Income Tax Assessment Act 1936

PART IVA - SCHEMES TO REDUCE INCOME TAX  

SECTION 177CB   THE BASES FOR IDENTIFYING TAX BENEFITS  

177CB(1)  
This section applies to deciding, under section 177C , whether any of the following ( tax effects ) would have occurred, or might reasonably be expected to have occurred, if a scheme had not been entered into or carried out:

(a)  an amount being included in the assessable income of the taxpayer;

(b)  the whole or a part of a deduction not being allowable to the taxpayer;

(c)  the whole or a part of a capital loss not being incurred by the taxpayer;

(ca)  

the whole or a part of a loss carry back tax offset not being allowable to the taxpayer;

(d)  the whole or a part of a foreign income tax offset not being allowable to the taxpayer;

(daa)  

the whole or a part of an innovation tax offset not being allowable to the taxpayer;

(da)  

the whole or a part of an exploration credit not being issued to the taxpayer;

(e)  the taxpayer being liable to pay withholding tax on an amount;

(f)  

the whole or a part of a refundable R & D tax offset, or of a non-refundable tax offset, not being allowable to the taxpayer.

177CB(2)  
A decision that a tax effect would have occurred if the scheme had not been entered into or carried out must be based on a postulate that comprises only the events or circumstances that actually happened or existed (other than those that form part of the scheme).

177CB(3)  
A decision that a tax effect might reasonably be expected to have occurred if the scheme had not been entered into or carried out must be based on a postulate that is a reasonable alternative to entering into or carrying out the scheme.

177CB(4)  
In determining for the purposes of subsection (3) whether a postulate is such a reasonable alternative:

(a)  have particular regard to:


(i) the substance of the scheme; and

(ii) any result or consequence for the taxpayer that is or would be achieved by the scheme (other than a result in relation to the operation of this Act); but

(b)  disregard any result in relation to the operation of this Act that would be achieved by the postulate for any person (whether or not a party to the scheme).

177CB(5)  


Subsection (4) applies in relation to the scheme as if references in that subsection to the operation of this Act included references to the operation of any foreign law relating to taxation:

(a)  

if this Part applies to the scheme because of section 177DA or 177J ; or

(b)  

for the purposes of determining whether this Part applies to the scheme because of section 177DA or 177J .

 

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