this determination, such a payment is called a
late termination payment
.
4. Determination
Paragraph
82-130(1)(b)
of the
Income Tax Assessment Act 1997
does not apply to a late termination payment if:
(a)
the person whose employment was terminated was a member of a redundancy trust and an application for the payment was lodged with the trustee of the redundancy trust within 12 months of the person becoming entitled to the payment under the terms of the trust deed of the redundancy trust; and
(b)
the payment was made by the trustee of the redundancy trust:
(i)
as soon as practicable after receipt of the application for payment; or
(ii)
no later than 2 years after the termination of the person's employment that led to the entitlement;
whichever occurs earlier; or
(c)
immediately before 1 July 2007 the member of the redundancy trust had an existing entitlement to a payment from the redundancy trust as a consequence of a termination of employment of the person before 1 July 2007 and the payment of the benefit was made by the trustee of the redundancy trust prior to 1 July 2010.
5. Definitions
In this Determination:
'redundancy trust'
means:
(a)
a workers entitlement fund that was established prior to 1 April 2003; or
(b)
is a prescribed workers entitlement fund listed in Schedule
3
to the Fringe Benefits Tax Regulations 1992.
'member of a redundancy trust'
means a person who is entitled to a payment/s under the terms of the redundancy trust
'
s deed due to termination of employment.
]
[
CCH Note 2:
The Commissioner has made
"
Employment Termination Payments (12 month rule) Legislative Instrument 2007
"
, effective 16 November 2007, which reads:
3. Application
This determination applies to a payment received after 30 June 2007 by a person if the payment is received:
(a)
either
i)
in consequence of the termination of that person
'
s employment, or
ii)
after another person
'
s death, in consequence of the termination of that other person
'
s employment; and
(b)
more than 12 months after that termination; and
(c)
is not a payment under section 82-135 of the
Income Tax Assessment Act 1997
.
In this determination, such a payment is called a
late termination payment
.
4. Determination
Paragraph 82-130(1)(b) of the
Income Tax Assessment Act 1997
does not apply to a late termination payment if the payment is received more than 12 months after the termination of a person
'
s employment because:
(a)
legal action was commenced within 12 months of the termination of employment, of which the subject is either or both:
i)
the person
'
s entitlement to the payment;
ii)
the amount of the person
'
s entitlement; or
(b)
the payment was made by a liquidator, receiveror trustee in bankruptcy of an entity that is otherwise liable to make the payment, where that liquidator, receiver or trustee is appointed no later than 12 months after the termination of employment.
5. Definitions
In this Determination:
'liquidator'
means a person who becomes a liquidator of a company and who has given the Commissioner of Taxation notice of that fact under subsection 260-45(2) of Schedule 1 to the
Taxation Administration Act 1953
.
'receiver'
means a person who, in the capacity of receiver, or of receiver and manager, takes possession of a company
'
s assets for the company
'
s debenture holders and who has given the Commissioner of Taxation notice of that fact under subsection 260-75(2) of Schedule 1 to the
Taxation Administration Act 1953
.
'trustee in bankruptcy'
means a person who, in the capacity of
'
the trustee
'
as defined in section 5 of the
Bankruptcy Act 1966
, notifies the Commissioner of Taxation of the bankruptcy.
]
82-130(8)
A determination under subsection (7) may provide for paragraph (1)(b) not to apply in circumstances relating to any (or all) of the following, as specified in the determination:
(a)
a class of employment termination (including a class described by reference to disputes of a specified type);
(b)
a class of payments;
(c)
a class of persons making payments;
(d)
the period after the employment termination until payment is received;
(e)
any other relevant circumstances.
History
S 82-130 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 82-135
82-135
Payments that are not
employment termination payments
The following payments you receive are
not
employment termination payments
:
(a)
a
*
superannuation benefit (see Divisions
301
to
307
);
(b)
a payment of a pension or an
*
annuity (whether or not the payment is a superannuation benefit); and
(c)
an
*
unused annual leave payment (see Subdivision
83-A
);
(d)
an
*
unused long service leave payment (see Subdivision
83-B
);
(e)
the part of a
*
genuine redundancy payment or an
*
early retirement scheme payment worked out under section
83-170
(see Subdivision
83-C
);
(f)
a payment to which Subdivision
83-D
(Foreign termination payments) applies;
(fa)
a payment (or part of one) made by a company or trust as mentioned in subsection
152-310(2)
;
(g)
a payment that is an advance or a loan to you on terms and conditions that would apply if you and the payer were dealing at
*
arm
'
s length;
(h)
a payment that is deemed to be a
*
dividend under this Act;
(i)
a capital payment for, or in respect of, personal injury to you so far as the payment is reasonable having regard to the nature of the personal injury and its likely effect on your capacity to
*
derive income from personal exertion (within the meaning of the definition of
income derived from personal exertion
in subsection
6(1)
of the
Income Tax Assessment Act 1936
);
(j)
a capital payment for, or in respect of, a legally enforceable contract in restraint of trade by you so far as the payment is reasonable having regard to the nature and extent of the restraint;
(k)
a payment:
(i)
received by you, or to which you are entitled, as the result of the commutation of a pension payable from a
*
constitutionally protected fund; and
(ii)
wholly applied in paying any superannuation contributions surcharge (as defined in section
37
of the
Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997
);
(l)
a payment:
(i)
received by you, or to which you are entitled, as the result of the commutation of a pension payable by a superannuation provider (within the meaning of the
Superannuation Contributions Tax (Assessment and Collection) Act 1997
); and
(ii)
wholly applied in paying any superannuation contributions surcharge (as defined in section
43
of that Act);
(m)
an amount included in your assessable income under Division
83A
of this Act (which deals with employee share schemes).
Note:
For paragraph (e)
-
the remaining part of a genuine redundancy payment or an early retirement scheme payment (apart from the amount mentioned in the paragraph) is an employment termination payment if section
82-130
applies to that part.
History
S 82-135 amended by No 133 of 2009, s 3 and Sch 1 item 25, by substituting
"
Division 83A of this Act
"
for
"
Division 13A of Part III of the
Income Tax Assessment Act 1936
"
in para (m), applicable in relation to the ESS interests mentioned in subsections
83A-5(1)
and
(2)
of the
Income Tax (Transitional Provisions) Act 1997
.
S 82-135 amended by No 15 of 2007, s 3 and Sch 2 item 2, by inserting para (fa). Act
No 143 of 2007
, s 3 and Sch 5 item 28 substitutes the application of this amendment with the following:
(1)
The amendments apply to:
(a)
individuals who:
(i)
make the choice referred to in subsection
152-305(1)
of the
Income Tax Assessment Act 1997
; or
(ii)
receive capital proceeds from a CGT event; and
(b)
companies or trusts that make a payment referred to in section
152-325
of the
Income Tax Assessment Act 1997
;
after 30 June 2007, regardless of when the relevant CGT event happened.
S 82-135 amended by No 15 of 2007, s 3 and Sch 1 items 183 to 185, by substituting
"
this Act
"
for
"
paragraph 109(1)(d) of the
Income Tax Assessment Act 1936
(which deals with excessive payments to shareholders, directors and
*
associates)
"
in para (h), substituting
"
Act);
"
for
"
Act).
"
in para (l)(ii) and inserting para (m) at the end, applicable to the 2007-2008 income year and later years.
S 82-135 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 82-140
82-140
Tax free component
of an employment termination payment
The
tax free component
of an
*
employment termination payment is so much of the payment as consists of the following:
(a)
the
*
invalidity segment of the payment;
(b)
the
*
pre-July 83 segment of the payment.
History
S 82-140 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 82-145
82-145
Taxable component
of an employment termination payment
The
taxable component
of an
*
employment termination payment is the amount of the payment less the
*
tax free component of the payment (see section
82-140
).
History
S 82-145 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 82-150
What is an
invalidity segment
of an employment termination payment
?
82-150(1)
An
*
employment termination payment includes an
invalidity segment
if:
(a)
the payment was made to a person because he or she stops being
*
gainfully employed; and
(b)
the person stopped being gainfully employed because he or she suffered from ill-health (whether physical or mental); and
(c)
the gainful employment stopped before the person's
*
last retirement day; and
(d)
2 legally qualified medical practitioners have certified that, because of the ill-health, it is unlikely that the person can ever be gainfully employed in capacity for which he or she is reasonably qualified because of education, experience or training.
82-150(2)
Work out the amount of the
invalidity segment
by applying the following formula:
| |
Amount of
*
employment termination payment |
× |
Days to retirement
Employment days
+
Days to retirement |
where:
days to retirement
is the number of days from the day on which the person's employment was terminated to the
*
last retirement day.
employment days
is the number of days of employment to which the payment relates.
History
S 82-150 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 82-155
What is a
pre-July 83 segment
of an employment termination payment
?
82-155(1)
An
*
employment termination payment includes a
pre-July 83 segment
if any of the employment to which the payment relates occurred before 1 July 1983.
82-155(2)
Work out the amount of the
pre-July 83 segment
as follows:
Step 1.
Subtract the
*
invalidity segment (if any) from the
*
employment termination payment.
Step 2.
Multiply the amount at step 1 by the fraction:
| |
Number of days of employment to which the payment relates that occurred before 1 July 1983 |
|
| |
Total number of days of employment to which the payment relates |
|
History
S 82-155 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 82-160
82-160
What is the ETP cap amount
?
The
ETP cap amount
for the 2007-2008 income year is
$
140,000. This amount is indexed annually.
Note 1:
Subdivision
960-M
shows how to index amounts. However, annual indexation does not necessarily increase the ETP cap amount: see section
960-285
.
Note 2:
The ETP cap amount may be reduced for the purpose of working out tax offsets for individual employment termination payments.
History
S 82-160 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Division 83
-
Other payments on termination of employment
History
Div 83 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Guide to Division 83
SECTION 83-1
83-1
What this Division is about
This Division sets out the taxation treatment for a variety of payments, other than employment termination payments, that are made in consequence of the termination of employment.
History
S 83-1 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Subdivision 83-A
-
Unused annual leave payments
History
Subdiv 83-A inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Guide to Subdivision 83-A
SECTION 83-5
83-5
What this Subdivision is about
You are entitled to a tax offset for a payment that you receive in consequence of the termination of your employment that is for unused annual leave.
History
S 83-5 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
TABLE OF SECTIONS
TABLE OF SECTIONS
| Operative provisions
|
| 83-10 |
Unused annual leave payment is assessable |
| 83-15 |
Entitlement to tax offset |
Operative provisions
SECTION 83-10
Unused annual leave payment is assessable
Application
-
annual leave
83-10(1)
This section applies to leave (
annual leave
) of the following types (whether it is made available as an entitlement or as a privilege):
(a)
leave ordinarily known as annual leave, including recreational leave and annual holidays;
(b)
any other leave made available in circumstances similar to those in which the leave mentioned in paragraph (a) is ordinarily made available.
Unused annual leave payments
83-10(2)
Your assessable income includes an
*
unused annual leave payment that you receive.
83-10(3)
A payment that you receive in consequence of the termination of your employment is an
unused annual leave payment
if:
(a)
it is for annual leave you have not used; or
(b)
it is a bonus or other additional payment for annual leave you have not used; or
(c)
it is for annual leave, or is a bonus or other additional payment for annual leave, to which you were not entitled just before the employment termination, but that would have been made available to you at a later time if it were not for the employment termination.
History
S 83-10 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 83-15
83-15
Entitlement to tax offset
You are entitled to a
*
tax offset to ensure that the rate of tax on an
*
unused annual leave payment does not exceed 30%, to the extent that:
(a)
the payment was made in connection with a payment that includes, or consists of, any of the following:
(i)
a
*
genuine redundancy payment;
(ii)
an
*
early retirement scheme payment;
(iii)
the
*
invalidity segment of an
*
employment termination payment or
*
superannuation benefit; or
(b)
the payment was made in respect of employment before 18 August 1993.
History
S 83-15 inserted byNo 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Subdivision 83-B
-
Unused long service leave payments
History
Subdiv 83-B inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Guide to Subdivision 83-B
SECTION 83-65
What this Subdivision is about
You are entitled to a tax offset for a payment that you receive in consequence of the termination of your employment that is for unused long service leave.
History
S 83-65 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
|
TABLE OF SECTIONS
|
|
General
|
| |
83-70 |
Application
-
long service leave |
| |
83-75 |
Meaning of
unused long service leave payment
|
| |
83-80 |
Taxation of unused long service leave payments |
| |
83-85 |
Entitlement to tax offset |
| |
83-90 |
Meaning of
pre-16/8/78 period
,
pre-18/8/93 period
,
post-17/8/93 period
and
long service leave employment period
|
|
Employment wholly full-time or wholly part-time
|
| |
83-95 |
How to work out amount of payment attributable to each period |
| |
83-100 |
How to work out
unused days of long service leave
for each period |
| |
83-105 |
How to work out long service leave accrued in each period |
|
Employment partly full-time and partly part-time
|
| |
83-110 |
Leave accrued in pre-16/8/78, pre-18/8/93 and post-17/8/93 periods
-
employment full-time and part-time |
|
Long service leave taken at less than full pay
|
| |
83-115 |
Working out used days of long service leave if leave taken at less than full pay |
General
SECTION 83-70
83-70
Application
-
long service leave
This Subdivision applies to leave (
long service leave
) of the following types (whether it is made available as an entitlement or as a privilege), other than annual leave to which section
83-10
applies:
(a)
leave ordinarily known as long service leave, including long leave, furlough and extended leave;
(b)
any other leave made available in circumstances similar to those in which the leave mentioned in paragraph (a) is ordinarily made available;
(c)
if your employer has entered into a
*
scheme or
*
arrangement for leave and, because of the existence and nature of the scheme or arrangement, the employer does not have to comply with the requirements of a law of the Commonwealth, or of a State or Territory, relating to leave mentioned in paragraph (a) or (b)
-
leave made available under the scheme or arrangement.
History
S 83-70 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 83-75
83-75
Meaning of
unused long service leave payment
A payment that you receive in consequence of the termination of your employment is an
unused long service leave payment
if:
(a)
it is for long service leave you have not used; or
(b)
it is for long service leave to which you were not entitled just before the employment termination, but that would have been made available to you at a later time if it were not for the employment termination.
History
S 83-75 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 83-80
Taxation of unused long service leave payments
Assessable and tax-free parts of unused long service leave payments
83-80(1)
If you receive an
*
unused long service leave payment, your assessable income includes the part of the payment shown in this table:
|
*
Unused long service leave payments
|
|
Item
|
To the extent the payment is attributable to the
…
|
Your assessable income includes this part of it
…
|
| 1 |
*
pre-16/8/78 period |
5% |
| 2 |
*
pre-18/8/93 period |
100% |
| 3 |
*
post-17/8/93 period |
100% |
83-80(2)
The remainder of that part (if any) of an
*
unused long service leave payment that is attributable to the
*
pre-16/8/78 period is not assessable income and is not
*
exempt income.
Note 1:
If your employment was wholly full-time or wholly part-time during a period, see sections
83-95
,
83-100
and
83-105
to work out the amount of an unused long service leave payment that is attributable to the period.
Note 2:
If your employment was partly full-time and partly part-time during a period, see section
83-110
to work out the amount of an unused long service leave payment that is attributable to the period.
History
S 83-80 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 83-85
Entitlement to tax offset
83-85(1)
You are entitled to a
*
tax offset on an
*
unused long service leave payment that ensures that the rate of income tax on the amount of the payment mentioned in subsection (2) does not exceed 30%.
83-85(2)
The amount is the part of the
*
unused long service leave payment included in your assessable income under subsection
83-80(1)
:
(a)
to the extent that it is attributable to the
*
pre-18/8/93 period; and
(b)
to the extent that it is attributable to the
*
post-17/8/93 period, if the payment was made in connection with a payment that includes, or consists of, any of the following:
(i)
a
*
genuine redundancy payment; or
(ii)
an
*
early retirement scheme payment; or
(iii)
an
*
invalidity segment of an
*
employment termination payment or a
*
superannuation benefit.
History
S 83-85 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 83-90
Meaning of
pre-16/8/78 period, pre-18/8/93 period, post-17/8/93 period
and
long service leave employment period
83-90(1)
The
pre-16/8/78 period
consists of each day (if any) in your
*
long service leave employment period that occurred before 16 August 1978.
83-90(2)
The
pre-18/8/93 period
consists of each day (if any) in your
*
long service leave employment period to which the payment relates that occurred after 15 August 1978 and before 18 August 1993.
83-90(3)
The
post-17/8/93 period
consists of each day (if any) in your
*
long service leave employment period to which the payment relates that occurred after 17 August 1993.
83-90(4)
Your
long service leave employment period
, for a period of long service leave, is:
(a)
the period of employment to which the long service leave relates; or
(b)
if your entitlement to long service leave changes so that it accrues over a shorter period
-
the period that would apply under paragraph (a) assuming the change had not happened.
History
S 83-90 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Employment wholly full-time or wholly part-time
SECTION 83-95
How to work out amount of payment attributable to each period
83-95(1)
Work out how much of an
*
unused long service leave payment is attributable to a period as follows:
(a)
for the
*
pre-18/8/93 period or to the
*
post-17/8/93 period
-
use the formula in subsection (2);
(b)
for the
*
pre-16/8/78 period
-
subtract the sum of the amounts (if any) worked out for paragraph (a) for the other 2 periods from the total amount of the payment.
83-95(2)
For the
*
pre-18/8/93 period or the
*
post-17/8/93 period, the formula is:
| |
Amount of payment |
× |
Unused long service leave days in the relevant period |
|
| |
Total unused long service leave days |
|
where:
total unused long service leave days
means the total number of unused days of long service leave in the
*
long service leave employment period for the payment.
unused long service leave days in the relevant period
means the number of unused days of long service leave in the
*
pre-18/8/93 period or the
*
post-17/8/93 period (as applicable), worked out under section
83-100
.
Note 1:
For the meaning of
unused days of long service leave
, see section
83-100
.
Note 2:
Section
83-110
explains how to work out the period of unused long service leave if your employment was partly full-time and partly part-time during the period.
History
S 83-95 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 83-100
How to work out
unused days of long service leave
for each period
83-100(1)
The number of
unused days of long service leave
for each of the
*
pre-16/8/78 period, the
*
pre-18/8/93 period and the
*
post-17/8/93 period is the number of days of long service leave that accrued to you during that period less the number of days of long service leave that you used in the period.
Exception if days used exceed days accrued in the pre-18/8/93 period and the post-17/8/93 period
83-100(2)
To the extent that the number of days of long service leave that you used during the
*
pre-18/8/93 period or the
*
post-17/8/93 period exceeds the number of days of long service leave that accrued to you during the period, apply the excess days as shown in this table:
|
How to apply excess days
|
|
Item
|
If there are excess days in this period:
|
Apply the excess days as follows:
|
If, after you apply the excess days as shown in column 2, excess days remain, apply the remaining days as follows:
|
| 1 |
*
pre-18/8/93 period |
Subtract the excess days from the unused days in the
*
post-17/8/93 period |
Subtract the excess days from the unused days in the
*
pre-16/8/78 period |
| 2 |
*
post-17/8/93 period |
Subtract the excess days from the unused days in the
*
pre-18/8/93 period |
Subtract the excess days from the unused days in the
*
pre-16/8/78 period |
83-100(3)
The number of
unused days of long service leave
in each period is the number of days after applying the table.
Note:
Section
83-115
explains how to work out the number of days of long service leave you are taken to have used if you took long service leave at less than the full pay rate.
History
S 83-100 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 83-105
How to work out long service leave accrued in each period
83-105(1)
Work out the number of days of long service leave that accrued to you during each part of your
*
long service leave employment period as follows:
(a)
for the
*
pre-18/8/93 period or the
*
post-17/8/93 period
-
use the formula in subsection (2);
(b)
for the
*
pre-16/8/78 period
-
subtract the sum of the number of days (if any) worked out under paragraph (a) for the other 2 periods from the total number of days of long service leave accrued to you during the long service leave employment period.
83-105(2)
For the
*
pre-18/8/93 period or the
*
post-17/8/93 period, the formula is:
| |
Days of long service leave accrued during
*
long service leave employment period |
×
|
Days in relevant period |
| |
Days in
*
long service leave employment period |
where:
relevant period
means the
*
pre-18/8/93 period or the
*
post-17/8/93 period (as applicable).
How to treat fraction of day
83-105(3)
If long service leave accrued to you during the
*
pre-18/8/93 period and the
*
post-17/8/93 period but not during the
*
pre-16/8/78 period, and the number of days worked out under subsection (2) for the post-17/8/93 period includes a fraction, treat the fraction as having accrued during the pre-18/8/93 period.
83-105(4)
If long service leave accrued to you during all 3 periods and the number of days worked out under subsection (2) for the
*
post-17/8/93 period or the
*
pre-18/8/93 period includes a fraction, treat the fraction as having accrued during the
*
pre-16/8/78 period.
History
S 83-105 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Employment partly full-time and partly part-time
SECTION 83-110
Leave accrued in pre-16/8/78, pre-18/8/93 and post-17/8/93 periods
-
employment full-time and part-time
83-110(1)
This section applies if the
*
long service leave employment period for an
*
unused long service leave payment includes:
(a)
1 or more periods when you were employed on a full-time basis; and
(b)
1 or more periods when you were employed on a part-time basis.
83-110(2)
Work out how much of the payment is attributable to the period or periods when you were employed on a full-time basis (the
full-time payment
) and how much to the period or periods when you were employed on a part-time basis (the
part-time payment
).
83-110(3)
The amount of the payment that is attributable to each of the
*
pre-16/8/78 period, the
*
pre-18/8/93 period and the
*
post-17/8/93 period is the sum of the amounts worked out in accordance with sections
83-95
,
83-100
and
83-105
that would be attributable to those periods if the full-time payment and the part-time payment were each
*
unused long service leave payments.
History
S 83-110 inserted by
No 9 of 2007
, s 3 and Sch 2, item 1, applicable on and after 1 July 2007.
Long service leave taken at less than full pay
SECTION 83-115
83-115
Working out used days of long service leave if leave taken at less than full pay
If you used days of long service leave at a rate of pay that is less than the rate to which you are entitled, the number of days of long service leave you are taken to have used (disregarding fractions of days) is as follows:
| |
Actual days of long service leave |
×
|
Rate of pay at which leave was actually taken |
| |
Rate of pay to which you were entitled when taking leave |
Example:
If you took 100 actual days of long service leave at a rate of pay of
$
30 per hour, while the rate of pay to which you were entitled when taking leave is
$
40 per hour, you are taken to have used 75 days of long service leave, worked out as follows:
| 100 actual days of long service leave |
× |
30
40 |
= |
75 days of long service leave you are taken to have used |
History
S 83-115 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Subdivision 83-C
-
Genuine redundancy payments and early retirement scheme payments
History
Subdiv 83-C inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Guide to Subdivision 83-C
SECTION 83-165
What this Subdivision is about
This Subdivision defines what are genuine redundancy payments and early retirement scheme payments.
If you receive a genuine redundancy payment or an early retirement scheme payment, you do not have to pay income tax on the payment so far as it does not exceed a certain amount worked out under this Subdivision.
A part of a genuine redundancy payment or an early retirement scheme payment that is not tax free under this Subdivision will normally be an employment termination payment.
History
S 83-165 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 83-170 |
Tax-free treatment of genuine redundancy payments and early retirement scheme payments |
| 83-175 |
What is a
genuine redundancy payment
? |
| 83-180 |
What is an
early retirement scheme payment
? |
Operative provisions
SECTION 83-170
Tax-free treatment of genuine redundancy payments and early retirement scheme payments
83-170(1)
This section applies if you receive a
*
genuine redundancy payment or an
*
early retirement scheme payment.
Note:
A payment cannot be both a genuine redundancy payment and an early retirement scheme payment, because of the nature of each of these types of payment: see sections
83-175
and
83-180
.
83-170(2)
So much of the relevant payment as does not exceed the amount worked out under subsection
(3)
is not assessable income and is not
*
exempt income.
83-170(3)
Work out the amount using the formula:
| Base amount
+
(Service amount
×
Years of service) |
where:
base amount
means:
(a)
for the income year 2006-2007
-
$
6,783; and
(b)
for a later income year
-
the amount mentioned in paragraph (a) indexed annually.
Note:
Subdivision
960-M
shows you how to index the base amount.
service amount
means:
(a)
for the income year 2006-2007
-
$
3,392; and
(b)
for a later income year
-
the amount mentioned in paragraph (a) indexed annually.
Note:
Subdivision
960-M
shows you how to index the service amount.
years of service
means the number of whole years in the period, or sum of periods, of employment to which the payment relates.
Note:
The remaining part of a genuine redundancy payment or an early retirement scheme payment (apart from the amount mentioned in subsection
(3)
) is an employment termination payment if section
82-130
applies to that part.
History
S 83-170 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 83-175
What is a
genuine redundancy payment
?
83-175(1)
A
genuine redundancy payment
is so much of a payment received by an employee who is dismissed from employment because the employee
'
s position is genuinely redundant as exceeds the amount that could reasonably be expected to be received by the employee in consequence of the voluntary termination of his or her employment at the time of the dismissal.
83-175(2)
A
genuine redundancy payment
must satisfy the following conditions:
(a)
the employee is dismissed before the earlier of the following:
(i)
the day the employee reached
*
pension age;
(ii)
if the employee
'
s employment would have terminated when he or she reached a particular age or completed a particular period of service
-
the day he or she would reach the age or complete the period of service (as the case may be);
(b)
if the dismissal was not at
*
arm
'
s length
-
the payment does not exceed the amount that could reasonably be expected to be made if the dismissal were at arm
'
s length;
(c)
at the time of the dismissal, there was no
*
arrangement between the employee and the employer, or between the employer and another person, to employ the employee after the dismissal.
History
S 83-175(2) amended by No 94 of 2019, s 3 and Sch 1 item 1, by substituting
"
the employee reached
*
pension age
"
for
"
he or she turned 65
"
in para (a)(i), effective 29 October 2019 and applicable to payments received by employees who are dismissed or retire on or after 1 July 2019.
83-175(3)
However, a
genuine redundancy payment
does not include any part of a payment that was received by the employee in lieu of
*
superannuation benefits to which the employee may have become entitled at the time the payment was received or at a later time.
Payments not covered
83-175(4)
A payment is
not
a
genuine redundancy payment
if it is a payment mentioned in section
82-135
(apart from paragraph
82-135(e)
).
Note:
Paragraph
82-135(e)
provides that the part of a genuine redundancy payment or an early retirement scheme payment worked out under section
83-170
is not an employment termination payment.
History
S 83-175 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 83-180
What is an
early retirement scheme payment
?
83-180(1)
An
early retirement scheme payment
is so much of a payment received by an employee because the employee retires under an
*
early retirement scheme as exceeds the amount that could reasonably be expected to be received by the employee in consequence of the voluntary termination of his or her employment at the time of the retirement.
83-180(2)
An
early retirement scheme payment
must satisfy the following conditions:
(a)
the employee retires before the earlier of the following:
(i)
the day the employee reached
*
pension age;
(ii)
if the employee
'
s employment would have terminated when he or she reached a particular age or completed a particular period of service
-
the day he or she would reach the age or complete the period of service (as the case may be);
(b)
if the retirement is not at
*
arm
'
s length
-
the payment does not exceed the amount that could reasonably be expected to be made if the retirement were at arm
'
s length;
(c)
at the time of the retirement, there was no
*
arrangement between the employee and the employer, or between the employer and another person, to employ the employee after the retirement.
History
S 83-180(2) amended by No 94 of 2019, s 3 and Sch 1 item 2, by substituting
"
the employee reached
*
pension age
"
for
"
he or she turned 65
"
in para (a)(i), effective 29 October 2019 and applicable to payments received by employees who are dismissed or retire on or after 1 July 2019.
83-180(3)
A scheme is an
early retirement scheme
if:
(a)
all the employer
'
s employees who comprise such a class of employees as the Commissioner approves may participate in the scheme; and
(b)
the employer
'
s purpose in implementing the scheme is to rationalise or re-organise the employer
'
s operations by making any change to the employer
'
s operations, or the nature of the work force, that the Commissioner approves; and
(c)
before the scheme is implemented, the Commissioner, by written instrument, approves the scheme as an early retirement scheme for the purposes of this section.
83-180(4)
A scheme is also an
early retirement scheme
if:
(a)
paragraph (3)(a) or (b) does not apply; and
(b)
the Commissioner is satisfied that special circumstances exist in relation to the scheme that make it reasonable to approve the scheme; and
(c)
before the scheme is implemented, the Commissioner, by written instrument, approves the scheme as an early retirement scheme for the purposes of this section.
83-180(5)
However, an
early retirement scheme payment
does not include any part of the payment that was paid to the employee in lieu of
*
superannuation benefits to which the employee may have become entitled at the time the payment was made or at a later time.
History
S 83-180(5) amended by No 15 of 2007, s 3 and Sch 4 items 1 and 2, by substituting
"
payment
"
for
"
*
employment termination payment
"
and substituting
"
payment
"
for
"
employment termination payment
"
, effective 15 March 2007.
Payments not covered
83-180(6)
A payment is
not
an
early retirement scheme payment
if it is a payment mentioned in section
82-135
(apart from paragraph
82-135(e)
).
Note:
Paragraph
82-135(e)
provides that the part of a genuine redundancy payment or an early retirement scheme payment worked out under section
83-170
is not an employment termination payment.
History
S 83-180 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Subdivision 83-D
-
Foreign termination payments
History
Subdiv 83-D inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Guide to Subdivision 83-D
SECTION 83-230
What this Subdivision is about
This Subdivision deals with termination payments that arise out of foreign employment.
These payments are not employment termination payments, and are tax free (except for amounts worked out under this Subdivision).
History
S 83-230 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 83-235 |
Termination payments tax free
-
foreign resident period |
| 83-240 |
Termination payments tax free
-
Australian resident period |
Operative provisions
SECTION 83-235
83-235
Termination payments tax free
-
foreign resident period
A payment received by you is not assessable income and is not
*
exempt income if:
(a)
it was received in consequence of the termination of your employment in a foreign country; and
(b)
it is not a
*
superannuation benefit; and
(c)
it is not a payment of a pension or an
*
annuity (whether or not the payment is a superannuation benefit); and
(d)
it relates only to a period of employment when you were not an Australian resident.
History
S 83-235 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
SECTION 83-240
Termination payments tax free
-
Australian resident period
83-240(1)
A payment received by you is not assessable income and is not
*
exempt income if:
(a)
it was received in consequence of:
(i)
the termination of your employment in a foreign country; or
(ii)
the termination of your engagement on qualifying service on an approved project (within the meaning of section
23AF
of the
Income Tax Assessment Act 1936
), in relation to a foreign country; and
(b)
it relates only to the period of that employment or engagement; and
(c)
it is not a
*
superannuation benefit; and
(d)
it is not a payment of a pension or an
*
annuity (whether or not the payment is a superannuation benefit); and
(e)
you were an Australian resident during the period of the employment or engagement; and
(f)
the payment is not exempt from income tax under the law of the foreign country; and
(g)
for a period of employment
-
your foreign earnings from the employment are exempt from income tax under section
23AG
of the
Income Tax Assessment Act 1936
; and
(h)
for a period of engagement
-
your
*
eligible foreign remuneration from the service is exempt from income tax under section
23AF
of that Act.
83-240(2)
For the purposes of subparagraph (1)(a)(ii), treat the termination of engagement on qualifying service on an approved project as including:
(a)
retirement from the engagement; and
(b)
cessation of the engagement because of the person's death.
Note:
The termination of a person's employment is treated in the same way: see section
80-10
.
History
S 83-240 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Subdivision 83-E
-
Other payments
History
Subdiv 83-E inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Guide to Subdivision 83-E
SECTION 83-290
What this Subdivision is about
If a payment you receive in consequence of the termination of your employment is made more than 12 months after the termination of your employment, it does not qualify as an employment termination payment, subject to certain exceptions (see section
82-130
).
The payment is treated as assessable income and no tax concession is allowed under Division
82
.
History
S 83-290 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 83-295 |
Termination payments made more than 12 months after termination etc. |
Operative provisions
SECTION 83-295
83-295
Termination payments made more than 12 months after termination etc.
A payment received by you that would be an
*
employment termination payment but for paragraph
82-130(1)(b)
is assessable income.
History
S 83-295 inserted by
No 9 of 2007
, s 3 and Sch 2 item 1, applicable on and after 1 July 2007.
Division 83A
-
Employee share schemes
History
Div 83A inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009. No 133 of 2009, s 3 and Sch 1 item 87 contains the following transitional provision:
87 Transitional
-
regulations
87
Despite subsection
12(2)
of the
Legislative Instruments Act 2003
, regulations that:
(a)
are made for the purposes of Division 83A of the
Income Tax Assessment Act 1997
; or
(b)
are made for the purposes of a taxation law (within the meaning of that Act) and relate to the amendments made;
may take effect from any time on or after 1 July 2009, if the regulations are made before the end of the period of 3 months commencing on 14 December 2009.
Guide to Division 83A
SECTION 83A-1
What this Division is about
Your assessable income includes discounts on shares, rights and stapled securities you (or your associate) acquire under an employee share scheme.
You may be entitled:
(a) to have the amount included in your assessable income reduced; or
(b) to have the income year in which it is included deferred.
History
S 83A-1 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
Subdivision 83A-A
-
Objects of Division and key concepts
History
Subdiv 83A-A inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-5
83A-5
Objects of Division
The objects of this Division are:
(a)
to ensure that benefits provided to employees under
*
employee share schemes are subject to income tax at the employees
'
marginal rates under
*
income tax law (instead of being subject to
*
fringe benefits tax law); and
(b)
to increase the extent to which the interests of employees are aligned with those of their employers, by providing a tax concession to encourage lower and middle income earners to acquire
*
shares under such schemes; and
(c)
to increase the number of new entrepreneurial companies in Australia by assisting them to attract and retain employees by providing those employees with a tax concession for acquiring shares under such schemes.
History
S 83A-5 amended by No 105 of 2015, s 3 and Sch 1 item 2, by inserting para (c), applicable in relation to ESS interests acquired on or after 1 July 2015.
S 83A-5 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-10
Meaning of
ESS interest
and
employee share scheme
83A-10(1)
An
ESS interest
, in a company, is a beneficial interest in:
(a)
a
*
share in the company; or
(b)
a right to acquire a beneficial interest in a share in the company.
83A-10(2)
An
employee share scheme
is a
*
scheme under which
*
ESS interests in a company are provided to employees, or
*
associates of employees, (including past or prospective employees) of:
(a)
the company; or
(b)
*
subsidiaries of the company;
in relation to the employees
'
employment.
Note:
See section
83A-325
for relationships similar to employment.
History
S 83A-10 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
Subdivision 83A-B
-
Immediate inclusion of discount in assessable income
History
Subdiv 83A-B inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
Guide to Subdivision 83A-B
SECTION 83A-15
What this Subdivision is about
Generally, a discount you receive on shares, rights or stapled securities you acquire under an employee share scheme is included in your assessable income when you acquire the beneficial interest in those shares, rights or securities.
You may be entitled to reduce the amount included in your assessable income if you meet one of 2 sets of conditions.
If you are a foreign resident, only the part of the discount that relates to your employment in Australia is included in your assessable income.
History
S 83A-15 amended by No 105 of 2015, s 3 and Sch 1 item 3, by substituting the second and third paras, applicable in relation to ESS interests acquired on or after 1 July 2015. The second and third paras formerly read:
You may be entitled to reduce the amount included in your assessable income if you meet certain conditions which seek to limit the concession to genuine schemes broadly available to all permanent employees who do not already have anything other than a minor interest in their employer.
The income year in which you are taxed may be deferred if there is a real risk of forfeiture, or you acquired the shares or securities under particular salary sacrifice arrangements (see Subdivision
83A-C
).
S 83A-15 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 83A-20 |
Application of Subdivision |
| 83A-25 |
Discount to be included in assessable income |
| 83A-30 |
Amount for which discounted ESS interest acquired |
| 83A-33 |
Reducing amounts included in assessable income
-
start ups |
| 83A-35 |
Reducing amounts included in assessable income
-
other cases |
| 83A-45 |
Further conditions for reducing amounts included in assessable income |
Operative provisions
SECTION 83A-20
Application of Subdivision
83A-20(1)
This Subdivision applies to an
*
ESS interest if you acquire the interest under an
*
employee share scheme at a discount.
Note 1:
This Subdivision does not apply if Subdivision
83A-C
applies: see section
83A-105
.
Note 2:
If an associate of yours acquires an interest in relation to your employment, this Division applies as if you, rather than your associate, acquired the interest: see section
83A-305
.
History
S 83A-20(1) amended by No 105 of 2015, s 3 and Sch 1 item 47, by repealing note 3, applicable to assessments for the 2011-12 income year and later income years. Note 3 formerly read:
Note 3:
Regulations made for the purposes of section
83A-315
may be relevant to working out whether you acquire the ESS interest at a discount.
83A-20(2)
However, this Subdivision does not apply if the
*
ESS interest is a beneficial interest in a
*
share that you acquire as a result of exercising a right, if you acquired a beneficial interest in the right under an
*
employee share scheme.
History
S 83A-20 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-25
Discount to be included in assessable income
83A-25(1)
Your assessable income for the income year in which you acquire the
*
ESS interest includes the discount given in relation to the interest.
Note:
Regulations made for section
83A-315
may be relevant to working out whether you acquire the ESS interest at a discount.
History
S 83A-25(1) amended by No 105 of 2015, s 3 and Sch 1 item 48, by inserting the note, applicable to assessments for the 2011-12 income year and later income years.
83A-25(2)
Treat an amount included in your assessable income under subsection (1) as being from a source other than an
*
Australian source to the extent that it relates to your employment outside Australia.
Note:
For the CGT treatment of employee share schemes, see Subdivision
130-D
.
History
S 83A-25 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-30
Amount for which discounted ESS interest acquired
83A-30(1)
For the purposes of this Act (other than this Division), the
*
ESS interest (and the
*
share or right of which it forms part) is taken to have been acquired for its
*
market value (rather than for its discounted value).
Note:
Regulations made for the purposes of section
83A-315
may substitute a different amount for the market value of the ESS interest.
History
S 83A-30 amended by No 105 of 2015, s 3 and Sch 1 item 4, by inserting
"
(1)
"
before
"
For
"
, applicable in relation to ESS interests acquired on or after 1 July 2015.
83A-30(2)
Subsection (1) does not apply to an
*
ESS interest that is a beneficial interest in a right (or to the right of which it forms part), if section
83A-33
(about start ups) reduces the amount to be included in your assessable income in relation to the interest.
History
S 83A-30(2) inserted by No 105 of 2015, s 3 and Sch 1 item 5, applicable in relation to ESS interests acquired on or after 1 July 2015.
History
S 83A-30 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-33
Reducing amounts included in assessable income
-
start ups
83A-33(1)
Reduce the total amount included in your assessable income under subsection
83A-25(1)
for an income year by the total of the amounts included in your assessable income under that subsection, for the income year, for
*
ESS interests to which all of the following provisions apply:
(a)
subsections (2) to (6) of this section;
(b)
section
83A-45
(about further conditions);
(c)
for ESS interests that are beneficial interests in
*
shares
-
subsection
83A-105(2)
(about broad availability of schemes).
No equity interests listed on a stock exchange
83A-33(2)
This subsection applies to an
*
ESS interest in a company (the
first company
) if no
*
equity interests in any of the following companies are listed for quotation in the official list of any
*
approved stock exchange at the end of the first company
'
s most recent income year before you acquired the interest:
(a)
the first company;
(b)
any
*
subsidiary of the first company at the end of that income year;
(c)
any holding company (within the meaning of the
Corporations Act 2001
) of the first company at the end of that income year;
(d)
any subsidiary of a holding company (within the meaning of that Act) of the first company at the end of that income year.
Note:
For identifying any holding company, see also subsection (7).
Incorporated for less than 10 years
83A-33(3)
This subsection applies to an
*
ESS interest in a company if:
(a)
the company (the
first company
); and
(b)
each of the other companies referred to in subsection (2);
was incorporated by or under an
*
Australian law or
*
foreign law less than 10 years before the end of the first company
'
s most recent income year before you acquired the interest.
Company has aggregated turnover not exceeding
$
50 million
83A-33(4)
This subsection applies to an
*
ESS interest in a company if the company has an
*
aggregated turnover not exceeding
$
50 million for the company
'
s most recent income year before the income year in which you acquire the ESS interest.
Note:
For working out aggregated turnover, see also subsection (7).
Conditions relating to market value
83A-33(5)
This subsection applies to an
*
ESS interest in a company if:
(a)
in the case of an ESS interest that is a beneficial interest in a
*
share
-
the discount on the ESS interest is no more than 15% of its
*
market value when you acquire it; or
(b)
in the case of an ESS interest that is a beneficial interest in a right
-
the amount that must be paid to exercise the right is greater than or equal to the market value of an ordinary share in the company when you acquire the ESS interest.
Employer to be an Australian resident company
83A-33(6)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme if, when you acquire the interest, your employer is an Australian resident.
Disregard certain investments
83A-33(7)
For the purposes of subsections (2) and (4), disregard:
(a)
*
eligible venture capital investments by a
*
VCLP,
*
ESVCLP or
*
AFOF; and
(b)
investments by an
*
exempt entity that is a
*
deductible gift recipient;
when identifying any holding company (within the meaning of the
Corporations Act 2001
) or working out
*
aggregated turnover.
History
S 83A-33 inserted by No 105 of 2015, s 3 and Sch 1 item 6, applicable in relation to ESS interests acquired on or after 1 July 2015.
SECTION 83A-35
Reducing amounts included in assessable income
-
other cases
Reduction and income test
83A-35(1)
Reduce the total amount included in your assessable income under subsection
83A-25(1)
for an income year by the total of the amounts included in your assessable income under that subsection, for the income year, for
*
ESS interests to which all of the following provisions apply:
(a)
subsections (6) and (7) of this section;
(b)
section
83A-45
(about further conditions).
History
S 83A-35(1) amended by No 105 of 2015, s 3 and Sch 1 item 8, by substituting all the words after
"
*
ESS interests
"
, applicable in relation to ESS interests acquired on or after 1 July 2015.
83A-35(2)
However:
(a)
do not reduce the total amount by more than
$
1,000; and
(b)
only make the reduction if the sum of the following does not exceed
$
180,000:
(i)
your taxable income for the income year (including any amount that would be included in your taxable income if you disregarded this section, but not including your
*
assessable FHSS released amount for the income year);
(ii)
your
*
reportable fringe benefits total for the income year;
(iii)
your
*
reportable superannuation contributions (if any) for the income year;
(iv)
your
*
total net investment loss for the income year; and
(c)
subsection (1) does not apply if section
83A-33
(about start ups) reduces the amount to be included in your assessable income for the income year for the
*
ESS interests.
History
S 83A-35(2) amended by No 132 of 2017, s 3 and Sch 1 item 29, by inserting
"
, but not including your
*
assessable FHSS released amount for the income year
"
in para (b)(i), effective 1 July 2018.
S 83A-35(2) amended by No 105 of 2015, s 3 and Sch 1 item 9, by inserting para (c), applicable in relation to ESS interests acquired on or after 1 July 2015.
83A-35(3)
(Repealed by No 105 of 2015)
History
S 83A-35(3) repealed by No 105 of 2015, s 3 and Sch 1 item 10, applicable in relation to ESS interests acquired on or after 1 July 2015. S 83A-35(3) formerly read:
Employment
83A-35(3)
This subsection applies to an
*
ESS interest in a company if, when you acquire the interest, you are employed by:
(a)
the company; or
(b)
a
*
subsidiary of the company.
83A-35(4)
(Repealed by No 105 of 2015)
History
S 83A-35(4) repealed by No 105 of 2015, s 3 and Sch 1 item 10, applicable in relation to ESS interests acquired on or after 1 July 2015. S 83A-35(4) formerly read:
Employee share scheme relates only to ordinary shares
83A-35(4)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme if, when you acquire the interest, all the ESS interests available for acquisition under the scheme relate to ordinary
*
shares.
83A-35(5)
(Repealed by No 105 of 2015)
History
S 83A-35(5) repealed by No 105 of 2015, s 3 and Sch 1 item 10, applicable in relation to ESS interests acquired on or after 1 July 2015. S 83A-35(5) formerly read:
Integrity rule about share trading and investment companies
83A-35(5)
This subsection applies to an
*
ESS interest in a company unless, when you acquire the interest:
(a)
the predominant business of the company (whether or not stated in its constituent documents) is the acquisition, sale or holding of
*
shares, securities or other investments (whether directly or indirectly through one or more companies, partnerships or trusts); and
(b)
you are employed by the company; and
(c)
you are also employed by any other company that is:
(i)
a
*
subsidiary of the first company; or
(ii)
a holding company (within the meaning of the
Corporations Act 2001
) of the first company; or
(iii)
a subsidiary of a holding company (within the meaning of the
Corporations Act 2001
) of the first company.
Scheme must be non-discriminatory
83A-35(6)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme if, when you acquire the interest, both:
(a)
the employee share scheme; and
(b)
any scheme for the provision of financial assistance in respect of acquisitions of ESS interests under the employee share scheme;
are operated on a non-discriminatory basis in relation to at least 75% of the permanent employees of your employer who have completed at least 3 years of service (whether continuous or non-continuous) with your employer and who are Australian residents.
No risk of losing interest or share under the conditions of the scheme
83A-35(7)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme if, when you acquire the interest:
(a)
if the ESS interest is a beneficial interest in a
*
share
-
there is no real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it); or
(b)
if the ESS interest is a beneficial interest in a right to acquire a beneficial interest in a
*
share:
(i)
there is no real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it, exercising the right or letting the right lapse); and
(ii)
there is no real risk that, under the conditions of the scheme, if you exercise the right, you will forfeit or lose the beneficial interest in the share (other than by disposing of it).
83A-35(8)
(Repealed by No 105 of 2015)
History
S 83A-35(8) repealed by No 105 of 2015, s 3 and Sch 1 item 10, applicable in relation to ESS interests acquired on or after 1 July 2015. S 83A-35(8) formerly read:
Minimum holding period
83A-35(8)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme if, at all times during the period that:
(a)
starts when you acquire the interest; and
(b)
ends at the earlier of:
(i)
3 years later; and
(ii)
when you cease being employed by your employer;
the scheme is operated so that:
(c)
you are not permitted to dispose of:
(i)
any ESS interest (the
scheme interest
) you acquire under the scheme; or
(ii)
a beneficial interest in a
*
share you acquire as a result of a scheme interest;
before the earlier of:
(iii)
the end of the period of 3 years after you acquire the scheme interest; and
(iv)
when you cease being employed by your employer; and
(d)
everyone else who acquires ESS interests under the scheme is subject to a corresponding restriction.
Note:
This subsection is taken to apply in the case of a takeover or restructure: see subsection
83A-130(3)
.
83A-35(9)
(Repealed by No 105 of 2015)
History
S 83A-35(9) repealed by No 105 of 2015, s 3 and Sch 1 item 10, applicable in relation to ESS interests acquired on or after 1 July 2015. S 83A-35(9) formerly read:
5% limit on shareholding and voting power
83A-35(9)
This subsection applies to an
*
ESS interest in a company if, immediately after you acquire the interest:
(a)
you do not hold a beneficial interest in more than 5% of the
*
shares in the company; and
(b)
you are not in a position to cast, or to control the casting of, more than 5% of the maximum number of votes that might be cast at a general meeting of the company.
History
S 83A-35 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-45
Further conditions for reducing amounts included in assessable income
Employment
83A-45(1)
This subsection applies to an
*
ESS interest in a company if, when you acquire the interest, you are employed by:
(a)
the company; or
(b)
a
*
subsidiary of the company.
Employee share scheme relates only to ordinary shares
83A-45(2)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme if, when you acquire the interest, all the ESS interests available for acquisition under the scheme relate to ordinary
*
shares.
Integrity rule about share trading and investment companies.
83A-45(3)
This subsection applies to an
*
ESS interest in a company unless, when you acquire the interest:
(a)
the predominant business of the company (whether or not stated in its constituent documents) is the acquisition, sale or holding of
*
shares, securities or other investments (whether directly or indirectly through one or more companies, partnerships or trusts); and
(b)
you are employed by the company; and
(c)
you are also employed by any other company that is:
(i)
a
*
subsidiary of the first company; or
(ii)
a holding company (within the meaning of the
Corporations Act 2001
) of the first company; or
(iii)
a subsidiary of a holding company (within the meaning of the
Corporations Act 2001
) of the first company.
Minimum holding period
83A-45(4)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme if, at all times during the interest
'
s
*
minimum holding period, the scheme is operated so that every acquirer of an ESS interest (the
scheme interest
) under the scheme is not permitted to dispose of:
(a)
the scheme interest; or
(b)
a beneficial interest in a
*
share acquired as a result of the scheme interest;
during the scheme interest
'
s minimum holding period.
Note:
This subsection is taken to apply in the case of a takeover or restructure: see subsection
83A-130(3)
.
83A-45(5)
An
*
ESS interest
'
s
minimum holding period
is the period starting when the interest is acquired under the
*
employee share scheme and ending at the earlier of:
(a)
3 years later, or such earlier time as the Commissioner allows if the Commissioner is satisfied that:
(i)
the operators of the scheme intended for subsection (4) to apply to the interest during the 3 years after that acquisition of the interest; and
(ii)
at the earlier time that the Commissioner allows, all
*
membership interests in the relevant company were disposed of under a particular
*
scheme; and
(b)
when the acquirer of the interest ceases being employed by the relevant employer.
10% limit on shareholding and voting power
83A-45(6)
This subsection applies to an
*
ESS interest in a company if, immediately after you acquire the interest:
(a)
you do not hold a beneficial interest in more than 10% of the
*
shares in the company; and
(b)
you are not in a position to cast, or to control the casting of, more than 10% of the maximum number of votes that might be cast at a general meeting of the company.
83A-45(7)
For the purposes of subsection (6), you are taken to:
(a)
hold a beneficial interest in any
*
shares in the company that you can acquire under an
*
ESS interest that is a beneficial interest in a right to acquire a beneficial interest in such shares; and
(b)
be in a position to cast votes as a result of holding that interest in those shares.
History
S 83A-45 inserted by No 105 of 2015, s 3 and Sch 1 item 11, applicable in relation to ESS interests acquired on or after 1 July 2015.
Subdivision 83A-C
-
Deferred inclusion of gain in assessable income
History
Subdiv 83A-C inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
Guide to Subdivision 83A-C
SECTION 83A-100
What this Subdivision is about
If there is a real risk you might forfeit the share, right or stapled security you acquired under an employee share scheme, you don
'
t include the discount in your assessable income when you acquired it. Instead, in the first income year you are able to dispose of the share, right or security, your assessable income will include any gain you have made to that time. If 15 years pass, the gain is included in that income year instead.
This deferred taxing point can also apply to:
(a) a share or stapled security you acquire under salary sacrifice arrangements, if you get no more than
$
5,000 worth of shares under those arrangements; or
(b) a right, if the scheme restricted you immediately disposing of the right, and stated that this Subdivision applies.
History
S 83A-100 amended by No 8 of 2022, s 3 and Sch 10 item 1, by substituting
"
If 15 years pass
"
for
"
If you cease employment earlier, or if 15 years pass
"
, effective 1 April 2022 and applicable in relation to each ESS interest for which the ESS deferred taxing point occurs on or after: (a) unless paragraph (b) applies
-
the first 1 July to occur after the day on which this Act receives the Royal Assent; or (b) if this Act receives the Royal Assent on a 1 July
-
that 1 July.
S 83A-100 amended by No 105 of 2015, s 3 and Sch 1 items 12 and 13, by substituting
"
15 years
"
for
"
7 years
"
and substituting the second para, applicable in relation to ESS interests acquired on or after 1 July 2015. The second para formerly read:
A share or stapledsecurity you acquire under salary sacrifice arrangements can also be subject to this deferred taxing point if you get no more than
$
5,000 worth of shares under those arrangements.
S 83A-100 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Main provisions
|
| 83A-105 |
Application of Subdivision |
| 83A-110 |
Amount to be included in assessable income |
| 83A-115 |
ESS deferred taxing point
-
shares |
| 83A-120 |
ESS deferred taxing point
-
rights to acquire shares |
| 83A-125 |
Tax treatment of ESS interests held after ESS deferred taxing points |
|
Takeovers and restructures
|
| 83A-130 |
Takeovers and restructures |
Main provisions
SECTION 83A-105
Application of Subdivision
Scope of Subdivision
83A-105(1)
This Subdivision applies, and Subdivision
83A-B
does not apply, to an
*
ESS interest in a company if:
(a)
Subdivision
83A-B
would, apart from this section, apply to the interest (see section
83A-20
); and
(aa)
after applying section
83A-315
, there is still a discount given in relation to the interest; and
(ab)
section
83A-33
(about start ups) does not reduce the amount to be included in your assessable income in relation to the interest; and
(b)
subsections
83A-45(1)
,
(2)
,
(3)
and
(6)
apply to the interest; and
(c)
if the interest is a beneficial interest in a
*
share:
(i)
subsection (2) of this section applies to the interest; and
(ii)
subsection (3) or (4) applies to the interest; and
(d)
if the interest is a beneficial interest in a right to acquire a beneficial interest in a share
-
subsection (3) or (6) applies to the interest.
Note:
Subsections
83A-45(1)
,
(2)
,
(3)
and
(6)
contain conditions relating to the following:
(a) your employment;
(b) the types of shares available under the employee share scheme;
(c) share trading and investment companies;
(d) your shareholding and voting power in the company.
History
S 83A-105(1) amended by No 105 of 2015, s 3 and Sch 1 item 49, by inserting para (aa), applicable to assessments for the 2011-12 income year and later income years.
S 83A-105(1) amended by No 105 of 2015, s 3 and Sch 1 items 14
-
17, by inserting para (ab), substituting
"
83A-45(1), (2), (3) and (6)
"
for
"
83A-35(3), (4), (5) and (9)
"
in para (b), inserting
"
or (6)
"
in para (d) and substituting
"
83A-45(1), (2), (3) and (6)
"
for
"
83A-35(3), (4), (5), and (9)
"
in the note, applicable in relation to ESS interests acquired on or after 1 July 2015.
Broad availability of schemes
83A-105(2)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme if, when you acquire the interest, at least 75% of the permanent employees of your employer who have completed at least 3 years of service (whether continuous or non-continuous) with your employer and who are Australian residents are, or at some earlier time had been, entitled to acquire:
(a)
ESS interests under the scheme; or
(b)
ESS interests in:
(i)
your employer; or
(ii)
a holding company (within the meaning of the
Corporations Act 2001
) of your employer;
under another employee share scheme.
Real risk of losing interest or share under the conditions of the scheme
83A-105(3)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme if, when you acquire the interest:
(a)
if the ESS interest is a beneficial interest in a
*
share
-
there is a real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it); or
(b)
if the ESS interest is a beneficial interest in a right to acquire a beneficial interest in a share:
(i)
there is a real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it, exercising the right or letting the right lapse); or
(ii)
there is a real risk that, under the conditions of the scheme, if you exercise the right, you will forfeit or lose the beneficial interest in the share (other than by disposing of it).
Salary sacrifice arrangement
83A-105(4)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme during an income year at a discount if:
(a)
the interest is provided:
(i)
because you agreed to acquire the interest in return for a reduction in your salary or wages that would not have happened apart from the agreement; or
(ii)
as part of your remuneration package, in circumstances where it is reasonable to conclude that your salary or wages would be greater if the interest was not made part of that package; and
(b)
at the time you acquire the interest:
(i)
the discount equals the
*
market value of the ESS interest; and
(ii)
all of the ESS interests available for acquisition under the scheme are ESS interests to which subsection (3) applies, beneficial interests in
*
shares, or both; and
(iii)
the governing rules of the scheme expressly state that this Subdivision applies to the scheme (subject to the requirements of this Act); and
(c)
the total
*
market value of the
*
ESS interests in your employer and any holding company (within the meaning of the
Corporations Act 2001
) of your employer:
(i)
that you acquire during the year under any employee share scheme or schemes; and
(ii)
to which both this Subdivision and this subsection apply;
does not exceed
$
5,000.
83A-105(5)
For the purposes of paragraph (4)(c), work out the
*
market value of each
*
ESS interest as at the time you acquire it.
Note:
Regulations made for the purposes of section
83A-315
may substitute a different amount for the market value of the ESS interest.
Scheme
'
s rules state that this Subdivision applies
83A-105(6)
This subsection applies to an
*
ESS interest you acquire under an
*
employee share scheme during an income year at a discount if:
(a)
the interest is a beneficial interest in a right; and
(b)
at the time you acquired the interest:
(i)
the scheme genuinely restricted you immediately disposing of the right; and
(ii)
the governing rules of the scheme expressly stated that this Subdivision applies to the scheme (subject to the requirements of this Act).
History
S 83A-105(6) inserted by No 105 of 2015, s 3 and Sch 1 item 18, applicable in relation to ESS interests acquired on or after 1 July 2015.
History
S 83A-105 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-110
Amount to be included in assessable income
83A-110(1)
Your assessable income for the income year in which the
*
ESS deferred taxing point for the
*
ESS interest occurs includes the
*
market value of the interest at the ESS deferred taxing point, reduced by the
*
cost base of the interest.
Note:
Regulations made for the purposes of section
83A-315
may substitute a different amount for the market value of the ESS interest.
83A-110(2)
Treat an amount included in your assessable income under subsection (1) as being from a source other than an
*
Australian source to the extent that it relates to your employment outside Australia.
Note:
For the CGT treatment of employee share schemes, see Subdivision
130-D
.
History
S 83A-110 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-115
ESS deferred taxing point
-
shares
Scope
83A-115(1)
This section applies if the
*
ESS interest is a beneficial interest in a
*
share.
Meaning of
ESS deferred taxing point
83A-115(2)
The
ESS deferred taxing point
for the
*
ESS interest is the earlier of the times mentioned in subsections
(4)
and
(6)
.
History
S 83A-115(2) amended by No 8 of 2022, s 3 and Sch 10 item 2, by substituting
"
earlier of the times mentioned in subsections (4) and (6)
"
for
"
earliest of the times mentioned in subsections (4) to (6)
"
, effective 1 April 2022 and applicable in relation to each ESS interest for which the ESS deferred taxing point occurs on or after: (a) unless paragraph (b) applies
-
the first 1 July to occur after the day on which this Act receives the Royal Assent; or (b) if this Act receives the Royal Assent on a 1 July
-
that 1 July.
83A-115(3)
However, the
ESS deferred taxing point
for the
*
ESS interest is instead the time you dispose of the interest, if that time occurs within 30 days after the time worked out under subsection
(2)
.
No restrictions on disposing of share
83A-115(4)
The first possible taxing point is the earliest time when:
(a)
there is no real risk that, under the conditions of the
*
employee share scheme, you will forfeit or lose the
*
ESS interest (other than by disposing of it); and
(b)
if, at the time you acquired the interest, the scheme genuinely restricted you immediately disposing of the interest
-
the scheme no longer so restricts you.
83A-115(5)
(Repealed by No 8 of 2022)
History
S 83A-115(5) repealed by No 8 of 2022, s 3 and Sch 10 item 3, effective 1 April 2022 and applicable in relation to each ESS interest for which the ESS deferred taxing point occurs on or after: (a) unless paragraph (b) applies
-
the first 1 July to occur after the day on which this Act receives the Royal Assent; or (b) if this Act receives the Royal Assent on a 1 July
-
that 1 July. S 83A-115(5) formerly read:
Cessation of employment
83A-115(5)
The 2nd possible taxing point is the time when the employment in respect of which you acquired the interest ends.
Maximum time period for deferral
83A-115(6)
The 2nd possible taxing point is the end of the 15 year period starting when you acquired the interest.
History
S 83A-115(6) amended by No 8 of 2022, s 3 and Sch 10 item 4, by substituting
"
2nd
"
for
"
3rd
"
, effective 1 April 2022 and applicable in relation to each ESS interest for which the ESS deferred taxing point occurs on or after: (a) unless paragraph (b) applies
-
the first 1 July to occur after the day on which this Act receives the Royal Assent; or (b) if this Act receives the Royal Assent on a 1 July
-
that 1 July.
S 83A-115(6) amended by No 105 of 2015, s 3 and Sch 1 item 19, by substituting
"
15 year
"
for
"
7 year
"
, applicable in relation to ESS interests acquired on or after 1 July 2015.
History
S 83A-115 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-120
ESS deferred taxing point
-
rights to acquire shares
Scope
83A-120(1)
This section applies if the
*
ESS interest is a beneficial interest in a right to acquire a beneficial interest in a
*
share.
Meaning of
ESS deferred taxing point
83A-120(2)
The
ESS deferred taxing point
for the
*
ESS interest is the earliest of the times mentioned in subsections
(4)
,
(6)
and
(7)
.
History
S 83A-120(2) amended by No 8 of 2022, s 3 and Sch 10 item 5, by substituting
"
subsections (4), (6) and (7)
"
for
"
subsections (4) to (7)
"
, effective 1 April 2022 and applicable in relation to each ESS interest for which the ESS deferred taxing point occurs on or after: (a) unless paragraph (b) applies
-
the first 1 July to occur after the day on which this Act receives the Royal Assent; or (b) if this Act receives the Royal Assent on a 1 July
-
that 1 July.
83A-120(3)
However, the
ESS deferred taxing point
for the
*
ESS interest is:
(a)
the time you dispose of the ESS interest (other than by exercising the right); or
(b)
if you exercise the right
-
the time you dispose of the beneficial interest in the
*
share;
if that time occurs within 30 days after the time worked out under subsection
(2)
.
No restrictions on disposing of right
83A-120(4)
The first possible taxing point is the earliest time when:
(a)
you have not exercised the right; and
(b)
there is no real risk that, under the conditions of the
*
employee share scheme, you will forfeit or lose the
*
ESS interest (other than by disposing of it, exercising the right or letting the right lapse); and
(c)
if, at the time you acquired the ESS interest, the scheme genuinely restricted you immediately disposing of the ESS interest
-
the scheme no longer so restricts you.
83A-120(5)
(Repealed by No 8 of 2022)
History
S 83A-120(5) repealed by No 8 of 2022, s 3 and Sch 10 item 6, effective 1 April 2022 and applicable in relation to each ESS interest for which the ESS deferred taxing point occurs on or after: (a) unless paragraph (b) applies
-
the first 1 July to occur after the day on which this Act receives the Royal Assent; or (b) if this Act receives the Royal Assent on a 1 July
-
that 1 July. S 83A-120(5) formerly read:
Cessation of employment
83A-120(5)
The 2nd possible taxing point is the time when the employment in respect of which you acquired the interest ends.
Maximum time period for deferral
83A-120(6)
The 2nd possible taxing point is the end of the 15 year period starting when you acquired the interest.
History
S 83A-120(6) amended by No 8 of 2022, s 3 and Sch 10 item 7, by substituting
"
2nd
"
for
"
3rd
"
, effective 1 April 2022 and applicable in relation to each ESS interest for which the ESS deferred taxing point occurs on or after: (a) unless paragraph (b) applies
-
the first 1 July to occur after the day on which this Act receives the Royal Assent; or (b) if this Act receives the Royal Assent on a 1 July
-
that 1 July.
S 83A-120(6) amended by No 105 of 2015, s 3 and Sch 1 item 19, by substituting
"
15 year
"
for
"
7 year
"
, applicable in relation to ESS interests acquired on or after 1 July 2015.
No restrictions on disposing of a share after exercising the right
83A-120(7)
The 3rd possible taxing point is the earliest time when:
(a)
you exercise the right; and
(b)
(Repealed by No 105 of 2015)
(c)
there is no real risk that, under the conditions of the scheme, after exercising the right, you will forfeit or lose the beneficial interest in the
*
share (other than by disposing of it); and
(d)
if, at the time you acquired the ESS interest, the scheme genuinely restricted you immediately disposing of the beneficial interest in the share if you exercised the right
-
the scheme no longer so restricts you.
History
S 83A-120(7) amended by No 8 of 2022, s 3 and Sch 10 item 8, by substituting
"
3rd
"
for
"
4th
"
, effective 1 April 2022 and applicable in relation to each ESS interest for which the ESS deferred taxing point occurs on or after: (a) unless paragraph (b) applies
-
the first 1 July to occur after the day on which this Act receives the Royal Assent; or (b) if this Act receives the Royal Assent on a 1 July
-
that 1 July.
S 83A-120(7) amended by No 105 of 2015, s 3 and Sch 1 items 21 and 22, by substituting para (a) for para (a) and (b) and
"
after exercising the right
"
for
"
if you exercise the right
"
in para (c), applicable in relation to ESS interests acquired on or after 1 July 2015. Para (a) and (b) formerly read:
(a)
there is no real risk that, under the conditions of the scheme, you will forfeit or lose the
*
ESS interest (other than by disposing of it, exercising the right or letting the right lapse); and
(b)
if, at the time you acquired the ESS interest, the scheme genuinely restricted you immediately exercising the right
-
the scheme no longer so restricts you; and
History
S 83A-120 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-125
83A-125
Tax treatment of ESS interests held after ESS deferred taxing points
For the purposes of this Act (other than this Division), the
*
ESS interest (and the
*
share or right of which it forms part) is taken to have been acquired immediately after the
*
ESS deferred taxing point for the interest for its
*
market value, unless the ESS deferred taxing point occurs at the time the interest is disposed of.
Note:
Regulations made for the purposes of section
83A-315
may substitute a different amount for the market value of the ESS interest.
History
S 83A-125 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
Takeovers and restructures
SECTION 83A-130
Takeovers and restructures
Object and scope
83A-130(1)
The object of this section is to allow this Division to continue to apply if:
(a)
at least one of the following applies:
(i)
an
*
arrangement (the
takeover
) is entered into that is intended to result in a company (the
old company
) becoming a
*
100% subsidiary of another company;
(ii)
*
ESS interests in a company (the
old company
) acquired under
*
employee share schemes can reasonably be regarded as having been replaced, wholly or partly, by ESS interests in one or more other companies as a result of a change (the
restructure
) in the ownership (including the structure of the ownership) of the old company or a
*
demerger subsidiary of the old company; and
(b)
just before the takeover or restructure, you held ESS interests (the
old interests
) in the old company that you acquired under an employee share scheme.
History
S 83A-130(1) amended by No 70 of 2015, s 3 and Sch 6 item 27, by inserting
"
or a
*
demerger subsidiary of the old company
"
in para (a)(ii), applicable in relation to ESS interests acquired on or after 1 July 2009.
Treat new interests as continuations of old interests
83A-130(2)
For the purposes of this Division, treat any
*
ESS interests (the
new interests
) in a company (the
new company
) that you acquire in connection with the takeover or restructure as a continuation of the old interests, to the extent that:
(a)
as a result of the arrangement or change, you stop holding the old interests; and
(b)
the new interests can reasonably be regarded as matching any of the old interests.
Note:
In determining to what extent something can reasonably be regarded as matching any of the old interests, one of the factors to consider is the respective market values of that thing and of the old interests.
83A-130(3)
Subsection
83A-45(4)
(about the minimum holding period) is taken to apply to the
*
ESS interests.
History
S 83A-130(3) amended by No 105 of 2015, s 3 and Sch 1 item 23, by substituting
"
83A-45(4) (about the minimum holding period)
"
for
"
83A-35(8) (about the 3 year rule)
"
, applicable in relation to ESS interests acquired on or after 1 July 2015.
83A-130(4)
Subsections (2) and (3) only apply if the new interests relate to ordinary
*
shares.
Old interest not matched by new interests
83A-130(5)
For the purposes of this Division, treat yourself as having disposed of the old interests to the extent that, in connection with the takeover or restructure, you acquire anything that:
(a)
can reasonably be regarded as matching any of the old interests; but
(b)
is not treated by subsection (2) as a continuation of those interests.
Continuation of your employment
83A-130(6)
For the purposes of this Division, treat your employment by:
(a)
the new company; or
(b)
a
*
subsidiary of the new company; or
(c)
a holding company (within the meaning of the
Corporations Act 2001
) of the new company; or
(d)
a subsidiary of a holding company (within the meaning of the
Corporations Act 2001
) of the new company;
as a continuation of the employment in respect of which you acquired the old interests.
Apportionment of cost base of old interests
83A-130(7)
Treat yourself as having given, as consideration for the assets mentioned in subsection (8), the amount worked out by apportioning among those assets, according to their respective
*
market values immediately after the takeover or restructure, the total of:
(a)
the
*
cost bases of the old interests when you stop holding them; and
(b)
the cost bases of the assets mentioned in paragraph (8)(b) immediately after the takeover or restructure (ignoring the effect of this subsection).
83A-130(8)
The assets are:
(a)
the things that:
(i)
you acquired in connection with the takeover or restructure; and
(ii)
can reasonably be regarded as matching the old interests;
(including all of the new interests); and
(b)
in a case covered by subparagraph (1)(a)(ii)
-
any
*
ESS interests in the old company that:
(i)
you held just before, and continue to hold just after, the restructure; and
(ii)
that can reasonably be regarded as matching the old interests.
Exceptions
83A-130(9)
This section only applies if:
(a)
at or about the time you acquire the new interests, you are employed as mentioned in subsection (6); and
(b)
at the time you acquire the new interests:
(i)
you do not hold a beneficial interest in more than 10% of the
*
shares in the new company; and
(ii)
you are not in a position to cast, or to control the casting of, more than 10% of the maximum number of votes that might be cast at a general meeting of the new company.
History
S 83A-130(9) amended by No 105 of 2015, s 3 and Sch 1 item 24, by substituting
"
10%
"
for
"
5%
"
in para (b)(i) and (ii), applicable in relation to ESS interests acquired on or after 1 July 2015.
83A-130(10)
For the purposes of paragraph (9)(b), you are taken to:
(a)
hold a beneficial interest in any
*
shares in the new company that you can acquire under an
*
ESS interest that is a beneficial interest in a right to acquire a beneficial interest in such shares; and
(b)
be in a position to cast votes as a result of holding that interest in those shares.
History
S 83A-130(10) inserted by No 105 of 2015, s 3 and Sch 1 item 25, applicable in relation to ESS interests acquired on or after 1 July 2015.
History
S 83A-130 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
Subdivision 83A-D
-
Deduction for employer
History
Subdiv 83A-D inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
Guide to Subdivision 83A-D
SECTION 83A-200
What this Subdivision is about
You can deduct an amount for shares, rights or stapled securities you provide to your employees under an employee share scheme if they are eligible for a reduction in their assessable income under section
83A-35
. The amount you can deduct is equal to that reduction.
You must defer any deduction you are entitled to for amounts you provide to finance your employees acquiring interests in shares, rights or stapled securities under an employee share scheme until the employees have actually acquired those interests.
History
S 83A-200 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
History
S 83A-200 inserted by No 133 of 2009.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 83A-205 |
Deduction for employer |
| 83A-210 |
Timing of general deductions |
Operative provisions
SECTION 83A-205
Deduction for employer
83A-205(1)
You can deduct an amount for an income year if:
(a)
during the year you provided one or more
*
ESS interests to an individual under an
*
employee share scheme; and
(b)
you did so as:
(i)
the employer of the individual; or
(ii)
a holding company (within the meaning of the
Corporations Act 2001
) of the employer of the individual; and
(c)
section
83A-35
applies to reduce the amount included in the individual
'
s assessable income under subsection
83A-25(1)
in relation to some or all of the interests.
83A-205(2)
Disregard paragraph
83A-35(2)(b)
(income test) for the purposes of paragraph (1)(c) of this section.
83A-205(3)
The amount of the deduction is the amount of the reduction mentioned in paragraph (1)(c).
Deduction to be apportioned if interest provided by multiple entities
83A-205(4)
The amount of the deduction worked out under subsection (3) must be apportioned between 2 or more entities on a reasonable basis if the entities jointly provide an
*
ESS interest for which an amount can be deducted under subsection (1).
History
S 83A-205 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-210
83A-210
Timing of general deductions
If:
(a)
at a particular time, you provide another entity with money or other property:
(i)
under an
*
arrangement; and
(ii)
for the purpose of enabling an individual (the
ultimate beneficiary
) to acquire, directly or indirectly, an
*
ESS interest under an
*
employee share scheme in relation to the ultimate beneficiary
'
s employment (including past or prospective employment); and
(b)
that particular time occurs before the time (the
acquisition time
) the ultimate beneficiary acquires the
*
ESS interest;
then, for the purpose of determining the income year (if any) in which you can deduct an amount in respect of the provision of the money or other property, you are taken to have provided the money or other property at the acquisition time.
History
S 83A-210 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
Subdivision 83A-E
-
Miscellaneous
History
Subdiv 83A-E inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-305
Acquisition by associates
83A-305(1)
If an
*
associate (other than an
*
employee share trust) of an individual acquires an
*
ESS interest in relation to the individual
'
s employment (including past or prospective employment), then, for the purposes of this Division:
(a)
treat the interest as having being acquired by the individual (instead of the associate); and
(b)
treat any circumstance, right or obligation existing or not existing in relation to the interest in relation to the associate as existing or not existing in relation to the individual; and
(c)
treat anything done or not done by or in relation to the associate in relation to the interest as being done or not done by or in relation to the individual.
Example 1:
The following are attributed to the employee, rather than to the associate:
(a) the associate
'
s voting rights;
(b) the associate
'
s ability or inability to dispose of the ESS interest;
(c) whether there is a real risk that the associate may lose the ESS interest;
(d) the associate
'
s cost base for the ESS interest.
Example 2:
If the associate disposes of the ESS interest, the employee is taken to have disposed of the ESS interest instead.
History
S 83A-305 amended by No 105 of 2015, s 3 and Sch 1 item 26, by inserting
"
(1)
"
before
"
If
"
, applicable in relation to ESS interests acquired on or after 1 July 2015.
83A-305(2)
For the purposes of subsections
83A-45(6)
and
(7)
, subsection (1) of this section also applies if the
*
associate acquired the
*
ESS interest otherwise than in relation to the individual
'
s employment.
History
S 83A-305(2) inserted by No 105 of 2015, s 3 and Sch 1 item 27, applicable in relation to ESS interests acquired on or after 1 July 2015.
History
S 83A-305 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-310
Forfeiture etc. of ESS interest
83A-310(1)
This Division (apart from this Subdivision) is taken never to have applied in relation to an
*
ESS interest acquired by an individual under an
*
employee share scheme if:
(a)
disregarding this section, an amount is included in the individual
'
s assessable income under this Division in relation to the interest; and
(b)
either:
(i)
the individual forfeits the interest; or
(ii)
in the case of an ESS interest that is a beneficial interest in a right
-
the individual forfeits or loses the interest (without having disposed of the interest or exercised the right); and
(c)
the forfeiture or loss is not the result of:
(i)
a choice made by the individual (other than a choice to which subsection (2) applies); or
(ii)
a condition of the scheme that has the direct effect of protecting (wholly or partly) the individual against a fall in the
*
market value of the interest.
History
S 83A-310 amended by No 105 of 2015, s 3 and Sch 1 items 28 and 29, by inserting
"
(1)
"
before
"
This
"
and substituting
"
to which subsection (2) applies
"
for
"
by that individual to cease particular employment
"
in para (c)(i), applicable in relation to ESS interests acquired on or after 1 July 2015.
83A-310(2)
This subsection applies to the following choices by the individual:
(a)
a choice to cease particular employment;
(b)
in the case of an
*
ESS interest that is a beneficial interest in a right:
(i)
a choice not to exercise the right before it lapsed; or
(ii)
a choice to allow the right to be cancelled.
History
S 83A-310(2) inserted by No 105 of 2015, s 3 and Sch 1 item 30, applicable in relation to ESS interests acquired on or after 1 July 2015.
History
S 83A-310 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-315
Market value of ESS interest
83A-315(1)
Whenever this Division (other than section
83A-20
) uses the
*
market value of an
*
ESS interest, instead use the amount specified in the regulations for the purposes of this section in relation to the interest, if the regulations specify such an amount.
History
S 83A-315(1) amended by No 105 of 2015, s 3 and Sch 1 item 50, by inserting
"
(other than section 83A-20)
"
, applicable to assessments for the 2011-12 income year and later income years.
83A-315(2)
To avoid doubt, apply the rule in subsection (1) to the
*
market value component of any calculation for the purposes of this Division that involves market value.
Example:
If the regulations specify an amount in relation to an ESS interest, use that amount instead of the market value of the interest in working out:
(a) whether there is a discount given in relation to interest; and
(b) if so
-
the amount of the discount.
History
S 83A-315 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-320
Interests in a trust
83A-320(1)
This section applies if, at a time:
(a)
you hold an interest in a trust whose assets include
*
shares; and
(b)
that interest corresponds to a particular number of the shares (even if the interest does not correspond to particular shares).
83A-320(2)
For the purposes of this Division, treat yourself as holding at that time a beneficial interest in each of a number of the
*
shares included in the assets of the trust equal to the number mentioned in paragraph (1)(b).
83A-320(3)
If there are 2 or more classes of
*
shares included in the assets of the trust, this section operates separately in relation to each class as if the shares in that class were all the shares included in the assets of the trust.
83A-320(4)
This section applies to rights to acquire beneficial interests in
*
shares in the same way it applies to shares.
Note:
For the CGT treatment of employee share schemes, see Subdivision
130-D
.
History
S 83A-320 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-325
83A-325
Application of Division to relationships similar to employment
This Division applies to an individual covered by column 1 of an item in the table as if:
(a)
he or she were employed by the entity referred to in column 2 of that item; and
(b)
the thing referred to column 3 of that item constituted that employment.
|
Application of Division to relationships similar to employment
|
|
Item
|
Column 1
This Division applies to an individual who:
|
Column 2
as if he or she were employed by:
|
Column 3
and this constituted that employment:
|
| 1 |
receives, or is entitled to receive,
*
work and income support withholding payments (otherwise than as an employee) |
the entity that pays or provides the work and income support withholding payments (or is liable to do so) |
the relationship because of which the entity pays or provides the work and income support withholding payments to the individual (or is liable to do so). |
| 2 |
is engaged in service in a foreign country as the holder of an office |
the entity by whom the individual is so engaged |
the holding of the office. |
| 3 |
provides services to an entity (other than services covered by a previous item in this table and services provided as an employee) |
the entity |
the
*
arrangement between the individual and the entity under which those services are provided. |
History
S 83A-325 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-330
83A-330
Application of Division to ceasing employment
For the purposes of this Division, you are treated as ceasing employment when you are no longer employed by any of the following:
(a)
your employer in that employment;
(b)
a holding company (within the meaning of the
Corporations Act 2001
) of your employer;
(c)
a
*
subsidiary of your employer;
(d)
a
*
subsidiary of a holding company (within the meaning of the
Corporations Act 2001
) of your employer.
History
S 83A-330 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-335
Application of Division to stapled securities
83A-335(1)
This Division applies in relation to a stapled security in the same way as it applies in relation to a
*
share in a company, if at least one of the
*
ownership interests that are stapled together to form the stapled security is a share in the company.
Note:
This means the Division also applies to rights to acquire such a stapled security in the same way it applies to rights to acquire a share.
83A-335(2)
This Division applies in relation to a stapled security in the same way as it applies in relation to an ordinary
*
share in a company, if at least one of the
*
ownership interests that are stapled together to form the stapled security is an ordinary share in the company.
83A-335(3)
For the purposes of this Division, in relation to a stapled security or right to acquire a beneficial interest in a stapled security, a company is taken to include (as part of the company) each
*
stapled entity for the stapled security, if at least one of the
*
ownership interests that are stapled together to form the stapled security is a
*
share in the company.
History
S 83A-335 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
SECTION 83A-340
Application of Division to indeterminate rights
83A-340(1)
This section applies if:
(a)
you acquire a beneficial interest in a right; and
(b)
the right later becomes a right to acquire a beneficial interest in a
*
share.
Example 1:
You acquire a right to acquire, at a future time:
(a) shares with a specified total value, rather than a specified number of shares; or
(b) an indeterminate number of shares.
Example 2:
You acquire a right under which the provider must provide you with either ESS interests or cash, whichever the provider chooses.
83A-340(2)
This Division applies as if the right had always been a right to acquire the beneficial interest in the
*
share.
History
S 83A-340 inserted by No 133 of 2009, s 3 and Sch 1 item 1, effective 14 December 2009.
PART 2-42
-
PERSONAL SERVICES INCOME
History
Part 2-42 inserted by No 86 of 2000.
Division 84
-
Introduction
History
Div 84 inserted by No 86 of 2000.
Guide to Part 2-42
SECTION 84-1
What this Part is about
This Part is about 2 issues relating to personal services income.
Division
85
limits the entitlements of individuals to deductions relating to their personal services income.
Division
86
sets out the tax consequences of individuals' personal services income being diverted to other entities (often called alienation of the income).
These Divisions do not affect individuals or other entities that conduct personal services businesses. Division
87
defines personal services businesses.
Note:
This Part may not apply until the 2002-03 income year to participants in the prescribed payments system on 13 April 2000: see item 26 of Schedule 1 to the
New Business Tax System (Alienation of Personal Services Income) Act 2000
.
History
S 84-1 inserted by No 86 of 2000.
TABLE OF SECTIONS
TABLE OF SECTIONS
|
Operative provisions
|
| 84-5 |
Meaning of
personal services income |
| 84-10 |
This Part does not imply that individuals are employees |
Operative provisions
SECTION 84-5
Meaning of
personal services income
84-5(1)
Your
*
ordinary income or
*
statutory income, or the ordinary income or statutory income of any other entity, is your
personal services income
if the income is mainly a reward for your personal efforts or skills (or would mainly be such a reward if it was your income).
EXAMPLES
Example 1:
NewIT Pty. Ltd. provides computer programming services, but Ron does all the work involved in providing those services. Ron uses the clients' equipment and software to do the work. NewIT's ordinary income from providing the services is Ron's personal services income because it is a reward for his personal efforts or skills.
Example 2:
Trux Pty. Ltd. owns one semi-trailer, and Tom is the only person who drives it. Trux's ordinary income from transporting goods is not Tom's personal services income because it is produced mainly by use of the semi-trailer, and not mainly as a reward for Tom's personal efforts or skills.
Example 3:
Jim works as an accountant for a large accounting firm that employs many accountants. None of the firm's ordinary income or statutory income is Jim's personal services income because it is produced mainly by the firm's business structure, and not mainly as a reward for Jim's personal efforts or skills.
84-5(2)
Only individuals can have personal services income.
84-5(3)
This section applies whether the income is for doing work or is for producing a result.
84-5(4)
The fact that the income is payable under a contract does not stop the income being mainly a reward for your personal efforts or skills.
History
S 84-5 inserted by No 86 of 2000.
SECTION 84-10
84-10
This Part does not imply that individuals are employees
The application of this Part to an individual does not imply, for the purposes of any
*
Australian law or any instrument made under an Australian law, that the individual is an employee.
History
S 84-10 inserted by No 86 of 2000.
Division 85
-
Deductions relating to personal services income
History
Div 85 inserted by No 86 of 2000.
SECTION 85-1
What this Division is about
This Division sets out amounts, relating to personal services income, that an individual cannot deduct. In particular, deductions that are unavailable to an employee are similarly unavailable to an individual who has personal services income and who is not an employee.
However, this Division does not apply if the individual is conducting a personal services business or receives the income as an employee or office holder.
History
S 85-1 inserted by No 86 of 2000.
Operative provisions
SECTION 85-5
85-5
Object of this Division
The object of this Division is to ensure that individuals who are not conducting
*
personal services businesses cannot deduct certain amounts (such as amounts that employees cannot deduct).
Note:
This Division also affects the extent to which a personal services entity is entitled to deductions relating to gaining or producing an individual's personal services income: see section
86-60
.
History
S 85-5 inserted by No 86 of 2000.
SECTION 85-10
Deductions for non-employees relating to personal services income
85-10(1)
You cannot deduct under this Act an amount to the extent that it relates to gaining or producing that part of your
*
ordinary income or
*
statutory income that is your
*
personal services income if:
(a)
the income is not payable to you as an employee; and
(b)
you would not be able to deduct the amount under this Act if the income were payable to you as an employee.
Example:
Ruth is an architect who works as an independent contractor for one firm. She is not conducting a personal services business. On most days she travels from her home to the business premises of the firm, where she does her work. She also has a home office, where she does some of her work.
This section confirms that Ruth cannot deduct her expenses of travelling between her home and the firm
'
s premises because she could not deduct them if she were an employee.
85-10(2)
Subsection (1) does not stop you deducting an amount to the extent that it relates to:
(a)
gaining work; or
Examples:
Advertising, tendering and quoting for work.
(b)
insuring against loss of your income or your income earning capacity; or
Examples:
Sickness, accident and disability insurance.
(c)
insuring against liability arising from your acts or omissions in the course of earning income; or
Examples:
Public liability insurance and professional indemnity insurance.
(d)
engaging an entity that is not your
*
associate to perform work; or
(e)
engaging your
*
associate to perform work that forms part of the principal work for which you gain or produce your
*
personal services income; or
(f)
contributing to a fund in order to obtain
*
superannuation benefits for yourself or for your
*
SIS dependants in the event of your death; or
Note:
For deductions for superannuation contributions: see Subdivision
290-C
.
(g)
meeting your obligations under a
*
workers
'
compensation law to pay premiums, contributions or similar payments or to make payments to an employee in respect of
*
compensable work-related trauma; or
(h)
meeting your obligations, or exercising your rights, under the
*
GST law.
History
S 85-10(2) amended by No 15 of 2007, s 3 and Sch 1 item 186, by substituting para (f) (including the note), applicable to the 2007-2008 income year and later years. Para (f) formerly read:
(f)
contributing to a fund in order to obtain superannuation benefits for yourself or for your dependants in the event of your death; or
Note:
For deductions for superannuation contributions: see Subdivision AB of Division
3
of Part
III
of the
Income Tax Assessment Act 1936
.
S 85-10 inserted by No 86 of 2000.
SECTION 85-15
85-15
Deductions for rent, mortgage interest, rates and land tax
You cannot deduct under this Act an amount of rent, mortgage interest, rates or land tax:
(a)
for some or all of your residence; or
(b)
for some or all of your
*
associate's residence;
to the extent that the amount relates to gaining or producing your
*
personal services income.
History
S 85-15 inserted by No 86 of 2000.
SECTION 85-20
Deductions for payments to associates etc.
85-20(1)
You cannot deduct under this Act:
(a)
any payment you make to your
*
associate; or
(b)
any amount you incur arising from an obligation you have to your associate;
to the extent that the payment or amount relates to gaining or producing your
*
personal services income.
85-20(2)
Subsection (1) does not stop you deducting a payment or amount to the extent that it relates to engaging your
*
associate to perform work that forms part of the principal work for which you gain or produce your
*
personal services income.
85-20(3)
An amount or payment that you cannot deduct because of this section is neither assessable income nor
*
exempt income of your
*
associate.
History
S 85-20(3) inserted by No 169 of 2001.
S 85-20 inserted by No 86 of 2000.
SECTION 85-25
Deductions for superannuation for associates
85-25(1)
You cannot deduct under this Act a contribution you make to a fund or an
*
RSA to provide for
*
superannuation benefits payable for your
*
associate, to the extent that the associate
'
s work for you relates to gaining or producing your
*
personal services income.
History
S 85-25(1) amended by No 15 of 2007, s 3 and Sch 1 item 187, by substituting
"
*
superannuation benefits
"
for
"
superannuation benefits
"
, applicable to the 2007-2008 income year and later years.
85-25(2)
Subsection
(1)
does not stop you deducting a contribution to the extent that your
*
associate
'
s performance of work forms part of the principal work for which you gain or produce your
*
personal services income.
85-25(3)
However, if subsection
(2)
applies, your deduction cannot exceed the amount you would have to contribute, for the benefit of the
*
associate, to a
*
complying superannuation fund or an
*
RSA in order to ensure that you did not have any
*
individual superannuation guarantee shortfalls in respect of the associate for any of the
*
quarters in the income year.
[
CCH Note:
S 85-25(3) will be amended by No 57 of 2025, s 3 and Sch 1 item 81, by substituting
"
*
individual final superannuation guarantee shortfalls for the associate and any
*
QE days
"
for
"
*
individual superannuation guarantee shortfalls in respect of the associate for any of the
*
quarters
"
, effective 1 July 2026. For application and transitional provisions, see note under s
85-25(4)
.]
History
S 85-25(3) amended by No 51 of 2002.
85-25(4)
To work out the amount you would have to contribute for the purposes of subsection
(3)
, the
*
associate
'
s salary or wages, for the purposes of the
Superannuation Guarantee (Administration) Act 1992
, are taken to be the amount that neither section
85-10
nor
85-20
prevent you deducting for salary or wages you paid to the associate.
Note:
See paragraph
85-10(2)(e)
for deductions relating to employment of associates.
[
CCH Note:
S 85-25(4) will be substituted by No 57 of 2025, s 3 and Sch 1 item 82, effective 1 July 2026. S 85-25(4) will read:
85-25(4)
To work out the amount you would have to contribute under subsection
(3)
, assume under the
Superannuation Guarantee (Administration) Act 1992
that your payments of qualifying earnings (within the meaning of that Act) to the associate do not include any amounts that section
85-10
or
85-20
of this Act would prevent you from deducting.
Note:
See paragraph
85-10(2)(e)
for deductions relating to employment of associates.
No 57 of 2025, s 3 and Sch 1 items 181 and 183
-
189 contain the following application and transitional provisions:
181 Definitions
181
In this Part:
new Act
means the
Superannuation Guarantee (Administration) Act 1992
as amended by this Schedule.
new law
means an Act as amended by this Schedule other than any of the following:
(a)
the
Corporations Act 2001
;
(b)
the
Fair Work Act 2009
;
(c)
the
Superannuation Guarantee (Administration) Act 1992
.
old Act
, as in force on a particular day before 1 July 2026, means the
Superannuation Guarantee (Administration) Act 1992
as in force on that day.
old law
means an Act amended by this Schedule (other than the
Superannuation Guarantee (Administration) Act 1992
) as that Act was in force immediately before 1 July 2026.
…
183 Application of amendments of other Acts
Application of the amendments
(1)
The new law applies in relation to the following:
(a)
a QE day that is 1 July 2026 or a later day;
(b)
a liability to pay superannuation guarantee charge relating to a QE day that is 1 July 2026 or a later day;
(c)
individual base superannuation guarantee shortfalls relating to a QE day that is 1 July 2026 or a later day;
(d)
individual final superannuation guarantee shortfalls relating to a QE day that is 1 July 2026 or a later day.
Saving of the old law
(2)
Despite the amendments made by this Schedule of the old law, the old law continues to apply on and after 1 July 2026 in relation to the following as if the amendments had not been made:
(a)
a liability to pay superannuation guarantee charge relating to a quarter ending before 1 July 2026 (whether the liability arose before, on or after 1 July 2026);
(b)
a related liability (whether the related liability arose before, on or after 1 July 2026);
(c)
individual superannuation guarantee shortfalls relating to a quarter ending before 1 July 2026;
(d)
contributions to reduce a charge percentage relating to a quarter ending before 1 July 2026;
(e)
salary or wages relating to a quarter ending before 1 July 2026;
(f)
an obligation to give a statement or information to the Commissioner under the
Superannuation Guarantee (Administration) Act 1992
relating to a quarter ending before 1 July 2026;
(g)
determining matters relevant to working out the SG minimum contribution (within the meaning of Part VIAA of the
Superannuation Act 1976
) for part of a period of employment that is before 1 July 2026.
Example:
Under the old law, the
notional productivity amount
under subsection 128(8) of the
Superannuation Act 1976
is worked out by reference to so much of a person
'
s earnings as are relevant for establishing whether an employer incurred an individual superannuation guarantee shortfall in relation to the person. Paragraph (c) of this subitem means that, on or after 1 July 2026, the notional productivity amount will continue to be worked out in this way in relation to periods ending before that day.
Note:
Assume regulations or other instruments can be made for a provision of the old law. If that provision of the old law continues to apply because of this item, then any regulations or instruments made for that provision will also continue to apply (and can continue to be made) for any of the matters in paragraphs (a) to (g).
184 Transitional
-
reversal after commencement of pre-commencement sacrificed contributions
184
For the new Act, a reversal of a sacrificed contribution includes a payment made on or after 1 July 2026 that represents the reversal of all or part of a contribution that was:
(a)
a sacrificed contribution (within the meaning of the old Act on 30 June 2026); and
(b)
made before 1 July 2026.
185 Transitional
-
excess contributions made before 1 July 2026 can be applied under the new Act
(1)
This item applies to a contribution made on a day (the
contribution day
) before 1 July 2026 that would be an eligible contribution made by an employer for the benefit of an employee if the new Act applied in relation to QE days before 1 July 2026.
(2)
For the purposes of the definition of
eligible contributions relevant for the QE day
in subsection
18C(1)
of the new Act, treat so much of the contribution as is neither:
(a)
applied under the old Act (as in force on the contribution day) to reduce the charge percentage for the employer for a quarter ending before 1 July 2026; nor
(b)
offset under section
23A
of the old Act (as in force on the contribution day) against a liability of the employer relating to a quarter ending before 1 July 2026;
as an
eligible contribution
made by the employer for the benefit of the employee.
(3)
To avoid doubt, the 12-month period mentioned in subparagraph (c)(ii) of that definition can start before 1 July 2026.
186 Transitional
-
how to apply contributions made between 1 July 2026 and 28 July 2026
(1)
This item applies to an eligible contribution made by an employer for the benefit of an employee if:
(a)
the contribution is made on a day (the
contribution day
) between 1 July 2026 and 28 July 2026; and
(b)
under the old Act (as in force on 30 June 2026), the employer has on the contribution day an individual superannuation guarantee shortfall that is greater than nil for the employee for the quarter ending on 30 June 2026.
First apply the contribution under the old Act
(2)
Without limiting subitem 182(3) of this Schedule, the old Act (as in force on 30 June 2026) continues to apply on and after 1 July 2026 in relation to the contribution in order to reduce the charge percentage for the employer for the employee for that quarter.
Then apply any remainder under the new Act
(3)
Despite subsection 18C(1) of the new Act, only so much of the contribution as is not applied under the old Act in the way described in subitem (2) is able to be applied under that subsection for a QE day that is on or after 1 July 2026.
187 Transitional
-
ending notice periods under the old Act
187
An employer
'
s notice period that:
(a)
was within the meaning of subsection
19A(4)
of the old Act (as in force on 30 June 2026); and
(b)
was in force on 30 June 2026;
is taken to end at the end of 30 June 2026.
188 Application of amendments
-
repayments of overpayments relating to a shortfall component
188
Section
69
of the new Act applies in relation to a payment by the Commissioner before, on or after 1 July 2026.
Note:
The excess amount paid by the Commissioner can only be recovered once (see subsection
69(7)
of the new Act.
189 Transitional
-
Norfolk Island salary or wages
(1)
This item applies if:
(a)
some or all of an employer
'
s payment of qualifying earnings to or for an employee on a QE day consists of Norfolk Island salary or wages; and
(b)
the QE day is in the financial year ending on 30 June 2027;
whether the payment of qualifying earnings relates to work done before, during or after that financial year.
(2)
For the purposes of subsection
17A(2)
of the new Act, treat the
amount of the qualifying earnings
for the employer, employee and the QE day as if it were reduced by the result of the following:
| |
Total Norfolk Island salary or wages paid to or for the employee by the employer on the QE day |
× |
1 |
|
| |
12 |
|
(3)
In this item:
Norfolk Island salary or wages
means qualifying earnings paid to or for the employee:
(a)
while the employee is a resident of Norfolk Island, and for work done in Norfolk Island or outside Australia; or
(b)
while the employer is a resident of Norfolk Island, and while the employee is a resident of Australia for work done in Norfolk Island.
Note:
For a similar result for quarters in a financial year starting on or after 1 July 2016 and ending before 1 July 2026, see subitem 2(2) of Schedule 2 to the
Tax and Superannuation Laws Amendment (Norfolk Island Reforms) Act 2015
(as amended by this Schedule).
]
History
S 85-25 inserted by No 86 of 2000.
SECTION 85-30
85-30
Exception: personal services businesses
This Division does not apply to an amount, payment or contribution to the extent that the amount, payment or contribution relates to income from you conducting a
*
personal services business.
History
S 85-30 inserted by No 86 of 2000.
SECTION 85-35
Exception: employees, office holders and religious practitioners
85-35(1)
This Division does not apply to an amount, payment or contribution to the extent that the amount, payment or contribution relates to
*
personal services income that you receive as:
(a)
an employee; or
(b)
an individual referred to in paragraph
12-45(1)(a)
, (b), (c), (d) or (e) (about payments to office holders) in Schedule
1
to the
Taxation Administration Act 1953
.
85-35(2)
This Division does not apply to an amount, payment or contribution to the extent that the amount, payment or contribution relates to a payment referred to in section
12-47
in Schedule
1
to the
Taxation Administration Act 1953
(payments to
*
religious practitioners).
History
S 85-35(2) inserted by No 168 of 2001.
S 85-35 inserted by No 86 of 2000.
SECTION 85-40
85-40
Application of Subdivision 900-B to individuals who are not employees
This Division does not have the effect of applying Subdivision
900-B
(about substantiating work expenses) to an individual who is not an employee.
History
S 85-40 inserted by No 86 of 2000.
Division 86
-
Alienation of personal services income
History
Div 86 inserted by No 86 of 2000.
Guide to Division 86
SECTION 86-1
What this Division is about
Income from the rendering of your personal services is treated as your assessable income if it is the income of another entity and is not promptly paid to you as salary.
However, this does not apply if the other entity is conducting a personal services business.
There are limits to the other entity's entitlement to deductions to offset against the amount treated as your income.
History
S 86-1 inserted by No 86 of 2000.
SECTION 86-5
A simple description of what this Division does
86-5(1)
This diagram shows an example of a simple arrangement for the alienation of personal services income.
Note 1:
Solid lines indicate actual payments between the parties. Dotted lines indicate other interactions between the parties.
Note 2:
This Division also applies to different and more complex arrangements.
86-5(2)
This Division has the effect of attributing the personal services entity's income from the personal services to the individual who performed them (unless the income is promptly paid to the individual as salary). Certain deduction entitlements of the personal services entity can reduce the amount of the attribution.
History
S 86-5 inserted by No 86 of 2000.
Subdivision 86-A
-
General
SECTION 86-10
86-10
Object of this Division
The object of this Division is to ensure that individuals cannot reduce or defer their income tax (and other liabilities) by alienating their
*
personal services income through companies, partnerships or trusts that are not conducting
*
personal services businesses.
Note:
The general anti-avoidance provisions of Part
IVA
of the
Income Tax Assessment Act 1936
may still apply to cases of alienation of personal services income that fall outside this Division.
History
S 86-10 inserted by No 86 of 2000.
SECTION 86-15
Effect of obtaining personal services income through a personal services entity
Amounts included in your assessable income
86-15(1)
Your assessable income includes an amount of
*
ordinary income or
*
statutory income of a
*
personal services entity that is your
*
personal services income.
Example:
Continuing example 1 in section
84-5
: Assume that NewIT only provides services to one client. Ron
'
s assessable income includes ordinary income of NewIT from providing the computer programming services, because the income is Ron
'
s personal services income.
Note:
The amount included in your assessable income can be reduced by certain deductions to which the personal services entity is entitled: see section
86-20
.
86-15(2)
A
personal services entity
is a company, partnership or trust whose
*
ordinary income or
*
statutory income includes the
*
personal services income of one or more individuals.
Exception: personal services businesses
86-15(3)
This section does not apply if that amount is income from the
*
personal services entity conducting a
*
personal services business.
Note:
Even if the entity is conducting a personal services business, it is possible that some of its income is not income from conducting that business.
Exception: amounts promptly paid to you as salary or wages
86-15(4)
This section does not apply to the extent that:
(a)
the
*
personal services entity pays that amount to you, as an employee, as salary or wages; and
(b)
the payment is made before the end of the 14th day after the
*
PAYG payment period during which the amount became
*
ordinary income or
*
statutory income of the entity.
Note:
The entity is obliged to withhold amounts from salary or wages paid before the end of that day: see section
12-35
in Schedule
1
to the
Taxation Administration Act 1953
.
Exception: exempt income etc.
86-15(5)
This section only applies to the extent that that amount would be assessable income of the personal services entity if this Division did not apply.
Example:
If the entity
'
s income includes an amount that is your personal services income for a service on which GST is payable, the amount included in your assessable income will not include the GST, because the GST is neither assessable income nor exempt income of the entity: see section
17-5
.
History
S 86-15 inserted by No 86 of 2000.
SECTION 86-20
Offsetting the personal services entity
'
s deductions against personal services income
86-20(1)
The amount of your
*
personal services income included in your assessable income under section
86-15
may be reduced (but not below nil) by the amount of certain deductions to which the
*
personal services entity is entitled.
Note 1:
Subdivision
86-B
limits a personal services entity
'
s entitlement to deductions.
Note 2:
If the amount of the deductions exceeds the amount of the personal services income, a deduction for the excess is available to you under section
86-27
. The personal services entity cannot deduct the amount of the excess: see section
86-87
.
History
S 86-20(1) amended by No 20 of 2004.
86-20(2)
Use this method statement to work out whether, and by how much, the amount is reduced:
Method statement
Step 1.
Work out, for the income year, the amount of any deductions (other than
*
entity maintenance deductions or deductions for amounts of salary or wages paid to you) to which the
*
personal services entity is entitled that are deductions relating to your
*
personal services income.
Step 2.
Work out, for the income year, the amount of any
*
entity maintenance deductions to which the
*
personal services entity is entitled.
Step 3.
Work out the
*
personal services entity
'
s assessable income for that income year, disregarding any income it receives that is your
*
personal services income or the personal services income of anyone else.
Step 4.
Subtract the amount under step 3 from the amount under step 2.
Note 1:
Step 4 ensures that, before entity maintenance deductions can contribute to the reduction, they are first exhausted against any income of the entity that is not personal services income.
Note 2:
If the personal services entity receives another individual
'
s personal services income, see section
86-25
.
Step 5.
If the amount under step 4 is greater than zero, the amount of the reduction under subsection (1) is the sum of the amounts under steps 1 and 4.
Step 6.
If the amount under step 4 is not greater than zero, the amount of the reduction under subsection (1) is the amount under step 1.
EXAMPLES
Example 1:
Continuing example 1 in section
84-5
: Assume these additional facts:
•
$
120,000 of NewIT
'
s income is Ron
'
s personal services income;
•
NewIT has deductions (including superannuation contributions) of
$
50,000 relating to Ron
'
s personal services income (step 1);
•
NewIT has entity maintenance deductions of
$
8,000 (step 2);
•
NewIT has investments that produce income. NewIT
'
s assessable income, disregarding Ron
'
s or anyone else
'
s personal services income, is
$
20,000 (step 3).
Because the step 4 amount is less than zero (
−
$
12,000), step 5 does not apply and, under step 6, the amount of the reduction is
$
50,000. Therefore the amount included in Ron
'
s assessable income is:
| $
120,000
−
$
50,000
=
$
70,000 |
Example 2:
Assume, as an alternative set of facts, that NewIT
'
s assessable income under step 3 was only
$
2,000.
The step 4 amount would have been
$
6,000, and, under step 5, the amount of the reduction would have been
$
56,000 (adding the amounts under steps 1 and 4). The amount included in Ron
'
s assessable income would then have been:
| $
120,000
−
$
56,000
=
$
64,000 |
Note:
The personal services entity
'
s deductions that do not relate to your personal services income and that are not entity maintenance deductions cannot reduce the amount included in your assessable income under section
86-15
.
History
S 86-20(2) amended by No 169 of 2001.
S 86-20 inserted by No 86 of 2000.
SECTION 86-25
86-25
Apportionment of entity maintenance deductions among several individuals
If, in the income year:
(a)
the amount worked out under step 4 of the method statement in section
86-20
is greater than zero; and
Note:
This happens if the entity has entity maintenance deductions that form some or all of the reduction under section
86-20
.
(b)
the
*
ordinary income or
*
statutory income of the
*
personal services entity includes another individual's
*
personal services income (as well as your personal services income); and
(c)
the other individual's personal services income is included in the other individual's assessable income under section
86-15
;
the amount worked out under step 4 is taken to be:
| Original step 4 amount |
× |
Your personal services income
Total personal services income |
where:
original step 4 amount
is the amount that would be the amount worked out under step 4 if this section did not apply.
total personal services income
is the sum of all the amounts of personal services income (whether your personal services income or someone else's) that are included in the personal services entity's ordinary income or statutory income for the income year.
your personal services income
is the sum of all the amounts of your personal services income that are included in the personal services entity's ordinary income or statutory income for the income year.
Example:
Continuing example 2 in section
86-20
: Assume that Robyn, another computer consultant, joined NewIT, and NewIT's ordinary income from providing the services also includes Robyn's personal services income of
$
168,000.
Because NewIT now receives the personal services income of someone else, Ron's step 4 amount is reduced as follows:
| $
6,000 |
× |
$
120,000
$
288,000
|
= |
$
2,500 |
Under step 5 of the method statement in section
86-20
, the amount of the reduction under that section is therefore
$
52,500, and the amount included in Ron's assessable income is
$
67,500.
History
S 86-25 inserted by No 86 of 2000.
SECTION 86-27
86-27
Deduction for net personal services income loss
If your personal services deduction amount exceeds your unreduced personal services income, then you can deduct the excess amount. For this purpose:
(a)
your
personal services deduction amount
is the amount of deductions relating to your
*
personal services income worked out under step 1 of the method statement in section
86-20
, increased by the amount (if greater than zero) worked out under step 4 of the method statement; and
(b)
your
unreduced personal services income
is the personal services income that would have been included in your assessable income for the income year if there had not been any reduction under section
86-20
.
History
S 86-27 inserted by No 20 of 2004.
SECTION 86-30
86-30
Assessable income etc. of the personal services entity
*
Ordinary income or
*
statutory income of the
*
personal services entity is neither assessable income nor
*
exempt income of the entity, to the extent that it is
*
personal services income included in your assessable income under section
86-15
.
Note:
Subsection 118-20(4) prevents this income being treated as a capital gain.
History
S 86-30 inserted by No 86 of 2000.
SECTION 86-35
Later payments of, or entitlements to, personal services income to be disregarded for income tax purposes
86-35(1)
To the extent that a payment by the
*
personal services entity, or by your
*
associate, is a payment to you or any of your associates of:
(a)
*
personal services income included in your assessable income under section
86-15
; or
(b)
any other amount that is attributable to that income;
the payment:
(c)
is neither assessable income nor
*
exempt income of the entity receiving it; and
Note:
Subsection 118-20(4) prevents this income being treated as a capital gain.
(d)
is not an amount that the entity making it can deduct.
Note:
Section 118-65 prevents this amount being treated as a capital loss.
Example:
Continuing example 2 in section
86-20
: Assume that NewIT had paid Jill, Ron's wife, an amount for work that is not the principal work of NewIT. The payment is made from money already included in Ron's assessable income under section
86-15
.
The amount is neither assessable income nor exempt income of Jill, and NewIT cannot deduct the amount.
86-35(2)
To the extent that you are entitled, or any of your
*
associates are entitled, to a share of the net income of the
*
personal services entity, or of any of your associates, and that income is:
(a)
*
personal services income included in your assessable income under section
86-15
; or
(b)
any other amount that is attributable to that income;
that share is neither assessable income nor
*
exempt income of the entity receiving it or entitled to receive it.
History
S 86-35(2) amended by No 169 of 2001.
S 86-35 inserted by No 86 of 2000.
SECTION 86-40
Salary payments shortly after an income year
86-40(1)
If:
(a)
before the end of 14 July in a particular income year, you receive, as salary or wages,
*
personal services income of yours from the
*
personal services entity; and
(b)
failure to make the payment before the end of 14 July would have resulted in an amount of income being included in your assessable income under section
86-15
for the preceding income year;
you are taken to have received the payment on 30 June of that preceding income year.
Example:
Continuing example 2 in section
86-20
: Assume that NewIT is a small withholder for PAYG withholding purposes, and its PAYG payment period covering April 2001 to June 2001 is the quarter ending on 30 June 2001. NewIT
'
s income for that period (after taking into account any reductions under sections
86-20
and
86-25
) includes
$
20,000 that is Ron
'
s personal services income, and NewIT pays this to Ron on 12 July 2001.
The
$
20,000 that Ron receives is assessable income for the income year ended on 30 June 2001.
86-40(2)
However, this section does not affect the time at which the
*
personal services entity is treated as having paid the salary or wages.
Note 1:
Therefore neither the timing of the entity
'
s deduction for the payment, nor the timing of the obligation to withhold amounts under section
12-35
in Schedule
1
to the
Taxation Administration Act 1953
, is affected.
Note 2:
However, these payments are treated as relating to the preceding income year for the purposes of the rules relating to payment summaries, PAYG credits and PAYG withholding non-compliance tax (see Subdivisions
16-C
,
18-A
and
18-D
in Schedule
1
to the
Taxation Administration Act 1953
).
History
S 86-40(2) amended by No 99 of 2012, s 3 and Sch 1 item 10, by substituting
"
, PAYG credits and PAYG withholding non-compliance tax (see Subdivisions 16-C, 18-A and 18-D
"
for
"
and PAYG credits (see Subdivisions 16-C and 18-A
"
in note 2, applicable to an individual in relation to amounts withheld by a company, if: (a) the amounts are withheld during an income year of the individual starting on or after 1 July 2011; and (b) the company is required to pay the amounts withheld to the Commissioner on or after 30 June 2012.
S 86-40 inserted by No 86 of 2000.
Subdivision 86-B
-
Entitlement to deductions
SECTION 86-60
86-60
General rule for deduction entitlements of personal services entities
A
*
personal services entity cannot deduct under this Act an amount to the extent that it relates to gaining or producing an individual's
*
personal services income, unless:
(a)
the individual could have deducted the amount under this Act if the circumstances giving rise to the entity's entitlement to deduct the amount had applied instead to the individual; or
Note:
In particular, Division
85
specifies limits on an individual's entitlements to deductions relating to the individual's personal services income.
(b)
the entity receives the individual's
*
personal services income in the course of conducting a
*
personal services business.
History
S 86-60 inserted by No 86 of 2000.
SECTION 86-65
Entity maintenance deductions
86-65(1)
Section 86-60 does not stop a
*
personal services entity deducting an amount to the extent that it is an
*
entity maintenance deduction.
Note:
See section
86-25
for how entity maintenance deductions are offset against a personal services entity's income.
86-65(2)
Each of these is an
entity maintenance deduction
:
(a)
any fee or charge payable by the entity for opening, operating or closing an account with an
*
ADI;
(b)
any deduction under section
25-5
(about tax-related expenses);
(c)
any loss or outgoing incurred in relation to preparation or lodgment of any document the entity is required to lodge under the
Corporations Act 2001
;
(d)
any fee or charge payable by the entity to an
*
Australian government agency for any licence, permission, approval, authorisation, registration or certification (however described) that is granted or given under an
*
Australian law.
History
S 86-65(2)(c) amended by No 55 of 2001.
86-65(3)
However, paragraph (2)(c) does not include any payment that the entity makes to an
*
associate.
History
S 86-65 inserted by No 86 of 2000.
SECTION 86-70
Car expenses
Cars used solely for business
86-70(1)
Section 86-60 does not stop a
*
personal services entity deducting a
*
car expense for a
*
car of which there is no
*
private use.
Other cars
86-70(2)
Section 86-60 does not stop a
*
personal services entity deducting:
(a)
a
*
car expense; or
(b)
an amount of tax payable under the
Fringe Benefits Tax Assessment Act 1986
for a
*
car fringe benefit;
for a
*
car of which there is
*
private use. However, there cannot be, at the same time, more than one car for which such deductions can arise in relation to gaining or producing the same individual's
*
personal services income.
86-70(3)
If there is more than one
*
car to which subsection (2) could apply at the same time, the entity must choose the car to which subsection (2) applies at that time. The choice remains in effect until the entity ceases to
*
hold that car.
Example:
Continuing example 2 in section
86-20
: Assume that NewIT provides 3 cars to Ron. Car 1 is used solely for business purposes and cars 2 and 3 are used for private purposes.
NewIT can deduct all the car expenses it incurs for car 1. It can also deduct all the car expenses it incurs for its choice of either car 2 or car 3, as well as the fringe benefits tax it pays for that car. However, it cannot deduct any car expenses or fringe benefits tax for the car that it does not choose.
Note:
If car expenses for a car are not deductible because of section
86-60
, the car benefit being provided is an exempt benefit for the purposes of fringe benefits tax: see subsection 8(4) of the
Fringe Benefits Tax Assessment Act 1986
.
History
S 86-70 inserted by No 86 of 2000.
SECTION 86-75
Superannuation
86-75(1)
Section
86-60
does not stop a
*
personal services entity deducting a contribution the entity makes to a fund or an
*
RSA for the purpose of making provision for
*
superannuation benefits payable for an individual whose
*
personal services income is included in the entity
'
s
*
ordinary income or
*
statutory income.
For deductions for superannuation contributions: see Subdivision
AA
of Division
3
of Part
III
of the
Income Tax Assessment Act 1936
.
[
CCH Note:
S 86-75(1) will be amended by No 57 of 2025, s 3 and Sch 1 item 83, by repealing the note, effective 1 July 2026. For application and transitional provisions, see note under s
85-25(4)
.]
History
S 86-75(1) amended by No 15 of 2007, s 3 and Sch 1 item 188, by substituting
"
*
superannuation benefits
"
for
"
superannuation benefits
"
, applicable to the 2007-2008 income year and later years.
86-75(2)
However, if:
(a)
the individual performs less than 20% (by
*
market value) of the entity
'
s principal work; and
(b)
the individual is an
*
associate of another individual whose
*
personal services income is included in the entity
'
s
*
ordinary income or
*
statutory income;
the entity
'
s deduction cannot exceed the amount it would have to contribute, for the benefit of the individual, to a
*
complying superannuation fund or an
*
RSA in order to ensure that it did not have any
*
individual superannuation guarantee shortfalls in respect of the individual for any of the
*
quarters in the income year.
[
CCH Note:
S 86-75(2) will be amended by No 57 of 2025, s 3 and Sch 1 item 84, by substituting
"
*
individual final superannuation guarantee shortfalls for the individual and any
*
QE days
"
for
"
*
individual superannuation guarantee shortfalls in respect of the individual for any of the
*
quarters
"
, effective 1 July 2026. For application and transitional provisions, see note under s
85-25(4)
.]
History
S 86-75(2) amended by No 51 of 2002.
86-75(3)
To work out the amount the entity would have to contribute for the purposes of subsection
(2)
, the individual
'
s salary or wages, for the purposes of the
Superannuation Guarantee (Administration) Act 1992
, are taken to be the amount that section
86-60
does not prevent the entity deducting for salary or wages it paid to the individual.
Note:
Section
86-60
will apply the limitations under sections
85-10
and
85-20
on an individual
'
s entitlement to deductions (but see paragraph
85-10(2)(e)
on employment of associates).
[
CCH Note:
S 86-75(3) will be substituted by No 57 of 2025, s 3 and Sch 1 item 85, effective 1 July 2026. For application and transitional provisions, see note under s
85-25(4)
. S 86-75(3) will read:
86-75(3)
To work out the amount the entity would have to contribute under subsection
(2)
, assume under the
Superannuation Guarantee (Administration) Act 1992
that the entity
'
s payments of qualifying earnings (within the meaning of that Act) to the individual do not include any amounts that section
86-60
of this Act would prevent the entity from deducting.
Note:
Section
86-60
will apply the limitations under sections
85-10
and
85-20
on an individual
'
s entitlement to deductions (but see paragraph
85-10(2)(e)
on employment of associates).
]
History
S 86-75 inserted by No 86 of 2000.
SECTION 86-80
86-80
Salary or wages promptly paid
Section 86-60 does not stop a
*
personal services entity deducting an amount for salary or wages it pays to the individual referred to in that section before the end of the 14th day after the
*
PAYG payment period during which the amount became
*
ordinary income or
*
statutory income of the entity.
History
S 86-80 inserted by No 86 of 2000.
SECTION 86-85
86-85
Deduction entitlements of personal services entities for amounts included in an individual's assessable income
The fact that a
*
personal services entity:
(a)
incurs an amount in gaining or producing an individual's assessable income; or
(b)
uses a
*
depreciating asset, or has it installed ready for use, for the
*
purpose of producing assessable income of an individual;
does not stop the entity deducting the loss or outgoing, or deducting an amount for the decline in value of the asset, under this Act if:
(c)
the entity incurs the amount in gaining or producing, or uses or installs the depreciating asset for the purpose of producing, its
*
ordinary income or
*
statutory income; and
(d)
the income is included in the individual's assessable income under section
86-15
.
History
S 86-85 amended by No 77 of 2001 and inserted by No 86 of 2000.
SECTION 86-87
86-87
Personal services entity cannot deduct net personal services income loss
The total amount of the deductions to which a
*
personal services entity is entitled for an income year is reduced by the amount of any deduction that an individual, whose
*
personal services income is ordinary or statutory income of the entity for that income year, is entitled to under section
86-27
.
History
S 86-87 inserted by No 20 of 2004.
SECTION 86-90
86-90
Application of Divisions 28 and 900 to personal services entities
This Division does not have the effect of applying Division
28
(about car expenses) or Division
900
(about substantiation rules) to a
*
personal services entity.
Note:
Divisions
28
and 900 can still apply to a personal services entity that is a partnership: see subsections
28-10(2)
and
900-5(2)
.
History
S 86-90 inserted by No 86 of 2000.
Division 87
-
Personal services businesses
History
Div 87 inserted by No 86 of 2000.
Guide to Division 87
SECTION 87-1
What this Division is about
Divisions
85
and 86 do not apply to personal services income that is income from conducting a personal services business.
It is not intended that the Divisions apply to independent contractors.
A personal services business exists if there is a personal services business determination or if one or more of 4 tests for what is a personal services business are met.
Regardless of how much of your personal services income is paid from one source, you can self-assess against the results test to determine whether you are an independent contractor. The results test is based on the traditional tests for determining independent contractors and it is intended that it apply accordingly.
However, you cannot ``self-assess'' whether you meet any of the other 3 tests if 80% or more of your personal services income is from one source. In these cases, you need a personal services business determination in order to be treated as conducting a personal services business.
History
S 87-1 substituted by No 169 of 2001 and inserted by No 86 of 2000.
SECTION 87-5
87-5
Diagram showing the operation of this Division
This diagram shows how this Division operates to ascertain whether personal services income is income from conducting a personal services business.
History
S 87-5 substituted by No 169 of 2001 and inserted by No 86 of 2000.
Subdivision 87-A
-
General
SECTION 87-10
87-10
Object of this Division
The object of this Division is to define
*
personal services businesses in a way that ensures that it covers genuine businesses but not situations that are merely arrangements for dealing with the
*
personal services income of individuals.
History
S 87-10 inserted by No 86 of 2000.
SECTION 87-15
What is a personal services business
?
87-15(1)
An individual or
*
personal services entity conducts a
personal services business
if:
(a)
for an individual
-
a
*
personal services business determination is in force relating to the individual
'
s
*
personal services income; or
(b)
for a personal services entity
-
a personal services business determination is in force relating to an individual whose personal services income is included in the entity
'
s
*
ordinary income or
*
statutory income; or
(c)
in any case
-
the individual or entity meets at least one of the 4
*
personal services business tests in the income year for which the question whether the individual or entity is conducting a personal services business is in issue.
Note 1:
For personal services business determinations, see Subdivision
87-B
.
Note 2:
Under subsection (3), the personal services business tests, apart from the results test under section
87-18
, do not apply if 80% or more of your personal services income is from one source (but they can still be used in deciding whether to make a personal services business determination).
87-15(2)
The 4
personal services business tests
are:
(a)
the results test under section
87-18
; and
(b)
the unrelated clients test under section
87-20
; and
(c)
the employment test under section
87-25
; and
(d)
the business premises test under section
87-30
.
87-15(3)
However, if 80% or more of an individual
'
s
*
personal services income (not including income referred to in subsection (4)) during an income year is income from the same entity (or one entity and its
*
associates), and:
(a)
the individual
'
s personal services income is not included in a
*
personal services entity
'
s
*
ordinary income or
*
statutory income during an income year, and the individual does not meet the results test under section
87-18
in that income year; or
(b)
the individual
'
s personal services income is included in a personal services entity
'
s ordinary income or statutory income during an income year, and the entity does not, in relation to the individual, meet the results test under section
87-18
in that income year;
the individual
'
s personal services income is
not
taken to be from conducting a
*
personal services business unless:
(c)
when the personal services income is gained or produced, a
*
personal services business determination is in force relating to the individual
'
s personal services income; and
(d)
if the determination was made on the application of a personal services entity
-
the individual
'
s personal services income is income from the entity conducting the personal services business.
Note:
Sections
87-35
and
87-40
affect the operation of subsection (3) in relation to Australian government agencies and certain agents.
History
S 87-15(3) amended by No 169 of 2001.
87-15(4)
Subsection (3) does not apply to income:
(a)
that the individual receives as an employee; or
(b)
that the individual receives as an individual referred to in paragraph
12-45(1)(a)
, (b), (c), (d) or (e) (payments to office holders) in Schedule
1
to the
Taxation Administration Act 1953
; or
(c)
to the extent that it is a payment referred to in section
12-47
(payments to
*
religious practitioners) in that Schedule.
History
S 87-15(4)(c) inserted by No 169 of 2001.
S 87-15(4) inserted by No 169 of 2001.
S 87-15 and s 87-18 substituted for s 87-15 by No 169 of 2001.
S 87-15 inserted by No 86 of 2000.
SECTION 87-18
The results test for a personal services business
87-18(1)
An individual meets the results test in an income year if, in relation to at least 75% of the individual
'
s
*
personal services income (not including income referred to in subsection (2)) during the income year:
(a)
the income is for producing a result; and
(b)
the individual is required to supply the
*
plant and equipment, or tools of trade, needed to perform the work from which the individual produces the result; and
(c)
the individual is, or would be, liable for the cost of rectifying any defect in the work performed.
87-18(2)
Paragraph (1)(a) does not apply to income:
(a)
that the individual receives as an employee; or
(b)
that the individual receives as an individual referred to in paragraph
12-45(1)(a)
, (b), (c), (d) or (e) (payments to office holders) in Schedule
1
to the
Taxation Administration Act 1953
; or
(c)
to the extent that it is a payment referred to in section
12-47
(payments to
*
religious practitioners) in that Schedule.
History
S 87-18(2) amended by No 169 of 2001.
87-18(3)
A
*
personal services entity meets the results test in an income year if, in relation to at least 75% of the
*
personal services income of one or more individuals that is included in the personal services entity
'
s
*
ordinary income or
*
statutory income during the income year:
(a)
the income is for producing a result; and
(b)
the personal services entity is required to supply the
*
plant and equipment, or tools of trade, needed to perform the work from which the personal services entity produces the result; and
(c)
the personal services entity is, or would be, liable for the cost of rectifying any defect in the work performed.
87-18(4)
For the purposes of paragraph (1)(a), (b) or (c) or (3)(a), (b) or (c), regard is to be had to whether it is the custom or practice, when work of the kind in question is performed by an entity other than an employee:
(a)
for the
*
personal services income from the work to be for producing a result; and
(b)
for the entity to be required to supply the
*
plant and equipment, or tools of trade, needed to perform the work; and
(c)
for the entity to be liable for the cost of rectifying any defect in the work performed;
as the case requires.
History
S 87-15 and s 87-18 substituted for s 87-15 by No 169 of 2001.
SECTION 87-20
The unrelated clients test for a personal services business
87-20(1)
An individual or a
*
personal services entity meets the unrelated clients test in an income year if:
(a)
during the year, the individual or personal services entity gains or produces income from providing services to 2 or more entities that are not
*
associates of each other, and are not associates of the individual or of the personal services entity; and
(b)
the services are provided as a direct result of the individual or personal services entity making offers or invitations (for example, by advertising), to the public at large or to a section of the public, to provide the services.
Note:
Sections
87-35
and
87-40
affect the operation of paragraph (1)(a) in relation to Australian government agencies and certain agents.
History
S 87-20(1) amended by No 169 of 2001.
87-20(2)
The individual or
*
personal services entity is
not
treated, for the purposes of paragraph (1)(b), as having made offers or invitations to provide services merely by being available to provide the services through an entity that conducts a
*
business of arranging for persons to provide services directly for clients of the entity.
History
S 87-20 inserted by No 86 of 2000.
SECTION 87-25
The employment test for a personal services business
87-25(1)
An individual meets the employment test in an income year if:
(a)
the individual engages one or more entities (other than
*
associates of the individual that are not individuals) to perform work; and
(b)
that entity performs, or those entities together perform, at least 20% (by
*
market value) of the individual's principal work for that year.
87-25(2)
A
*
personal services entity meets the employment test in an income year if:
(a)
the entity engages one or more other entities to perform work, other than:
(i)
individuals whose
*
personal services income is included in the entity's
*
ordinary income or
*
statutory income; or
(ii)
*
associates of the entity that are not individuals; and
(b)
that other entity performs, or those other entities together perform, at least 20% (by
*
market value) of the entity's principal work for that year.
87-25(2A)
If the
*
personal services entity is a partnership, work that a partner performs is taken, for the purposes of subsection (2), to be work that the personal services entity engages another entity to perform.
History
S 87-25(2A) inserted by No 169 of 2001.
87-25(3)
An individual or a
*
personal services entity also meets the employment test in an income year if, for at least half the income year, the individual or entity has one or more apprentices.
History
S 87-25 inserted by No 86 of 2000.
SECTION 87-30
The business premises test for a personal services business
87-30(1)
An individual or a
*
personal services entity meets the business premises test in an income year if, at all times during the income year, the individual or entity maintains and uses business premises:
(a)
at which the individual or entity mainly conducts activities from which
*
personal services income is gained or produced; and
(b)
of which the individual or entity has exclusive use; and
(c)
that are physically separate from any premises that the individual or entity, or any
*
associate of the individual or entity, uses for private purposes; and
(d)
that are physically separate from the premises of the entity to which the individual or entity provides services and from the premises of any associate of the entity to which the individual or entity provides services.
87-30(2)
The individual or entity need not maintain and use the same business premises throughout the income year.
History
S 87-30 inserted by No 86 of 2000.
SECTION 87-35
Personal services income from Australian government agencies
87-35(1)
*
Australian government agencies are not treated as
*
associates of each other for the purposes of subsection
87-15(3)
and paragraph
87-20(1)(a)
.
Example:
You receive 60% of your personal services income from a Department of a State government and 40% of your personal services income from a corporation in which that State has a majority shareholding.
You are not treated as if 80% or more of your personal services income is income from the same entity and that entity's associates, and therefore you will not need a personal services business determination to satisfy subsection
87-15(3)
.
In addition, you satisfy the first limb (but not necessarily the second limb) of the unrelated clients test in subsection
87-20(1)
, because you receive your personal services income from 2 entities that are not treated as associates of each other.
87-35(2)
Each Agency within the meaning of the
Public Service Act 1999
:
(a)
is treated as a separate entity; and
(b)
is not treated as an
*
associate of any other such Agency, or of any
*
Australian government agency;
for the purposes of subsection
87-15(3)
and paragraph
87-20(1)(a)
.
Example:
You receive 70% of your personal services income from the Commonwealth Department of Treasury and 30% of your personal services income from the Australian Taxation Office (neither body has a legal identity separate from the Commonwealth Government).
You are not treated as if 80% or more of your personal services income is income from the same entity, or from the same entity and that entity's associates, and therefore you will not need a personal services business determination to satisfy subsection
87-15(3)
.
In addition, you satisfy the first limb (but not necessarily the second limb) of the unrelated clients test in subsection
87-20(1)
, because you receive your personal services income from 2 bodies that are treated as separate entities and that are not treated as associates of each other.
87-35(3)
Each part of the government of a State or Territory, and each part of an authority of the State or Territory, that has, under a law of the State or Territory, a status corresponding to an Agency within the meaning of the
Public Service Act 1999
:
(a)
is treated as a separate entity; and
(b)
is not treated as an
*
associate of any other part of such a government or authority, or of any
*
Australian government agency;
for the purposes of subsection
87-15(3)
and paragraph
87-20(1)(a)
.
History
S 87-35 inserted by No 86 of 2000.
SECTION 87-40
Application of this Division to certain agents
Object of this section
87-40(1)
The object of this section is to modify the operation of this Division for
*
agents who bear entrepreneurial risk in the way they provide services.
History
S 87-40(1) amended by
No 4 of 2007
, s 3 and Sch 2 item 26, by substituting
"
*
agents
"
for
"
agents
"
, effective 19 February 2006.
Agent rules do not apply
87-40(1A)
The rules in section
960-105
(Certain entities treated as agents) do not apply to this section.
History
S 87-40(1A) inserted by
No 58 of 2006
, s 3 and Sch 7 item 71, effective 22 June 2006.
Agents covered by this section
87-40(2)
Subsection 87-15(3) and section
87-20
apply, in the manner specified in this section, to an individual or
*
personal services entity if:
(a)
the individual or personal services entity is an
*
agent of another entity (the
principal
) but not the principal
'
s employee; and
(b)
the agent receives income from the principal that is for services that the agent provides to other entities (
customers
) on the principal
'
s behalf; and
(c)
at least 75% of that income is commissions, or fees, based on the agent
'
s performance in providing services to the customers on the principal
'
s behalf; and
(d)
the agent actively seeks other entities to whom the agent could provide services on the principal
'
s behalf; and
(e)
the agent does not provide any services to the customers, on the principal
'
s behalf, using premises:
(i)
that the principal or an
*
associate of the principal owns; or
(ii)
in which the principal or an associate of the principal has a leasehold interest;
unless the agent uses the premises under an arrangement entered into at
*
arm
'
s length.
History
S 87-40(2) amended by No 88 of 2013, s 3 and Sch 7 item 236, by substituting
"
*
arm's length
"
for
"
arm's length
"
in para (e), effective 28 June 2013.
Whether personal services income is from one source
87-40(3)
If the
*
agent is an individual, in applying subsection
87-15(3)
to the
*
personal servicesincome of the agent during an income year, any part of the agent
'
s personal services income from the principal that:
(a)
the agent gains or produces during the income year; and
(b)
is for services that the agent provided to a customer on the principal
'
s behalf in the income year or an earlier income year;
is treated as if it were personal services income from the customer, and not personal services income from the principal.
87-40(4)
If the
*
agent is a
*
personal services entity, in applying subsection
87-15(3)
to an individual
'
s
*
personal services income that is included in the entity
'
s
*
ordinary income or
*
statutory income during an income year, any part of the individual
'
s personal services income from the principal that:
(a)
the agent gains or produces during the income year; and
(b)
is for services that the individual or the agent provided to a customer on the principal
'
s behalf in the income year or an earlier income year;
is treated as if it were personal services income from the customer, and not personal services income from the principal.
The unrelated clients test for a personal services business
87-40(5)
In determining whether, during an income year, the
*
agent meets the unrelated clients test under section
87-20
, any services the agent provided in the income year or an earlier income year:
(a)
for which the agent gains or produces, during the income year, personal services income from the principal; and
(b)
that were provided to a customer on the principal
'
s behalf;
are treated for the purposes of paragraph
87-20(1)(a)
as if the agent, and not the principal, provided them to the customer.
History
S 87-40 inserted by No 169 of 2001.
Subdivision 87-B
-
Personal services business determinations
87-55
(Repealed) SECTION 87-55 Effect of personal services business determinations
(Repealed by No 169 of 2001)
History
S 87-55 repealed by No 169 of 2001 and inserted by No 86 of 2000.
SECTION 87-60
Personal services business determinations for individuals
Making etc. personal services business determinations
87-60(1)
The Commissioner may, by giving written notice to an individual:
(a)
make a personal services business determination relating to the individual; or
(b)
vary such a determination.
87-60(2)
The Commissioner may, in the notice, specify:
(a)
the day on which the determination or variation takes effect, or took effect;
(b)
the period for which the determination has effect;
(c)
conditions to which the determination is subject.
Matters about which the Commissioner must be satisfied
87-60(3)
The Commissioner must not make the determination unless satisfied that, in the income year during which the determination first has effect, or is taken to have first had effect, the conditions in one or more of subsections (3A), (3B), (5) and (6) are met.
History
S 87-60(3) amended by No 83 of 2004.
S 87-60(3), (3A) and (3B) substituted for s 87-60(3) by No 83 of 2004.
S 87-60(3) amended by No 169 of 2001.
First alternative
-
results, employment or business premises test met or reasonably expected to be met
87-60(3A)
The conditions in this subsection are that:
(a)
the individual could reasonably be expected to meet, or met, the results test under section
87-18
, the employment test under section
87-25
, the business premises test under section
87-30
or more than one of those tests; and
(b)
the individual's
*
personal services income could reasonably be expected to be, or was, from the individual conducting activities that met one or more of those tests.
History
S 87-60(3), (3A) and (3B) substituted for s 87-60(3) by No 83 of 2004.
Second alternative
-
unusual circumstances prevented the results, employment or business premises test from being met
87-60(3B)
The conditions in this subsection are that:
(a)
but for unusual circumstances applying to the individual in that year, the individual could reasonably have been expected to meet, or would have met, the results test under section
87-18
, the employment test under section
87-25
, the business premises test under section
87-30
or more thanone of those tests; and
(b)
the individual's
*
personal services income could reasonably be expected to be, or was, from the individual conducting activities that met one or more of those tests.
History
S 87-60(3B) amended by No 83 of 2004.
S 87-60(3), (3A) and (3B) substituted for s 87-60(3) by No 83 of 2004.
87-60(4)
For the purposes of paragraph (3B)(a) but without limiting the scope of that paragraph, unusual circumstances include providing services to an insufficient number of entities to meet the unrelated clients test under section
87-20
if:
(a)
the individual starts a
*
business during the income year, and can reasonably be expected to meet the test in subsequent income years; or
(b)
the individual provides services to only one entity during the income year, but met the test in one or more preceding income years and can reasonably be expected to meet the test in subsequent income years.
History
S 87-60(4) amended by No 83 of 2004.
Third alternative
-
unrelated clients test was met but 80% or more of income from same source because of unusual circumstances
87-60(5)
The conditions in this subsection are that:
(a)
the individual could reasonably be expected to meet, or met, the unrelated clients test under section
87-20
; and
(b)
because of unusual circumstances applying to the individual in the income year, 80% or more of the individual's
*
personal services income (not including income mentioned in subsection
87-15(4)
) could reasonably have been expected to be, or would have been, income from the same entity (or one entity and its
*
associates); and
(c)
the individual's personal services income could reasonably be expected to be, or was, from the individual conducting activities that met the unrelated clients test under section
87-20
.
History
S 87-60(5) inserted by No 83 of 2004.
S 87-60(5) repealed by No 169 of 2001.
Fourth alternative
-
unrelated clients test not met because of unusual circumstances
87-60(6)
The conditions in this subsection are that:
(a)
but for unusual circumstances applying to the individual in that year, the individual could reasonably have been expected to meet, or would have met, the unrelated clients test under section
87-20
; and
(b)
if 80% or more of the individual's
*
personal services income (not including income mentioned in subsection
87-15(4)
) could reasonably have been expected to be, or would have been, income from the same entity (or one entity and its
*
associates)
-
that is the case only because of unusual circumstances applying to the individual in the income year; and
(c)
the individual's personal services income could reasonably be expected to be, or was, from the individual conducting activities that met the unrelated clients test under section
87-20
.
History
S 87-60(6) inserted by No 83 of 2004.
S 87-60(6) repealed by No 169 of 2001.
87-60(7)
(Repealed by No 169 of 2001)
History
S 87-60 inserted by No 86 of 2000.
SECTION 87-65
Personal services business determinations for personal services entities
Making etc. personal services business determinations
87-65(1)
The Commissioner may, by giving written notice to a
*
personal services entity whose
*
ordinary income or
*
statutory income includes some or all of an individual
'
s
*
personal services income:
(a)
make a personal services business determination relating to the individual
'
s personal services income included in the entity
'
s ordinary income or statutory income; or
(b)
vary such a determination.
87-65(2)
The Commissioner may, in the notice, specify:
(a)
the day on which the determination or variation takes effect, or took effect;
(b)
the period for which the determination has effect;
(c)
conditions to which the determination is subject.
Matters about which the Commissioner must be satisfied
87-65(3)
The Commissioner must not make the determination unless satisfied that, in the income year during which the determination first has effect, or is taken to have first had effect, the conditions in one or more of subsections (3A), (3B), (5) and (6) are met.
History
S 87-65(3) amended by No 83 of 2004.
S 87-65(3), (3A) and (3B) substituted for s 87-65(3) by No 83 of 2004.
S 87-65(3) amended by No 169 of 2001.
First alternative
-
results, employment or business premises test met or reasonably expected to be met
87-65(3A)
The conditions in this subsection are that:
(a)
the entity could reasonably be expected to meet, or met, the results test under section
87-18
, the employment test under section
87-25
, the business premises test under section
87-30
or more than one of those tests; and
(b)
the individual
'
s
*
personal services income included in the entity
'
s
*
ordinary income or
*
statutory income could reasonably be expected to be, or was, from the entity conducting activities that met one or more of those tests.
History
S 87-65(3), (3A) and (3B) substituted for s 87-65(3) by No 83 of 2004.
Second alternative
-
unusual circumstances prevented the results, employment or business premises test from being met
87-65(3B)
The conditions in this subsection are that:
(a)
but for unusual circumstances applying to the entity in that year, the entity could reasonably have been expected to meet, or would have met, the results test under section
87-18
, the employment test under section
87-25
, the business premises test under section
87-30
or more than one of those tests; and
(b)
the individual
'
s
*
personal services income included in the entity
'
s
*
ordinary income or
*
statutory income could reasonably be expected to be, or was, from the entity conducting activities that met one or more of those tests.
History
S 87-65(3B) amended by No 83 of 2004.
S 87-65(3), (3A) and (3B) substituted for s 87-65(3) by No 83 of 2004.
87-65(4)
For the purposes of paragraph (3B)(a) but without limiting the scope of that paragraph, unusual circumstances include providing services to an insufficient number of entities to meet the unrelated clients test under section
87-20
if:
(a)
the
*
personal services entity starts a
*
business during the income year, and can reasonably be expected to meet that test in subsequent income years; or
(b)
the personal services entity provides services to only one entity during the income year, but met the test in one or more preceding income years and can reasonably be expected to meet the test in subsequent income years.
History
S 87-65(4) amended by No 83 of 2004.
Third alternative
-
unrelated clients test was met but 80% or more of income from same source because of unusual circumstances
87-65(5)
The conditions in this subsection are that:
(a)
the entity could reasonably be expected to meet, or met, the unrelated clients test under section
87-20
; and
(b)
because of unusual circumstances applying to the entity in the income year, 80% or more of the individual
'
s
*
personal services income (not including income mentioned in subsection
87-15(4)
) included in the entity
'
s
*
ordinary income or
*
statutory income could reasonably have been expected to be, or would have been, income from the same entity (or one entity and its
*
associates); and
(c)
the individual
'
s personal services income included in the entity
'
s ordinary income or statutory income could reasonably be expected to be, or was, from the entity conducting activities that met the unrelated clients test under section
87-20
.
History
S 87-65(5) inserted by No 83 of 2004.
S 87-65(5) repealed by No 169 of 2001.
Fourth alternative
-
unrelated clients test not met because of unusual circumstances
87-65(6)
The conditions in this subsection are that:
(a)
but for unusual circumstances applying to the entity in that year, the entity could reasonably have been expected to meet, or would have met, the unrelated clients test under section
87-20
; and
(b)
if 80% or more of the individual
'
s
*
personal services income (not including income mentioned in subsection
87-15(4)
) included in the entity
'
s
*
ordinary income or
*
statutory income could reasonably have been expected to be, or would have been, income from the same entity (or one entity and its
*
associates)
-
that is the case only because of unusual circumstances applying to the entity in the income year; and
(c)
the individual
'
s personal services income included in the entity
'
s ordinary income or statutory income could reasonably be expected to be, or was, from the entity conducting activities that met the unrelated clients test under section
87-20
.
History
S 87-65(6) inserted by No 83 of 2004.
S 87-65(6) repealed by No 169 of 2001.
87-65(7)
(Repealed by No 169 of 2001)
History
S 87-65 inserted by No 86 of 2000.
SECTION 87-70
Applying etc. for personal services business determinations
87-70(1)
An individual or a
*
personal services entity may apply to the Commissioner, in the
*
approved form:
(a)
for a
*
personal services business determination; or
(b)
for a variation of a personal services business determination.
87-70(2)
The Commissioner may request the applicant to give the Commissioner specified information, or a specified document, that the Commissioner needs to decide the application.
87-70(3)
If the Commissioner has not decided the application within 60 days after it is made, the applicant may, at any time, give the Commissioner written notice that the applicant wishes to treat the application as having been refused.
87-70(4)
If the applicant gives notice under subsection (3), the Commissioner is taken, for the purposes of section
87-85
, to have refused the application on the day on which the notice is given.
87-70(5)
For the purposes of measuring the 60 days mentioned in subsection (3), disregard each period (if any):
(a)
starting on the day when the Commissioner requests the applicant under subsection (2) to give the Commissioner specified information or a specified document; and
(b)
ending at the end of the day the applicant gives the Commissioner the specified information or document.
History
S 87-70 inserted by No 86 of 2000.
SECTION 87-75
When personal services business determinations have effect
87-75(1)
The determination, or a variation of the determination, has effect, or is taken to have had effect, on and from:
(a)
the day specified in the notice as the day on which the determination or variation takes effect, or took effect; or
(b)
if a day is not specified
-
the day on which the notice is given.
87-75(2)
The determination ceases to have effect at the end of the earliest day on which one or more of these occurs:
(a)
one or more conditions to which the determination is subject are not met;
(b)
the Commissioner revokes the determination;
(c)
the period for which the determination has effect comes to an end.
History
S 87-75 inserted by No 86 of 2000.
SECTION 87-80
87-80
Revoking personal services business determinations
The Commissioner must, by giving written notice to the individual or
*
personal services entity on whose application a
*
personal services business determination was made, revoke the determination if the Commissioner is no longer satisfied that there are grounds on which the determination could be made.
History
S 87-80 inserted by No 86 of 2000.
SECTION 87-85
87-85
Review of decisions
A person who is dissatisfied with;
(a)
a decision of the Commissioner to make, vary or revoke a
*
personal services business determination; or
(b)
the Commissioner's refusal of an application for a personal services business determination or for a variation of a personal services business determination;
may object against the decision in the manner set out in Part
IVC
of the
Taxation Administration Act 1953
.
History
S 87-85 inserted by No 86 of 2000.
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