INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997 [ARCHIVE]

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-1 - ASSESSABLE INCOME  

Division 20 - Items included to reverse the effect of past deductions  

Subdivision 20-A - Insurance, indemnity or recoupment for deductible expenses  

SECTION 20-1 [ARCHIVE]   Application of Subdivision 20-A of the Income Tax Assessment Act 1997  

20-1(2)  
That Subdivision also applies to an amount by which you are taken because of paragraph 70A(5)(b) of the Income Tax Assessment Act 1936 to be recouped in the 1997-98 income year.

Note:

Paragraph 70A(5)(b) of the Income Tax Assessment Act 1936 carries forward to the next income year a recoupment of mains electricity connection expenditure that is not assessable in the current year.

SECTION 20-5 [ARCHIVE]   Continued application of some 1936 Act provisions about recoupment  

20-5(1)  
The provisions of the Income Tax Assessment Act 1936 listed in the table continue to apply to assessments for the 1997-98 income year and later income years (except in relation to an amount received as recoupment in the 1997-98 income year or a later income year).

Note:

The provisions in the table generally treat expenditure as not having been incurred to the extent that it has been recouped.


Item Provision Description of expense provision relates to:
1 73D research and development activity expenditure
.
2 82BE environmental impact study expenditure
.
2A 122T General mining and quarrying expenditure
.
2B 123A(2) and (3) Expenditure on transporting minerals
.
2C 123BD(4) and (5) Expenditure on transporting quarry materials
.
2D 124AQ Petroleum mining expenditure
.
3 124ZZN horticultural plant establishment expenditure

20-5(2)  
Sections 82BE and 124ZZN of the Income Tax Assessment Act 1936 do not apply to an assessment for the 1998-99 income year or a later income year. This has effect despite subsection (1).

PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS  

Division 28 - Car expenses  

SECTION 28-100 [ARCHIVE]   Log books  

28-100(1)  
This section has effect for the purposes of section 28-115 (Income years for which you need to keep a log book) of the Income Tax Assessment Act 1997.

28-100(2)  
You are taken to have used the ``log book'' method for a car for the 1993-94 income year or an earlier income year if section 82KUD of the Income Tax Assessment Act 1936 applied for the purpose of determining the amounts of deductions allowable under that Act in respect of car expenses you incurred for the car in that income year.

28-100(3)  
You are taken to have used the ``log book'' method for a car for the 1994-95, 1995-96 or 1996-97 income year if you used that method of deducting car expenses for that income year.

28-100(4)  
You are taken to have kept a log book for a car for the 1994-95 income year or an earlier income year if log book records and odometer records for the car were maintained by you or on your behalf, in accordance with Subdivision F of Division 3 of Part III of the Income Tax Assessment Act 1936, for the applicable log book period in that income year. Those log book records and odometer records are taken to be the log book you kept for that income year.

28-100(5)  
You are taken to have kept a log book for a car for the 1994-95, 1995-96 or 1996-97 income year if you did so in accordance with Schedule 2A to the Income Tax Assessment Act 1936.

Note:

The 1994-95 income year is covered by both subsections (4) and (5). This is because you may have kept your log book records and odometer records under Subdivision F of Division 3 of Part III of the Income Tax Assessment Act 1936 before Schedule 2A to that Act was enacted.

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-B - Core provisions  

SECTION 40-85 [ARCHIVE]   40-85   Excess deductions  
You can deduct any amount of new EPE (see sections 330-30 and 330-35 of this Act) you have at the end of your 2000-01 income year, reduced by the total of the relevant amounts (see subsections 330-30(4) and 330-35(4) of this Act) for an earlier applicable year (see subsections 330-30(3) and 330-35(3) of this Act).

Division 41 - Common rules for capital allowances  

Subdivision 41-A - Common rule 1 (Roll-over relief for related entities  

SECTION 41-40 [ARCHIVE]   41-40   Application of section 41-40 to disposals between February 1999 and September 1999  
In applying Division 45 of the Income Tax Assessment Act 1997 to 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, section 41-40 of that Act applies as if this provision were added at the end of subsection 41-40(4):

and


(d) if the transferor was a member of a partnership that has deducted or could deduct an amount for depreciation of the property, the amount representing the extent to which the deductions have been or would be reflected in the transferor's interest in the partnership net income or partnership loss is taken to be an amount deducted by the transferee for depreciation of the property.

Division 42 - Depreciation  

SECTION 42-1 [ARCHIVE]   42-1   Definitions  
In this Division:

1997 Act
means the Income Tax Assessment Act 1997.

1936 Act
means the Income Tax Assessment Act 1936.

new depreciation provisions
means the provisions of Division 42 of the 1997 Act.

old depreciation provisions
means:


(a) sections 54 to 62AAV (inclusive) of the 1936 Act; and


(b) relevant transitional provisions in Acts that amended that Act.

SECTION 42-2 [ARCHIVE]   Application of Division 42 of the 1997 Act  

42-2(1)  
The provisions of Division 42 of the 1997 Act apply to assessments for the 1997-98 income year and later income years.

42-2(2)  
However, section 42-15 of the 1997 Act does not apply to allow you to deduct an amount for depreciation of a ship for an income year if you calculate the amount of a deduction in accordance with section 57AM of the 1936 Act for the ship for that year.

Note:

Depreciation deductions for these ships are allowable under the 1936 Act: see subsection 53I(2) of the 1936 Act.

SECTION 42-6 [ARCHIVE]   General transitional provision  

42-6(1)  
The following subsections have effect if you have deducted or can deduct an amount for depreciation of plant:


(a) under the old depreciation provisions; or


(b) using the ``log book'' method or the ``one-third of actual expenses'' method under section 82KUD or 82KW, or Schedule 2A, of the 1936 Act;

and you can deduct an amount for depreciation of it under the new depreciation provisions or Division 28 of the 1997 Act.

Method

42-6(2)  
You use the same method of calculation that you were using for the plant under the old depreciation provisions. Cost

42-6(3)  
The cost of the plant is the cost you were using under the old depreciation provisions.

42-6(4)  
However, if you are using the diminishing value method for the plant and section 58 of the 1936 Act applied to its acquisition by you, the cost is:


(a) the cost used by the transferor; or


(b) if there were earlier successive transferors - the cost used by the earliest successive transferor. Rate

42-6(5)  
Your rate is the annual depreciation percentage worked out under the old depreciation provisions.

42-6(6)  
However, if you are using the diminishing value method and you acquired or constructed the plant before 27 February 1992, you multiply that percentage by 1.5.

42-6(7)  
However, if you are using the prime cost method and you acquired or constructed the plant after 26 February 1992, you multiply that percentage by two thirds.

Note:

Section 42-400 of this Act is relevant in working out whether plant was acquired or constructed after 26 February 1992.

SECTION 42-7 [ARCHIVE]   Special rules for plant used but not depreciated before the 1997-98 income year  

42-7(1)  
This section applies to you if:


(a) you can first deduct an amount for depreciation of plant for the 1997-98 income year or a later income year; and


(b) you owned and used it before that income year but:


(i) you did not use it for the purpose of producing assessable income; or

(ii) a provision of the 1936 Act denied a depreciation deduction for it.
Method

42-7(2)  
If section 58 of the 1936 Act applied to your acquisition of the plant, you use the method of calculation that the transferor was using or would have been required to use.

Note:

However, for other plant to which this section applies, you choose your method under the 1997 Act.

Cost

42-7(3)  
The cost of the plant is the cost you would have been required to use if you had been deducting amounts for depreciation of it under the 1936 Act.

42-7(4)  
However, if you are using the diminishing value method for the plant and section 58 of the 1936 Act applied to your acquisition of the plant, the cost is:


(a) the cost used by the transferor; or


(b) if there were earlier successive transferors - the cost used by the earliest successive transferor. Rate

42-7(5)  
You use the rate worked out under subsections 42-6(5), (6) and (7).

SECTION 42-8 [ARCHIVE]   Rules where Common rule 1 applies   Effective life

42-8(1)  
Subdivision 42-C of the 1997 Act does not apply to plant if:


(a) Common rule 1 in Subdivision 41-A of the 1997 Act applied to your acquisition of it; and


(b) the transferor, or an earlier successive transferor, acquired or constructed it before 13 March 1991. Rate

42-8(2)  
If:


(a) Common rule 1 applied to your acquisition of plant; and


(b) the rate for the transferor, or an earlier successive transferor, was an annual depreciation percentage worked out under the old depreciation provisions;

you use the rate worked out under subsections 42-6(5), (6) and (7).

42-8(3)  
In working out that rate, you are taken to have acquired or constructed the plant at the time when:


(a) the transferor; or


(b) if there were earlier successive transferors - the earliest successive transferor;

acquired or constructed it for the purposes of the old depreciation provisions.

SECTION 42-9 [ARCHIVE]   Amounts deducted under old law taken to be amounts deducted under new law  

42-9(1)  
This section applies to the various references in Division 42 of the 1997 Act to an amount you have deducted or can deduct for depreciation of plant. However, it does not apply for the purpose of working out the undeducted cost of the plant (see section 42-175 of this Act).

42-9(2)  
Those references are taken to include:


(a) amounts you have deducted or can deduct for depreciation of the plant under the old depreciation provisions, other than an amount that is taken by subsection 59(2E) of the 1936 Act to be depreciation allowed for the plant because of paragraph 59(2A)(a) or (b) or subsection 59(2D) of that Act; and


(b) amounts you have deducted or can deduct for depreciation of the plant using the ``log book'' method or the ``one-third of actual expenses'' method under section 82KUD or 82KW, or Schedule 2A, of the 1936 Act; and


(c) if section 58 of the 1936 Act, or Common rule 1, applied to your acquisition of the plant - the sum of the amounts that would apply under paragraph (a) or (b) to the transferor and earlier successive transferors.

42-9(3)  
Also, the references in sections 42-30, 42-190 and 42-240 of the 1997 Act to amounts you have deducted or can deduct for depreciation of the plant are taken to include an amount that is taken by subsection 59(2E) of the 1936 Act to be depreciation allowed for the plant because of paragraph 59(2A)(a) or (b) or subsection 59(2D) of that Act.

SECTION 42-18 [ARCHIVE]   Meaning of plant  

42-18(1)  
Paragraph 42-18(1)(d) of the 1997 Act applies to structural improvements completed after 30 June 1963.

42-18(2)  
Paragraph 42-18(1)(e) of the 1997 Act applies to structural improvements completed after 30 June 1958.

SECTION 42-45 [ARCHIVE]   42-45   Exclusions  
The reference in subsection 42-45(1) of the 1997 Act to an amount that has been or can be deducted for plant under Subdivision 387-A or 387-B of that Act includes a reference to an amount that:


(a) has been or can be deducted for the plant under section 75B or 75D of the 1936 Act; or


(b) would have been so deducted or deductible apart from subsection 75B(4) or 75D(4) of the 1936 Act.

SECTION 42-48 [ARCHIVE]   Debt forgiveness: amounts deducted for depreciation  

42-48(1)  
Section 42-48 of the 1997 Act applies to debts forgiven after the beginning of your 1997-98 income year.

42-48(2)  
An amount you applied in reduction of deductible expenditure (within the meaning of Division 245 of Schedule 2C to the Income Tax Assessment Act 1936) for plant under section 245-155 of that Schedule for a debt forgiven before the beginning of your 1997-98 income year is taken to be an amount you have deducted under the old depreciation provisions for depreciation of the plant.

SECTION 42-70 [ARCHIVE]   42-70   Adjustment: acquiring a car at a discount  
Paragraph 42-70(1)(c) of the Income Tax Assessment Act 1997 has effect as if, in addition to referring to the car depreciation limit, it also referred to the motor vehicle depreciation limit under section 57AF of the Income Tax Assessment Act 1936.

SECTION 42-80 [ARCHIVE]   42-80   Adjustment: car depreciation limit  
If you:


(a) have a substituted accounting period; and


(b) acquire a car designed mainly for carrying passengers in your 1997-98 income year but before 1 July 1997;

you must use the car depreciation limit for the car that is fixed for the 1996-97 financial year under section 57AF of the 1936 Act.

SECTION 42-90 [ARCHIVE]   Adjustment: previously depreciated plant limit  

42-90(1)  
The reference in subsection 42-90(1) of the 1997 Act to an amount that has been deducted or can be deducted for depreciation of plant includes a reference to an amount that has been deducted or can be deducted for it under the old depreciation provisions.

42-90(2)  
The reference in subsection 42-90(2) of the 1997 Act to the written down value of plant includes, for plant for which an amount has been or can be deducted for depreciation under the old depreciation provisions, a reference to its depreciated value under those provisions.

42-90(3)  
A reference in subsection 42-90(2) or (3) of the 1997 Act to a balancing adjustment event for plant includes a reference to a disposal of the plant under the old depreciation provisions.

42-90(4)  
In working out the cost of plant under section 42-90 of the 1997 Act, the sum of the amounts that:


(a) were included in a person's assessable income for the plant under section 59 or 62AAT of the 1936 Act; and


(b) would have been so included if balancing adjustment relief under subsection 59(2A) or (2D) of the 1936 Act had not applied;

is taken to be a balancing adjustment included in the person's assessable income under section 42-190, 42-240 or 42-390.

SECTION 42-95 [ARCHIVE]   42-95   Application of Subdivision 42-C of the 1997 Act  
Subdivision 42-C of the 1997 Act does not apply to plant that you acquired or constructed before 13 March 1991.

SECTION 42-110 [ARCHIVE]   42-110   Commissioner's determination of effective life  
The Commissioner's determination of effective lives of units of property in Taxation Ruling IT2685 is taken to be a determination made under section 42-110 of the 1997 Act.

SECTION 42-120 [ARCHIVE]   Which rate do you use? (application of old transitional provision)  

42-120(1)  
This section applies to you if:


(a) you acquire plant after the beginning of the 1997-98 income year; and


(b) if the 1997 Act had not been enacted, you would be taken to have acquired the plant under a contract entered into before 27 February 1992 by section 66 of the Taxation Laws Amendment Act (No. 2) 1992.

42-120(2)  
Your rate is the annual depreciation percentage worked out under the old depreciation provisions.

42-120(3)  
If you are using the diminishing value method, you multiply that percentage by 1.5.

SECTION 42-175 [ARCHIVE]   Meaning of undeducted cost  

42-175(1)  
In working out the undeducted cost of plant under section 42-175 of the 1997 Act, the amounts that you deduct from the cost of the plant include:


(a) for plant that is not a car - any amounts that you have deducted or can deduct for the plant under the old depreciation provisions, other than an amount that is taken by subsection 59(2E) of the 1936 Act to be depreciation allowed for the plant because of paragraph 59(2A)(a) or (b) or subsection 59(2D) of that Act; and


(b) for plant that is not a car - any further amount you could have deducted for depreciation of the plant under the old depreciation provisions for any period you owned and used it, or had it installed ready for use, assuming that:


(i) you used it wholly for the purpose of producing assessable income during that period; and

(ii) you used the same rate and method during that period as you used for the income year in which a depreciation deduction was first allowable to you for the plant; and

(iii) no provision of the 1936 Act or the 1997 Act denied a depreciation deduction for it; and


(c) if the plant is a car - the amount you could have deducted under the old depreciation provisions during any period you were its owner and used it, or had it installed ready for use, assuming that:


(i) you used it wholly for the purpose of producing assessable income during that period; and

(ii) you used the same rate and method during that period as you used for the income year in which a depreciation deduction was first allowable to you for the car; and

(iii) no provision of the 1936 Act denied a depreciation deduction for it; and

(iv) Subdivision F of Division 3 of Part III, or Schedules 2A and 2B, of the 1936 Act did not apply; and


(d) if section 58 of the 1936 Act, or Common rule 1, applied to your acquisition of the plant - the sum of the amounts that would apply under paragraphs (a), (b) and (c) to the transferor and earlier successive transferors.

42-175(2)  
If paragraph 38(3)(e) of the Taxation Laws Amendment Act (No. 3) 1992 applied to you for the plant, the amount referred to in that paragraph as being an amount that would have been allowable to you for depreciation of the plant is to be taken into account under paragraph (1)(a) of this section as an amount that you have deducted under the old depreciation provisions.

Note:

Subsection (2) applies to pre-27 February 1992 plant that was attached to a Crown Lease if you were using the prime cost method.

42-175(3)  
In working out your undeducted cost, you can apply a different rate to the rate required by subparagraphs (1)(b)(ii) and (1)(c)(ii) of this section and subparagraphs 42-175(b)(ii) and 42-175(c)(ii) of the 1997 Act for an income year for plant you acquired or constructed before 27 February 1992 if subsection (4) applies to you.

42-175(4)  
This subsection applies to you if subsection 55(5) or 55(8) of the 1936 Act (as it applied immediately before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1992) applied in working out your rate for the income year in which a depreciation deduction was first allowable to you for the plant or a later income year.

42-175(5)  
For an income year in which you did not deduct an amount for depreciation of the plant, that different rate must be one you could have used in calculating the depreciation that would have been an allowable deduction for the plant had you used it for the purpose of producing assessable income.

42-175(6)  
For any other income year, that different rate is the rate you used to deduct an amount for depreciation of the plant for that year.

Note:

The provisions of section 42-175 of the 1997 Act are replaced by other provisions in relation to a *transition entity in respect of *plant of which the entity is the owner or a *quasi-owner. Section 42-175 of this Act therefore does not have any effect in respect of such plant.

SECTION 42-195 [ARCHIVE]   42-195   Deducting an amount  
For the purpose of applying subsection 42-195(3) of the 1997 Act, you are taken to be the quasi-owner of plant during any period before the commencement of the new depreciation provisions when you were deemed to be its owner by section 54AA of the 1936 Act.

SECTION 42-215 [ARCHIVE]   Adjustment: car depreciation limit  

42-215(1)  
This section applies for the purpose of applying section 42-215 of the 1997 Act to a car that you first used for any purpose before 1 July 1997.

42-215(2)  
The reference in section 42-215 of the 1997 Act to section 42-80 of that Act includes a reference to section 57AF of the 1936 Act.

42-215(3)  
For the component ``CDL'' in the fraction, use the car depreciation limit applicable under section 57AF of the 1936 Act.

42-215(4)  
Unless you first used the car for any purpose in your 1997-98 income year, for the component ``original cost'' in the fraction, use the component ``C'' in the formula in subsection 59(6) of the 1936 Act.

SECTION 42-220 [ARCHIVE]   42-220   Plant used for research and development  
The references in subsection 42-220(3) of the 1997 Act to Common rule 1 include references to section 58 of the 1936 Act.

SECTION 42-235 [ARCHIVE]   Balancing adjustments for cars  

42-235(1)  
References in Subdivision 42-G of the 1997 Act to the ``cents per kilometre'' method include references to that method under section 82KX, and Division 3 of Schedule 2A, of the 1936 Act.

42-235(2)  
References in Subdivision 42-G of the 1997 Act to the ``12% of original value'' method include references to that method under subsection 82KW(3), and Division 4 of Schedule 2A, of the 1936 Act.

SECTION 42-255 [ARCHIVE]   42-255   Meaning of notional depreciation amount  
The reference in section 42-255 of the 1997 Act to Division 28 of that Act includes a reference to Subdivision F of Division 3 of Part III, and Schedule 2A, of the 1936 Act.

SECTION 42-280 [ARCHIVE]   42-280   Additional consequence of Common rule 1  
The reference in subsection 42-280(4) of the 1997 Act to Subdivision 42-C of that Act includes a reference to section 54A of the 1936 Act.

SECTION 42-290 [ARCHIVE]   Later year relief  

42-290(1)  
The reference in subsection 42-290(1) of the 1997 Act to an amount that has been included in your assessable income for plant as a result of a balancing adjustment calculation includes a reference to an amount that has been included in your assessable income for the plant under subsection 59(2) or 62AAT(1) of the 1936 Act.

42-290(2)  
The reference in paragraph 42-290(2)(a) of the 1997 Act to a balancing adjustment event for plant includes a reference to a disposal, loss or destruction of the plant under the old depreciation provisions before the 1997-98 income year.

42-290(3)  
The reference in paragraph 42-290(2)(d) of the 1997 Act to a choice under section 42-285 of that Act for plant includes a reference to an election under subsection 59(2A) of the 1936 Act for the plant.

SECTION 42-310 [ARCHIVE]   Meaning of quasi-owner  

42-310(1)  
You cannot be the quasi-owner of plant that is attached to land you hold under a quasi-ownership right granted by an exempt Australian government agency or an exempt foreign government agency if, before the 1997-98 income year, section 54AA of the 1936 Act did not apply to you for the plant because of subparagraph 54AA(1)(d)(ii) or 54AA(1)(e)(iii).

42-310(2)  
The references in subsection 42-310(2) of the 1997 Act to the effective life of plant include references to its effective life worked out or adopted under section 54A of the 1936 Act.

42-310(3)  
For plant that an entity acquired or constructed before 13 March 1991, references in subsection 42-310(2) of the 1997 Act to the effective life of plant include references to the period that would have been worked out or adopted as its effective life if the contract was entered into or the construction commenced on or after that date.

SECTION 42-355 [ARCHIVE]   42-355   Creating a pool  
A pool created under the 1936 Act continues in existence for the 1997-98 income year and later income years as if it had been created under section 42-355 of the 1997 Act.

SECTION 42-360 [ARCHIVE]   42-360   Allocating plant to a pool  
Plant that was allocated to such a pool immediately before the 1997-98 income year remains allocated to it, but may be removed under section 42-370 of the 1997 Act.

SECTION 42-365 [ARCHIVE]   What plant is eligible for allocation to a pool?  

42-365(1)  
In applying paragraph 42-365(b) of the 1997 Act to work out whether you can allocate plant that you acquired or constructed before 27 February 1992 to a pool, use the annual depreciation percentage worked out under the old depreciation provisions rather than the diminishing value rate.

42-365(2)  
You cannot allocate plant you acquired before that date and plant you acquired on or after that date to the same pool.

SECTION 42-370 [ARCHIVE]   42-370   Removal of plant from a pool  
In applying paragraph 42-370(2)(b) of the 1997 Act to work out whether plant that you acquired or constructed before 27 February 1992 is automatically removed from a pool, you also use the annual depreciation percentage worked out under the old depreciation provisions rather than the diminishing value rate.

SECTION 42-375 [ARCHIVE]   42-375   Calculating depreciation deductions for pooled plant  
In calculating depreciation deductions for pooled plant that you acquired or constructed before 27 February 1992, multiply the result you get by using the formula in section 42-375 of the 1997 Act by 1.5.

SECTION 42-380 [ARCHIVE]   42-380   Meaning of opening balance  
The component ``closing balance for last year'' in the formula in section 42-380 is, for the 1997-98 income year, the closing balance of the pool for the preceding year worked out under section 62AAO of the 1936 Act.

SECTION 42-400 [ARCHIVE]   42-400   Whether plant acquired or constructed after 26 February 1992  
The rules in section 66 of the Taxation Laws Amendment Act (No. 2) 1992 apply for the purpose of working out whether plant was acquired or constructed after 26 February 1992.

SECTION 42-405 [ARCHIVE]   42-405   Modifying Common rule 1 so that it may apply to a disposal of plant under the new depreciation provisions  
If:


(a) you have deducted or can deduct an amount for depreciation of plant under the old depreciation provisions; and


(b) in the 1997-98 income year or a later income year, a roll-over event occurs for the plant;

Subdivision 41-A of the 1997 Act (Common rule 1) applies as if:


(c) you had deducted or could deduct an amount for depreciation of the plant under the new depreciation provisions; and


(d) if in the 1996-97 income year or an earlier income year there was a disposal of the plant where roll-over relief was available under section 58 of the 1936 Act - that Common rule had applied to the disposal.

SECTION 42-410 [ARCHIVE]   42-410   Application of Common rule 2 where amounts deducted only under the old depreciation provisions  
If:


(a) you have deducted or can deduct an amount for depreciation of plant under the old depreciation provisions; and


(b) you have not deducted and cannot deduct an amount for depreciation of the plant under the new depreciation provisions; and


(c) in the 1997-98 income year or a later income year, you dispose of the plant;

subsection 41-65(2) of the 1997 Act applies as if you had deducted or could deduct an amount for depreciation of the plant under the new depreciation provisions.

SECTION 42-415 [ARCHIVE]   42-415   Meaning of associate  
The definition of associate in section 318 of the 1936 Act applies for the purposes of Division 42 of the 1997 Act as if paragraphs (1)(b) and (2)(a) also applied to a partnership in which the primary entity referred to in those paragraphs is or was a partner (whether or not the partnership still exists).

PART 2-15 - EXEMPT INCOME  

Division 51 - Exempt amounts  

SECTION 51-5 [ARCHIVE]   51-5   Keeping in force old regulations about exempt allowances and bounties  
Any regulations made for the purposes of subparagraph 23(t)(iii) of the Income Tax Assessment Act 1936 that are in force at the end of the 1996-97 income year have effect in the 1997-98 income year and later income years as if they were regulations made for the purposes of items 1.1 and 1.2 of the table in section 51-5 of the Income Tax Assessment Act 1997.

Note:

Subparagraph 23(t)(iii) of the Income Tax Assessment Act 1936 and items 1.1 and 1.2 of the table in section 51-5 of the Income Tax Assessment Act 1997 exempt from income tax prescribed allowances and bounties payable to, or in respect of, a member of the Defence Force.

PART 2-25 - TRADING STOCK  

Division 70 - Trading stock  

SECTION 70-1 [ARCHIVE]   Application of Division 70 of the Income Tax Assessment Act 1997  

70-1(1)  
(It applies to assessments for the 1997-98 income year as if the value of trading stock on hand at the start of that year were the value specified in section 70-40 of this Act.)

SECTION 70-5 [ARCHIVE]   70-5   Treatment of items that become trading stock because of the change of definition  
If:


(a) immediately before the 1997-98 income year you owned an item that was not trading stock as defined in subsection 6(1) of the Income Tax Assessment Act 1936 as in force at that time; and


(b) at the start of that income year you hold the item as trading stock as defined in section 70-10 of the Income Tax Assessment Act 1997 (the 1997 Act );

section 70-30 of the 1997 Act applies as if you had started to hold the item as trading stock as defined in section 70-10 of the 1997 Act immediately after the start of that income year.

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 104 - CGT events  

Subdivision 104-B - Use and enjoyment before title passes  

SECTION 104-15 [ARCHIVE]   104-15   Use and enjoyment before title passes  
A capital gain or capital loss is disregarded if:


(a) you made the capital gain or capital loss for the 1997-1998 income year or an earlier income year under Part IIIA of the Income Tax Assessment Act 1936 because of an agreement to which paragraph 160M(3)(d) of that Act applies with another entity in relation to an asset; and


(b) the agreement ends in the 1998-99 income year or a later income year; and


(c) title in the asset does not pass to the other entity at or before the end of the agreement.

Subdivision 104-E - Trusts  

SECTION 104-72 [ARCHIVE]   104-72   Application to Divisions 10C and 10D of Part III of the Income Tax Assessment Act 1936  
Paragraph 104-70(7)(a) of the Income Tax Assessment Act 1997 applies to deductions under Divisions 10C and 10D of Part III of the Income Tax Assessment Act 1936 (about capital works) in the same way that it applies to deductions under Division 43 of the Income Tax Assessment Act 1997.

Subdivision 104-K - Other CGT events  

SECTION 104-210 [ARCHIVE]   104-210   Bankrupt pays amount in relation to debt  
Subsection 104-210(1) of the Income Tax Assessment Act 1997 applies to a net capital loss mentioned in subsection 160ZC(4A) of the Income Tax Assessment Act 1936 in the same way as it applies to a net capital loss referred to in subsection 102-5(2) of the Income Tax Assessment Act 1997.

Note:

This provision covers the case where the net capital loss was for the 1997-1998 income year or an earlier one and the payment in respect of the debt was made in the 1998-99 income year or a later one.

Division 115 - Discount capital gains and trusts' net capital gains  

Subdivision 115-A - Discount capital gains  

SECTION 115-10 [ARCHIVE]   Who can make a discount capital gain?  

115-10(1)  
A *capital gain may also be a *discount capital gain if it is made by:


(a) a *life insurance company (other than a *registered organisation), in relation to a non-exempt modified discount capital gain from a notional CGT event in respect of a *CGT asset where the event occurred during the period starting immediately after 11.45 am (by legal time in the Australian Capital Territory) on 21 September 1999 and ending immediately before 1 July 2000; or


(b) a *registered organisation, in relation to a modified discount capital gain from a notional CGT event in respect of a CGT asset where the event occurred during that period.

115-10(2)  
In paragraph (1)(a), non-exempt modified discount capital gain and notional CGT event have the meanings that were given by Division 8 of Part III of theIncome Tax Assessment Act 1936 as in force when the relevant *CGT event occurred.

115-10(3)  
In paragraph (1)(b), modified discount capital gain and notional CGT event have the meanings that were given by Division 8A of Part III of the Income Tax Assessment Act 1936 as in force when the relevant *CGT event occurred.

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS  

Division 138 - Value shifts between companies under common ownership  

Subdivision 138-A - Application  

SECTION 138-7 [ARCHIVE]   Apply the 1936 Act in certain cases  

138-7(1)  
This section applies if:


(a) the CGT event that is a trigger event under Division 138 of the Income Tax Assessment Act 1997 happened before the start of your 1998-99 income year; and


(b) apart from this section, the trigger event would require you to modify the cost base of a CGT asset under that Division in relation to another CGT event that happens in your 1998-99 income year or a later one.

138-7(2)  
You work out the cost base modification under Division 19A of Part IIIA of the Income Tax Assessment Act 1936 as in force at the time of the trigger event, taking into account provisions of other Acts that amended that Part of that Act and that affected the operation of that Division at that time.

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS  

Division 330 - Mining and quarrying  

Subdivision 330-C - Development and operation of a mine or quarry  

SECTION 330-1 [ARCHIVE]   Converting pre-19 July 1982 general mining and petroleum expenditure into allowable capital expenditure under the new law  

330-1(1)   [Expenditure under old diminishing value provisions]  

If, apart from this section, you would have been entitled to a deduction in respect of expenditure for the 1997-98 income year or a later income year under any of the old diminishing value provisions, you are not entitled to that deduction.

330-1(2)   [ New ACE ]  

Instead, the total of that expenditure, less the total of any amounts you have already deducted in respect of that expenditure for income years before 1997-98, is taken to be allowable capital expenditure ( new ACE ) incurred by you in the 1997-98 income year.

330-1(3)   [Incurring new ACE ]  

If the old diminishing value provision that would have given rise to the deduction is in Subdivision A (General mining) of Division 10 of Part III of the Income Tax Assessment Act 1936, then the new ACE is taken to have been incurred in carrying on eligible mining operations (other than in the course of petroleum mining).

If, on the other hand, it is in Division 10AA (Prospecting and mining for petroleum) of that Part, then the new ACE is taken to have been incurred in carrying on eligible mining operations in the course of petroleum mining.

330-1(4)   [ Old diminishing value provisions ]  

The old diminishing value provisions are:


Item In Subdivision A (General mining) of Division 10 of Part III of the Income Tax Assessment Act 1936 In Division 10AA (Prospecting and mining for petroleum) of Part III of the Income Tax Assessment Act 1936
1. section 122D section 124AD
.
2. section 122DB section 124ADB
.
3. section 122DD section 124ADD
.
4. section 122DF section 124ADF

SECTION 330-5 [ARCHIVE]   Converting post-19 July 1982 general mining and petroleum expenditure, and post-15 August 1989 quarrying expenditure, into allowable capital expenditure under the new law  

330-5(1)   [ New ACE ]  

If:


(a) in the 1996-97 income year or an earlier income year you incurred allowable capital expenditure of the kind referred to in subsection 122DG(1), 122JE(1) or 124ADG(1) of the Income Tax Assessment Act 1936 ( old capital expenditure ); and


(b) at the end of the 1996-97 income year an amount of that expenditure is unrecouped (worked out under subsection 122DG(4), 122JE(3) or 124ADG(4) of that Act (as appropriate));

that amount is taken to be allowable capital expenditure incurred by you in the 1997-98 income year ( new ACE ).

330-5(2)   [Years remaining affected]  

In working out how much of that new ACE is deductible for the 1997-98 income year or a later income year, the calculation (under paragraph 330-100(2)(a), (3)(a) or (4)(a) of the Income Tax Assessment Act 1997) of the years remaining is affected.

330-5(3)   [Calculation of remaining years]  

Take away from the number you get after doing that calculation the number of income years before the 1997-98 income year for which you deducted or, apart from the operation of subsection 122DG(6), 122JE(5) or 124ADG(6) of the Income Tax Assessment Act 1936 (as appropriate) would have deducted, an amount in respect of that old capital expenditure.

SECTION 330-10 [ARCHIVE]   Converting old excess pre-1 July 1975 general mining exploration or prospecting deductions into allowable capital expenditure under the new law  

330-10(1)   [Exploration or prospecting expenditure]  

If, at the end of the 1996-97 income year, there are excess amounts of expenditure of the kind referred to in subsection 122J(3) of the Income Tax Assessment Act 1936, that expenditure is taken to be exploration or prospecting expenditure incurred by you in the 1997-98 income year.

330-10(2)   [Not deductible]  

But you cannot deduct that expenditure under section 330-15 of the Income Tax Assessment Act 1997 in the 1997-98 income year or a later income year.

330-10(3)   [Deemed allowable capital expenditure]  

Instead, in the firstincome year after the 1996-97 income year in which you carry on eligible mining operations (other than in the course of petroleum mining) that expenditure is taken to be allowable capital expenditure incurred by you in that year. You can then write it off in that income year and later income years under section 330-80 of the Income Tax Assessment Act 1997.

SECTION 330-15 [ARCHIVE]   Reducing your unrecouped expenditure in the year you derive exempt income from the sale of rights to mine  

330-15(1)   [Application of section]  

If:


(a) in the 1997-98 income year or a later income year (the sale year ) you derive, from the sale, transfer or assignment of your rights to mine in a particular area in Australia, an amount that is exempt income because of section 330-60 of the Income Tax Assessment Act 1997; and


(b) in relation to that area, any excess amounts of expenditure referred to in subsection 122J(3) of the Income Tax Assessment Act 1936 have become allowable capital expenditure incurred in the sale year or an earlier income year;

your unrecouped expenditure for the purposes of section 330-105 of the Income Tax Assessment Act 1997 as at the end of the sale year is reduced by an amount referred to in subsection (2).

330-15(2)   [Calculation of reduction]  

The amount is so much of those excess amounts as you have not deducted and that you cannot deduct in the sale year. However, the amount of the reduction cannot exceed the amount of the exempt income.

SECTION 330-20 [ARCHIVE]   330-20   Reducing your unrecouped expenditure in a year later than the year you derive exempt income from the sale of rights to mine  
If:


(a) in the 1997-98 income year or a later income year (the sale year ) you derive, from the sale, transfer or assignment of your rights to mine in a particular area in Australia, an amount that is exempt income because of section 330-60 of the Income Tax Assessment Act 1997; and


(b) in relation to that area, there are excess amounts of expenditure referred to in subsection 122J(3) of the Income Tax Assessment Act 1936 that have not become allowable capital expenditure incurred in the sale year or an earlier income year; and


(c) those excess amounts become allowable capital expenditure incurred in an income year after the sale year (the conversion year );

your unrecouped expenditure for the purposes of section 330-105 of the Income Tax Assessment Act 1997 as at the end of the conversion year is reduced by so much of those amounts as does not exceed the amount of exempt income.

Subdivision 330-E - Selling a right or information  

SECTION 330-25 [ARCHIVE]   330-25   Old general mining and petroleum expenditure on plant cannot be transferred under the new law  
If:


(a) any of the new ACE referred to in section 330-1 of this Act; or


(b) any of the unrecouped expenditure referred to in section 330-5 of this Act; or


(c) any of the whole or part of a deduction disallowed for the 1996-97 income year because of subsection 122DG(6) or 124ADG(6) of the Income Tax Assessment Act 1936;

can be attributed to expenditure on plant, disregard that expenditure for the purposes of paragraph 330-245(2)(a) (about the limit on an amount that can be included in an agreement) of the Income Tax Assessment Act 1997.

Subdivision 330-F - Excess deductions  

SECTION 330-30 [ARCHIVE]   Converting old excess 1 July 1974 to 21 August 1984 general mining exploration or prospecting deductions into excess deductions under the new law  

330-30(1)   [ New EPE ]  

If, at the end of the 1995-96 income year, there are excess amounts of expenditure of the kind referred to in subsection 122J(4) of the Income Tax Assessment Act 1936, that expenditure is taken to be exploration or prospecting expenditure incurred by you in the 1997-98 income year ( new EPE ).

330-30(2)   [Relevant amount deductible]  

For each applicable year you are taken to be able, because of section 330-310 of the Income Tax Assessment Act 1997, to deduct the relevant amount of the new EPE under section 330-15 of that Act.

330-30(3)   [Applicable year]  

An applicable year is an income year after the 1996-97 income year in which you carry on eligible mining operations (other than in the course of petroleum mining) and a mining business (other than a petroleum mining business).

330-30(4)   [Relevant amount]  

The relevant amount for an applicable year is worked out as follows:


(a) take away from the amount of new EPE the total of the relevant amounts for any earlier applicable years;


(b) the relevant amount is so much of what remains as does not exceed:

  • · the assessable income you derive in that year from carrying on that mining business, or from your activities associated directly or indirectly with your carrying on that business;

  • less
  • · all your deductions that directly relate to that business or those activities in that year.
  • SECTION 330-35 [ARCHIVE]   Converting old excess pre-17 August 1976 petroleum exploration or prospecting deductions into excess deductions under the new law  

    330-35(1)   [ New EPE ]  

    If, at the end of the 1996-97 income year, there are excess amounts of expenditure of the kind referred to in subsection 124AH(4) of the Income Tax Assessment Act 1936, that expenditure is taken to be exploration or prospecting expenditure incurred by you in the 1997-98 income year ( new EPE ).

    330-35(2)   [Relevant amount deductible]  

    For each applicable year you are taken to be able, because of section 330-310 of the Income Tax Assessment Act 1997, to deduct the relevant amount of the new EPE under section 330-15 of that Act.

    330-35(3)   [ Applicable year ]  

    An applicable year is an income year after the 1996-97 income year in which you have assessable income from petroleum.

    330-35(4)   [ Relevant amount ]  

    The relevant amount for an applicable year is worked out as follows:


    (a) take away from the amount of new EPE the total of the relevant amounts for any earlier applicable years;


    (b) the relevant amount is so much of what remains as does not exceed:

  • · the assessable income you derive in that year from petroleum;

  • less
  • · all your deductions in respect of that assessable income.
  • SECTION 330-40 [ARCHIVE]   Converting old excess post-21 August 1984 general mining, post-15 August 1989 quarrying and post-17 August 1976 petroleum, exploration or prospecting deductions into excess deductions under the new law  

    330-40(1)   [ New EPE ]  

    If, at the end of the 1996-97 income year, there are excess amounts of expenditure of the kind referred to in subsection 122J(4C), 122JF(6) or 124AH(4B) of the Income Tax Assessment Act 1936 (the 1936 Act ), that expenditure is taken to be exploration or prospecting expenditure incurred by you in the 1997-98 income year ( new EPE ).

    330-40(2)   [New EPE deductible]  

    You are taken to be able, because of section 330-310 of the Income Tax Assessment Act 1997 (the 1997 Act ), to deduct the new EPE under section 330-15 of that Act in the first income year after the 1996-97 income year for which you have assessable income.

    330-40(3)   [Limitation]  

    But you can only deduct the new EPE under section 330-15 of the 1997 Act if you could have deducted it under that section had you incurred it in that income year.

    330-40(4)   [Gold expenditure]  

    If any part of the new EPE can be attributed to eligible gold exploration or prospecting expenditure within the meaning of section 159GZZJ of the 1936 Act ( gold expenditure ), you can only deduct that part under section 330-15 of the 1997 Act in the 1997-98 income year or a later income year if that year begins less than 7 years after the day on which that gold expenditure was incurred.

    SECTION 330-45 [ARCHIVE]   330-45   Converting old excess general mining, quarrying and petroleum deductions into excess deductions under the new law  
    If the whole or part of a deduction for the 1996-97 income year is disallowed because of subsection 122DG(6), 122JE(5) or 124ADG(6) of the Income Tax Assessment Act 1936 then that whole or part is taken to be:


    (a) allowable capital expenditure incurred by you in the 1997-98 income year; and


    (b) because of section 330-310 of the Income Tax Assessment Act 1997, deductible by you under section 330-80 of that Act in the 1997-98 income year.

    SECTION 330-50 [ARCHIVE]   330-50   Preserving the old election rules for post-1 July 1985 general mining, quarrying and petroleum expenditure  
    If:


    (a) you incurred allowable capital expenditure within the meaning of Division 10 or 10AA of Part III of the Income Tax Assessment Act 1936 on or after 1 July 1985 and before the 1997-98 income year; and


    (b) an amount of that expenditure:


    (i) is taken, because of section 330-1 of this Act, to be allowable capital expenditure incurred by you in the 1997-98 income year in carrying on eligible mining operations in the course of petroleum mining; or

    (ii) is taken, because of section 330-5 or 330-45 of this Act, to be allowable capital expenditure incurred by you in the 1997-98 income year; and


    (c) in the 1997-98 income year or a later income year you can, because of section 330-310 of the Income Tax Assessment Act 1997 (the 1997 Act ), deduct the whole or part of that amount under section 330-80 of that Act; and


    (d) in that year you elect under subsection 330-315(1) of the 1997 Act that your deductions under Subdivision 330-C of that Act not be limited by your available assessable income;

    subsection 330-315(3) of the 1997 Act does not apply to that whole or part if you would have been able to deduct that whole or part under Division 10 or 10AA of Part III of the Income Tax Assessment Act 1936 if that Division had applied in that year.

    SECTION 330-55 [ARCHIVE]   No right to elect that your deductions be unlimited for pre-1 July 1985 general mining and petroleum expenditure  

    330-55(1)   [No right to election]  

    If:


    (a) before 1 July 1985 you incurred expenditure of the kind referred to in Division 10 or 10AA of Part III of the Income Tax Assessment Act 1936; and


    (b) an amount of that expenditure becomes allowable capital expenditure, or exploration or prospecting expenditure, incurred by you in the 1997-98 income year because of section 330-1, 330-5, 330-10, 330-30, 330-35, 330-40 or 330-45 of this Act; and


    (c) in the 1997-98 income year or a later income year you can deduct the whole or part of that amount under section 330-15 or 330-80 of the Income Tax Assessment Act 1997;

    you cannot make an election under section 330-315 of the Income Tax Assessment Act 1997 in that year in relation to that whole or part.

    330-55(2)   [Where subsec (1) does not apply]  

    The restriction in subsection (1) does not apply to the whole or part of an amount you deduct in that income year if:


    (a) the whole or part is taken, because of section 330-1 of this Act, to have been allowable capital expenditure incurred by you in the 1997-98 income year in carrying on eligible mining operations (other than in the course of petroleum mining); or


    (b) the whole or part is taken, because of section 330-10 of this Act, to have been allowable capital expenditure incurred by you in the first income year after the 1996-97 income year in which you carry on eligible mining operations (other than in the course of petroleum mining).

    330-55(3)   [Transfer of loss]  

    If:


    (a) in the 1997-98 income year or a later income year, you elect that your deductions under Subdivision 330-C of the Income Tax Assessment Act 1997 not be limited so that they contribute to a tax loss; and


    (b) the whole or part of an amount referred to in subsection (2) is one of those deductions;

    you can only transfer so much of that loss, under Subdivision 170-A (Transfer of tax losses within wholly-owned groups of companies) of the Income Tax Assessment Act 1997, as remains after taking off that whole or part.

    Subdivision 330-H - Transporting the product  

    SECTION 330-60 [ARCHIVE]   Converting old transport expenditure into transport capital expenditure under the new law  

    330-60(1)   [ New TCE ]  

    If:


    (a) in the 1996-97 income year or an earlier income year you incurred capital expenditure of the kind referred to in subsection 123B(1) ( minerals expenditure ) or 123BE(1) ( quarry expenditure ) of the Income Tax Assessment Act 1936; and


    (b) at the end of the 1996-97 income year you have not deducted all of that expenditure;

    then so much of that expenditure as you have not deducted is taken to be transport capital expenditure incurred by you in the 1997-98 income year ( new TCE ).

    330-60(2)   [Deductible amount and deductibility period]  

    You must use this section to work out how much of that new TCE is deductible over how long.

    330-60(3)   [Minerals expenditure]  

    In the case of minerals expenditure, the number of income years (starting in the 1997-98 income year) over which you can deduct the new TCE (the remaining years ) is worked out by taking away from 10 (or 20 if you made an election under section 123BB of the Income Tax Assessment Act 1936) the number of income years before the 1997-98 income year for which you deducted an amount of the minerals expenditure.

    The amount that you deducted in each of those income years before the 1997-98 income year is deductible in each of the remaining years.

    330-60(4)   [Quarry expenditure]  

    In the case of quarry expenditure, the number of income years (starting in the 1997-98 income year) over which you can deduct the new TCE (the remaining years ) is worked out by taking away from 20 the number of income years before the 1997-98 income year for which you deducted an amount of the quarry expenditure.

    330-60(5)   [Amount deductible in remaining years]  

    The amount that you deducted in each of those income years before the 1997-98 income year is deductible in each of the remaining years.

    Subdivision 330-J - Balancing adjustment  

    SECTION 330-65 [ARCHIVE]   How the balancing adjustment is affected if there has only been old roll-over relief  

    330-65(1)   [Where balancing adjustment affected]  

    If:


    (a) in the 1996-97 income year or an earlier income year roll-over relief was available under any of the old roll-over provisions in relation to the disposal of property by a taxpayer (the transferor ) to another taxpayer (the transferee ); and


    (b) in the 1997-98 income year or a later income year:


    (i) the property is lost or destroyed; or

    (ii) the transferee disposes of the property in circumstances where Subdivision 41-A of the Income Tax Assessment Act 1997 (Common rule 1 (Roll-over relief for related entities)) does not apply to the disposal; or

    (iii) the transferee stops using the property for purposes that qualify expenditure on the property for a deduction under Subdivision 330-A, 330-C or 330-H of the Income Tax Assessment Act 1997; and


    (c) there has been no earlier disposal of the property where roll-over relief was available under Common rule 1;

    the balancing adjustment is affected in 2 ways.

    330-65(2)   [Deemed deductible amounts of transferee]  

    First:


    (a) the total amounts deductible by the transferor, under Division 10, 10AAA or 10AA of Part III of the Income Tax Assessment Act 1936, in relation to the property; or


    (b) if there have been 2 or more prior applications of the old roll-over provisions - the total amounts deductible by the prior transferors, under that Division, in relation to the property;

    are taken to have been deductible by the transferee, under that Division, in relation to the property.

    330-65(3)   [Deemed capital expenditure of transferee]  

    Second:


    (a) the total capital expenditure of the transferor in relation to the property; or


    (b) if there have been 2 or more prior applications of the old roll-over provisions - the total capital expenditure of the prior transferors in relation to the property;

    is taken to have been total capital expenditure of the transferee in relation to the property.

    330-65(4)   [ Old roll-over provisions ]  

    The old roll-over provisions are:


    Item Mining Activity Section of the Income Tax Assessment Act 1936
    1. General mining 122JAA
    .
    2. Quarrying 122JG
    .
    3. Transport of certain minerals 123BBA
    .
    4. Transport of quarry materials 123BF
    .
    5. Prospecting and mining for petroleum 124AMAA

    SECTION 330-70 [ARCHIVE]   What the corresponding previous law is  

    330-70(1)   [Corresponding previous law]  

    For the purposes of Subdivisions 330-J, 330-K and 330-L of the Income Tax Assessment Act 1997 (the 1997 Act ), the corresponding previous law is set out in the following table.

    330-70(2)   [Table]  

    The table sets out the rules for some of the capital allowances in the 1997 Act. It also sets out the corresponding previous law in the Income Tax Assessment Act 1936 (the 1936 Act ).


    Item Capital allowance Rules in the 1997 Act Corresponding previous law in the 1936 Act
    1. Mining and quarrying: exploration or prospecting expenditure Subdivision 330-A Division 10 or 10AA of Part III
    .
    2. Mining and quarrying: development and operation of a mine or quarry Subdivision 330-C Division 10 or 10AA of Part III
    .
    3. Mining and quarrying: transporting minerals or quarry materials Subdivision 330-H Division 10AAA of Part III

    SECTION 330-72 [ARCHIVE]   330-72   What the old excess deduction provisions are  
    For the purposes of section 330-480 (When a balancing adjustment is required) of the Income Tax Assessment Act 1997, the old excess deduction provisions are:


    Item Mining Activity Provisions of the Income Tax Assessment Act 1936
    1. General mining 122DG(6) and 122J(4B)
    .
    2. Quarrying 122JE(5) and 122JF(2)
    .
    3. Prospecting and mining for petroleum 124ADG(6) and 124AH(4A)

    Subdivision 330-L - Modification of Common rules  

    SECTION 330-75 [ARCHIVE]   Modifying Common rule 1 so that it may apply to a disposal of property under the new law  

    330-75(1)  
    If:


    (a) in the 1996-97 income year or an earlier income year you have deducted amounts in respect of property under Division 10, 10AAA or 10AA of Part III of the Income Tax Assessment Act 1936; and


    (b) in the 1997-98 income year or a later income year you dispose of the property;

    Subdivision 41-A of the Income Tax Assessment Act 1997 (Common rule 1 (Roll-over relief for related entities)) applies as if:


    (c) a reference in that Common rule to the rules for the capital allowance included a reference to that Division; and


    (d) (Repealed by Act No 54 of 1999)


    (e) if in the 1996-97 income year or an earlier income year there was a disposal of the property where roll-over relief was available under any of the old roll-over provisions - that Common rule had applied to that disposal.

    Note:

    The old roll-over provisions are set out in section 330-65 of this Act.

    330-75(1A)  
    If:


    (a) Common rule 1 applies as mentioned in subsection (1) of this section; and


    (b) any of the old recoupment provisions has applied to:


    (i) the transferor; or

    (ii) if there have been 2 or more prior applications of that Common rule - any of the prior transferors of the property;

    section 170 of the Income Tax Assessment Act 1936 does not stop the Commissioner amending, at any time, an assessment of the transferee.

    330-75(2)  
    The old recoupment provisions are:


    Item Mining Activity Provisions of the Income Tax Assessment Act 1936
    1. General mining 122T
    .
    2. Quarrying 122T
    .
    3. Transport of certain minerals 123A(2) and (3)
    .
    4. Transport of quarry materials 123BD(4) and (5)
    .
    5. Prospecting and mining for petroleum 124AQ

    Division 373 - Intellectual property  

    SECTION 373-1 [ARCHIVE]   373-1   Application of Division 373 of the Income Tax Assessment Act 1997  
    Division 373 (Intellectual property) of the Income Tax Assessment Act 1997 applies to assessments for the 1998-99 income year and later income years.

    SECTION 373-10 [ARCHIVE]   Application to item of intellectual property you owned before 1998-99  

    373-10(1)  
    This section affects how Division 373 (Intellectual property) of the Income Tax Assessment Act 1997 applies if you have owned an item of intellectual property since before the 1998-99 income year. Unrecouped expenditure

    373-10(2)  
    Your unrecouped expenditure on the item at the start of the 1998-99 income year equals the item's residual value in relation to you immediately after the end of the 1997-98 income year, as worked out under Division 10B of Part III of the Income Tax Assessment Act 1936. (It can later be reduced and increased as provided in Division 373 (Intellectual property) of the Income Tax Assessment Act 1997.)

    See section 373-25 of the Income Tax Assessment Act 1997.

    Effective life

    373-10(3)  
    The item's effective life in your hands is the same as its effective life worked out at the end of the 1997-98 income year under Division 10B of Part III of the Income Tax Assessment Act 1936. (This is despite section 373-35 of the Income Tax Assessment Act 1997.) Taking account of what happened before 1998-99

    373-10(4)  
    The provisions of the Income Tax Assessment Act 1997 listed in column 2 of an item in the table apply as shown in the table.


    Taking account of what happened before 1998-99
    Item The following provision(s): apply to this: in the same way as they apply to this:
    1. 373-50(4); 373-65(2); 41-40(2) (as applying because of 373-80 and 373-85) an amount you have deducted or can deduct for the item under Division 10B of Part III of the Income Tax Assessment Act 1936 for an income year before the 1998-99 income year an amount you have deducted or can deduct for the item under Subdivision 373-B or 373-D (as appropriate) of the Income Tax Assessment Act 1997
    .
    2. 373-50(4); 373-65(2); 373-85(4); 41-40(2) (as applying because of 373-80 and 373-85) an amount that section 124P of the Income Tax Assessment Act 1936 included in your assessable income for the item for an income year before the 1998-99 income year an amount included in your assessable income for the item by section 373-50 or 373-65 (as appropriate) of the Income Tax Assessment Act 1997
    .
    3. 373-60(1)(a) the item's cost to you for the purposes of Division 10B of Part III of the Income Tax Assessment Act 1936 your expenditure on the item

    SECTION 373-65 [ARCHIVE]   Effect on balancing adjustment if there has been roll-over relief under the old law only  

    373-65(1)  
    If:


    (a) in the 1997-98 income year or an earlier income year roll-over relief was available under section 124PA of the Income Tax Assessment Act 1936 in relation to the disposal of an item of intellectual property by a taxpayer (the transferor ) to another taxpayer (the transferee ); and


    (b) a balancing adjustment is required for the item for the 1998-99 income year or a later income year; and


    (c) there has been no earlier balancing adjustment event for the item for which roll-over relief was available under Common rule 1;

    the balancing adjustment is affected in 2 ways.

    373-65(2)  
    First:


    (a) the total amounts that the transferor deducted or could deduct for the item under Division 10B of Part III of the Income Tax Assessment Act 1936; or


    (b) if there have been 2 or more prior applications of section 124PA of that Act to the item - the total amounts that the prior transferors deducted or could deduct for the item under that Division;

    are taken to have been amounts that the transferee deducted or could deduct for the item under that Division.

    373-65(3)  
    Second:


    (a) the total amounts included in the transferor's assessable income under Division 10B of Part III of the Income Tax Assessment Act 1936 because of the item; or


    (b) if there have been 2 or more prior applications of section 124PA of that Act to the item - the total amounts included under that Division in the assessable income of the prior transferors because of the item;

    are taken to have been amounts included in the transferee's assessable income under that Division because of the item.

    SECTION 373-100 [ARCHIVE]   Item you acquired in a non-arm's length transaction  

    373-100(1)  
    This section affects how section 373-100 of the Income Tax Assessment Act 1997 applies to you if the entity from which you acquired the item had owned since before the 1998-99 income year:


    (a) the item itself; or


    (b) if subsection 373-100(4) of that Act applies - the other item.

    373-100(2)  
    That entity's expenditure on the item or other item (as appropriate) is taken to be the cost of the item or other item to the entity for the purposes of Division 10B of Part III of the Income Tax Assessment Act 1936.

    Division 385 - Primary production  

    SECTION 385-100 [ARCHIVE]   385-100   Application of Subdivision 385-E of the Income Tax Assessment Act 1997 to disposal or death of live stock on or after 1 July 1997  
    Subdivision 385-E (Primary producer can elect to spread or defer tax on profit from forced disposal or death of live stock) of the Income Tax Assessment Act 1997 applies to a disposal or death of live stock on or after 1 July 1997.

    SECTION 385-130 [ARCHIVE]   385-130   Application of Subdivision 385-F of the Income Tax Assessment Act 1997 to loss of live stock or trees in 1997-98 and later income years  
    Subdivision 385-F (Insurance for loss of live stock or trees) of the Income Tax Assessment Act 1997 applies if your assessable income for the 1997-98 income year or a later income year would include an insurance recovery.

    SECTION 385-135 [ARCHIVE]   Application of Subdivision 385-G of the Income Tax Assessment Act 1997 to earlier than normal wool clips in 1997-98 and later income years  

    385-135(1)  
    Subdivision 385-G (Double wool clips) of the Income Tax Assessment Act 1997 applies if your assessable income for the 1997-98 income year or a later income year would include the proceeds of the sale of 2 wool clips. Election to defer including profit on second wool clip in 1997-98 income year

    385-135(2)  
    Section 385-135 (Election to defer including profit on second wool clip) of the Income Tax Assessment Act 1997 applies to the 1997-98 income year as if:


    (a) subparagraph 385-135(3)(b)(ii) referred to wool that you took into account at cost price under section 31 of the Income Tax Assessment Act 1936 (instead of wool you took into account at cost under Division 70 of the Income Tax Assessment Act 1997); and


    (b) subparagraph 385-135(3)(b)(iii) referred to an election under section 26BA of the Income Tax Assessment Act 1936 (instead of an election under section 385-135 itself).

    Division 387 - Capital allowances for primary producers and some land-holders  

    Subdivision 387-A - Landcare operations  

    SECTION 387-50 [ARCHIVE]   387-50   Application of Subdivision 387-A of the Income Tax Assessment Act 1997  
    Subdivision 387-A of the Income Tax Assessment Act 1997 applies to expenditure incurred in the 1997-98 income year or a later income year.

    SECTION 387-80 [ARCHIVE]   Transitional provision for approved management plans  

    387-80(1)  
    An approved land management plan under section 75D of the Income Tax Assessment Act 1936 is taken to be an approved management plan for the purposes of Subdivision 387-A of the Income Tax Assessment Act 1997 also.

    Note:

    This means that you can deduct amounts for capital expenditure in the 1997-98 income year or a later income year on fencing under an approved management plan that was prepared or approved before the 1997-98 income year.

    387-80(2)  
    An approved management plan for the purposes of Subdivision 387-A of the Income Tax Assessment Act 1997 also has effect as if it were an approved land management plan under section 75D of the Income Tax Assessment Act 1936.

    Note:

    This allows an entity whose 1996-97 income year ends after 30 June 1997 to deduct expenditure incurred after that date on fencing under a management plan prepared or approved after 30 June 1997 but before the end of the entity's 1996-97 income year.

    SECTION 387-85 [ARCHIVE]   Transitional provisions for approvals of farm consultants  

    387-85(1)  
    An approval of a person as a farm consultant for the purposes of section 75D of the Income Tax Assessment Act 1936 that was in force immediately before 1 July 1997 also has effect on and after that day as an approval of the person as a farm consultant for the purposes of Subdivision 387-A of the Income Tax Assessment Act 1997 (until the approval is revoked).

    387-85(2)  
    Anything done in relation to the approval under that Subdivision also has effect for the purposes of section 75D of the Income Tax Assessment Act 1936.

    387-85(3)  
    If:


    (a) the Secretary to the Department of Primary Industries and Energy has authorised an officer of that Department to approve persons as farm consultants for the purposes of section 75D of the Income Tax Assessment Act 1936; and


    (b) the authority was in force immediately before 1 July 1997;

    the authority also has effect on and after that day as an authority to approve persons as farm consultants for the purposes of Subdivision 387-A of the Income Tax Assessment Act 1997 (until the authority is revoked).

    387-85(4)  
    Anything relating to an authority done under that Subdivision also has effect for the purposes of section 75D of the Income Tax Assessment Act 1936.

    Subdivision 387-B - Installations to conserve or convey water  

    SECTION 387-120 [ARCHIVE]   Application of Subdivision 387-B of the Income Tax Assessment Act 1997  

    387-120(1)  
    Subdivision 387-B of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years, in relation to capital expenditure relating to a water facility, regardless of when it was incurred.

    387-120(2)  
    For the purpose of applying that Subdivision in relation to expenditure you incurred before the 1997-98 income year, you are taken to have incurred the amount of expenditure for which you could deduct an amount under section 75B of the Income Tax Assessment Act 1936 for an income year before the 1997-98 income year.

    Note:

    This means that you cannot get a deduction under that Subdivision for expenditure that you recouped before the 1997-98 income year.

    SECTION 387-140 [ARCHIVE]   387-140   Income Tax Assessment Act 1997 taken to apply to expenditure covered by section 75A or 75B of the Income Tax Assessment Act 1936  
    In determining whether section 387-140 of the Income Tax Assessment Act 1997 prevents you from deducting expenditure on acquiring a water facility, treat the following amounts as if they had been deducted under Subdivision 387-B of that Act:


    (a) an amount that was or can be deducted for any income year under section 75A or 75B of the Income Tax Assessment Act 1936 for earlier expenditure by any person on constructing or manufacturing the facility or on a previous acquisition of the facility;


    (b) an amount that could have been so deducted if the person who incurred the earlier expenditure had neither recouped it nor become entitled to recoup it.

    Subdivision 387-C - Establishing horticultural plants  

    SECTION 387-160 [ARCHIVE]   Application of Subdivision 387-C of the Income Tax Assessment Act 1997  

    387-160(1)  
    Subdivision 387-C of the Income Tax Assessment Act 1997 applies to assessments for the 1998-99 income year and later income years, in relation to expenditure incurred on or after 10 May 1995.

    387-160(2)  
    You can deduct an amount under that Subdivision for expenditure incurred before the 1998-99 income year only to the extent to which you could have deducted an amount for that expenditure under Division 10F of Part III of the Income Tax Assessment Act 1936 if that Division had allowed deductions for the 1998-99 income year and later income years.

    Note:

    This means that you cannot deduct an amount for expenditure that was recouped before the 1997-98 income year.

    387-160(3)  
    If the effective life of a horticultural plant was set under section 124ZZK of the Income Tax Assessment Act 1936, its effective life is the same for the purposes of Subdivision 387-C of the Income Tax Assessment Act 1997.

    SECTION 387-175 [ARCHIVE]   Saving of determinations specifying periods for effective life  

    387-175(1)  
    A determination in force under section 124ZZL of the Income Tax Assessment Act 1936 immediately before 1 July 1998 also has effect for the purposes of Subdivision 387-C of the Income Tax Assessment Act 1997 on and after that day as if it were a determination under section 387-175 of the Income Tax Assessment Act 1997.

    Note:

    Section 124ZZL of the Income Tax Assessment Act 1936 and section 387-175 of the Income Tax Assessment Act 1997 allow the Commissioner to make a determination specifying a period that an entity can adopt as the effective life of a horticultural plant.

    387-175(2)  
    Anything done in relation to the determination under that Subdivision also has effect for the purposes of Division 10F (Deduction for capital expenditure incurred in establishing horticultural plants) of Part III of the Income Tax Assessment Act 1936.

    SECTION 387-190 [ARCHIVE]   Deduction for destruction of a horticultural plant first used for commercial horticulture before 1998-99 income year  

    387-190(1)  
    Section 387-190 of the Income Tax Assessment Act 1997 applies in relation to a horticultural plant first used (or held ready for use) for commercial horticulture before the 1998-99 income year and destroyed in that income year or later, as if sections 387-165 and 387-185 of that Act had applied to assessments for income years before that income year.

    Note:

    Section 387-190 of the Income Tax Assessment Act 1997 allows a deduction for the destruction of a horticultural plant with an effective life of 3 years or more. This deduction is additional to the deduction for the plant under section 387-165 of that Act.

    387-190(2)  
    This section has effect despite section 387-160.

    SECTION 387-195 [ARCHIVE]   Treatment of deductions under Division 10F of Part III of the Income Tax Assessment Act 1936  

    387-195(1)  
    In applying subsection 387-195(2) of the Income Tax Assessment Act 1997 to work out whether you can deduct an amount under Subdivision 387-C of that Act for expenditure on establishing a horticultural plant, disregard any amount deducted or deductible under Division 10F of Part III of the Income Tax Assessment Act 1936.

    Note:

    This ensures that you can deduct amounts for the 1998-99 income year and later income years under Subdivision 387-C of the Income Tax Assessment Act 1997 for expenditure on establishing a horticultural plant, even if an entity did or can deduct amounts for one or more income years before the 1998-99 income year under Division 10F of Part III of the Income Tax Assessment Act 1936 for the expenditure.

    387-195(2)  
    Subdivision 387-C of the Income Tax Assessment Act 1997 does not affect a deduction, or an entitlement to a deduction, under Division 10F of Part III of the Income Tax Assessment Act 1936 for the 1997-98 income year or an earlier income year.

    SECTION 387-205 [ARCHIVE]   387-205   New owners' requests for tax information from last owners of horticultural plants  
    Section 387-205 of the Income Tax Assessment Act 1997 applies to a change of ownership of a horticultural plant that occurs on or after 1 July 1998.

    Note:

    That section allows the new owner of a horticultural plant to require the last owner to provide tax information relating to the plant.

    Subdivision 387-D - Establishing grapevines  

    SECTION 387-300 [ARCHIVE]   Application of Subdivision 387-D of the Income Tax Assessment Act 1997  

    387-300(1)  
    Subdivision 387-D of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years, in relation to expenditure incurred on or after 1 July 1993.

    387-300(2)  
    For the purpose of applying that Subdivision in relation to expenditure you incurred before the 1997-98 income year, you are taken to have incurred the amount of expenditure for which you could deduct an amount under section 75AA of the Income Tax Assessment Act 1936 for an income year before the 1997-98 income year.

    Note:

    This means that you cannot get a deduction under that Subdivision for expenditure that you recouped before the 1997-98 income year.

    SECTION 387-315 [ARCHIVE]   387-315   Deduction for destruction of grapevine established before 1997-98 income year  
    Despite section 387-300 of this Act, section 387-315 of the Income Tax Assessment Act 1997 applies in relation to a grapevine established before the 1997-98 income year and destroyed in that income year or later, as if section 387-305 of that Act had applied to assessments for income years before that income year.

    Subdivision 387-E - Mains electricity supply  

    SECTION 387-350 [ARCHIVE]   387-350   Application of Subdivision 387-E of the Income Tax Assessment Act 1997  
    Subdivision 387-E of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years, in relation to:


    (a) capital expenditure on connecting power to land or upgrading the connection, regardless of when it was incurred; and


    (b) contributions to the cost of connecting power to land or upgrading the connection, regardless of when they were made.

    SECTION 387-375 [ARCHIVE]   387-375   Saving of deductions under section 70A of the Income Tax Assessment Act 1936  
    Subdivision 387-E of the Income Tax Assessment Act 1997 does not affect a deduction, or an entitlement to a deduction, under section 70A of the Income Tax Assessment Act 1936 for the 1996-97 income year or an earlier income year.

    Subdivision 387-F - Telephone lines  

    SECTION 387-400 [ARCHIVE]   387-400   Application of Subdivision 387-F of the Income Tax Assessment Act 1997  
    Subdivision 387-F of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years, in relation to capital expenditure on a telephone line, regardless of when it was incurred.

    SECTION 387-410 [ARCHIVE]   Disregarding deductions under section 70 of the Income Tax Assessment Act 1936  

    387-410(1)  
    In applying subsection 387-410(1) of the Income Tax Assessment Act 1997 to work out whether you can deduct an amount under Subdivision 387-F of that Act for your expenditure, disregard any amount that you have deducted, or can deduct, for that expenditure under section 70 of the Income Tax Assessment Act 1936.

    Note:

    This ensures that you can deduct amounts under Subdivision 387-F of the Income Tax Assessment Act 1997 for the 1997-98 income year and later income years, even if you did or can deduct amounts for your expenditure under section 70 of the Income Tax Assessment Act 1936 for one or more income years before the 1997-98 income year.

    387-410(2)  
    Disregard an amount deducted or deductible for any income year under section 70 of the Income Tax Assessment Act 1936 for capital expenditure on a part of a telephone line by an entity that worked on installing that part, when applying subsection 387-410(2) of the Income Tax Assessment Act 1997 to work out whether you can deduct an amount under that Subdivision.

    Note:

    This helps prevent deductions by different entities for capital expenditure on the same part of a telephone line.

    SECTION 387-415 [ARCHIVE]   387-415   Saving of deductions under section 70 of the Income Tax Assessment Act 1936  
    Subdivision 387-F of the Income Tax Assessment Act 1997 does not affect a deduction, or an entitlement to a deduction, under section 70 of the Income Tax Assessment Act 1936 for the 1996-97 income year or an earlier income year.

    Subdivision 387-G - Forestry roads and timber mill buildings  

    SECTION 387-450 [ARCHIVE]   387-450   Application of Subdivision 387-G of the Income Tax Assessment Act 1997  
    Subdivision 387-G of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years, in relation to expenditure, regardless of when it was incurred.

    SECTION 387-470 [ARCHIVE]   Expenditure incurred before the 1997-98 income year  

    387-470(1)  
    The purpose of this section is to ensure that the amount of capital expenditure you must take into account for the purposes of working out the amount of a deduction under Subdivision 387-G of the Income Tax Assessment Act 1997 is the same as the amount of your capital expenditure taken into account as a basis for working out a deduction under section 124F or 124JA of the Income Tax Assessment Act 1936.

    387-470(2)  
    This section applies if, before the 1997-98 income year, you incurred capital expenditure (the original expenditure ) on an access road or a timber mill building for which you did or can deduct an amount for an income year before the 1997-98 income year under section 124F or 124JA ofthe Income Tax Assessment Act 1936.

    387-470(3)  
    For the purposes of Subdivision 387-G of the Income Tax Assessment Act 1997:


    (a) you are taken to have incurred an amount (the base amount ) of capital expenditure on the road or building equal to:


    (i) what was your residual capital expenditure for the road or building for the purposes of section 124F or 124JA of the Income Tax Assessment Act 1936 immediately after you incurred the original expenditure; or

    (ii) if you incurred the original expenditure before the first income year for which you could deduct an amount for it - what was your residual capital expenditure for the road or building for the purposes of section 124F or 124JA of that Act at the start of that first income year; and


    (b) you are taken to have incurred the base amount:


    (i) when you incurred the original expenditure; or

    (ii) if you incurred the original expenditure before the first income year for which you could deduct an amount for it - at the start of that first income year.
    Note:

    Your residual capital expenditure mentioned in subparagraph (3)(a)(i) will equal your capital expenditure (as affected by section 124H or 124JC of the Income Tax Assessment Act 1936) if you incurred the original expenditure on construction of an access road after the 1955-56 income year, or on construction of a timber mill building after the 1962-63 income year.

    387-470(4)  
    Despite subsection (3), if before the 1997-98 income year:


    (a) you incurred capital expenditure on constructing or acquiring an access road for which you did or can deduct an amount under section 124F of the Income Tax Assessment Act 1936; and


    (b) you stopped using the road for the purpose for which it was primarily and principally constructed; and


    (c) you started using the road again for that purpose;

    you are taken to have incurred an amount of capital expenditure on the road equal to the amount described in subsection 124F(4) of that Act in the income year in which you started using the road again.

    SECTION 387-472 [ARCHIVE]   Treatment of deductions for income years before 1997-98  

    387-472(1)  
    If you deducted, or can deduct, an amount for an income year (the old law year ) before the 1997-98 income year under section 124F or 124JA of the Income Tax Assessment Act 1936 for your expenditure on an access road or a timber mill building:


    (a) you are taken to have deducted that amount for the old law year under Subdivision 387-G of the Income Tax Assessment Act 1997 (which allows deductions for the 1997-98 income year and later income years for expenditure on forestry roads and timber mill buildings), as if that Subdivision had applied to assessments for the old law year; and


    (b) the amount is taken not to have been deducted or be deductible under section 124F or 124JA of the Income Tax Assessment Act 1936.

    387-472(2)  
    This section applies only for the purposes of Subdivision 387-G of the Income Tax Assessment Act 1997. It does not affect a deduction, or an entitlement to a deduction, under section 124F or 124JA of the Income Tax Assessment Act 1936 for an income year before the 1997-98 income year for the purposes of that Act.

    SECTION 387-485 [ARCHIVE]   How the balancing adjustment is affected if there has only been old roll-over relief  

    387-485(1)  
    If:


    (a) before the 1997-98 income year, roll-over relief was available under section 124GA or section 124JD of the Income Tax Assessment Act 1936 in relation to the disposal of an access road or a timber mill building by a taxpayer (the transferor ) to another taxpayer (the transferee ); and


    (b) in the 1997-98 income year or a later income year:


    (i) the road or building is destroyed; or

    (ii) the transferee disposes of it in circumstances where Subdivision 41-A of the Income Tax Assessment Act 1997 (which sets out Common rule 1 dealing with roll-over relief for related entities) does not apply to the disposal; or

    (iii) for some other reason, the transferee stops using it for the purpose for which it was primarily and principally constructed or acquired; and


    (c) there has been no earlier disposal of the road or building where roll-over relief was available under Common rule 1;

    the balancing adjustment is affected in 2 ways.

    387-485(2)  
    First:


    (a) the total amounts deductible by the transferor under section 124F or 124JA of the Income Tax Assessment Act 1936 in relation to the road or building; or


    (b) if there have been 2 or more prior applications of section 124GA or 124JA of that Act in relation to the road or building - the total amounts deductible by the prior transferors under section 124F or 124JA of that Act in relation to the road or building;

    are taken to have been deductible by the transferee under Subdivision 387-G of the Income Tax Assessment Act 1997 in relation to the road or building.

    387-485(3)  
    Second:


    (a) the transferor's total capital expenditure (of a kind that qualified for a deduction under section 124F or 124JA of the Income Tax Assessment Act 1936) relating to the road or building; or


    (b) if there have been 2 or more prior applications of section 124GA or 124JD of that Act - the prior transferors' total capital expenditure (of a kind that qualified for a deduction under section 124F or 124JA of that Act) relating to the road or building;

    is taken to have been the transferee's total capital expenditure (of a kind that qualified for a deduction under Subdivision 387-G of the Income Tax Assessment Act 1997) relating to the road or building.

    SECTION 387-505 [ARCHIVE]   387-505   Application of Common rule 1 to disposal of road or building under new law  
    If:


    (a) you deducted or can deduct amounts for capital expenditure relating to an access road or a timber mill building under Division 10A of Part III of the Income Tax Assessment Act 1936 (except section 124J of that Act) for the 1996-97 income year or an earlier income year; and


    (b) in the 1997-98 income year or a later income year you dispose of the road or building;

    Subdivision 41-A of the Income Tax Assessment Act 1997 (which sets out Common rule 1 dealing with roll-over relief for related entities) applies as if:


    (c) a reference in that Common rule to the rules for the capital allowance included a reference to that Division (except section 124J); and


    (d) that Common rule had applied to any disposal of the road or building during or before the 1996-97 income year for which roll-over relief was available under section 124GA or 124JD of the Income Tax Assessment Act 1936.

    SECTION 387-507 [ARCHIVE]   Transitional provision for certain non-arm's length transactions  

    387-507(1)  
    If:


    (a) an entity incurred capital expenditure on an access road or a timber mill building for which the entity has deducted, or can deduct, an amount for a year of income before the 1997-98 income year under Division 10A of Part III of the Income Tax Assessment Act 1936 (except section 124J); and


    (b) the entity disposes of the road or building during the 1997-98 income year or a later income year in a transaction in which the parties do not deal at arm's length; and


    (c) under the transaction the entity receives an amount less than the market value of what the amount is for; and


    (d) subsection 41-65(2) of the Income Tax Assessment Act 1997 does not apply;

    the entity is taken to have received that market value for the disposal.

    387-507(2)  
    In determining whether the parties to the transaction dealt at arm's length, consider any connection between them, as well as any other relevant circumstance.

    Division 400 - Environmental impact assessment and environmental protection  

    SECTION 400-10 [ARCHIVE]   Application of Subdivision 400-A of the Income Tax Assessment Act 1997  

    400-10(1)  
    Subdivision 400-A of the Income Tax Assessment Act 1997 applies to assessments for the 1998-99 income year and later income years, in relation to expenditure incurred on or after 12 March 1991.

    400-10(2)  
    To work out the amount (if any) you can deduct under that Subdivision for expenditure you incurred before the 1998-99 income year, use the amount of that expenditure that you were allowed to use to work out your deductions under section 82BB of the Income Tax Assessment Act 1936 for income years before the 1998-99 income year.

    Note:

    This means that you cannot get a deduction under that Subdivision for expenditure that you recouped before the 1997-98 income year.

    SECTION 400-20 [ARCHIVE]   Deductions under section 82BB of the Income Tax Assessment Act 1936   Deductions under section 82BB do not prevent deductions under Subdivision 400-A of the Income Tax Assessment Act 1997

    400-20(1)  
    In applying section 400-20 of the Income Tax Assessment Act 1997 to work out whether you can deduct an amount under Subdivision 400-A of that Act for expenditure, disregard any possibility of deducting an amount for the expenditure under section 82BB of the Income Tax Assessment Act 1936.

    Note:

    This ensures that you can deduct amounts under Subdivision 400-A of the Income Tax Assessment Act 1997 for the 1998-99 income year and later income years, even if you can deduct amounts under section 82BB of the Income Tax Assessment Act 1936 for one or more income years before the 1998-99 income year.

    Saving of deductions under section 82BB of the Income Tax Assessment Act 1936

    400-20(2)  
    Subdivision 400-A of the Income Tax Assessment Act 1997 does not affect a deduction under section 82BB of the Income Tax Assessment Act 1936 for the 1997-98 income year or an earlier income year.

    SECTION 400-50 [ARCHIVE]   400-50   Application of Subdivision 400-B of the Income Tax Assessment Act 1997  
    Subdivision 400-B of the Income Tax Assessment Act 1997 applies to assessments for the 1998-99 income year and later income years.

    SECTION 400-100 [ARCHIVE]   400-100   Application of Subdivision 400-C of the Income Tax Assessment Act 1997  
    Subdivision 400-C of the Income Tax Assessment Act 1997 applies to the use of property in the 1998-99 income year and later income years.

    Division 405 - Above-average special professional income of authors, inventors, performing artists, production associates and sportspersons  

    SECTION 405-1 [ARCHIVE]   Application of Division 405 of the Income Tax Assessment Act 1997  

    405-1(1)  
    Division 405 of the Income Tax Assessment Act 1997 applies for the purposes of assessments for the 1998-99 income year and later income years.

    405-1(2)  
    It applies for the purposes of your assessment as if:


    (a) for each income year earlier than the 1998-99 income year you had a taxable professional income equal to your eligible taxable income (if any) under Division 16A of Part III of the Income Tax Assessment Act 1936 for that earlier income year; and


    (b) you had been an Australian resident for each income year before the 1998-99 income year for which you were a qualifying resident taxpayer under Division 16A of Part III of the Income Tax Assessment Act 1936.

    PART 3-90 - CONSOLIDATED GROUPS  

    Division 701 - Modified application provisions of Income Tax Assessment Act for certain consolidated groups formed in 2002-3 and 2003-4 financial years  

    Subdivision 701-B - Modified application provisions  

    SECTION 701-30 [ARCHIVE]   Undistributed, untaxed pre-formation profits of non-chosen transitional entities - adjustment to allocable cost amount and tax cost setting amount reduction for over-depreciated assets   Section only applies to transitional groups formed at certain times

    701-30(1)  
    This section applies if the day on which the transitional group comes into existence is before 1 July 2003 or is both:


    (a) the first day of the first income year of the head company starting after 30 June 2003; and


    (b) before 1 July 2004.

    Section only applies to non-chosen transitional entities in such groups

    701-30(1A)  
    This section applies to each transitional entity in the transitional group, other than a chosen transitional entity. This is so even if there are no chosen transitional entities at all.

    Increase in step 3 of allocable cost amount on group formation

    701-30(2)  
    The amount to be added under section 705-90 (step 3 of allocable cost amount) of the Income Tax Assessment Act 1997 in working out the transitional group's allocable cost amount for the transitional entity is increased by the additional undistributed profits (the step 3 untaxed profits increase ) that would form part of the step 3 amount under that section if:


    (a) subsections (3) and (4) of that section were disregarded; and


    (b) it were a requirement of that section that, if any additional undistributed profits resulting from paragraph (a) of this subsection were distributed as dividends just before the group came into existence, the head company and each other transitional entity interposed between the head company and the transitional entity would be entitled to a rebate of income tax under section 46 or 46A of the Income Tax Assessment Act 1936 on the dividends.

    Note:

    If an entity interposed between the head company and the transitional entity is a non-fixed trust, this subsection may involve determining how a power of appointment would have been exercised. Section 713-50 of the Income Tax Assessment Act 1997 (applying because of section 700-1 of this Act) lists matters to have regard to in determining this.

    Creation of, or increase in, tax deferral amount

    701-30(3)  
    For the purposes of applying section 705-50 (reduction in tax cost setting amount for over-depreciated assets) of the Income Tax Assessment Act 1997 in relation to an asset of the transitional entity that becomes that of the head company under subsection 701-1(1) of that Act when the transitional group comes into existence:


    (a) if, before the transitional group came into existence, the transitional entity paid any dividends to which paragraph 705-50(2)(b) of that Act applies - the tax deferral amount in relation to the dividends under subsection 705-50(3) of that Act is increased by the amount worked out under subsection (4) of this section; and


    (b) if paragraph (a) does not apply - the transitional entity is taken to have paid dividends to which paragraph 705-50(2)(b) of that Act applies and there is taken to be a tax deferral amount in relation to the dividends under subsection 705-50(3) of that Act whose amount is worked out under subsection (4) of this section.

    Amount for purposes of paragraphs (3)(a) and (b)

    701-30(4)  
    The amount for the purposes of paragraphs (3)(a) and (b) is equal to the amount that would have been the step 3 untaxed profits increase if the undistributed profits constituting that increase were also required to satisfy the following requirements:


    (a) the profits were not subject to income tax because of deductions for the asset's decline in value;


    (b) the decline in value represented the over-depreciation of the asset;


    (c) the deductions for the decline in value do not form part of a tax loss covered by the step 5 amount mentioned in step 5 in the table in section 705-60 of the Income Tax Assessment Act 1997 in working out the transitional group's allocable cost amount for the transitional entity.

    CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

    PART 4-5 - GENERAL  

    Division 820 - Application of the thin capitalisation rules  

    SECTION 820-15 [ARCHIVE]   820-15   Transitional provision - application of Divisions 16F and 16G of Part III of the Income Tax Assessment Act 1936  
    If Division 16F or 16G of Part III of the Income Tax Assessment Act 1936 would have applied to an entity for a period that is all or a part of an income year that begins before 1 July 2001, then, despite the repeal of that Division, it continues to apply to that entity for that period.

    SECTION 820-20 [ARCHIVE]   820-20   Transitional provision - application of section 389 of the Income Tax Assessment Act 1936  
    If Division 16F or 16G of Part III of the Income Tax Assessment Act 1936 continues to apply to an entity for a period under section 820-15, section 389 of that Act applies to that entity for that period as if that section has not been amended by the New Business Tax System (Thin Capitalisation) Act 2001.

    SECTION 820-25 [ARCHIVE]   Transitional provision - average value of a matter for the first income year  

    820-25(1)  
    If:


    (a) Division 820 of the Income Tax Assessment Act 1997 applies to an entity for a period that is all or a part of an income year; and


    (b) that income year begins before 1 July 2002 and ends before 30 June 2003;

    the entity may, for the purposes of that application, choose to use the value of a particular matter as at the end of that period as if it were the average value of that matter for that period.

    Note:

    This means that the entity may, for that period, apply subsection (1) instead of calculating an average value in accordance with Subdivision 820-G of the Income Tax Assessment Act 1997.

    820-25(2)  
    However, an entity making that choice must apply subsection (1) throughout that period for every matter for which an average value is required to be calculated for the purposes of that Division's application to that entity.

    820-25(3)  
    This section alters the effect of that Division accordingly.

    SECTION 820-30 [ARCHIVE]   Transitional provision - average value of a matter for a resident TC group that includes an ADI or an Australian permanent establishment of a foreign bank  

    820-30(1)  
    This section affects how the average value of a matter is determined for the purposes of Division 820 of the Income Tax Assessment Act 1997, as it applies to a resident TC group for an income year beginning before 1 July 2002 and ending before 30 June 2003.

    820-30(2)  
    If:


    (a) the group is an outward investing entity (ADI) for that income year, or section 820-565 of that Act applies Subdivision 820-D of that Act to the group for that income year as if it were an outward investing entity (ADI); and


    (b) apart from this section, a day on which the group did not include at least one entity that is an ADI would be a measurement day for the group under section 820-645 of that Act;

    that day is treated as not being such a measurement day.

    820-30(3)  
    If:


    (a) section 820-575 of that Act applies Subdivision 820-E of that Act to the group for that income year as if it were an inward investing entity (ADI); and


    (b) apart from this section, a day on which the group did not include at least one Australian permanent establishment through which a foreign bank carries on its banking business in Australia would be a measurement day for the group under section 820-645 of that Act;

    that day is treated as not being such a measurement day.

    SECTION 820-35 [ARCHIVE]   Transitional provision - transitional debt interests  

    820-35(1)  
    This section applies to an interest for the period starting from 1 July 2001 and ending immediately before 1 July 2004 (the transitional period ) if:


    (a) the interest was issued before 1 July 2001; and


    (b) disregarding the debt and equity test amendments (within the meaning of Part 4 of Schedule 1 to the New Business Tax System (Debt and Equity) Act 2001), the interest would be:


    (i) an asset of an entity comprised by equity issued by another entity; or

    (ii) equity issued by an entity to another entity; and


    (c) the interest is a debt interest that remains on issue. What happens if there is no election

    820-35(2)  
    If:


    (a) the issuer of the interest does not elect under paragraph 118(6)(b) of Schedule 1 to the New Business Tax System (Debt and Equity) Act 2001 to have that paragraph apply to the interest; and


    (b) at any time during the transitional period, Division 820 of the Income Tax Assessment Act 1997 applies to an entity that is the issuer or the holder of the interest;

    the interest must be treated as an equity interest for the purposes of applying that Division to that entity at that time.

    What happens if there is an election

    820-35(3)  
    Subsections (4) to (6) apply if the issuer of the interest elects under paragraph 118(6)(b) of Schedule 1 to the New Business Tax System (Debt and Equity) Act 2001 to have that paragraph apply to the interest.

    820-35(4)  
    For the purposes of applying Division 820 of the Income Tax Assessment Act 1997 at any time during the transitional period to an entity that is the issuer of the interest at that time, the interest must be treated as a debt interest at that time.

    820-35(5)  
    Except as provided by subsection (6), for the purposes of applying that Division at any time during the transitional period to an entity that is the holder of the interest at that time, the interest must be treated as an equity interest at that time.

    820-35(6)  
    Despite subsection (5), the interest must be treated as a debt interest at that time for the purposes of applying that Division to that holder at that time if:


    (a) apart from this section, the interest would be included in the associate entity debt of that holder at that time for those purposes; and


    (b) at that time, the issuer of the interest is not an Australian controlled foreign entity for which that holder is an Australian controller.

    SECTION 820-40 [ARCHIVE]   Transitional provision - transitional equity interests  

    820-40(1)  
    This section applies to an interest for the period starting from 1 July 2001 and ending immediately before 1 July 2004 (the transitional period ) if:


    (a) the interest was issued before 1 July 2001; and


    (b) disregarding the debt and equity test amendments (within the meaning of Part 4 of Schedule 1 to the New Business Tax System (Debt and Equity) Act 2001), the interest would be:


    (i) an asset of an entity comprised by a debt owed to the entity by the issuer of the interest; or

    (ii) a debt owed by the issuer of the interest to another entity; and


    (c) the interest is an equity interest; and


    (d) the arrangement giving rise to the interest is not an arrangement covered by paragraphs (a), (b), (c) and (d) of subsection 974-75(4) of the Income Tax Assessment Act 1997 before that subsection ceases to have effect on 1 January 2003 (as provided by that subsection).

    For the issuer

    820-40(2)  
    The interest must be treated as an equity interest at any time during the transitional period for the purposes of applying Division 820 of the Income Tax Assessment Act 1997 to an entity that is the issuer of that interest at that time. For the holder

    820-40(3)  
    Except as provided by subsection (4), the interest must be treated as a debt interest at any time during the transitional period for the purposes of applying that Division to an entity that is the holder of the interest at that time.

    820-40(4)  
    Despite subsection (3), that interest must be treated as an equity interest at that time for the purposes of applying that Division to that holder at that time if:


    (a) apart from this section, the interest would be included in the associate entity equity of that holder at that time for those purposes; and


    (b) at that time, the issuer of the interest is not an Australian controlled foreign entity for which that holder is an Australian controller.

    Division 830 - Application of the foreign hybrid rules  

    SECTION 830-5 [ARCHIVE]  Election to extend standard application for foreign hybrids  

    830-5(1)  
    If a taxpayer will, as a result of making an election under this subsection, be a partner in an entity that is a foreign hybrid in relation to the 2002-2003 income year, the taxpayer may elect that Division 830 of the Income Tax Assessment Act 1997 applies to the taxpayer's assessment for the 2002-2003 income year.

    830-5(2)  
    If:


    (a) a taxpayer is, as a result of subsection 830-1(1) of this Act, a partner in an entity that is a foreign hybrid in relation to the 2003-2004 income year; and


    (b) the entity is a foreign hybrid in relation to that income year in a case where the requirements in subsection 830-15(3) of the Income Tax Assessment Act 1997 are satisfied;

    the taxpayer may elect that Division 830 of the Income Tax Assessment Act 1997 applies to the taxpayer's assessment for the 2002-2003 income year as if the entity were a foreign hybrid in relation to that income year.

    830-5(3)  
    A taxpayer must make an election under this section:


    (a) on or before the day on which the taxpayer lodges its income tax return for the 2003-2004 income year; or


    (b) within a further time allowed by the Commissioner.

    830-5(4)  
    The election is irrevocable.

    SECTION 830-10 [ARCHIVE]   Election to extend standard application for CFCs with direct or indirect interests in foreign hybrid  

    830-10(1)  
    If:


    (a) an entity is an attributable taxpayer in relation to a CFC at the end of the statutory accounting period that starts on 1 July 2002 or on the day on which, as a result of an election under subsection 319(2) of the Income Tax Assessment Act 1936, the statutory accounting period that would otherwise start on 1 July 2002 starts; and


    (b) either:


    (i) if the attributable taxpayer makes an election under this subsection, the CFC will, as a result, be a partner in an entity that is a foreign hybrid in relation to that statutory accounting period; or

    (ii) the CFC has, directly or indirectly through one or more other entities, an interest in another entity that, if the attributable taxpayer makes an election under this subsection, will, as a result, be a foreign hybrid in relation to that statutory accounting period;

    the attributable taxpayer may elect that Division 830 of the Income Tax Assessment Act 1997 applies for the purpose of working out the attributable income of the CFC for the statutory accounting period.

    830-10(2)  
    If:


    (a) for the purpose of working out the attributable income of a CFC in relation to an attributable taxpayer, a CFC:


    (i) is, as a result of subsection 830-1(2) of this Act, a partner in an entity that is a foreign hybrid in relation to the statutory accounting period mentioned in paragraph (a) of that subsection; or

    (ii) has, directly or indirectly through one or more other entities, an interest in another entity that is, as a result of subsection 830-1(2) of this Act, a foreign hybrid in relation to that statutory accounting period; and


    (b) the entity mentioned in subparagraph (a)(i) or (ii) is also a foreign hybrid in relation to that statutory accounting period in a case where the requirements in subsection 830-15(3) of the Income Tax Assessment Act 1997 are satisfied;

    the attributable taxpayer may elect that Division 830 of the Income Tax Assessment Act 1997 applies for the purpose of working out the attributable income of the CFC, in relation to the attributable taxpayer, for the preceding statutory accounting period.

    830-10(3)  
    An attributable taxpayer must make an election under this section:


    (a) on or before the day on which it lodges its income tax return for the 2003-2004 income year; or


    (b) within a further time allowed by the Commissioner.

    830-10(4)  
    The election is irrevocable.