Income Tax Assessment Act 1936

SCHEDULE 2D - TAX EXEMPT ENTITIES THAT BECOME TAXABLE  

Division 57 - Tax exempt entities that become taxable  

Subdivision 57-E - Assets and liabilities  

SECTION 57-30   DEEMED CESSATION AND RE-ASSUMPTION OF LIABILITIES  

57-30(1)  
Subject to subsection (3), for the purposes of determining a deduction allowable to, or an amount included in the assessable income of, the transition taxpayer after the transition time in respect of the satisfaction of a liability owed by the transition taxpayer immediately before the transition time, the transition taxpayer is taken:


(a) to have ceased immediately before the transition time to have any liabilities; and


(b) to have assumed each of its liabilities again at the transition time in return for consideration equal to the adjusted market value (see subsection (2)) at that time of the right or other asset, corresponding to the liability, that was held by the person to whom the liability was owed.

57-30(2)  
The adjusted market value of the corresponding right or other asset is the market value of that right or asset at the transition time:


(a) reduced by any amount paid or that becomes payable by the transition taxpayer in respect of the liability at or after the transition time, where:


(i) because of subsection 57-20(2) ; or

(ii) because all of the transition taxpayer ' s income was wholly exempt from income tax before the transition time;
the amount is not an allowable deduction; and


(b) increased by any amount paid or that became payable by the transition taxpayer in respect of the liability before the transition time, where:


(i) because of subsection 57-20(1) ; or

(ii) because the transition taxpayer ' s income ceased to be exempt from income tax at the transition time;
the amount is an allowable deduction.
Note:

If the liability is, or is part of, a Division 230 financial arrangement, section 57-32 may affect how the market value of the corresponding right or other asset is worked out.

57-30(3)  
A provision listed in subsection (4) only applies to a liability of the transition taxpayer at the transition time if the liability first came into existence after the day on which Division 3B of Part III commenced.

57-30(4)  


The provisions are listed in the table below. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .


Listed provisions
Item Provision
1 the former Division 3B of Part III
2 Subdivision 20-A, so far as it applies to an amount that may be an assessable recoupment because a deduction has been allowed or is allowable under the former subsection 82Z(1) .

57-30(5)  


A provision listed in subsection (6) only applies to a liability of the transition taxpayer at the transition time if the taxpayer first assumed the liability on or after the taxpayer ' s applicable commencement date (within the meaning of Division 775 of the Income Tax Assessment Act 1997 ).
Note:

For applicable commencement date , see section 775-155 of the Income Tax Assessment Act 1997 .

57-30(6)  


The provisions are listed in the table below. Provisions of the Income Tax Assessment Act 1997 are identified in normal text.


Listed provisions
Item Provision
1 Division 775
2 Subdivision 20-A, so far as it applies to an amount that may be an assessable recoupment because a deduction has been allowed or is allowable under section 775-30.

57-30(7)  


The rule in subsection (5) does not apply, and is taken never to have applied, to the transition taxpayer if the taxpayer makes an election under section 775-150 of the Income Tax Assessment Act 1997 .

 

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