INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 2 - Income  

Subdivision A - Assessable income generally  

SECTION 26B   INSURANCE RECOVERIES ON LOSSES OF LIVE STOCK AND TREES  

26B(1)   [Amounts to which section applies]  

This section applies to an amount (in this section referred to as an insurance recovery) received, by a taxpayer or a partnership carrying on in Australia a business of primary production, by way of insurance for or in respect of a loss of live stock or a loss by fire of trees.

26B(2)   [Election]  

Where a taxpayer receives an insurance recovery which is included in his assessable income of a year of income before the 1997-98 year of income, he may elect that that assessable income shall be reduced by an amount equal to four-fifths of the insurance recovery.

Note:

Subdivision 385-F (Insurance for loss of live stock or trees) of the Income Tax Assessment Act 1997 allows an election to reduce the amount of an insurance recovery received in or after the 1997-98 year of income.

26B(3)   [Election by partner]  

Where an insurance recovery is received by a partnership, each partner in the partnership may make an election under subsection (2) in relation to that part of the insurance recovery which is included in his individual interest in the net income of the partnership.

26B(4)   [Election by trustee or presently entitled beneficiary]  

Where an insurance recovery is received by the trustee of a trust estate -

(a) the trustee may make an election under subsection (2) in relation only to that part of the insurance recovery which is included in the net income of the trust estate in respect of which he is liable to be assessed and to pay tax under the provisions of Division 6 ; and

(b) each beneficiary in the trust estate who is not under a legal disability and is presently entitled to a share of the net income of the trust estate, being a share which includes a part of the insurance recovery, may make an election under subsection (2) in relation to that part.

26B(5)   [Conditions re election]  

The election which a taxpayer may make under subsection (2) must be made on or before the date of lodgment of the return of income of the year of income in which the insurance recovery is received, or within such further time as the Commissioner allows.

26B(6)   [Spreading of recovery]  

Where a taxpayer has made an election under subsection (2), his assessable income of the year in which the insurance recovery is received shall be reduced by an amount equal to four-fifths of the insurance recovery, or of the part of the insurance recovery to which his election relates, and there shall be included in his assessable income of each of the next 4 succeeding years an amount equal to one-fifth of the insurance recovery, or of that part of the insurance recovery, as the case may be.

26B(7)   [Departure, death, bankruptcy, winding-up]  

Where, in a year of income, a taxpayer who has made an election under subsection (2) -

(a) appears to the Commissioner to be about to leave Australia;

(b) dies;

(c) becomes bankrupt or insolvent, applies to take the benefit of a law for the relief of bankrupt or insolvent debtors, compounds with his creditors, or makes an assignment of any of his property for their benefit; or

(d) being a company, commences to be wound up,

there shall, if the Commissioner so determines, be included in the assessable income of the taxpayer of that year of income any amount which would otherwise be included, in pursuance of this section, in the assessable income of any subsequent year of income.

26B(8)   [Amount deemed income from primary production]  

An amount which, in accordance with subsection (6) or (7) is included in the assessable income of a taxpayer of any year shall, for all purposes of this Act, be deemed to be assessable income derived by him during that year from the carrying on by him in Australia, during that year, of a business of primary production.