Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
Chapter 5 - Tax Law Improvement Project - drafting and technical corrections
5.1 The amendments in Schedules 5, 6, 7, 8, 9 and 11 of the Bill make drafting and technical corrections to the income tax laws rewritten by the Tax Law Improvement Project (TLIP).
5.2 These measures make miscellaneous amendments to the:
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- Income Tax Assessment Act 1997;
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- Income Tax Assessment Act 1936;
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- Income Tax (Transitional Provisions) Act 1997;
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- Income Tax (Consequential Amendments) Act 1997;
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- Financial Corporations (Transfer of Assets and Liabilities) Act 1993.
5.3 Schedules 5, 6, 7, 8 and 9 will amend technical errors that have arisen from the rewrite of the income tax laws. The amendments make corrections to the Income Tax Assessment Act 1997 (referred to as the ITAA 1997 throughout this chapter) so that it restates the effect of the Income Tax Assessment Act 1936 (referred to as the ITAA 1936 throughout this chapter) or gives the Government policy changes that were incorporated in the ITAA 1997 their full intended operation. Schedule 11 will make amendments to further improve the readability of the rewritten income tax laws.
5.4 Generally, the amendments discussed in this chapter will apply to assessments for the 1997-98 and later income years. However, some items do have a different date of effect and these are specifically identified below.
5.5 The Parliament has enacted the first two instalments of the TLIP's rewrite of the ITAA 1936. The first instalment comprises three Acts:
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- the Income Tax Assesment Act 1997;
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- the Income Tax (Transitional Provisions) Act 1997; and
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- the Income Tax (Consequential Amendments) Act 1997.
Those Acts received Royal Assent on 18 April 1997 and have effect for the 1997-98 income year.
5.6 The ITAA 1997 contains a rewrite of the core provisions of the income tax law including the general income and deduction provisions and of the deductions for capital works, carry forward losses and mining and quarrying.
5.7 The second instalment is the Tax Law Improvement Act 1997 (TLIA 1997) which received Royal Assent on 8 July 1997. That Act amends the ITAA 1997 by inserting the rewritten assessable income, exempt income and trading stock provisions as well as some allowable deduction provisions including gifts, entertainment, depreciation and primary production. Those provisions also have effect for the 1997-98 income year.
Schedule 5 - Technical amendments of the Income Tax Assessment Act 1997
Items 1, 2, 11, 12, 17, 18, 19, 34, 35, 40 and 41
Provisions being amended: Various sections which allow deductions for losses or outgoings.
Amendment will: Insert signposts to Subdivision 20-A (Insurance, indemnity or recoupment for deductible expenses) for cases where a recoupment is received for the various losses or outgoings.
Provision being amended: Subsection 9-5(1) lists entities that work out their income tax by reference to something other than taxable income.
Amendment will: Add a new item to the list to refer to Australian resident individuals who derive foreign source income exempt under section 23AF or section 23AG of the ITAA 1936.
Reason for amendment: These individuals are liable to pay income tax on their assessable income reduced by some, not all, of their otherwise allowable deductions.
Provision being amended: Section 12-5 lists rules about specific kinds of deductions.
Amendments will: Insert a new item, balancing adjustment, which contains cross-references to entries in the list.
Provisions being amended: Sections 20-10 and 20-15, which are guide material to Subdivision 20-A which deals with the recoupment of deductible expenses.
Amendment will: Take account of the new sections 20-60 and 20-65 to be inserted into Subdivision 20-A by item 10 (discussed below). These sections will deal with the case where the person incurring an expense receives a recoupment, but another person is entitled to some or all of the deductions.
Provision being amended: Subsection 20-45(3) which explains how to deal with a recoupment where a balancing charge has been included in assessable income in respect of a deduction allowable over 2 or more years.
Amendment will: Substitute references to subsection 20-40(2) for incorrect references to subsection 20-40(3).
Provision being amended: Subdivision 20-A, which includes in assessable income certain amounts received as recoupment for a deductible expense.
Amendment will: Insert new sections 20-60 and 20-65 to ensure that appropriate adjustments flow through when the person who incurred the relevant expense has that expenditure recouped but another person was entitled to deductions for the expense.
Reason for amendment: Under the ITAA 1936, some deductions can be transferred to another person so that the transferee claims deductions by reference to the expenditure incurred by the transferor. The deduction for expenditure on establishing a grapevine is an example. Further, some of these transferable deductions contain a recoupment provision which applies to disallow the deductions claimed by the transferor and transferee if the transferor's expenditure is recouped.
Subdivision 20-A of the ITAA 1997 consolidates all the various deduction recoupment rules of the ITAA 1936. However, as enacted it does not apply to a transferee.
The amendment has two effects. Firstly, it will restate the effect of the ITAA 1936 by ensuring that the recoupment provisions apply to the transferee if the transferor's expenditure is recouped.
Secondly, new sections 20-60 and 20-65 adopt the new standard approach in the ITAA 1997 of assessing recouped deductible expenses.
When the new sections apply, the recoupment will be assessed:
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- firstly to the transferor, but only to the extent that deductions have been allowed to the transferor; and
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- then to the transferee.
Example: On 1 July 1997, Don incurs $10,000 of expenditure on establishing a grapevine. Don owns the grapevine and uses it in a primary production business until he sells it to Sally on 1 July 1999. Sally also uses the vine in a primary production business. During the 1999-2000 income year, Don receives $6,000 as recoupment of the expenditure on the grapevine.
On these facts, Don is entitled to a $2,500 deduction in the 1997-98 and 1998-99 income years under section 387-305 of the ITAA 1997. Sally is entitled to a $2,500 deduction in the 1999-2000 and 2000-2001 income years.
The new section 20-65 would apply in these circumstances because Don's recoupment is an assessable recoupment under subsection 20-20(3) (see item 1.15 in subsection 20-30(1) of the ITAA 1997). Section 20-65's effect is:
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- subsections 20-65(2) and (3): The notional entity's (Don and Sally together) assessable amount is $6,000.
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- subsection 20-65(5): The recoupment reverses $6,000 of deductions (paragraph (a)) - $2,500 from the 1997-98 income year, $2,500 from the 1998-99 income year and $1,000 from the 1999-2000 income year (paragraph (b)).
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- subsection 20-65(4): As Don has all of his deductions reversed, he has $5,000 included in his assessable income in the 1999-2000 income year. Sally has $1,000 of her deductions reversed, and will therefore have this amount included in assessable income in the 1999-2000 income year.
Provisions being amended: The example to subsection 25-5(5). Subsection 25-5(5) provides that certain property used in managing an entity's tax affairs is taken to be used to produce assessable income.
Amendment will: Omit a reference to section 54 of the ITAA 1936 and substitute a reference to Division 42 of the ITAA 1997 which contains the rewritten depreciation deduction previously in section 54.
Provisions being amended: Subsection 25-10(1), which allows a deduction for expenditure on repairs to premises and plant, machinery, tools or articles used to produce assessable income.
Amendment will: Substitute the reference to plant, machinery, tools or articles with a reference to *plant.
Reason for amendment: The subsection 995-1(1) definition of *plant in the ITAA 1997 has been extended to include machinery, tools and articles.
Provision being amended: Subsection 25-35(5) which lists special rules which affect deductions for bad debts.
Amendments will: Insert a new item in the table in subsection 25-35(5) to refer readers to the operation of Subdivision 20-A (Insurance, indemnity or recoupment for deductible expenses) when a recoupment is received for a bad debt.
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- Section 28-15, which contains a graphic illustrating methods of calculating car expense deductions;
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- Section 40-30, which contains a table providing information about capital allowances; and
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- Section 330-10, which contains a diagram indicating how the income tax law treats mining and quarrying.
Amendments will: Adjust for changes in pagination by substituting the words below or in this section for the words on the next page.
Provision being amended: The note to subsection 41-25(1). Subsection 41-25(1) states that there is no need to do a balancing adjustment for a capital allowance when a roll-over event occurs. The note indicates how a balancing adjustment will be applied if roll-over relief is not available for a later roll-over event. Amendment will: Substitute a new note, more accurately expressed to refer to a disposal instead of to a roll-over event. The substituted note will now refer generally to a disposal instead of to a roll-over event.
Provision being amended: The example to section 42-65 illustrates how to work out the cost on which a depreciation deduction is based.
Amendment will: Omit the reference to the market value of the car and substitute references to the cost of the car had the parties been dealing at arm's length.
Reason for amendment: The reference to market value is inappropriate because the example is based on Common rule 2 of the capital allowance common rules as modified by section 42-75. Together those sections reduce the cost of the car to what would have been incurred had the parties been dealing at arm's length.
Provision being amended: Sections 42-65 and 42-205 which contain depreciation cost and termination value tables.
Amendments will: Insert a new subsection (2) into each provision so that references to quasi-ownership rights in the tables are read as quasi-ownership rights granted by exempt Australian and foreign government agencies.
Reason for amendments: The tables as enacted could apply to any lease of land, easement etc. The amendment will restate the effect of the ITAA 1936 by ensuring that only leases, easements etc. granted by exempt government agencies are covered.
Provision being amended: Paragraph 42-310(1)(b), which is part of the definition of quasi-owner of plant.
Amendment will: Confine the notion of a quasi-owner of plant to an entity who:
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- acquired or constructed plant and attached it to land held under a quasi-ownership right granted by an exempt Australian government agency or an exempt foreign government agency; or
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- subsequently acquired the right.
Reason for amendment: The provision as enacted does not reproduce the effect of its equivalents in the ITAA 1936. Under the ITAA 1936, the quasi-owner of plant must both acquire or construct the plant and attach the plant to land held under the relevant quasi-ownership right. The ITAA 1997 only restates the latter requirement. The amendment will reinstate the effect of the ITAA 1936 by adding the requirement that the quasi-owner acquire or construct the plant.
Provision being amended: Section 43-250, which allows a deduction on the destruction of capital works.
Amendment will: Ensure that the amount of the balancing deduction is reduced to take account of any period during which the capital works were:
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- not used at all to produce assessable income;
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- used concurrently for income producing and other purposes.
Reason for amendment: The amendment will uphold the effect of the ITAA 1936.
Provision being amended: Subsection 70-30(4), which treats an asset converted into trading stock as having a cost' equal to its market value if it was acquired for no consideration.
Amendment will: Correct an unintended change to the effect of the ITAA 1936 that can arise if the asset was inherited.
Reason for amendment: If someone disposes of an asset worth more than its indexed cost base, the excess is normally taxable as a capital gain. But, if the asset is disposed of to a beneficiary on the owner's death, the beneficiary is treated instead as acquiring it for the deceased's inflation adjusted (i.e. indexed) cost base. Effectively, the accrued capital gain is rolled-over' so that gain would normally be taxed to the beneficiary when he or she disposes of the asset.
However, if the beneficiary converts it to trading stock at cost, subsection 70-30(4) says that its cost is the market value it had at inheritance. No taxable capital gain can be made in these circumstances and the difference between the market value and the asset's indexed cost base (i.e., the accrued capital gain') would escape tax.
The amendment will ensure that inherited assets that are later put into trading stock have a cost' equal to the asset's indexed cost base in the deceased's hands. If the taxpayer ultimately sells the asset for more than its indexed cost base, the difference will be assessable income. If the final sale proceeds are less than the indexed cost base, the difference will be deductible.
Provision being amended: The notes to section 70-90. That section includes the market value of an item of trading stock in assessable income if that item is disposed of outside the ordinary course of business.
Amendment will: Add a new note 5 to refer readers to section 70-10 of the Income Tax (Transitional Provisions) Act 1997.
Reason for amendment: The amendment draws to a reader's attention the fact that the Income Tax (Transitional Provisions) Act 1997 gives the section a wider operation than appears on its face. That operation is explained in more detail at item 2, Schedule 8 below.
Provision being amended: Subsection 175-5(2), which sets out the circumstances in which the Commissioner is denied the ability to reverse the effect of tax avoidance schemes using tax losses and current year deductions of companies.
Amendment will: Correct the formatting of the subsection.
Provision being amended: Subsection 175-5(2). Subdivision 175A is an anti-avoidance provision which sets out the circumstances in which the Commissioner may deny a company a deduction for a tax loss. Subsection 175-5(2) sets out circumstances in which the Commissioner cannot apply the anti-avoidance provision. It provides that the deduction for a tax loss is not denied when the company satisfies the same business test even if the company has failed the continuity of beneficial ownership test for the income year.
Amendment will: Amend paragraph 175-5(2)(a) to ensure the conditions of the continuity of beneficial ownership test refer to both the loss year and the income year.
Reason for amendment: To ensure that the ITAA 1997 accurately reflects the ITAA 1936 by more precisely describing the circumstance of failing the continuity of beneficial ownership test. As enacted, it is arguable that the rewritten provision can be read more narrowly than the equivalent provision in the ITAA 1936.
Provision being amended: Subsection 330-110(1) which tells you when you can deduct allowable capital expenditure.
Amendment will: Substitute references to paragraph 330-85(h) for incorrect references to paragraph 330-85(1)(h).
Provision being amended: Section 330-175, which deals with mining and prospecting cash bidding payments. It determines both:
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- the entitlement to an eligible cash bidding amount; and
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- how much that amount is.
Amendments will: Replace paragraphs (b) and (c) of existing section 330-175 with a new paragraph (b) which will:
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- correct an error in paragraph (b) as enacted; and
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- restate the combined effect of paragraphs (b) and (c).
Reasons for amendments: Paragraph 330-175(b) provides that, if a person is to be entitled to an eligible cash bidding amount, that person has to be the original owner of the exploration or prospecting authority to which the cash bidding payment relates. This was not the position under the ITAA 1936 where the entitlement to an eligible cash bidding amount was not restricted to the original owner. This amendment brings section 330-175 into line with the ITAA 1936.
Provision being amended: Note 3 to subsection 330-547(1). Section 330-547 modifies Common rule 1 about roll-over relief for the purposes of mining and quarrying provisions.
Amendment will: Make it clear that roll-over relief does not depend on an election.
Provision being amended: Section 995-1 definition of listed public company which is relevant to concessional tracing rules used to determine when companies are entitled to claim prior and current year losses in Division 166.
Amendment will: Substitute a new definition to restate the effect of the ITAA 1936 by ensuring that the company is listed on an approved stock exchange and the ownership of its shares is widely held.
Application: : The amendments made by Schedule 5 apply to assessments for the 1997-98 and later income years.
Schedule 6 - Technical amendments of the Income Tax Assessment Act 1936
Provision being amended: Subsection 36(1), which includes in assessable income the market value of an item of trading stock disposed of outside the ordinary course of business.
Amendment will: Add a note to alert readers to section 70-10 of the Income Tax (Transitional Provisions) Act 1997 which allows a deduction in the income year in which subsection 36(1) includes an amount in assessable income on the disposal of some items of trading stock.
Provision being amended: Section 51, the general deduction provision of the ITAA 1936, which includes subsection (2) dealing with deductions for expenditure incurred in the purchase of trading stock.
Amendment will: Insert a new subsection 51(1B) which will ensure that subsection 51(2) does not apply for the 1997-98 and later income years, i.e. the years in which the ITAA 1997, as amended by TLIA 1997, operates.
Provision being amended: Section 93, which allows partners to make separate elections for the value of their partnership's live stock.
Amendment will: Insert a new subsection 93(1A) which will ensure that section 93 does not apply for the 1997-98 and later income years. It will also provide a cross-reference to the transitional provisions that apply for the 1997-98 income year.
Reason for amendment: Under the ITAA 1936, a partnership generally makes a single election (rather than a separate one by each partner) about how to value its trading stock at the end of each income year. However, section 93 of that Act allows each partner to make a separate election if the trading stock is live stock. This would have created significant tax planning opportunities except that, unlike other trading stock it was a once only' election and taxpayers had to use the same valuation method for their live stock in all future years. They also had to value every animal according to the same method. So, in practice, partners have almost always made the same election.
The rewrite of the trading stock rules streamlines and simplifies the law by bringing the rules for valuing live stock into line with those for other trading stock. Thus, the rewrite allows owners of live stock to vary their valuation method from year to year and animal to animal in the same way as they can with other trading stock. However, a consequential amendment to require live stock to be valued by partnerships rather than by the individual partners was omitted. This could open up unintended tax planning opportunities for partners.
This amendment will limit section 93 to the 1996-97 and prior income years. Transitional provisions (discussed below at items 3 and 4 of Schedule 7) will apply in the 1997-98 income year to ensure that any (rare) partnerships where the partners have made different elections will not be disadvantaged.
Provision being amended: Section 124AF, which allows a deduction for unrecouped previous capital expenditure incurred in prospecting and mining for petroleum.
Amendment will: Insert a new subsection 124AF(1A) which will ensure that section 124AF does not apply for the 1997-98 and later income years.
Reason for amendment: This consequential amendment is, at a practical level, unnecessary because there are no deductions still allowable under that section. However, because no consequential amendment was made to section 124AF, it remains technically operative.
Provision being amended: Subsection 160ZK(3A), which specifies rules for determining the reduced cost base of an asset where a deduction has been allowed to a partnership.
Amendment will: Add a reference to Division 43 of the ITAA 1997 to the current reference to Divisions 10C and 10D of Part III of the ITAA 1936 to ensure that subsection (3A) refers to the relevant provisions of both the ITAA 1936 and the ITAA 1997.
Provision being amended: Sections 177C, 262A, 390, 577 and 579. Each section refers to selections, elections or notices of one kind or another available under the ITAA 1936.
Amendment will: Add additional references to choices that can be made under the ITAA 1997.
Reason for amendment: The rewrite of the depreciation provisions contained in Division 42 of the ITAA 1997 allows owners and quasi-owners of plant to make various choices such as about the effective life of plant, calculation method, rate of deduction, balancing adjustment relief and pooling. These choices replace elections, nominations and notices under the ITAA 1936.
Application: : The amendments made by Schedule 6 (except items 2, 3 and 4) apply to assessments for the 1997-98 and later income years.
Schedule 7 - Technical amendments of the Income Tax (Transitional Provisions) Act 1997
Provision being amended: Division 43 of the Income Tax (Transitional Provisions) Act 1997 which contains the transitional measures needed for Division 43 of the ITAA 1997 (Deductions for capital works).
Amendment will: Insert a new transitional provision (new section 43-110) that ensures that subsection 43-75(3) of the ITAA 1997 does not apply to hotel buildings or apartment buildings begun before 1 July 1997.
Reason for amendment: Subsection 43-75(3) is intended to legislate an administrative concession for buildings covered by Division 10D of Part III of the ITAA 1936. However, subsection 43-75(3) applies to all capital works, including those formerly covered by Division 10C. This amendment ensures that subsection 43-75(3) will not apply to hotel buildings and apartment buildings (i.e. the buildings formerly covered by Division 10C) begun before the commencement of the ITAA 1997. This ensures that the legislative concession is not extended retrospectively to buildings that were not within the administrative concession.
Provision being amended: Section 70-10 of the Income Tax (Transitional Provisions) Act 1997, which explains how to treat an item that used to be trading stock under the ITAA 1936 definition of trading stock but is not under the ITAA 1997 definition.
Amendment will:
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- 1. Ensure that late balancing taxpayers do not escape tax on disposals of items that used to be trading stock.
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- 2. Allow taxpayers to deduct, in the year in which they finally dispose of the item, the value at which it was brought to account at the end of 1996-97.
Reason for amendment: The intended effect of the section 70-10 transitional provision is to ensure that the change of definition of trading stock in the ITAA 1997 does not result in an asset that a taxpayer has ceased to use as trading stock escaping tax that the ITAA 1936 would have levied. It seeks to achieve this outcome by assessing the item's market value when it is finally disposed of in the same way that subsection 36(1) of the ITAA 1936 did before 1 July 1997. The policy is to include an amount in assessable income to balance the deduction already allowed to the taxpayer for the acquisition of the stock. The section 70-10 transitional provision fails to achieve its objective and needs to be amended in two respects.
The first proposed amendment ensures that the effect of the ITAA 1936 is maintained for taxpayers with income years ending other than on 30 June. The current transitional provision did not achieve this if, eg. a taxpayer acquired an item as trading stock after 30 June 1997, put the item to another use before the end of the 1996-97 income year and still held the item at the end of that income year. The proposed amendment will overcome the problem by including an amount in assessable income when the taxpayer finally disposes of the item.
The second proposed amendment will ensure that if this transitional provision applies, it will tax only the profit on disposal, rather than the whole of the item's market value. This was the result under the ITAA 1936 because an item which stopped being used as trading stock would have been brought to account at the end of each income year it was on hand. However, under the transitional provision, as enacted, the full market value would have been taxed because the item would have stopped being trading stock under the ITAA 1997 at the start of the 1997-98 income year.
Provision being amended: Division 70, which contains the transitional provisions for the rewritten trading stock provisions in Division 70 of the ITAA 1997.
Amendment will: Insert new section 70-35 and new subsection 70-55(3) which will provide transitional rules for partners and partnerships which are affected by the amendments to section 93 discussed above at item 3, Schedule 7.
Reason for amendment: The opening value of trading stock for an income year is determined by the closing value of that trading stock in the prior income year. These new transitional provisions are needed to provide a mechanism for converting from a system where partners individually valued live stock to a system where the partnership values the live stock. This prevents any disadvantage under the ITAA 1997 to partners who have chosen different valuation methods at the end of the 1996-97 income year.
Provision being amended: Section 330-20, which provides for the reduction of unrecouped expenditure where:
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- an amount derived from the sale of rights to mine an area is exempt under section 330-60 of the ITAA 1997; and
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- in relation to that area, there are amounts of expenditure under subsection 122J(3) of the ITAA 1936 that have become allowable capital expenditure under the ITAA 1997 (the excess amount).
Unrecouped expenditure determines how much mining or quarrying expenditure is deductible under Subdivision 330-C of the ITAA 1997.
Amendment will: Replace the word exceeds with the words does not exceed to ensure that unrecouped expenditure is reduced by the excess amount. But if the excess amount exceeds the exempt income, there is a limit on the extent of the reduction to the unrecouped expenditure. That limit is the amount of the exempt income.
Reason for amendment: Section 330-20 of the Transitional Provisions Act incorrectly reduces unrecouped expenditure by so much of the excess amount as exceeds the amount of exempt income instead of the amount that does not exceed the amount of exempt income.
Application: : The amendments made by Schedule 7 apply to assessments for the 1997-98 and later income years.
Schedule 8 - Technical amendments of the Income Tax (Consequential Amendments) Act 1997
Provision being amended: Item 98 of Schedule 1, which amends paragraph 82KZM(c) of the ITAA 1936.
Amendment will: Insert a reference to paragraph 82KZM(1)(c) instead of the incorrect reference to paragraph 82KZM(c).
Provision being amended: Item 99 of Schedule 1, which amends section 82KZM of the ITAA 1936.
Amendment will: Insert a more accurate reference to subsection 82KZM(1) instead of the reference to section 82KZM.
Provision being amended: Item 1 of Schedule 3, which amends paragraph 3(e) of Schedule 1 to the Administrative Decisions (Judicial Review) Act 1977.
Amendment will: Insert a reference to paragraph (e) of Schedule 1 instead of the reference to paragraph 3(e).
Provision being amended: Item 88 of Schedule 3, which amends paragraph 52(1)(ba)(ii) of the Fringe Benefits Tax Assessment Act 1986.
Amendment will: Omit the item.
Reason for amendment: Subparagraph 52(1)(ba)(ii) was amended by both items 86 and 88. The amendment made by item 88 was unnecessary.
Schedule 9 - Technical amendments of other Acts
Provision being amended: Section 22 of the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 which specifies how the deduction for bad debts allowed under section 63 of the ITAA 1936 applies to certain financial corporations.
Amendment will:
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- Insert a reference to section 25-35 of the ITAA 1997 which is the rewrite of section 63 of the ITAA 1936. This ensures the provision applies to debts that are written off in the 1997-98 and later income years.
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- Extend the provision to take account of a change made by the ITAA 1997, which allows a deduction for a bad debt that has been bought by the transferring corporation in the ordinary course of its business of lending money.
Application: : The amendment made by Schedule 9 applies to assessments for the 1997-98 and later income years.
Schedule 11 - Amendments to improve further the readability of the Income Tax Assessment Act 1997
Provision being amended: Sections 36-10, 36-20, 70-30, 165-75, 165-90, 166-10, 166-30 and, 166-145.
Amendments will:
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- Insert asterisks to identify that particular terms are defined.
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- Remove asterisks which incorrectly identify something as a defined term or which have already been identified in the provision as defined terms.
Items 9 to 13, 15 to 17, 26, 27 and 28
Provision being amended: Various subsections of sections 165-80, 165-85 and 165-90 and section 995-1. Sections 165-80 and 165-85 explain how to calculate a company's share of a partnership's notional loss or notional net income for an income year in which the company has failed the continuity of ownership and same business test of the carry forward loss provisions. Section 165-90 provides that certain full year deductions of a partnership in which a company is a partner are taken to be full year deductions of the company. Section 995-1 is the dictionary of defined terms for the ITAA 1997.
Amendments will:
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- Ensure that subsections 165-80(2) and 165-85(2) make clear that the terms notional loss and notional net income are being defined by those subsections.
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- Ensure that subsections 165-80(3), 165-80(4), 165-85(3), 165-90(3), 165-90(4) and 165-90(5) show that the term company's share is defined.
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- Insert in the dictionary definitions of notional loss for a partnership and notional net income for a partnership.
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- Insert in the dictionary a definition of company's share of a partnership's notional loss or notional net income and of a partnership's full year deductions.
Provision being amended: Various guide sections.
Amendment will: Remove asterisks from defined terms that appear in the guides included in the ITAA 1997.
Reason for amendment: Subsection 2-15(2) provides that defined terms are not identified with an asterisk when used in non-operative material.
Provision being amended: Various sections which are not operative provisions.
Amendment will: Remove asterisks from defined terms that appear in the non-operative material included in the ITAA 1997.
Reason for amendment: Subsection 2-15(2) indicates that defined terms are not identified with an asterisk when used in non-operative material.
Provision being amended: Various sections.
Amendment will: Insert a link note to indicate when guides end.
Reason for amendment: To make clear where guides end and operative provisions start.
Provision being amended: Subsection 950-150(1), which defines the term guide and subsection 995-1(1), which contains a series of defined terms including the term link note.
Amendment will: Substitute new definitions of guide and link note to further assist readers in delineating between guides and operatives rules.
Application: : The amendments made by Schedule 11 apply to assessments for the 1997-98 and later income years.
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