Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 16D - Certain arrangements relating to the use of property  

SECTION 159GE   INTERPRETATION  

159GE(1)   [Definitions]  

In this Division:

arrangement
includes:

(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b) any scheme, plan, proposal, action, course of action or course of conduct whether unilateral or otherwise;

arrangement payment
, in relation to an arrangement relating to the use, or the control of the use, of an item of property, means so much of any payment liable to be made under the arrangement as represents consideration for any one or more of the following:

(a) the use of the item;

(b) the control of the use of the item;

(c) the sale or disposal of the item;

arrangement period
, in relation to an item of eligible property that is, or is included in, arrangement property in relation to an arrangement at a particular time, means the period that is at that time the total period during which the arrangement is likely to be in force in relation to that item of eligible property (including any period before that time when the arrangement was in force in relation to that item of eligible property);

arrangement property
means property that is, or is to be, used, or the use of which is, or is to be, controlled, under an arrangement;

assessable arrangement payment
means an arrangement payment that, apart from this Division, would be included in whole or in part in the assessable income of a taxpayer of a year of income;

associate
means, in relation to a person other than an exempt public body, any person who is an associate, within the meaning of section 318 , in relation to the person or, in relation to an exempt public body:

(a) a partner of the exempt public body or a partnership in which the exempt public body is a partner; or

(b) if a partner of the exempt public body is a natural person otherwise than in the capacity of trustee - the spouse or a child of that partner; or

(c) a trustee of a trust where the exempt public body, or another entity that is an associate of the exempt public body because of paragraph (a), (b) or (d), benefits under the trust; or

(d) a company where:

(i) the company is sufficiently influenced by:

(A) the exempt public body; or

(B) another entity that is an associate of the exempt public body because of paragraph (a), (b) or (c); or

(C) another company that is an associate of the exempt public body because of another application of this paragraph; or

(D) 2 or more entities covered by the preceding sub-subparagraphs; or

(ii) a majority voting interest in the company is held by:

(A) the exempt public body; or

(B) the entities that are associates of the primary entity because of subparagraph (i) of this paragraph and paragraphs (a), (b) and (c); or

(C) the exempt public body and the entities that are associates of the exempt public body because of subparagraph (i) of this paragraph and because of paragraphs (a), (b) and (c).

Subsections 318(6) and (7) apply for the purposes of paragraphs (a) to (d) in the same way as those subsections apply for the purposes of section 318 .

capital expenditure deduction
means a deduction:

(a) under the former Division 10, 10AAA, 10AA, 10A, 10C or 10D, of this Part; or

(b) under Subdivision 40-B of the Income Tax Assessment Act 1997 for a depreciating asset that is a forestry road or timber mill building; or

(c) under Division 43 of that Act; or

(d) under section 40-830 of that Act for an amount that is a project amount under subsection 40-840(1) (about mining capital expenditure and transport capital expenditure); or

(e) under the former Subdivision 330-C, 330-H or 387-G of that Act.

control
means effectively control;

depreciation deduction
means a deduction:

(a) in respect of depreciation under Division 3 of this Act or the former Division 42 of the Income Tax Assessment Act 1997 ; or

(b) for the decline in value of a depreciating asset under Division 40 of the Income Tax Assessment Act 1997 .

Division 10, 10AA or 10A property
means property in relation to which there has been incurred:

(a) allowable capital expenditure within the meaning of the former Division 10 or 10AA of this Part or the former Subdivision 330-C of the Income Tax Assessment Act 1997 or mining capital expenditure within the meaning of section 40-860 of that Act;

(b) expenditure taken into account in ascertaining an amount of residual capital expenditure specified in the former paragraph 122C(1)(a); or

(c) capital expenditure specified in the former subsection 124F(1) or 124JA(1) of this Act or the former section 387-460 of the Income Tax Assessment Act 1997 ; or

(d) capital expenditure on a forestry road in connection with a timber operation, or capital expenditure for the construction or acquisition of a timber mill building.

Division 10AAA property
means property in relation to which there has been incurred capital expenditure to which the former Division 10AAA of this Part applies or transport capital expenditure within the meaning of the former Subdivision 330-H, or section 40-865 of the Income Tax Assessment Act 1997 ;

Division 10C or 10D property
means property in relation to which there has been incurred qualifying expenditure within the meaning of the former Division 10C or 10D or for which there is a pool of construction expenditure within the meaning of Division 43 of the Income Tax Assessment Act 1997 ;

effective life
, in relation to an item of eligible property at a particular time, means the period (if any) that the Commissioner estimates will be, or would be, at that time the effective life of the property after that time assuming that it is or would be maintained in reasonably good order and condition;

eligible amount
, in relation to an item of eligible property, means:

(a) where the item is an item of eligible depreciation property - the amount that:

(i) was the cost of the item of property within the meaning of Division 40 , or the former Division 42, of the Income Tax Assessment Act 1997 to the taxpayer who holds it; or

(ii) would have been the cost of the item of property to the taxpayer for the purposes of that Division if that Division had applied in relation to the item of property; and

(b) where the item is an item of eligible capital expenditure property - any amount of eligible capital expenditure in relation to the item of property;

eligible capital expenditure
, in relation to an item of eligible capital expenditure property, means expenditure by reason of which the item of property is eligible capital expenditure property;

eligible capital expenditure property
means Division 10, 10AA or 10A property, Division 10AAA property, Division 10C or 10D property or eligible spectrum licences;

eligible depreciation property
means:

(a) plant or articles within the meaning of the former section 54 of this Act; or

(b) plant within the meaning of the former section 42-18 of the Income Tax Assessment Act 1997 or plant within the meaning of section 45-40 of that Act; or

(c) a depreciating asset within the meaning of Division 40 of that Act;

eligible property
means:

(a) eligible depreciation property;

(b) Division 10, 10AA or 10A property;

(c) Division 10AAA property;

(d) Division 10C or 10D property; or

(e) eligible spectrum licences;

eligible real property
, means eligible property that is:

(a) a building or a part of a building; or

(b) a structure that is a fixture or a part of such a structure;

eligible spectrum licence
means a spectrum licence within the meaning of the Income Tax Assessment Act 1997 ;

exempt public body
means:

(a) the Commonwealth, a State or a Territory; or

(aa) an STB (within the meaning of Division 1AB ) the income of which is wholly exempt from tax; or

(b) a municipal corporation or other local governing body, the income of which is wholly exempt from tax; or

(c) a public authority:

(i) that is constituted by or under a law of the Commonwealth, a State or a Territory; and

(ii) the income of which is wholly exempt from tax;

payment portion
, in relation to an arrangement payment in relation to an eligible amount in relation to an item of eligible property, means so much of the arrangement payment as the Commissioner considers is attributable to the eligible amount in relation to the item of eligible property;

person
includes an exempt public body;

total notional principal
, in relation to an eligible amount in relation to an item of eligible property in relation to an application period, means the sum of all notional principal amounts (if any) in relation to payment portions of arrangement payments in relation to the eligible amount in relation to the application period.

Note:

This Division applies to deductions under Division 40 (Capital allowances) and Division 43 (Capital works) of the Income Tax Assessment Act 1997 as if you were the owner of an asset you hold (under that Division) instead of any other person: see section 40-135 of that Act.

159GE(2)   [Period arrangement in force]  

For the purposes of the definition of arrangement period in subsection (1), a reference in that definition to the total period during which an arrangement is, at a particular time, likely to be in force in relation to an item of eligible property that at that time is, or is included in, arrangement property in relation to the arrangement is a reference to:

(a) where at that time the total period during which the arrangement was, or is, to be in force in relation to that item of eligible property (including any period before that time when the arrangement was in force in relation to that item) was or is specified in or ascertainable in accordance with the arrangement - that period; and

(b) in any other case - such period as would have been, or is, at that time the period during which the arrangement would be, or is, likely to be in force in relation to the item of property (including any period before that time when the arrangement was in force in relation to the item), having regard to the provisions of the arrangement and any other relevant circumstances in relation to the arrangement, or in relation to the item of property.

159GE(3)   [Item of eligible property]  

Nothing in this Division prevents an item of eligible property from being an item of eligible property by reason of the application of 2 or more paragraphs of the definition of eligible property in subsection (1).

159GE(4)   [Amount of total notional principal]  

For the purposes of the definition of total notional principal in subsection (1), where:

(a) under section 159GK there is an interest amount within the meaning of that section in relation to a payment portion (not being a notional final payment portion within the meaning of that section) in relation to an arrangement payment; and

(b) the interest amount is less than the amount of the payment portion;

there shall be taken to be a notional principal amount in relation to the payment portion of an amount equal to the difference between the interest amount and the amount of the payment portion.

159GE(5)   [Successive arrangements deemed single arrangement]  

Where:

(a) under 2 or more successive arrangements relating to the use by a person, or the control by a person of the use, of property owned by another person, the same property is used by, or the use of the same property is controlled by, the same person or by persons who, in relation to each other, are associates; and

(b) the Commissioner considers that the arrangements should be taken, for the purposes of this Division, to be a single arrangement,

the arrangements shall, for the purposes of this Division, be deemed to be a single arrangement entered into at the same time as the first of the arrangements, coming into force at the same time as the first of the arrangements and continuing in force until the expiration of the second or last, as the case requires, of the arrangements.

159GE(6)   [Reference to successive arrangements]  

A reference in subsection (5) to successive arrangements includes a reference to:

(a) where the arrangement periods of 2 or more arrangements overlap - those arrangements; and

(b) where there is a period between the expiration of an arrangement and the commencement of another arrangement and the Commissioner considers that the arrangements should be taken to be successive arrangements for the purposes of that subsection - those arrangements.

159GE(7)   [Application period in relation to qualifying arrangement]  

Where this Division applies in relation to an item of eligible property in relation to a qualifying arrangement, a reference in this Division to the application period in relation to that application of this Division in relation to the item of eligible property is a reference to the period commencing at the time at which this Division in that application commences to apply and ending at the time at which this Division in that application ceases to apply.

159GE(8)   [Control of item of property by partners]  

For the purposes of this Division, where one or more of the partners in a partnership uses, or controls the use of, an item of property, each of the partners in the partnership shall be taken to use, or to control the use of, the item of property and the partnership shall be taken not to use, or to control the use of, the item of property.

159GE(9)    

(Repealed by No No 77 of 2001)

159GE(10)   [Transfer or redemption of security]  

For the purpose of this Division, disregard an acquisition or disposal of property by way of the transfer of the property for the provision or redemption of a security. Consequently this Division applies as if the person who was the owner of the property before the transfer continues to be the owner after the transfer.