Tax Laws Amendment (2004 Measures No. 7) Act 2005 (41 of 2005)

Schedule 2   STS accounting method

Income Tax (Transitional Provisions) Act 1997

10   Before Division 330

Insert:

Division 328 - STS taxpayers

Table of sections

328-115 When you stop using the STS accounting method

328-120 Continuing to use the STS accounting method

328-125 Meaning of STS accounting method

328-440 Becoming an STS taxpayer after stopping to be one

328-115 When you stop using the STS accounting method

(1) This section sets out what happens to your ordinary income and general deductions, and deductions under section 25-5 or 25-10 of the Income Tax Assessment Act 1997, if:

(a) you are an STS taxpayer for an income year and for the following income year (the changeover year ); and

(b) you were using the STS accounting method for the income year before the changeover year; and

(c) you change to an accruals accounting method for the changeover year.

(2) This section also sets out what happens to your ordinary income and general deductions, and deductions under section 25-5 or 25-10 of the Income Tax Assessment Act 1997, if:

(a) you stop being an STS taxpayer for an income year (also the changeover year ); and

(b) you were using the STS accounting method for the income year before the changeover year; and

(c) you change to an accruals accounting method for the changeover year.

(3) Any ordinary income that, apart from paragraph 328-105(1)(a) of the Income Tax Assessment Act 1997, you would have derived before the changeover year (while you were an STS taxpayer) and you have not included in your assessable income because you have not received it is included in your assessable income for the changeover year.

(4) Any general deductions, and deductions under section 25-5 or 25-10 of the Income Tax Assessment Act 1997, that, apart from paragraph 328-105(1)(b) of that Act, you would have incurred before the changeover year (while you were an STS taxpayer) and that you have not deducted because you have not paid them can be deducted for the changeover year.

328-120 Continuing to use the STS accounting method

If you were an STS taxpayer for your first income year that started before 1 July 2005, you can continue to use the STS accounting method for your first income year starting on or after 1 July 2005 and later income years while you continue to be an STS taxpayer.

328-125 Meaning of STS accounting method

In sections 328-115 and 328-120, STS accounting method means the accounting method that was required by the Income Tax Assessment Act 1997 to be used by STS taxpayers for the 2004-05 income year.

328-440 Becoming an STS taxpayer after stopping to be one

Subsection 328-440(3) of the Income Tax Assessment Act 1997 does not apply to you, during the period of 5 years starting on 1 July 2005, if you chose to stop being an STS taxpayer for an income year before your first income year starting on or after 1 July 2005.