Income Tax (Transitional Provisions) Act 1997
This Act may be cited as the Income Tax (Transitional Provisions) Act 1997. SECTION 1-5 1-5 Commencement
This Act commences on 1 July 1997. SECTION 1-7 1-7 Administration of this Act
The Commissioner has the general administration of this Act.
Note:
An effect of this provision is that people who acquire information under this Act are subject to the confidentiality obligations and exceptions in Division 355 in Schedule 1 to the Taxation Administration Act 1953.
In this Act, an expression has the same meaning as in the Income Tax Assessment Act 1997.
1-10(2)
Division 950 of the Income Tax Assessment Act 1997 (which contains rules for interpreting that Act) applies to this Act as if the provisions of this Act were provisions of that Act.
The Income Tax Assessment Act 1997, as originally enacted, applies to assessments for the 1997-98 income year and later income years.
Note:
For the application of amendments of that Act (including new provisions inserted in it), see the Acts making the amendments.
4-10 (Repealed) SECTION 4-10 Temporary flood and cyclone reconstruction levy(Repealed by No 16 of 2011)
Temporary budget repair levy
4-11(1)
You must pay extra income tax ( temporary budget repair levy ) for a financial year if:
(a) you are an individual; and
(b) your taxable income for the corresponding income year exceeds $180,000; and
(c) the financial year is a temporary budget repair levy year.
Note:
This section will also affect the income tax payable by some trustees who are taxed as if certain trust income were income of individuals. See sections 98 and 99 of the Income Tax Assessment Act 1936.
Amount of temporary budget repair levy
4-11(2)
Your temporary budget repair levy is worked out by reference to your taxable income for the corresponding income year using the rate or rates that apply to you.
Interaction with other provisions
4-11(3)
For the purpose of working out your income tax for the financial year:
(a) section 4-10 of the Income Tax Assessment Act 1997 has effect as if it made you liable to pay the extra tax mentioned in subsection (1) of this section; and
(b) subsection 4-10(3) of that Act has effect as if step 4 of the method statement in that subsection were omitted and the following were substituted:
Step 3A.
Subtract your tax offsets from your basic income tax liability.
For the list of tax offsets, see section 13-1.
Step 3B.
Add the extra income tax you must pay as mentioned in subsection 4-11(1) of the Income Tax (Transitional Provisions) Act 1997.
Step 4.
If an amount of your tax offset for foreign income tax under Division 770 remains after applying section 63-10, subtract the remaining amount from the result of step 3B. The result is how much income tax you owe for the financial year.
4-11(4)
To avoid doubt, temporary budget repair levy is not included in your basic income tax liability.
Note:
As a result, you cannot apply any tax offsets against temporary budget repair levy under Part 2-20 of the Income Tax Assessment Act 1997 (apart from the foreign income tax offset applied under step 4 of the method statement in subsection (3)).
Meaning of temporary budget repair levy year
4-11(5)
Each of the following is a temporary budget repair levy year :
(a) the 2014-15 financial year;
(b) the 2015-16 financial year;
(c) the 2016-17 financial year.
Subject to section 5-15 of this Act, Division 5 of the Income Tax Assessment Act 1997, as originally enacted, applies in relation to income tax or shortfall interest charge you must pay for:
(a) the 2010-11 financial year; or
(b) a later financial year.
A reference in an agreement to section 204 of the Income Tax Assessment Act 1936 is taken, from the commencement of this section, to be a reference to section 5-5 of the Income Tax Assessment Act 1997, if:
(a) paragraph 721-25(1)(a) of the Income Tax Assessment Act 1997 applies to the agreement; and
(b) the agreement was in force just before the commencement of this section.
5-7(2)
This section applies in relation to tax to which Division 5 of the Income Tax Assessment Act 1997 applies.
This section applies if, just before the commencement of this section, you were liable, under subsection 204(3) (the old provision ) of the Income Tax Assessment Act 1936, to pay the general interest charge on an unpaid amount (the liability ) of any tax or shortfall interest charge.
5-10(2)
On that commencement, the old provision ceases to apply to the liability.
5-10(3)
From that commencement, section 5-15 (the new provision ) of the Income Tax Assessment Act 1997, as originally enacted, applies to the liability as if:
(a) the liability remained unpaid at that time; and
(b) so much of the charge under the old provision as remained unpaid at that time had been imposed under the new provision and remained unpaid at that time.
[
CCH Note:
No 51 of 2011, s 3 and Sch 2 item 4 contains the following provision:
4 Former subsection 204(3) of the
Income Tax Assessment Act 1936
]
4
For the purposes of applying, at a particular time, former subsection 204(3) of the Income Tax Assessment Act 1936 in relation to any tax, it does not matter whether the tax had been assessed at that time.
Section 5-15 of the Income Tax Assessment Act 1997 (General interest charge payable on unpaid income tax or shortfall interest charge), as originally enacted, applies to an amount of income tax or shortfall interest charge you must pay for a financial year, if the income tax or shortfall interest charge is due to be paid on or after the commencement of that section.
5-15(2)
For the purposes of subsection (1), it does not matter whether the financial year ended before, on or after the commencement of that section.
This Division has effect for the purposes of the Income Tax Assessment Act 1997 and of this Act. SECTION 6-3 6-3 Assessable income for income years before 1997-98
For the 1996-97 income year or an earlier income year, assessable income means all the amounts that under the Income Tax Assessment Act 1936 are included in the assessable income. SECTION 6-20 6-20 Exempt income for income years before 1997-98
For the 1996-97 income year or an earlier income year, exempt income means income which is exempt from tax and includes income which is not assessable income. Division 8 - Deductions SECTION 8-2 8-2 Effect of this Division
This Division has effect for the purposes of the Income Tax Assessment Act 1997 and of this Act. SECTION 8-3 8-3 Deductions for income years before 1997-98
For the 1996-97 income year or an earlier income year, deduction means a deduction allowable under the Income Tax Assessment Act 1936. SECTION 8-10 8-10 No double deductions for income year before 1997-98 and income year after 1996-97
If:
(a) a provision of the Income Tax Assessment Act 1936 allows you a deduction in respect of an amount for the 1996-97 income year or an earlier income year; and
(b) a different provision of that Act, or a provision of the Income Tax Assessment Act 1997, allows you a deduction in respect of the same amount for the 1997-98 income year or a later income year;
you can deduct only under the provision that is most appropriate.
CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION PART 2-1 - ASSESSABLE INCOMEDivision 15 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.
15-1(2)
However, the sections of that Act listed in the table apply in accordance with the corresponding sections of this Act.
Application provisions for specific sections | ||
Item | This section of the Income Tax Assessment Act 1997 … | Applies as described in this section of this Act … |
1 | 15-10 | 15-10 |
. | ||
2 | 15-15 | 15-15 |
. | ||
3 | 15-20 | 15-20 |
. | ||
4 | 15-30 | 15-30 |
. | ||
5 | 15-35 | 15-35 |
SECTION 15-10 15-10 Application of section 15-10 of the Income Tax Assessment Act 1997 to bounties and subsidies
Section 15-10 (Bounties and subsidies) of the Income Tax Assessment Act 1997 applies to a bounty or subsidy received in the 1997-98 income year or a later income year.
Section 15-15 (Profit-making undertaking or plan) of the Income Tax Assessment Act 1997 applies to a profit arising in the 1997-98 income year or a later income year, even if the undertaking or plan was entered into, or began to be carried on or carried out, before the 1997-98 income year.
Section 15-20 (Royalties) of the Income Tax Assessment Act 1997 applies to an amount received as or by way of royalty in the 1997-98 income year or a later income year.
Section 15-30 (Insurance or indemnity for loss of assessable income) of the Income Tax Assessment Act 1997 applies to an amount received in the 1997-98 income year or a later income year as insurance or indemnity for the loss at any time of an amount that would have been assessable income under the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997.
Section 15-35 (Interest on overpayments and early payments of tax) of the Income Tax Assessment Act 1997 applies to interest that is paid or applied in the 1997-98 income year or a later income year, even if some or all of the interest became payable earlier.
Subdivision 20-A of the Income Tax Assessment Act 1997 applies to an assessable recoupment received in the 1997-98 income year or a later income year of a loss or outgoing whenever incurred.
Subdivision 20-B of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.
If:
(a) in the 1997-98 income year or a later income year you dispose of a car that was leased to you or your associate; and
(b) the lessor acquired the car in the 1996-97 income year or an earlier income year;
the cost of the car to the lessor for the purposes of section 20-120 of the Income Tax Assessment Act 1997 is worked out under the depreciation provisions of the Income Tax Assessment Act 1936.
Note 1:
Section 20-120 of the Income Tax Assessment Act 1997 is about a limit on the amount to be included in your assessable income because of your disposal of the car.
Note 2:
The depreciation provisions were in Subdivision A of Division 3 of Part III of the Income Tax Assessment Act 1936.
20-105(2)
In working out the cost of the car to the lessor, disregard any election the lessor made under former subsection 59(2A) or (2D) of the Income Tax Assessment Act 1936 to reduce the cost of the car.
SECTION 20-110 20-110 The termination value of a car disposed of in the 1996-97 income year or an earlier income year
If:
(a) in the 1997-98 income yearor a later income year you dispose of a car that was leased to you or your associate; and
(b) the lessor disposed of the car in the 1996-97 income year or an earlier income year;
the car's termination value (in respect of the disposal by the lessor) for the purposes of section 20-120 of the Income Tax Assessment Act 1997 is the consideration receivable by the lessor for the disposal (worked out under former section 59 of the Income Tax Assessment Act 1936).
Note:
Section 20-120 of the Income Tax Assessment Act 1997 is about a limit on the amount to be included in your assessable income because of your disposal of the car.
If:
(a) section 20-110 or 20-125 of the Income Tax Assessment Act 1997 includes an amount in your assessable income for the 1997-98 income year or a later income year because of your disposal of a car; and
(b) in the 1996-97 income year or an earlier income year (but after the lease period began) there was an earlier disposal of the car, or an interest in it, by you or another entity in a situation described in the following table;
each limit on the amount to be included in your assessable income is reduced as follows:
Reducing each limit on the amount to be included | ||
Item | In this situation: | reduce each limit by: |
1 | Former section 26AAB of the Income Tax Assessment Act 1936 included an amount in your assessable income in respect of such an earlier disposal by you | that amount |
. | ||
2 | Former section 26AAB of the Income Tax Assessment Act 1936 included an amount in another entity's assessable income in respect of such an earlier disposal by the other entity | that amount |
. | ||
3 | Former section 26AAB of the Income Tax Assessment Act 1936 would have included an amount in your assessable income in respect of such an earlier disposal by you but for the operation of former subsection 26AAB(12) of that Act | that amount |
. | ||
4 | Former section 26AAB of the Income Tax Assessment Act 1936 would have included an amount in another entity's assessable income in respect of such an earlier disposal by the other entity but for the operation of former subsection 26AAB(12) of that Act | that amount |
. | ||
5 | Former subsection 26AAB(9) of the Income Tax Assessment Act 1936 reduced the amount to be included in your assessable income in respect of such an earlier disposal by you | the amount of the reduction |
. | ||
6 | Former subsection 26AAB(9) of the Income Tax Assessment Act 1936 reduced the amount to be included in another entity's assessable income in respect of such an earlier disposal by the other entity | the amount of the reduction |
(Repealed by No 66 of 2003) PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS Division 25 - Some amounts you can deduct
Division 25 (Some amounts you can deduct) of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years, except as provided by this Division.
Section 25-40 (Loss from profit-making undertaking or plan) of the Income Tax Assessment Act 1997 applies to a loss arising in the 1997-98 income year or a later income year, even if the undertaking or plan was entered into, or began to be carried on or carried out, before the 1997-98 income year.
Section 25-45 (which is about deductions for losses by theft etc.) of the Income Tax Assessment Act 1997 applies to a loss discovered in the 1997-98 income year or a later income year.
Section 25-90 (which is about deductions relating to foreign exempt income) of the Income Tax Assessment Act 1997 applies to an amount incurred in an income year that begins on or after 1 July 2001.
Section 25-65 of the Income Tax Assessment Act 1997 applies to the 2006-07 income year and later income years, in relation to expenditure whenever incurred. In relation to expenditure incurred in the 2005-06 income year or an earlier income year, it applies as if:
(a) it had applied to all income years before the 2006-07 income year; and
(b) an allowable deduction for the expenditure under section 74A of the Income Tax Assessment Act 1936 had been a deduction for the expenditure under section 25-65 of the Income Tax Assessment Act 1997.
Note:
This section also has the result that, to the extent that a recoupment of the expenditure has been included in your assessable income by former subsections 74A(4) and (5) of the Income Tax Assessment Act 1936, the expenditure will be disregarded in applying the $1,000 per election deduction limit: see subsection 25-65(2) of the Income Tax Assessment Act 1997.
Division 26 of the Income Tax Assessment Act 1997 (which prevents or limits deductions) applies to assessments for the 1997-98 income year and later income years, except as provided by this Division.
Section 26-30 (which denies a deduction for relative's travel expenses) of the Income Tax Assessment Act 1997 applies to travel on or after 1 July 1997.
Division 30 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.
This section applies to a declaration or other instrument (described in column 2 of an item in the table in this section) that is in force at the end of 30 June 1997 for the purposes of the provision of the Income Tax Assessment Act 1936 referred to in that column of the item.
30-5(2)
On and after 1 July 1997 the declaration or other instrument also has effect as if it were an approval or declaration (described in column 3 of the same item) made for the purposes of the provision of the Income Tax Assessment Act 1997 referred to in that column of the item.
Anything done on or after 1 July 1997 in relation to an approval or declaration described in column 3 of an item in the table also has effect as if it had been done in relation to the declaration or other instrument described in column 2 of that item.
On and after 1 July 1997 | ||
Item | This approval, declaration or other instrument: | also has effect as if it were: |
1 | An instrument certifying an institution to be a technical and further education institution for the purposes of item 2.1.7 of table 2 in subsection 78(4) | A declaration that the institution is a technical and further education institution for the purposes of item 2.1.7 of the table in subsection 30-25(1) |
. | ||
2 | An instrument certifying that purposes of an institution covered by item 2.1.7 of table 2 in subsection 78(4), or of the college covered by item 2.2.14 of that table, relate exclusively to tertiary education | A declaration (for the purposes of section 30-30) that those purposes of the institution, or of the college, relate solely to tertiary education |
. | ||
3 | An instrument approving an organisation, or a branch or section of an organisation, to be a marriage guidance organisation for the purposes of item 8.1.1 of table 8 in subsection 78(4) | A declaration that the organisation, or branch or section of the organisation, is a marriage guidance organisation for the purposes of item 8.1.1 of the table in subsection 30-70(1) |
. | ||
4 | A declaration that a public fund is an eligible fund for the purposes of item 9.1.1 of table 9 in subsection 78(4) | A declaration that the public fund is a relief fund for the purposes of item 9.1.1 of the table in subsection 30-80(1) |
. | ||
5 | An instrument approving a person as a valuer under subsection 78(18) | An approval of the person as a valuer under section 30-210 |
. | ||
6 | An instrument approving an organisation as an approved organisation for the purposes of subsection 78(21) | A declaration that the organisation is an approved organisation for the purposes of section 30-85 |
. | ||
7 | An instrument certifying a country to be a developing country for the purposes of subsection 78(21) | A declaration that the country is a developing country for the purposes of section 30-85 |
30-10 (Repealed) SECTION 30-10 Applications for approval of testamentary gifts not yet decided
(Repealed by No 12 of 2012)
(Repealed by No 12 of 2012)
(Repealed by No 12 of 2012)
On and after 1 July 1997, the register described in column 2 of an item in the table in this section (as the register existed at the end of 30 June 1997) also has effect as if it were the register described in column 3 of that item.
Column 2 refers to provisions of the Income Tax Assessment Act 1936. Column 3 refers to provisions of the Income Tax Assessment Act 1997.
30-25(2)
Anything done on or after 1 July 1997 in relation to the register described in column 3 of an item in the table also has effect as if it had been done in relation to the register described in column 2 of that item.
On and after 1 July 1997 | ||
Item | This register: | also has effect as if it were: |
1 | The register of cultural organisations kept under section 78AA | The register of cultural organisations kept under Subdivision 30-F |
. | ||
2 | The register of environmental organisations kept under section 78AB | The register of environmental organisations kept under Subdivision 30-E |
SECTION 30-102 Fund, authorities and institutions taken to be endorsed 30-102(1)
The authorities and institutions listed in this table are taken to have been endorsed by the Commissioner of Taxation for the purposes of item 12A.1.1 of the table in section 30-102 of the Income Tax Assessment Act 1997 under paragraph 30-120(a) of that Act.
Item | Fund, authority or institution | Established under legislation of the following State or Territory |
1 | State Emergency Service | New South Wales |
2 | Country Fire Authority | Victoria |
3 | Victoria State Emergency Service | Victoria |
4 | Queensland Fire and Rescue Service | Queensland |
5 | State Emergency Service | Queensland |
6 | Fire and Emergency Services Authority of Western Australia | Western Australia |
7 | State Emergency Service South Australia | South Australia |
8 | Tasmania Fire Service | Tasmania |
9 | State Emergency Service | Tasmania |
10 | ACT Rural Fire Service | Australian Capital Territory |
11 | ACT State Emergency Service | Australian Capital Territory |
30-102(2)
The fund listed in this table is taken to have been endorsed by the Commissioner of Taxation for the purposes of item 12A.1.2 of section 30-102 of the Income Tax Assessment Act 1997 under paragraph 30-120(b) of that Act.
Item | Fund, authority or institution | Established under legislation of the following State or Territory |
1 | CFA & Brigades Donations Fund | Victoria |
30-102(3)
The funds, authorities and institutions referred to in subsections (1) and (2) are taken to have been endorsed on the day on which Schedule 7 to the Tax Laws Amendment (2010 Measures No. 4) Act 2010 commences.
Division 32 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.
Division 34 (Non-compulsory uniforms) of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income yearand later income years.
From 1 July 1997, anything done under or in connection with a provision of former section 51AL of the Income Tax Assessment Act 1936 has effect as if it had been done under or in connection with the corresponding provision of Division 34 of the Income Tax Assessment Act 1997.
34-5(2)
From 1 July 1997, a thing described in column 2 of an item in the table (as that thing existed at the end of 30 June 1997) has effect as if it were the thing described in column 3 of that item.
Column 2 refers to provisions of the Income Tax Assessment Act 1936. Column 3 refers to provisions of the Income Tax Assessment Act 1997.
As from 1 July 1997 | ||
Item | This: | has effect as if it were this: |
1 | The Register of Approved Occupational Clothing that former subsection 51AL(5) requires the Industry Secretary to keep | The Register of Approved Occupational Clothing that section 34-45 requires the Industry Secretary to keep |
. | ||
2 | Approved occupational clothing guidelines in force under former subsection 51AL(7) | Approved occupational clothing guidelines made under section 34-55 |
. | ||
3 | A delegation by the Industry Secretary under former subsection 51AL(23) | A delegation by the Industry Secretary under section 34-65 |
34-5(3)
Subsection (2) does not limit the generality of subsection (1).
Division 35 - Deferral of losses from non-commercial business activities
The rule in subsection 35-10(2) of the Income Tax Assessment Act 1997 does not apply for an income year to a business activity if:
(a) apart from that rule, you could otherwise deduct amounts under Division 41 of that Act for that income year; and
(b) the total of those amounts is more than or equal to the excess worked out under that subsection for the business activity for the income year.
A decision of the Commissioner made under section 35-55 of the Income Tax Assessment Act 1997:
(a) before the commencement of Schedule 2 to the Tax Laws Amendment (2009 Budget Measures No 2) Act 2009; and
(b) for one or more income years;
continues to have effect, after that commencement, for those income years despite the amendments made by that Schedule.
To work out your tax loss (if any) for the 1997-98 income year or a later income year, apply the provisions of the Income Tax Assessment Act 1997 about tax losses.
Start at Division 36 of that Act.
SECTION 36-105 Tax losses for 1989-90 to 1996-97 income years 36-105(1) [Incurring tax loss]If you incurred a loss for the purposes of section 79E (General domestic losses of 1989-90 to 1996-97 years of income) of the Income Tax Assessment Act 1936 in any of the 1989-90 to 1996-97 income years, the loss is your tax loss for that income year, which is called a loss year .
36-105(2) [Deducting loss in 1997/98 or later]You can deduct the tax loss in the 1997-98 or a later income year only to the extent that it has not already been deducted.
SECTION 36-110 Tax losses for 1957-58 to 1988-89 income years 36-110(1)If you incurred a loss for the purposes of section 80AA (Primary production losses of pre-1990 years of income) of the Income Tax Assessment Act 1936 in any of the 1957-58 to 1988-89 income years, the loss is your tax loss for that income year, which is called a loss year . The loss is also called a primary production loss .
36-110(2)
You can deduct the tax loss in the 1997-98 or a later income year only to the extent that it has not already been deducted.
36-110(3)
You deduct your primary production losses (in the order in which you incurred them) before any other tax losses of the same or any other loss year, except film losses.
36-110(4)
A company cannot transfer any amount of a primary production loss for the 1983-84 or an earlier income year under Subdivision 170-A (Transfer of tax losses within wholly-owned groups of companies) of the Income Tax Assessment Act 1997.
36-110(5)
For the purposes of determining how much (if any) of a primary production loss you can deduct in the 1997-98 or a later income year, subsections 80AA(9), (10) and (11) of the Income Tax Assessment Act 1936 apply in the same way as they apply for the purposes they refer to.
PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE Division 40 - Capital allowances
This section applies to you if:
(a) you have deducted or can deduct amounts for plant under Division 42 of the Income Tax Assessment Act 1997 (the former Act ) as in force just before it was amended by the New Business Tax System (Capital Allowances) Act 2001 and the New Business Tax System (Capital Allowances - Transitional and Consequential) Act 2001, or you could have deducted amounts under that Division for the plant if you had used it, or had it installed ready for use, for the purpose of producing assessable income before that day; and
(b) either:
(i) you hold the plant at 1 July 2001; or
(ii) subparagraph (i) does not apply and you were the owner or quasi-owner of the plant at the end of 30 June 2001.
40-10(2)
Division 40 of the Income Tax Assessment Act 1997 as amended by the New Business Tax System (Capital Allowances) Act 2001 and the New Business Tax System (Capital Allowances - Transitional and Consequential) Act 2001 (the new Act ) applies to the plant on this basis:
(a) the amount that was your undeducted cost at the end of 30 June 2001 becomes the plant's opening adjustable value; and
(b) you use the same cost, effective life and method that you were using under Division 42 of the former Act, or that you would have used if you had used the plant for the purpose of producing assessable income at the end of 30 June 2001; and
(c) if you excluded an amount from your assessable income under section 42-290 of the former Act for a balancing adjustment event that occurred on or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999 - the cost of the plant, and its opening adjustable value, are reduced by that amount; and
(d) if subparagraph (1)(b)(ii) applies to you - you are treated as the holder of the plant while you are its holder or while the circumstances under which you would have been the owner or quasi-owner of the plant under the former Act continue.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
40-10(3)
If you were using a rate for the plant under subsection 42-160(1) or 42-165(1) of the former Act just before 1 July 2001, or would have been using such a rate if you had used it, or had it installed ready for use, for the purpose of producing assessable income before that day, Division 40 of the new Act applies to the plant on this basis:
(a) for the diminishing value method - replace the component in the formula in subsection 40-70(1) of the new Act that includes the plant's effective life with the rate you were using; and
(b) for the prime cost method:
(i) replace the component in the formula in subsection 40-75(1) of the new Act that includes the plant's effective life with the rate you were using; and
(ii) increase the plant's cost under Division 42 of the former Act by any amounts included in the second element of the plant's cost after 30 June 2001.
Note 1:
Recalculating effective life will have no practical effect for an entity to whom subsection (3) applies because the component in the relevant formula that relies on effective life has been replaced.
Note 2:
Small business entities can choose to work out the decline in value of their depreciating assets under Division 328.
SECTION 40-12 Plant acquired after 30 June 2001 40-12(1)
This section applies to you if:
(a) you entered into a contract to acquire an item of plant before 1 July 2001 and you acquired it after 30 June 2001; or
(b) you started to construct an item of plant before 1 July 2001 and you complete its construction after 30 June 2001.
40-12(2)
Division 40 of the new Act applies to the plant.
40-12(3)
If you entered into the contract, or started to construct the plant, at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999, you replace the component in the formula in subsection 40-70(1) or 40-75(1) of the new Act that includes the plant's effective life with the rate you would have been using if you had acquired it, or completed its construction, before 1 July 2001 and had used it, or had it installed ready for use, for the purpose of producing assessable income before that day.
SECTION 40-13 Accelerated depreciation for split or merged plant 40-13(1)
This section applies to a depreciating asset that is plant if:
(a) you entered into a contract to acquire the plant, you otherwise acquired it or you started to construct it before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; and
(b) you held it at the end of 30 June 2001; and
(c) on or after 1 July 2001:
(i) the plant is split into 2 or more depreciating assets; or
(ii) the plant is merged into another depreciating asset.
40-13(2)
For a case where the plant is split into 2 or more depreciating assets, the new Act applies as if it you had acquired the assets into which it is split before the time mentioned in paragraph (1)(a) while you continue to hold those assets.
40-13(3)
For a case where the plant is merged into another depreciating asset, section 40-125 of the new Act does not apply to the asset, or to your interest in the asset, into which it is merged while you continue to hold it.
You cannot recalculate the effective life of a depreciating asset for which:
(a) you were using, just before 1 July 2001, a rate under subsection 42-160(1) or 42-165(1) of the former Act; or
(b) you would have been using such a rate if you had used the asset, or had it installed ready for use, for the purpose of producing assessable income before that day.
This section applies to you if:
(a) you have deducted or can deduct an amount for an IRU under Division 44 of the former Act or you would have been able to deduct an amount for it under that Division if you had used it for the purpose of producing assessable income before 1 July 2001; and
(b) you hold the IRU at 1 July 2001.
40-20(2)
Division 40 of the new Act applies to the IRU on this basis:
(a) you use the cost, effective life and method you were using under Division 44 of the former Act or that you would have used if you had used the IRU for the purpose of producing assessable income before 1 July 2001; and
(b) the amount that was your undeducted cost of the IRU at the end of 30 June 2001 becomes the IRU's opening adjustable value.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
SECTION 40-25 Software 40-25(1)
Despite its repeal by this Act, Division 46 of the former Act continues to apply to expenditure on software that you incurred and that was in a software pool under that Division at the end of 30 June 2001.
40-25(2)
For a unit of software for which you were deducting amounts under Subdivision 46-B of the former Act or for which you could have deducted amounts under that Subdivision if you had used the software for the purpose of producing assessable income before 1 July 2001, Division 40 of the new Act applies to the unit on this basis:
(a) its cost is the amount of expenditure you incurred on the unit; and
(b) you must use the prime cost method; and
(c) its opening adjustable value at 1 July 2001 is its undeducted cost at the end of 30 June 2001; and
(d) you must use the same effective life you were using under Subdivision 46-B of the former Act or that you would have used if you had used the software for the purpose of producing assessable income before 1 July 2001.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
SECTION 40-30 Spectrum licences 40-30(1)
This section applies to you if you have deducted or can deduct an amount under Division 380 of the former Act for expenditure incurred in obtaining a spectrum licence on or before 30 June 2001 or you could have deducted an amount under that Division for that expenditure if you had used the licence for the purpose of producing assessable income on or before that day.
40-30(2)
Division 40 of the new Act applies to the spectrum licence on this basis:
(a) its cost is your expenditure incurred in obtaining the licence; and
(b) its opening adjustable value at 1 July 2001 is the amount of unrecouped expenditure for the licence at the end of 30 June 2001; and
(c) its effective life is the same as it had under the former Act; and
(d) you must use the prime cost method.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
SECTION 40-33 Datacasting transmitter licences 40-33(1)
This section applies to you if you hold a datacasting transmitter licence at 1 July 2001.
40-33(2)
Division 40 of the new Act applies to the licence on this basis:
(a) its cost is your expenditure incurred in obtaining the licence; and
(b) its opening adjustable value at 1 July 2001 is its cost; and
(c) its effective life is 15 years less any period that has elapsed from the day the licence was issued until 1 July 2001; and
(d) you must use the prime cost method.
SECTION 40-35 Mining unrecouped expenditure 40-35(1)
This section applies to you if you have an amount of unrecouped expenditure under Division 330 of the former Act at the end of 30 June 2001.
Note:
Subsection (6) also applies to a case where you did not have unrecouped expenditure at 30 June 2001: see subsection (8).
40-35(2)
Division 40 of the new Act applies to the expenditure as if it were a depreciating asset (the notional asset ) you hold on this basis:
(a) it has an opening adjustable value at 1 July 2001 equal to the amount of unrecouped expenditure reduced by any deductions allowable under section 330-80 of the former Act for your income year ending on 30 June 2001; and
(b) it has a cost equal to the total amount of allowable capital expenditure under the former Act; and
(c) in applying the formula in section 40-75 of the new Act for the income year in which 1 July 2001 occurs - you use the adjustments in subsection 40-75(3) of the new Act; and
(d) it is taken to have been used for a taxable purpose at the start of 1 July 2001; and
(e) it has a remaining effective life worked out under subsection (3); and
(f) you must use the prime cost method.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
40-35(3)
The remaining effective life of the notional asset at the start of an income year ( present income year ) for which you are working out its decline in value is:
(a) for an amount of unrecouped expenditure in respect of expenditure incurred in carrying on eligible mining operations other than in the course of petroleum mining is the lesser of these:
(i) the number equal to the difference between 10 and the number of income years (which may be zero) before the present income year for which an amount in respect of expenditure was deductible;
(ii) the number equal to the number of whole years in the estimated life of the mine, or proposed mine, on the mining property, or, if there is more than one such mine, of the mine that has the longest estimated life, as at the end of the present income year; or
(b) for an amount of unrecouped expenditure in respect of expenditure incurred in carrying on eligible mining operations in the course of petroleum mining is the lesser of these:
(i) the number equal to the difference between 10 and the number of income years (which may be zero) before the present income year for which an amount in respect of expenditure was deductible;
(ii) the number equal to the number of whole years in the estimated life of the petroleum field or proposed petroleum field as at the end of the present income year; or
(c) for an amount of unrecouped expenditure in respect of expenditure incurred in carrying on eligible quarrying operations the lesser of these:
(i) the number equal to the difference between 20 and the number of income years (which may be zero) before the present income year for which an amount in respect of expenditure was deductible; and
(ii) the number equal to the number of whole years in the estimated life of the quarry, or proposed quarry, on the quarrying property, or, if there is more than one such quarry, of the quarry that has the longest estimated life, as at the end of the present income year.
40-35(4)
Sections 40-95 and 40-110 of the new Act do not apply to the unrecouped expenditure.
40-35(5)
If either:
(a) both of these subparagraphs apply:
(i) any of the unrecouped expenditure referred to in subsection (1) relates to a depreciating asset (the real asset );
(ii) in an income year (the cessation year ) you stop holding the real asset, or stop using it for a taxable purpose; or
(b) both of these subparagraphs apply:
(i) any of the unrecouped expenditure referred to in subsection (1) relates to property that is not a depreciating asset (the other property );
(ii) in the cessation year, the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose;
there is an additional decline in value of the notional asset for the cessation year equal to so much of the notional asset's adjustable value as relates to the real asset or the other property and has not been taken into account in working out the amount of a balancing adjustment in relation to the real asset.
40-35(6)
If the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose, you must include in your assessable income:
(a) if the other property is sold for a price specific to that property - that price, less the expenses of the sale (to the extent the expenses are reasonably attributable to selling that particular property); or
(b) if the other property is sold with additional property without a specific price being allocated to it - the part of the total sale price, less the reasonably attributable expenses of the sale, that is reasonably attributable to selling the other property; or
(c) if the other property is lost or destroyed - the amount or value received or receivable under an insurance policy or otherwise for the loss or destruction; or
(d) if you own the other property and you stop using it for a taxable purpose - its market value at that time; or
(e) if you do not own the property and you stop using it for a taxable purpose - a reasonable amount.
However, the amount included is reduced to the extent (if any) that it is also included under subsection 40-830(6) of the new Act.
40-35(7)
If section 40-115 of the new Act applies, or section 40-125 of the new Act would, apart from this subsection, apply, to the real asset referred to in subsection (5) of this section, then:
(a) if the real asset is split into 2 or more depreciating assets and you stop holding, or stop using for a taxable purpose, one or more but not all of the assets into which it is split - subsection (5) does not apply to that asset or assets into which it is split that you continue to hold and continue to use for a taxable purpose; or
(b) if the real asset is merged into another depreciating asset - section 40-125 does not apply to the asset into which it is merged while you continue to hold it.
40-35(8)
Subsection (6) also applies to a case where:
(a) you did not have an amount of unrecouped expenditure under Division 330 of the former Act at the end of 30 June 2001, but you had an amount of unrecouped expenditure under that Division before 30 June 2001; and
(b) that expenditure relates to property that is not a depreciating asset (the other property ); and
(c) after that day, the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose.
SECTION 40-37 Post-30 June 2001 mining expenditure 40-37(1)
This section applies to you if:
(a) you incur expenditure after 30 June 2001 under a contract entered into before that day; and
(b) the expenditure would have been allowable capital expenditure, and you could have deducted an amount for it, under Division 330 of the former Act if you had incurred it before 1 July 2001; and
(c) the expenditure does not relate to a depreciating asset.
40-37(2)
Division 40 of the new Act applies to the expenditure as if it were a depreciating asset (the notional asset ) you hold on this basis:
(a) it has a cost at the time you incur the expenditure equal to the amount of the expenditure; and
(b) in applying the formula in section 40-75 of the new Act for the income year in which you incur the expenditure - you use the adjustments in subsection 40-75(3) of the new Act; and
(c) it is taken to be used for a taxable purpose when you incur the expenditure; and
(d) it has an effective life worked out under subsection (3); and
(e) you must use the prime cost method.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
40-37(3)
The effective life of the notional asset at the start of an income year ( present income year ) for which you are working out its decline in value is:
(a) for an amount of expenditure incurred in carrying on eligible mining operations other than in the course of petroleum mining - the lesser of 10 and the number equal to the number of whole years in the estimated life of the mine, or proposed mine, on the mining property, or, if there is more than one such mine, of the mine that has the longest estimated life, as at the end of the present income year; or
(b) for an amount of expenditure incurred in carrying on eligible mining operations in the course of petroleum mining - the lesser of 10 and the number equal to the number of whole years in the estimated life of the petroleum field or proposed petroleum field as at the end of the present income year; or
(c) for an amount of expenditure incurred in carrying on eligible quarrying operations - the lesser of 20 and the number equal to the number of whole years in the estimated life of the quarry, or proposed quarry, on the quarrying property, or, if there is more than one such quarry, of the quarry that has the longest estimated life, as at the end of the present income year.
40-37(4)
Sections 40-95 and 40-110 of the new Act do not apply to the expenditure.
40-37(5)
If both of these paragraphs apply:
(a) any of the expenditure referred to in subsection (1) relates to property that is not a depreciating asset (the other property );
(b) in an income year (the cessation year ), the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose;
there is an additional decline in value of the notional asset for the cessation year equal to so much of the notional asset's adjustable value as relates to the other property.
40-37(6)
If the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose, you must include in your assessable income:
(a) if the other property is sold for a price specific to that property - that price, less the expenses of the sale (to the extent the expenses are reasonably attributable to selling that particular property); or
(b) if the other property is sold with additional property without a specific price being allocated to it - the part of the total sale price, less the reasonably attributable expenses of the sale, that is reasonably attributable to selling the other property; or
(c) if the other property is lost or destroyed - the amount or value received or receivable under an insurance policy or otherwise for the loss or destruction; or
(d) if you own the other property and you stop using it for a taxable purpose - its market value at that time; or
(e) if you do not own the property and you stop using it for a taxable purpose - a reasonable amount.
However, the amount included is reduced to the extent (if any) that it is also included under subsection 40-830(6) of the new Act.
SECTION 40-38 Mining cash bidding payments 40-38(1)
This section applies to expenditure you incur, under a contract entered into before 30 June 2001, if:
(a) the expenditure would have been a mining cash bidding payment under Subdivision 330-D of the former Act; and
(b) either:
(i) you incurred the expenditure before that day but the grant of the mining authority concerned occurred on a day (the start day ) after 30 June 2001; or
(ii) the grant of the mining authority concerned occurred before 30 June 2001 but you incurred the expenditure on a day (also the start day ) after 30 June 2001.
40-38(2)
Division 40 of the new Act applies to the expenditure as if it were a depreciating asset (the notional asset ) you hold on this basis:
(a) it has a cost at the start day equal to the amount of the expenditure; and
(b) in applying the formula in section 40-75 of the new Act for the income year in which the start day occurs - you use the adjustments in subsection 40-75(3) of the new Act; and
(c) it is taken to be used for a taxable purpose on the start day; and
(d) it has an effective life worked out under subsection (3); and
(e) you must use the prime cost method.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
40-38(3)
The effective life of the notional asset at the start of an income year ( present income year ) for which you are working out its decline in value is:
(a) for an amount of expenditure incurred in carrying on eligible mining operations other than in the course of petroleum mining - the lesser of 10 and the number equal to the number of whole years in the estimated life of the mine, or proposed mine, on the mining property, or, if there is more than one such mine, of the mine that has the longest estimated life, as at the end of the present income year; or
(b) for an amount of expenditure incurred in carrying on eligible mining operations in the course of petroleum mining - the lesser of 10 and the number equal to the number of whole years in the estimated life of the petroleum field or proposed petroleum field as at the end of the present income year.
40-38(4)
Sections 40-95 and 40-110 of the new Act do not apply to the expenditure.
40-38(5)
If both of these paragraphs apply:
(a) any of the expenditure referred to in subsection (1) relates to a depreciating asset (the real asset );
(b) in an income year (the cessation year ) you stop holding the real asset, or stop using it for a taxable purpose;
there is an additional decline in value of the notional asset for the cessation year equal to so much of the notional asset's adjustable value as relates to the real asset and has not been taken into account in working out the amount of a balancing adjustment in relation to the real asset.
40-38(6)
If section 40-115 of the new Act applies, or section 40-125 of the new Act would, apart from this subsection, apply, to the real asset referred to in subsection (5) of this section, then:
(a) if the real asset is split into 2 or more depreciating assets and you stop holding, or stop using for a taxable purpose, one or more but not all of the assets into which it is split - subsection (5) does not apply to that asset or assets into which it is split that you continue to hold and continue to use for a taxable purpose; or
(b) if the real asset is merged into another depreciating asset - section 40-125 does not apply to the asset into which it is merged while you continue to hold it.
SECTION 40-40 Transport expenditure 40-40(1)
This section applies to you if you have deducted or can deduct an amount for transport capital expenditure in respect of a transport facility under Subdivision 330-H of the former Act, or you could have deducted an amount for the expenditure under that Subdivision if you had started to use the facility for a qualifying purpose before 1 July 2001.
40-40(2)
Division 40 of the new Act applies to the expenditure as if it were a depreciating asset (the notional asset ) you hold on this basis:
(a) it has an opening adjustable value at 1 July 2001 equal to the total amount of transport capital expenditure under the former Act less the amounts you have deducted or can deduct for that expenditure under the former Act; and
(b) it has a cost equal to the total amount of transport capital expenditure under the former Act; and
(c) in applying the formula in section 40-75 of the new Act for your income year in which 1 July 2001 occurs - you use the adjustments in subsection 40-75(3) of the new Act; and
(ca) it is taken to have been used for a taxable purpose at the start of 1 July 2001; and
(d) it has an effective life at the start of 1 July 2001 equal to the years remaining for the expenditure under section 330-395 of the former Act; and
(e) you must use the prime cost method.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
40-40(3)
Sections 40-95 and 40-110 of the new Act do not apply to the expenditure.
40-40(4)
If either:
(a) both of these subparagraphs apply:
(i) any of the transport capital expenditure referred to in subsection (1) relates to a depreciating asset (the real asset );
(ii) in an income year (the cessation year ) you stop holding the real asset, or stop using it for a taxable purpose; or
(b) both of these subparagraphs apply:
(i) any of the transport capital expenditure referred to in subsection (1) relates to property that is not a depreciating asset (the other property );
(ii) in the cessation year, the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose;
there is an additional decline in value of the notional asset for the cessation year equal to so much of the notional asset's adjustable value as relates to the real asset or the other property and has not been taken into account in working out the amount of a balancing adjustment in relation to the real asset.
40-40(5)
If the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose, you must include in your assessable income:
(a) if the other property is sold for a price specific to that property - that price, less the expenses of the sale (to the extent the expenses are reasonably attributable to selling that particular property); or
(b) if the other property is sold with additional property without a specific price being allocated to it - the part of the total sale price, less the reasonably attributable expenses of the sale, that is reasonably attributable to selling the other property; or
(c) if the other property is lost or destroyed - the amount or value received or receivable under an insurance policy or otherwise for the loss or destruction; or
(d) if you own the other property and you stop using it for a taxable purpose - its market value at that time; or
(e) if you do not own the property and you stop using it for a taxable purpose - a reasonable amount.
However, the amount included is reduced to the extent (if any) that it is also included under subsection 40-830(6) of the new Act.
40-40(6)
If section 40-115 of the new Act applies, or section 40-125 of the new Act would, apart from this subsection, apply, to the real asset referred to in subsection (4) of this section, then:
(a) if the real asset is split into 2 or more depreciating assets and you stop holding, or stop using for a taxable purpose, one or more but not all of the assets into which it is split - subsection (4) does not apply to that asset or assets into which it is split that you continue to hold and continue to use for a taxable purpose; or
(b) if the real asset is merged into another depreciating asset - section 40-125 does not apply to the asset into which it is merged while you continue to hold it.
SECTION 40-43 Post-30 June 2001 transport expenditure 40-43(1)
This section applies to you if:
(a) you incur expenditure after 30 June 2001 under a contract entered into before that day; and
(b) the expenditure would have been transport capital expenditure in respect of a transport facility, and you could have deducted an amount for it, under Subdivision 330-H of the former Act if you had incurred it before 1 July 2001 and you had started to use the facility for a qualifying purpose before 1 July 2001; and
(c) the expenditure does not relate to a depreciating asset.
40-43(2)
Division 40 of the new Act applies to the expenditure as if it were a depreciating asset (the notional asset ) you hold on this basis:
(a) it has a cost at the time you incur the expenditure equal to the amount of the expenditure; and
(b) in applying the formula in section 40-75 of the new Act for your income year in which you incur the expenditure - you use the adjustments in subsection 40-75(3) of the new Act; and
(c) it is taken to have been used for a taxable purpose when you incur the expenditure; and
(d) it has an effective life when you incur the expenditure equal to the years remaining for the expenditure under section 330-395 of the former Act; and
(e) you must use the prime cost method.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
40-43(3)
Sections 40-95 and 40-110 of the new Act do not apply to the expenditure.
40-43(4)
If both of these paragraphs apply:
(a) any of the expenditure referred to in subsection (1) relates to property that is not a depreciating asset (the other property );
(b) in an income year (the cessation year ), the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose;
there is an additional decline in value of the notional asset for the cessation year equal to so much of the notional asset's adjustable value as relates to the other property.
40-43(5)
If the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose, you must include in your assessable income:
(a) if the other property is sold for a price specific to that property - that price, less the expenses of the sale (to the extent the expenses are reasonably attributable to selling that particular property); or
(b) if the other property is sold with additional property without a specific price being allocated to it - the part of the total sale price, less the reasonably attributable expenses of the sale, that is reasonably attributable to selling the other property; or
(c) if the other property is lost or destroyed - theamount or value received or receivable under an insurance policy or otherwise for the loss or destruction; or
(d) if you own the other property and you stop using it for a taxable purpose - its market value at that time; or
(e) if you do not own the property and you stop using it for a taxable purpose - a reasonable amount.
However, the amount included is reduced to the extent (if any) that it is also included under subsection 40-830(6) of the new Act.
SECTION 40-44 No additional decline in certain cases 40-44(1)
Despite subsections 40-35(5), 40-38(5) and 40-40(4), there is no additional decline in the value of the notional asset referred to in those subsections if:
(a) apart from this section, subsection 40-35(5), 40-38(5) or 40-40(4) would apply because the real asset referred to in that subsection is disposed of; and
(b) roll-over relief is chosen under subsection 40-340(3) of the Income Tax Assessment Act 1997 for the disposal.
40-44(2)
Instead, the cost to the transferee of that real asset is the sum of:
(a) the adjustable value of that real asset; and
(b) the adjustable value of the notional asset referred to in subsection 40-35(5), 40-38(5) or 40-40(4);
just before the disposal.
SECTION 40-45 Intellectual property 40-45(1)
This section applies to you if:
(a) at the end of 30 June 2001, you hold an item of intellectual property referred to in the table in section 373-35 of the former Act; and
(b) you have deducted or can deduct an amount for expenditure on the asset under Division 373 of the former Act or you could have deducted an amount under that Division for that expenditure if you had used the asset for the purpose of producing assessable income on or before that day.
40-45(2)
Division 40 of the new Act applies to the item on this basis:
(a) it has an opening adjustable value at 1 July 2001 equal to its unrecouped expenditure under the former Act at the end of 30 June 2001; and
(b) its cost is its original unrecouped expenditure under the former Act; and
(c) its effective life is the same as it had under the former Act; and
(d) you must use the prime cost method.
Note:
There are special rules for entities that have substituted accounting periods: see s 40-65.
SECTION 40-47 IRUs 40-47(1)
Division 40 of the new Act does not apply to an IRU to the extent to which expenditure on the IRU was incurred at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999 (the IRU time ).
40-47(2)
Division 40 of the new Act does not apply to an IRU over an international telecommunications submarine cable system if the system had been used for telecommunications purposes at or before the IRU time.
SECTION 40-50 Forestry roads and timber mill buildings 40-50(1)
This section applies to you if:
(a) you have deducted or can deduct an amount under Subdivision 387-G of the former Act for an amount (the qualifying amount ) of expenditure on a forestry road or timber mill building or could have deducted an amount under that Subdivision if you had used the road or building for the purpose of producing assessable income; and
(b) you hold the road or building at the end of 30 June 2001.
40-50(2)
Division 40 of the new Act applies to the asset on this basis:
(a) it has an opening adjustable value at 1 July 2001 equal to the qualifying amount less any amounts you have deducted or can deduct for it under the former Act; and
(b) in applying the formula in section 40-75 of the new Act for your income year in which 1 July 2001 occurs - you use the adjustments in subsection 40-75(3) of the new Act; and
(c) its cost is the qualifying amount; and
(d) it has an effective life equal to the remaining life you last estimated for it under the former Act; and
(e) you can recalculate its effective life if you conclude that your estimate is no longer accurate (except that the effective life cannot exceed 25 years); and
(f) you must use the prime cost method.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
SECTION 40-55 Environmental impact assessment 40-55(1)
This section applies to you if you have deducted or can deduct an amount under Subdivision 400-A of the former Act for an amount (the qualifying amount ) of expenditure on or before 30 June 2001 on evaluating the impact on the environment of a project under Subdivision 400-A of the former Act.
40-55(2)
Division 40 of the new Act applies to the qualifying amount as if it were a depreciating asset on this basis:
(a) it has an opening adjustable value at 1 July 2001 equal to the qualifying amount less any amounts you have deducted or can deduct for it under the former Act or the Income Tax Assessment Act 1936; and
(b) it has a cost equal to the qualifying amount; and
(c) it has an effective life equal to the number of years for which you could deduct for the qualifying amount worked out under subsection 400-15(3) of the former Act; and
(d) you must use the prime cost method.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
SECTION 40-60 Pooling under Subdivision 42-L of the former Act 40-60(1)
Units of plant that you had allocated to a pool under Subdivision 42-L of the former Act and that were allocated to the pool by 30 June 2001 are treated as a single depreciating asset for the purposes of Division 40 of the new Act.
40-60(2)
Division 40 of the new Act applies to the single depreciating asset on this basis:
(a) its cost and opening adjustable value at 1 July 2001 is the closing balance of the pool for your income year in which 30 June 2001 occurred; and
(b) you must use the diminishing value method; and
(c) in applying the formula in section 40-70 of the new Act for your income year in which 1 July 2001 occurs - it has a base value equal to that opening adjustable value; and
(d) you replace the component in the formula in subsection 40-70(1) of the new Act that includes an asset's effective life with the pool percentage you were using for the pool; and
(e) if an item of plant is removed from the pool because a balancing adjustment event occurs for the item or because of subsection (3) of this section, section 40-115 of the new Act applies so that you are treated as having split the single depreciating asset into the removed asset and the remaining assets in the pool; and
(f) if an amount is included in the second element of the cost of a depreciating asset in the pool, Division 40 of the new Act applies as if that amount had been included in the second element of the cost of the single asset.
Note:
There are special rules for entities that have substituted accounting periods: see section 40-65.
40-60(3)
An item of plant in the pool is automatically removed from the pool if you stop using it wholly for taxable purposes (except because a balancing adjustment event occurs for the item).
Note 1:
You work out the decline in value of an item removed under this subsection under Subdivision 40-B of the new Act, using the cost for it worked out under section 40-205 of the new Act.
Note 2:
There are special rules for entities that have substituted accounting periods: see section 40-65.
SECTION 40-65 Substituted accounting periods 40-65(1)
This section sets out special rules for the application of Division 40 of the new Act to an entity that:
(a) has a substituted accounting period; and
(b) because of a provision of this Subdivision, uses Division 40 of the new Act to work out the decline in value of an asset, or of something that is treated as an asset.
40-65(2)
The entity works out its deductions for its income year that includes 1 July 2001 (the calculation year ) in this way:
(a) the entity works out its deductions for that asset under the former Act as from the start of its calculation year up to the end of 30 June 2001 as if that period were an income year; and
(b) the entity works out the decline in value of the asset under Division 40 of the new Act from 1 July 2001 until the end of its calculation year as if that period were an income year in accordance with the following provisions of this section.
40-65(3)
The asset's opening adjustable value for the purposes of Division 40 of the new Act is:
(a) for a unit of plant (including IRUs and expenditure on software that is not pooled) - its undeducted cost at the end of 30 June 2001; or
(b) for expenditure on eligible mining or quarrying operations, an item of intellectual property or a spectrum licence - the amount of unrecouped expenditure for the expenditure, item or licence under the former Act at the end of 30 June 2001 reduced, in the case of eligible mining or quarrying operations, by an amount you have deducted or can deduct for the calculation year under the former Act and not yet taken into account in calculating unrecouped expenditure; or
(c) for transport capital expenditure - the entity's amount of transport capital expenditure under the former Act at the end of 30 June 2001 less any amounts the entity has deducted or can deduct for it under the former Act up to that time; or
(d) for expenditure on a forestry road, a timber mill building, a horticultural plant or a grapevine - the amount of that expenditure less any amounts the entity has deducted or can deduct for it under the former Act up to 30 June 2001; or
(e) for expenditure on evaluating the impact on the environment of a project - the amount of that expenditure less any amounts the entity has deducted or can deduct for it under the former Act up to 30 June 2001; or
(f) for assets that were pooled under Subdivision 42-M or 42-L of the former Act - the closing balance of the pool at the end of 30 June 2001.
40-65(4)
The asset's base value for applying the formula in section 40-70 of the new Act for the diminishing value method is that opening adjustable value.
40-65(5)
The decline in value for the assets referred to in this subsection is worked out using the prime cost method without the adjustments in subsection 40-75(3) of the new Act, and the opening adjustable value specified in subsection (3) of this section, in this way:
(a) for an item of plant for which you were using the prime cost method - using the rules in section 40-10 of this Act; and
(b) for an IRU for which you were using the prime cost method - using the rules in section 40-20 of this Act; and
(c) for a unit of software for which the entity was deducting amounts under Subdivision 46-B of the former Act - using the rules in subsection 40-25(2) of this Act; and
(d) for a spectrum licence - using the rules in section 40-30 of this Act; and
(e) for an item of intellectual property - using the rules in section 40-45 of this Act; and
(f) for an amount of expenditure on evaluating the impact on the environment of a project - using the rules in section 40-55 of this Act.
40-65(6)
The decline in value for the assets referred to in this subsection is worked out using the prime cost method using the adjustments in subsection 40-75(3) of the new Act, and the opening adjustable value specified in subsection (3) of this section, in this way:
(a) for an amount of unrecouped expenditure under Division 330 of the former Act - using the rules in section 40-35 of this Act; and
(b) for an amount of transport capital expenditure under Division 330 of the former Act - using the rules in section 40-40 of this Act; and
(c) for a forestry road or timber mill building - using the rules in section 40-50 of this Act.
40-65(7)
The entity must work out the decline in value of each of the assets for later income years under Division 40 of the new Act.
40-65(8)
The entity must, in working out its deductions under this section for the calculation year for:
(a) allowable capital expenditure for which the entity had deducted or can deduct an amount under Subdivision 330-C of the former Act; or
(b) transport capital expenditure for which the entity had deducted or can deduct an amount under Subdivision 330-H of the former Act; or
(c) a water facility for which the entity had deducted or can deduct an amount under Subdivision 387-B of the former Act; or
(d) expenditure on connecting power to land or upgrading the connection for which the entity had deducted or can deduct an amount under Subdivision 387-E of the former Act; or
(e) expenditure on a telephone line on or extending to land for which the entity had deducted or can deduct an amount under Subdivision 387-E of the former Act;
reduce its deductions for each of the periods referred to in paragraphs (2)(a) and (b) by multiplying the deduction for that period by the number of days in that period and dividing the result by 365.
40-65(9)
The entity cannot deduct anything for an asset referred to in this section under the former Act for any part of its calculation year after 30 June 2001.
40-65(10)
You are entitled to a further deduction for a depreciating asset for which you are using the diminishing value method if the sum of the deductions worked out under paragraphs (2)(a) and (b) (the sum amount ) is less than the deduction to which you would have been entitled for the asset if the former Act had continued to apply to the whole of the calculation year (the former Act amount ).
40-65(11)
You increase the amount worked out under paragraph (2)(b) by the difference between the former Act amount and the sum amount.
SECTION 40-67 Methods for working out decline in value 40-67(1)
Subsections 40-65(6) and (7) of the Income Tax Assessment Act 1997 apply with the changes set out in this section if either or both of the following events have happened:
(a) you have deducted one or more amounts under former section 73BA of the Income Tax Assessment Act 1936 for an asset;
(b) you could have deducted one or more amounts under that former section for the asset if you had not chosen tax offsets under former section 73I of that Act.
40-67(2)
Assume:
(a) paragraph 40-65(6)(a) of the Income Tax Assessment Act 1997 included both events set out in subsection (1) of this section; and
(b) subsections 40-65(6) and (7) of that Act deal with all 4 kinds of events in a corresponding way to the way that they deal with 2 kinds of events.
A reference in the new Act to an amount that you have deducted or can deduct for a depreciating asset under Division 40 of the new Act includes a reference to an amount that you have deducted or can deduct for a capital allowance relating to the asset under the former Act or the Income Tax Assessment Act 1936.
40-70(2)
An amount you have deducted or can deduct for a water facility under Subdivision 387-B of the former Act or former section 75B of the Income Tax Assessment Act 1936 is taken to have been deducted under Subdivision 40-F of the new Act.
40-70(3)
A reference in the new Act to a reduction in your deduction for a depreciating asset includes a reference to amounts by which your deductions for the asset were reduced under the former Act or the Income Tax Assessment Act 1936.
SECTION 40-72 New diminishing value method not to apply in some cases 40-72(1)
If:
(a) you are taken to start holding a depreciating asset on or after 10 May 2006 because of section 40-115 (about splitting a depreciating asset) or 40-125 (about merging depreciating assets) of the Income Tax Assessment Act 1997; and
(b) it is reasonable to conclude that you split the asset or merged the assets for the main purpose of ensuring that the decline in value of the asset or assets (after the splitting or merging) would be worked out under section 40-72 of that Act;
that Act applies to you as if you had started to hold the split or merged asset or assets before 10 May 2006.
40-72(2)
The Income Tax Assessment Act 1997 applies to you as if you had started to hold a depreciating asset before 10 May 2006 if:
(a) you had actually started to hold it before that day; and
(b) on or after 10 May 2006, you stop holding the depreciating asset; and
(c) it is reasonable to conclude that you did this for the main purpose of ensuring that the decline in value of the asset would be worked out under section 40-72 of that Act.
40-72(3)
The Income Tax Assessment Act 1997 applies to you as if you had started to hold a depreciating asset (the substituted asset ) before 10 May 2006 if:
(a) you started to hold the substituted asset on or after that day under an arrangement; and
(b) the substituted asset is identical to or has a purpose similar to another depreciating asset that another entity acquired from you on or after that day under that arrangement; and
(c) you did not deal with the other entity at arm's length; and
(d) it is reasonable to conclude that you entered into the arrangement for the main purpose of ensuring that the decline in value of the substituted asset would be worked out under section 40-72 of that Act.
This section applies to you if:
(a) you hold a depreciating asset (except a mining, quarrying or prospecting right that you started to hold before 1 July 2001) that you:
(i) started to hold under a contract entered into before 1 July 2001; or
(ii) constructed where the construction started before that day; or
(iii) started to hold in some other way before that day; and
(b) your expenditure on the asset, whenever incurred, would have been allowable capital expenditure, transport capital expenditure or expenditure on exploration or prospecting within the meaning of Division 330 of the former Act if it had been incurred before 1 July 2001.
40-75(2)
If you incur expenditure on the asset after 30 June 2001 that forms part of the cost of the asset, you can deduct the expenditure for the income year in which you incur it if it would have been expenditure on exploration or prospecting within the meaning of Division 330 of the former Act.
40-75(3)
Otherwise, Subdivision 40-B of the new Act applies to the asset on the basis that it has a cost, and an adjustable value, of zero at the start of 1 July 2001, and an effective life on that day or at its start time, whichever is the later, worked out under subsection (4) of this section.
40-75(4)
The effective life of the depreciating asset is the shorter of its effective life worked out under Division 40 and:
(a) if the expenditure on the asset was incurred in relation to eligible mining operations other than in the course of petroleum mining - the shorter of:
(i) 10 years; and
(ii) the number of whole years in the estimated life of the mine or proposed mine to which the expenditure relates or, if there is more than one such mine, of the mine that has the longest estimated life; or
(b) if the expenditure on the asset was incurred in relation to eligible mining operations in the course of petroleum mining - the shorter of:
(i) 10 years; and
(ii) the number of whole years in the estimated life of the petroleum field or proposed petroleum field to which the expenditure relates; or
(c) if the expenditure on the asset was incurred in relation to eligible quarrying operations - the shorter of:
(i) 20 years; or
(ii) the number of whole years in the estimated life of the quarry or proposed quarry to which the expenditure relates or, if there is more than one such quarry, of the quarry that has the longest estimated life.
SECTION 40-77 Mining, quarrying or prospecting rights or information held before 1 July 2001 40-77(1)
Division 40 of the new Act does not apply to a mining, quarrying or prospecting right that you started to hold before 1 July 2001.
Note:
If you incur expenditure relating to assets of that kind, you cannot deduct it under Division 40. However, the expenditure may be taken into account in calculating a capital gain or capital loss under Part 3-1 or 3-3 of the Income Tax Assessment Act 1997.
40-77(1A)
Division 40 of the new Act does not apply to a renewal or extension of a mining, quarrying or prospecting right that you started to hold before 1 July 2001.
40-77(1B)
Subsection (1) applies to a mining, quarrying or prospecting right (the new right ) that you start to hold on or after 1 July 2001 as if you had started to hold the new right before that day if:
(a) you started to hold another mining, quarrying or prospecting right before that day; and
(b) the other right ends on or after that day; and
(c) the new right and the other right relate to the same area, or any difference in area is not significant.
40-77(1C)
Division 40 of the new Act does not apply to a mining, quarrying or prospecting right if:
(a) a company (the original holder ) started to hold the right before 1 July 2001; and
(b) the right is transferred after that day to another company where:
(i) the other company is a member of the same wholly-owned group as the original holder and was a member of that group just before that day; and
(ii) the right was held in the period between that day and the time of the transfer by a company or companies that were members of that group on that day and at the time of the transfer.
40-77(1D)
Division 40 of the new Act does not apply to an interest in a mining, quarrying or prospecting right that you started to hold on or after 1 July 2001 if:
(a) you acquired the interest under an interest realignment arrangement; and
(b) the interest was acquired in exchange for one or more other interests in other mining, quarrying or prospecting rights all of which you had started to hold before 1 July 2001.
40-77(1E)
If:
(a) you acquired, under an interest realignment arrangement, an interest (a new interest ) in a mining, quarrying or prospecting right; and
(b) the interest was acquired in exchange for one or more other interests ( old interests ) in other mining, quarrying or prospecting rights; and
(c) you started to hold some of the old interests before 1 July 2001;
Division 40 of the new Act applies to the new interest only to the extent that the new interest was acquired in exchange for the old interests that you started to hold on or after 1 July 2001.
40-77(2)
If, after 30 June 2001:
(a) you dispose of a mining, quarrying or prospecting right that you started to hold before 1 July 2001 to an associate of yours (except a company that is a member of the same wholly-owned group); or
(b) you enter into an arrangement in relation to such a right under which you maintain, in essence, the economic ownership of the right but not its legal ownership;
the cost of the right to the purchaser is limited, for the purposes of Division 40 of the new Act, to a maximum of the costs that would have been deductible for the right under Division 330 of the former Act.
40-77(3)
An amount that would be included in your assessable income under section 15-40 or subsection 40-285(1) of the new Act in respect of mining, quarrying or prospecting information you started to hold before 1 July 2001 is reduced (but not below zero) by so much of the capital cost of acquiring the information that you incurred before that day and that:
(a) you have not deducted and cannot deduct (either immediately or over time) under the former Act; and
(b) did not form part of allowable capital expenditure under the former Act; and
(c) did not entitle you to a deduction under section 330-235 of the former Act;
but only to the extent that you have not already applied the amount under this section.
40-77(4)
Your assessable income includes an amount if:
(a) after 1 July 2001, you stop holding a mining, quarrying or prospecting right that you started to hold before that day; and
(b) you have deducted or can deduct an amount for it under Subdivision 330-C in relation to Subdivision 330-D or 330-E of the former Act.
The amount included is the amount you have deducted or can deduct.
40-77(5)
Your assessable income also includes an amount if:
(a) after 1 July 2001, you stop holding a mining, quarrying or prospecting right that you started to hold before that day; and
(b) because of section 40-35 or 40-38 of this Act, you have deducted or can deduct an amount for a notional asset that relates to expenditure on the right under Division 40 of the new Act.
The amount included is the amount you have deducted or can deduct.
40-77(6)
Division 110 of the new Act applies as if an amount included in assessable income under subsection (4) or (5) of this section were the reversal of a deduction under a provision of the new Act outside Parts 3-1 and 3-3 and Division 243.
40-77(7)
An amount that would be included in your assessable income under subsection 40-285(1) of the new Act in respect of a mining, quarrying or prospecting right is reduced by an amount worked out under subsection (8) if:
(a) you acquired the right from an associate (except a company that is a member of the same wholly-owned group) on or after 1 July 2001; and
(b) the associate started to hold the right before that day.
40-77(8)
The amount is reduced (but not below zero) by the difference between the capital cost that you incurred after that day and the amount to which the cost of the right is limited under subsection (2) of this section.
This section applies to you if:
(a) you incur expenditure after 30 June 2001 that forms part of the cost of a depreciating asset; and
(b) the depreciating asset is one that you:
(i) started to hold under a contract entered into before 1 July 2001; or
(ii) constructed where the construction started before that day; or
(iii) started to hold in some other way before that day; and
(c) if you had incurred the expenditure before 1 July 2001, and had satisfied any relevant requirement for deductibility, you would have been able to deduct an amount for it under Division 44, 373 or 380, or Subdivision 46-B or 387-G, of the former Act.
40-80(2)
Subdivision 40-B of the new Act applies to the asset on the basis that it has a cost, and an adjustable value, of zero at the start of 1 July 2001.
(Repealed by No 58 of 2006)
SECTION 40-100 40-100 Commissioner's determination of effective life
A determination by the Commissioner of the effective life of an asset that was made under section 42-110 of the former Act and that was in force at the end of 30 June 2001 has effect as if it had been made under section 40-100 of the new Act.
This section applies to the following (the instrument ):
(a) a determination under section 40-100 of the Income Tax Assessment Act 1997 of the effective life of an asset;
(b) a calculation under section 40-105 of that Act of the effective life of an asset;
if the instrument was in force immediately before the commencement of Schedule 1 to the Tax Laws Amendment (Research and Development) Act 2011.
40-105(2)
The instrument has effect, after that commencement, as if it had been made under that section as amended by the Tax Laws Amendment (Research and Development) Act 2011.
For the purposes of Division 40 of the Income Tax Assessment Act 1997, the decline in value of a depreciating asset for an income year is the amount worked out under section 40-130 if: (a) the income year is the year in which you start to use the asset, or have it installed ready for use, for a taxable purpose; and (b) subsection (2) (about businesses with turnover less than $500 million) applies to you for the year and for the income year in which you started to hold the asset (if that was an earlier year); and (c) you are covered by section 40-125 for the asset; and (d) you have not made a choice under section 40-137 in relation to the income year.
Note 1:
An effect of paragraph (1)(a) is that this Subdivision only applies to one income year per asset. See also subsection 40-135(1).
Note 2:
This subsection does not apply if Subdivision 40-BB of this Act applies: see section 40-145 of this Act.
Businesses with turnover less than $500 million
40-120(2)
This subsection applies to you for an income year if you: (a) are a small business entity; or (b) would be a small business entity if:
(i) each reference in Subdivision 328-C of the Income Tax Assessment Act 1997 (about what is a small business entity) to $10 million were instead a reference to $500 million; and
(ii) the reference in paragraph 328-110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this subsection.
Exception - assets for which the decline in value is worked out under section 40-82 or Subdivision 40-E or 40-F of the Income Tax Assessment Act 1997
40-120(3)
However, this section does not apply to a depreciating asset for an income year if you work out the decline in value of the asset for the income year under any of the following: (a) section 40-82 of the Income Tax Assessment Act 1997; (b) Subdivision 40-E or 40-F of that Act.
For the purposes of paragraph 40-120(1)(c) and section 328-182, you are covered by this section for a depreciating asset if, in the period beginning on 12 March 2020 and ending on 30 June 2021, you: (a) start to hold the asset; and (b) start to use it, or have it installed ready for use, for a taxable purpose.
Note:
Section 328-182 provides similar accelerated depreciation for small business entities that choose to use Subdivision 328-D of the Income Tax Assessment Act 1997.
Exception - commitments already entered into
40-125(2)
Despite subsection (1), you are not covered by this section for the asset if, before 12 March 2020, you: (a) entered into a contract under which you would hold the asset; or (b) started to construct the asset; or (c) started to hold the asset in some other way.
40-125(3)
Despite subsection (1), you are not covered by this section for an asset (the post-12 March 2020 asset ) if: (a) on a day before 12 March 2020, you:
(i) enter into a contract under which you hold an asset on that day, or will hold the asset on a later day; or
(ii) start to construct an asset; or
(b) on a day on or after 12 March 2020 (the conduct day ), you engage in conduct that results in you:
(iii) start to hold an asset in some other way; and
(i) entering into a contract under which you hold the post-12 March 2020 asset on the conduct day, or will hold that asset on an even later day; or
(ii) starting to construct the post-12 March 2020 asset; or
(c) the post-12 March 2020 asset is the asset mentioned in paragraph (a), or an identical or substantially similar asset; and (d) you engage in that conduct for the purpose, or for purposes that include the purpose, of becoming covered by this section for the post-12 March 2020 asset.
(iii) starting to hold the post-12 March 2020 asset in some other way; and
40-125(4)
For the purposes of subsections (2) and (3), 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.
40-125(5)
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.
40-125(6)
For the purposes of subsections (2), (3), (4) and (5), if a partner in a partnership does any of the following things, treat the partnership (instead of the partner) as having done the thing: (a) entering into a contract under which the partnership would hold the asset; (b) starting to construct the asset; (c) acquiring an option to enter into such a contract.
Exception - second hand assets
40-125(7)
Despite subsection (1), you are not covered by this section for the asset if: (a) another entity held the asset when it was first used, or first installed ready for use, other than:
(i) as trading stock; or
(b) you started holding the asset under section 40-115 of the Income Tax Assessment Act 1997 (about splitting a depreciating asset) or section 40-125 of that Act (about merging depreciating assets); or (c) you were already covered by this section for the asset as a member of a consolidated group or a MEC group of which you are no longer a member.
(ii) merely for the purposes of reasonable testing or trialling; or
40-125(7A)
The exception in subsection (7) also applies in relation to an asset if: (a) the asset is a licence (including a sub-licence) relating to an intangible asset; and (b) the exception in that subsection applies in relation to the intangible asset.
40-125(8)
However, paragraph (7)(a) does not apply in relation to an intangible asset unless the asset was used for the purpose of producing ordinary income before you first used it, or had it installed ready for use, for any purpose. In applying this subsection, disregard ordinary income that arises as a result of the disposal of the asset to you.
Exception - assets to which Division 40 does not apply
40-125(9)
Despite subsection (1), you are not covered by this section for the asset if Division 40 of the Income Tax Assessment Act 1997 does not apply to the asset because of section 40-45 of that Act.
Exception - assets not located in Australia
40-125(10)
Despite subsection (1), you are not covered by this section for the asset if, at the time you first use the asset, or have it installed ready for use, for a taxable purpose: (a) it is not reasonable to conclude that you will use the asset principally in Australia for the principal purpose of carrying on a business; or (b) it is reasonable to conclude that the asset will never be located in Australia.
For the purposes of section 40-120, the decline in value for the income year in which paragraph 40-120(1)(a) is satisfied (the current year ) is:
(a) if the asset's start time occurs in the current year - the amount worked out under subsection (2); or
(b) if the asset's start time occurred in an earlier year - the amount worked out under subsection (4).
Note 1:
The asset's start time is when you first use it, or have it installed ready for use, for any purpose (including a non-taxable purpose): see subsection 40-60(2) of the Income Tax Assessment Act 1997.
Note 2:
A case covered by paragraph (b) is where you start to hold the asset in the period 12 March 2020 to 30 June 2020 and use it for only non-taxable purposes in that period, then first use it for a taxable purpose in the period 1 July 2020 to 30 June 2021.
Current year is the year the asset starts to decline in value
40-130(2)
If this subsection applies, the amount for the current year is the sum of the following amounts:
(a) 50% of the asset's cost as at the end of the current year, disregarding any amount included in the second element of the asset's cost after 30 June 2021;
(b) the amount that would be the asset's decline in value for the current year under Division 40 of the Income Tax Assessment Act 1997, assuming its cost were reduced by the amount worked out under paragraph (a).
Note:
Paragraph (a) effectively only requires you to disregard an amount included in the second element of cost if you have a substituted accounting period that ends after 30 June 2021.
40-130(3)
However, the amount worked out under subsection (2) for an income year cannot be more than the amount that is the asset's cost for the year.
Asset had declined in value before the start of the current year
40-130(4)
If this subsection applies, the amount for the current year is the sum of the following amounts:
(a) 50% of the sum of the asset's opening adjustable value for the current year and any amount included in the second element of its cost for that year, disregarding any amount included in that second element after 30 June 2021;
(b) the amount that would be the asset's decline in value for the current year under Division 40 of the Income Tax Assessment Act 1997 assuming:
(i) for the diminishing value method - its base value were reduced by the amount worked out under paragraph (a); or
(ii) for the prime cost method - the component "Asset's *cost" in the formula in subsection 40-75(1) of that Act (as adjusted under that section) were reduced by the amount worked out under paragraph (a).
Note:
Paragraph (a) effectively only requires you to disregard an amount included in the second element of cost if you have a substituted accounting period that ends after 30 June 2021.
40-130(5)
However, the amount worked out under subsection (4) for an income year cannot be more than:
(a) for the diminishing value method - the asset's base value for the year; or
(b) for the prime cost method - the sum of its opening adjustable value for the income year and any amount included in the second element of its cost for that year.
The decline in value of a depreciating asset is not worked out under this Subdivision for an income year if this Subdivision already applied in working out the decline in value of the asset for an income year.
40-135(2)
For an income year later than the year in which the decline in value is worked out under this Subdivision, the decline in value is worked out under the other provisions of Division 40 of the Income Tax Assessment Act 1997.
Adjustment required for prime cost method
40-135(3)
If you use the prime cost method for the asset, you must adjust the formula in subsection 40-75(1) of the Income Tax Assessment Act 1997 for the later year in the manner set out in subsection 40-75(3) of that Act. The later year is the change year referred to in that subsection.
Balancing adjustment provisions
40-135(4)
Subdivision 40-D of the Income Tax Assessment Act 1997 has effect as if the decline in value worked out under this Subdivision had been worked out under Subdivision 40-B of that Act.
You may choose that the decline in value of a particular depreciating asset for an income year, and subsequent income years, is not to be worked out under this Subdivision.
40-137(2)
The choice must be in the approved form.
40-137(3)
The choice cannot be revoked.
40-137(4)
You must give the choice to the Commissioner by the day you lodge your income tax return for the first income year to which the choice relates.
Note:
The Commissioner may defer the time for giving the choice: see section 388-55 in Schedule 1 to the Taxation Administration Act 1953.
In this Subdivision:
2020 budget time
means 7.30 pm, by legal time in the Australian Capital Territory, on 6 October 2020.
If this Subdivision applies to work out the decline in value of a depreciating asset you hold for an income year, no other provision of this Act or the Income Tax Assessment Act 1997 applies to work out that decline in value.
For the purposes of this Subdivision, you are covered by this section for a depreciating asset if, on or before 30 June 2023: (a) you start to hold the asset; and (b) you start to use the asset, or have it installed ready for use, for a taxable purpose.
Exception - assets to which Division 40 does not apply
40-150(2)
Despite subsection (1), you are not covered by this section for the asset if Division 40 of the Income Tax Assessment Act 1997 does not apply to the asset because of section 40-45 of that Act.
Exception - assets not used or located in Australia
40-150(3)
Despite subsection (1), you are not covered by this section for the asset if, at the time you first use the asset, or have it installed ready for use, for a taxable purpose: (a) it is not reasonable to conclude that you will use the asset principally in Australia for the principal purpose of carrying on a business; or (b) it is reasonable to conclude that the asset will never be located in Australia.
Exception - assets for which the decline in value is worked out under Subdivision 40-E or 40-F of the Income Tax Assessment Act 1997
40-150(4)
Despite subsection (1), you are not covered by this section for the asset if: (a) the asset is allocated to a low-value pool, or expenditure on the asset is allocated to a software development pool (see Subdivision 40-E of the Income Tax Assessment Act 1997); or (b) you or another taxpayer has deducted or can deduct amounts for the asset under Subdivision 40-F of the Income Tax Assessment Act 1997 (about primary production depreciating assets).
This section covers you for an income year if: (a) you are a small business entity for the income year; or (b) you would be a small business entity for the income year if:
(i) each reference in Subdivision 328-C of the Income Tax Assessment Act 1997 (about what is a small business entity) to $10 million were instead a reference to $5 billion; and
(ii) the reference in paragraph 328-110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this section.
This section covers you for an income year if: (a) you are a corporate tax entity at any time in the income year; and (b) any of the following amounts is less than $5 billion:
(i) the sum of your ordinary income (if any) and statutory income (if any) for the 2018-19 income year;
(c) the sum of the amounts worked out under subsection (3) for the 2016-17, 2017-18 and 2018-19 income years exceeds $100 million.
(ii) if the 2019-20 income year ends on or before 6 October 2020 - the sum of your ordinary income (if any) and statutory income (if any) for the 2019-20 income year; and
40-157(2)
For the purposes of paragraph (1)(b), disregard non-assessable non-exempt income.
40-157(3)
The amount under this subsection for an income year is worked out as follows: (a) firstly, identify each depreciating asset (other than an intangible asset) that:
(i) you hold at any time in the income year; and
(b) next, work out the cost of each of those assets (including any amounts included in the second element of the asset's cost at a time that is in the income year); (c) finally, work out the total of those costs.
(ii) you started to use, or have installed ready for use, for a taxable purpose in the income year;
40-157(4)
For the purposes of subsection (3), disregard an asset if, at the time you first used the asset, or had it installed ready for use, for a taxable purpose: (a) it was not reasonable to conclude that you would use the asset principally in Australia for the principal purpose of carrying on a business; or (b) it was reasonable to conclude that the asset would never be located in Australia.
40-157(5)
For the purposes of paragraph (3)(b), to work out the cost of a depreciating asset that is capital works (see section 43-20 of the Income Tax Assessment Act 1997): (a) disregard section 40-45 of that Act and work out the cost of the capital works using Subdivision 40-C of that Act; and (b) disregard section 40-215 of that Act.
For the purposes of Division 40 of the Income Tax Assessment Act 1997, the decline in value of a depreciating asset you hold for an income year (the current year ) is the amount worked out under subsection (3) if: (a) you start to hold the asset at or after the 2020 budget time; and (b) you start to use the asset, or have it installed ready for use, for a taxable purpose in the current year; and (c) you are covered by section 40-150 for the asset; and (d) you are covered for the current year by any of the following:
(i) section 40-155 (about businesses with turnover under $5 billion);
(e) no balancing adjustment event happens to the asset in the current year; and (f) you have not made a choice under section 40-190 in relation to the current year.
(ii) section 40-157 (about corporate tax entities with income under $5 billion); and
Exclusions
40-160(2)
However, this section does not apply if: (a) where section 40-155 covers you for the current year (regardless whether section 40-157 also covers you for the current year) - an exclusion applies to you and the asset for the current year under section 40-165 (about exclusions for businesses with turnover of $50 million or more); or (b) where section 40-157 covers you for the current year (but section 40-155 does not):
(i) an exclusion applies to you and the asset for the current year under section 40-165; or
(ii) an exclusion applies to you and the asset for the current year under section 40-167 (about exclusions for corporate tax entities with income under $5 billion).
Amount of the decline in value
40-160(3)
The decline in value for the current year is: (a) if the asset's start time occurs in the current year - the asset's cost as at the end of the current year, disregarding any amount included in the asset's cost after 30 June 2023; or (b) if the asset's start time occurred in an earlier year - the sum of its opening adjustable value for the current year and any amount included in the second element of its cost for the current year, disregarding any amount included in the asset's cost after 30 June 2023.
Note 1:
The asset's start time is when you first use it, or have it installed ready for use, for any purpose (including a non-taxable purpose): see subsection 40-60(2) of the Income Tax Assessment Act 1997.
Note 2:
A case covered by paragraph (b) is where you start to hold the asset in the period 6 October 2020 to 30 June 2021 and use it for only non-taxable purposes in that period, then first use it for a taxable purpose in the period 1 July 2021 to 30 June 2022.
For the purposes of subsection 40-160(2), an exclusion applies to you and an asset for an income year if: (a) where paragraph 40-160(2)(a) applies - section 40-155 would not cover you for the income year if the reference in that section to $5 billion were instead a reference to $50 million; and (b) any of the exclusions in this section applies in relation to the asset.
Exclusion - commitments already entered into
40-165(2)
This exclusion applies in relation to the asset if, before the 2020 budget time, you: (a) entered into a contract under which you would hold the asset; or (b) started to construct the asset; or (c) started to hold the asset in some other way.
40-165(3)
This exclusion applies in relation to the asset (the post-6 October 2020 asset ) if: (a) on a day before 6 October 2020, you:
(i) enter into a contract under which you hold an asset on that day, or will hold the asset on a later day; or
(ii) start to construct an asset; or
(b) on a day on or after 6 October 2020 (the conduct day ), you engage in conduct that results in you:
(iii) start to hold an asset in some other way; and
(i) entering into a contract under which you hold the post-6 October 2020 asset on the conduct day, or will hold that asset on an even later day; or
(ii) starting to construct the post-6 October 2020 asset; or
(c) the post-6 October 2020 asset is the asset mentioned in paragraph (a), or an identical or substantially similar asset; and (d) you engage in that conduct for the purpose, or for purposes that include the purpose, of satisfying paragraph 40-160(1)(a) for the post-6 October 2020 asset.
(iii) starting to hold the post-6 October 2020 asset in some other way; and
40-165(4)
For the purposes of subsections (2) and (3), 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.
40-165(5)
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.
40-165(6)
For the purposes of subsections (2), (3), (4) and (5), if a partner in a partnership does any of the following things, treat the partnership (instead of the partner) as having done the thing: (a) entering into a contract under which the partnership would hold an asset; (b) starting to construct an asset; (c) acquiring an option to enter into such a contract.
Exclusion - second hand assets
40-165(7)
This exclusion applies in relation to the asset if: (a) another entity held the asset when it was first used, or first installed ready for use, other than:
(i) as trading stock; or
(b) you started holding the asset under section 40-115 of the Income Tax Assessment Act 1997 (about splitting a depreciating asset) or section 40-125 of that Act (about merging depreciating assets); or (c) you already satisfied paragraph 40-160(1)(a) of this Act for the asset as a member of a consolidated group or a MEC group of which you are no longer a member.
(ii) merely for the purposes of reasonable testing or trialling; or
40-165(8)
The exclusion in subsection (7) also applies in relation to an asset if: (a) the asset is a licence (including a sub-licence) relating to an intangible asset; and (b) the exclusion in that subsection applies in relation to the intangible asset.
40-165(9)
However, paragraph (7)(a) does not apply in relation to an intangible asset unless the asset was used for the purpose of producing ordinary income before you first used it, or had it installed ready for use, for any purpose. In applying this subsection, disregard ordinary income that arises as a result of the disposal of the asset to you.
For the purposes of subsections 40-160(2) and 40-170(1A), an exclusion applies to you and an asset for an income year if any of the exclusions in this section applies in relation to the asset.
Exclusion - intangible assets
40-167(2)
This exclusion applies in relation to the asset if the asset is an intangible asset.
Exclusion - assets previously held by associates
40-167(3)
This exclusion applies in relation to the asset if it had been previously held by an associate of yours.
Exclusion - assets available for use by associates or foreign residents
40-167(4)
This exclusion applies in relation to the asset if the asset is available for use, at any time in the income year, by any of the following: (a) an associate of yours; (b) an entity that is a foreign resident.
For the purposes of Division 40 of the Income Tax Assessment Act 1997, the decline in value of a depreciating asset you hold for an income year (the current year ) is the amount worked out under this section if: (a) either:
(i) you start to use the asset, or have it installed ready for use, for a taxable purpose in the current year; or
(b) you are covered by section 40-150 for the asset; and (c) you are covered for the current year by any of the following:
(ii) you started to use the asset, or have it installed ready for use, for a taxable purpose in an earlier income year; and
(i) section 40-155 (about businesses with turnover under $5 billion);
(d) the eligible second element worked out under section 40-175 for the asset for the year is greater than nil; and (e) no balancing adjustment event happens to the asset in the current year; and (f) you have not made a choice under section 40-190 in relation to the current year.
(ii) section 40-157 (about corporate tax entities with income under $5 billion); and
Exclusions
40-170(1A)
However, this section does not apply if: (a) section 40-157 covers you for the current year (but section 40-155 does not); and (b) an exclusion applies to you and the asset for the current year under section 40-167 (about exclusions for corporate tax entities with income under $5 billion).
Amount of the decline in value
40-170(2)
The decline in value of the asset for the current year is: (a) if the asset's decline in value for the year would, apart from section 40-145, be worked out under section 40-82 of the Income Tax Assessment Act 1997 - the amount worked out under subsection (3); or (b) if the asset's decline in value for the year would, apart from section 40-145, be worked out under Subdivision 40-BA of this Act - the amount worked out under subsection (4); or (c) otherwise - the amount worked out under subsection (5).
Assets affected by section 40-82 of the Income Tax Assessment Act 1997 (about assets costing less than $150,000, medium sized businesses)
40-170(3)
If this subsection applies, the amount for the current year is the sum of: (a) the amount that would be the asset's decline in value for the year under section 40-82 of the Income Tax Assessment Act 1997, assuming the reference in subparagraph 40-82(3A)(b)(ii) of that Act to 31 December 2020 were instead a reference to the 2020 budget time; and (b) the eligible second element worked out under section 40-175 of this Act for the asset for the year.
Assets affected by Subdivision 40-BA (backing business investment)
40-170(4)
If this subsection applies, the amount for the current year is the sum of: (a) the amount that would be worked out under paragraph 40-130(2)(a) or (4)(a) (whichever is applicable) for the year, assuming the references in paragraphs 40-130(2)(a) and (4)(a) to 30 June 2021 were instead references to the 2020 budget time; and (b) the eligible second element worked out under section 40-175 for the asset for the year; and (c) the amount that would be worked out under paragraph 40-130(2)(b) or (4)(b) (whichever is applicable) for the year, assuming the references in paragraphs 40-130(2)(b) and (4)(b) to "the amount worked out under paragraph (a)" were instead references to "the amounts worked out under paragraphs 40-170(4)(a) and (b)".
Other assets
40-170(5)
If this subsection applies, the amount for the current year is the sum of: (a) the amount that would be the asset's decline in value for the year under Division 40 of the Income Tax Assessment Act 1997, disregarding any amounts included in the eligible second element worked out under section 40-175 of this Act for the asset for the year; and (b) the eligible second element worked out under section 40-175 for the asset for the year.
The amount worked out under this section (the eligible second element ) for a depreciating asset for an income year is the sum of any amounts included in the second element of the asset's cost at a time that is in both of the following periods: (a) the income year; (b) the period beginning at the 2020 budget time and ending on 30 June 2023.
For an income year later than a year in which the decline in value is worked out under this Subdivision, the decline in value is worked out under the other provisions of Division 40 of the Income Tax Assessment Act 1997.
Adjustment required for prime cost method
40-180(2)
If you use the prime cost method for the asset, you must adjust the formula in subsection 40-75(1) of the Income Tax Assessment Act 1997 for the later year in the manner set out in subsection 40-75(3) of that Act. The later year is the change year referred to in that subsection.
Balancing adjustment provisions
40-180(3)
Subdivision 40-D of the Income Tax Assessment Act 1997 has effect as if the decline in value worked out under this Subdivision had been worked out under Subdivision 40-B of that Act.
This section applies if the decline in value for a depreciating asset for an income year is worked out under this Subdivision, and at a time (the balancing adjustment time ) in a later income year: (a) either:
(i) it becomes not reasonable to conclude that you will use the asset principally in Australia for the principal purpose of carrying on a business; or
(b) none of the requirements in paragraphs 40-295(1)(a), (b) or (c) of the Income Tax Assessment Act 1997 are satisfied in relation to the asset.
(ii) it becomes reasonable to conclude that the asset will never be located in Australia; and
Balancing adjustment event and termination value
40-185(2)
For the purposes of Subdivision 40-D of the Income Tax Assessment Act 1997 assume that, at the balancing adjustment time, you stop using the asset, or having it installed ready for use, for any purpose and you expect never to use it, or have it installed ready for use, again.
Cost resulting from balancing adjustment event
40-185(3)
For the purposes of section 40-180 of the Income Tax Assessment Act 1997 assume that the reference in item 3 of the table in subsection 40-180(2) of that Act to "because you stop using it for any purpose expecting never to use it again" were instead a reference to "because of section 40-185 of the Income Tax (Transitional Provisions) Act 1997".
Subdivision does not apply for income year after balancing adjustment event
40-185(4)
If a balancing adjustment event happens to a depreciating asset you hold because of this section, this Subdivision cannot apply to work out the decline in value of the asset for a later income year.
You may choose that the decline in value of a particular depreciating asset for an income year is not to be worked out under this Subdivision.
40-190(2)
The choice must be in the approved form.
40-190(3)
The choice cannot be revoked.
40-190(4)
You must give the choice to the Commissioner by the day you lodge your income tax return for the income year to which the choice relates.
Note:
The Commissioner may defer the time for giving the choice: see section 388-55 in Schedule 1 to the Taxation Administration Act 1953.
Division 40 of the new Act applies as if references in that Division to the car limit included references to:
(a) the car depreciation limit under Division 42 of the former Act; and
(b) the motor vehicle depreciation limit under former section 57AF of the Income Tax Assessment Act 1936.
40-230(2)
If you:
(a) have a substituted accounting period; and
(b) start to hold a car in your 2001-02 income year but before 1 July 2001;
you must use as the car limit the car depreciation limit under section 42-80 of the former Act for the 2000-01 financial year.
Subdivision 40-D - Balancing adjustments
Paragraphs 40-285(1)(a) and (2)(a) of the new Act have effect in relation to a depreciating asset that you held at 1 July 2001 as if amounts you have deducted or can deduct for the asset under the former Act or the Income Tax Assessment Act 1936 were part of the asset's decline in value under Division 40.
40-285(2)
You are entitled to a further deduction under subsection (3) if:
(a) you are entitled to a deduction under subsection 40-285(2) of the new Act for a balancing adjustment event happening to a depreciating asset:
(i) to which Division 58 of the former Act applied; or
(ii) to which former section 61A of the Income Tax Assessment Act 1936 applied, or for which the transition time under Division 57 in Schedule 2D to that Act occurred before 1 July 2001; and
(b) you would have been entitled to a further deduction under section 42-197 of the former Act.
40-285(3)
The amount of the further deduction is the amount worked out under section 42-197 of the former Act.
40-285(4)
Division 40 of the new Act applies to a balancing adjustment event that occurs on or after 1 July 2001 for a depreciating asset you hold if you held the asset on that day.
40-285(5)
The amount included in your assessable income under subsection 40-285(1) or section 40-370 of the new Act for a balancing adjustment event happening to a depreciating asset is reduced if:
(a) the asset is either:
(i) a depreciating asset that is not plant and that you started to hold under a contract entered into before 1 July 2001, you constructed where the construction started before that day or you started to hold in some other way before that day; or
(ii) plant that you acquired at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; and
(b) any capital gain or capital loss would be disregarded (if Part 3-1 of the new Act applied):
(i) because of section 118-5 (about cars, motor cycles and valour decorations); or
(ii) because of section 118-10 (about collectables); or
(iii) because of section 118-12 (about plant used to produce exempt income); or
(iv) because the asset was a pre-CGT asset at the time of the balancing adjustment event.
40-285(6)
The reduction is:
where:
sum of reductions
is the sum of the reductions in your deductions for the asset because you did not use it for a particular purpose.
total decline
is the decline in value of the depreciating asset since you started to hold it.
40-285(7)
Section 118-24 of the new Act applies to CGT event A1 (disposal of a CGT asset) happening to a depreciating asset if the event happens:
(a) if the depreciating asset is plant - at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; or
(b) if the depreciating asset is not plant - before 1 July 2001;
where:
(c) the time of the event is when you entered into the contract for the disposal of the asset; and
(d) the change in ownership constituting the disposal occurred after the applicable time mentioned in paragraph (a) or (b).
SECTION 40-287 Disposal of pre-1 July 2001 mining depreciating asset to associate 40-287(1)
This section applies if:
(a) on or after 1 July 2001, a company (the transferor ) disposes of a depreciating asset to another company; and
(b) the companies are members of the same linked group at the time of the disposal; and
(c) apart from this section, the disposal would have resulted in:
(i) an amount (the included amount ) being included in the assessable income of the transferor under subsection 40-285(1) of the Income Tax Assessment Act 1997; and
(ii) the transferor having an additional decline in value (the deductible amount ) under subsection 40-35(5), 40-38(5) or 40-40(4) of this Act; and
(d) the included amount is more than the deductible amount.
40-287(2)
Subsection 40-35(5), 40-38(5) or 40-40(4) of this Act does not apply to the disposal.
40-287(3)
The amount that is included in the transferor's assessable income under subsection 40-285(1) of the Income Tax Assessment Act 1997 is the included amount reduced by the deductible amount.
SECTION 40-288 Disposal of pre-1 July 2001 mining non-depreciating asset to associate 40-288(1)
This section applies if:
(a) on or after 1 July 2001, a company (the transferor ) disposes of property that is not a depreciating asset to another company; and
(b) the companies are members of the same linked group at the time of the disposal; and
(c) apart from this section, the disposal would have resulted in the transferor having an additional decline in value (the deductible amount ) under subsection 40-35(5), 40-37(5), 40-40(4) or 40-43(4) of this Act; and
(d) the sum of:
(i) the money the transferor receives, or is entitled to receive, in respect of the disposal; and
is more than the deductible amount.
(ii) the market value of any other property the transferor receives, or is entitled to receive, in respect of the disposal;
40-288(2)
There is no additional decline in value of the notional asset referred to in subsection 40-35(5), 40-37(5), 40-40(4) or 40-43(4) as a result of the disposal.
40-288(3)
Any amount that would be included in the transferor's assessable income under subsection 40-35(6), 40-37(6), 40-38(6), 40-40(5) or 40-43(5) of this Act, or subsection 40-830(6) of the Income Tax Assessment Act 1997, as a result of the disposal is reduced by the deductible amount.
SECTION 40-289 40-289 Surrendered firearms
If a balancing adjustment event for a firearm that you hold occurs because you surrender it after the commencement of this section under firearms surrender arrangements, any amount by which its termination value exceeds its adjustable value is not included in your assessable income under subsection 40-285(1) of the Income Tax Assessment Act 1997.
Subsection 40-290(2) of the new Act has effect in relation to a depreciating asset that you held at 1 July 2001 as if:
(a) any amount by which your deductions for the asset were reduced under the former Act or the Income Tax Assessment Act 1936 because you did not use it for a particular purpose were an amount by which your deductions for the asset were reduced under section 40-25 of the new Act; and
(b) the total decline element of the formula in that subsection included all amounts you have deducted or can deduct for the asset under the former Act or the Income Tax Assessment Act 1936.
R&D entity has old law R&D decline in value deductions
40-292(1)
This section applies to an R&D entity if: (a) a balancing adjustment event happens in an income year (the event year ) commencing on or after 1 July 2011 for an asset held by the R&D entity and:
(i) the R&D entity can deduct, for an income year, an amount under section 40-25 of the Income Tax Assessment Act 1997 (the new Act ), as that section applies apart from Division 355 of that Act and former section 73BC of the Income Tax Assessment Act 1936 (the old Act ); or
(b) either or both of the following subparagraphs apply:
(ii) the R&D entity could have deducted, for an income year, an amount as described in subparagraph (i) if it had used the asset; and
(i) the R&D entity can deduct (the old law deductions ) under former section 73BA or 73BH of the old Act an amount for one or more income years for the asset;
(ii) the R&D entity chooses tax offsets under former section 73I of the old Act instead of deductions (also the old law deductions ) under those former sections for one or more income years for the asset.
Note:
This section applies even if the R&D entity is entitled under section 355-100 of the new Act to tax offsets for one or more income years for deductions under section 355-305 of that Act for the asset.
Section 40-290 to be applied as if use for carrying on R&D activities were use for a taxable purpose
40-292(2)
In applying section 40-290 of the new Act (including references in that section to the reduction of deductions under section 40-25 of that Act) in relation to the asset, assume that using the asset for a taxable purpose includes using it for: (a) the purpose of the carrying on, by or on behalf of the R&D entity, of the research and development activities (within the meaning of former section 73B of the old Act) to which the old law deductions relate; or (b) if the R&D entity is entitled under section 355-100 of the new Act to tax offsets for one or more income years for deductions (the new law deductions ) under section 355-305 of that Act for the asset - the purpose of conducting the R&D activities to which the new law deductions relate.
Increase in amounts deductible or assessable under section 40-285
40-292(3)
Any amount (the section 40-285 amount ): (a) that the R&D entity can deduct for the asset under section 40-285 of the new Act (after applying subsection (2) of this section) for the event year; or (b) that is included in the R&D entity's assessable income for the asset under section 40-285 of the new Act (after applying subsection (2) of this section) for the event year;
is taken to be increased under section 40-292 of the new Act by the following amount:
where:
adjusted section 40-285 amount
means:
(a) if the section 40-285 amount is a deduction - the amount of the deduction; or
(b) if the section 40-285 amount is an amount included in the R&D entity's assessable income - so much of the section 40-285 amount as does not exceed the total decline in value.
old law 1.25 rate deductions
means the sum of the R&D entity's notional Division 40 deductions, and notional Division 42 deductions, (if any) for the asset that were multiplied by 1.25 in working out the old law deductions.
total decline in value
means the cost of the asset less its adjustable value.
Application of Division 355
40-292(3A)
In applying Division 355 of the new Act in relation to the asset for the income year, the R&D entity is taken to have: (a) if the section 40-285 amount is an amount included in the R&D entity's assessable income - a clawback amount under section 355-447 of the new Act for the income year; or (b) if the section 40-285 amount is a deduction - a catch up amount under section 355-466 of the new Act for the income year;
equal to the following amount:
Adjusted section 40-285 amount | × | Sum of new law deductions |
Total decline in value |
where:
adjusted section 40-285 amount
means:
(a) if the section 40-285 amount is a deduction - the amount of the deduction; or
(b) if the section 40-285 amount is an amount included in the R&D entity's assessable income - so much of the section 40-285 amount as does not exceed the total decline in value.
total decline in value
means the cost of the asset less its adjustable value.
Normal rules do not apply for the asset and the event
40-292(4)
Neither of the following sections: (a) section 40-292 of the new Act (as amended by the Tax Laws Amendment (Research and Development) Act 2011); (b) section 40-292 of the new Act (as that section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 2011);
to the extent that they would otherwise apply apart from this section to the R&D entity for the event, do so apply to the R&D entity for the event.
Note 1:
The section 40-292 of the new Act mentioned in paragraph (a) would otherwise apply for the event in a case where the R&D entity had new law deductions.
Note 2:
The section 40-292 of the new Act mentioned in paragraph (b) would otherwise apply for the event in respect of the old law deductions.
Partners have old law R&D decline in value deductions
40-293(1)
This section applies to an R&D partnership if: (a) a balancing adjustment event happens in an income year (the event year ) commencing on or after 1 July 2011 for an asset held by the R&D partnership and:
(i) the R&D partnership can deduct, for an income year, an amount under section 40-25 of the Income Tax Assessment Act 1997 (the new Act ), as that section applies apart from Division 355 of that Act and former section 73BC of the Income Tax Assessment Act 1936 (the old Act ); or
(b) either or both of the following subparagraphs apply:
(ii) the R&D partnership could have deducted, for an income year, an amount as described in subparagraph (i) if it had used the asset; and
(i) one or more partners of the R&D partnership can deduct (the old law deductions ) under former section 73BA or 73BH of the old Act amounts for one or more income years for the asset;
(ii) one or more partners of the R&D partnership choose tax offsets under former section 73I of the old Act instead of deductions (also the old law deductions ) under those former sections for one or more income years for the asset.
Note:
This section applies even if the partners are entitled under section 355-100 of the new Act to tax offsets for one or more income years for deductions under section 355-520 of that Act for the asset.
Section 40-290 to be applied as if use for carrying on R&D activities were use for a taxable purpose
40-293(2)
In applying section 40-290 of the new Act (including references in that section to the reduction of deductions under section 40-25 of that Act) in relation to the asset, assume that using the asset for a taxable purpose includes using it for: (a) the purpose of the carrying on, by or on behalf of the R&D partnership, of the research and development activities (within the meaning of former section 73B of the old Act) to which the old law deductions relate; or (b) if one or more partners of the R&D partnership are entitled under section 355-100 of the new Act to tax offsets for one or more income years for deductions (the new law deductions ) under section 355-520 of that Act for the asset - the purpose of conducting the R&D activities to which the new law deductions relate.
Increase in amounts deductible or assessable under section 40-285
40-293(3)
Any amount (the section 40-285 amount ): (a) that the R&D partnership can deduct for the asset under section 40-285 of the new Act (after applying subsection (2) of this section) for the event year; or (b) that is included in the R&D partnership's assessable income for the asset under section 40-285 of the new Act (after applying subsection (2) of this section) for the event year;
is taken to be increased under section 40-293 of the new Act by the following amount:
where:
adjusted section 40-285 amount
means:
(a) if the section 40-285 amount is a deduction - the amount of the deduction; or
(b) if the section 40-285 amount is an amount included in the R&D partnership's assessable income - so much of the section 40-285 amount as does not exceed the total decline in value.
old law 1.25 rate deductions
means the sum of the partners' notional Division 40 deductions, and notional Division 42 deductions, (if any) for the asset that were multiplied by 1.25 in working out the old law deductions.
total decline in value
means the cost of the asset less its adjustable value.
Application of Division 355
40-293(3A)
In applying Division 355 of the new Act in relation to the asset for the income year, an R&D entity (the partner) that is a partner in the R&D partnership and is entitled to one or more new law deductions for one or more income years for the asset, is taken to have: (a) if the section 40-285 amount is an amount included in the R&D partnership's assessable income - a clawback amount under section 355-449 of the new Act for the income year; or (b) if the section 40-285 amount is a deduction - a catch up amount under section 355-468 of the new Act for the income year;
equal to the partner's proportion of the following amount:
Adjusted section 40-285 amount | × | Sum of new law deductions |
Total decline in value |
where:
adjusted section 40-285 amount
means:
(a) if the section 40-285 amount is a deduction - the amount of the deduction; or
(b) if the section 40-285 amount is an amount included in the R&D partnership's assessable income - so much of the section 40-285 amount as does not exceed the total decline in value.
sum of new law deductions
means the sum of each partner's new law deductions mentioned in paragraph (2)(b) of this section.
total decline in value
means the cost of the asset less its adjustable value.
Normal rules do not apply for the asset and the event
40-293(4)
Section 40-293 of the new Act, to the extent that it would otherwise apply apart from this section to the R&D partnership or its partners for the event, does not so apply to the R&D partnership and the partners for the event.
Note:
Section 40-293 of the new Act would otherwise apply for the event in a case where the partners had new law deductions.
You may exclude an amount that has been included in your assessable income for plant as a result of a balancing adjustment event that occurred in your 1999-2000 or 2000-01 income year to the extent that you choose under section 42-290 of the former Act to treat that amount as an amount you have deducted for the decline in value of replacement plant.
40-295(2)
You can only make this choice for the replacement plant if:
(a) you acquire it:
(i) within 2 income years after the end of the income year in which the balancing adjustment event occurred; and
(ii) in your 2001-02 or 2002-2003 income year; and
(b) at the end of the income year in which you acquired it, you used it, or had it installed ready for use, wholly for the purpose of producing assessable income; and
(c) you can deduct an amount for its decline in value; and
(d) you had not made a choice under section 42-285 or 42-293 of the former Act for the balancing adjustment event.
40-295(3)
The adjustable value of the replacement plant is reduced by the amount covered by the choice as at the first day of the income year in which you acquired it.
SECTION 40-340 Roll-overs 40-340(1)
This section applies to an entity (the transferee ) if:
(a) there is roll-over relief under section 40-340 of the new Act as a result of a balancing adjustment event happening to plant; and
(b) the transferor referred to in that section was working out the decline in value of the plant under subsection 40-10(3) or 40-12(3) of this Act.
Plant acquired before 21 September 1999
40-340(2)
The transferee works out the decline in value of the plant under subsection 40-10(3) or 40-12(3) of this Act using the same method as the transferor if:
(a) the transferor started to hold the plant under a contract entered into at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; or
(b) the transferor constructed it and the construction started at or before that time; or
(c) the transferor acquired it in some other way at or before that time; or
(d) the transferor acquired it from an entity that was working out the decline in value of the plant under subsection 40-10(3) or 40-12(3) of this Act and paragraph (a), (b) or (c) of this subsection applied to that entity or to the earliest successive transferor.
Small business taxpayers
40-340(3)
The transferee also works out the decline in value of the plant under subsection 40-10(3) or 40-12(3) of this Act using the same method as the transferor if:
(a) the plant was not acquired as mentioned in subsection (2); and
(b) the transferor, or an earlier successive transferor, was using a rate for the plant under subsection 42-160(1) or 42-165(1) of the former Act; and
(c) the conditions set out in this table are satisfied:
Conditions for small business taxpayers retaining accelerated rates | ||
Item | Condition | |
1 | The transferee must have been a small business taxpayer for the income year (the start year ) that includes the time when the entity first used the plant, or first had it installed ready for use. | |
. | ||
2 | At that time, at least 50% of the transferee's intended use of the plant must be in carrying on a business for the purpose of producing assessable income. | |
. | ||
3 | At that time, neither of these applies: | |
(a) | it could reasonably be expected that, because of the plant's use, whether in connection with another asset or not, the transferee would not be a small business taxpayer for the income year following the start year or for either of the next 2 income years; | |
(b) | the plant is being or is intended to be let predominantly on a lease of a kind specified in subsection (5). |
40-340(4)
For the purposes of item 2 in the table in subsection (3), an entity is treated as if it is not carrying on a business in relation to the activities of a partnership in which the entity is a partner unless the entity is connected with the partnership.
40-340(5)
A lease of plant referred to in item 3 of the table in subsection (3) is an agreement (including a renewal of an agreement) under which the holder of the plant grants a right to use the plant to another entity, but not a hire purchase agreement or a short-term hire agreement.
40-340(6)
The transferee works out the decline in value of the plant by:
(a) for the diminishing value method - replacing the component in the formula in subsection 40-70(1) of the new Act that includes the plant's effective life with the rate the transferor, or the earliest successive transferor, was using; or
(b) for the prime cost method:
(i) replacing the component in the formula in subsection 40-75(1) of the new Act that includes the plant's effective life with the rate the transferor, or the earliest successive transferor, was using; and
(ii) increasing the plant's cost under Division 42 of the former Act by any amounts included in the second element of the plant's cost after 30 June 2001.
Meaning of small business taxpayer
40-340(7)
An entity is a small business taxpayer for an income year if:
(a) the entity carries on a business in that year; and
(b) the entity's average turnover for that year is less than $1,000,000.
Note:
An entity is treated as carrying on a business if it is winding up a business and it was previously a small business taxpayer: see subsection (11).
Meaning of average turnover
40-340(8)
An entity's average turnover for an income year (the current year ) is:
Sum of relevant group turnovers |
Number of averaging years |
(a) 3; or
(b) if the entity did not carry on a business in each of the current year and the 2 years before the current year, the number of those income years in which the entity carried on a business.
Note:
An entity is treated as carrying on a business if it is winding up a business and it was previously a small business taxpayer: see subsection (11).
sum of relevant group turnovers
is the sum of:
(a) the entity's group turnover for the current year; and
(b) the entity's group turnover (if any) for the 2 preceding income years.
Meaning of group turnover
40-340(9)
The group turnover of an entity (the primary entity ) for an income year is the sum of:
(a) the value of the business supplies the primary entity made in the income year; and
(b) the value of the business supplies entities connected with the primary entity made in the income year;
reduced by:
(c) that part of the value of the business supplies the primary entity made in the income year that is attributable to supplies it made during the year to entities connected with it when they were connected with it; and
(d) that part of the value of the business supplies entities connected with the primary entity made in the income year that is attributable to supplies the connected entities made during the year to the primary entity when they were connected with it; and
(e) that part of the value of the business supplies another entity made in the income year that is attributable to suppliesthe other entity made to a third entity at a time when both the other entity and third entity were connected with the primary entity.
Value of business supplies
40-340(10)
The value of the business supplies an entity makes in an income year is the sum of:
(a) for taxable supplies (if any) the entity makes during the year in the course of carrying on a business - the value (as defined by section 9-75 of the GST Act) of the supplies; and
(b) for other supplies the entity makes during the year in the course of carrying on a business - the prices (as defined by section 9-75 of the GST Act) of the supplies.
Winding up a business
40-340(11)
Subsections (7) and (8) apply to an entity as if it carried on a business in an income year if:
(a) in that year the entity was winding up a business it previously carried on; and
(b) the entity was a small business taxpayer for the income year in which it stopped carrying on that business.
SECTION 40-345 Balancing adjustments for depreciating assets that retain CGT indexation 40-345(1)
The amount included in your assessable income under subsection 40-285(1) or 104-240(1) of the new Act as a result of a balancing adjustment event occurring for:
(a) plantthat you acquired at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; or
(b) a depreciating asset that is not plant and that you acquired before 1 July 2001;
is reduced (but not below nil) if:
(c) for a paragraph (a) case - there would have been a reduction under subsection 42-192(2) of the former Act as a result of that event; or
(d) for a paragraph (b) case - there would have been a reduction under subsection 42-192(2) of the former Act as a result of that event if the asset were plant.
40-345(2)
The amount of the reduction is the amount worked out under subsection 42-192(2) of the former Act.
40-345(3)
There is no reduction under subsection (1) to an amount included in your assessable income under subsection 104-240(1) if the balancing adjustment event results in a discount capital gain under Division 115.
40-345(4)
However, you can choose not to make a reduction under subsection (1) and instead take advantage of the discount capital gain.
40-345(5)
Subsection (6) applies to an entity (the transferee ) if there is roll-over relief under section 40-340 of the new Act as a result of a balancing adjustment event happening to a depreciating asset held by the transferee.
40-345(6)
Subsections (1), (2), (3) and (4) apply also to the transferee if:
(a) for a depreciating asset that is plant:
(i) the transferor referred to in section 40-340 of the new Act started to hold the plant under a contract entered into at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; or
(ii) the transferor constructed it and the construction started at or before that time; or
(iii) the transferor acquired it in some other way at or before that time; or
(iv) the transferor acquired it from an entity that was working out the decline in value of the plant under subsection 40-10(3) or 40-12(3) of this Act and subparagraph (i), (ii) or (iii) of this paragraph applied to that entity or to the earliest successive transferor; or
(b) for a depreciating asset that is not plant:
(i) the transferor started to hold the asset under a contract entered into before 1 July 2001; or
(ii) the transferor constructed it and the construction started at or before that day; or
(iii) the transferor acquired it in some other way before that day.
SECTION 40-365 40-365 Involuntary disposals
Section 40-365 of the new Act applies to a case where:
(a) a balancing adjustment event occurred for plant in the circumstances mentioned in subsection 42-293(2) of the former Act before 1 July 2001; and
(b) you start to hold a replacement asset or assets after that day; and
(c) the conditions in subsections 40-365(3) and (4) of the new Act are satisfied.
A low-value pool you created under Subdivision 42-M of the former Act continues under the new Act as if it had been created under Subdivision 40-E of the new Act.
40-420(2)
For the purposes of working out the decline in value of depreciating assets in such a pool for your income year in which 1 July 2001 occurs, step 3 of the method statement in subsection 40-440(1) of the new Act applies to the pool closing balance, worked out under section 42-470 of the former Act, for the income year before that year.
40-425 (Repealed) SECTION 40-425 Allocating depreciating assets to low-value pools
(Repealed by No 119 of 2002)
For the purposes of Subdivision 40-E of the Income Tax Assessment Act 1997, you cannot allocate a depreciating asset to alow-value pool if:
(a) you can deduct an amount for the asset under former section 73BA of the Income Tax Assessment Act 1936; or
(b) you could so deduct an amount if you had not chosen a tax offset under former section 73I of that Act;
for a period before, or starting at the same time as, the allocation has effect.
Subsection 40-450(2) of the new Act has effect as if the reference to expenditure being allocated to a software development pool included a reference to expenditure being allocated to a software pool under Division 46 of the former Act.
This section applies to you if you have deducted or can deduct an amount under Division 387 of the former Act for an amount (the qualifying amount ) of expenditure on any of these (the primary production asset ):
(a) the construction, manufacture, installation or acquisition of a water facility; or
(b) the establishment of horticultural plants; or
(c) the establishment of grapevines;
and you would have been able to deduct amounts for the qualifying amount for the income year in which 1 July 2001 occurs under the former Act if it had continued to apply.
40-515(2)
Subdivision 40-F of the new Act applies to the primary production asset on this basis:
(a) the qualifying amount is taken to be:
(i) for a water facility - the amount of capital expenditure you incurred on the construction, manufacture, installation or acquisition of the water facility; or
(ii) for a horticultural plant or a grapevine - the amount of capital expenditure incurred that is attributable to the establishment of the plant or grapevine; and
(b) for horticultural plants, you use the effective life determined under section 387-175 of the former Act; and
(c) amounts that have been deducted or can be deducted for the qualifying amount under the former Act or the Income Tax Assessment Act 1936 are taken to be a decline in value under Subdivision 40-F of the new Act.
SECTION 40-520 Special rule for water facilities you no longer hold 40-520(1)
This section applies to you if:
(a) you have deducted or can deduct an amount under Division 387 of the former Act for an amount (the qualifying amount ) of expenditure on a water facility; and
(b) you do not hold the water facility at the start of 1 July 2001.
40-520(2)
Subdivision 40-F of the new Act applies to the water facility on the basis specified in subsection 40-515(2) of this Act, and no other taxpayer can deduct amounts for it under the new Act.
SECTION 40-525 40-525 Amounts deducted for water facilities
The reference in subsection 40-555(1) of the new Act to a person having deducted or being able to deduct an amount under Subdivision 40-F of the new Act for expenditure on a water facility includes a reference to the person having deducted or being able to deduct an amount for it under:
(a) Subdivision 387-B of the former Act; or
(b) former section 75B of the Income Tax Assessment Act 1936.
This section applies to you if you have deducted or can deduct an amount under Division 387 of the former Act for an amount (the qualifying amount ) of expenditure on:
(a) connecting or upgrading the supply of mains electricity to land; or
(b) a telephone line on land;
and you hold the land to which the electricity or telephone line relates at the start of 1 July 2001.
40-645(2)
You deduct amounts for the qualifying amount under Subdivision 40-G of the new Act in the same way you were writing it off under Division 387 of the former Act.
40-645(3)
A reference in subsection 40-650(4), (5) or (7) of the new Act to an amount being deducted under Subdivision 40-G of that Act includes a reference to an amount being deducted under:
(a) Subdivision 387-F of the former Act; or
(b) former section 70 of the Income Tax Assessment Act 1936.
SECTION 40-650 Special rule for land that you no longer hold 40-650(1)
This section applies to you if:
(a) you have deducted or can deduct an amount under Division 387 of the former Act for an amount (the qualifying amount ) of expenditure on connecting or upgrading the supply of mains electricity to land or a telephone line on land; and
(b) you do not hold the land to which the electricity or telephone line relates at the start of 1 July 2001.
40-650(2)
Subdivision 40-G of the new Act applies to the qualifying amount on the basis specified in that Subdivision, and no other taxpayer can deduct amounts for it under the new Act.
SECTION 40-670 40-670 Farm consultants
A person approved as a farm consultant under Subdivision 387-A of the former Act is taken to be approved as a farm consultant under section 40-670 of the new Act.
The exemption provided by section 330-60 of the former Act continues to apply to ordinary income derived before 20 August 2001.
If:
(a) on or after 10 May 2006 you abandon, sell or otherwise dispose of a project; and
(b) you have deducted or can deduct amounts for project amounts in relation to that project; and
(c) on or after that day, you start to operate that project again; and
(d) it is reasonable to conclude that you did this for the main purpose of ensuring that deductions for project amounts in relation to that project would be worked out under section 40-832 of that Act;
the Income Tax Assessment Act 1997 applies to you as if the project had started to operate before 10 May 2006.
This section applies if:
(a) you have deducted or can deduct amounts for a ship under section 57AM of the Income Tax Assessment Act 1936 as in force before its repeal by Schedule 1 to the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006; and
(b) you hold the ship when this section commences.
40-840(2)
Division 40 of the Income Tax Assessment Act 1997 applies to the ship after the commencement of this section.
40-840(3)
For the purposes of that application:
(a) the cost of the ship when this section commences is its cost under the Income Tax Assessment Act 1936 just before that time; and
(b) the ship's adjustable value when this section commences is its depreciated value under the Income Tax Assessment Act 1936 just before that time; and
(c) paragraphs 40-285(1)(a) and (2)(a) have effect as if amounts you have deducted or can deduct under section 57AM of the Income Tax Assessment Act 1936, as in force before its repeal, are taken to be part of the ship's decline in value under Subdivision 40-B of the Income Tax Assessment Act 1997.
Division 43 of the Income Tax Assessment Act 1997 applies to quasi-ownership rights over land granted in respect of:
(a) capital works being a hotel building or an apartment building begun after 30 June 1997; and
(b) other capital works begun after 26 February 1992. SECTION 43-105 43-105 Application of subsections 43-50(1) and (2) to hotel buildings and apartment buildings
Subsections 43-50(1) and (2) of the Income Tax Assessment Act 1997 do not apply to capital works being a hotel building or an apartment building begun before 1 July 1997. SECTION 43-110 43-110 Application of subsection 43-75(3)
Subsection 43-75(3) of the Income Tax Assessment Act 1997 does not apply to capital works being a hotel building or an apartment building begun before 1 July 1997.
Division 45 of the Income Tax Assessment Act 1997 applies to assessments for the income year in which 22 February 1999 occurs and later income years.
For disposals of plant or interests in plant on or after 22 February 1999 and before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999, Division 45 of the Income Tax Assessment Act 1997 applies with the modifications specified in this section.
45-3(2)
That Division applies as if subsection 45-5(2) were replaced by this provision:
(2)
The amount included is the lesser of:
(a) the excess referred to in paragraph (1)(e); and
(b) the amounts you have deducted or can deduct for depreciation of the plant or, if you disposed of an interest in the plant, so much of those amounts as is attributable to that interest.It is included for the income year in which the disposal occurred.
45-3(3)
That Division applies as if paragraph 45-5(5)(a) were replaced by this provision:
(a) it is included in that assessable income under a provision of this Act outside this Division and Parts 3-1 and 3-3 (about capital gains and losses); or
45-3(4)
That Division applies as if subsection 45-10(2) were replaced by this provision:
(2)
The amount included is the lesser of:
(a) the excess referred to in paragraph (1)(f); and
(b) that part of the amounts the partnership has deducted or can deduct for depreciation 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.It is included for the income year in which the disposal occurred.
45-3(5)
That Division applies as if paragraph 45-10(5)(a) were replaced by this provision:
(a) it is included in that assessable income under a provision of this Act outside this Division and Parts 3-1 and 3-3 (about capital gains and losses); or
45-3(6)
That Division applies as if this section were added at the end of that Division:
SECTION 45-40 Application of Division to plant formerly owned by exempt entities 45-40(1)
There are the consequences set out in this table for a transition entity that disposes of the plant, interest in plant or interest (or part) in a partnership to an entity specified in subsection (3).
Consequences for transition entities | |||
Item | In this situation: | There are these consequences: | |
1 | The entity chooses, under section 58-20, that depreciation deductions and balancing adjustments are to be calculated by reference to the notional written down value of plant | (a) | section 45-5 has effect as if paragraph 45-5(2)(b) were omitted and replaced by paragraph 58-85(8)(a); and |
(b) | section 45-10 has effect as if paragraph 45-10(2)(b) operated on that part of the amount worked out under paragraph 58-85(8)(a) that has been or would be reflected in the entity's interest in the partnership net income or partnership loss if that amount were an amount deducted for depreciation of the plant. | ||
. | |||
2 | The entity chooses, under section 58-20, that depreciation deductions and balancing adjustments are to be calculated by reference to the undeducted pre-existing audited book value of plant | (a) | section 45-5 has effect as if paragraph 45-5(2)(b) were omitted and replaced by paragraph 58-145(8)(a); and |
(b) | section 45-10 has effect as if paragraph 45-10(2)(b) operated on that part of the amount worked out under paragraph 58-145(8)(a) that has been or would be reflected in the entity's interest in the partnership net income or partnership loss if that amount were an amount deducted for depreciation of the plant. |
45-40(2)
There are the consequences set out in this table for an entity that: (a) acquired the plant from a tax exempt vendor in connection with the acquisition of a business; and (b) disposes of the plant, interest in plant or interest (or part) in a partnership to an entity specified in subsection (3).
Consequences for transition entities | |||
Item | In this situation: | There are these consequences: | |
1 | The entity chooses, under section 58-155, that depreciation deductions and balancing adjustments are to be calculated by reference to the notional written down value of plant | (a) | section 45-5 has effect as if paragraph 45-5(2)(b) were omitted and replaced by paragraph 58-215(3)(a); and |
(b) | section 45-10 has effect as if paragraph 45-10(2)(b) operated on that part of the amount worked out under paragraph 58-215(3)(a) that has been or would be reflected in the entity's interest in the partnership net income or partnership loss if that amount were an amount deducted for depreciation of the plant. | ||
. | |||
2 | The entity chooses, under section 58-155, that depreciation deductions and balancing adjustments are to be calculated by reference to the undeducted pre-existing audited book value of plant | (a) | section 45-5 has effect as if paragraph 45-5(2)(b) were omitted and replaced by paragraph 58-270(3)(a); and |
(b) | section 45-10 has effect as if paragraph 45-10(2)(b) operated on that part of the amount worked out under paragraph 58-270(3)(a) that has been or would be reflected in the entity's interest in the partnership net income or partnership loss if that amount were an amount deducted for depreciation of the plant. |
45-40(3)
The entities are: (a) an exempt entity; or (b) the trustee of a complying superannuation fund; or (c) the trustee of a complying approved deposit fund; or (d) the trustee of a pooled superannuation trust; or (e) an entity that is not an Australian resident; or (f) an entity that is a State/Territory body for the purposes of Division 1AB of Part III of the Income Tax Assessment Act 1936 and whose income is exempt under that Division.
Apportionment
45-40(4)
If the entity concerned disposed of an interest in the plant rather than the plant (for a paragraph 45-5(2)(b) case), instead of the amount worked out under the table in subsection (1) or (2), the entity uses so much of that amount as is attributable to that interest.
45-40(5)
If the entity concerned disposed of part of its interest in the plant rather than all of it (for a paragraph 45-10(2)(b) case), instead of the amount worked out under the table in subsection (1) or (2), the entity uses so much of that amount as is attributable to that part of that interest.
PART 2-15 - NON-ASSESSABLE INCOME
Division 50 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.
Disregard the use of the following amounts in determining (for the purposes of Subdivision 50-A of the Income Tax Assessment Act 1997) whether a fund established before 1 July 1997 operates and pursues its purposes in Australia:
(a) an amount received by the entity before 1 July 1997;
(b) an amount derived from an amount mentioned in paragraph (a) or this paragraph.
Division 51 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.
Division 52 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.
(Repealed by No 83 of 1999)
Division 53 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.
Division 54 of the Income Tax Assessment Act 1997 applies to assessments for the 2001-2002 income year and later income years.
54-1(2)
However, the Division does not apply unless the date of the settlement or order is 26 September 2001 or a later date.
Division 55 - Payments that are not exempt from income tax
Division 55 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.
Without limiting subsection 59-50(6) of the Income Tax Assessment Act 1997, an entity was an Indigenous holding entity at a time if:
(a) the time occurred:
(i) during an income year starting on or after 1 July 2008; and
(ii) before the commencement of Chapter 2 of the Australian Charities and Not-for-profits Commission Act 2012; and
(b) at that time, the entity was endorsed under Subdivision 50-B of the Income Tax Assessment Act 1997 as exempt from income tax because the entity was covered by item 1.1, 1.5, 1.5A or 1.5B of the table in section 50-5 of that Act, as in force at that time.
Subdivision 61-L (Tax offset for Medicare levy surcharge (lump sum payments in arrears)) of the Income Tax Assessment Act 1997 applies to assessments for the 2005-06 income year and later income years.
67-100 (Repealed) SECTION 67-100 Notices of total of tax offset refunds
(Repealed by No 8 of 2019)
(Repealed by No No 8 of 2019)
(Repealed by No 8 of 2019)
(Repealed by No 8 of 2019)
67-120 (Repealed) SECTION 67-120 Amendment of notices
(Repealed by No 8 of 2019)
67-125 (Repealed) SECTION 67-125 Validity of notices
(Repealed by No 8 of 2019)
(Repealed by No 8 of 2019)
(Repealed by No 8 of 2019)
Division 70 (Trading stock) of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.
70-1(2)
However, the sections of that Division listed in the table apply in accordance with the corresponding sections of this Act.
Application provisions for specific sections | ||
Item | This section of the Income Tax Assessment Act 1997 … | Applies as described in this provision of this Act … |
1 | 70-20 | 70-20 |
. | ||
2 | 70-55 | 70-55(1) |
. | ||
3 | 70-70 | 70-70 |
. | ||
4 | 70-90 | 70-90 |
. | ||
5 | 70-95 | 70-90 |
. | ||
6 | 70-100 | 70-100 |
. | ||
7 | 70-105 | 70-105 |
. | ||
8 | 70-115 | 70-115 |
This section explains how to account for your disposal of an item during or after the 1997-98 income year if:
(a) just before that income year, the item was an item of your trading stock, as defined in subsection 6(1) of the Income Tax Assessment Act 1936 as in force at that time; and
(b) at no time since that time has the item been an item of your trading stock, as defined in section 70-10 of the Income Tax Assessment Act 1997.
Example:
This section applies to an item you produced, manufactured, acquired or purchased before 1997-98 for manufacture, sale or exchange, but have not held for that purpose at any time since just before the start of that year.
If the disposal is outside the ordinary course of business
70-10(2)
If:
(a) the disposal occurred on or after 1 July 1997; and
(b) former subsection 36(1) of the Income Tax Assessment Act 1936 (dealing with disposals of trading stock outside the ordinary course of business) would have applied to the disposal if it had occurred before 1 July 1997;
sections 70-90 and 70-95 of the Income Tax Assessment Act 1997 (dealing with disposals of trading stock outside the ordinary course of business) apply to your disposal of the item as if it were an item of your trading stock (as defined in section 70-10 of the Income Tax Assessment Act 1997).
Note:
This ensures that your assessable income includes the market value of the item on the day of disposal. This counters your deduction under the Income Tax Assessment Act 1936 for your expenditure to acquire the item as trading stock.
Additional rule for early balancers
70-10(3)
If the disposal occurred before 1 July 1997, then, for the purposes of former subsection 36(1) of the Income Tax Assessment Act 1936 (dealing with disposals of trading stock outside the ordinary course of business), the item is taken to have been, at the time of the disposal, trading stock as defined in section 70-10 of the Income Tax Assessment Act 1997.
Note:
See the note to subsection (2).
Deduction for closing value at end of 1996-97
70-10(4)
If:
(a) former subsection 36(1) of the Income Tax Assessment Act 1936 applies to the disposal, or would have if it had occurred before 1 July 1997; and
(b) the item's value was taken into account at the end of the 1996-97 income year under former Subdivision B (Trading stock) of Division 2 of Part III of the Income Tax Assessment Act 1936;
you can deduct for the income year of the disposal the item's value as so taken into account.
Note:
This deduction offsets the effect of the item's value not having been taken into account under Subdivision 70-C of the Income Tax Assessment Act 1997 at the start of the income year of the disposal.
SECTION 70-20 70-20 Application of section 70-20 of the Income Tax Assessment Act 1997 to trading stock bought on or after 1 July 1997
Section 70-20 (Non-arm's length transactions) of the Income Tax Assessment Act applies to purchases thattake place on or after 1 July 1997.
(Repealed by No 101 of 2006)
(Repealed by No 101 of 2006)
(Repealed by No 101 of 2006)
Section 70-55 of the Income Tax Assessment Act 1997 applies to animals acquired by natural increase in or after the 1997-98 income year.
70-55(2)
For the purposes of Subdivision 70-C of the Income Tax Assessment Act 1997, the cost of an animal acquired by natural increase before the 1997-98 income year is the cost price of the animal under former section 34 of the Income Tax Assessment Act 1936.
70-55(3)
For the purposes of Subdivision 70-C of the Income Tax Assessment Act 1997, the cost of an animal acquired by a partnership by natural increase before the 1997-98 income year depends on whether its cost price has been used in working out the share of a partner in the partnership's net income or partnership loss for an earlier income year:
(a) if it has, the cost is that cost price, or the lowest of those cost prices if more than one cost price was used to work out the respective shares of partners;
(b) if it has not, the cost is the minimum cost price prescribed for the purposes of former section 34 of the Income Tax Assessment Act 1936 for that class of animal for the time when the animal was acquired, or the animal's actual cost price if no minimum was prescribed.
Note 1:
Former section 93 of the Income Tax Assessment Act 1936 allowed each partner to choose the cost price of an animal for working out the partner's share of the partnership's net income or partnership loss for income years before the 1997-98 income year.
Note 2:
Former section 34 of the Income Tax Assessment Act 1936 provides for the valuation of live stock acquired by natural increase before the 1997-98 income year.
SECTION 70-70 Valuing interests in FIFs on hand at the start of 1991-92 70-70(1)
If:
(a) an interest in a FIF was an item of your trading stock on hand at the start of the 1991-92 income year; and
(b) that interest was also an item of your trading stock on hand at the end of the 1997-98 income year or a later income year;
the value of the item at the end of the 1997-98 or later income year is the value of the item as taken into account under former Subdivision B (Trading stock) of Division 2 of Part III of the Income Tax Assessment Act 1936 at the start of the 1991-92 income year.
70-70(2)
This section has effect despite section 70-45 (the general rule about how to value your trading stock at the end of the income year) of the Income Tax Assessment Act 1997, but subject to subsection 70-70(2) (which allows you to elect to value all your interests in FIFs at their market value instead) of that Act.
Effect of election under former subsection 31(5) of the Income Tax Assessment Act 1936 on valuation of interests in FIFs
70-70(3)
If you made an election under former subsection 31(5) of the Income Tax Assessment Act 1936 (to value all your interests in FIFs at market value), subsection 70-70(2) of the Income Tax Assessment Act 1997 applies to your interests in FIFs as if you had made an election under subsection 70-70(2).
SECTION 70-90 70-90 Application of sections 70-90 and 70-95 of the Income Tax Assessment Act 1997 to disposals of trading stock outside the ordinary course of business
Sections 70-90 (Assessable income on disposal of trading stock outside the ordinary course of business) and 70-95 (Purchase price is taken to be market value) of the Income Tax Assessment Act 1997 apply to a disposal of an item of trading stock that takes place on or after 1 July 1997.
Basic application
70-100(1)
Section 70-100 (Notional disposal when you stop holding an item as trading stock) of the Income Tax Assessment Act 1997 applies to trading stock that stops being trading stock on hand of an entity on or after 1 July 1997.
Transitional provision if that section affects an assessment for 1996-97
70-100(2)
The value of trading stock to which subsection (4) of that section applies is to be worked out using the rules in the Income Tax Assessment Act 1936 (and not the rules in Subdivision 70-C of the Income Tax Assessment Act 1997) if:
(a) that section affects an assessment for the 1996-97 year of income under the Income Tax Assessment Act 1936; and
(b) an election is made under subsection (4) of that section to value trading stock at what would have been its value at the end of an income year ending on the day it became trading stock on hand of the second entity.
Note:
Section 70-100 of the Income Tax Assessment Act 1997 may affect an assessment for the 1996-97 income year if any of the entities with an interest in the trading stock (either before or after it becomes trading stock on hand of the second entity) has a 1996-97 income year ending on or after 1 July 1997.
Section 70-105 (Death of owner) of the Income Tax Assessment Act 1997 applies to trading stock that devolves as a result of a person dying on or after 1 July 1997.
Transitional provision if that section affects an assessment for 1996-97
70-105(2)
The value of an item to which subsection (3) or (4) of that section applies is to be worked out using the rules in the Income Tax Assessment Act 1936 (and not the rules in Subdivision 70-C of the Income Tax Assessment Act 1997) if:
(a) that section affects an assessment for the 1996-97 year of income under the Income Tax Assessment Act 1936; and
(b) an election is made under subsection (3) or (4) of that section to value the item at an amount other than its market value.
Note:
Section 70-105 of the Income Tax Assessment Act 1997 may affect an assessment for the 1996-97 income year if an entity on which the item devolves has a 1996-97 income year ending on or after 1 July 1997.
Section 70-115 (Compensation for lost trading stock) of the Income Tax Assessment Act 1997 applies to an amount received in the 1997-98 income year or a later income year by way of insurance or indemnity for a loss of trading stock, even if the loss occurred earlier. However, that section does not apply to an amount that is assessable income for an income year before the 1997-98 income year.
This Division applies in relation to a life benefit termination payment received by you on or after 1 July 2007 if:
(a) the payment is received by you because you are entitled to it under a written contract, a law of the Commonwealth, a State, a Territory or another country, an instrument under such a law, a collective agreement within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 or an AWA within the meaning of that Act; and
(b) the entitlement is provided for under that contract, law, instrument or agreement as in force just before 10 May 2006.
82-10(2)
However, this Division does not apply in relation to a life benefit termination payment received by you on or after 1 July 2012 (except to the extent provided by Subdivision 82-E).
82-10(3)
This Division applies in relation to a life benefit termination payment only to the extent that the contract, law or agreement as in force just before 10 May 2006 specifies the amount of the payment, or a way to work out a specific amount of the payment.
82-10(4)
For the purpose of subsection (3), a specific amount can be worked out in ways including either or both of the following:
(a) by a method or formula for working out the amount;
(b) by provision for you or another person (or entity) to make a choice between forms of payment allowing amounts to be worked out as provided by subsection (3) and paragraph (a) of this subsection.
Example:
For paragraph (b), a specific amount of a life benefit termination payment that you receive on 1 July 2007 can be worked out from the terms of your written contract if the contract provided (just before 10 May 2006) for you to choose between payment in the form of a cash amount of $100,000 or the transfer to you of 10,000 shares in a specified company.
Note:
Section 80-15 of the Income Tax Assessment Act 1997 allows for employment termination payments to include the transfer of property (for example, shares). If so, the market value of the property is included in the amount of the payment (except any part of the property for which separate consideration has been given).
82-10(5)
To the extent that this Division applies to a life benefit termination payment, Subdivision 82-A of the Income Tax Assessment Act 1997 does not apply to the payment (subject to Subdivision 82-E of this Act).
82-10(6)
In this Division:
transitional termination payment
means:
(a) a life benefit termination payment to which this Division applies; or
(b) if this Division applies to only part of a life benefit termination payment - that part of the payment.
Application
82-10A(1)
This section applies to a transitional termination payment you receive (except any part of the payment that is a directed termination payment) if you are your preservation age or older on the last day of the income year in which you receive the payment.
Note 1:
You do not pay income tax on directed termination payments: see section 82-10G.
Note 2:
Under section 82-10C, you may also be entitled to a tax offset on the taxable component of a transitional termination payment you receive in an income year before the year in which you reached your preservation age.
Tax free component
82-10A(2)
The tax free component of the payment is not assessable income and is not exempt income.
Taxable component
82-10A(3)
The taxable component of the payment is assessable income.
82-10A(4)
You are entitled to a tax offset that ensures that the rate of income tax on the amount mentioned in subsection (6) (the low rate part ) does not exceed 15%.
82-10A(5)
You are entitled to a tax offset that ensures that the rate of income tax on the amount mentioned in subsection (7) (the middle rate part ) does not exceed 30%.
Note:
The remaining part is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986.
82-10A(6)
The low rate part is so much of the taxable component of the payment as does not exceed your lower cap amount under section 82-10B.
82-10A(7)
The middle rate part is so much of the taxable component of the payment as:
(a) exceeds your low rate part (if any); and
(b) does not exceed the amount worked out as follows:
Your upper cap amount under
section 82-10D |
− | Your lower cap amount under
section 82-10B |
Note:
If you have received another life benefit termination payment in the same income year (or in an earlier income year) that is not a transitional termination payment, your entitlement to a tax offset under this section is not affected by your entitlement (if any) to a tax concession for the other payment (under section 82-10 of the Income Tax Assessment Act 1997).
Initial lower cap amount is the ETP cap for the income year
82-10B(1)
Your lower cap amount in relation to a transitional termination payment you receive at a time in an income year is the ETP cap amount for the year, reduced in accordance with this section.
Note:
For the ETP cap amount, see section 82-160 of the Income Tax Assessment Act 1997.
Reduction of lower cap amount in relation to each payment
82-10B(2)
Reduce your lower cap amount in relation to the payment (but not below zero):
(a) by the amount (if any) (the cap excess ) worked out under subsection (3); and
(b) by so much of the total amounts of transitional termination payments (if any) that you received at an earlier time (whether in the income year or in an earlier income year) for which you are entitled to a tax offset under subsection 82-10A(4).
82-10B(3)
For paragraph (2)(a), the cap excess is worked out using this method: Method statement
Step 1.
Work out the total of the taxable components of all the amounts (if any) of transitional termination payments received by you (including any directed termination payments received on your behalf) in any income year before the income year in which you reached your preservation age.
Step 2.
Work out the total of the taxable components of all the directed termination payments (if any) received on your behalf at an earlier time, in the income year in which you reached your preservation age or later.
Step 3.
Work out the amount (the cap difference ) by which $1,000,000 exceeds the ETP cap for the income year in which you receive the payment to which subsection (1) applies.
Step 4.
The cap excess is the amount (not less than zero) by which the sum of the amounts in steps 1 and 2 exceeds the cap difference in step 3.
Directed termination payments - time of receipt when received by entity to which they are directed
82-10B(4)
For the purposes of this section, a directed termination payment is taken to be received on your behalf at the time the entity to which it is directed receives the payment.
ETP cap not to be reduced under section 82-10 of the Income Tax Assessment Act 1997
82-10B(5)
For the purposes of this section, disregard any reduction of the ETP cap amount under section 82-10 of the Income Tax Assessment Act 1997.
Application
82-10C(1)
This section applies to a transitional termination payment you receive (except any part of the payment that is a directed termination payment) if you are under your preservation age on the last day of the income year in which you receive the payment.
Note:
You do not pay income tax on directed termination payments: see section 82-10G.
Tax free component
82-10C(2)
The tax free component of the payment is not assessable income and is not exempt income.
Taxable component
82-10C(3)
The taxable component of the payment is assessable income.
82-10C(4)
You are entitled to a tax offset that ensures that the rate of income tax on the amount mentioned in subsection (5) 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.
82-10C(5)
The amount is so much of the taxable component of the payment as does not exceed your upper cap amount under section 82-10D.
Note:
If you have received another life benefit termination payment in the same income year (or in an earlier income year) that is not a transitional termination payment, your entitlement to a tax offset under this section is not affected by your entitlement (if any) to a tax concession for the other payment (under section 82-10 of the Income Tax Assessment Act 1997).
Initial upper cap amount is $1,000,000
82-10D(1)
Your upper cap amount in relation to a transitional termination payment you receive at a time in an income year is $1,000,000, reduced in accordance with this section.
Reduction of upper cap amount for each payment
82-10D(2)
Reduce your upper cap amount in relation to the payment (but not below zero):
(a) by the total of all the amounts (if any) included in your assessable income under subsection 82-10C(3) and subsection 82-10A(3) that you received at an earlier time (whether in the income year or in an earlier income year); and
(b) by the total amount of the taxable components of all directed termination payments (if any) received on your behalf at an earlier time (whether in the income year or in an earlier income year).
Directed termination payments - time of receipt when received by entity to which they are directed
82-10D(3)
For this section, a directed termination payment is taken to be received on your behalf at the time the entity to which it is directed receives the payment.
This section applies if an entity (the payer ) proposes to pay a transitional termination payment to an individual.
82-10E(2)
The payer must give the individual a statement (a pre-payment statement ) meeting the requirements of this section.
82-10E(3)
The statement must include the following information:
(a) the amount (if any) that would be the tax free component of the transitional termination payment;
(b) the amount (if any) that would be the taxable component of the transitional termination payment;
(c) any other information specified in the regulations.
82-10E(4)
The statement must also include details of the opportunity to make a choice in accordance with section 82-10F.
A transitional termination payment (or part of such a payment) is a directed termination payment if:
(a) the individual chooses, in accordance with this section, to direct the payment (or part of the payment) to bemade; and
(b) the payment (or part of the payment) is made on the individual's behalf as directed.
Choice to make payment
82-10F(2)
An individual may choose, within 30 days after a pre-payment statement about a transitional termination payment is given to the individual under section 82-10E, to direct the payer to use all or part of the payment to make a payment on behalf of the individual:
(a) to a complying superannuation plan; or
(b) to purchase a superannuation annuity.
82-10F(3)
To make the choice, the individual must:
(a) make it in the approved form; and
(b) give the completed form to the payer.
82-10F(4)
The payer must, immediately after receiving a completed form under subsection (3):
(a) give the entity (or entities) to which payment is directed written notice of the amount that is to be paid, and of the tax free component of the amount; and
(b) comply with the direction (or directions) in the form.
A directed termination payment made on your behalf, that you are taken to receive under section 80-20 of the Income Tax Assessment Act 1997, is not assessable income and is not exempt income.
Note 1:
Directed termination payments are paid into a complying superannuation plan (or to purchase a superannuation annuity) on your behalf: see section 82-10F.
Note 2:
The taxable component of the payment is included in the assessable income of the entity receiving the payment: see section 295-190 of the Income Tax Assessment Act 1997.
Note 3:
In addition, income tax may be payable on a benefit you later receive from the plan to which the directed termination payment is made: see Divisions 301 to 307 of the Income Tax Assessment Act 1997.
This section deals with the application of paragraph 82-10(4)(b) of the Income Tax Assessment Act 1997 to an income year beginning on or after 1 July 2012.
82-10H(2)
For the purposes of that paragraph, the ETP cap amount is taken to be further reduced (but not below zero) by the amount mentioned in subsection (3) (the concessional amount ) of any transitional termination payment made in consequence of the same employment termination as the employment termination to which the paragraph applies.
82-10H(3)
The concessional amount of a transitional termination payment is the part (if any) of the taxable component of the payment for which you are entitled to a tax offset under section 82-10A or 82-10C of this Act.
Division 83A of the Income Tax Assessment Act 1997 applies in relation to an ESS interest if:
(a) the interest was acquired on or after 1 July 2009; and
(b) the relevant share or right (within the meaning of Division 13A of Part III of the Income Tax Assessment Act 1936, as in force at the time (the pre-Division 83A time ) occurring just before Schedule 1 to the Tax Laws Amendment (2009 Budget Measures No 2) Act 2009 commenced, ( former Division 13A ) was not acquired (within the meaning of former Division 13A) before 1 July 2009.
83A-5(2)
Furthermore, Subdivision 83A-C of the Income Tax Assessment Act 1997 (and the rest of Division 83A of that Act, to the extent that it relates to that Subdivision) also applies in relation to an ESS interest if:
(a) all of the following subparagraphs apply:
(i) at the pre-Division 83A time, subsection 139B(3) of the Income Tax Assessment Act 1936 applied in relation to the interest;
(ii) the interest was acquired (within the meaning of former Division 13A) before 1 July 2009;
(iii) the cessation time mentioned in subsection 139B(3) of the Income Tax Assessment Act 1936, as in force at the pre-Division 83A time, for the interest did not occur before 1 July 2009; or
(b) all of the following subparagraphs apply:
(i) at the pre-Division 83A time, section 26AAC of the Income Tax Assessment Act 1936, as in force at that time, ( former section 26AAC ) applied in relation to the interest;
(ii) the interest was acquired (within the meaning of former section 26AAC) before 1 July 2009;
(iii) an amount has not been included in a person's assessable income under former section 26AAC in relation to the interest before 1 July 2009.
83A-5(2A)
To avoid doubt, for the purposes of subparagraph (2)(a)(i), section 139CDA of the Income Tax Assessment Act 1936 applied to the interest at the pre-Division 83A time if the taxpayer in question first became or becomes an employee, as mentioned in that section, before the cessation time for the interest. It does not matter whether the employee so became or becomes an employee before, on or after the pre-Division 83A time.
Note:
Section 139CDA was about shares or rights acquired while engaged in foreign service.
83A-5(3)
Subsection (2) applies despite section 83A-105 of the Income Tax Assessment Act 1997.
83A-5(4)
If Subdivision 83A-C of the Income Tax Assessment Act 1997 applies in relation to an ESS interest because of subsection (2):
(a) do not include an amount in your assessable income under subsection 83A-110(1) of that Act in relation to the ESS interest to the extent that the amount relates to your employment outside Australia; and
(b) subject to subsection 83A-115(3) or 83A-120(3) of that Act, whichever is applicable, treat the ESS deferred taxing point for the interest as being:
(i) if paragraph (2)(a) of this section applies - the cessation time mentioned in subparagraph (2)(a)(iii); or
(ii) if paragraph (2)(b) applies - the earliest time at which an amount is included in a person's assessable income under former section 26AAC in relation to the interest; and
(c) treat the reference in subsection 83A-115(3) or 83A-120(3) (30 day rule for ESS deferred taxing point), whichever is applicable, of that Act to the time worked out under subsection 83A-115(2) or 83A-120(2) of that Act as being a reference to the time worked out under paragraph (b) of this subsection; and
(d) treat the requirements in paragraphs 83A-310(1)(a), (b) and (c) of that Act as being satisfied in relation to the interest if, and only if:
(i) if paragraph (2)(a) applies - the 2 requirements mentioned in section 139DD of the Income Tax Assessment Act 1936 (as in force at the pre-Division 83A time) are satisfied in relation to the interest; or
(ii) if paragraph (2)(b) applies - the requirements in paragraphs (8D)(a), (b) and (c) of former section 26AAC are satisfied in relation to the interest; and
(e) Subdivision 14-C in Schedule 1 to the Taxation Administration Act 1953 (about TFN withholding tax (ESS)) does not apply to the ESS interest; and
(f) if paragraph (2)(a) applies:
(i) for the purposes of Division 115 of the Income Tax Assessment Act 1997 (Discount capital gains and trusts' net capital gains), treat the ESS interest as having been acquired by an individual when the individual acquired the legal title in the share or right of which the ESS interest forms part; and
(ii) for the purposes of Division 392 in Schedule 1 to the Taxation Administration Act 1953 (Statements), disregard any election made under former section 139E of the Income Tax Assessment Act 1936; and
(g) if paragraph (2)(b) applies - paragraph 82-135(m) of the Income Tax Assessment Act 1997 does not apply in relation to the ESS interest.
This section applies if:
(a) at the time (the pre-Division 83A time ) occurring just before Schedule 1 to the Tax Laws Amendment (2009 Budget Measures No 2) Act 2009 commenced:
(i) Division 13A of Part III of the Income Tax Assessment Act 1936, as in force at that time, ( former Division 13A ) applied in relation to a share or right (within the meaning of former Division 13A); or
(ii) section 26AAC of that Act, as in force at that time, applied in relation to a share or right (within the meaning of that section as in force at that time); and
(b) if there is a beneficial interest in the share or right that is an ESS interest - Division 83A of the Income Tax Assessment Act 1997 does not apply in relation to the interest under section 83A-5.
83A-10(2)
If subparagraph (1)(a)(i) applies, to avoid doubt, former Division 13A continues to apply (in spite of its repeal) to the share or right.
83A-10(3)
If subparagraph (1)(a)(ii) applies, to avoid doubt, sections 26AAC and 26AAD of the Income Tax Assessment Act 1936, as in force at the pre-Division 83A time, continue to apply (in spite of their repeal) to the share or right.
This section applies if:
(a) you acquired a beneficial interest in a right before 1 July 2009; and
(b) on or after 1 July 2009, the right becomes a right to acquire a beneficial interestin a share.
83A-15(2)
Division 13A of the Income Tax Assessment Act 1936 is taken to have applied as if the right had always been a right to acquire the beneficial interest in the share.
Amendment of assessments
83A-15(3)
Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment at any time for the purpose of giving effect to subsection (2) of this section.
Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about capital gains and capital losses) apply to assessments for the 1998-99 income year and later income years.
General rule
102-5(1)
In working out whether you have made a capital gain or a capital loss from a CGT event that happens in relation to a CGT asset in the 1998-99 income year or a later income year, you use only the provisions of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (or a provision of an Act that modifies the operation of those Parts) unless a provision of this Part or Part 3-3 of this Act also requires you to use another provision.
Note 1:
This means that, for example, in working out your cost base of the asset, you will apply the new law to circumstances that occurred before the 1998-99 income year (except where this Act requires you to use another provision).
Note 2:
In most cases, the other provision is a provision of this Act. However, in some cases, other provisions may be relevant (for example, provisions of the Income Tax Assessment Act 1936).
Note 3:
Part X of the Income Tax Assessment Act 1936 includes provisions that modify the operation of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997.
Roll-overs
102-5(2)
If:
(a) an entity acquired a CGT asset before the start of the 1998-99 income year as part of a transaction or event or series of transactions or events in respect of which there was a roll-over under the Income Tax Assessment Act 1936; and
(b) the entity owned the asset just before the start of that income year; and
(c) a CGT event happens in relation to the asset in that income year or a later one;
the provisions of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply to the asset from the time when the roll-over happened except that the first element of the cost base and reduced cost base of the asset (when the roll-over happened) is the amount the entity is taken to have paid as consideration in respect of the acquisition of the asset under the relevant provision of the Income Tax Assessment Act 1936.
SECTION 102-15 Applying net capital losses 102-15(1)
In working out whether you have a net capital gain for the 1998-99 income year, the amount of any net capital loss for the 1997-98 income year or an earlier income year must be worked out under the Income Tax Assessment Act 1936.
102-15(2)
If you had a net capital loss for the 1997-98 income year, or some unapplied net capital loss for either of the 2 preceding income years, under former Part IIIA of the Income Tax Assessment Act 1936, it can be carried forward to a later income year to be applied under the Income Tax Assessment Act 1997.
Note:
The way in which capital losses can be applied may be affected by other provisions: see section 102-30 of the Income Tax Assessment Act 1997.
102-15(3)
If you had a net listed personal-use asset loss for the 1997-98 income year under former Part IIIA of the Income Tax Assessment Act 1936, it is taken for the purposes of the Income Tax Assessment Act 1997 to be a net capital loss from collectables for that income year.
SECTION 102-20 102-20 Net capital gains, capital gains and capital losses for income years before 1998-99
For the 1997-98 income year or an earlier income year:
capital gain
has the meaning given by former Part IIIA of the Income Tax Assessment Act 1936.
capital loss
has the meaning given by former Part IIIA of the Income Tax Assessment Act 1936.
net capital gain
has the meaning given by former Part IIIA of the Income Tax Assessment Act 1936.
If:
(a) an entity was a prescribed person (within the meaning of former Division 1A of Part III of the Income Tax Assessment Act 1936) because of residence in the Territory of Cocos (Keeling) Islands on or before 30 June 1991; and
(b) the entity acquired a CGT asset on or before that day; and
(c) the asset is not a pre-CGT asset; and
(d) had a CGT event happened in relation to the asset immediately before 1 July 1991, and had the Income Tax Assessment Act 1997 been in force at the time of the event, any capital gain or capital loss from the event would have been disregarded because the entity was a prescribed person;
then, for the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997:
(e) the asset is taken to have been acquired by the entity on 30 June 1991; and
(f) the first element of the asset's cost base in the hands of the entity (at the end of that day) is its market value at that time.
Note:
A prescribed person was a Territory resident, a Territory company or a trustee of a Territory trust, as defined by former sections 24C, 24D and 24E of the Income Tax Assessment Act 1936.
102-25(2)
If:
(a) an entity was a prescribed person (within the meaning of former Division 1A of Part III of the Income Tax Assessment Act 1936) because of residence in Norfolk Island on or before 23 October 2015; and
(b) the entity acquired a CGT asset on or before that day; and
(c) the asset is not a pre-CGT asset; and
(d) had a CGT event happened in relation to the asset immediately before 24 October 2015, any capital gain or capital loss from the event would have been disregarded because the entity was a prescribed person;
(e)-(f) (Repealed by No 20 of 2016)
then Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply in relation to the asset as if references in those Parts to 20 September 1985 were references to 24 October 2015.
102-25(3)
Despite Division 121 of the Income Tax Assessment Act 1997, the entity is not required to keep records of:
(a) the date of acquisition of an asset in relation to which subsection (1) of this section applies, or its cost base on 30 June 1991; or
(b) the date of acquisition of an asset in relation to which subsection (2) of this section applies.
102-25(4)
However, the entity may choose that subsection (1) does not apply in relation to an asset to which it would (apart from this subsection) apply if:
(a) a CGT event happens in relation to the asset; and
(b) as at the date on which it happens, the entity has complied with Division 121 of the Income Tax Assessment Act 1997 in relation to the asset.
The capital proceeds from an ending referred to in subsection 104-25(3) of the Income Tax Assessment Act 1997 in relation to shares are reduced by any amount that was taken into account as a capital gain for the shares under former section 160ZL of the Income Tax Assessment Act 1936 for the 1997-98 income year or an earlier income year.
A capital gain or capital loss is disregarded if:
(a) you made the capital gain or capital loss for the 1997-98 income year or an earlier income year under former Part IIIA of the Income Tax Assessment Act 1936 because you granted an option to an entity, or renewed or extended an option you had granted; and
(b) the other entity exercises the option in the 1998-99 income year or a later income year.
Section 104-70 of the Income Tax Assessment Act 1997 applies for the purpose of working out the cost base of a unit or an interest you own in a trust if these conditions are satisfied:
(a) CGT event E4 happens in relation to the unit; and
(b) you were taken to have disposed of the unit or interest under former section 160ZM of the Income Tax Assessment Act 1936 (the former equivalent of CGT event E4) because of a payment made by the trustee before 18 December 1986; and
(c) some or all of the payment (the non-assessable part ) was not included in your assessable income; and
(d) some or all of the non-assessable part (theattributable part ) was attributable to a deduction under former Division 10C or 10D of Part III of the Income Tax Assessment Act 1936 (about capital works).
104-70(2)
The cost base of the unit or interest is also reduced by the attributable part.
104-70(3)
Subsection 104-70(5) of the Income Tax Assessment Act 1997 also reduces the cost base and reduced cost base of a unit or interest to nil if an amount was taken into account as a capital gain for the unit or interest under former section 160ZM of the Income Tax Assessment Act 1936.
Subdivision 104-G - Shares
Subsection 104-135(3) of the Income Tax Assessment Act 1997 also reduces the cost base and reduced cost base of a share to nil if an amount was taken into account as a capital gain for the share under former section 160ZL of the Income Tax Assessment Act 1936.
This section applies if:
(a) a choice was made under subsection 104-165(2) of the Income Tax Assessment Act 1997; and
(b) because of the choice, an asset is taken to have the necessary connection with Australia under subsection 104-165(3) of the Income Tax Assessment Act 1997 just before the commencement of Schedule 4 of the Tax Laws Amendment (2006 Measures No 4) Act 2006.
104-165(2)
To avoid doubt, the choice has effect for the purposes of subsection 104-165(3) of the Income Tax Assessment Act 1997 as in force on and after that commencement.
Note:
This means that the asset will be taxable Australian property under the Income Tax Assessment Act 1997 as in force on and after that commencement.
Subsection 104-165(1) of the Income Tax Assessment Act 1997 continues to apply, despite its repeal by item 20 of Schedule 1 to the Tax Laws Amendment (2006 Measures No. 1) Act 2006, to an individual:
(a) who is in Australia on the day on which that item receives the Royal Assent; and
(b) who remains an Australian resident from that day until the time subsection 104-165(1) is applied in respect of him or her.
Unless subsection (2) or (3) of this section applies, sections 104-175 and 104-180 of the Income Tax Assessment Act 1997 apply if there was a roll-over under former section 160ZZO of the Income Tax Assessment Act 1936 for a disposal of an asset from one company to another company (the transferee ).
104-175(2)
If CGT event J1 would happen in relation to the roll-over in a situation involving something happening in relation to the transferee, that event does not happen if there would have been no deemed disposal and re-acquisition of the asset by the transferee in that situation under whichever of these provisions would have been relevant for that situation if it had happened before the start of the 1998-99 income year:
(a) former section 160ZZOA of that Act; or
(b) former paragraphs 160ZZO(1)(g) and (h) of that Act.
104-175(3)
In working out whether subsection (2) affects you, take into account provisions of other Acts that amended former Part IIIA of the Income Tax Assessment Act 1936 and that affect the situation referred to in that subsection.
SECTION 104-185 104-185 Change of status of replacement asset for a roll-over under Division 17A of former Part IIIA of the 1936 Act or Division 123 of the 1997 Act
Section 104-185 of the Income Tax Assessment Act 1997 applies to a replacement asset for a roll-over under:
(a) Division 17A of former Part IIIA of the Income Tax Assessment Act 1936; or
(b) Division 123 of the Income Tax Assessment Act 1997;
in the same way as it applies to a replacement asset for a roll-over under Subdivision 152-E of the Income Tax Assessment Act 1997.
(Repealed by No 55 of 2007)
Subsection 104-205(3) of the Income Tax Assessment Act 1997 also reduces the cost base and reduced cost base of the item to nil if an amount was taken into account as a capital gain for the item under former section 160ZZD of the Income Tax Assessment Act 1936.
Section applies if asset used for old law R&D activities
104-235(1)
This section applies to an R&D entity if:
(a) a balancing adjustment event happens in an income year commencing on or after 1 July 2011 for an asset held by the R&D entity; and
(b) at some time when the R&D entity held the asset, it used the asset for the purpose of the carrying on by or on its behalf of research and development activities (within the meaning of former section 73B of the Income Tax Assessment Act 1936).
Changed application of sections 104-235 and 104-240
104-235(2)
Sections 104-235 and 104-240 of the Income Tax Assessment Act 1997 (the new Act ) apply to the R&D entity for the event as if:
(a) a reference in those sections to the purpose of conducting R&D activities for which you were registered under section 27A of the Industry Research and Development Act 1986;
included:
(b) a reference to the purpose described in paragraph (1)(b) of this section.
Normal rules do not apply for the asset and the event
104-235(3)
Neither of the following sections:
(a) sections 104-235 and 104-240 of the new Act (as amended by the Tax Laws Amendment (Research and Development) Act 2011);
(b) sections 104-235 and 104-240 of the new Act (as those sections apply because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 2011);
to the extent that they would otherwise apply apart from this section to the R&D entity for the event, do so apply to the R&D entity for the event.
Note 1:
The sections described in paragraph (a) would otherwise apply for the event in a case where the R&D entity had used the asset for the purpose of conducting R&D activities for which it was registered under section 27A of the Industry Research and Development Act 1986.
Note 2:
The sections described in paragraph (b) would otherwise apply in respect of the purpose described in paragraph (1)(b) of this section.
If:
(a) an entity owned a thing that is not a form of property before 26 June 1992 and at all times from that day to the start of the entity's 1998-99 income year; and
(b) that thing was not, before 26 June 1992, an asset as defined in former section 160A of the Income Tax Assessment Act 1936;
the thing is not a CGT asset.
Section 108-15 of the Income Tax Assessment Act 1997 does not apply to a collectable you own that you last acquired before 16 December 1995.
Note:
That section has special rules for the separate disposal of collectables that are a set.
Subsection 108-75(2) of the Income Tax Assessment Act 1997 applies to a roll-over under former section 160ZWA of the Income Tax Assessment Act 1936 in the same way that it applies to a roll-over under Subdivision 124-J of the Income Tax Assessment Act 1997.
108-75(2)
Subsection 108-75(2) of the Income Tax Assessment Act 1997 applies to a roll-over under former section 160ZZF of the Income Tax Assessment Act 1936 in the same way that it applies to a roll-over under Subdivision 124-L of the Income Tax Assessment Act 1997.
108-75(3)
Subsection 108-75(2) of the Income Tax Assessment Act 1997 applies to a roll-over under former section 160ZZPE of the Income Tax Assessment Act 1936 in the same way that it applies to a roll-over under Subdivision 124-C of the Income Tax Assessment Act 1997.
108-75(4)
Subsection 108-75(2) of the Income Tax Assessment Act 1997 applies to a roll-over under former section 160ZWC of the Income Tax Assessment Act 1936 in the same way that it applies to a roll-over under Subdivision 124-K of the Income Tax Assessment Act 1997.
Note:
This provision covers the case where the roll-over occurred in the 1997-98 income year or an earlier one and the relevant CGT event in the 1998-99 income year or a later one.
Despite section 108-85 of the Income Tax Assessment Act 1997, the Commissioner is entitled to publish the improvement threshold for the 1998-99 income year:
(a) before the beginning of that year; or
(b) within a reasonable time after the beginning of that year.
If:
(a) the circumstances specified in the second column of the table in subsection 109-5(2) of the Income Tax Assessment Act 1997 for CGT event E1, E2 or E3 happened in relation to an asset before 12 noon, by legal time in the Australian Capital Territory, on 12 January 1994; and
(b) the trustee that owned the asset just after those circumstances happened also owned it at all times from then until the start of the trustee's 1998-99 income year;
the question whether those circumstances resulted in an acquisition of an asset by the trustee is to be determined under the Income Tax Assessment Act 1936 as in force just before 12 noon, by legal time in the Australian Capital Territory, on 12 January 1994.
109-5(2)
The acquisition rule for CGT event E9 (about an entity creating a trust over future property) in the table in subsection 109-5(2) of the Income Tax Assessment Act 1997 does not apply to you as trustee if the agreement to create the trust was made before 12 noon, by legal time in the Australian Capital Territory, on 12 January 1994.
Division 110 - Cost base and reduced cost base
For the purpose of working out the capital gain of a life insurance company or a registered organisation from a CGT event happening after 11.45 am (by legal time in the Australian Capital Territory) on 21 September 1999 and before 1 July 2000, the cost base includes indexation only if the company or organisation chooses that the cost base includes indexation.
Despite subsection 110-35(2) of the Income Tax Assessment Act 1997, expenditure for professional advice about taxation incurred before 1 July 1989 does not form part of the cost base of a CGT asset.
In working out the cost base and reduced cost base of a CGT asset:
(a) that you acquired before 16 August 1989; and
(b) to which paragraph 112-20(2)(b) or (c), or item 5 or 6 in the table in subsection 112-20(3), of the Income Tax Assessment Act 1997 would apply (apart from this section);
disregard subsections 112-20(2) and (3) of that Act.
Note:
This section preserves the pre-16 August 1989 position for, among other things, shares or units issued or allotted to you by allowing the market value substitution rule to apply.
This section affects how to work out a capital gain or capital loss you make from a CGT event that happens to a CGT asset after 31 December 1990 if:
(a) before 1 January 1991, you used the asset (other than on a prior holding of it) solely for the purpose of producing exempt income, and principally for the purpose of producing exempt income to which former paragraph 23(o) or former subsection 23C(1) of the Income Tax Assessment Act 1936 (about income from producing or selling gold) applied; and
(b) you owned the asset continuously from the end of 31 December 1990 until the CGT event.
Capital gain
112-100(2)
For the purposes of working out a capital gain you make from the CGT event, if the asset's market value at the end of 31 December 1990 was more than its cost base at that time, the first element of its cost base at that time is that market value.
Capital loss
112-100(3)
The rest of this section has effect for the purposes of working out a capital loss you make from the CGT event.
112-100(4)
If the asset's market value at the end of 31 December 1990 was less than its reduced cost base at that time, the first element of its reduced cost base at that time is that market value.
112-100(5)
In applying section 110-55 of the Income Tax Assessment Act 1997 (about reduced cost base):
(a) treat your notional deductions (within the meaning of Subdivision B or C of former Division 16H of Part III of the Income Tax Assessment Act 1936) as amounts you have deducted; and
(b) disregard the effect of former sections 159GZZO and 159GZZZ of that Act.
Indexation is not relevant to the capital gain of a life insurance company or a registered organisation from a CGT event happening after 11.45 am (by legal time in the Australian Capital Territory) on 21 September 1999 and before 1 July 2000 unless the company or organisation has chosen that the cost base include indexation for the purposes of the Income Tax Assessment Act 1997.
This section applies to a collectable you own that:
(a) is an interest in:
(i) artwork, jewellery, an antique or a coin or medallion; or
(ii) a rare folio, manuscript or book; or
(iii) a postage stamp or first day cover; and
(b) you last acquired before 16 December 1995.
118-10(2)
A capital gain or capital loss you make from the interest is disregarded if the first element of its cost base is $500 or less.
SECTION 118-24A Pilot plant 118-24A(1)
Disregard a capital gain or capital loss you make from a CGT event happening in relation to pilot plant, as defined in former subsection 73B(1) of the Income Tax Assessment Act 1936:
(a) if the CGT event happens after 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; or
(b) if:
(i) the CGT event is CGT event A1 (disposal of a CGT asset); and
(ii) the time of the event is when you entered into the contract for the disposal of the CGT asset; and
(iii) the change of ownership constituting the disposal occurred after 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999.
118-24A(2)
However, subsection (1) does not apply to assessments for the 2001-2002 income year and later income years.
Subdivision 118-B - Main residence
None of the amendments made by Part 1 of Schedule 1 to the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Act 2019 apply in relation to a capital gain or capital loss you make from a CGT event if:
(a) the CGT event happens on or before 30 June 2020; and
(b) you held an ownership interest in the dwelling to which the CGT event relates throughout the period:
(i) starting just before 7.30 pm, by legal time in the Australian Capital Territory, on 9 May 2017; and
(ii) ending just before the CGT event happens.
118-110(2)
For the purposes of paragraph (1)(b), treat the ownership interest in the dwelling as having been held by you during a time during which the interest was held by:
(a) in relation to sections 118-195 to 118-210 of the Income Tax Assessment Act 1997 - the deceased or the trustee of the deceased estate; or
(b) in relation to sections 118-215 to 118-230 of that Act - the trustee of the special disability trust.
This section applies to an entity:
(a) that acquired an ownership interest in a dwelling as trustee of a deceased estate on or before 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996; or
(b) to whom an ownership interest in a dwelling passed as a beneficiary in a deceased estate on or before that time.
118-195(2)
Item 1 in the table in subsection 118-195(1) of the Income Tax Assessment Act 1997 applies to the entity in relation to the dwelling as if that item required the dwelling to be the deceased's main residence throughout the deceased's ownership period.
118-195(3)
Section 118-192 and subsections 118-190(4) and 118-200(4) do not apply to the entity in relation to the dwelling.
Subdivision 118-C - Goodwill
Despite section 118-260 of the Income Tax Assessment Act 1997, the Commissioner is entitled to publish the business exemption threshold for the 1998-99 income year:
(a) before the beginning of that year; or
(b) within a reasonable time after the beginning of that year.
If you were retaining records under former section 160ZZU of the Income Tax Assessment Act 1936 for an asset, you must continue to retain them in accordance with Division 121 of the Income Tax Assessment Act 1997.
A superannuation fund to which former subsection 160ZZU(6A) of the Income Tax Assessment Act 1936 applied just before the start of the 1998-99 income year must keep the records referred to in that subsection, and retain them until the end of 30 June 2002.
121-25(2)
A superannuation fund to which former subsection 160ZZU(6B) of the Income Tax Assessment Act 1936 applied just before the start of the 1998-99 income year in relation to a CGT asset must keep the records referred to in that subsection for the asset, and retain them until the end of 5 years after CGT event A1, B1, C1, C2, G1 or G3 happens in relation to the asset.
Note:
The full list of CGT events is in section 104-5 of the Income Tax Assessment Act 1997.
Penalty: 30 penalty units.
121-25(3)
Subsection (1) or (2) does not require a fund to retain records if the Commissioner notifies the fund that the retention of the records is not required.
Sections 124-141 and 124-142 apply if:
(a) there are one or more roll-overs under section 124-140 of the Income Tax Assessment Act 1997 where:
(i) your ownership of one or more statutory licences (each of which is an original licence ) ends, resulting in CGT event C2 happening to the licence (or to each of the licences as part of an arrangement); and
(ii) you are issued one or more new licences (each of which is a new licence ) for the original licence (or original licences); and
(b) if there was only one original licence - that licence is covered under subsection (2); and
(c) if there was more than one original licence - at least one of the original licences was covered under subsection (2); and
(d) if there is only one new licence - that licence is covered under subsection (3); and
(e) if there is more than one new licence - only one of the new licences is covered under subsection (3); and
(f) the original licence (or at least one of the original licences) has an ineligible part (as described in section 124-150 of the Income Tax Assessment Act 1997).
124-140(2)
A licence is covered under this subsection if it is:
(a) a bore licence issued under the Water Act 1912 of New South Wales; or
(b) a licence of a kind specified in the regulations.
124-140(3)
A licence is covered under this subsection if it is:
(a) an aquifer access licence under the Water Management Act 2000 of New South Wales issued in accordance with the New South Wales Achieving Sustainable Groundwater Entitlements program (the ASGE program ); or
(b) a licence of a kind specified in the regulations.
For an original licence that has an ineligible part, the cost base of the ineligible part is the cost base of the original licence multiplied by the amount worked out under the formula:
Total ineligible proceeds | ||
Total ineligible proceeds + Value of new licence |
total ineligible proceeds
is the total of the ineligible proceeds (as described in section 124-150 of the Income Tax Assessment Act 1997) in relation to all of the original licences that have an ineligible part.
(a) if the new licence is an aquifer access licence mentioned in paragraph 124-40(3)(a) - the 2002 value assigned under the ASGE program to the new licence; or
(b) otherwise - the value of the new licence worked out in accordance with the regulations.
124-141(2)
The regulations may specify one or more ways of working out the value of a licence (other than an aquifer access licence mentioned in paragraph 124-40(3)(a)) for the purposes of this section.
124-141(3)
For an original licence that has an ineligible part, the reduced cost base of the ineligible part is the reduced cost base of the original licence multiplied by the amount worked under the formula set out in subsection (1).
The first element of the cost base and reduced cost base of the new licence that is covered under subsection 124-140(3) is the total of the cost bases of the original licences.
Note:
For the purposes of this section, the cost base of each original licence that has an ineligible part is reduced in accordance with subsection 124-150(4) of the Income Tax Assessment Act 1997.
124-142(2)
The cost base and reduced cost base of any new licence that is not covered under subsection 124-140(3) is nil.
124-142(3)
Subsections (4) and (5) apply if:
(a) there was more than one original licence; and
(b) some of the original licences were acquired before 20 September 1985; and
(c) subsection 124-165(2) of the Income Tax Assessment Act 1997 applies in relation to the new licence that is covered under subsection 124-140(3) (splitting that licence into 2 separate CGT assets).
124-142(4)
For the purposes of subsection (2), treat the asset that is taken under paragraph 124-165(2)(a) of that Act to have been acquired on or after 20 September 1985 as a new licence that is covered under subsection 124-140(3) of this Act.
124-142(5)
Work out the first element of the cost base and reduced cost base of that asset in accordance with subsection 124-165(3) of that Act.
Subdivision 124-I of the Income Tax Assessment Act 1997, as amended by Schedule 2 to the Tax Laws Amendment (2011 Measures No. 9) Act 2012, applies to CGT events happening after 7.30 pm (by legal time in the Australian Capital Territory) on 11 May 2010.
Despite the amendment of section 125-75 of the Income Tax Assessment Act 1997 made by Schedule 1 to the Tax Laws Amendment (2009 Budget Measures No. 2) Act 2009, subsection (1) of that section continues to apply, from the commencement of that Schedule, to each ownership interest that it applied to just before that commencement.
This section applies to a CGT asset of a superannuation fund (the transferee ) if:
(a) the transferee acquired the asset from another superannuation fund in circumstances to which former section 160ZZPI of the Income Tax Assessment Act 1936 applied; and
(b) the transferee owned the asset just before the start of the 1998-99 income year; and
(c) CGT event A1, B1, C1, C2, G1 or G3 happens in relation to the asset in that income year or a later one.
Note:
The full list of CGT events is in section 104-5 of the Income Tax Assessment Act 1997.
126-100(2)
The first element of the cost base of the asset in the hands of the transferee (at the time the transferee acquired the asset) is the asset's cost base (in the hands of the other fund) at that time.
126-100(3)
The reduced cost base of the asset in the hands of the transferee is worked out similarly.
Subdivision 126-B - Transfer of life insurance business
There may be a roll-over if:
(a) a CGT event happens because all or part of the life insurance business of a life insurance company (the originating company ) is transferred to another life insurance company (the recipient company ):
(i) in accordance with a scheme confirmed by the Federal Court of Australia under Part 9 of the Life Insurance Act 1995; or
(ii) under the Financial Sector (Transfers of Business) Act 1999; and
(b) the originating company and the recipient company were members of the same wholly-owned group just before the transfer; and
(c) one of these happens:
(i) a CGT asset (the original asset ) of the originating company becomes an asset of the recipient company; or
(ii) a CGT asset of the originating company ends and the recipient company acquires an equivalent replacement asset; or
(iii) the originating company creates a CGT asset in the recipient company; and
(d) the transfer takes place:
(i) before 30 June 2004; or
(ii) if the originating company and the recipient company are members of the same consolidated group or consolidatable group and the head company of that group has a substituted accounting period - before the end of the head company's income year in which 30 June 2004 occurs.
126-150(2)
The CGT asset involved (the roll-over asset ) must not be trading stock of the recipient company just after the time of the transfer.
126-150(3)
If:
(a) the roll-over asset is a right or convertible interest referred to in Division 130, or an option referred to in Division 134, of the Income Tax Assessment Act 1997 or an exchangeable interest; and
(b) the recipient company acquires another CGT asset by exercising the right or option or by converting the convertible interest or in exchange for the disposal or redemption of the exchangeable interest;
the other asset cannot become trading stock of the recipient company just after the recipient company acquired it.
126-155 (Repealed) SECTION 126-155 When there is a roll-over
(Repealed by No 41 of 2011)
A capital gain or capital loss the originating company makes from the CGT event is disregarded.
126-160(2)
The first element of the cost base of the original asset or the replacement asset for the recipient company is the cost base of the original asset for the originating company just before the time of the CGT event.
126-160(3)
The first element of the reduced cost base of the original asset or the replacement asset for the recipient company is worked out similarly.
126-160(4)
For a case where the originating company creates a CGT asset in the recipient company, the first element of the asset's cost base (in the hands of the recipient company) is the amount applicable under this table. The first element of its reduced cost base is worked out similarly.
Creating a CGT asset | |
CGT event number | Applicable amount |
D1 | the incidental costs the originating company incurred that relate to the CGT event |
D2 | the expenditure the originating company incurred to grant the option |
D3 | the expenditure the originating company incurred to grant the right |
F1 | the expenditure the originating company incurred on the grant, renewal or extension of the lease |
The expenditure can include giving property: see section 103-5 of the Income Tax Assessment Act 1997.
126-160(5)
If the originating company acquired the original asset before 20 September 1985, the recipient company is taken to have acquired the original asset or the replacement asset before that day.
SECTION 126-165 126-165 References to Subdivision 126-B of the Income Tax Assessment Act 1997
A reference in an Act to a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 includes a reference to a roll-over under this Subdivision.
Example:
Examples of the operation of this provision include:
(a) CGT event J1 may happen if the recipient company stops being a 100% subsidiary of a member of a company group after a roll-over under this Subdivision; and (b) (Repealed by No 56 of 2010) (c) an allocable cost amount may be affected under section 705-93 because of a roll-over under this Subdivision.
The rule in item 3 in the table in subsection 128-15(4) of the Income Tax Assessment Act 1997 (about a dwelling that was your main residence just before you died and was not being used for the purpose of producing assessable income) does not apply to a dwelling that devolved to your legal personal representative, or passed to a beneficiary in your estate, on or before 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996.
This section modifies some of the rules in section 130-20 of the Income Tax Assessment Act 1997 if:
(a) you own shares in a company or units in a unit trust (the original equities ); and
(b) on or before the day specified in subsection (2) or (3), the company issues other shares, or the trustee issues other units, (the bonus equities ) to you because it owes an amount to you in relation to the original equities.
130-20(2)
If the bonus equities are shares and they were issued on or before 30 June 1987:
(a) subsection 130-20(2) of the Income Tax Assessment Act 1997 does not apply to you; and
(b) you work out the cost base and reduced cost base of the bonus equities under subsection 130-20(3) of that Act regardless of whether any part of the amount owed to you by the company is a dividend.
130-20(3)
The rule in item 2 of the table in subsection 130-20(3) of the Income Tax Assessment Act 1997 does not apply if the bonus equities were issued on or before 1 pm, by legal time in the Australian Capital Territory, on 10 December 1986 and you were required to pay or give something for them. Instead, you are taken to have acquired the bonus equities when you acquired the original equities.
Subdivision 130-B - Rights
The modifications in section 130-40 of the Income Tax Assessment Act 1997 apply to you for rights (issued to you by a company before 16 August 1989) to acquire shares, or options to acquire shares, in that company, only if you were a shareholder of that company.
130-40(2)
The modifications in section 130-40 of the Income Tax Assessment Act 1997 apply to you for rights (issued to you by a company after 15 August 1989 and before the start of the 1993-94 income year) to acquire shares, or options to acquire shares in the company because you were a shareholder of another company, only if the companies were members of the same wholly-owned group for the whole of the income year in which the issue occurred.
130-40(3)
The modification in item 3 of the table in section 130-40 of the Income Tax Assessment Act 1997 applies also to your exercise of rights (that you acquired before 20 September 1985) to acquire shares, or options to acquire shares, in a company.
Subdivision 130-C - Convertible notes
The modification in item 1 of the table in subsection 130-60(1) of the Income Tax Assessment Act 1997 does not apply to shares or units in a unit trust you acquire by converting a convertible note (that is a traditional security) that you acquired after 10 May 1989 and before 16 August 1989. Instead, the first element of the cost base and reduced cost base of the shares or units is the sum of:
(a) what you paid or gave to acquire the note; and
(b) any amount you paid in relation to the conversion;
if that sum is more than the market value of the shares or units (at the time of conversion).
130-60(2)
The modification in item 2 of the table in subsection 130-60(1) of the Income Tax Assessment Act 1997 does not apply to shares you acquire by converting a convertible note (that is not a traditional security) that you acquired before 20 September 1985 where you paid or gave something in relation to the conversion. Instead, the first element of the cost base and reduced cost base of the shares is the sum of:
(a) the market value of the note at the time of the conversion; and
(b) what you paid or gave in relation to the conversion.
130-60(3)
Subsection 130-60(2) of the Income Tax Assessment Act 1997 does not apply to the acquisition of shares by the conversion of a convertible note that you acquired before 20 September 1985 if you did not pay or give anything in relation to the conversion. Instead, you are taken to have acquired them when you acquired the convertible note.
(Repealed) Subdivision 130-DA - Employee share schemes
(Repealed by No 133 of 2009)
(Repealed by No 133 of 2009)
(Repealed by No 133 of 2009)
(Repealed by No 133 of 2009)
(Repealed by No 133 of 2009)
(Repealed by No 133 of 2009)
(Repealed by No 133 of 2009)
The modification in item 1 in the table in subsection 134-1(1) of the Income Tax Assessment Act 1997 does not apply to an option (that was granted before 20 September 1985 and exercised after that day) that binds the grantor to create (including grant or issue) or dispose of a CGT asset. Instead, the first element of the cost base and reduced cost base of the CGT asset acquired by the grantee by exercising the option includes the market value of the option when it was exercised.
134-1(2)
This section does not apply to an option if:
(a) it has been renewed or extended; and
(b) the last renewal or extension occurred on or after 20 September 1985.
Division 136 - Foreign residents
A CGT asset a company owns is taxable Australian property if:
(a) the company acquired the asset after 28 January 1988 and on or before 25 May 1988; and
(b) it acquired the asset as a result of a disposal (for the purposes of former Part IIIA of the Income Tax Assessment Act 1936) for which there was a roll-over under former section 160ZZN or 160ZZO of that Act; and
(c) that disposal was by:
(i) an entity that was not a trustee, and not a resident of Australia for the purposes of that Act; or
(ii) an entity that was a trustee of a trust that was not a resident trust estate, or a resident unit trust, for the purposes of that Act.
SECTION 137-10 137-10 Applicable CGT events
Division 137 of the Income Tax Assessment Act 1997 applies in relation to events: (a) that happen on or after the commencement of that Division; and (b) that, apart from that Division, would be CGT events;
(whether the arrangements to which the events relate were entered into before, on or after that commencement).
You make adjustments to the cost base and reduced cost base of shares under Division 140 of the Income Tax Assessment Act 1997 only in relation to schemes where the decrease in market value and increase in market value occur after 12 noon, by legal time in the Australian Capital Territory, on 12 January 1994.
A share value shift is disregarded under subsection 140-15(8) of the Income Tax Assessment Act 1997 only if:
(a) the company concerned buys back the shares after 7.30 pm, by legal time in the Australian Capital Territory, on 9 May 1995; and
(b) the buy back is not done under an arrangement that is an excluded transitional arrangement within the meaning of subitem 12(2) of Schedule 1 of the Taxation Laws Amendment Act (No. 1) 1996.
Division 149 - When an asset stops being a pre-CGT asset
This section applies to a CGT asset that:
(a) an entity last acquired before 20 September 1985; and
(b) the entity owned just before the start of the 1998-99 income year; and
(c) the entity was taken to have acquired on a day (the acquisition day ) on or after 20 September 1985 under Division 20 of former Part IIIA of the Income Tax Assessment Act 1936.
149-5(2)
In applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the entity:
(a) the entity is taken to have acquired the asset on the acquisition day; and
(b) the first element of the cost base and reduced cost base of the asset on the acquisition day is the amount for which the entity is taken to have acquired it under Division 20 of former Part IIIA of the Income Tax Assessment Act 1936.
Division 152 - Small business relief
This section applies if:
(a) you chose a roll-over under Subdivision 152-E of the Income Tax Assessment Act 1997 (or under former Division 123 of that Act) for a capital gain you made for an income year from a CGT event that happened in relation to a CGT asset before the commencement of this section; and
(b) you did not include the capital gain in working out your net capital gain for that year; and
(c) assuming that you had acquired a replacement asset before the CGT event, you would have been entitled to choose that roll-over.
152-5(2)
The capital gain is disregarded for the purposes of the Income Tax Assessment Act 1997.
152-5(3)
If you acquired a replacement asset within the period (the replacement asset period ) ending 2 years after the last CGT event in the income year for which you obtained the roll-over but the total of the first and second elements of the cost base of that asset is less than the amount of the capital gain that would, apart from this subsection, be disregarded, the amount to be disregarded is that total.
152-5(4)
However, if you do not acquire a replacement asset within the replacement asset period, that Act applies to you as if you had never chosen the roll-over, and the capital gain is not disregarded.
152-5(5)
The Commissioner may extend the replacement asset period.
This section applies if:
(a) you made a capital gain for an income year from a CGT event that happened before the commencement of this section; and
(b) you included the capital gain in working out your net capital gain for that year; and
(c) at the commencement of this section, you have not acquired a replacement asset but the replacement asset period had not expired; and
(d) assuming that you had acquired a replacement asset before the CGT event, you would have been entitled to choose a roll-over under Subdivision 152-E of that Act.
152-10(2)
The capital gain is disregarded for the purposes of the Income Tax Assessment Act 1997.
152-10(3)
If you acquired a replacement asset within the replacement asset period but the total of the first and second elements of the cost base of that asset is less than the amount of the capital gain that would, apart from this subsection, be disregarded, the amount to be disregarded is that total.
152-10(4)
However, if you do not acquire a replacement asset within the replacement asset period, that Act applies to you as if you had never chosen the roll-over, and the capital gain is not disregarded.
152-10(5)
The Commissioner may extend the replacement asset period.
Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment made before the commencement of this section at any time in the period of 4 years starting at that commencement for the purpose of giving effect to this Division.
(Repealed by No 96 of 2014)
(Repealed by No 96 of 2014)
Subdivision 165-CA of the Income Tax Assessment Act 1997 (about companies applying net capital losses of earlier income years) applies to assessments for the 1998-99 income year and later income years.
Subdivision 165-CB of the Income Tax Assessment Act 1997 (about companies working out the net capital gain and the net capital loss for the income year of the change) applies to assessments for the 1998-99 income year and later income years.
A choice under section 165-115E of the Income Tax Assessment Act 1997 to use the global method of working out whether a company has an unrealised net loss at a particular time must be made within 6 months after the day on which the New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 received the Royal Assent if:
(a) that time is before that day; and
(b) subsection 165-115E(4) of that Act would otherwise require the choice to be made before the end of those 6 months.
A choice under section 165-115U of the Income Tax Assessment Act 1997 to use the global method of working out whether a company has an adjusted unrealised loss at a particular time must be made within 6 months after the day on which the New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 received the Royal Assent if:
(a) that time is before that day; and
(b) subsection 165-115U(1D) of that Act would otherwise require the choice to be made before the end of those 6 months.
A notice under subsection 165-115ZC(4) or (5) of the Income Tax Assessment Act 1997 must be given within 6 months after the day on which the New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 received the Royal Assent if the alteration time is before that day.
165-115ZC(2)
If, because of amendments made by Schedule 14 to the New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002, a notice already given under subsection 165-115ZC(4) or (5) of the Income Tax Assessment Act 1997 before the day referred to in subsection (1) of this section no longer complies with section 165-115ZC of the Income Tax Assessment Act 1997, the entity required to give the notice may comply with that section 165-115ZC by giving a further notice.
165-115ZC(3)
The further notice:
(a) must vary the notice referred to in subsection (2) in such a way (which may include setting out additional information) that the notice as varied complies with section 165-115ZC of the Income Tax Assessment Act 1997 as affected by the amendments; and
(b) must be given within the 6 months referred to in subsection (1) of this section, or within a further period allowed by the Commissioner; and
(c) must otherwise be given in accordance with that section.
Special rules for consolidatable groups and potential MEC groups
165-115ZC(4)
Subsections (5) and (6) have effect if:
(a) the alteration time mentioned in section 165-115ZC of the Income Tax Assessment Act 1997 is after 10 November 1999 and before 1 July 2004; and
(b) apart from this section, subsection 165-115ZC(4) or (5) of that Act would require an entity (the notifying entity ) to give a notice to another entity (the receiving entity ) in relation to the alteration time; and
(c) just before the alteration time, the notifying entity and the receiving entity were both members of the same consolidatable group or potential MEC group.
165-115ZC(5)
Subsections 165-115ZC(4) and (5) of the Income Tax Assessment Act 1997 do not apply to the notifying entity if both it and the receiving entity became members of the same consolidated group or MEC group before 1 July 2004.
165-115ZC(6)
Even if subsection (5) does not apply, the notifying entity is not required to give the notice to the receiving entity before the end of 6 months after the commencement of this subsection.
165-115ZC(7)
Subsections (1) and (3) have effect subject to subsections (5) and (6).
SECTION 165-115ZD Adjustment (or further adjustment) for interest realised at a loss after global method has been used 165-115ZD(1)
This section affects how sections 165-115ZA and 165-115ZB of the Income Tax Assessment Act 1997 apply to an interest (the equity ) in, or a debt owed by, a company if apart from this section, a loss (the realised loss ):
(a) would be realised for income tax purposes by a realisation event that happens to the equity or debt; or
(b) would be so realised but for Subdivision 170-D of that Act (which defers realisation of capital losses and deductions);
and the company chose to use the global method of working out whether it had an adjusted unrealised loss at the last alteration time:
(c) that happened for the company, before the realisation event; and
(d) immediately before which the equity or debt was, or was part of:
(i) if the company was a loss company at that alteration time - a relevant equity interest, or a relevant debt interest, that an entity had in the company; or
(ii) otherwise - what would have been such an interest if the company had been a loss company at that alteration time;
and these conditions are satisfied:
(e) that last alteration time is before the day on which the New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 received the Royal Assent; and
(f) the entity that owns the equity or debt immediately before the realisation event chooses to apply this section to the equity or debt, in relation to that last alteration time, instead of section 165-115ZD of the Income Tax Assessment Act 1997; and
(g) the choice is made on or before the latest of these:
(i) the last day of the period of 6 months after the day referred to in paragraph (c) of this subsection;
(ii) the day on which the entity lodges its income tax return for the income year in which the realisation event occurred;
(iii) such later day as the Commissioner allows.
If the entity makes that choice, this section applies accordingly instead of that section.
165-115ZD(2)
In addition to any application to the equity or debt, in relation to that last alteration time, that sections 165-115ZA and 165-115ZB of the Income Tax Assessment Act 1997 have apart from this section, those sections apply (and are taken always to have applied) to the equity or debt, in relation to that last alteration time, as if:
(a) the company had an adjusted unrealised loss at that time equal to the realised loss (see subsection (1) or (5), as appropriate, of this section) of this section, except so much of the loss as it is reasonable to conclude is attributable to none of these:
(i) a notional capital loss, or a notional revenue loss, that the company has at that last alteration time in respect of a CGT asset;
(ii) a trading stock decrease in relation to that time for a CGT asset that was trading stock of the company at that time; and
(b) the company were therefore a loss company at that time; and
(c) that adjusted unrealised loss were the company's overall loss at that time.
165-115ZD(3)
For the purposes of how sections 165-115ZA and 165-115ZB of the Income Tax Assessment Act 1997 apply because of this section, the adjustment amount under section 165-115ZB of that Act is to be worked out and applied in accordance with subsection 165-115ZB(6) (the non-formula method) of that Act.
165-115ZD(4)
To avoid doubt:
(a) a notice need not be given under section 165-115ZC of the Income Tax Assessment Act 1997 because of thissection; and
(b) this section does not affect the requirements that apply to a notice that otherwise must be given under that section.
165-115ZD(5)
If the equity or debt is a revenue asset at the time of the realisation event, subsection (2) applies on the basis that the realised loss is the total of:
(a) the loss (if any) realised for income tax purposes by the realisation event happening to the equity or debt in its character as a CGT asset; and
(b) the loss (if any) realised for income tax purposes by the realisation event happening to the equity or debt in its character as a revenue asset.
Subdivision 165-C - Deducting bad debts
Subdivision 165-C of the Income Tax Assessment Act 1997 (about companies deducting bad debts) applies to assessments for the 1998-1999 income year and later income years.
Subdivision 166-C of the Income Tax Assessment Act 1997 (about listed public companies deducting bad debts) applies to assessments for the 1998-1999 income year and later income years.
Division 167 of the Income Tax Assessment Act 1997 applies:
(a) to any tax loss that is incurred in an income year commencing on or after 1 July 2002; and
(b) to any net capital loss that is made in an income year commencing on or after 1 July 2002; and
(c) to any deduction in respect of a bad debt that is claimed in an income year commencing on or after 1 July 2002; and
(d) in determining whether any changeover time or alteration time occurred on or after 1 July 2002.
167-1(2)
Division 167 of the Income Tax Assessment Act 1997 also applies:
(a) to any tax loss of a company:
(i) that is incurred in an income year commencing on or before 30 June 2002; and
(ii) that could have been deducted, in accordance with Divisions 165 and 166 of that Act as in force at that time, in the first income year commencing after 30 June 2002 if the deduction had not been limited by the company's income for that income year; and
(b) to any net capital loss of a company:
(i) that is made in an income year commencing on or before 30 June 2002; and
(ii) that could have been applied, in accordance with Divisions 165 and 166 of that Act as in force at that time, in the first income year commencing after 30 June 2002 if the application of the loss had not been limited by the company's capital gains for that income year.
In working out an amount under subsection 170-45(4) of the Income Tax Assessment Act 1997 (which may limit the amount of a tax loss that can be transferred under Subdivision 170-A of that Act), disregard these sections of this Act:
(a) section 707-325 (which lets the available fraction for a bundle of losses be greater than it would otherwise be);
(b) section 707-327 (which effectively lets the available fraction relevant to the utilisation of a loss be chosen in some cases);
(c) section 707-350 (which sets the limit on utilising certain losses in a bundle).
If 2 or more losses that a company can transfer for an income year under Subdivision 170-A of the Income Tax Assessment Act 1997 were previously transferred to it under Subdivision 707-A of that Act, it must transfer first those losses (if any) covered by subsection 707-350(1).
Subdivision 170-B of the Income Tax Assessment Act 1997 (about transfer of net capital losses within wholly-owned groups of companies) applies to assessments for the 1998-99 income year and later income years.
In working out an amount under subsection 170-145(7) of the Income Tax Assessment Act 1997 (which may limit the amount of a net capital loss that can be transferred under Subdivision 170-B of that Act), disregard these sections of this Act:
(a) section 707-325 (which lets the available fraction for a bundle of losses be greater than it would otherwise be);
(b) section 707-327 (which effectively lets the available fraction relevant to the utilisation of a loss be chosen in some cases);
(c) section 707-350 (which sets the limit on utilising certain losses in a bundle).
If 2 or more losses that a company can transfer for an income year under Subdivision 170-B of the Income Tax Assessment Act 1997 were previously transferred to it under Subdivision 707-A of that Act, it must transfer first those losses (if any) covered by subsection 707-350(1).
(Repealed by No 169 of 1999)
(Repealed by No 169 of 1999)
Any reduction in the cost base and reduced cost base of a share or in the reduced cost base of a debt that has been made or is required to be made under former subsection 160ZP(13) of the Income Tax Assessment Act 1936 (as that subsection applied from time to time) is taken to have been made or to be required to be made under section 170-220 of the Income Tax Assessment Act 1997.
Any increase in the cost base and reduced cost base of a share or debt that has been made or is authorised to be made under former subsections 160ZP(14) and (15) of the Income Tax Assessment Act 1936 (as those subsections applied from time to time) is taken to have been made or to be authorised to be made under section 170-225 of the Income Tax Assessment Act 1997.
If:
(a) all or part of the life insurance business of a life insurance company (the originating company ) is transferred to another life insurance company (therecipient company ):
(i) in accordance with a scheme confirmed by the Federal Court of Australia under Part 9 of the Life Insurance Act 1995; or
(ii) under the Financial Sector (Transfers of Business) Act 1999; and
(b) the originating company makes a capital loss from a CGT asset as a result of the transfer; and
(c) that capital loss is disregarded because of Subdivision 126-B of this Act;
Subdivision 170-C of the Income Tax Assessment Act 1997 has effect as if:
(d) that capital loss were a net capital loss transferred by the originating company to the recipient company by an agreement under section 170-150 of that Act; and
(e) the application year referred to in section 170-225 of that Act were the year in which the transfer of life insurance business took place.
Subdivision 175-CA of the Income Tax Assessment Act 1997 (about companies obtaining tax benefits from unused net capital losses of earlier income years) applies to assessments for the 1998-99 income year and later income years.
Subdivision 175-CB of the Income Tax Assessment Act 1997 (about companies obtaining tax benefits from unused capital losses of the current income year) applies to assessments for the 1998-99 income year and later income years.
Subdivision 175-C of the Income Tax Assessment Act 1997 (about companies obtaining tax benefits from unused bad debt deductions) applies to assessments for the 1998-99 income year and later income years.
In this Part:
introduction day
means the day on which the Bill for the Act that added this Division was introduced into the Parliament.
new Division 197
means Division 197 of the Income Tax Assessment Act 1997.
old Division 7B
means Division 7B of Part IIIAA of the Income Tax Assessment Act 1936.
old Division 7B close-off day
means 1 July 2002.
Subject to Subdivision 197-C of this Division, new Division 197 applies to transfers made into a company's share capital account after the introduction day.
This Subdivision applies to a company if, immediately before the old Division 7B close-off day, the company's share capital account was tainted under old Division 7B.
The company's share capital account is taken to have ceased to be tainted under old Division 7B at the start of the Division 7B close-off day.
197-15(2)
No liability to untainting tax, and no franking debit, arises under old Division 7B in relation to the share capital account being taken to have ceased to be tainted.
Immediately after the introduction day, the company's share capital account is taken to become tainted under new Division 197 as if:
(a) the company had, at that time, transferred an amount (the notionally transferred amount ) to its share capital account from another of its accounts that equalled the tainting amount (the old Division 7B tainting amount ), within the meaning of old Division 7B, in relation to the share capital account immediately before the old Division 7B close-off day; and
(b) none of the exclusions in sections 197-10 to 197-40 of new Division 197 applied, to any extent, in relation to the notionally transferred amount.
197-20(2)
No franking debit arises under Subdivision 197-B of new Division 197 in relation to the notionally transferred amount.
This section applies if, after the introduction day, the company chooses under section 197-55 of new Division 197 to untaint its share capital account.
Working out the amount of section 197-60 untainting tax
197-25(2)
For the purpose of section 197-60 of new Division 197, the tainting amount at the time of the choice to untaint is taken to consist of:
(a) the amounts (the old Division 7B tainting amount components ) that made up the old Division 7B tainting amount; and
(b) any amounts to which new Division 197 applies that have been transferred to the company's share capital account since the introduction day and before the choice to untaint is made.
Note 1:
The company will not be liable to untainting tax if it is covered by subsection (5).
Note 2:
If the company is covered by subsection (6), the old Division 7B tainting amount components will not be included in the tainting amount for the purpose of section 197-60.
197-25(3)
For the purpose of section 197-60 of new Division 197, a reference to the section 197-45 franking debit that arose in relation to an old Division 7B tainting amount component is taken to be a reference to the tax-paid basis franking debit amount in relation to that component (see subsection (4)).
197-25(4)
For the purpose of subsection (3), the tax-paid-basis franking debit amount , in relation to an old Division 7B tainting amount component, is the amount worked out in accordance with the formula:
where:
class A franking debit
means the class A franking debit (if any) that arose under section 160ARDV of old Division 7B in relation to the old Division 7B tainting amount component.
class C franking debit
means the class C franking debit that arose under section 160ARDQ or 160ARDV of old Division 7B in relation to the old Division 7B tainting amount component.
197-25(5)
The company is not liable to untainting tax under section 197-60 of new Division 197 in relation to the choice to untaint if:
(a) during the period from the time when the company's share capital account became tainted under old Division 7B to the time when the choice to untaint is made, the company was a company with only lower tax shareholders (as defined in subsection 197-60(1) of new Division 197); and
(b) the tainting amount for the purpose of section 197-60 of new Division 197 does not include any amounts of the kind mentioned in paragraph (2)(b) of this section.
197-25(6)
If:
(a) the tainting amount for the purpose of section 197-60 of new Division 197 consists of or includes an amount or amounts of the kind mentioned in paragraph (2)(b) of this section; and
(b) during the period from the time when the company's share capital account became tainted to the time when the amount, or the first of the amounts, referred to in paragraph (a) of this subsection was transferred into the company's share capital account, the company was a company with only lower tax shareholders (as defined in subsection 197-60(1) of new Division 197);
then, despite subsection (2) of this section, for the purpose of section 197-60 of new Division 197, the tainting amount at the time of the choice to untaint does not include the old Division 7B tainting amount components.
Working out the amount of section 197-65 franking debit
197-25(7)
For the purpose of section 197-65 of new Division 197, the tainting amount at the time of the choice to untaint is taken to consist of:
(a) the amounts (the old Division 7B tainting amount components ) that made up the old Division 7B tainting amount; and
(b) any amounts to which new Division 197 applies that have been transferred to the company's share capital account since the introduction day and before the choice to untaint is made.
Note:
In relation to amounts described in paragraph (b), section 197-65 applies without any notional modifications.
197-25(8)
Paragraph 197-65(1)(b) of new Division 197 has effect in relation to each old Division 7B tainting amount component as if the following paragraph (the notionally substituted paragraph ) were substituted for it:
(b) the tax-paid basis franking debit amount in relation to the old Division 7B tainting amount component is less than the amount calculated by the formula in subsection 197-65(3) in relation to the component.
197-25(9)
Subsection 197-65(3) of new Division 197 has effect in relation to each old Division 7B tainting amount component as if the reference to the amount of the franking debit that arose under section 197-45 in relation to the transferred amount were instead a reference to the tax-paid basis franking debit amount in relation to the old Division 7B tainting amount component.
197-25(10)
For the purpose of the notionally substituted paragraph, and of subsection (9) of this section, the tax-paid-basis franking debit amount , in relation to an old Division 7B tainting amount component, is the amount worked out in accordance with the formula:
where:
class A franking debit
means the class A franking debit (if any) that arose under section 160ARDV of old Division 7B in relation to the old Division 7B tainting amount component.
class C franking debit
means the class C franking debit that arose under section 160ARDQ or 160ARDV of old Division 7B in relation to the old Division 7B tainting amount component.
Former Part IIIAA of the Income Tax Assessment Act 1936 does not apply to any of the following acts if it is done on or after 1 July 2002:
(a) lodging an application with the Commissioner for a determination of an estimated debit;
(b) lodging an application with the Commissioner for a determination of an estimated debit in substitution for an earlier determination;
(c) a determination by the Commissioner of an estimated debit (including a determination in substitution for an earlier determination);
(d) the service of notice of any such determination on a company;
(e) the deemed determination of an estimated debit in accordance with an application (including an application for a determination in substitution for an earlier determination);
(f) the deemed service of notice of a determination on a company (including service of notice of a determination in substitution for an earlier determination).
Where, but for this section, 1 July 2002 would fall within a franking period for a corporate tax entity, but would not be the first day of the franking period, the franking period:
(a) is taken to begin at the start of 1 July 2002; and
(b) is taken to end when it would otherwise have ended.
If a company has a franking account under former Part IIIAA of the Income Tax Assessment Act 1936 (the old account ) at the end of 30 June 2002, the old account is closed off and an opening balance is created in the company's franking account under section 205-10 as follows:
(a) any estimated debits in the old account at the end of 30 June 2002 are washed out of the account under section 205-5; and
(b) then:
(i) in the case of a company whose 2001-02 franking year ends on 30 June 2002 under former Part IIIAA of the Income Tax Assessment Act 1936 - the company's franking account balances are converted under section 205-10 to a tax paid basis; and
(ii) in the case of a company whose 2001-02 franking year ends before 30 June 2002 under former Part IIIAA of the Income Tax Assessment Act 1936 - the company's franking account balances are converted under section 205-15 to a tax paid basis.
If, under former Part IIIAA of the Income Tax Assessment Act 1936, the termination time in relation to an estimated debit of a company would, but for this section, occur after the end of 30 June 2002, it is taken to have occurred at the end of 30 June 2002.
Note:
A franking credit of the appropriate class equal to the debit will arise under former section 160APU of that Act at the beginning of 30 June 2002.
This section applies to companies whose 2001-02 franking year ends on 30 June 2002 under former Part IIIAA of the Income Tax Assessment Act 1936 (the 1936 Act ).
205-10(2)
If the company has a franking surplus of a particular class under former Part IIIAA of the 1936 Act at the end of 30 June 2002:
(a) no franking credit arises under former section 160APL of that Act because of the surplus; and
(b) a franking credit arises on 1 July 2002 in the franking account established under section 205-10 of the Income Tax Assessment Act 1997 (the 1997 Act ) for the company.
The amount of the franking credit is worked out under subsection (3).
205-10(3)
The franking credit generated under paragraph (2)(b) from a franking surplus of a class specified in column 2 of the following table is worked out using the formula in column 3 of the table for that class.
Conversion of 1936 Act franking surplus into 1997 Act franking credit | ||||
Item | Franking surplus | Franking credit generated under paragraph (2)(b) | ||
1 | class A franking surplus | Amount of the class A franking surplus at
the end of 30 June 2002 under the 1936 Act |
× |
39
61 |
. | ||||
2 | class B franking surplus | Amount of the class B franking surplus at
the end of 30 June 2002 under the 1936 Act |
× |
33
67 |
. | ||||
3 | class C franking surplus | Amount of the class C franking surplus at
the end of 30 June 2002 under the 1936 Act |
× |
30
70 |
SECTION 205-15 Converting the franking account balance to a tax paid basis - companies whose 2001-02 franking year ends before 30 June 2002 205-15(1)
This section applies to companies whose 2001-02 franking year ends before 30 June 2002 under former Part IIIAA of the Income Tax Assessment Act 1936 (the 1936 Act ).
205-15(2)
If, but for this subsection, the company would have a franking surplus of a particular class under former Part IIIAA of the 1936 Act at the end of 30 June 2002 (an original surplus ):
(a) a franking debit equal to the surplus is taken to arise for the company under former Part IIIAA of the 1936 Act at the end of 30 June 2002; and
(b) a franking credit arises on 1 July 2002 in the franking account established under section 205-10 of the Income Tax Assessment Act 1997 (the 1997 Act ) for the company.
The amount of the franking credit is worked out under subsection (3).
205-15(3)
The franking credit generated under paragraph (2)(b) from an original surplus of a class specified in column 2 of the following table is worked out using the formula in column 3 of the table for that class.
Conversion of 1936 Act franking surplus into 1997 Act franking credit | ||||
Item | Original surplus | Franking credit generated under paragraph (2)(b) | ||
1 | class A | Amount of the original class A surplus | × |
39
61 |
. | ||||
2 | class B | Amount of the original class B surplus | × |
33
67 |
. | ||||
3 | class C | Amount of the original class C surplus | × |
30
70 |
205-15(4)
If, but for this subsection, the company would have a franking deficit of a particular class under former Part IIIAA of the 1936 Act at the end of 30 June 2002 (an original deficit ):
(a) a franking credit equal to the deficit is taken to arise for the company under former Part IIIAA of the 1936 Act at the end of 30 June 2002; and
(b) a franking debit arises on 1 July 2002 in the franking account established under section 205-10 of the 1997 Act for the company.
The amount of the franking debit is worked out under subsection (5).
205-15(5)
The franking debit generated under paragraph (4)(b) from an original deficit of a class specified in column 2 of the following table is worked out using the formula in column 3 of the table for that class.
Conversion of 1936 Act franking deficit into 1997 Act franking debit | ||||
Item | Original deficit | Franking debit generated under paragraph (4)(b) | ||
1 | class A | Amount of the original class A deficit | × |
39
61 |
. | ||||
2 | class B | Amount of the original class B deficit | × |
33
67 |
. | ||||
3 | class C | Amount of the original class C deficit | × |
30
70 |
SECTION 205-20 A late balancing company may elect to have its FDT liability determined on 30 June 205-20(1)
This section applies after 30 June 2002.
205-20(2)
A corporate tax entity's liability to pay franking deficit tax is determined under sections 205-25 and 205-30 of this Act (the transitional provisions ), and not under sections 205-45 and 205-50 of the Income Tax Assessment Act 1997 (the ongoing provisions ), if:
(a) the entity was in existence at the end of 30 June 2002; and
(b) the entity's 2001-02 income year ends after 30 June 2002; and
(c) the entity makes a valid election to have its liability to pay franking deficit tax determined under the transitional provisions.
205-20(3)
The entity makes a valid election to have its liability to pay franking deficit tax determined under the transitional provisions if:
(a) the election is in writing; and
(b) the election is made on the day on which liability for franking deficit tax would be determined under those provisions, or earlier than that day but in the income year in which that day occurs; and
(c) the entity's liability to pay franking deficit tax has not previously been determined under the ongoing provisions.
SECTION 205-25 Franking deficit tax
Object
205-25(1)
While recognising that an entity may anticipate franking credits when franking distributions, the object of this section is to prevent those credits from being anticipated indefinitely by requiring the entity to reconcile its franking account at certain times and levying tax if the account is in deficit.
Franking deficit at end of 30 June
205-25(2)
An entity is liable to pay franking deficit tax imposed by the New Business Tax System (Franking Deficit Tax) Act 2002 if its franking account is in deficit at the end of 30 June in the year 2003 or a later year.
Corporate tax entity ceases to be a franking entity
205-25(3)
An entity is liable to pay franking deficit tax imposed by the New Business Tax System (Franking Deficit Tax) Act 2002 if:
(a) it ceases to be a franking entity after 30 June 2002; and
(b) immediately before it ceases to be a franking entity, its franking account is in deficit.
Note:
The tax is imposed in the New Business Tax System (Franking Deficit Tax) Act 2002 and the amount of the tax is set out in that Act.
Object
205-30(1)
The object of this section is to ensure that an entity does not avoid franking deficit tax by deferring the time at which a franking debit occurs in its franking account.
End of year deficit deferred
205-30(2)
If:
(a) a corporate tax entity receives a refund of income tax within 3 months after 30 June in the year 2003 or a later year; and
(b) the refund is attributable to a period of 12 months ending at the end of 30 June in that year; and
(c) the franking account of the entity would have been in deficit, or in deficit to a greater extent, at the end of 30 June in that year if the refund had been received immediately before that time;
the refund is taken to have been paid to the entity immediately before that time.
Deficit on ceasing to be a franking entity deferred
205-30(3)
If an entity ceases to be a franking entity during a period of 12 months ending on 30 June in the year 2003 or a later year, a refund of income tax is taken to have been paid to it immediately before it ceased to be a franking entity, for the purposes of subsection 205-25(3), if:
(a) the refund is attributable to a period within that 12 months during which the entity was a franking entity; and
(b) the refund is paid within 3 months after the entity ceases to be a franking entity; and
(c) the franking account of the entity would have been in deficit, or in deficit to a greater extent, immediately before it ceased to be a franking entity, if the refund had been received before it ceased to be a franking entity.
If:
(a) an entity's 2001-02 income year ends after 30 June 2002; and
(b) its franking account is in deficit at the end of that income year;
the entity is not liable to pay franking deficit tax under subsection 205-45(2) of the Income Tax Assessment Act 1997 because the account is in deficit at that time.
General application rule
205-70(1)
Section 205-70 of the Income Tax Assessment Act 1997 has effect in relation to a corporate tax entity's assessments for the 2002-2003 income year and later income years, except as provided in the following subsections.
Late balancing entities - 2001-2002 income year
205-70(2)
If a corporate tax entity's 2001-2002 income year ends after 30 June 2002, section 205-70 of the Income Tax Assessment Act 1997 has effect in relation to the entity's assessment for that income year as if the following method statement had replaced the method statement in that section. Method statement
Step 1.
Work out the total amount of franking deficit tax that is covered by paragraph (1)(a).
Step 2.
Add to the step 1 result the excess that is covered by paragraph (1)(c).
The result is the tax offset to which the entity is entitled under this section for the relevant year.
Late balancing entities - 2002-2003 income year
205-70(3)
If:
(a) a corporate tax entity's 2002-2003 income year ends after 30 June 2003; and
(b) the entity makes a valid election under section 205-20 in that income year;
section 205-70 of the Income Tax Assessment Act 1997 has effect in relation to the entity's assessment for that income year as if the following method statement had replaced the method statement in that section.
Method statementStep 1.
Work out the total amount of franking deficit tax that is covered by paragraph (1)(a) and was incurred before 30 June 2003.
Step 2.
Work out the total amount of franking deficit tax that is covered by paragraph (1)(a) and was incurred on 30 June 2003.
Then reduce it by 30% if it exceeds 10% of the total amount of franking credits that arose in the entity's franking account during the period of 12 months immediately preceding that date.
Step 3.
Work out the total amount of franking deficit tax that is covered by paragraph (1)(a) and was incurred after 30 June 2003.
Then reduce it by 30% if it exceeds 10% of the total amount of franking credits that arose in the entity's franking account after that date and before the end of the last day on which the entity incurred a franking deficit tax liability in the relevant year.
Step 4.
Work out the total amount of franking deficit tax that is covered by paragraph (1)(b) and was incurred in the 2001-2002 income year.
Step 5.
Work out the excess that is covered by paragraph (1)(c).
Step 6.
Add up the results of steps 1, 2, 3, 4 and 5. The result is the tax offset to which the entity is entitled under this section for the relevant year.
Late balancing entities - later income years
205-70(4)
If:
(a) an income year of a corporate tax entity ends after 30 June 2004; and
(b) the entity makes a valid election under section 205-20 in that income year;
section 205-70 of the Income Tax Assessment Act 1997 has effect in relation to the entity's assessment for that income year as if the following method statement had replaced the method statement in that section.
Method statementStep 1.
Work out the total amount of franking deficit tax that is covered by paragraph (1)(a) and was incurred on or before the 30 June in the relevant year.
Then reduce it by 30% if it exceeds 10% of the total amount of franking credits that arose in the entity's franking account during the period of 12 months immediately preceding that 30 June.
Step 2.
Work out the total amount of franking deficit tax that is covered by paragraph 1(a) and was incurred after the 30 June in the relevant year.
Then reduce it by 30% if it exceeds 10% of the total amount of franking credits that arose in the entity's franking account after that date and before the end of the last day on which the entity incurred a franking deficit tax liability in the relevant year.
Step 3.
Work out the total amount of franking deficit tax that is covered by paragraph (1)(b) in relation to a previous income year and was incurred on or before the 30 June in that income year.
Then reduce it by 30% if it exceeds 10% of the total amount of franking credits that arose in the entity's franking account during the period of 12 months immediately preceding that 30 June.
Step 4.
Work out the total amount of franking deficit tax that is covered by paragraph (1)(b) in relation to a previous income year and was incurred after the 30 June in that income year.
Then reduce it by 30% if it exceeds 10% of the total amount of franking credits that arose in the entity's franking account after that date and before the end of the last day on which the entity incurred a franking deficit tax liability in that income year.
Step 5.
Add up the results of steps 3 and 4 for all the previous income years covered by paragraph (1)(b).
Step 6.
Work out the excess that is covered by paragraph (1)(c).
Step 7.
Add up the results of steps 1, 2, 5 and 6. The result is the tax offset to which the entity is entitled under this section for the relevant year.
Application of the 30% reduction rule
205-70(5)
If a franking credit has been taken into account previously in reducing an amount worked out under a step in the method statement in:
(a) subsection (3) or (4); or
(b) section 205-70 of the Income Tax Assessment Act 1997;
that credit is not to be taken into account again in reducing another amount worked out under a step in such a method statement.
205-70(6)
The 30% reductions for an entity in steps 2 and 3 of the method statement in subsection (3), and in steps 1, 2, 3 and 4 of the method statement in subsection (4), apply only to franking deficit tax that is attributable to franking debits of the entity:
(a) that arose under table item 1, 3, 5 or 6 in section 205-30 of the Income Tax Assessment Act 1997 for the relevant income year; and
(b) if the entity has franking debits covered by paragraph (a) for the relevant income year - that arose under table item 2 in that section of that Act for the relevant income year.
205-70(7)
The 30% reductions in those steps do not apply in working out the amount of the tax offset to which an entity is entitled for the relevant year if the Commissioner determines in writing, on application by the entity in the approved form, that the excess referred to in those steps was due to events outside the control of the entity.
205-70(8)
A determination under subsection (7) is not a legislative instrument.
SECTION 205-71 Modification of franking deficit tax offset rules 205-71(1)
This section applies to events that occur on or after 1 July 2002 and before the start of the 2004-05 income year.
205-71(2)
The 30% reductions for an entity in steps 1 and 2 of the method statement in subsection 205-70(2) of the Income Tax Assessment Act 1997 apply only to franking deficit tax that is attributable to franking debits of the entity:
(a) that arose under table item 1, 3, 5 or 6 in section 205-30 of the Income Tax Assessment Act 1997 for the relevant income year; and
(b) if the entity has franking debits covered by paragraph (a) for the relevant income year - that arose under table item 2 in that section of that Act for the relevant income year.
205-71(3)
The 30% reduction in steps 1 and 2 of the method statement in subsection 205-70(2) of the Income Tax Assessment Act 1997 do not apply in working out the amount of the tax offset to which an entity is entitled for the relevant year if the Commissioner determines in writing, on application by the entity in the approved form, that the excess referred to in those steps was due to events outside the control of the entity.
205-71(4)
A determination under subsection (3) is not a legislative instrument.
First income year and relevant liabilities
205-75(1)
This section applies to a corporate tax entity in relation to:
(a) this income year of the entity (the first income year ):
(i) the 2001-2002 income year if subsection 205-70(2) applies to the entity; or
(ii) the 2002-2003 income year if subsection 205-70(2) does not apply to the entity; and
(b) amounts of liabilities incurred by the entity (the relevant liabilities ) that:
(i) are covered by paragraph (1)(a) of former section 160AQK or of former section 160AQKAA (as appropriate) of the Income Tax Assessment Act 1936; and
(ii) have not been applied under that Act to reduce the entity's income tax liabilities for an earlier income year.
Relevant liabilities carried forward to the first income year
205-75(2)
Section 205-70 of the Income Tax Assessment Act 1997 has effect in relation to the entity as if:
(a) so much of the relevant liabilities as were incurred by the entity during the first income year were liabilities to pay franking deficit tax under that Act; and
(b) so much of the relevant liabilities as were incurred by the entity before the start of the first income year were the excess mentioned in paragraph (1)(c) of that section.
205-75(3)
Subsection (2) has effect only for the purposes of working out:
(a) whether or not the entity is entitled to a tax offset under section 205-70 of the Income Tax Assessment Act 1997 for the first income year or a later income year; and
(b) the amount of that tax offset.
SECTION 205-80 Application of Subdivision C of Division 5 of former Part IIIAA of the Income Tax Assessment Act 1936 205-80(1)
This section applies if Subdivision C of Division 5 of former Part IIIAA of the Income Tax Assessment Act 1936would, apart from former section 160AOAA of that Act, apply in relation to an entity's assessment for a year of income that ends before 1 July 2002.
205-80(2)
Former section 160AOAA of that Act does not prevent:
(a) the making of a determination under that Subdivision on or after that date for an offset to reduce the entity's income tax liability for that year of income; and
(b) the operation of any provision in that Subdivision in relation to that determination.
205-80(3)
However, in working out the amount of that offset, any liabilities to pay franking deficit tax or deficit deferral tax that have been taken into account in working out a tax offset under section 205-70 of the Income Tax Assessment Act 1997 must be disregarded.
Division 208 - Exempting entities and former exempting entities
This section has effect for the purposes of working out the following for a company that was a former exempting company (as defined in former Part IIIAA of the Income Tax Assessment Act 1936) at the end of 30 June 2002:
(a) whether the company has an exempting surplus or an exempting deficit for the purposes of the Income Tax Assessment Act 1997 at a time after 30 June 2002;
(b) the company's class A exempting account balance (as defined in that Part) at a time after 30 June 2002;
(c) the company's class C exempting account balance (as defined in that Part) at a time after 30 June 2002.
Class A exempting surplus at the end of 30 June 2002
208-111(2)
If the company had a class A exempting surplus (as defined in former Part IIIAA of the Income Tax Assessment Act 1936) at the end of 30 June 2002:
(a) a class A exempting debit equal to the surplus is taken to have arisen immediately before the end of 30 June 2002 for the purposes of that Part; and
(b) an exempting credit of the amount worked out using the formula is taken to have arisen at the start of 1 July 2002 in the exempting account that the company has under section 208-110 of the Income Tax Assessment Act 1997:
Amount of the surplus × |
39
61 |
Note:
Section 205-5 (with former sections 160APU and 160AQCNM of the Income Tax Assessment Act 1936) may affect whether the company had such a surplus at the end of 30 June 2002 and the amount of that surplus, but this section does not (because this section affects the company's exempting account balance only after then).
Class C exempting surplus at the end of 30 June 2002
208-111(3)
If the company had a class C exempting surplus (as defined in former Part IIIAA of the Income Tax Assessment Act 1936) at the end of 30 June 2002:
(a) a class C exempting debit equal to the surplus is taken to have arisen immediately before the end of 30 June 2002 for the purposes of that Part; and
(b) an exempting credit of the amount worked out using the formula is taken to have arisen at the start of 1 July 2002 in the exempting account that the company has under section 208-110 of the Income Tax Assessment Act 1997:
Amount of the surplus × |
30
70 |
Note:
Section 205-5 (with former sections 160APU and 160AQCNM of the Income Tax Assessment Act 1936) may affect whether the company had such a surplus at the end of 30 June 2002 and the amount of that surplus, but this section does not (because this section affects the company's exempting account balance only after then).
Class A exempting deficit at end of 30 June 2002
208-111(4)
If the company had a class A exempting deficit (as defined in former Part IIIAA of the Income Tax Assessment Act 1936) at the end of 30 June 2002 and its 2001-02 franking year (as defined in that Part) ended earlier:
(a) a class A exempting credit equal to the deficit is taken to have arisen at the end of 30 June 2002 for the purposes of that Part; and
(b) an exempting debit of the amount worked out using the formula is taken to have arisen at the start of 1 July 2002 in the exempting account that the company has under section 208-110 of the Income Tax Assessment Act 1997:
Amount of the deficit × |
39
61 |
Note:
If the company's 2001-02 franking year ended at the end of 30 June 2002 and it would have had a class A exempting deficit at that time apart from former section 160AQCNO of the Income Tax Assessment Act 1936, that section will have eliminated the deficit and either:
Class C exempting deficit at end of 30 June 2002
208-111(5)
If the company had a class C exempting deficit (as defined in former Part IIIAA of the Income Tax Assessment Act 1936) at the end of 30 June 2002 and its 2001-02 franking year (as defined in that Part) ended earlier:
(a) a class C exempting credit equal to the deficit is taken to have arisen at the end of 30 June 2002 for the purposes of that Part; and
(b) an exempting debit of the amount worked out using the formula is taken to have arisen at the start of 1 July 2002 in the exempting account that the company has under section 208-110 of the Income Tax Assessment Act 1997:
Amount of the deficit × |
30
70 |
Note:
If the company's 2001-02 franking year ended at the end of 30 June 2002 and it would have had a class C exempting deficit at that time apart from former section 160AQCNO of the Income Tax Assessment Act 1936, that section will have eliminated the deficit and either:
Division 210 - Venture capital franking
The venture capital sub-account of a PDF under former Part IIIAA of the Income Tax Assessment Act 1936 (the old sub-account ) is closed off at the end of 30 June 2002 and an opening balance is created in the PDF's venture capital sub-account under section 210-100 of the Income Tax Assessment Act 1997 as follows:
(a) any estimated venture capital debits in the old sub-account at the end of 30 June 2002 are washed out of the account under section 210-5; and
(b) then:
(i) in the case of a PDF whose 2001-02 franking year ends on 30 June 2002 under former Part IIIAA of the Income Tax Assessment Act 1936 - the PDF's venture capital sub-account balance is converted under section 210-10 to a tax paid basis; and
(ii) in the case of a PDF whose 2001-02 franking year ends before 30 June 2002 under former Part IIIAA of the Income Tax Assessment Act 1936 - the PDF's venture capital sub-account balance is converted under section 210-15 to a tax paid basis.
If, under former Part IIIAA of the Income Tax Assessment Act 1936, the termination time in relation to an estimated venture capital debit of a PDF would, but for this section, occur after the end of 30 June 2002, it is taken to have occurred at the end of 30 June 2002.
This section applies to PDFs whose 2001-02 franking year ends on 30 June 2002 under former Part IIIAA of the Income Tax Assessment Act 1936 (the 1936 Act ).
210-10(2)
If the PDF has a venture capital surplus under former Part IIIAA of the 1936 Act at the end of 30 June 2002:
(a) no venture capital credit arose under former section 160ASEE of that Act because of the surplus; and
(b) a venture capital credit arises on 1 July 2002 in the venture capital sub-account established under section 210-100 of the Income Tax Assessment Act 1997 for the PDF.
210-10(3)
The amount of the venture capital credit is worked out using the following formula:
Amount of the venture capital
surplus at the end of 30 June 2002 under the 1936 Act |
× |
30
70 |
SECTION 210-15 Converting the venture capital sub-account balance to a tax paid basis - PDFs whose 2001-02 franking year ends before 30 June 2002 210-15(1)
This section applies to PDFs whose 2001-02 franking year ends before 20 June 2002 under former Part IIIAA of the Income Tax Assessment 1936 (the 1936 Act ).
210-15(2)
If, but for this subsection, the PDF would have a venture capital surplus under former Part IIIAA of the 1936 Act at the end of 30 June 2002 (the original surplus ):
(a) a venture capital debit equal to the original surplus is taken to arise for the PDF under former Part IIIAA of the 1936 Act at the end of 30 June 2002; and
(b) a venture capital credit arises on 1 July 2002 in the venture capital sub-account established under section 210-100 of the Income Tax Assessment Act 1997 (the 1997 Act ) for the PDF.
210-15(3)
The amount of the venture capital credit is worked out using the formula:
Amount of the original surplus × |
30
70 |
210-15(4)
If, but for this subsection, the PDF would have a venture capital deficit under former Part IIIAA of the 1936 Act at the end of 30 June 2002 (the original deficit ):
(a) a venture capital credit equal to the original deficit is taken to arise for the PDF under former Part IIIAA of the 1936 Act at the end of 30 June 2002; and
(b) a venture capital debit arises on 1 July 2002 in the venture capital sub-account established under section 210-100 of the 1997 Act for the PDF.
210-15(5)
The amount of the venture capital debit is worked out using the formula:
Amount of the original deficit × |
30
70 |
Division 214 - Administering the imputation system
This Division applies to a corporate tax entity if a liability to pay franking deficit tax arises for the entity under section 205-25 of this Act because of events that occur within a period of 12 months ending on 30 June in any year (the balancing period ).
The entity must give the Commissioner a franking return for the balancing period setting out the following information before the end of the month immediately following the end of the period:
(a) if the entity is a franking entity at the end of the balancing period - its franking account balance at the end of the period; and
(b) if the entity ceases to be a franking entity during the balancing period - its franking account balance immediately before it ceased to be a franking entity; and
(c) the amount (if any) of franking deficit tax that the entity is liable to pay under section 205-25 of this Act because of events that have occurred, or are taken to have occurred, during the balancing period.
214-5(2)
The return must be in writing in the approved form.
SECTION 214-10 Notice to a specific corporate tax entity 214-10(1)
The Commissioner may give the entity a written notice requiring the entity to give the Commissioner a franking return for the balancing period.
214-10(2)
The entity must comply with the requirement within the time specified in the notice, or within any further time allowed by the Commissioner.
214-10(3)
The entity must comply with the requirement regardless of whether the entity has given, or has been required to give, the Commissioner a return under section 214-5.
SECTION 214-15 Effect of a refund on franking returns
If no franking return is outstanding
214-15(1)
If:
(a) the entity receives a refund of income tax; and
(b) the receipt of the refund gives rise to a liability, or an increased liability, to pay franking deficit tax because of the operation of subsection 205-30(2) or (3) of this Act; and
(c) when the refund is received, the entity does not have a franking return that is outstanding for the balancing period in which the liability arose;
the entity must give the Commissioner a franking return for the period within 14 days after the refund is received.
Refund received within 14 days before an outstanding franking return is due
214-15(2)
If:
(a) the entity receives a refund of income tax; and
(b) the receipt of the refund gives rise to a liability, or an increased liability, to pay franking deficit tax because of the operation of subsection 205-30(2) or (3) of this Act; and
(c) when the refund is received, the entity does not have a franking return that is outstanding for the balancing period in which the liability arose; and
(d) the entity receives the refund within the period of 14 days ending on the day by which the outstanding return must be given to the Commissioner;
the entity may, instead of accounting for the liability, or increased liability, in the outstanding return, account for it in a further return given to the Commissioner within 14 days after the refund is received.
Meaning of outstanding
214-15(3)
A franking return for a balancing period is outstanding at a particular time if each of the following is true at that time:
(a) the entity has been required to give a franking return for the period;
(b) the time within which the franking return must be given has not yet passed;
(c) the franking return has not yet been given.
A franking return for a balancing period is in addition to any franking return that the entity is required to give to the Commissioner under Subdivision 214-A of the Income Tax Assessment Act 1997 for the income year in which the balancing period ends.
214-20(2)
However, if an entity is required to give a franking return for a balancing period, it is not required to include in its franking return for the income year in which that period ends anything that should have been included in the franking return for the balancing period.
SECTION 214-25 Commissioner may make a franking assessment 214-25(1)
The Commissioner may make an assessment of:
(a) if the entity is a franking entity at the end of the balancing period - its franking account balance at the end of the period; and
(b) if the entity ceases to be a franking entity during the balancing period - its franking account balance immediately before it ceased to be a franking entity; and
(c) the amount (if any) of franking deficit tax that the entity is liable to pay under section 205-25 of this Act because of events that have occurred, or are taken to have occurred, during the balancing period.
This is a franking assessment for the entity for the balancing period.
214-25(2)
The Commissioner must give the entity notice of the assessment as soon as practicable after making the assessment.
214-25(3)
(Repealed by No 81 of 2016)
SECTION 214-30 Commissioner taken to have made a franking assessment on first return 214-30(1)
If:
(a) the entity gives the Commissioner a franking return under section 214-5 or 214-10 of this Act on a particular day (the return day ); and
(b) the return is the first franking return given to the Commissioner by the entity for the balancing period; and
(c) the Commissioner has not already made a franking assessment for the entity for that period;
the Commissioner is taken to have made a franking assessment for the entity for the period on the return day, and to have assessed:
(d) the entity's franking account balance at a particular time as that stated in the return as the balance at that time; and
(e) the amount (if any) of franking deficit tax payable by the entity because of events that have occurred, or are taken to have occurred, during the period as those stated in the return.
214-30(2)
The return is taken to be notice of the assessment signed by the Commissioner and given to the entity on the return day.
SECTION 214-35 Amendments within 3 years of the original assessment 214-35(1)
The Commissioner may amend a franking assessment for the entity for the balancing period at any time during the period of 3 years after the original assessment day for the entity for the period.
214-35(2)
The original assessment day for the entity for the balancing period is the day on which the first franking assessment for the entity for the period is made.
SECTION 214-40 214-40 Amended assessments are treated as franking assessments
Once an amended franking assessment for the entity for the balancing period is made, it is taken to be a franking assessment for the entity for the period.
If:
(a) a franking assessment for the entity for the balancing period has been made; and
(b) on a particular day (the further return day ) the entity gives the Commissioner a further return for the balancing period under subsection 214-15(1) of this Act (because the entity has received a refund of income tax that affects its liability to pay franking deficit tax);
the Commissioner is taken to have amended the entity's franking assessment on the further return day, and to have assessed:
(c) the entity's franking account balance at a particular time as that stated in the further return as the balance at that time; and
(d) the amount of franking deficit tax payable by the entity because of events that have occurred, or are taken to have occurred, during the period as those stated in the further return.
214-45(2)
The further return is taken to be notice of the amended assessment signed by the Commissioner and given to the entity on the further return day.
SECTION 214-50 214-50 Later amendments - on request
The Commissioner may amend a franking assessment for the entity for the balancing period after the end of a period of 3 years after the original franking assessment day if, within that 3 year period:
(a) the entity applies for the amendment; and
(b) the entity gives the Commissioner all the information necessary for making the amendment.
If:
(a) the entity does not make a full and true disclosure to the Commissioner of the information necessary for a franking assessment for the entity for the balancing period; and
(b) in making the assessment, the Commissioner makes an under-assessment; and
(c) the Commissioner is not of the opinion that the under-assessment is due to fraud or evasion;
the Commissioner may amend the assessment at any time during the period of 6 years after the original franking assessment day.
If:
(a) the entity does not make a full and true disclosure to the Commissioner of the information necessary for a franking assessment for the entity for the balancing period; and
(b) in making the assessment, the Commissioner makes an under-assessment; and
(c) the Commissioner is of the opinion that the under-assessment is due to fraud or evasion;
the Commissioner may amend the assessment at any time.
If:
(a) a franking assessment for the entity for the balancing period has been amended (the first amendment ) in any particular; and
(b) the Commissioner is of the opinion that it would be just to further amend the assessment in that particular so as to reduce the assessment;
the Commissioner may do so within a period of 3 years after the first amendment.
In a case not covered by sections 214-50, 214-55, 214-60 or 214-65, the Commissioner may amend the franking assessment for the entity for the balancing period after the period of 3 years after the original assessment day has expired, but not so as to reduce the assessment.
Nothing in this Division prevents the amendment of a franking assessment for the entity for the balancing period:
(a) to give effect to a decision on a review or appeal; or
(b) to reduce the assessment as a result of an objection made under this Act or pending an appeal or review.
If the Commissioner amends the entity's franking assessment for the balancing period, the Commissioner must give the entity notice of the amendment as soon as practicable after making the amendment.
(Repealed by No 81 of 2016)
SECTION 214-85 214-85 Validity of assessment
The validity of a franking assessment for the entity for the balancing period is not affected because any of the provisions of this Act (as defined in the Income Tax Assessment Act 1997) have not been complied with.
If a corporate tax entity is dissatisfied with a franking assessment made in relation to the entity under this Division, the entity may object against the assessment in the manner set out in Part IVC of the Taxation Administration Act 1953.
(Repealed by No 2 of 2015)
General rule
214-100(1)
Unless this section provides otherwise, franking deficit tax assessed for the entity because of events that have occurred, or are taken to have occurred, during the balancing period is due and payable on the last day of the month immediately following the end of the balancing period.
Amended assessments - other than because of deficit deferral
214-100(2)
If:
(a) the Commissioner amends a franking assessment for the entity for the balancing period (the earlier assessment ) other than because of the operation of section 214-30 (an amendment because of a refund of tax that affects franking deficit tax liability); and
(b) the amount of franking deficit tax payable under the amended assessment exceeds the amount of franking deficit tax payable under the earlier assessment;
the excess amount is due and payable one month after the day on which the assessment was amended.
Tax payable because of deficit deferral
214-100(3)
If:
(a) the entity receives a refund of income tax; and
(b) the receipt of the refund gives rise to a liability, or an increased liability, to pay franking deficit tax because of the operation of subsection 205-30(2) or (3);
the franking deficit tax or, if there is an increase in an existing liability to pay franking deficit tax, the difference between the original liability and the increased liability, is due and payable on:
(c) if the entity accounts for the liability, or increased liability, in a franking return that is outstanding for the balancing period in which the liability arose - the day on which the outstanding return is required to be given to the Commissioner; or
(d) in any other case - 14 days after the day on which the refund was received.
If:
(a) franking deficit tax that is payable by the entity remains unpaid after the time by which it is due and payable; and
(b) the Commissioner has not allocated the unpaid amount to an RBA;
the entity is liable to pay the general interest charge on the unpaid amount for each day in the period that:
(c) starts at the beginning of the day on which the franking deficit tax was due to be paid; and
(d) ends at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the franking deficit tax;
(ii) general interest charge on any of the franking deficit tax.
Note:
The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953.
Section 172 of the Income Tax Assessment Act 1936 applies for the purposes of this Division as if references in that section to tax included references to franking deficit tax.
(Repealed by No 79 of 2010)
Section 262A of the Income Tax Assessment Act 1936 applies for the purposes of this Division as if:
(a) the reference in that section to a person carrying on a business were a reference to a corporate tax entity; and
(b) the reference in paragraph (2)(a) of that section to the person's income and expenditure were a reference to:
(i) the entity's franking account balance; and
(ii) the entity's liability to pay franking tax; and
(c) paragraph (5)(a) of that section were omitted.
Section 264 of the Income Tax Assessment Act 1936 applies for the purposes of this Division as if the reference in paragraph (1)(b) of that section to a person's income or assessment were a reference to a matter relevant to the administration or operation of this Division.
(Repealed by No 114 of 2009)
If an expression is defined in this Division, it has the meaning given in that definition, and not the meaning given in the Income Tax Assessment Act 1997.
This section applies if:
(a) a franking credit arose before 1 July 2002 in the franking account of a life insurance company under former section 160APVJ of the Income Tax Assessment Act 1936 in relation to a PAYG instalment in respect of an income year; and
(b) the company's assessment day (the assessment day ) for that income year occurs on or after 1 July 2002; and
(c) the company has a franking account (the new franking account ) under section 205-10 of the Income Tax Assessment Act 1997.
219-40(2)
A franking debit of the amount worked out in accordance with the following formula is taken to have arisen in the new franking account on the assessment day:
Amount of the 1936 Act credit × |
30
70 |
where:
amount of the 1936 Act credit
means the amount of the franking credit mentioned in paragraph (1)(a).
219-40(3)
On the assessment day, a franking credit of the amount mentioned in item 2 of the table in section 219-15 of the Income Tax Assessment Act 1997 arises in the new franking account in relation to a payment of the PAYG instalment mentioned in paragraph (1)(a) of this section that was made before 1 July 2002.
Note:
On the assessment day, the franking credit mentioned in paragraph (1)(a) is therefore:
SECTION 219-45 Reversing (on tax paid basis) certain franking debits that arose before 1 July 2002 219-45(1)
This section applies if:
(a) a franking debit arose before 1 July 2002 in the franking account of a life insurance company under former section 160AQCNCE of the Income Tax Assessment Act 1936 in relation to a PAYG instalment variation credit in respect of an income year; and
(b) the company's assessment day (the assessment day ) for that income year occurs on or after 1 July 2002; and
(c) the company has a franking account (the new franking account ) under section 205-10 of the Income Tax Assessment Act 1997.
219-45(2)
A franking credit of the amount worked out in accordance with the following formula is taken to have arisen in the new franking account on 1 July 2002:
Amount of the 1936 Act debit × |
30
70 |
where:
amount of the 1936 Act debit
means the amount of the franking debit mentioned in paragraph (1)(a).
Note:
As the effects of former sections 160AQCNCE and 160APVN of the Income Tax Assessment Act 1936 are not duplicated in the Income Tax Assessment Act 1997, this section ensures that a debit arising under former section 160AQCNCE before 1 July 2002 is reversed on a tax paid basis on that date if it has not been reversed under former section 160APVN before that date.
Division 220 - Imputation for NZ resident companies and related companies
The following apply in relation to things happening on or after 1 April 2003, subject to this Division:
(a) Division 220 of the Income Tax Assessment Act 1997;
(b) the amendments of that Act made by Division 1 of Part 2 of Schedule 10 to the Taxation Laws Amendment Act (No. 6) 2003 relating to Division 220 of the Income Tax Assessment Act 1997.
In determining whether an NZ franking company meets the residency requirement for the income year including 1 April 2003 regard may be had to things that happened in relation to the company before 1 April 2003.
An NZ franking company cannot:
(a) frank a distribution made before 1 October 2003; or
(b) frank with an exempting credit a distribution made before 1 October 2003.
A company that is an NZ resident may make an NZ franking choice that comes into force at the start of the company's income year including 1 April 2003 by giving notice in the approved form to the Commissioner before the end of the next income year.
220-35(2)
Subsection (1) has effect despite paragraph 220-40(1)(a) of the Income Tax Assessment Act 1997.
SECTION 220-501 Franking and exempting accounts of new former exempting entities 220-501(1)
This section has effect if:
(a) a company (the Australian company ) that is an Australian resident becomes a former exempting entity at a time (the switch time ) because of:
(i) an NZ franking choice by a company (the NZ company ); and
(ii) Division 220 of the Income Tax Assessment Act 1997; and
(b) the NZ franking choice comes into force at the start of the NZ company's income year including 1 April 2003; and
(c) at the switch time there is a franking surplus in the Australian company's franking account; and
(d) at the switch time the Australian company is a 100% subsidiary of a company (the NZ parent company ) that:
(i) is not a 100% subsidiary of another company that is a member of the same wholly-owned group; and
(ii) is a post-choice NZ franking company; and
(e) there is a period for which all these requirements are met:
(i) the period must start as soon as possible after 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997 and end immediately before the switch time;
(ii) the Australian company must have been a 100% subsidiary of the NZ parent company for the whole of the period;
(iii) the Australian company must meet either or both of the conditions in subsections (2) and (3) for the whole of the period;
(iv) the NZ parent company must meet the condition in subsection (4) for the whole of the period.
Conditions relating to the Australian company
220-501(2)
One condition relating to the Australian company is that the company would not have been effectively owned by prescribed persons as described in sections 208-25 to 208-45 of the Income Tax Assessment Act 1997 if:
(a) those sections and sections 220-505 and 220-510 of that Act had applied throughout the period; and
(b) an accountable membership interest or accountable partial interest in the Australian company had, at a time in the period, been held by, or indirectly for the benefit of, a post-choice NZ franking company if, at that time:
(i) the interest was held by, or indirectly for the benefit of, a company (the interest holder ); and
(ii) the interest holder was an NZ resident or would have been one had section 220-20 of the Income Tax Assessment Act 1997, and section 995-1 of that Act so far as it relates to section 220-20 of that Act, applied throughout the period.
220-501(3)
The other condition relating to the Australian company is that the company was a 100% subsidiary of a company that:
(a) was a listed public company; and
(b) was an NZ resident or would have been one had section 220-20 of the Income Tax Assessment Act 1997, and section 995-1 of that Act so far as it relates to section 220-20 of that Act, applied throughout the period.
Condition relating to the NZ parent company
220-501(4)
The condition relating to the NZ parent company is that it:
(a) was not a 100% subsidiary of another company that was a member of the same wholly-owned group; and
(b) was an NZ resident or would have been one had section 220-20 of the Income Tax Assessment Act 1997, and section 995-1 of that Act so far as it relates to section 220-20 of that Act, applied throughout the period.
Franking credits for the period remain franking credits
220-501(5)
A franking credit arises in the Australian company's franking account immediately after the switch time.
Note:
This franking credit will partly or fully offset the franking debit that arises under item 1 of the table in section 208-145 of the Income Tax Assessment Act 1997 because the Australian company becomes a former exempting entity at the switch time.
Franking credits for the period do not become exempting credits
220-501(6)
An exempting debit arises in the Australian company's exempting account immediately after the switch time.
Note:
This exempting debit will partly or fully offset the exempting credit that arises under item 1 of the table in section 208-115 of the Income Tax Assessment Act 1997 because the Australian company becomes a former exempting entity at the switch time.
Amount of franking credit and exempting debit
220-501(7)
Work out the amount of the franking credit arising under subsection (5) and the exempting debit arising under subsection (6) using the table:
Amount of the franking credit and the exempting debit | ||
Item | If: | The amount of the credit and debit is: |
1 | The period starts immediately after 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997 | The franking surplus in the Australian company's franking account at the switch time |
2 | Both these conditions are met:
(a) item 1 does not apply; (b) the Australian company's franking account was not in surplus at the start of the period |
The franking surplus in the Australian company's franking account at the switch time |
3 | All these conditions are met:
(a) item 1 does not apply; (b) the Australian company's franking account was in surplus at the start of the period; (c) the surplus in the account at the switch time is greater than the surplus at the start of the period |
The difference between:
(a) the franking surplus in the Australian company's franking account at the switch time; and (b) the franking surplus in the Australian company's franking account at the start of the period |
No franking credit or exempting debit in some cases
220-501(8)
Subsections (5) and (6) do not have effect if:
(a) the start of the period is not immediately after 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997; and
(b) the franking surplus in the Australian company's franking account at the switch time is not greater than the franking surplus in the Australian company's franking account at the start of the period.
Subdivision 235-I of the Income Tax Assessment Act 1997 applies to assets acquired by the trustee of an instalment trust in:
(a) the 2007-08 income year; or
(b) a later income year.
Division 242 of the Income Tax Assessment Act 1997 (the new Division ) applies to assessments for the 2010-11 income year and later years.
242-10(2)
However, the new Division does not apply to a lease of a car if the lease was granted on or before 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996 unless the lease was extended after that time (whether the extension took effect before or after that time).
242-10(3)
The definition of luxury car in subsection 995-1(1) of the Income Tax Assessment Act 1997 applies to a reduction under former section 57AF of the Income Tax Assessment Act 1936 or former section 42-80 of the Income Tax Assessment Act 1997 in the same way as it applies to a reduction under section 40-230 of the Income Tax Assessment Act 1997.
Sections 242-20 and 242-90 of the Income Tax Assessment Act 1997 apply to an amount included in assessable income under former Subdivision 42-F or 42-G of the Income Tax Assessment Act 1997 and former subsection 59(2) of the Income Tax Assessment Act 1936 in the same way as they apply to an amount included in assessable income under section 40-285 of the Income Tax Assessment Act 1997.
Division 245 of the Income Tax Assessment Act 1997 applies to debts forgiven in:
(a) the 2010-11 income year; and
(b) later income years.
245-5(2)
Despite the repeal of Schedule 2C to the Income Tax Assessment Act 1936, that Schedule continues to apply to debts forgiven in:
(a) the 2009-10 income year; and
(b) earlier income years.
245-5(3)
Subsection (2) does not limit the effect of section 8 of the Acts Interpretation Act 1901 in relation to the repeal.
Subdivisions 245-C to 245-G of the Income Tax Assessment Act 1997 do not apply to a forgiveness of a debt if the forgiveness occurs in accordance with the terms of an arrangement that:
(a) was entered into on or before 27 June 1996; and
(b) is evidenced in writing otherwise than by a document evidencing the arrangement or transaction under which the debt arose.
245-10(2)
Those Subdivisions also do not apply to reduce your expenditure:
(a) if the asset in respect of which the expenditure was incurred was disposed of by you, or was lost or destroyed, on or before 27 June 1996; or
(b) to the extent (if any) to which the expenditure was recouped by you on or before 27 June 1996.
The methodology set out in this Subdivision must be used to work out how much of an amount that a borrower incurs under or in respect of a capital protected borrowing is reasonably attributable to the capital protection provided under the capital protected borrowing if the capital protected borrowing is entered into or extended at or after 9.30 am, by legal time in the Australian Capital Territory, on 16 April 2003 and before 1 July 2007.
Note:
To work out how much of such an amount is reasonably attributable to the capital protection provided under a capital protected borrowing entered into on or after 1 July 2007, see Division 247 of the Income Tax Assessment Act 1997.
For a capital protected borrowing that:
(a) is an instalment warrant listed on the Australian Stock Exchange; and
(b) contains an explicit put option that permits the underlying investment to be sold for at least the amount borrowed or amount of credit provided and has a separate price that reasonably reflects the market value of that option;
subsection (2) applies.
247-10(2)
If an amount is incurred:
(a) to acquire the capital protected borrowing in the primary market; or
(b) at a reset date of the borrowing under the capital protected borrowing;
the amount that is reasonably attributable to the capital protection is the amount specified by the lender under the capital protected borrowing as the cost of the put option.
247-10(3)
For a capital protected borrowing acquired on the secondary market, the amount that is reasonably attributable to the capital protection for an income year is worked out in accordance with subsection (4) or (5).
247-10(4)
If the market value of the underlying security at the time of acquisition is greater than the amount of the borrowing, the amount that is reasonably attributable to the capital protection is:
(a) the sum of the market value of the instalment warrant and the amount of the borrowing or amount of credit provided; less
(b) the sum of the market value of the underlying security and so much of the amount incurred as is attributable to pre-paid interest.
247-10(5)
If the market value of the underlying security at the time of acquisition is equal to or less than the amount of the borrowing or amount of credit provided, the amount that is reasonably attributable to the capital protection is:
(a) the market value of the instalment warrant; less
(b) any pre-paid interest.
247-10(6)
If the amount worked out in accordance with subsection (4) or (5) is less than nil, the amount that is reasonably attributable to the capital protection is nil.
If section 247-10 does not apply, the total amount that is reasonably attributable to the capital protection for an income year is the greater of the amount worked out using section 247-20 (the indicator method) and section 247-25 (the percentage method). If those amounts are the same, use either one.
247-15(2)
If an arrangement involves more than one amount incurred in an income year, the total amount that is reasonably attributable to the capital protection for the year is distributed pro-rata between those amounts incurred.
Work out the total amount incurred by the borrower under or in respect of the capital protected borrowing for the income year, ignoring amounts that are not in substance for capital protection or interest.
Example:
Amounts that would be ignored under subsection (1) include amounts that are in substance the repayment of a loan or credit, the payment of an application fee or brokerage commission and the payment of stamp duty or other tax.
247-20(2)
Work out the amount that would have been incurred by applying the relevant indicator rate to a borrowing or provision of credit of the same amount for the income year.
247-20(3)
If the subsection (1) amount exceeds the subsection (2) amount, the excess is reasonably attributable to the capital protection for the income year.
247-20(4)
The relevant indicator rate is:
(a) for a capital protected borrowing based on a variable interest rate, the Reserve Bank of Australia's Indicator Rate for Personal Unsecured Loans - Variable Rate at the time the first payment for the income year was incurred; and
(b) for another capital protected borrowing, the Reserve Bank of Australia's Indicator Rate for Personal Unsecured Loans - Fixed Rate at the time the borrowing was entered into.
Work out the total amount incurred by the borrower under or in respect of the capital protected borrowing for the income year, ignoring amounts that are not in substance for capital protection or interest.
Example:
Amounts that would be ignored under subsection (1) include amounts that are in substance the repayment of a loan or credit, the payment of an application fee or brokerage commission and the payment of stamp duty or other tax.
247-25(2)
The amount that is reasonably attributable to the capital protection for the income year is this percentage of the total amount incurred for the income year:
(a) 40% if the term is 1 year or shorter; or
(b) 27.5% if the term is longer than 1 year but not longer than 2 years; or
(c) 20% if the term is longer than 2 years but not longer than 3 years; or
(d) 17.5% if the term is longer than 3 years but not longer than 4 years; or
(e) 15% if the term is longer than 4 years.
For a capital protected borrowing entered into or extended:
(a) on or after 1 July 2007; but
(b) at or before 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 2008 (the 2008 Budget time );
work out the amount that is reasonably attributable to the capital protection using the following method statement.
Method statementStep 1.
Work out the total amount incurred by the borrower under or in respect of the capital protected borrowing for the income year, ignoring amounts that are not in substance for capital protection or interest.
Step 2.
Work out the total interest that would have been incurred for the income year on a borrowing or provision of credit of the same amount as under the capital protected borrowing at the rate applicable under either or both of subsections (2) and (3).
Step 3.
If the step 1 amount exceeds the step 2 amount, the excess is reasonably attributable to the capital protection for the income year.
Example:
Amounts that would be ignored under step 1 include amounts that are in substance the repayment of a loan or credit, the payment of an application fee or brokerage commission and the payment of stamp duty or other tax.
247-75(2)
If:
(a) the capital protected borrowing is at a fixed rate for all or part of the term of the capital protected borrowing; and
(b) that fixed rate is applicable to the capital protected borrowing for all or part of the income year;
use the Reserve Bank of Australia's Indicator Lending Rate for Personal Unsecured Loans - Variable Rate (the personal unsecured loan rate ) at the first time an amount covered by step 1 of the method statement in subsection (1) was incurred, in any income year, during the term of the capital protected borrowing or that part of the term.
247-75(3)
If:
(a) the capital protected borrowing is at a variable rate for all or part of the term of the capital protected borrowing; and
(b) a variable rate is applicable to the capital protected borrowing for all or part of the income year;
use the average of the personal unsecured loan rates applicable during those parts of the income year when the capital protected borrowing is at a variable rate.
This section applies to a capital protected borrowing (including one covered by Subdivision 247-A or section 247-75):
(a) entered into at or before the 2008 Budget time; and
(b) in existence on 1 July 2013; and
(c) to which section 247-85 does not apply.
247-80(2)
Work out the amount that is reasonably attributable to the capital protection using the method statement in subsection 247-75(1) and, for step 2 in that method statement, using the rate applicable under either or both of subsections (3) and (5) on or after 1 July 2013.
247-80(3)
If:
(a) the capital protected borrowing is at a fixed rate for all or part of the term of the capital protected borrowing; and
(b) that fixed rate is applicable to the capital protected borrowing for all or part of the income year that is on or after 1 July 2013;
use the rate worked out under subsection (4) at the first time an amount covered by step 1 of that method statement was incurred, in any income year, while the capital protected borrowing is at that fixed rate.
247-80(4)
The rate (the adjusted loan rate ), at a particular time, is the sum of:
(a) the Reserve Bank of Australia's Indicator Lending Rate for Standard Variable Housing Loans at that time; and
(b) 100 basis points.
247-80(5)
If:
(a) the capital protected borrowing is at a variable rate for all or part of the term of the capital protected borrowing; and
(b) a variable rate is applicable to the capital protected borrowing for all or part of the income year that is on or after 1 July 2013;
use the average of the adjusted loan rates applicable during those parts of the income year when the capital protected borrowing is at a variable rate.
This section applies to a capital protected borrowing entered into at or before the 2008 Budget time (including one covered by Subdivision 247-A or section 247-75) where, after that time, one or both of these events occurred:
(a) the term of the capital protected borrowing is extended;
(b) some other change is made to the terms and conditions of the capital protected borrowing.
247-85(2)
Work out the amount that is reasonably attributable to the capital protection using the method statement in subsection 247-75(1) and, for step 2 in that method statement, using the rate applicable under either or both of subsections (3) and (4) from the earlier of these times:
(a) the time the extension or change took effect;
(b) the start of 1 July 2013;
(the switch-over time ).
247-85(3)
If:
(a) the capital protected borrowing is at a fixed rate for all or part of the term of the capital protected borrowing; and
(b) that fixed rate is applicable to the capital protected borrowing for all or part of the income year that is at or after the switch-over time;
use the adjusted loan rate (as described in subsection 247-80(4)) applicable at the first time an amount covered by step 1 of that method statement was incurred, in any income year, while the capital protected borrowing is at that fixed rate.
247-85(4)
If:
(a) the capital protected borrowing is at a variable rate for all or part of the term of the capital protected borrowing; and
(b) a variable rate is applicable to the capital protected borrowing for all or part of the income year that is at or after the switch-over time;
use the average of the adjusted loan rates (as described in subsection 247-80(4)) applicable during those parts of the income year when the capital protected borrowing is at a variable rate.
Section 253-5 of the Income Tax Assessment Act 1997 applies to amounts paid or applied before, on or after the commencement of that section to meet entitlements arising under Division 2AA of Part II of the Banking Act 1959 after 17 October 2008.
Note:
Division 2AA of Part II of the Banking Act 1959 commenced on 18 October 2008.
Sections 253-10 and 253-15 of the Income Tax Assessment Act 1997 apply to CGT events happening after 17 October 2008.
This section applies if:
(a) the trustee of a managed investment trust makes a choice under section 275-115 of the Income Tax Assessment Act 1997 covering the trust that is in force for the 2008-09 income year; and
(b) the Commissioner made an assessment (the previous assessment ) for a previous income year for any of the following entities:
(i) the trustee of the managed investment trust;
(ii) a beneficiary of the managed investment trust;
(iii) an entity that holds interests in the managed investment trust indirectly, through a chain of trusts; and
(c) the previous assessment was made on the basis that:
(i) a CGT event happened at a time involving a CGT asset that was owned by the managed investment trust; and
(ii) a gain or loss was realised for income tax purposes because of the circumstances that gave rise to the CGT event; and
(d) the previous assessment was also made on the basis that:
(i) the gain or loss should be reflected in the net income of the managed investment trust for that previous income year; or
(ii) the gain or loss should be reflected in a tax loss or net capital loss of the managed investment trust for that previous income year; and
(e) the previous assessment was also made on one of these bases:
(i) the CGT asset was a revenue asset;
(ii) the CGT asset was not a revenue asset; and
(f) none of the provisions mentioned in subsection 275-100(2) of the Income Tax Assessment Act 1997 would have applied at the time of the CGT event in relation to the asset, if these assumptions were made:
(i) Subdivision 275-B of the Income Tax Assessment Act 1997 (and any other provision of that Act or of the Income Tax Assessment Act 1936, to the extent that it relates to that Subdivision) had applied in relation to the CGT event;
(ii) a choice under section 275-115 of the Income Tax Assessment Act 1997 covering the entity for which the assessment was made was in force for the previous income year.
275-10(2)
The Commissioner cannot amend the previous assessment on the basis that:
(a) if subparagraph (1)(e)(i) applies - the CGT asset should not have been treated as a revenue asset; or
(b) if subparagraph (1)(e)(ii) applies - the CGT asset should have been treated as a revenue asset.
275-10(3)
Subsection (2) applies despite any other provision of this Act (apart from subsection (4) of this section), the Income Tax Assessment Act 1997 and the Income Tax Assessment Act 1936.
275-10(4)
Subsection (2) does not apply in any of these cases:
(a) if the entity for which the assessment was made gives the Commissioner a written consent to the amendment;
(b) if the Commissioner may amend the assessment in accordance with item 5 (fraud or evasion) or 6 (review or appeal) of the table in subsection 170(1) of the Income Tax Assessment Act 1936;
(c) if the amendment is made for the purpose of giving effect to a provision specified in the regulations for the purposes of this paragraph.
This section applies if:
(a) the requirements set out in paragraphs 275-610(1)(a), (b) and (c) of the Income Tax Assessment Act 1997 are satisfied in respect of an amount of non-arm's length income of a managed investment trust in relation to an income year; and
(b) the managed investment trust became a party to the scheme mentioned in paragraph 275-610(1)(a) of that Act before the day on which the Bill that became the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 was introduced into the House of Representatives; and
(c) the amount was derived before the start of the 2018-19 income year.
275-605(2)
Subsections 275-605(2), (3) and (4) of that Act do not apply in respect of the amount.
Division 276 of the Income Tax Assessment Act 1997 as inserted in that Act by the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 (the amending Act ) applies as set out in subitem 1(1) of Schedule 8 to the amending Act.
In this Division:
(a) unless paragraph (b) or (c) applies - the 2017-18 income year; or
(b) if the trustee of the trust has made a choice for the purposes of paragraph 1(1)(b) of Schedule 8 to the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 - the first income year starting on or after 1 July 2015; or
(c) if the trustee of the trust has made a choice for the purposes of subparagraph 276-10(1)(e)(i) of the Income Tax Assessment Act 1997 in respect of the 2016-17 income year - that income year.
This Subdivision applies if:
(a) a managed investment trust becomes an AMIT for the starting income year; and
(b) the trust existed in an earlier income year (the base year ); and
(c) the trust is an AMIT for an income year (the discovery year ) that is the starting incomeyear or a later income year.
This section applies if the trust has an under or over of a character in the discovery year relating to the base year.
276-705(2)
For the purposes of subsection (1):
(a) assume that the trust is an AMIT for the base year and every later year before the starting income year; and
(b) if, at a time, the trust sent its members distribution statements for an income year that is prior to the starting income year - assume that the trust sent those members AMMA statements for that income year at that time.
276-705(3)
For the purposes of Division 276 of the Income Tax Assessment Act 1997, treat the under or over mentioned in subsection (1) as an under or over of the AMIT, in the discovery year relating to the base year, of the character mentioned in that subsection.
276-705(4)
If:
(a) had the under or over mentioned in subsection (1) been discovered before the starting income year, this Act would have operated to produce a particular effect (the pre-AMIT scheme effect ) for the base year in relation to the amount or amounts reflected in the under or over; and
(b) subsection (3) accounts for the pre-AMIT scheme effect;
treat this Act as not operating to produce the pre-AMIT scheme effect for the base year.
Note:
Subsection (3) continues to operate in relation to the under or over.
This section applies if:
(a) a trust becomes an AMIT for an income year; and
(b) the trustee of the trust made a payment to an entity at a time:
(i) on or after 1 July 2011; and
(ii) before the start of the income year mentioned in paragraph (a).
276-750(2)
Subsection (3) applies for the purpose of:
(a) working out whether CGT event E4 happens because of the payment; and
(b) working out the amount (if any) of the entity's capital gain under subsection 104-70(4) of the Income Tax Assessment Act 1997.
276-750(3)
For the purpose of working out the amount of the non-assessable part mentioned in paragraph 104-70(1)(b), treat the following provisions as being in operation at the time the payment was made:
(a) sections 104-107F and 104-107G of the Income Tax Assessment Act 1997;
(b) any other provision of that Act, to the extent that it relates to the operation of the provisions mentioned in paragraph (a).
276-750(4)
Subsection (3) does not apply to the extent (if any) that the entity, in the income tax return that it lodged for the income year in which the payment was made, included the amount of the payment in its assessable income for that income year.
276-750(5)
For the purposes of section 118-20 of the Income Tax Assessment Act 1997, treat this section as being in Part 3-1 of that Act.
Note:
Section 118-20 deals with reducing capital gains if an amount is otherwise assessable.
This section applies if:
(a) a trust becomes an AMIT for an income year; and
(b) the trustee of the trust made a payment to an entity at a time before 1 July 2011.
276-755(2)
The Commissioner cannot amend the entity's assessment for the income year in which the payment was made in a particular way if:
(a) the effect of the amendment would be to increase the entity's assessable income for that income year; and
(b) the Commissioner could not amend the assessment in that way if the following provisions were in operation at the time the payment was made:
(i) sections 104-107F, 104-107G and 104-107H of the Income Tax Assessment Act 1997;
(ii) any other provision of that Act, to the extent that it relates to the operation of the provisions mentioned in subparagraph (i); and
(c) the entity has not requested the Commissioner to amend the assessment in that way.
Division 290 of the Income Tax Assessment Act 1997 does not apply to a contribution that is a directed termination payment (within the meaning of section 82-10F).
This section applies if a person's 2006-2007 income year ends before the end of the 2006-2007 financial year.
290-15(2)
The object of this section is to apply (with modifications) provisions limiting deductibility in respect of certain contributions made during the period that:
(a) starts when the person's 2006-2007 income year ends; and
(b) ends just before 1 July 2007.
290-15(3)
The provisions are as follows:
(a) Subdivisions AA and AB of Division 3 of Part III of the Income Tax Assessment Act 1936, as in force just before they were repealed by the Superannuation Legislation Amendment (Simplification) Act 2007;
(b) any other provision of the Income Tax Assessment Act 1936, or of any instrument made under that Act, to the extent that it relates to the operation of those Subdivisions;
(c) any other provision of any other Act, or of any instrument made under any other Act, to the extent that it relates to the operation of those Subdivisions.
290-15(4)
Those provisions apply in relation to the period mentioned in subsection (2), and do so as if:
(a) that period were the 2007-2008 income year; and
(b) the deduction limit mentioned in section 82AAC for the 2006-2007 income year were the deduction limit for the income year mentioned in paragraph (a); and
(c) the deduction limit mentioned in section 82AAT for the 2006-2007 income year were the deduction limit for the income year mentioned in paragraph (a); and
(d) Division 290 of the Income Tax Assessment Act 1997 did not apply to contributions made during the income year mentioned in paragraph (a).
Division 291 of the Income Tax Assessment Act 1997 applies to the 2013-14 income year and later income years.
(Repealed by No 81 of 2016)
This section applies despite section 291-170 of the Income Tax Assessment Act 1997.
Certain interests held on 5 September 2006
291-170(2)
Despite subsection 291-170(1) of the Income Tax Assessment Act 1997, your notional taxed contributions for the financial year in respect of a defined benefit interest are equal to your basic concessional contributions cap for the financial year if:
(a) Subdivision 291-C of that Act applies in relation to you because you have a defined benefit interest in a financial year; and
(b) disregarding this subsection and subsection (4), the notional taxed contributions for the financial year in respect of the defined benefit interest exceed your basic concessional contributions cap for the financial year; and
(c) either:
(i) you held the defined benefit interest in a superannuation fund on 5 September 2006; or
(ii) all the requirements in subsection (3) are satisfied; and
(d) the conditions (if any) specified in the regulations are satisfied.
Note:
In some cases, section 291-370 of the Income Tax Assessment Act 1997 has the effect of replacing this subsection with a similar rule covering a broader class of contributions and amounts.
291-170(3)
For the purposes of subparagraph (2)(c)(ii), the requirements are as follows:
(a) you held a defined benefit interest (the original interest ) in a superannuation fund (the original fund ) on 5 September 2006;
(b) the defined benefit interest mentioned in paragraph (2)(a) (the current interest ) is in a different superannuation fund (the current fund );
(c) the entire value of the original interest:
(i) was transferred directly to the current interest after 5 September 2006; or
(ii) was transferred to another superannuation interest after 5 September 2006, and was later transferred to the current interest (whether directly or through a series of transfers between superannuation interests);
(d) your rights to accrue future benefits under the current interest are equivalent to your rights to accrue future benefits under the original interest;
(e) either:
(i) the notional taxed contributions mentioned in paragraph (2)(b) do not exceed what they would have been if the transfer mentioned in paragraph (c) had not taken place; or
(ii) the conditions (if any) specified in the regulations are satisfied;
(f) the conditions (if any) specified in the regulations are satisfied.
Certain interests held on 12 May 2009
291-170(4)
Despite subsection 291-170(1) of the Income Tax Assessment Act 1997, your notional taxed contributions for the financial year in respect of the defined benefit interest are equal to your basic concessional contributions cap for the financial year if:
(a) Subdivision 291-C of that Act applies in relation to you because you have a defined benefit interest in a financial year; and
(b) disregarding this subsection, the notional taxed contributions for the financial year in respect of the defined benefit interest exceed your basic concessional contributions cap for the financial year; and
(c) either:
(i) you held the defined benefit interest in a superannuation fund on 12 May 2009; or
(ii) all the requirements in subsection (5) are satisfied; and
(d) the conditions (if any) specified in the regulations are satisfied; and
(e) the financial year is the 2009-2010 financial year or a later financial year.
Note:
In some cases, section 291-370 of the Income Tax Assessment Act 1997 has the effect of replacing this subsection with a similar rule covering a broader class of contributions and amounts.
291-170(5)
For the purposes of subparagraph (4)(c)(ii), the requirements are as follows:
(a) you held a defined benefit interest (the original interest ) in a superannuation fund (the original fund ) on 12 May 2009;
(b) the defined benefit interest mentioned in paragraph (4)(a) (the current interest ) is in a different superannuation fund (the current fund );
(c) the entire value of the original interest:
(i) was transferred directly to the current interestafter 12 May 2009; or
(ii) was transferred to another superannuation interest after 12 May 2009, and was later transferred to the current interest (whether directly or through a series of transfers between superannuation interests);
(d) your rights to accrue future benefits under the current interest are equivalent to your rights to accrue future benefits under the original interest;
(e) either:
(i) the notional taxed contributions mentioned in paragraph (4)(b) do not exceed what they would have been if the transfer mentioned in paragraph (c) had not taken place; or
(ii) the conditions (if any) specified in the regulations are satisfied;
(f) the conditions (if any) specified in the regulations are satisfied.
Constitutionally protected funds
291-170(6)
This section does not apply in relation to a defined benefit interest in a constitutionally protected fund.
(Repealed by No 118 of 2013)
(Repealed by No 118 of 2013)
The object of this section is to apply (with modifications) provisions relating to excess non-concessional contributions tax in respect of certain contributions made during the period that:
(a) begins on 10 May 2006; and
(b) ends just before 1 July 2007.
292-80(2)
The provisions are as follows:
(a) Subdivision 292-C of the Income Tax Assessment Act 1997 (excess non-concessional contributions tax);
(b) any other provision of that Act, or of any instrument made under that Act, to the extent that it relates to the operation of that Subdivision;
(c) any other provision of any other Act, or of any instrument made under any other Act, to the extent that it relates to the operation of that Subdivision.
Example:
Section 390-65 in Schedule 1 to the Taxation Administration Act 1953.
292-80(3)
Those provisions apply in relation to that period, and do so as if:
(a) that period were the 2006-2007 financial year; and
(b) the amount of a person's non-concessional contributions for that financial year:
(i) did not include the amount of the person's excess concessional contributions for that financial year; and
(ii) if subsection (6) applies - included the amount mentioned in that subsection; and
(iii) included each contribution covered under subsection (7) in respect of the person; and
(c) the person's non-concessional contributions cap for that financial year were $1,000,000; and
(d) subsections 292-85(3) and (4) of the Income Tax Assessment Act 1997 were omitted; and
(e) the person's CGT cap amount at the start of that financial year were $1,000,000; and
(ea) in a case where paragraph 292-95(1)(b) of that Act would have allowed the contribution mentioned in that paragraph to be made at a time within that period - that paragraph allowed the contribution to be made on or before 30 June 2007; and
(f) paragraph 292-95(1)(d) of that Act allowed the notification mentioned in that paragraph to be made on or before 31 July 2007; and
(fa) in a case where subsection 292-100(2), (4), (7) or (8) of that Act would have allowed the contribution mentioned in that subsection to be made at a time within that period - that subsection allowed the contribution to be made on or before 30 June 2007; and
(g) paragraph 292-100(9)(b) of that Act allowed the choice mentioned in that paragraph to be given on or before 31 July 2007; and
(h) contributions made during that period that are covered under section 292-100 of that Act reduce the person's CGT cap amount for the 2007-2008 financial year in accordance with subsection 292-105(2) of that Act (and despite subsection (1) of that section); and
(i) if the conditions in subsection (4) are satisfied - the person's excess non-concessional contributions for that financial year were reduced by the amount paid as mentioned in paragraph (4)(d); and
(j) the reference in subsection 307-220(1) of that Act to 30 June 2007 were a reference to 9 May 2006.
292-80(4)
For the purposes of paragraph (3)(i), the conditions are:
(a) the person gives the Commissioner an application under subsection 292-80A(1) before 1 July 2007; and
(b) the Commissioner gives the person a transitional release authority under subsection 292-80A(2) in response to the application; and
(c) the person gives the transitional release authority to a superannuation provider that holds a superannuation interest for the person (other than a defined benefit interest) in accordance with section 292-80B within 21 days after the date of the release authority; and
(d) the superannuation provider pays the person the amount required under section 292-80C in relation to the transitional release authority.
292-80(5)
Subsection (6) applies if:
(a) contributions are made in respect of a person (the first person ) in either or both of the following periods:
(i) 10 May 2006 to 30 June 2006;
(ii) 1 July 2006 to 30 June 2007; and
(b) those contributions are allowable as a deduction for another person under subsection 82AAC(1) of the Income Tax Assessment Act 1936 (apart from subsection 82AAC(2) of that Act).
292-80(6)
The amount to be included in the first person's amount of non-concessional contributions under subparagraph (3)(b)(ii) is the sum of:
(a) the amount of those contributions made in the period mentioned in subparagraph (5)(a)(i), to the extent that they exceed the first person's deduction limit (within the meaning of subsection 82AAC(2A) of the Income Tax Assessment Act 1936) for the income year of the other person in which the contributions were made; and
(b) the amount of those contributions made in the period mentioned in subparagraph (5)(a)(ii), to the extent that they exceed the first person's deduction limit (within the meaning of subsection 82AAC(2A) of the Income Tax Assessment Act 1936) for the income year of the other person in which the contributions were made.
292-80(7)
A contribution is covered under this subsection if:
(a) the contribution is made in respect of the person mentioned in subparagraph (3)(b)(iii) by another entity; and
(b) the person is not an employee of the other entity; and
(c) under Division 295 of the Income Tax Assessment Act 1997 (as that Division applies for the purposes of subsection (3)), the contribution is included in the assessable income of the superannuation provider in relation to the superannuation plan to which the contribution is made; and
(d) the contribution is made after 6 December 2006.
292-80(8)
For the purposes of paragraph (7)(b), treat the person as an employee of the other entity if the person would be treated as an employee of the other entity under Division 290 of the Income Tax Assessment Act 1997 (as that Division applies for the purposes of subsection (3)).
SECTION 292-80A Transitional release authority 292-80A(1)
A person may apply to the Commissioner in the approved form for a transitional release authority under subsection (2). The application can only be made before 1 July 2007.
292-80A(2)
The Commissioner must give the person a transitional release authority if the Commissioner considers that, apart from subparagraph 292-80(3)(b)(i), the person would have excess non-concessional contributions for the financial year mentioned in paragraph 292-80(3)(a).
292-80A(3)
The transitional release authority must:
(a) state the amount of excess non-concessional contributions mentioned in subsection (2); and
(b) be dated; and
(c) contain any other information that the Commissioner considers relevant.
292-80A(4)
For the purposes of this section, disregard contributions made in respect of the person after 6 December 2006 in working out:
(a) whether the person has excess non-concessional contributions as mentioned in subsection (2); and
(b) the amount of those excess non-concessional contributions.
The person may give the transitional release authority to a superannuation provider that holds a superannuation interest (other than a defined benefit interest) for the person in a complying superannuation plan within 21 days after the date of the release authority.
A superannuation provider that has been given a transitional release authority in accordance with section 292-80B must pay to the person within 30 days after receiving the release authority the least of the following amounts:
(a) if the person requests the provider in writing to pay a specified amount in relation to the release authority - that amount;
(b) the amount of excess non-concessional contributions stated in the release authority;
(c) the sum of the values of every superannuation interest (other than a defined benefit interest) held by the superannuation provider for the person in complying superannuation plans.
Note 1:
Section 288-95 in Schedule 1 to the Taxation Administration Act 1953 provides for an administrative penalty for failing to comply with this subsection.
Note 2:
Section 288-100 in Schedule 1 to the Taxation Administration Act 1953 provides that the person giving the release authority to the superannuation provider can be liable to an administrative penalty if excess amounts are paid in relation to the release authority.
Note 3:
For reporting obligations on the superannuation provider in these circumstances, see section 390-65 in Schedule 1 to the Taxation Administration Act 1953.
292-80C(2)
The payment must be made out of one or more superannuation interests (other than a defined benefits interest) held by the superannuation provider for the person in complying superannuation plans.
292-80C(3)
Section 307-125 of the Income Tax Assessment Act 1997 (the proportioning rule) does not apply to a payment made as required under this section.
For the purposes of working out your non-concessional contributions cap for the 2017-2018 financial year, if:
(a) your non-concessional contributions cap for the 2015-2016 financial year was worked out under subsection 292-85(4) of the Income Tax Assessment Act 1997; and
(b) that year was a first year within the meaning of subsection 292-85(3) of that Act;
subsection 292-85(7) of that Act as amended by the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 applies after the commencement of this section as if:
(c) the amount worked out under subsection 292-85(5) of that Act as so amended were $460,000; and
(d) subsection 292-85(6) of that Act as so amended had been applied (taking into account paragraph (c) of this subsection) for the purposes of working out your non-concessional contributions cap for the 2016-2017 financial year.
292-85(2)
For the purposes of working out your non-concessional contributions caps for the 2017-2018 financial year and the 2018-2019 financial year, if:
(a) your non-concessional contributions cap for the 2016-2017 financial year was worked out under subsection 292-85(4) of the Income Tax Assessment Act 1997; and
(b) that year was a first year within the meaning of subsection 292-85(3) of that Act;
subsections 292-85(6) and (7) of that Act as amended by the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 apply after the commencement of this section as if the amount worked out under subsection 292-85(5) of that Act as so amended were $380,000.
292-85(3)
To avoid doubt, this section does not affect your non-concessional contributions cap for any financial year that ended before 1 July 2017.
The tax free component of a directed termination payment (within the meaning of section 82-10F) made in a financial year on behalf of you is not included in your non-concessional contributions (see section 292-90 of the Income Tax Assessment Act 1997) for the financial year.
Division 293 of the Income Tax Assessment Act 1997 applies to the 2012-13 income year and later income years.
Division 294 of the Income Tax Assessment Act 1997 applies on and after 1 July 2017.
294-10(2)
Subject to section 294-55, the amendments of Division 294 of the Income Tax Assessment Act 1997 made by Schedule 1 to the Treasury Laws Amendment (2017 Measures No 2) Act 2017 apply on and after 1 July 2017.
SECTION 294-30 294-30 Minor excess transfer balances disregarded if remedied in first 6 months
Despite sections 294-30 and 294-140 of the Income Tax Assessment Act 1997 (which are about when you have excess transfer balance), you do not have excess transfer balance in your transfer balance account on any day in the period of 6 months beginning on 1 July 2017 if:
(a) the only transfer balance credits in the account in that period arose under item 1 of the table in subsection 294-25(1) of that Act (which is about superannuation income streams you have just before 1 July 2017); and
(b) the sum of those transfer balance credits exceeds your transfer balance cap, but is less than or equal to $1,700,000; and
(c) at the end of the period, the sum of all the transfer balance debits arising in your transfer balance account equals or exceeds the amount of the excess from paragraph (b).
Despite subsection 294-10(2), a transfer balance credit arises under item 4 of the table in subsection 294-25(1) of the Income Tax Assessment Act 1997 only in relation to a borrowing that arises under a contract entered into on or after 1 July 2017.
294-55(2)
For the purposes of subsection (1), a borrowing (the new borrowing ) that arises under a contract entered into on or after 1 July 2017 is treated as if it arose under a contract entered into before 1 July 2017 if:
(a) the new borrowing is a refinancing of a borrowing (the old borrowing ) that was made under a contract:
(i) entered into before 1 July 2017; and
(ii) covered by the exception in subsection 67A(1) of the Superannuation Industry (Supervision) Act 1993 (which is about limited recourse borrowing arrangements); and
(b) the new borrowing is secured by the same asset or assets as the old borrowing; and
(c) the amount of the new borrowing at the time it is first made equals, or is less than, the outstanding balance on the old borrowing just before the refinancing.
This section applies to you if:
(a) on 1 July 2017, a transfer balance debit arose in your transfer balance account under item 2 of the table in subsection 294-80(1) of the Income Tax Assessment Act 1997; and
(b) the sum of all the transfer balance credits that arise in your transfer balance account under item 1 of the table in subsection 294-25(1) of that Act exceeds the amount that would, apart from this section, be the amount of that debit.
294-80(2)
Despite column 2 of item 2 of the table in subsection 294-80(1) of the Income Tax Assessment Act 1997, the amount of the transfer balance debit is instead equal to the sum worked out under paragraph (1)(b) of this section.
The object of this Subdivision is to provide temporary relief from certain capital gains that might arise as a result of individuals complying with the following legislative changes:
(a) the introduction of a transfer balance cap (as a result of Schedule 1 to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016);
(b) the exclusion of transition to retirement income streams (and similar income streams) from being superannuation income streams in the retirement phase (as a result of Schedule 8 to that Act).
In this Subdivision:
pre-commencement period
means the period:
(a) starting on the start of the day on which the Bill that became the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 was introduced into the House of Representatives; and
(b) ending just before 1 July 2017.
This section applies if:
(a) at the start of the pre-commencement period, a CGT asset of a fund is a segregated current pension asset of the fund; and
(b) either:
(i) at a time (the cessation time ) in the pre-commencement period, the asset ceases to be a segregated current pension asset of the fund; or
(ii) at the start of 1 July 2017 (also the cessation time ), the asset ceases to be a segregated current pension asset of the fund because it supports a superannuation income stream covered by subsection 307-80(3) of the Income Tax Assessment Act 1997; and
(c) the fund held the CGT asset throughout the pre-commencement period (disregarding subsection (3)); and
(d) the fund is a complying superannuation fund throughout the period:
(i) starting at the start of the pre-commencement period; and
(ii) ending at the cessation time; and
(e) the trustee of the fund makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2).
294-110(2)
A choice made for the purposes of paragraph (1)(e):
(a) is to be in the approved form; and
(b) can only be made on or before the day by which the trustee of the fund is required to lodge the fund's income tax return for the 2016-17 income year; and
(c) cannot be revoked.
294-110(3)
For the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997, the fund is taken:
(a) to have sold, immediately before the cessation time, the asset for a consideration equal to its market value; and
(b) to have purchased the asset again at the cessation time for a consideration equal to its market value.
Application
294-115(1)
This section applies in relation to a CGT asset of a fund if:
(a) the fund is a complying superannuation fund throughout the pre-commencement period; and
(b) the proportion mentioned in subsection 295-390(3) of the Income Tax Assessment Act 1997 in respect of the fund for the 2016-17 income year is greater than nil; and
(c) the fund held the asset throughout the pre-commencement period; and
(d) throughout the pre-commencement period, the asset:
(i) was not a segregated current pension asset of the fund; and
(ii) was not a segregated non-current asset of the fund; and
(e) the trustee of the fund makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2).
294-115(2)
A choice made for the purposes of paragraph (1)(e):
(a) is to be in the approved form; and
(b) can only be made on or before the day by which the trustee of the fund is required to lodge the fund's income tax return for the 2016-17 income year; and
(c) cannot be revoked.
Deemed sale and purchase
294-115(3)
For the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997, the fund is taken:
(a) to have sold, immediately before 1 July 2017, the asset for a consideration equal to its market value; and
(b) to have purchased the asset again just after that sale for a consideration equal to its market value.
Application
294-120(1)
This section applies in relation to a CGT asset of a complying superannuation fund if:
(a) section 294-115 applies in relation to the CGT asset; and
(b) as a result of paragraph 294-115(3)(a), the fund makes a capital gain in respect of the asset (disregarding this section); and
(c) the trustee of the fund makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2).
294-120(2)
A choice made for the purposes of paragraph (1)(c):
(a) is to be in the approved form; and
(b) can only be made on or before the day by which the trustee of the fund is required to lodge the fund's income tax return for the 2016-17 income year; and
(c) cannot be revoked.
Disregard initial capital gain
294-120(3)
Disregard the capital gain mentioned in paragraph (1)(b).
Recognition of deferred notional gain
294-120(4)
The deferred notional gain is the 2016-17 non-exempt proportion of the amount of the fund's net capital gain for the 2016-17 income year determined on the assumptions that:
(a) subsection (3) of this section does not apply; and
(b) the fund made no capital gains in that income year other than the gain mentioned in paragraph (1)(b); and
(c) the fund made no capital losses in that income year; and
(d) the fund had no previously unapplied net capital losses from earlier income years.
294-120(5)
For the purposes of Division 102 of the Income Tax Assessment Act 1997, if a realisation event happens to the asset in an income year that starts on or after 1 July 2017:
(a) treat the fund as having made a capital gain in that income year equal to the deferred notional gain; and
(b) disregard section 102-20 of that Act in respect of that capital gain; and
(c) treat that capital gain as not being a discount capital gain.
294-120(6)
Subsection 295-390(1) of the Income Tax Assessment Act 1997 does not apply to the amount by which a net capital gain is increased (or comes into existence) as a result of subsection (5).
294-120(7)
In this section:
2016-17 non-exempt proportion
means 1 minus the proportion mentioned in subsection 295-390(3) of the Income Tax Assessment Act 1997 in respect of the fund for the 2016-17 income year.
deferred notional gain
has the meaning given by subsection (4).
Application
294-125(1)
This section applies in relation to a CGT asset of a trust if:
(a) the trust is a pooled superannuation trust throughout the pre-commencement period; and
(b) either of the following is greater than nil:
(i) the proportion mentioned in subsection 295-400(1) of the Income Tax Assessment Act 1997 in respect of the trust for the 2016-17 income year;
(ii) if the trustee has made a choice under subsection 295-400(3) of that Act - the percentage mentioned in subsection 295-400(4) of that Act in respect of the trust for the 2016-17 income year; and
(c) the trust held the asset throughout the pre-commencement period; and
(d) the trustee of the trust makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2).
294-125(2)
A choice made for the purposes of paragraph (1)(d):
(a) is to be in the approved form; and
(b) can only be made on or before the day by which the trustee of the trust is required to lodge the trust's income tax return for the 2016-17 income year; and
(c) cannot be revoked.
Deemed sale and purchase
294-125(3)
For the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997, the trust is taken:
(a) to have sold, immediately before 1 July 2017, the asset for a consideration equal to its market value; and
(b) to have purchased the asset again just after that sale for a consideration equal to its market value.
Application
294-130(1)
This section applies in relation to a CGT asset of a pooled superannuation trust if:
(a) section 294-125 applies in relation to the CGT asset; and
(b) as a result of paragraph 294-125(3)(a), the trust makes a capital gain in respect of the asset (disregarding this section); and
(c) the trustee of the trust makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2).
294-130(2)
A choice made for the purposes of paragraph (1)(c):
(a) is to be in the approved form; and
(b) can only be made on or before the day by which the trustee of the trust is required to lodge the trust's income tax return for the 2016-17 income year; and
(c) cannot be revoked.
Disregard initial capital gain
294-130(3)
Disregard the capital gain mentioned in paragraph (1)(b).
Recognition of deferred notional gain
294-130(4)
The deferred notional gain is the 2016-17 non-exempt proportion of the amount of the trust's net capital gain for the 2016-17 income year determined on the assumptions that:
(a) subsection (3) of this section does not apply; and
(b) the trust made no capital gains in that income year other than the gain mentioned in paragraph (1)(b); and
(c) the trust made no capital losses in that income year; and
(d) the trust had no previously unapplied net capital losses from earlier income years.
294-130(5)
For the purposes of Division 102 of the Income Tax Assessment Act 1997, if a realisation event happens to the asset in an income year that starts on or after 1 July 2017:
(a) treat the trust as having made a capital gain in that income year equal to the deferred notional gain; and
(b) disregard section 102-20 of that Act in respect of that capital gain; and
(c) treat that capital gain as not being a discount capital gain.
294-130(6)
Section 295-400 of the Income Tax Assessment Act 1997 does not apply to the amount by which a net capital gain is increased (or comes into existence) as a result of subsection (5).
294-130(7)
In this section:
2016-17 non-exempt proportion
means:
(a) unless paragraph (b) applies - 1 minus the proportion mentioned in subsection 295-400(1) of the Income Tax Assessment Act 1997; or
(b) if the trustee has made a choice under subsection 295-400(3) of that Act - the percentage worked out by subtracting the percentage mentioned in subsection 295-400(4) of that Act in respect of the trust for the 2016-17 income year from 100%.
deferred notional gain
has the meaning given by subsection (4).
This Subdivision applies to an entity that is the trustee of a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust.
For the purposes of this Subdivision, an asset is a 30 June 1988 asset of a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust if the entity owned it at the end of 30 June 1988.
Note:
Section 295-90 of the Income Tax Assessment Act 1997 treats these assets as having been acquired on 30 June 1988.
The first element of the cost base of each 30 June 1988 asset of the entity's is the greater of the asset's market value (at the end of 30 June 1988) and its cost base (on that day).
295-85(2)
The first element of the reduced cost base of each 30 June 1988 asset of the entity's is the lesser of the asset's market value (at the end of 30 June 1988) and its cost base (on that day).
If:
(a) a 30 June 1988 asset of the entity's was listed on an Australian stock exchange on 30 June 1988; and
(b) on that day, identical assets were:
(i) computer traded on a national market; or
(ii) traded on a State capital city market;
the market value of the asset as at the end of 30 June 1988 is the average of the highest and lowest trade prices for identical assets recorded on 30 June 1988 in whichever of the following markets is applicable:
(c) if, on that date, identical assets were computer traded on a national market - that national market;
(d) if, on that date, there was a State capital city market (other than the Sydney market) that recorded a higher volume of trading than the Sydney market in identical assets - that State capital city market;
(e) in any other case - the Sydney market.
295-90(2)
For the purposes of this section, an asset is taken to have been listed on an Australian stock exchange on 30 June 1988 if, and only if, on that day the asset had the status of having been granted official quotation by a securities exchange within the meaning of the former Securities Industry Act 1980 or the law of a State or Territory corresponding to that former Act.
If:
(a) 30 June 1988 assets of the entity's consist of shares in a company; and
(b) at any time during the period commencing at the time when the shares were acquired and ending at the end of 30 June 1988, the company paid an amount that was not a dividend to the entity in respect of the shares;
the cost base to the entity of the shares as at 30 June 1988 is reduced by that amount.
295-95(2)
If:
(a) a 30 June 1988 asset of the entity's consists of an interest or unit in a trust; and
(b) at any time during the period commencing at the time when the interest or unit was acquired and ending at the end of 30 June 1988, the trustee of the trust paid an amount to the entity in respect of the interest or unit, being:
(i) in a case where the entity was exempt from tax for the year of income in which the payment was made - an amount that, if the entity had not been exempt from tax, would not have been the entity's assessable income; or
(ii) in any other case - an amount that would not have been the entity's assessable income;
the cost base to the entity of the interest or unit as at 30 June 1988 is reduced by so much of the amount as is not attributable to a deduction allowed under former Division 10C or 10D of the Income Tax Assessment Act 1936.
Despite section 130-40 of the Income Tax Assessment Act 1997, the modifications in subsections (2) and (3) of this section apply if an entity exercises rights or options as mentioned in that section to acquire:
(a) shares in a company, or options to acquire shares in a company; or
(b) units in a unit trust, or options to acquire units in a unit trust;
and those rights or options are 30 June 1988 assets of the entity.
295-100(2)
The first element of the cost base of the shares, units or options is the sum of:
(a) the amount paid to exercise the rights or options; and
(b) the greater of the market value of the rights or options (at the end of 30 June 1988) and the cost base of the rights or options (on that day).
295-100(3)
The first element of the reduced cost base of the shares, units or options is the sum of:
(a) the amount paid to exercise the rights or options; and
(b) the lesser of the market value of the rights or options (at the end of 30 June 1988) and the cost base of the rights or options (on that day).
295-100(4)
The payment referred to in subsection (2) or (3) can include giving property. To the extent that the payment does, use the market value of the property in working out the amount of the payment.
295-100(5)
For indexation purposes, the amount referred to in paragraph (2)(b) is taken to have been incurred on 30 June 1988.
A notice given under subsection 82AAT(1A) or (1CB) of the Income Tax Assessment Act 1936 in relation to the 2006-07 income year or an earlier year has effect, after 1 July 2007, as if it were a notice under section 290-170 of the Income Tax Assessment Act 1997.
295-190(2)
A notice given under subsection 82AAT(1C) or (1CD) of the Income Tax Assessment Act 1936 in relation to the 2006-07 income year or an earlier year has effect, after 1 July 2007, as if it were a notice under section 290-180 of the Income Tax Assessment Act 1997.
A proportion of the ordinary income and statutory income of a continuously complying fixed interest ADF of an income year that would otherwise be assessable income is exempt from income tax under this section. The proportion is worked out under subsection (3).
295-390(2)
Subsection (1) does not apply to:
(a) non-arm's length income; or
(b) amounts included in assessable income under Subdivision 295-C of the Income Tax Assessment Act 1997.
295-390(3)
The proportion is:
Aggregate of current 25 May balances |
Aggregate current balance |
Aggregate current balance
is the total amount deposited with the fund (together with accumulated earnings), as at the reckoning time in relation to the income year.
Aggregate of current 25 May balances
is the aggregate of the current 25 May balances of eligible depositors, as at the reckoning time in relation to the income year.
295-390(4)
A choice for the purposes of the definition of reckoning time in subsection (5) must be made on or before the date of lodgment of the income tax return of the ADF for the income year to which the choice relates, or before a later day allowed by the Commissioner.
295-390(5)
In this section:
continuously complying fixed interest ADF
, in relation to an income year (the
current year
), means a fund that is a fixed interest complying ADF in relation to each of the following years:
(a) the current year;
(b) the income year in which 1 July 1988 occurred;
(c) each income year later than the year mentioned in paragraph (b) and earlier than the current year.
current 25 May balance
, in relation to an eligible depositor as at the reckoning time, is the balance as at that time determined by varying the original 25 May balance, in accordance with the following rules, during the period from 26 May 1988 to the reckoning time:
(a) the balance from time to time is not to exceed the original 25 May balance and is not to be less than nil;
(b) subject to paragraph (a), an amount deposited with the ADF by the depositor before 1 September 1989 is to be added to the balance;
(c) subject to paragraph (a), an amount repaid to the depositor from the ADF is to be deducted from the balance.
eligible depositor
, in relation to an ADF, means:
(a) a depositor whose 55th birthday occurred on or before 25 May 1988; or
(b) a depositor whose 50th birthday occurred on or before 25 May 1988 and who, on or before that day, made a deposit with the ADF that consisted wholly or partly of the roll-over (as defined in Subdivision AA of Division 2 of Part III of the Income Tax Assessment Act 1936 as in force on that day) of an eligible termination payment as so defined, being an eligible termination payment that included a concessional component (as so defined).
fixed interest complying ADF
, in relation to a year of income, means a complying ADF where both of the following conditions are satisfied:
(a) not less than 90% of the amount that, apart from this section, would be the assessable income of the ADF of the income year (other than non-arm's length income or amounts included in assessable income under Subdivision 295-C of the Income Tax Assessment Act 1997) consists of any one or more of the following:
(i) interest or a payment in the nature of interest;
(ii) any profit arising on the disposal, redemption, cancellation or maturity of a CGT asset referred to in paragraph 295-85(3)(b) of the Income Tax Assessment Act 1997;
(iii) an amount included in assessable income under Division 16E of Part III of the Income Tax Assessment Act 1936 (or would be so included if Division 230 of the Income Tax Assessment Act 1997 did not apply);
(b) at no time during the year of income did the assets of the fund consist of or include any of the following:
(i) units in a PST;
(ii) virtual PST life insurance policies (as defined in the Income Tax Assessment Act 1997) issued by a life insurance company.
original 25 May balance
, in relation to an eligible depositor, means the amount of the deposits (together with accumulated earnings) standing to the credit of the depositor as at the end of 25 May 1988.
reckoning time
, in relation to an ADF in relation to an income year, means the beginning of the income year, or such other time during the income year as the ADF chooses in accordance with subsection (4).
295-390(6)
This section does not apply to an ADF in relation to an income year unless the whole of the benefit that would accrue to the ADF from the application of this section in relation to the income year has been, or can reasonably expected to be, passed on to eligible depositors.
An election made by the trustee of a complying superannuation fund under subsection 279(4) of the Income Tax Assessment Act 1936 that had effect for the income year of the fund in which 30 June 2007 occurs continues to have effect as if it had been made under section 295-465 of the Income Tax Assessment Act 1997.
(Repealed by No 117 of 2010)
(Repealed by No 43 of 2011)
(Repealed by No 81 of 2016)
(Repealed by No 81 of 2016)
Subdivisions 295-I (no-TFN contributions) and 295-J (Tax offset for no-TFN contributions income (TFN quoted within 4 years)) of the Income Tax Assessment Act 1997 apply to an entity whose 2006-2007 income year ends on a day (the end day ) after 1 July 2007 as if:
(a) the period starting on 1 July 2007 and ending on the end day were part of the entity's 2007-2008 income year; and
(b) the entity's no-TFN contributions income for the entity's 2007-2008 income year included contributions made during that period that would have been income of that kind for the entity's 2007-2008 income year if the contributions concerned had been made in the entity's 2007-2008 income year.
A foreign superannuation fund is covered by this section if:
(a) the fund has been a complying superannuation fund; and
(b) the fund last stopped being a complying superannuation fund after 1 July 1988 and before 1 July 1995.
301-5(2)
Division 301 of the Income Tax Assessment Act 1997 applies to payments to you from a foreign superannuation fund covered by this section because you are a member of the fund in the same way as it would apply if the payments were superannuation member benefits paid to you from a complying superannuation fund.
For the purposes of the Income Tax Assessment Act 1997, a superannuation income stream benefit is taken to be a disability superannuation benefit if, just before 1 July 2007, the superannuation income stream from which the benefit is paid was covered by paragraph (b) of the definition of death or disability annuity/pension in section 159SJ of the Income Tax Assessment Act 1936.
Subdivision 301-F of the Income Tax Assessment Act 1997 applies in relation to income years starting on or after 1 July 2007.
Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purposes of giving effect to the following in respect of an income year that starts on or before 1 July 2021: (a) Subdivision 301-F of the Income Tax Assessment Act 1997; (b) the amendments of the Income Tax Assessment (1997 Act) Regulations 2021 made by Schedule 9 to the Treasury Laws Amendment (2022 Measures No. 4) Act 2023.
Note:
Section 170 of the Income Tax Assessment Act 1936 specifies the periods within which assessments may be amended.
This section applies if: (a) a superannuation benefit (the trigger benefit ) was paid to a person in the 2020-21 income year or an earlier income year; and (b) the Commissioner made an assessment for the income year for the person before 4 December 2020; and (c) the trigger benefit was paid to the person because the person satisfied a condition of release specified in item 103 (permanent incapacity) of the table in Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994; and (d) the Commissioner made the assessment on the basis that the trigger benefit was a superannuation lump sum.
301-100(2)
The Commissioner cannot amend an assessment on the basis that a superannuation benefit paid to the person is a superannuation income stream benefit because of the amendments made by Schedule 9 to the Treasury Laws Amendment (2022 Measures No. 4) Act 2023 if: (a) the superannuation benefit is the trigger benefit; or (b) all of these conditions are satisfied:
(i) the assessment is for the 2021-22 income year or an earlier income year;
(ii) the superannuation benefit was paid to the person after the trigger benefit was paid to the person;
(iii) the superannuation benefit was paid to the person because the person satisfied a condition of release specified in item 103 (permanent incapacity) of the table in Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994;
(iv) the Commissioner made the assessment on the basis that the superannuation benefit was a superannuation lump sum.
301-100(3)
Subsection (2) applies despite any other provision of this Act (apart from subsection (4) of this section), the Income Tax Assessment Act 1997 and the Income Tax Assessment Act 1936.
301-100(4)
Subsection (2) does not apply in any of these cases: (a) if the Commissioner may amend the assessment in accordance with item 5 (fraud or evasion) or 6 (review or appeal) of the table in subsection 170(1) of the Income Tax Assessment Act 1936; (b) if the amendment is made for the purpose of giving effect to a provision specified in the regulations for the purposes of this paragraph.
The Minister may, by legislative instrument, make rules prescribing matters of a transitional nature (including prescribing any saving or application provisions) that: (a) relate to the amendments or repeals made by Schedule 9 to the Treasury Laws Amendment (2022 Measures No. 4) Act 2023; and (b) relate to either or both of the 2022-23 and 2023-24 income years.
301-105(2)
Without limiting subsection (1), rules made under this section before the end of the period of 12 months starting on the day that Schedule commences may provide that provisions of that Schedule, or any other Act or instrument, have effect with any modifications prescribed by the rules. Those provisions then have effect as if they were so modified.
301-105(3)
To avoid doubt, the rules may not do the following: (a) create an offence or civil penalty; (b) provide powers of:
(i) arrest or detention; or
(c) impose a tax; (d) set an amount to be appropriated from the Consolidated Revenue Fund under an appropriation in any Act; (e) directly amend the text of an Act.
(ii) entry, search or seizure;
301-105(4)
This Schedule (other than subitem (3)) does not limit the rules that may be made for the purposes of subitem (1).
A foreign superannuation fund is covered by this section if:
(a) the fund has been a complying superannuation fund; and
(b) the fund last stopped being a complying superannuation fund after 1 July 1988 and before 1 July 1995.
302-5(2)
Division 302 of the Income Tax Assessment Act 1997 applies to payments to you from a foreign superannuation fund covered by this section after another person's death, because the other person was a member of that fund, in the same way as it would apply if the payments were superannuation death benefits paid to you from a complying superannuation fund.
For the purposes of Division 302 of the Income Tax Assessment Act 1997, treat a person who receives a superannuation income stream benefit as a death benefits dependant in relation to the benefit if:
(a) the benefit is a superannuation death benefit; and
(b) just before 1 July 2007, the superannuation income stream from which the benefit is paid was covered by paragraph (a) of the definition of death or disability annuity/pension in section 159SJ of the Income Tax Assessment Act 1936.
This section applies only for the 2008-2009 income year.
302-195A(2)
For the purposes of Subdivision 82-B of Division 82, Division 302 and section 303-5 of the Income Tax Assessment Act 1997, the definition of death benefits dependant in section 302-195 of that Act applies as if paragraphs (a) and (b) of the definition were replaced with the following paragraphs:
(a) a spouse of the deceased within the meaning of the Superannuation Industry (Supervision) Act 1993 as in force immediately after the commencement of Schedule 4 to the Same-Sex Relationships (Equal Treatment in Commonwealth Laws - Superannuation) Act 2008 or a person who was formerly such a spouse; or
(b) a child of the deceased within the meaning of the Superannuation Industry (Supervision) Act 1993 as in force immediately after the commencement of Schedule 4 to the Same-Sex Relationships (Equal Treatment in Commonwealth Laws - Superannuation) Act 2008, who is aged less than 18.
This section applies to a superannuation member benefit that you receive during the 2007-08 financial year and that:
(a) is a superannuation lump sum; and
(b) is:
(i) paid from a complying superannuation plan; or
(ii) a superannuation guarantee payment, a small superannuation account payment, an unclaimed money payment, a superannuation co-contribution benefit payment or a superannuation annuity payment.
303-10(2)
The lump sum is not assessable income and is not exempt income if a terminal medical condition exists in relation to you at a time in the period:
(a) starting when you receive the lump sum; and
(b) ending at the later of:
(i) 90 days after you receive it; and
(ii) 30 June 2008.
A superannuation member benefit that is a superannuation lump sum is not assessable income and is not exempt income if:
(a) it is paid from a complying superannuation plan; and
(b) it is paid because you satisfy:
(i) a condition of release specified in item 107A or 207AA of the table in Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994; or
(ii) a condition of release specified in item 109AA of the table in Schedule 2 to the Retirement Savings Accounts Regulations 1997.
This section applies to a superannuation benefit that you receive, paid in relation to a release authority given in relation to you in accordance with section 292-80B.
304-15(2)
The superannuation benefit is not assessable income and is not exempt income to the extent that it does not exceed the amount mentioned in subsection (3).
304-15(3)
The amount is the amount of excess non-concessional contributions stated in the release authority in accordance with paragraph 292-80A(3)(a), reduced (but not below zero) by the amount of any superannuation benefit that was not assessable income and not exempt income under a previous operation of subsection (2) in relation to the release authority.
304-15(4)
The superannuation benefit is assessable income to the extent (if any) that it exceeds the amount mentioned in subsection (3).
304-15(5)
This section applies despite Divisions 301, 302 and 303 of the Income Tax Assessment Act 1997.
You are entitled to a deduction for an income year (the deduction year ) if:
(a) you have an interest in a FIF (within the meaning of Part XI of the Income Tax Assessment Act 1936, as in force just before the commencement of item 37 of Schedule 1 to the Tax Laws Amendment (Foreign Source Income Deferral) Act (No. 1) 2010) (the paying fund ); and
(b) Subdivision 305-B of the Income Tax Assessment Act 1997 applies in relation to the paying fund (see section 305-55 of that Act); and
(c) the paying fund transfers an amount to a complying superannuation fund in respect of you during the deduction year; and
(d) you choose under section 305-80 of the Income Tax Assessment Act 1997 that the amount, or part of the amount, is to be treated as assessable income of the complying superannuation fund; and
(e) immediately before the transfer happens, there is a post-FIF abolition surplus (within the meaning of the Income Tax Assessment Act 1936) for the paying fund in relation to you; and
(f) the deduction year is the 2010-11 income year or a later income year.
305-80(2)
The amount of the deduction is the lesser of:
(a) the post-FIF abolition surplus; and
(b) the amount covered by your choice mentioned in paragraph (1)(d).
For the purposes of the definition of specified roll-over amount in the Income Tax Assessment Act 1997, treat the taxable component of a directed termination payment (within the meaning of section 82-10F) as the element untaxed in the fund of a superannuation benefit that is a roll-over superannuation benefit.
This section applies to a superannuation income stream from which at least one superannuation income stream benefit has been paid before 1 July 2007.
Note:
This section also applies to an income stream replacing an earlier one because of an involuntary roll-over (see section 307-127).
307-125(2)
Despite subsection 307-125(2) of the Income Tax Assessment Act 1997, work out the tax free component of superannuation income stream benefits paid from the superannuation income stream in an income year beginning on or after 1 July 2007 as follows:
(a) first, work out the deductible amount in relation to the superannuation income stream for the income year including 30 June 2007 in accordance with section 27H of the Income Tax Assessment Act 1936 (as in force just before 1 July 2007);
(b) next, allocate the deductible amount worked out under paragraph (a) to each of those benefits in proportion to the amount of those benefits.
The amount allocated to a superannuation income stream benefit under paragraph (b) is the tax free component of the benefit. The taxable component of the benefit is the remainder of the benefit.
307-125(3)
Subsection (2) does not apply to the payment of a superannuation income stream benefit after at least one of the following events has happened:
(a) the superannuation income stream has been wholly or partially commuted;
(b) the holder of the superannuation interest has died, if:
(i) none of the superannuation income stream benefits paid from the superannuation interest after 30 June 2007 consist of, or include, an element untaxed in the fund; or
(ii) where no superannuation income stream benefits have been paid from the superannuation interest after 30 June 2007 - all payments from the interest on or before that day would have satisfied the requirement in subparagraph (i) if they had been paid after that day;
(ba) the holder of the superannuation interest is aged 60 or above on 1 July 2007, if none of the superannuation income stream benefits paid from the superannuation interest after 30 June 2007 consist of, or include, an element untaxed in the fund;
(c) the holder of the superannuation interest turns 60, if:
(i) none of the superannuation income stream benefits paid from the superannuation interest after 30 June 2007 consist of, or include, an element untaxed in the fund; or
(ii) where no superannuation income stream benefits have been paid from the superannuation interest after 30 June 2007 - all payments from the interest on or before that day would have satisfied the requirement in subparagraph (i) if they had been paid after that day.
Continuing payments of superannuation income stream after subsection (3) event
307-125(4)
If subsection (2) does not apply to the payment of a superannuation income stream benefit because of subsection (3):
(a) treat the time mentioned in subsection (5) as the applicable time for the purposes of subsection 307-125(3) of the Income Tax Assessment Act 1997 in relation to the benefit; and
(b) work out the tax free component of the superannuation interest for the purposes of section 307-125 of the Income Tax Assessment Act 1997 under subsections (6) and (6A).
307-125(5)
For the purposes of subsection (4), the time is:
(a) the time just before the event mentioned in subsection (3) happens; or
(b) if there are 2 or more such events - the time just before the earliest of those events happens.
307-125(6)
For the purposes of paragraph (4)(b), work out the tax free component of the superannuation interest as follows:
(a) first, assume that:
(i) an eligible termination payment had been made in respect of the holder of the interest just before the time mentioned in subsection (5); and
(ii) the amount of the eligible termination payment had been equal to the value of the superannuation interest at that time;
(b) next, work out the unused undeducted purchase price (within the meaning of paragraph (a) of the definition of that term in subsection 27A(1) of the Income Tax Assessment Act 1936 just before the commencement of this section, and disregarding paragraphs (b) and (c) of that definition) of the superannuation income stream, reduced by the tax free components (worked out under subsection (2)) of any benefits paid from the superannuation income stream after 30 June 2007;
(c) next, work out the pre-July 83 component (within the meaning of section 27A of the Income Tax Assessment Act 1936 just before the commencement of this section) of the eligible termination payment.
The tax free component is equal to the sum of the amounts worked out under paragraphs (b) and (c).
307-125(6A)
Despite subsection (6), if:
(a)at least one superannuation income stream benefit was paid from the superannuation income stream before 1 July 1994; or
(b) section 27AAAA of the Income Tax Assessment Act 1936 (as in force just before 1 July 2007) applied to the superannuation income stream just before 1 July 2007;
for the purposes of paragraph (4)(b), the tax free component is equal to the amount worked out under paragraph (6)(b).
307-125(7)
For the purposes of paragraph (6)(c), disregard the value of the interest to the extent that it would consist, apart from this subsection, of the element untaxed in the fund of the taxable component of a superannuation benefit constituted by the eligible termination payment.
Commutation of superannuation income stream
307-125(8)
If the superannuation income stream has been wholly or partially commuted as mentioned in paragraph (3)(a), treat the applicable time for the purposes of subsection 307-125(3) of the Income Tax Assessment Act 1997 in relation to a superannuation benefit arising from the commutation as:
(a) the time just before the commutation; or
(b) if 1 or more other events mentioned in subsection (3) happened before the commutation - the time just before the earliest of those events happens.
Section 307-125 also applies to a superannuation income stream (the later income stream ) if:
(a) the later income stream commenced using only the amount of an involuntary roll-over superannuation benefit:
(i) covered by paragraph 306-12(a) of the Income Tax Assessment Act 1997; and
(ii) paid from a superannuation interest (the earlier interest ); and
(b) immediately before that benefit was paid:
(i) the earlier interest was supporting another superannuation income stream (the earlier income stream ); and
(ii) section 307-125 of this Act applied to the earlier income stream because of subsection (1) of that section.
307-127(2)
Section 307-125 applies to the later income stream as if:
(a) references in that section to the later income stream (in relation to a time, or event happening, before the payment of that involuntary roll-over superannuation benefit) include references to the earlier income stream; and
(b) references in that section to the superannuation interest supporting the later income stream (in relation to a time, or event happening, before the payment of that benefit) include references to the earlier interest.
This section applies for the purposes of working out the amount of your total superannuation balance just before 1 July 2017.
307-230(2)
The transfer balance mentioned in paragraph 307-230(1)(b) of the Income Tax Assessment Act 1997 just before 1 July 2017 is taken to be equal to:
(a) the sum of the transfer balance credits (if any) in your transfer balance account just after the start of 1 July 2017; less
(b) the sum of the transfer balance debits (if any) arising in your transfer balance account on 1 July 2017 under item 4 of the table in subsection 294-80(1) of that Act (about payment splits).
Section 307-231 of the Income Tax Assessment Act 1997 applies in relation to borrowings that arise under contracts entered into on or after 1 July 2018.
307-231(2)
For the purposes of subsection (1), a borrowing (the new borrowing ) that arises under a contract entered into on or after 1 July 2018 is treated as if it arose under a contract entered into before 1 July 2018 if:
(a) the new borrowing is a refinancing of a borrowing (the old borrowing ) that was made under a contract:
(i) entered into before 1 July 2018; and
(ii) covered by the exception in subsection 67A(1) of the Superannuation Industry (Supervision) Act 1993 (which is about limited recourse borrowing arrangements); and
(b) the new borrowing is secured by the same asset or assets as the old borrowing; and
(c) the amount of the new borrowing at the time it is first made equals, or is less than, the outstanding balance on the old borrowing just before the refinancing.
For the purposes of section 307-290 of the Income Tax Assessment Act 1997:
(a) treat a deduction made under former section 279 of the Income Tax Assessment Act 1936 as having been made under section 295-465 of the Income Tax Assessment Act 1997 instead; and
(b) treat a deduction made under former section 279B of the Income Tax Assessment Act 1936 as having been made under section 295-470 of the Income Tax Assessment Act 1997 instead.
If you have become entitled to a rebate under section 159SA of the Income Tax Assessment Act 1936, your low rate cap amount for the 2007-2008 income year is, despite subsection 307-345(1), the total of:
(a) your closing balance for the 2006-2007 income year (worked out under subsection 159SF(2) of that Act); and
(b) the amount by which $140,000 exceeds the upper limit for the 2006-2007 income year (worked out under section 159SG of that Act).
Division 316 of the Income Tax Assessment Act 1997 applies in relation to demutualisations occurring on or after 1 July 2008.
Subdivision 320-A - Preliminary SECTION 320-5 320-5 Life insurance companies that are friendly societies
If:
(a) any assets held by the benefit funds of a life insurance company that is a friendly society for the purpose of providing superannuation benefits to its members are transferred before 1 July 2001 to a complying superannuation fund; and
(b) the persons who had interests in those assets immediately before the transfer had substantially the same interests in the assets after the transfer;
the transfer is disregarded for any purposes of the Income Tax Assessment Act 1997 or the Income Tax Assessment Act 1936.
In working out the amount that a life insurance company can deduct, in respect of life insurance policies that are disability policies (other than continuous disability policies) under subsection 320-85(1) of the Income Tax Assessment Act 1997 for the income year in which 1 July 2000 occurs, the value of the company's liabilities under the net risk components of the policies at the end of the previous income year is taken to be the value of the liabilities as at the end of 30 June 2000 relating to those policies that was used by the company for the purposes of its return of income.
320-85(2)
In working out the amount that a life insurance company can deduct, in respect of life insurance policies (other than policies to which subsection (1) applies) under subsection 320-85(1) of the Income Tax Assessment Act 1997 for the income year in which 1 July 2000 occurs, the value of the company's liabilities under the net risk components of the policies at the end of the previous income year is taken to be the value of the company's liabilities as at the end of 30 June 2000 under the net risk components relating to those policies as calculated under subsection 320-85(4) of that Act.
Subdivision 320-D - Taxable income and tax loss of life insurance companies
If:
(a) a life insurance company has a tax loss for an income year ending before 1 July 2000; and
(b) all or a part of that tax loss is carried forward to the income year that includes that date;
so much of that tax loss as is so carried forward has effect as if it were a tax loss of the ordinary class.
This section applies to an asset (an approved asset ) of a life insurance company if:
(a) the asset was acquired by the company before 1 July 2000; and
(b) the asset is held in an Australian fund or an Australian/overseas fund of the company; and
(c) the market value of the asset at that date exceeds whichever is the lesser of:
(i) $50,000,000; or
(ii) whichever is the greater of 2% of the value of that fund at that date or $5,000,000.
320-170(2)
If the life insurance company wishes to include a part of an approved asset in its virtual PST before 1 October 2000, the company must, before that date, certify in writing the part (if any) of the asset to be included in the virtual PST.
320-170(3)
If the life insurance company so certifies, the part of the asset stated in the certificate is to be treated as a separate asset of the company.
SECTION 320-175 Transfers of assets to virtual PST 320-175(1)
If:
(a) a life insurance company had a liability before 1 July 2000 under a life insurance policy; and
(b) the liability or a part of the liability is to be discharged out of the company's virtual PST assets; and
(c) there is a transfer of the company's assets to the virtual PST to meet that liability or that part of the liability;
then, to the extent to which the assets are transferred to meet that liability or that part of the liability:
(d) if the transfer occurs before 1 October 2000 - the transfer is to be disregarded for the purposes of the Income Tax Assessment Act 1997; or
(e) if the transfer occurs on or after 1 October 2000 - the transfer is to be disregarded for the purposes of that Act, except:
(i) section 320-200 of that Act; and
(ii) any other provisions that rely on the operation of that section (for example, paragraph 320-15(1)(e) of that Act).
Note:
This means, amongst other things, that a life insurance company to which this subsection applies will not be able to claim a deduction in respect of the transfer under subsection 320-87(2) of that Act.
320-175(1A)
If subsection (1) has applied to a life insurance company in respect of a transfer of assets to meet a liability or a part of a liability, that subsection does not apply again in respect of another transfer of assets to meet that liability or that part of the liability.
320-175(2)
If a life insurance company that is a friendly society establishes a virtual PST in the 2000-01 income year, the calculation of the transfer values of the company's virtual PST assets as at the end of that income year is to be made not later than 90 days after the end of that income year.
SECTION 320-180 Deferred annuities purchased before 1 July 2007 320-180(1)
Subsection (3) applies for the purposes of subparagraph (b)(i) of the definition of virtual PST life insurance policy in subsection 995-1(1) of the Income Tax Assessment Act 1997, as in force just after the commencement of item 259 of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007.
320-180(2)
Subsection (3) also applies for the purposes of subparagraph (b)(i) of the definition of complying superannuation/FHSA life insurance policy in subsection 995-1(1) of the Income Tax Assessment Act 1997, as in force just after the commencement of item 47 of Schedule 7 to the First Home Saver Accounts (Consequential Amendments) Act 2008.
320-180(3)
Treat an annuity as having been purchased out of a superannuation lump sum or an employment termination payment, if the annuity was purchased:
(a) before 1 July 2007; and
(b) out of an eligible termination payment (within the meaning of the Income Tax Assessment Act 1997, as in force just before the commencement mentioned in subsection (1) of this section).