INCOME TAX ASSESSMENT ACT 1936 INCOME TAX ASSESSMENT ACT 1936 - TABLE OF PROVISIONS PART I--PRELIMINARY 1. Short title [see Note 1] 6. Interpretation 6AA. Certain sea installations and offshore areas to be treated as part of Australia 6A. Provisions relating to cessation of superannuation benefits 6AB. Foreign income and foreign tax 6B. Income beneficially derived 6BA. Taxation treatment of certain shares 6C. Source of royalty income derived by a non-resident 6CA. Source of natural resource income derived by a non-resident 6D. Some tax offsets under the 1997 Assessment Act are treated as credits 6F. Dual resident investment company 6H. Recognised small credit unions, recognised medium credit unions and recognised large credit unions 7A. Application of Act in relation to certain Territories 7B. Application of the Criminal Code PART II--ADMINISTRATION 8. Commissioner 14. Annual report PART III--LIABILITY TO TAXATION Division 1--General 18. Accounting period 18A. Accounting periods for VCLPs, ESVCLPs, AFOFs and VCMPs 21. Where consideration not in cash 21A. Non-cash business benefits 23AA. Income of persons connected with certain projects of United States Government 23AB. Income of certain persons serving with an armed force under the control of the United Nations 23AC. Exemption of pay and allowances of members of Defence Force serving in operational areas 23AD. Exemption of pay and allowances of Defence Force members performing certain overseas duty 23AF. Exemption of certain income derived in respect of approved overseas projects 23AG. Exemption of income earned in overseas employment 23AH. Foreign branch income of Australian companies not assessable 23AI. Amounts paid out of attributed income not assessable 23AJ. Certain non-portfolio dividends from foreign countries not assessable 23AK. Amounts paid out of attributed foreign investment fund income not assessable 23B. Reduction of disposal consideration if FIF attributed income not distributed 23E. Redemption of Special Bonds redeemable at a premium 23G. Exemption of interest received by credit unions 23J. Sale of securities purchased at a discount 23K. Substitution of certain securities 23L. Certain benefits in the nature of income not assessable Division 1AB--Certain State Subdivision A--Exemption for certain State 24AK. Key principle 24AL. Diagram--guide to work out if body is exempt under this Division 24AM. Certain STBs exempt from tax 24AN. Certain STBs not exempt from tax under this Division 24AO. First way in which a body can be an STB 24AP. Second way in which a body can be an STB 24AQ. Third way in which a body can be an STB 24AR. Fourth way in which a body can be an STB 24AS. Fifth way in which a body can be an STB 24AT. What do excluded STB, government entity and Territory mean? 24AU. Governor, Minister and Department Head taken to be a government entity 24AV. Regulations prescribing excluded STBs Subdivision B--Body ceasing to be an STB 24AW. Body ceasing to be an STB 24AX. Special provisions relating to capital gains and losses 24AY. Losses from STB years not carried forward 24AYA. Effect of unfunded superannuation liabilities 24AZ. Meaning of period and prescribed excluded STB Division 1A--Provisions relating to certain 24B. Interpretation 24C. Territory resident 24D. Territory company 24E. Territory trusts 24F. Exemption from tax of certain income derived from sources outside Australia 24G. Exemption from tax of certain income derived from sources in a prescribed Territory 24H. When income to be taken to be applied for benefit of a person 24J. Source of dividends 24K. Source of income from employment 24L. Source of interest or royalty 24M. Certain income deemed not to be derived from sources in a prescribed Territory or outside Australia 24P. Transitional capital gains tax provisions for certain Cocos (Keeling) Islands assets Division 2--Income Subdivision A--Assessable income generally 25A. Assessable income to include certain profits 26AB. Assessable income--premium for lease 26AF. Assessable income to include value of benefits received from or in connection with former paragraph 23(ja) funds or former section 23FB funds 26AFA. Assessable income to include value of certain benefits received from or in connection with former section 23F funds 26AG. Certain film proceeds included in assessable income 26AH. Bonuses and other amounts received in respect of certain short-term life assurance policies 26AJ. Investment-related lottery winnings to be included in assessable income 26BB. Assessability of gain on disposal or redemption of traditional securities 26BC. Securities lending arrangements 26C. Disposal of certain securities 26E. Income from RSAs 27. Interest on loans raised in Australia by governments outside Australia Subdivision AA--Non-superannuation annuities etc 27H. Assessable income to include annuities and superannuation pensions Subdivision D--Dividends 43A. Subdivision has effect subject to provisions of Division 216 of the Income Tax Assessment Act 1997 43B. Application of Subdivision to non-share dividends 44. Dividends 45. Streaming of bonus shares and unfranked dividends 45A. Streaming of dividends and capital benefits 45B. Schemes to provide certain benefits 45BA. Effect of determinations under section 45B for demerger benefits 45C. Effect of determinations under sections 45A and 45B for capital benefits 45D. Determinations under sections 45A, 45B and 45C 46FA. Deduction for dividends on-paid to non-resident owner 46FB. Unfranked non-portfolio dividend account 47. Distributions by liquidator 47A. Distribution benefits--CFCs Division 3--Deductions Subdivision A--General 51AAA. Deductions not allowable in certain circumstances 51AD. Deductions not allowable in respect of property used under certain leveraged arrangements 51AEA. Meal entertainment--election under section 37AA of Fringe Benefits Tax Assessment Act 1986 to use 50/50 split method 51AEB. Meal entertainment--election under section 37CA of Fringe Benefits Tax Assessment Act 1986 to use the 12 week register method 51AEC. Entertainment facility--election under section 152B of Fringe Benefits Tax Assessment Act 1986 to use 50/50 split method 51AF. Car expenses incurred by employee 51AGA. No deduction to employee for certain car parking expenses 51AH. Deductions not allowable where expenses incurred by employee are reimbursed 51AJ. Deductions not allowable for private component of contributions for fringe benefits etc. 51AK. Agreements for the provision of non-deductible non-cash business benefits 52. Loss on property acquired for profit-making 52A. Certain amounts disregarded in ascertaining taxable income 63. Bad debts 63D. Bad debts etc. of money-lenders not allowable deductions where attributable to listed country or unlisted country branches 63E. Debt/equity swaps 63F. Limit on deductions where debt write offs and debt/equity swaps occur 63G. Bad debts etc. of trust not allowable in certain circumstances 65. Payments to associated persons and relatives 70B. Deduction for loss on disposal or redemption of traditional securities 73A. Expenditure on scientific research 73AA. Section 73A roll-over relief in the case of certain CGT roll-overs 78A. Certain gifts not to be allowable deductions 79A. Rebates for residents of isolated areas 79B. Rebates for members of Defence Force serving overseas 82. Double deductions 82A. Deductions for expenses of self-education Subdivision CB--Regional Headquarters 82C. Object 82CA. Deduction for setup costs of RHQ companies 82CB. Interpretation 82CC. Associated companies 82CD. Application to become an RHQ company 82CE. Determination of RHQ companies Subdivision D--Losses and outgoings incurred under certain tax avoidance schemes 82KH. Interpretation 82KJ. Deduction not allowable in respect of certain pre-paid outgoings 82KK. Schemes designed to postpone tax liability 82KL. Tax benefit not allowable in respect of certain recouped expenditure Subdivision H--Period of deductibility of certain advance expenditure 82KZL. Interpretation 82KZLA. Subdivision does not apply to financial arrangements to which Subdivision 250-E applies 82KZLB. How this Subdivision applies to deductible R&D expenditure incurred to associates in earlier income years 82KZM. Expenditure by small business entities and individuals incurring non-business expenditure 82KZMA. Application of section 82KZMD 82KZMD. Business expenditure and non-business expenditure by non-individual 82KZME. Expenditure under some agreements 82KZMF. Proportional deduction 82KZMG. Deductions for certain forestry expenditure 82KZMGA. Deductions for certain forestry expenditure 82KZMGB. CGT event in relation to interest in 82KZMG agreement 82KZN. Transfer etc. of rights under agreement 82KZO. Partnership changes where entire interest in agreement rights is not transferred Division 3A--Convertible notes 82LA. Application of Division 82L. Interpretation 82M. New loans and replacement loans 82N. Prescribed stock exchanges 82P. Bonus share allotments 82Q. Classes of shares 82R. Interest on certain convertible notes not to be an allowable deduction 82SA. Interest on certain convertible notes to be an allowable deduction--where loan made on or after 1 January 1976 82T. Value of shares Division 5--Partnerships 90. Interpretation 91. Liability of partnerships 92. Income and deductions of partner 92A. Deductions in respect of outstanding subsection 92(2AA) amounts 94. Partner not having control and disposal of share in partnership income Division 5A--Income of certain limited partnerships Subdivision A--Preliminary 94A. Object 94B. Interpretation 94C. Continuity of limited partnership not affected by changes in composition Subdivision B--Corporate limited partnerships 94D. Corporate limited partnerships 94E. Continuity of business test 94F. Change in composition of limited partnership--election that partnership not be treated as an eligible limited partnership 94G. Continuity of ownership test Subdivision C--Corporate tax modifications applicable to corporate limited partnerships 94H. Corporate tax modifications applicable to corporate limited partnerships 94J. Company includes corporate limited partnership 94K. Partnership does not include corporate limited partnership 94L. Dividend includes distribution of corporate limited partnership 94M. Drawings etc. deemed to be dividends paid out of profits 94N. Private company does not include corporate limited partnership 94P. Share includes interest in corporate limited partnership 94Q. Shareholder includes partner in corporate limited partnership 94R. Liquidator may include partner in corporate limited partnership 94S. Continuity of corporate limited partnership not affected by changes in composition 94T. Residence of corporate limited partnership 94U. Incorporation 94V. Obligations and offences 94X. Modification of loss provisions Division 6--Trust income 95AAA. Simplified outline of the relationship between this Division, Division 6E and Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997 95AAB. Adjustments under Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997--references in this Act to assessable income under section 97, 98A or 100 95AAC. Adjustments under Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997--references in this Act to liabilities under section 98, 99 or 99A 95. Interpretation 95AA. Division does not apply in relation to FHSA trust 95AB. Modifications for special disability trusts 95A. Special provisions relating to present entitlement 95B. Certain beneficiaries deemed not to be under legal disability 96. Trustees 97. Beneficiary not under any legal disability 97A. Beneficiaries who are owners of farm management deposits 98. Liability of trustee 98A. Non-resident beneficiaries assessable in respect of certain income 98B. Deduction from beneficiary's tax 99. Certain trust income to be taxed as income of an individual 99A. Certain trust income to be taxed at special rate 99B. Receipt of trust income not previously subject to tax 99C. Determining whether property is applied for benefit of beneficiary 99D. Refund of tax to non-resident beneficiary 99E. Later trust not taxed on income already taxed under subsection 98(4) 99G. Amounts covered by withholding requirement 99H. Late payments 100. Beneficiary assessable in respect of certain trust income 100AA. Failure to pay or notify present entitlement of exempt entity 100AB. Adjusted Division 6 percentage exceeding benchmark percentage: present entitlement of exempt entity 100A. Present entitlement arising from reimbursement agreement 101. Discretionary trusts 101A. Income of deceased received after death 102. Revocable trusts Division 6AAA--Special provisions relating to non-resident trust estates etc Subdivision A--Preliminary 102AAA. Object of Division 102AAB. Interpretation 102AAC. Each listed country and unlisted country to be treated as a separate foreign country 102AAD. Subject to tax--application of subsection 324(2) 102AAE. Listed country trust estates 102AAF. Public unit trusts 102AAG. When entity is in a position to control a trust estate 102AAH. Non-resident family trusts 102AAJ. Transfer of property or services 102AAK. Deemed transfers of property or services to trust estate 102AAL. Division not to apply to transfers by trustees of deceased estates Subdivision B--Payment of interest by taxpayer on distributions from certain non-resident trust estates 102AAM. Payment of interest by taxpayer on distributions from certain non-resident trust estates 102AAN. Collection etc. of interest Subdivision D--Accruals system of taxation of certain non-resident trust estates 102AAS. Object of Subdivision 102AAT. Accruals system of taxation--attributable taxpayer 102AAU. Attributable income of a trust estate 102AAV. Double tax agreements to be disregarded 102AAW. Certain provisions to be disregarded in calculating attributable income 102AAY. Modified application of trading stock provisions 102AAZ. Modified application of depreciation provisions 102AAZA. Modified application of Division 13 of Part III 102AAZB. General modifications--CGT 102AAZBA. Modified application of CGT--effect of certain changes of residence 102AAZC. Modified application of loss provisions--pre-1990-91 losses 102AAZD. Assessable income of attributable taxpayer to include attributable income of trust estate to which taxpayer has transferred property or services 102AAZE. Accruals system of taxation does not apply to small amounts 102AAZF. Only resident partners, beneficiaries etc. liable to be assessed as a result of attribution 102AAZG. Keeping of records Division 6AA--Income of certain children 102AA. Interpretation 102AB. Application of Division 102AC. Persons to whom Division applies 102AD. Taxable income to which Division applies 102AE. Eligible assessable income 102AF. Employment income and business income 102AG. Trust income to which Division applies 102AGA. Transfer of property as the result of a family breakdown Division 6A--Alienation of income 102A. Interpretation 102B. Certain income transferred for short periods to be included in assessable income of transferor 102C. Effect of certain transfers of rights to receive income from property 102CA. Consideration in respect of transfer to be included in assessable income of transferor in certain cases Division 6B--Income of certain unit trusts 102D. Interpretation 102E. Prescribed arrangements 102F. Eligible unit trusts 102G. Public unit trusts 102H. Resident unit trusts 102J. Corporate unit trusts 102K. Taxation of net income of corporate unit trust 102L. Modified application of Act in relation to certain unit trusts Division 6C--Income of certain public trading trusts 102M. Interpretation 102MA. Arrangements not covered 102MB. Investing in land 102MC. When trading business not carried on 102MD. Application of Division to trustees etc. of exempt life assurance funds and superannuation funds 102N. Trading trusts 102NA. Certain interposed trusts not trading trusts 102P. Public unit trusts 102Q. Resident unit trusts 102R. Public trading trusts 102S. Taxation of net income of public trading trust 102T. Modified application of Act in relation to certain unit trusts Division 6D--Provisions relating to certain closely held trusts Subdivision A--Overview 102UA. What this Division is about Subdivision B--Interpretation 102UB. Definitions--general 102UC. Closely held trust 102UD. Trustee beneficiary 102UE. Meaning of untaxed part 102UG. Correct TB statement 102UH. TB statement period 102UI. Tax-preferred amount 102UJ. Extended concept of present entitlement to capital of a trust Subdivision C--Trustee beneficiary non-disclosure tax on share of net income 102UK. Trustee beneficiary non-disclosure tax where no correct TB statement 102UL. Exclusion of directors of closely held trust from liability to pay tax 102UM. Trustee beneficiary non-disclosure tax where share is distributed to trustee of closely held trust Subdivision D--Payment etc 102UN. Amount of trustee beneficiary non-disclosure tax reduced by notional tax offset 102UO. Payment of trustee beneficiary non-disclosure tax 102UP. Late payment of trustee beneficiary non-disclosure tax 102UR. Notice of liability 102URA. Request for notice of liability 102US. Evidentiary effect of notice of liability 102USA. Recovery of trustee beneficiary non-disclosure tax from trustee beneficiaries providing incorrect information etc. to head trustee Subdivision E--Making correct TB statement about trustee beneficiaries of tax-preferred amounts 102UT. Requirement to make correct TB statement about trustee beneficiaries of tax-preferred amounts Subdivision F--Special provisions about tax file numbers 102UU. Trustee beneficiary may quote tax file number to trustee of closely held trust 102UV. Trustee of closely held trust may record etc. tax file number Division 6E--Adjustment of Division 6 assessable amount in relation to capital gains, franked distributions and franking credits 102UW. Application of Division 102UX. Adjustment of Division 6 assessable amount in relation to capital gains, franked distributions and franking credits 102UY. Interpretation Division 7--Private companies 102V. Application of Division to non-share dividends 103. Interpretation 103A. Private companies 109. Excessive payments to shareholders, directors and associates deemed to be dividends Division 7A--Distributions to entities connected with a private company Subdivision A--Overview of this Division 109B. Simplified outline of this Division Subdivision AA--Application of Division 109BA. Application of Division to non-share dividends 109BB. Application of Division to closely-held corporate limited partnerships 109BC. Application of Division to non-resident companies Subdivision B--Private company payments, loans and debt forgiveness are treated as dividends 109C. Payments treated as dividends 109CA. Payment includes provision of asset 109D. Loans treated as dividends 109E. Amalgamated loan from a previous year treated as dividend if minimum repayment not made 109F. Forgiven debts treated as dividends Subdivision C--Forgiven debts that are not treated as dividends 109G. Debt forgiveness that does not give rise to a dividend Subdivision D--Payments and loans that are not treated as dividends 109H. Simplified outline of this Subdivision 109J. Payments discharging pecuniary obligations not treated as dividends 109K. Inter-company payments and loans not treated as dividends 109L. Certain payments and loans not treated as dividends 109M. Loans made in the ordinary course of business on arm's length terms not treated as dividends 109N. Loans meeting criteria for minimum interest rate and maximum term not treated as dividends 109NA. Certain liquidator's distributions and loans not treated as dividends 109NB. Loans to purchase shares under employee share schemes not treated as dividends 109P. Amalgamated loans not treated as dividends in the year they are made 109Q. Commissioner may allow amalgamated loan not to be treated as dividend 109R. Some payments relating to loans not taken into account Subdivision DA--Demerger dividends not treated as dividends 109RA. Demerger dividends not treated as dividends Subdivision DB--Other exceptions 109RB. Commissioner may disregard operation of Division or allow dividend to be franked 109RC. Dividend may be franked if taken to be paid because of family law obligation 109RD. Commissioner may extend period for repayments of amalgamated loan Subdivision E--Payments and loans through interposed entities 109S. Simplified outline of this Subdivision 109T. Payments and loans by a private company to an entity through one or more interposed entities 109U. Payments and loans through interposed entities relying on guarantees 109UA. Certain liabilities under guarantees treated as payments 109V. Amount of private company's payment to target entity through one or more interposed entities 109W. Private company's loan to target entity through one or more interposed entities 109X. Operation of Subdivision D in relation to payment or loan Subdivision EA--Unpaid present entitlements 109XA. Payments, loans and debt forgiveness by a trustee in favour of a shareholder etc. of a private company with an unpaid present entitlement 109XB. Amounts included in assessable income 109XC. Modifications 109XD. Forgiveness of loan debt does not give rise to assessable income if loan gives rise to assessable income 109XE. Simplified outline of this Subdivision 109XF. Payments through interposed entities 109XG. Loans through interposed entities 109XH. Amount and timing of payment or loan through interposed entities 109XI. Entitlements to trust income through interposed trusts Subdivision F--General rules applying to all amounts treated as dividends 109Y. Proportional reduction of dividends so they do not exceed distributable surplus 109Z. Characteristics of dividends taken to be paid under this Division 109ZA. No dividend taken to be paid for withholding tax purposes 109ZB. Amount treated as dividend is not a fringe benefit 109ZC. Treatment of dividend that is reduced on account of an amount taken under this Division to be a dividend 109ZCA. Treatment of dividend that is reduced on account of an amount included in assessable income under Subdivision EA Subdivision G--Defined terms 109ZD. Defined terms 109ZE. Interpretation rules about entities Division 9--Co-operative and mutual companies 117. Co-operative companies 118. Company not co-operative if less than 90% of business with members 119. Sums received to be taxed 120. Deductions allowable to co-operative company 121. Mutual insurance associations Division 9AA--Demutualisation of insurance companies and affiliates Subdivision A--What this Division is about 121AA. What this Division is about Subdivision B--Key concepts and related definitions 121AB. Insurance company definitions 121AC. Mutual affiliate company 121AD. Demutualisation and demutualisation resolution day 121AE. Demutualisation methods, the policyholder/member group and the listing period 121AEA. Replacement of policyholders by persons exercising certain rights 121AF. Demutualisation method 1 121AG. Demutualisation method 2 121AH. Demutualisation method 3 121AI. Demutualisation method 4 121AJ. Demutualisation method 5 121AK. Demutualisation method 6 121AL. Demutualisation method 7 121AM. Embedded value of a mutual life insurance company 121AN. Net tangible asset value of a general insurance company or mutual affiliate company 121AO. Treasury bond rate, capital reserve adequacy level, eligible actuary and security 121AP. Subsidiary and wholly-owned subsidiary 121AQ. Other definitions 121AR. List of definitions Subdivision C--Tax consequences of demutualisation 121AS. CGT consequences of demutualisation 121AT. Other tax consequences of demutualisation 121AU. This Subdivision does not apply to demutualisation of friendly society health or life insurers Division 9A--Offshore banking units Subdivision A--Object and simplified outline 121A. Object 121B. Simplified outline Subdivision B--Interpretation 121C. Interpretation 121D. Meaning of OB activity 121DA. Meaning of expressions relevant to investment activity 121E. Meaning of offshore person 121EA. OBU requirement 121EB. Internal financial dealings of an OBU 121EC. Meaning of OBU resident-owner money 121ED. Meaning of trade with a person 121EE. Definitions relating to assessable income of an OBU 121EF. Definitions relating to allowable deductions of an OBU Subdivision C--Operative provisions 121EG. Reduction of assessable OB income, allowable OB deductions and foreign income tax paid 121EH. Loss of special treatment where excessive use of non-OB money 121EJ. Source of income derived from OB activities 121EK. Deemed interest on 90% of certain OBU resident-owner money 121EL. Exemption of income etc. of OBU offshore investment trusts 121ELA. Exemption of income etc. of overseas charitable institutions 121ELB. Adjustment of capital gains and losses from disposal of units in OBU offshore investment trusts Division 9C--Assessable income diverted under certain tax avoidance schemes 121F. Interpretation 121G. Diverted income and diverted trust income 121H. Assessment of diverted income and diverted trust income 121J. Ascertainment of diverted income or diverted trust income deemed to be an assessment 121K. Application of International Tax Agreements Act 121L. Division applies notwithstanding exemption under other laws Division 10E--PDFs Subdivision A--Shares in PDFs 124ZM. Treatment distributions to shareholders in PDF 124ZN. Exemption of income from sale of shares in a PDF 124ZO. Shares in a PDF are not trading stock 124ZQ. Effect of company becoming a PDF 124ZR. Effect of company ceasing to be a PDF Subdivision B--The taxable income of PDFs 124ZS. Definitions 124ZTA. Taxable income in first year as PDF if PDF component is nil 124ZT. SME assessable income 124ZU. SME income component 124ZV. Unregulated investment component Subdivision C--Adjustments of the tax treatment of capital gains and capital losses of PDFs 124ZW. Definitions 124ZX. Companies to which this Subdivision applies 124ZY. Classes of assessable income 124ZZ. Treatment of capital gains 124ZZA. Allocation of gain amounts and loss amounts to classes of assessable income 124ZZB. Assessable income etc. in relation to capital gains 124ZZD. No net capital loss Division 11--Interest paid by companies on bearer debentures 126. Interest paid by a company on bearer debentures 127. Credit for tax paid by company 128. Assessments of tax Division 11A--Dividends, interest and royalties paid to non-residents and to certain other persons Subdivision A--General 128AAA. Application of Division to non-share dividends 128A. Interpretation 128AA. Deemed interest in respect of transfers of certain securities 128AB. Certificates relating to issue price of certain securities 128AC. Deemed interest in respect of hire-purchase and certain other agreements 128AD. Indemnification etc. agreements in relation to bills of exchange and promissory notes 128AE. Interpretation provisions relating to offshore banking units 128AF. Payments through interposed entities 128B. Liability to withholding tax 128C. Payment of withholding tax 128D. Certain income not assessable 128F. Division does not apply to interest on certain publicly offered company debentures or debt interests 128FA. Division does not apply to interest on certain publicly offered unit trust debentures or debt interests 128GB. Division not to apply to interest payments on offshore borrowings by offshore banking units 128NA. Special tax payable in respect of certain securities and agreements 128NB. Special tax payable in respect of certain dealings by current and former offshore banking units 128NBA. Credits in respect of amounts assessed in relation to certain financial arrangements 128P. Objections 128Q. Power of Commissioner to obtain information 128R. Informal arrangements Division 11B--Equity investments in small-medium enterprises 128TG. Summary of this Division 128TH. When Division applies 128TI. Consequences of Division applying 128TJ. Acquiring a threshold interest in an SME 128TK. SME or small-medium enterprise 128TL. Subsidiary and direct ownership group Division 11C--Payments in respect of mining operations on Aboriginal land 128U. Interpretation 128V. Liability to mining withholding tax 128W. Payment of mining withholding tax 128X. Power of Commissioner to obtain information Division 12--Oversea ships 129. Taxable income of ship-owner or charterer 130. Master or agent to make return 131. Determination by Commissioner 132. Assessment of tax 133. Master liable to pay 134. Notice of assessment 135. Clearance of ship 135A. Freights payable under certain agreements Division 13--International agreements and determination of source of certain income 136AA. Interpretation 136AB. Operation of Division 136AC. International agreements 136AD. Arm's length consideration deemed to be received or given 136AE. Determination of source of income etc. 136AF. Consequential adjustments to assessable income and allowable deductions Division 15--Insurance with non-residents 141. Interpretation 142. Income derived by non-resident insurer 143. Taxable income of non-resident insurer 144. Liability of agents of insurer 145. Deduction of premiums 146. Exporter to furnish information 147. Rate of tax in special circumstances 148. Reinsurance with non-residents Division 16--Averaging of incomes 149. Average income 149A. Capital gains, abnormal income and certain death benefits to be disregarded 150. First average year 151. First application of Division in relation to a taxpayer 152. Taxpayer not in receipt of assessable income 153. Taxpayer with no taxable income 154. Excess of allowable deductions 155. Permanent reduction of income 156. Rebate of tax for, or complementary tax payable by, certain primary producers 157. Application of Division to primary producers 158. Application of Division 158A. Election that Division not apply Division 16D--Certain arrangements relating to the use of property 159GE. Interpretation 159GEA. Division applies to certain State/Territory bodies 159GF. Residual amounts 159GG. Qualifying arrangements 159GH. Application of Division in relation to property 159GJ. Effect of application of Division on certain deductions etc. 159GK. Effect of application of Division on assessability of arrangement payments 159GL. Special provision relating to Division 10C or 10D property 159GM. Special provision where cost of plant etc. is also eligible capital expenditure 159GN. Effect of use of property under qualifying arrangement for producing assessable income 159GO. Special provisions relating to partnerships Division 16E--Accruals assessability etc 159GP. Interpretation 159GQ. Tax treatment of holder of qualifying security 159GQA. Accrual period 159GQB. Accrual amount 159GQC. Implicit interest rate for fixed return security 159GQD. Implicit interest rate for variable return security 159GR. Consequences of actual payments 159GS. Balancing adjustments on transfer of qualifying security 159GT. Tax treatment of issuer of a qualifying security 159GU. Effect of Division on certain transfer profits and losses 159GV. Consequence of variation of terms of security 159GW. Effect of Division in relation to non-residents 159GX. Effect of Division where certain payments not assessable 159GY. Effect of Division where qualifying security is trading stock 159GZ. Stripped securities Division 16J--Effect of cancellation of subsidiary's shares in holding company 159GZZZC. Interpretation--general 159GZZZD. Meaning of eligible entity, eligible interest and eligible proportion 159GZZZE. Share cancellations to which this Division applies 159GZZZF. Effect on subsidiary of share cancellations to which this Division applies 159GZZZG. Pre-cancellation disposals of eligible interests 159GZZZH. Post-cancellation disposals of eligible interests etc. 159GZZZI. Additional application of sections 159GZZZG and 159GZZZH to associates Division 16K--Effect of buy-backs of shares Subdivision AA--Application of Division to non-share equity interests 159GZZZIA. Application of Division to non-share dividends Subdivision A--Interpretation 159GZZZJ. Interpretation 159GZZZK. Explanation of terms 159GZZZL. Special buy-backs not made in ordinary course of trading on a stock exchange 159GZZZM. Purchase price in respect of buy-back Subdivision B--Company buying-back shares 159GZZZN. Buy-back and cancellation disregarded for certain purposes Subdivision C--Off-market purchases 159GZZZP. Part of off-market purchase price is a dividend 159GZZZQ. Consideration in respect of off-market purchase Subdivision D--On-market purchases 159GZZZR. No part of on-market purchase price is a dividend 159GZZZS. Consideration in respect of on-market purchase Division 16L--Tax-exempt infrastructure borrowings 159GZZZZD. Interpretation 159GZZZZE. Infrastructure borrowings to be non-assessable and non-deductible 159GZZZZF. Tax exemption to be disregarded for certain purposes 159GZZZZG. Rebate election 159GZZZZH. Tax payable where infrastructure borrowing certificate cancelled Division 17--Rebates Subdivision A--Concessional rebates 159H. Application 159HA. Indexation for the purposes of sections 159J, 159L and 159P 159J. Rebates for dependants 159JA. Rebates for dependants--reduction because of certain other benefits 159K. Sole parent rebate 159L. Rebates for housekeepers 159LA. Rebates for housekeepers--reduction because of certain other benefits 159M. Double concessional rebates 159N. Rebate for certain low-income taxpayers 159P. Rebate for medical expenses Subdivision AB--Lump sum payments in arrears 159ZR. Interpretation 159ZRA. Eligibility for rebate 159ZRB. Calculation of rebate 159ZRC. Notional tax amount for recent accrual years 159ZRD. Notional tax amount for distant accrual years Subdivision B--Miscellaneous 160AAAA. Tax rebate for low income aged persons 160AAAB. Tax rebate for low income aged persons--trustees assessed under section 98 160AAA. Rebate in respect of certain pensions, benefits etc. 160AAB. Rebate in respect of amounts assessable under section 26AH 160AD. Maximum amount of rebates 160ADA. Most tax offsets under the 1997 Assessment Act are treated as rebates PART IIIB--AUSTRALIAN BRANCHES OF FOREIGN BANKS Division 1--Preliminary 160ZZVA. Object 160ZZVB. Application 160ZZV. Definitions 160ZZW. Certain provisions to apply as if Australian branch of foreign bank were a separate legal entity Division 2--Provisions relating to income tax 160ZZX. Income of branch to have Australian source 160ZZZ. Notional borrowing by branch from bank 160ZZZA. Notional payment of interest by branch to bank 160ZZZC. Offshore banking units 160ZZZE. Notional derivative transactions between branch and bank 160ZZZF. Notional foreign exchange transactions between branch and bank 160ZZZG. Losses 160ZZZH. Net capital losses 160ZZZI. Certain transactions to be disregarded Division 3--Provisions relating to withholding tax 160ZZZJ. Withholding tax on interest paid by branch to bank Division 4--Extension of Part to Australian branches of foreign financial entities 160ZZZK. Treatment like Australian branches of foreign banks PART IV--RETURNS AND ASSESSMENTS 161. Annual returns 161A. Form and content of returns 161AA. Contents of returns of full self-assessment taxpayers 161G. Tax agent to give taxpayer copy of notice of assessment 162. Further returns and information 163. Special returns 163A. Late lodgement penalty--relevant entities, instalment taxpayers and full self-assessment taxpayers 163AA. General interest charge on unpaid penalty 163B. Late lodgment of returns by persons other than relevant entities, instalment taxpayers and full self-assessment taxpayers 164. Returns deemed to be duly made 166. Assessment 166A. Deemed assessment 167. Default assessment 168. Special assessment 169. Assessments on all persons liable to tax 169AA. Consolidated assessments 169A. Reliance by Commissioner on returns and statements 170. Amendment of assessments 170C. Power of Commissioner to reduce amount of tax payable in certain cases 171. Where no notice of assessment served 171A. Limited period to make assessments for nil liability returns for the 2003-04 year of income or earlier 172. Refunds of amounts overpaid 173. Amended assessment to be an assessment 174. Notice of assessment 175. Validity of assessment 175A. Objections against assessments 176. Judicial notice of signature 177. Evidence PART IVA--SCHEMES TO REDUCE INCOME TAX 177A. Interpretation 177B. Operation of Part 177C. Tax benefits 177CA. Withholding tax avoidance 177D. Schemes to which Part applies 177E. Stripping of company profits 177EA. Creation of franking debit or cancellation of franking credits 177EB. Cancellation of franking credits--consolidated groups 177F. Cancellation of tax benefits etc. 177G. Amendment of assessments PART VA--TAX FILE NUMBERS Division 1--Preliminary 202. Objects of this Part 202A. Interpretation 202AA. Definition of eligible PAYG payment Division 2--Issuing of tax file numbers 202B. Application for tax file number 202BA. Issuing of tax file numbers 202BB. Current tax file number 202BC. Deemed refusal by Commissioner 202BD. Interim notices 202BE. Cancellation of tax file numbers 202BF. Alteration of tax file numbers Division 3--Quotation of tax file numbers by recipients of eligible PAYG payments 202C. TFN declarations by recipients of eligible PAYG payments 202CA. Operation of TFN declaration 202CB. Quotation of tax file number in TFN declaration 202CC. Making a replacement TFN declaration in place of an ineffective declaration 202CD. Sending of TFN declaration to Commissioner 202CE. Effect of incorrect quotation of tax file number 202CF. Payer must notify Commissioner if no TFN declaration by recipient Division 4--Quotation of tax file numbers in connection with certain investments 202D. Explanation of terms: investment, investor, investment body 202DA. Phasing-in period for Division 202DB. Quotation of tax file numbers in connection with investments 202DC. Method of quoting tax file number 202DD. Investor excused from quoting tax file number in certain circumstances 202DDB. Quotation of tax file number in connection with indirectly held investment 202DE. Securities dealer to inform the investment body of tax file number 202DF. Effect of incorrect quotation of tax file number 202DG. Investments held jointly 202DH. Tax file number quoted for superannuation or surcharge purposes taken to be quoted for purposes of the taxation of eligible termination payments 202DHA. Tax file number quoted for Division 3 purposes taken to have been quoted for superannuation purposes 202DI. Tax file number quoted for RSA purposes taken to be quoted for purposes of the taxation of superannuation benefits 202DJ. Tax file number quoted for purposes of taxation of superannuation benefits taken to be quoted for surcharge purposes Division 4A--Quotation of tax file numbers in connection with farm management deposits 202DL. Quotation of tax file number 202DM. Effect of incorrect quotation of tax file number Division 4B--Quotation of tax file numbers in connection with certain closely held trusts 202DN. Application of Division 202DO. Quotation of tax file numbers 202DP. Trustee must report quoted tax file numbers 202DR. Effect of incorrect quotation of tax file number Division 5--Exemptions 202EA. Persons receiving certain pensions etc.--employment 202EB. Persons receiving certain pensions etc.--investments 202EC. Entities not required to lodge income tax returns 202EE. Non-residents 202EF. Territory residents etc. 202EG. Manner of completing declarations 202EH. Declarations under this Division to be retained in certain circumstances Division 6--Review of decisions 202F. Review of decisions 202FA. Statements to accompany notification of decisions Division 7--Manner of providing information 202G. Transmission of information in accordance with specifications PART VIIB--MEDICARE LEVY AND MEDICARE LEVY SURCHARGE 251R. Interpretation 251S. Medicare levy 251T. Levy (other than certain levy increases) not payable by prescribed persons or by certain trustees 251U. Prescribed persons 251V. Subsections 251R(4), (5), (6B), (6C) and (6D) not to apply to certain medicare levy increases 251VA. Subsection 251U(3) not to apply for certain medicare levy increases 251W. Regulations 251X. Notice of assessment to set out Medicare levy and surcharge 251Z. Administration of Medicare levy surcharge Act PART VIII--MISCELLANEOUS 252. Public officer of company 252A. Public officer of trust estate 254. Agents and trustees 255. Person in receipt or control of money from non-resident 257. Payment of tax by banker 260. Contracts to evade tax void 262. Periodical payments in the nature of income 262A. Keeping of records [see Note 3] 263. Access to books etc. 264. Commissioner may require information and evidence 264A. Offshore information notices 264BB. Commissioner may require private health insurers to provide information 265A. Release of liability of members of the Defence Force on death 265B. Notices in relation to certain securities 266. Regulations PART X--ATTRIBUTION OF INCOME IN RESPECT OF CONTROLLED FOREIGN COMPANIES Division 1--Preliminary 316. Object of Part 317. Interpretation 318. Associates 319. Statutory accounting period of a company 320. Listed countries and unlisted countries 321. Each listed country and each unlisted country to be treated as a separate foreign country 322. Meaning of entitled to acquire 323. State foreign taxes may be treated as federal foreign taxes 324. When income or profits subject to tax in a listed country 325. When dividends etc. taxed in a country at normal company tax rate 326. AFI subsidiary 327. Eligible finance shares 327A. Widely distributed finance shares 327B. Transitional finance shares 328. Non-resident family trusts 329. Public unit trusts 330. Tax detriment 331. Company deemed to be treated as a resident of a listed country or an unlisted country for the purposes of the tax law of that country 332. Companies that are residents of listed countries 332A. Companies that are residents of section 404 countries 333. Companies that are residents of unlisted countries 334A. Voting interests in companies 335. References extend to pre-commencement matters and things Division 2--Types of entity Subdivision A--Australian entities 336. Australian entity 337. Australian partnership 338. Australian trust Subdivision B--Controlled foreign entities 339. Controlled foreign entity (CFE) 340. Controlled foreign company (CFC) 341. Controlled foreign partnership (CFP) 342. Controlled foreign trust (CFT) Subdivision C--Eligible transferors in relation to trusts 343. Interpretation 344. References to transfer of property or services 345. Deemed transfers of property or services 346. Circumstances in which a transfer of property or services is an eligible business transaction 347. Eligible transferor in relation to a discretionary trust 348. Eligible transferor in relation to a non-discretionary trust or a public unit trust Division 3--Control interests, attribution interests, attributable taxpayers and attribution percentages Subdivision A--Control interests 349. Associate-inclusive control interest in a company or trust 350. Direct control interest in a company 351. Direct control interest in a trust 352. Indirect control interest in a company or trust 353. Control tracing interest in a company 354. Control tracing interest in a CFP 355. Control tracing interest in a CFT Subdivision B--Attribution interests 356. Direct attribution interest in a CFC or CFT 357. Indirect attribution interest in a CFC or CFT 358. Attribution tracing interest in a CFC 359. Attribution tracing interest in a CFP 360. Attribution tracing interest in a CFT Subdivision C--Attributable taxpayers and attribution percentages 361. Attributable taxpayer in relation to a CFC or a CFT 362. Attribution percentage of an attributable taxpayer Division 4--Attribution accounts 363. Attribution account entity 364. Attribution account percentage 365. Attribution account payment 366. Direct attribution account interest in a company 367. Direct attribution account interest in a partnership 368. Direct attribution account interest in a trust 369. Indirect attribution account interest in an entity 370. Attribution surplus 371. Attribution credit 372. Attribution debit 373. Grossed-up amount of an attribution debit Division 7--Calculation of attributable income of CFC Subdivision A--Basic principles 381. Separate attributable income for each attributable taxpayer 382. Attributable income is taxable income calculated on certain assumptions 383. Basic assumptions 384. Additional assumption for unlisted country CFC 385. Additional assumption for listed country CFC 386. Adjusted tainted income 387. Reduction of attributable income because of interim dividends Subdivision B--General modifications of Australian tax law 388. Double tax agreements to be disregarded 389. Certain provisions to be disregarded in calculating attributable income 389A. Other provisions to be disregarded in calculating attributable income 390. Elections to be made by eligible taxpayer 392. Notional assessable amounts are to be pre-tax 393. Notional allowable deduction for taxes paid 394. Notional allowable deduction for eligible finance share dividends, widely distributed finance share dividends and transitional finance share dividends 395. Expenditure incurred to produce income or profits in later statutory accounting periods 396. Modified application of sections 25A and 52 397. Modified application of trading stock provisions 398. Modified application of depreciation provisions 398A. Application of Division 3A of Part III 399. Modifications of net income of partnerships and trusts 399A. Modified application of bad debt etc. provisions 400. Modified application of Division 13 of Part III 401. Reduction of disposal consideration or capital proceeds if attributed income not distributed 402. Additional notional exempt income--unlisted or listed country CFC 403. Additional notional exempt income--unlisted country CFC 404. Additional notional exempt income--listed or section 404 country CFC Subdivision C--Modifications relating to Australian capital gains tax 405. Interpretation 406. Meaning of commencing day and commencing day asset 408. Certain capital gains and losses disregarded 408A. Certain events before commencing day ignored 409. Losses before 30 June 1990 to be disregarded 410. General modifications--CGT 411. Commencing day assets taken to have been acquired on commencing day 412. Cost base of commencing day asset 413. Adjustment of cost base as at commencing day--return of capital 414. Exercise of rights 418. Options 418A. Effect of change of residence from Australia to listed or unlisted country 419. Modified application of Subdivision 126-B of the Income Tax Assessment Act 1997 421. Elections under CGT roll-over provisions 422. Adjustment of capital proceeds where change of residence by eligible CFC from unlisted to listed country 423. Adjustment of capital proceeds where section 47A applies to rolled-over assets Subdivision D--Modifications relating to losses 425. Sometimes-exempt income etc. 426. Creation of loss 427. Certain provisions to be disregarded 428. Subdivision to apply as if there were always a requirement to calculate attributable income 429. Notional allowable deduction for (sometimes-exempt income) loss 431. Deduction etc. for previous period loss Division 8--Active income test Subdivision A--Basic conditions for passing the active income test 432. Active income test Subdivision B--Tainted income ratio 433. Tainted income ratio 434. Gross turnover 435. Gross tainted turnover 436. Amounts excluded from active income test Subdivision C--Treatment of partnership income 437. Treatment of partnership income Subdivision D--General interpretive provisions 438. Roll-overs--asset disposals 439. When currency exchange gains or losses relate to active income transactions 440. Asset disposals--revaluations and arm's length amounts 441. Hire-purchase and other property financing transactions 442. Assumption of rights of lender under a loan 443. Net tainted commodity gains 444. Net tainted currency exchange gains 445. Net gains--disposal of tainted assets Subdivision E--Passive income, tainted sales income and tainted services income 446. Passive income 447. Tainted sales income 448. Tainted services income Subdivision F--Special rules relating to AFI subsidiaries carrying on financial intermediary business 449. AFI subsidiaries--interest income 450. AFI subsidiaries--asset disposals and currency transactions Subdivision G--Substantiation requirements 451. Active income test--substantiation requirements for company 452. Active income test--substantiation requirements for partnership 453. Active income test--substantiation requirements for attributable taxpayer 454. Assessment on assumption--retention of accounts etc. and compliance with information notices 455. Amendment of assessments Division 9--Attribution of attributable income and other amounts 456. Assessability in respect of CFC's attributable income 456A. Reduction of section 456 assessability where item subject to foreign accruals tax 457. Assessability where CFC changes residence from unlisted country to listed country or to Australia 459A. Assessability where CFC or CFT has interest in certain attributable taxpayers 460. Only resident partners, beneficiaries etc. liable to be assessed as a result of attribution 460A. Effect of reducing section CGT event J1 amount Division 10--Post-attribution asset disposals 461. Reduction of disposal consideration or capital proceeds if attributed income not distributed Division 11--Keeping of records 462. Keeping of records--section 456 462A. Keeping of records--section 457 464A. Keeping of records--section 459A 465. Offence of failing to keep records 466. Manner in which records required to be kept 467. Circumstances where records not required to be kept--reasonable excuse etc. 468. Treatment of partnerships SCHEDULE 2 SCHEDULE 2D Tax exempt entities that become taxable [see Note 2] SCHEDULE 2F Trust losses and other deductions SCHEDULE 2H Demutualisation of mutual entities other than insurance companies and health insurers [see Note 2] INCOME TAX ASSESSMENT ACT 1936 - LONG TITLE An Act to consolidate and amend the law relating to the imposition assessment and collection of a tax upon incomes INCOME TAX ASSESSMENT ACT 1936 - SECT 1 Short title [see Note 1] This Act may be cited as the Income Tax Assessment Act 1936. INCOME TAX ASSESSMENT ACT 1936 - SECT 6 Interpretation (1AA) So far as a provision of the Income Tax Assessment Act 1936 gives an expression a particular meaning, the provision does not also have effect for the purposes of the Income Tax Assessment Act 1997 (the 1997 Act), or for the purposes of Schedule 1 to the Taxation Administration Act 1953, except as provided in the 1997 Act or in that Schedule. (1) In this Act, unless the contrary intention appears: 100% subsidiary has the same meaning as in the Income Tax Assessment Act 1997. "adjusted fringe benefits total" of a taxpayer for a year of income is the amount worked out using the formula:where: "FBT rate" is the rate of tax set by the Fringe Benefits Tax Act 1986 for the FBT year (as defined in the Fringe Benefits Tax Assessment Act 1986) beginning on the 1 April just before the start of the year of income. "AFOF" means an Australian venture capital fund of funds within the meaning of subsection 118-410(3) of the Income Tax Assessment Act 1997. "agent": this Act applies to some entities (within the meaning of the Income Tax Assessment Act 1997) that are not agents in the same way as it applies to agents: see section 960-105 of the Income Tax Assessment Act 1997. "Agriculture Secretary" has the meaning given by the Income Tax Assessment Act 1997. "allowable deduction has the same meaning as deduction" has in the Income Tax Assessment Act 1997. "amount paid-up" on a share means the amount (if any), including any premium, paid on that share. "amount unpaid" on a share means the amount (if any) unpaid on that share. "apportionable deductions" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "approved form" has the meaning given by section 388-50 in Schedule 1 to the Taxation Administration Act 1953. "approved stock exchange" has the same meaning as in the Income Tax Assessment Act 1997. "Arts Department" has the meaning given by the Income Tax Assessment Act 1997. "Arts Minister" has the meaning given by the Income Tax Assessment Act 1997. "Arts Secretary" has the meaning given by the Income Tax Assessment Act 1997. "assessable income" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "assessment" means: (a) the ascertainment of the amount of taxable income (or that there is no taxable income) and of the tax payable on that taxable income (or that no tax is payable); or Note 1: A taxpayer does not have a taxable income if the taxpayer's deductions equal or exceed the taxpayer's assessable income: see subsection 4-15(1) of the Income Tax Assessment Act 1997. Note 2: A taxpayer may have no tax payable on an amount of taxable income if that income is below the tax-free threshold or if the taxpayer's tax offsets reduce the taxpayer's basic income tax liability to nil. (b) for a taxpayer being the trustee of a unit trust that is a corporate unit trust within the meaning of section 102J--the ascertainment of the net income of the trust as defined by section 102D (or that there is no net income) and of the tax payable on that net income (or that no tax is payable); or (c) for a taxpayer being the trustee of a unit trust that is a public trading trust within the meaning of section 102R--the ascertainment of the net income of the trust as defined by section 102M (or that there is no net income) and of the tax payable on that net income (or that no tax is payable); or (d) for any other taxpayer that is the trustee of a trust estate but excluding a taxpayer that is the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust--the ascertainment of so much of the net income of the trust estate as is net income in respect of which the trustee is liable to pay tax (or that there is no net income in respect of which the trustee is so liable) and of the tax payable on that net income (or that no tax is payable); or (e) the ascertainment of the amount of interest payable under section 102AAM (about distributions from non-resident trust estates); or (f) the ascertainment of an amount of additional tax under section 128TE; or (g) the ascertainment of an amount of tax under section 159GZZZZH; or (h) the ascertainment of the amount of income tax payable on the no-TFN contributions income as defined by section 295-610 of the Income Tax Assessment Act 1997 (or that no tax is payable); or (i) the ascertainment of an amount of FHSA misuse tax (within the meaning of the Income Tax Assessment Act 1997) (or that no tax is payable). "Australian superannuation fund" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "bank or banker" includes, but is not limited to, a body corporate that is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959. "base interest rate" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "basic income tax liability" has the meaning given by section 4-10 of the Income Tax Assessment Act 1997. "business" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "capital gain" has the same meaning as in the Income Tax Assessment Act 1997. "capital loss" has the same meaning as in the Income Tax Assessment Act 1997. "capital proceeds" has the same meaning as in the Income Tax Assessment Act 1997. "CGT asset" has the same meaning as in the Income Tax Assessment Act 1997. "CGT event" has the same meaning as in the Income Tax Assessment Act 1997. "Chief Executive Centrelink" has the same meaning as in the Human Services (Centrelink) Act 1997. "child" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "Commissioner" means the Commissioner of Taxation. "Commonwealth education or training payment" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "Commonwealth securities" means bonds, debentures, stock or other securities issued under an Act, but does not include: (a) securities (not being securities to which paragraph (b) applies) issued in respect of a loan raised outside Australia unless there is in force a declaration by the Treasurer, published in the Gazette, that those securities shall be Commonwealth securities for the purposes of this Act; or (b) securities issued after 12 April 1976 by a bank. "company" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "complying approved deposit fund" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "complying superannuation fund" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "consolidated group" has the same meaning as in the Income Tax Assessment Act 1997. "constituent document", in relation to a company, means the memorandum and articles of association of the company, or any rules or other document constituting the company or governing its activities. "corporate limited partnership" has the meaning given by section 94D. "corporate tax entity" has the same meaning as in the Income Tax Assessment Act 1997. "corporate tax rate" has the same meaning as in the Income Tax Assessment Act 1997. "cost base" of a CGT asset has the same meaning as in the Income Tax Assessment Act 1997. "creditable acquisition" has the meaning given by section 195-1 of the GST Act. "debenture", in relation to a company, includes debenture stock, bonds, notes and any other securities of the company, whether constituting a charge on the assets of the company or not. "debt interest" has the same meaning as in the Income Tax Assessment Act 1997. "demerged entity" has the meaning given by section 125-70 of the Income Tax Assessment Act 1997. "demerger" has the meaning given by section 125-70 of the Income Tax Assessment Act 1997. "demerger allocation" means: (a) the total market value of the allocation represented by the ownership interests issued by the demerged entity in itself under a demerger to the owners of ownership interests in the head entity of the demerger group; or (b) the total market value of the allocation represented by the ownership interests disposed of by a member of a demerger group under a demerger to the owners of ownership interests in the head entity; or (c) the total of both of those market values. "demerger dividend" means that part of a demerger allocation that is assessable as a dividend under subsection 44(1) or that would be so assessable apart from subsections 44(3) and (4). "demerger group" has the meaning given by section 125-65 of the Income Tax Assessment Act 1997. "demerger subsidiary" has the meaning given by section 125-65 of the Income Tax Assessment Act 1997. "demerging entity" has the meaning given by section 125-70 of the Income Tax Assessment Act 1997. "depreciating asset" has the same meaning as in the Income Tax Assessment Act 1997. "Deputy Commissioner" means a Deputy Commissioner of Taxation. "distribution", when used in a franking context, has the same meaning as in the Income Tax Assessment Act 1997. "dividend" includes: (a) any distribution made by a company to any of its shareholders, whether in money or other property; and (b) any amount credited by a company to any of its shareholders as shareholders; but does not include: (d) moneys paid or credited by a company to a shareholder or any other property distributed by a company to shareholders (not being moneys or other property to which this paragraph, by reason of subsection (4), does not apply or moneys paid or credited, or property distributed for the redemption or cancellation of a redeemable preference share), where the amount of the moneys paid or credited, or the amount of the value of the property, is debited against an amount standing to the credit of the share capital account of the company; or (e) moneys paid or credited, or property distributed, by a company for the redemption or cancellation of a redeemable preference share if: (i) the company gives the holder of the share a notice when it redeems or cancels the share; and (ii) the notice specifies the amount paid-up on the share immediately before the cancellation or redemption; and (iii) the amount is debited to the company's share capital account; except to the extent that the amount of those moneys or the value of that property, as the case may be, is greater than the amount specified in the notice as the amount paid-up on the share; or (f) a reversionary bonus on a life assurance policy. Note: Subsection (4) sets out when paragraph (d) of this definition does not apply. Division 230 financial arrangement has the same meaning as in the Income Tax Assessment Act 1997. "dual resident investment company" has the meaning given by section 6F. "dwelling" has the meaning given by the Income Tax Assessment Act 1997. "Education Department" has the meaning given by the Income Tax Assessment Act 1997. "Education Secretary" has the meaning given by the Income Tax Assessment Act 1997. "eligible taxable income" has the meaning given by section 102AD. "Employment Secretary" has the meaning given by the Income Tax Assessment Act 1997. "employment termination payment" has the same meaning as in the Income Tax Assessment Act 1997. "equity holder" has the same meaning as in the Income Tax Assessment Act 1997. "equity interest" has the same meaning as in the Income Tax Assessment Act 1997. "ESVCLP" means an early stage venture capital limited partnership within the meaning of subsection 118-407(4) of the Income Tax Assessment Act 1997. "exempt entity" has the same meaning as in the Income Tax Assessment Act 1997. "exempt income" has the meaning given by section 6-20 of the Income Tax Assessment Act 1997. "Families Secretary" has the meaning given by the Income Tax Assessment Act 1997. "farm management deposit" has the meaning given by the Income Tax Assessment Act 1997. "FHSA" has the meaning given by the First Home Saver Accounts Act 2008. "FHSA trust" has the meaning given by the First Home Saver Accounts Act 2008. "FMD provider" has the meaning given by the Income Tax Assessment Act 1997. "foreign superannuation fund" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "foreign tax" has the meaning given by section 6AB. "frankable distribution" has the same meaning as in the Income Tax Assessment Act 1997. "franked part" of a distribution has the same meaning as in the Income Tax Assessment Act 1997. "franking credit" has the same meaning as in the Income Tax Assessment Act 1997. "franking debit" has the same meaning as in the Income Tax Assessment Act 1997. "franking deficit tax" has the same meaning as in the Income Tax Assessment Act 1997. "franking surplus" has the same meaning as in the Income Tax Assessment Act 1997. "franks with an exempting credit" has the same meaning as in the Income Tax Assessment Act 1997. "friendly society" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "friendly society dispensary" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "fringe benefit" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "full self-assessment taxpayer, for a year of income (the current year"), means any of the following: (a) a company; (b) the trustee of a trust that is a corporate unit trust in relation to the current year for the purposes of Division 6B of Part III; (c) the trustee of a trust that is a public trading trust in relation to the current year for the purposes of Division 6C of Part III; (d) the trustee of a complying approved deposit fund or a non-complying approved deposit fund in relation to the current year; (e) the trustee of a complying superannuation fund or a non-complying superannuation fund in relation to the current year; (f) the trustee of a pooled superannuation trust in relation to the current year; (g) the trustee of an FHSA trust in relation to the current year. Note: A corporate limited partnership is taken to be a company under section 94J, so it will fall within paragraph (a) of this definition. "fund payment" has the same meaning as in the Income Tax Assessment Act 1997. "general insurance company" has the same meaning as in the Income Tax Assessment Act 1997. "general insurance policy" has the same meaning as in the Income Tax Assessment Act 1997. "general interest charge" means the charge worked out under Part IIA of the Taxation Administration Act 1953. "general partner" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "GST Act" means the A New Tax System (Goods and Services Tax) Act 1999. "head company" of a consolidated group or a MEC group has the same meaning as in the Income Tax Assessment Act 1997. "head entity" of a demerger group has the meaning given by section 125-65 of the Income Tax Assessment Act 1997. "Health Department" has the meaning given by the Income Tax Assessment Act 1997. "Health Minister" has the meaning given by the Income Tax Assessment Act 1997. "Health Secretary" means the Secretary of the Health Department. "hold", in relation to an RSA, has the same meaning as in the Retirement Savings Accounts Act 1997. "holder", in relation to an RSA, has the same meaning as in the Retirement Savings Accounts Act 1997. "Housing Secretary" has the meaning given by the Income Tax Assessment Act 1997. "Immigration Department" means the Department that: (a) deals with matters arising under section 1 of the Migration Act 1958; and (b) is administered by the Immigration Minister. "Immigration Minister" means the Minister administering section 1 of the Migration Act 1958. "Immigration Secretary" means the Secretary of the Immigration Department. "income from personal exertion or income derived from personal exertion" means income consisting of earnings, salaries, wages, commissions, fees, bonuses, pensions, superannuation allowances, retiring allowances and retiring gratuities, allowances and gratuities received in the capacity of employee or in relation to any services rendered, the proceeds of any business carried on by the taxpayer either alone or as a partner with any other person, any amount received as a bounty or subsidy in carrying on a business, any amount that is included in the assessable income of the taxpayer by reason of section 393-10 of the Income Tax Assessment Act 1997, the income from any property where that income forms part of the emoluments of any office or employment of profit held by the taxpayer, and any profit arising from the sale by the taxpayer of any property acquired by the taxpayer for the purpose of profit-making by sale or from the carrying on or carrying out of any profit-making undertaking or scheme, but does not include: (a) interest, unless the taxpayer's principal business consists of the lending of money, or unless the interest is received in respect of a debt due to the taxpayer for goods supplied or services rendered by the taxpayer in the course of the taxpayer's business; or (b) rents, dividends or non-share dividends. "income from property or income derived from property" means all income not being income from personal exertion. "income tax or tax" means income tax imposed as such by any Act, as assessed under this Act, but, except in section 260, does not include mining withholding tax or withholding tax. "insurance business" has the same meaning as in the Insurance Act 1973. "insurance funds", in relation to a company, means all the Australian statutory funds of the company and all other funds maintained by the company in respect of the life assurance business of the company. "interest income", in relation to a taxpayer, means income consisting of interest, or a payment in the nature of interest, in respect of: (a) money lent, advanced or deposited; or (b) credit given; or (c) any other form of debt or liability; whether security is given or not, other than: (d) an amount to the extent to which it is a return on an equity interest in a company; or (e) interest derived by the taxpayer from a transaction directly related to the active conduct of a trade or business; or (f) interest derived by the taxpayer from carrying on a banking business or any other business whose income is principally derived from the lending of money; or (g) interest received by the taxpayer during a year of income from a foreign company, where: (i) at any time during the year of income, the taxpayer had (or would have had, if the taxpayer were a company and a resident), a voting interest, within the meaning of section 334A, amounting to at least 10% of the voting power, within the meaning of that section, in that company; and (ii) during the year of income or the preceding year of income, the company has not derived an amount of interest income exceeding 10% of the total profits derived by the company during the same year. "international tax sharing treaty": (a) means an agreement between Australia and another country under which Australia and the other country share tax revenues from activities undertaken in an area identified by or under the agreement; and (b) does not include an agreement within the meaning of the International Tax Agreements Act 1953. "life assurance company has the meaning given to life insurance company" by the Income Tax Assessment Act 1997. "life assurance policy has the meaning given to life insurance policy" by the Income Tax Assessment Act 1997. "life assurance premium has the meaning given to life insurance premium" by the Income Tax Assessment Act 1997. "limited partner" has the same meaning as in the Income Tax Assessment Act 1997. "limited partnership" has the same meaning as in the Income Tax Assessment Act 1997. "liquidator" means the person who, whether or not appointed as liquidator, is the person required by law to carry out the winding-up of a company. "loss year" has the same meaning as in the Income Tax Assessment Act 1997. "managed investment trust" has the same meaning as in the Income Tax Assessment Act 1997. "MEC group" has the same meaning as in the Income Tax Assessment Act 1997. "member" of a consolidated group or MEC group has the same meaning as in the Income Tax Assessment Act 1997. "member of a family tax benefit (Part B) family without shared care": a taxpayer is a member of a family tax benefit (Part B) family without shared care if: (a) the taxpayer, or the taxpayer's spouse while being the taxpayer's partner (within the meaning of the A New Tax System (Family Assistance) Act 1999), is eligible for family tax benefit at the Part B rate (within the meaning of that Act); and (b) clause 31 of Schedule 1 to that Act does not apply in respect of the Part B rate. "minerals" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "mining withholding tax" means income tax payable in accordance with section 128V. "mortgage" includes any charge, lien or encumbrance to secure the repayment of money. "mutual life assurance company" means a life assurance company the profits of which are divisible only among the policy holders. "natural resource" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "net capital gain" has the same meaning as in the Income Tax Assessment Act 1997. "net capital loss" has the same meaning as in the Income Tax Assessment Act 1997. "net GST" has the meaning given by section 995-1 of the Income Tax Assessment Act 1997. "net input tax credit" has the meaning given by section 995-1 of the Income Tax Assessment Act 1997. "non-assessable non-exempt income" has the meaning given by the Income Tax Assessment Act 1997. "non-complying approved deposit fund" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "non-complying superannuation fund" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "non-entity joint venture" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "non-equity share" has the same meaning as in the Income Tax Assessment Act 1997. "non-resident" means a person who is not a resident of Australia. "non-share capital account" has the same meaning as in the Income Tax Assessment Act 1997. "non-share capital return" has the same meaning as in the Income Tax Assessment Act 1997. "non-share distribution" has the same meaning as in the Income Tax Assessment Act 1997. "non-share dividend" has the same meaning as in the Income Tax Assessment Act 1997. "non-share equity interest" has the same meaning as in the Income Tax Assessment Act 1997. "once-only deduction": a deduction in a year of income in respect of a percentage of expenditure is a once-only deduction, in relation to the expenditure, if no deduction is allowable in respect of a percentage of the expenditure in any other year of income. "ordinary class" has the same meaning as in the Income Tax Assessment Act 1997. "ordinary income" has the same meaning as in the Income Tax Assessment Act 1997. "over-franking tax" has the same meaning as in the Income Tax Assessment Act 1997. "owner" of a farm management deposit has the meaning given by the Income Tax Assessment Act 1997. "ownership interest" has the meaning given by section 125-60 of the Income Tax Assessment Act 1997. "paid" in relation to dividends or non-share dividends includes credited or distributed. "paid-up share capital" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "parent" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "part of a distribution that is franked with an exempting credit" has the same meaning as in the Income Tax Assessment Act 1997. "part of a distribution that is franked with a venture capital credit" has the same meaning as in the Income Tax Assessment Act 1997. "partnership" has the same meaning as in the Income Tax Assessment Act 1997. "passive commodity gain, in relation to a taxpayer, in relation to a year of income, means a gain realised by the taxpayer in a year of income from disposing of a forward contract or a futures contract, or a right or option in respect of a forward contract or a futures contract, in respect of any thing (a commodity"): (a) that is capable of delivery under an agreement for its delivery; and (b) that is not an instrument creating or evidencing a chose in action; unless the contract, right or option relates to the carrying on by the taxpayer of a business: (c) of producing or processing the commodity; or (d) that involves the use of the commodity as a raw material in a production process. "passive income," in relation to a taxpayer, in relation to a year of income means: (a) dividends (within the meaning of this section) and non-share dividends paid to the taxpayer in the year of income; or (b) unit trust dividends (within the meaning of Division 6B or 6C) paid to the taxpayer in the year of income; or (c) a distribution made to the taxpayer in the year of income that is taken to be a dividend because of section 47; or (d) an amount that is taken to be a dividend paid to the taxpayer in the year of income because of section 47A or 108 or Division 7A of Part III; or (e) interest income derived by the taxpayer in the year of income; or (f) annuities derived by the taxpayer in the year of income; or (g) income derived by the taxpayer by way of rent (within the meaning of Part X) in the year of income; or (h) royalties derived by the taxpayer in the year of income; or (i) an amount derived by the taxpayer in the year of income as consideration for the assignment, in whole or in part, of any copyright, patent, design, trade mark or other like property or right; or (j) profits of a capital nature that accrued to the taxpayer in the year of income; or (k) passive commodity gains that accrued to the taxpayer in the year of income; or (l) an amount included in the assessable income of the taxpayer of the year of income under section 102AAZD, 456, 457 or 459A; but does not include: (m) an amount that arose from an asset necessarily held by the taxpayer in connection with an insurance business actively carried on by the taxpayer; or (n) an amount included in the taxpayer's assessable income under Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes). "PDF" (pooled development fund) means a company that is a PDF within the meaning of the Pooled Development Funds Act 1992, but does not include such a company in the capacity of a trustee. "PDF component", in relation to a company that becomes a PDF during the year of income and is still a PDF at the end of the year of income, means: (a) in a case where the amount that, if: (i) the period beginning at the start of the year of income and ending immediately before the company becomes a PDF were a year of income of the company; and (ii) the period (the PDF notional year) beginning when the company becomes a PDF and ending at the end of the year of income were a year of income of the company; and (iii) paragraph (c) of the definition of taxable income were omitted; would be the company's taxable income of the PDF notional year is $1 or more--that amount; or (b) otherwise--a nil amount. "permanent establishment", in relation to a person (including the Commonwealth, a State or an authority of the Commonwealth or a State), means a place at or through which the person carries on any business and, without limiting the generality of the foregoing, includes: (a) a place where the person is carrying on business through an agent; (b) a place where the person has, is using or is installing substantial equipment or substantial machinery; (c) a place where the person is engaged in a construction project; and (d) where the person is engaged in selling goods manufactured, assembled, processed, packed or distributed by another person for, or at or to the order of, the first-mentioned person and either of those persons participates in the management, control or capital of the other person or another person participates in the management, control or capital of both of those persons--the place where the goods are manufactured, assembled, processed, packed or distributed; but does not include: (e) a place where the person is engaged in business dealings through a bona fide commission agent or broker who, in relation to those dealings, acts in the ordinary course of his or her business as a commission agent or broker and does not receive remuneration otherwise than at a rate customary in relation to dealings of that kind, not being a place where the person otherwise carries on business; (f) a place where the person is carrying on business through an agent: (i) who does not have, or does not habitually exercise, a general authority to negotiate and conclude contracts on behalf of the person; or (ii) whose authority extends to filling orders on behalf of the person from a stock of goods or merchandise situated in the country where the place is located, but who does not regularly exercise that authority; not being a place where the person otherwise carries on business; or (g) a place of business maintained by the person solely for the purpose of purchasing goods or merchandise. Note: Subsection (6) treats a person as carrying on, at or through a permanent establishment that is a place described in paragraph (d) of this definition, the business of selling the goods manufactured, assembled, processed, packed or distributed by the other person as described in that paragraph. "person" has the same meaning as in the Income Tax Assessment Act 1997. "pooled superannuation trust" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "post FIF abolition credit" means a post FIF abolition credit arising under: (a) subsection 23AK(6); and (b) subsection 717-220(2) of the Income Tax Assessment Act 1997; and (c) subsection 717-255(2) of that Act. "post FIF abolition debit" means a post FIF abolition debit arising under: (a) subsection 23AK(2); and (b) subsection 23B(1); and (c) subsection 717-220(3) of the Income Tax Assessment Act 1997; and (d) subsection 717-255(3) of that Act. "post FIF abolition surplus" has the meaning given by section 23AK. "prescribed dual resident" means a company that satisfies either of the following conditions: (a) the first condition is that: (i) the company is a resident of Australia within the meaning of subsection 6(1); and (ii) there is an agreement (within the meaning of the International Tax Agreements Act 1953) in force in respect of a foreign country; and (iii) the agreement contains a provision that is expressed to apply where, apart from the provision, the company would, for the purposes of the agreement, be both a resident of Australia and a resident of the foreign country; and (iv) that provision has the effect that the company is, for the purposes of the agreement, a resident solely of the foreign country; (b) the alternative condition is that the company: (i) is a resident of Australia within the meaning of subsection 6(1) for no other reason than that it carries on business in Australia and has its central management and control in Australia; and (ii) it is also a resident of another country; and (iii) its central management and control is in another country. "primary production business" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "principal beneficiary of a special disability trust" has the same meaning as in the Income Tax Assessment Act 1997. "private company", in relation to a year of income, means a company that is a private company in relation to that year of income for the purposes of Division 7 of Part III. "proclaimed superannuation standards day" means 1 July 1990. "provider", in relation to an RSA, has the same meaning as in the Retirement Savings Accounts Act 1997. "prudential standards" has the same meaning as in the Income Tax Assessment Act 1997. "rebate income" of an individual for a year of income is the sum of: (a) the individual's taxable income for the year of income; and (b) the individual's reportable superannuation contributions for the year of income; and (c) the individual's total net investment loss for the year of income; and (d) the individual's adjusted fringe benefits total for the year of income. "recognised small credit union" has the meaning given by section 6H. "recognised medium credit union" has the meaning given by section 6H. "recognised large credit union" has the meaning given by section 6H. "reduced cost base" of a CGT asset has the same meaning as in the Income Tax Assessment Act 1997. "relative" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "reportable fringe benefits total" has the same meaning as in the Fringe Benefits Tax Assessment Act 1986. "reportable superannuation contributions" has the same meaning as in the Income Tax Assessment Act 1997. "Research Department" means the Department that: (a) deals with matters arising under section 1 of the Australian Research Council Act 2001; and (b) is administered by the Research Minister. "Research Minister" means the Minister administering section 1 of the Australian Research Council Act 2001. "Research Secretary" means the Secretary of the Research Department. "resident or resident of Australia" means: (a) a person, other than a company, who resides in Australia and includes a person: (i) whose domicile is in Australia, unless the Commissioner is satisfied that the person's permanent place of abode is outside Australia; (ii) who has actually been in Australia, continuously or intermittently, during more than one-half of the year of income, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and that the person does not intend to take up residence in Australia; or (iii) who is: (A) a member of the superannuation scheme established by deed under the Superannuation Act 1990; or (B) an eligible employee for the purposes of the Superannuation Act 1976; or (C) the spouse, or a child under 16, of a person covered by sub-subparagraph (A) or (B); and (b) a company which is incorporated in Australia, or which, not being incorporated in Australia, carries on business in Australia, and has either its central management and control in Australia, or its voting power controlled by shareholders who are residents of Australia. "resident trust for CGT purposes" has the same meaning as in the Income Tax Assessment Act 1997. "return" on a debt interest or equity interest has the same meaning as in the Income Tax Assessment Act 1997. "return of income" means a return of income, or of profits or gains of a capital nature, or of both income and such profits or gains. "royalty or royalties" includes any amount paid or credited, however described or computed, and whether the payment or credit is periodical or not, to the extent to which it is paid or credited, as the case may be, as consideration for: (a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark, or other like property or right; (b) the use of, or the right to use, any industrial, commercial or scientific equipment; (c) the supply of scientific, technical, industrial or commercial knowledge or information; (d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in paragraph (a), any such equipment as is mentioned in paragraph (b) or any such knowledge or information as is mentioned in paragraph (c); (da) the reception of, or the right to receive, visual images or sounds, or both, transmitted to the public by: (i) satellite; or (ii) cable, optic fibre or similar technology; (db) the use in connection with television broadcasting or radio broadcasting, or the right to use in connection with television broadcasting or radio broadcasting, visual images or sounds, or both, transmitted by: (i) satellite; or (ii) cable, optic fibre or similar technology; (dc) the use of, or the right to use, some or all of the part of the spectrum (within the meaning of the Radiocommunications Act 1992) specified in a spectrum licence issued under that Act; (e) the use of, or the right to use: (i) motion picture films; (ii) films or video tapes for use in connexion with television; or (iii) tapes for use in connexion with radio broadcasting; or (f) a total or partial forbearance in respect of: (i) the use of, or the granting of the right to use, any such property or right as is mentioned in paragraph (a) or any such equipment as is mentioned in paragraph (b); (ii) the supply of any such knowledge or information as is mentioned in paragraph (c) or of any such assistance as is mentioned in paragraph (d); (iia) the reception of, or the granting of the right to receive, any such visual images or sounds as are mentioned in paragraph (da); (iib) the use of, or the granting of the right to use, any such visual images or sounds as are mentioned in paragraph (db); (iic) the use of, or the granting of the right to use, some or all of such part of the spectrum specified in a spectrum licence as is mentioned in paragraph (dc); or (iii) the use of, or the granting of the right to use, any such property as is mentioned in paragraph (e). "RSA" has the same meaning as in the Income Tax Assessment Act 1997.Note: That Act defines RSA as having the meaning given by the Retirement Savings Accounts Act 1997. "RSA provider" has the same meaning as in the Income Tax Assessment Act 1997.Note: That Act defines RSA provider as having the same meaning as in the Retirement Savings Accounts Act 1997. "Second Commissioner" means a Second Commissioner of Taxation. "share" in a company has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "share capital account" has the same meaning as in the Income Tax Assessment Act 1997. "shareholder" includes member or stockholder. "shareholders' funds" has the same meaning as in the Life Insurance Act 1995. "shortfall interest charge" means the charge worked out under Division 280 in Schedule 1 to the Taxation Administration Act 1953. "small business entity" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "social security law" has the meaning given by the Social Security Act 1991. "special disability trust" has the same meaning as in the Income Tax Assessment Act 1997. "spouse" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "subsidiary member" of a consolidated group or a MEC group has the same meaning as in the Income Tax Assessment Act 1997. "superannuation benefits" means individual personal benefits, pensions or retiring allowances. "superannuation fund" means: (a) a scheme for the payment of superannuation benefits upon retirement or death; or (b) a superannuation fund within the definition of superannuation fund in section 10 of the Superannuation Industry (Supervision) Act 1993. "superannuation fund for foreign residents" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "superannuation lump sum" has the same meaning as in the Income Tax Assessment Act 1997. "tainted", in relation to a company's share capital account, has the same meaning as in the Income Tax Assessment Act 1997. "taxable Australian property" has the same meaning as in the Income Tax Assessment Act 1997. "taxable income" has the same meaning as in the Income Tax Assessment Act 1997. "taxable supply" has the meaning given by section 195-1 of the GST Act. "tax cost is set" has the same meaning as in the Income Tax Assessment Act 1997. "tax loss" has the same meaning as in the Income Tax Assessment Act 1997. "taxpayer" means a person deriving income or deriving profits or gains of a capital nature. "this Act" includes: (a) the Income Tax Assessment Act 1997; and (b) Part IVC of the Taxation Administration Act 1953, so far as that Part relates to: (i) this Act or the Income Tax Assessment Act 1997; or (ii) Schedule 1 to the Taxation Administration Act 1953; and (c) Schedule 1 to the Taxation Administration Act 1953. Note: Subsection (1AA) of this section prevents definitions in the Income Tax Assessment Act 1936 from affecting the interpretation of the Income Tax Assessment Act 1997. "Timor Sea Treaty" means the Treaty defined by subsection 5(1) of the Petroleum (Timor Sea Treaty) Act 2003. "total net investment loss" has the same meaning as in the Income Tax Assessment Act 1997. "Trade Department" means the Department that: (a) deals with matters arising under section 1 of the Export Market Development Grants Act 1997; and (b) is administered by the Trade Minister. "Trade Minister" means the Minister administering section 1 of the Export Market Development Grants Act 1997. "Trade Secretary" means the Secretary of the Trade Department. "trading stock" has the meaning given by section 70-10 of the Income Tax Assessment Act 1997. "Tribunal" means the Administrative Appeals Tribunal. "trustee" in addition to every person appointed or constituted trustee by act of parties, by order, or declaration of a court, or by operation of law, includes: (a) an executor or administrator, guardian, committee, receiver, or liquidator; and (b) every person having or taking upon himself the administration or control of income affected by any express or implied trust, or acting in any fiduciary capacity, or having the possession, control or management of the income of a person under any legal or other disability; "unfranked part" of a distribution has the same meaning as in the Income Tax Assessment Act 1997. "VCLP" means a venture capital limited partnership within the meaning of subsection 118-405(2) of the Income Tax Assessment Act 1997. "VCMP" means a venture capital management partnership. "venture capital deficit tax" has the same meaning as in the Income Tax Assessment Act 1997. "venture capital management partnership" has the meaning given by subsection 94D(3). "Veterans' Affairs Department" means the Department that: (a) deals with matters arising under section 1 of the Veterans' Entitlements Act 1986; and (b) is administered by the Veterans' Affairs Minister. "Veterans' Affairs Minister" means the Minister administering section 1 of the Veterans' Entitlements Act 1986. "Veterans' Affairs Secretary" means the Secretary of the Veterans' Affairs Department. "withholding tax" has the same meaning as in the Income Tax Assessment Act 1997. "work and income support related withholding payments and benefits" means: (a) payments from which an amount: (i) must be withheld under a provision of Subdivision 12-B (other than section 12-55), 12-C or 12-D or Division 13 in Schedule 1 to the Taxation Administration Act 1953 (even if the amount is not withheld); or (ii) would be required to be withheld under a provision mentioned in subparagraph (i) (other than section 12-55) apart from subsection 12-1(1A) in Schedule 1 to that Act; and (b) amounts included in a person's assessable income under section 86-15 of the Income Tax Assessment Act 1997 in respect of which an amount must be paid under Division 13 in Schedule 1 to the Taxation Administration Act 1953 (even if the amount is not paid); and (c) non-cash benefits in relation to which the provider of the benefit must pay an amount to the Commissioner under Division 14 in Schedule 1 to the Taxation Administration Act 1953 (even if the amount is not paid). Note: The payments covered by paragraph (a) are: payments to employees and company directors, payments to office holders, return to work payments, payments under labour hire arrangements, payments of annuities, superannuation benefits, payments for termination of employment, payments for unused leave, benefit payments, compensation payments and payments specified by regulations. "year of income" means an income year as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997. "year of tax" means the financial year for which income tax is levied. (1A) Unless the contrary intention appears, a reference in this Act to a failure to do an act or thing includes a reference to a refusal to do the act or thing. (2AA) A reference in this Act to an accounting period adopted in lieu of a year of income includes a reference to an accounting period: (a) that commences or ends under section 18A; and (b) that would, but for that section, form part of an accounting period so adopted. (2AB) The Commissioner may, by legislative instrument, make a determination modifying the operation of one or more provisions of this Act in relation to limited partnerships whose accounting periods commence or end under section 18A of the Income Tax Assessment Act 1936. (2AC) A determination can only be made under subsection (2AB) in order to take account of the fact that such accounting periods are of less than 12 months' duration. (3) The express references in this Act to companies do not imply that references to persons do not include references to companies. (4) Paragraph (d) of the definition of dividend in subsection (1) does not apply if, under an arrangement: (a) a person pays or credits any money or gives property to the company and the company credits its share capital account with the amount of the money or the value of the property; and (b) the company pays or credits any money, or distributes property to another person, and debits its share capital account with the amount of the money or the value of the property so paid, credited or distributed. (6) Where a place is, by virtue of paragraph (d) of the definition of permanent establishment in subsection (1), a permanent establishment of a person, the person shall, for the purposes of this Act, be deemed to be carrying on at or through that permanent establishment the business of selling the goods manufactured, assembled, processed, packed or distributed by the other person at the place that is that permanent establishment. INCOME TAX ASSESSMENT ACT 1936 - SECT 6AA Certain sea installations and offshore areas to be treated as part of Australia (1) For all purposes of this Act related directly or indirectly to: (a) the exploration for minerals in, or the exploitation of the natural resources (being minerals) of: (i) an eligible external Territory; or (ii) a Petroleum Act offshore area; or (iii) an Installations Act adjacent area by means of a sea installation installed in that area; whether the exploration or exploitation is by the taxpayer concerned or by another person; (b) the carrying on of an environment related activity in: (i) an eligible external Territory; or (ii) a Petroleum Act offshore area; or (iii) an Installations Act adjacent area by means of a sea installation installed in that area; whether the activity is carried on by the taxpayer concerned or by another person; or (c) acts, matters, circumstances and things touching, concerning, arising out of or connected with any such exploration, exploitation or environment related activity; including purposes in relation to the application of this Act in respect of income or profits derived from any such exploration, exploitation, environment related activity, act, matter, circumstance or thing, or in respect of dividends paid wholly or partly out of any such profits, the provisions of this Act have effect, subject to this section, as if: (d) the whole of each eligible external Territory and each Petroleum Act offshore area were, and at all times had been, a part of Australia; and (e) each sea installation, when installed in the Installations Act adjacent area, were a part of Australia. (2) Where a company carries on business that: (a) consists of exploration or exploitation, or an environment related activity, of a kind referred to in subsection (1); or (b) arises out of or is connected with any such exploration, exploitation or environment related activity (whether by that company or by another person); the company shall, for the purposes of the definition of resident or resident of Australia in subsection 6(1), be deemed to be carrying on business in Australia. (4) For the purposes of this section: (a) eligible external Territory means the area, whether land or water, within the territorial limits of: (i) the Territory of Ashmore and Cartier Islands; (ii) the Coral Sea Islands Territory; or (iii) the Territory of Heard and McDonald Islands; and includes the space above and below that area; (b) environment related activity has the same meaning as in the Sea Installations Act 1987; and (c) Installations Act adjacent area means an area that is an adjacent area for the purposes of the Sea Installations Act 1987; (e) Petroleum Act offshore area means: (i) an area that is an offshore area for the purposes of the Offshore Petroleum and Greenhouse Gas Storage Act 2006; and (ii) the Joint Petroleum Development Area within the meaning of the Petroleum (Timor Sea Treaty) Act 2003. (5) Where, if the definition of sea installation in subsection 4(1) of the Sea Installations Act 1987: (a) extended to include: (i) resources industry fixed structures and resources industry mobile units, within the meaning of subsections 4(2) and (3) of that Act; (ii) partly constructed structures (including pipelines) or vessels that, when completed, are intended to be, or could be, structures or units referred to in subparagraph (i); and (iii) the remains of structures (including pipelines) or vessels that have been structures, units or vessels referred to in subparagraph (i) or (ii); and (b) did not include fishing boats, fishing equipment and pearling vessels; a structure or vessel, or structures or vessels, would, by section 6 of that Act, be deemed for the purposes of that Act to be a sea installation installed in a particular area, the structure or vessel, or the structures or vessels, shall be taken for the purposes of this section to be a sea installation installed in that area. INCOME TAX ASSESSMENT ACT 1936 - SECT 6A Provisions relating to cessation of superannuation benefits (1) For the purposes of this Act: (a) a right of a person or of the person's dependants to receive superannuation benefits from a fund shall be deemed to have ceased at a particular time (whether before or after the commencement of this section) if, by virtue of the terms and conditions applicable to the fund at that time, a right (including a contingent right) of the person, or of the person's dependants, as the case may be, to an amount that has accrued or could accrue from the fund ceased at that time otherwise than by payment of that amount to, or for the benefit of, the person or the person's dependants or by the transfer of that amount to another fund in which, as a result of the transfer, the person acquires, or the person's dependants acquire, as the case may be, a fully-secured right (including a contingent right) to receive superannuation benefits, being a right that is not less valuable than the first-mentioned right; and (b) where a right of a person or of the person's dependants to receive superannuation benefits from a fund has ceased at any time (whether before or after the commencement of this section)--the amount of those benefits shall be deemed to have been so much of the amount that was included in the fund at that time for the purpose of making provision for superannuation benefits for the person or the person's dependants as was not required for the purpose of providing for the person or the person's dependants superannuation benefits (including benefits payable at that time) the right to receive which had not ceased at or before that time. (2) For the purposes of this Act, where a right of a person or of the person's dependants to receive superannuation benefits from a fund has ceased at any time (whether before or after the commencement of this section) and, at that time, a specific part of the amount of the fund was not appropriated for the purpose of making provision for superannuation benefits for the person or the person's dependants: (a) an amount determined by the Commissioner shall be deemed to have been included in the fund at that time for that purpose; (b) any payment made out of the fund at that time or at a later time to the person or the person's dependants shall be deemed to have been an application at the time at which, and for the purpose for which, the payment was made of so much of the amount determined by the Commissioner in pursuance of paragraph (a) as is equal to the amount of the payment; and (c) except to the extent to which the amount determined by the Commissioner in pursuance of paragraph (a) is to be so deemed to have been applied by a payment out of the fund, that amount shall be deemed to have been applied in the year of income of the fund in which the right ceased, to such extent, if any, as the Commissioner determines, for the purpose of making provision for the superannuation benefits that other persons or their dependants had rights to receive from the fund. INCOME TAX ASSESSMENT ACT 1936 - SECT 6AB Foreign income and foreign tax (1) A reference in this Act to foreign income is a reference to income (including superannuation lump sums and employment termination payments) derived from sources in a foreign country or foreign countries, and includes a reference to an amount included in assessable income under section 102AAZD, 456, 457 or 459A of this Act, or section 305-70 of the Income Tax Assessment Act 1997. (1C) A reference in this Act to foreign income includes a reference to an amount included in assessable income under: (a) Division 301 of the Income Tax Assessment Act 1997 in its application under section 301-5 of the Income Tax (Transitional Provisions) Act 1997; or (b) Division 302 of the Income Tax Assessment Act 1997 in its application under section 302-5 of the Income Tax (Transitional Provisions) Act 1997. (2) A reference in this Act to foreign tax is a reference to tax imposed by a law of a foreign country, being: (a) tax upon income; or (b) tax upon profits or gains, whether of an income or capital nature; or (c) any other tax, being a tax that is subject to an agreement having the force of law under the International Tax Agreements Act 1953; but does not include a unitary tax or a credit absorption tax. (5B) This section applies to a non-share dividend in the same way as it applies to a dividend. (6) In this section: "credit absorption tax" means a tax imposed by a law of a foreign country to the extent that the tax would not have been payable if the taxpayer concerned or another taxpayer had not been entitled to an offset in respect of the tax under Division 770 of the Income Tax Assessment Act 1997. "law", in relation to a foreign country, means a law of that country, or of any part of, or place in, that country. "unitary tax" means tax imposed by a law of a foreign country, being a law which, for the purposes of taxing income, profits or gains of a company derived from sources within that country, takes into account, or is entitled to take into account, income, losses, outgoings or assets of the company (or of a company that for the purposes of that law is treated as being associated with the company) derived, incurred or situated outside that country, but does not include tax imposed by that law if that law only takes those matters into account: (a) if such an associated company is a resident for the purposes of that law; or (b) for the purposes of granting any form of relief in relation to tax imposed on dividends received by one company from another company. INCOME TAX ASSESSMENT ACT 1936 - SECT 6B Income beneficially derived (1) For the purposes of this Act, an amount of income derived by a person, not being a dividend paid by a company to the person as a shareholder in the company, shall be deemed to be attributable to a dividend: (a) if the person derived the amount of income by reason of being the beneficial owner of the share in respect of which the dividend was paid; or (b) if the person derived the amount of income as a beneficiary in a trust estate and the amount of income can be attributed, directly or indirectly, to the dividend or to an amount that is deemed, by any application or successive applications of this subsection, to be an amount of income attributable to the dividend. (1A) For the purposes of this Act, an amount of income derived by a person, being income other than passive income, is to be taken to be income attributable to passive income: (a) if the person derived the amount of income by reason of being beneficially entitled to an amount representing passive income; or (b) if the person derived the amount of income as a beneficiary in a trust estate and the amount of income can be attributed, directly or indirectly, to passive income or to an amount that is taken, by any application or successive applications of this subsection, to be an amount of income attributable to passive income. (2) For the purposes of this Act, an amount of income derived by a person, being income other than interest income, shall be deemed to be income attributable to interest income: (a) if the person derived the amount of income by reason of being beneficially entitled to an amount representing interest income; or (b) if the person derived the amount of income as a beneficiary in a trust estate and the amount of income can be attributed, directly or indirectly, to interest income or to an amount that is deemed, by any application or successive applications of this subsection, to be an amount of income attributable to interest income. (2A) For the purposes of this Act, an amount of income derived by a person shall be deemed to be income derived from a particular source: (a) except where paragraph (b) applies: (i) if the person derived the amount of income by reason of being beneficially entitled to an amount that is derived from that source; or (ii) if the person derived the amount of income as a beneficiary in a trust estate and the amount of income can be attributed, directly or indirectly, to income derived from that source or to an amount that is deemed, by any other application or applications of this subsection, to be an amount that is income derived from that source; or (b) if the income so derived is, by virtue of subsection (1), (1A) or (2), attributable to a dividend, passive income or interest income derived from that source. (3) Where a beneficiary in a trust estate is presently entitled to income of the trust estate, that income shall, for the purposes of this section, be deemed to be an amount of income derived by the person. (4) This section: (a) applies to a non-share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non-share dividend in the same way as it applies to a dividend. INCOME TAX ASSESSMENT ACT 1936 - SECT 6BA Taxation treatment of certain shares (1) This section applies if a shareholder holds shares in a company (the original shares) and the company issues other shares (the bonus shares) in respect of the original shares. (2) If the bonus shares are a dividend, or taken to be a dividend (including as a result of section 45C), the consideration for the acquisition of the shares for the purposes of this Act is so much of the dividend as is: (a) included in the taxpayer's assessable income; and (b) is not rebatable under section 46A. (3) If the bonus shares are issued for no consideration and are not a dividend or taken to be a dividend, then for the purposes of this Act, in determining: (a) the value of such of the original shares and bonus shares as the taxpayer elects under section 70-45 of the Income Tax Assessment Act 1997 to value at cost; and (b) where any of the original shares or any of the bonus shares are not articles of trading stock of the taxpayer: (i) the amount or value of the consideration paid in respect of the acquisition of any of those shares for the purposes of Part 3-1 or 3-3 of the Income Tax Assessment Act 1997; or (ii) the amount of any profit or loss arising on the sale or disposal of any of those shares; any amounts paid or payable by the taxpayer in respect of the original shares (whether on purchase of the shares, on application for or allotment of the shares, to meet calls or otherwise) shall be deemed to have been paid or to be payable by the taxpayer in respect of the original shares and the bonus shares in such proportions as the Commissioner considers appropriate in the circumstances. (4) A company issues shares for no consideration if: (a) it credits its capital account with profits in connection with the issue of the shares; or (b) it credits its capital account with the amount of any dividend to a shareholder and the shareholder does not have a choice whether to be paid the dividend or to be issued with the shares. This subsection does not limit the generality of subsection (3). Note: A company that makes a credit covered by paragraph (a) or (b) will have a tainted share capital account. (5) Subject to subsection (6), if a shareholder has a choice whether to be paid a dividend or to be issued shares and the shareholder chooses to be issued with shares: (a) the dividend is taken to be credited to the shareholder; and (b) the dividend is taken to have been paid out of profits; and (c) subsections (2) and (3) apply in working out the consideration for the acquisition of the shares for the purposes of this Act. However, the share capital account of the company does not become a tainted share capital account as a result of the crediting of the dividend to the share capital account. (6) Subsection (5) does not apply if: (a) a shareholder in a listed public company (within the meaning of the Income Tax Assessment Act 1997) has a choice whether to be paid a dividend (other than a minimally franked dividend within the meaning of subsection 45(3)) or to be issued shares and the shareholder chooses to be issued with shares; and (b) the company does not credit the share capital account in connection with the issue of those shares. Note: If subsection (5) does not apply because of this subsection, subsection (3) will apply. (7) This section (other than subsection (6)): (a) applies to a non-share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non-share dividend in the same way as it applies to a dividend. INCOME TAX ASSESSMENT ACT 1936 - SECT 6C Source of royalty income derived by a non-resident (1) This section applies to income that is derived on or after 1 July 1968 by a non-resident and consists of royalty that: (a) is paid or credited to the non-resident by the Commonwealth, by a State, by an authority of the Commonwealth or of a State or by a person who is, or by persons at least one of whom is, a resident and is not an outgoing wholly incurred by the Commonwealth, the State, the authority or that person or those persons in carrying on business in a country outside Australia at or through a permanent establishment of the Commonwealth, the State, the authority or that person or those persons in that country; or (b) is paid or credited to the non-resident by a person who is, or by persons each of whom is, a non-resident and is, or is in part, an outgoing incurred by that person or those persons in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia. (1A) For the purposes of Division 5 and Division 6 of Part III, but subject to subsections (3) and (4), income to which this section applies shall be deemed to be attributable to sources in Australia. (2) For the purposes of sections 6-5 and 6-10 of the Income Tax Assessment Act 1997, but subject to subsections (3) and (4), income to which this section applies shall be deemed to have been derived from a source in Australia. (3) Where: (a) income to which this section applies is paid or credited to the non-resident by whom it is derived by the Commonwealth, by a State, by an authority of the Commonwealth or of a State or by a person who is, or by persons at least one of whom is, a resident; and (b) the royalty of which the income consists is, in part, an outgoing incurred by the Commonwealth, the State, the authority or that person or those persons in carrying on business in a country outside Australia at or through a permanent establishment of the Commonwealth, the State, the authority or that person or those persons in that country; subsection (2) has effect in relation to so much only of the income as is attributable to so much of the royalty as is not an outgoing so incurred. (4) Where: (a) income to which this section applies is paid or credited to the non-resident by whom it is derived by a person who, or by persons each of whom, is a non-resident; and (b) the royalty of which the income consists is, in part only, an outgoing incurred by the person or persons by whom it is paid or credited in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia; subsection (2) has effect in relation to so much only of the income as is attributable to so much of the royalty as is an outgoing so incurred. (5) In subsection (6), a reference to a relevant person is a reference to the Commonwealth, a State, an authority of the Commonwealth or of a State or a person who is, or persons at least 1 of whom is, a resident. (6) For the purposes of paragraphs (1)(a) and (3)(b), where: (a) royalty is paid or credited, after the commencement of this subsection, to a non-resident by a relevant person carrying on business in a country outside Australia; and (b) the royalty or a part of the royalty: (i) is incurred by the relevant person in gaining or producing income that is derived by the relevant person otherwise than in carrying on business in a country outside Australia at or through a permanent establishment of the relevant person in that country or is incurred by the relevant person for the purpose of gaining or producing income to be so derived; or (ii) is incurred by the relevant person in carrying on business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the relevant person otherwise than in so carrying on business at or through a permanent establishment of the relevant person in a country outside Australia; the royalty or the part of the royalty, as the case may be, is not an outgoing incurred by the relevant person in carrying on business in a country outside Australia at or through a permanent establishment of the relevant person in that country. (7) For the purposes of paragraphs (1)(b) and (4)(b), where: (a) royalty is paid or credited, after the commencement of this subsection, to a non-resident by another person or other persons (in this subsection referred to as the payer), being: (i) another person who is carrying on business in Australia and is a non-resident; or (ii) other persons who are carrying on business in Australia and each of whom is a non-resident; and (b) the royalty or a part of the royalty: (i) is incurred by the payer in gaining or producing income that is derived by the payer in carrying on business in Australia at or through a permanent establishment of the payer in Australia or is incurred by the payer for the purpose of gaining or producing income to be so derived; or (ii) is incurred by the payer in carrying on a business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the payer in so carrying on business at or through a permanent establishment of the payer in Australia; the royalty or the part of the royalty, as the case may be, is an outgoing incurred by the payer in carrying on business in Australia at or through a permanent establishment of the payer in Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 6CA Source of natural resource income derived by a non-resident (1) In this section: "double tax agreement" means an agreement within the meaning of the International Tax Agreements Act 1953. "natural resource income" means income that: (a) is derived by a non-resident; and (b) is calculated, in whole or in part, by reference to the value or quantity of natural resources produced, recovered or produced and recovered, in Australia after 7 April 1986; but does not include: (c) income that consists of royalty; or (d) income where: (i) on 7 April 1986, the non-resident had a continuing entitlement to receive the income; (ii) the income was derived by the non-resident pursuant to that continuing entitlement; (iii) the non-resident was, at 5 o'clock in the afternoon, by standard time in the Australian Capital Territory on 7 April 1986, a resident, within the meaning of a double tax agreement, of a foreign country in respect of which the double tax agreement was in force; (iv) before 8 April 1986, the Commissioner had given a statement in writing to the effect that income tax would be levied on 50% of income included in a specified class of income; and (v) the income is included in that class of income. (2) For the purposes of Divisions 5 and 6 of Part III, natural resource income shall be deemed to be attributable to sources in Australia. (3) For the purposes of section 255 of this Act and sections 6-5 and 6-10 of the Income Tax Assessment Act 1997, natural resource income shall be deemed to have been derived from a source in Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 6D Some tax offsets under the 1997 Assessment Act are treated as credits A tax offset under a provision of the Income Tax Assessment Act 1997 that corresponds to a provision of this Act that provides for a credit is taken to be a credit for the purposes of this Act. Note: All other tax offsets under the Income Tax Assessment Act 1997 are treated as rebates: see section 160ADA. INCOME TAX ASSESSMENT ACT 1936 - SECT 6F Dual resident investment company (1) For the purposes of this Act, a company (other than a company in the capacity of trustee) is a dual resident investment company in relation to a year of income if: (a) at any time during the year of income the company is a resident of Australia; and (b) the company is liable to tax in a foreign country in respect of some or all of the income or profits of the company of the year of income (or would be so liable if the company derived income or profits) because: (i) the company is treated as a resident of that country for the purposes of the relevant law of that country; or (ii) the company is treated as domiciled in that country for the purposes of the relevant law of that country; or (iii) the company's management and control is treated as being located in that country for the purposes of the relevant law of that country; and (c) at any time during the year of income when the company was in existence: (i) the company was not carrying on business with a reasonable view to profit; or (ii) a substantial purpose of the company (whether or not stated in its constituent document) was to acquire or hold shares, securities or other investments in related companies (whether directly or indirectly through one or more companies, partnerships or trusts). (2) For the purposes of this section, companies are related to each other if they are controlled (as defined by subsection (3)) by the same person, either alone or together with associates (whether or not the same associates are involved in relation to each company). (3) For the purposes of this section, a person, either alone or together with associates, controls a company if: (a) the person, either alone or together with associates: (i) controls or is capable of controlling, either directly or through one or more interposed companies, partnerships or trusts, at least 50% of the maximum number of votes that might be cast at a general meeting of the company; or (ii) is beneficially entitled to receive, directly or indirectly, at least 50% of any dividends that are or might be paid, or of any distribution of capital that is or may be made, by the company; or (iii) is capable, under a scheme, of gaining such control or such an entitlement; or (b) the company or its directors are accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the person, either alone or together with associates. (4) Section 159GZH applies for the purposes of this section in determining the beneficial entitlement of a person to receive indirectly the whole or a particular fraction of a dividend that is, or might be, paid by a company or of a distribution of capital of a company. (5) In this section: "associate" has the same meaning as in section 318. "scheme" means: (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 there are 2 or more parties or only one party involved. INCOME TAX ASSESSMENT ACT 1936 - SECT 6H Recognised small credit unions, recognised medium credit unions and recognised large credit unions Recognised small credit union in relation to a year of income (1) For the purposes of this Act, a credit union is a recognised small credit union in relation to a year of income if: (a) both: (i) the year of income is the 1994-95 year of income; and (ii) either: (A) the credit union is not a designated credit union; or (B) the credit union's notional taxable income of the year of income is less than $50,000; or (b) both: (i) the year of income is the 1995-96 year of income or a later year of income; and (ii) the credit union's notional taxable income of the year of income is less than $50,000. Recognised medium credit union in relation to a year of income (2) For the purposes of this Act, a credit union is a recognised medium credit union in relation to a year of income if: (a) the year of income is the 1994-95 year of income or a later year of income; and (b) the credit union is not a recognised small credit union in relation to the year of income; and (c) the credit union's notional taxable income of the year of income is less than $150,000. Recognised large credit union in relation to a year of income (3) For the purposes of this Act, a credit union is a recognised large credit union in relation to a year of income if: (a) the year of income is the 1994-95 year of income or a later year of income; and (b) the credit union is neither: (i) a recognised small credit union in relation to the year of income; nor (ii) a recognised medium credit union in relation to the year of income. Designated credit union (4) For the purposes of this section, a credit union is a designated credit union if: (a) it was in existence on 1 July 1993; and (b) assuming that its accounts for the last accounting period that ended before 1 July 1993 had been prepared in accordance with generally accepted accounting principles--the amount that would have been shown in those accounts as the gross value of its assets as at the end of that accounting period is more than $30 million. Notional taxable income (5) For the purposes of this section, the notional taxable income of a credit union of a year of income is the amount that would be its taxable income of the year of income if: (a) section 23G did not apply to income derived by it in the 1994-95 year of income or any later year of income; and (b) Division 9 of Part III had not been enacted. Definitions (6) In this section: "accounts", in relation to a credit union, means accounts prepared for the purposes of reporting annually to the shareholders in the credit union. "accounting period", in relation to a credit union, means a period at the end of which the balance of its accounts is struck. "credit union" means a credit union as defined in section 23G, except a life assurance company. INCOME TAX ASSESSMENT ACT 1936 - SECT 7A Application of Act in relation to certain Territories (1) This Act extends to Norfolk Island, the Territory of Cocos (Keeling) Islands and the Territory of Christmas Island. (2) Subject to Division 1A of Part III, this Act has effect as if Norfolk Island, the Territory of Cocos (Keeling) Islands and the Territory of Christmas Island were part of Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 7B Application of the Criminal Code Chapter 2 of the Criminal Code applies to all offences against this Act. Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. INCOME TAX ASSESSMENT ACT 1936 - SECT 8 Commissioner The Commissioner shall have the general administration of this Act. Note: An effect of this provision is that people who acquire information under this Act are subject to the confidentiality obligations and exceptions in Division 355 in Schedule 1 to the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 14 Annual report (1) The Commissioner shall, as soon as practicable after 30 June in each year, prepare and furnish to the Minister a report on the working of this Act, including any breaches or evasions of this Act of which the Commissioner has notice. (2) The Minister shall cause a copy of a report furnished to him or her under subsection (1) to be laid before each House of the Parliament within 15 sitting days of that House after the day on which he or she receives the report. (3) For the purposes of section 34C of the Acts Interpretation Act 1901, a report that is required by subsection (1) to be furnished as soon as practicable after 30 June in a year shall be taken to be a periodic report relating to the working of this Act during the year ending on that 30 June. INCOME TAX ASSESSMENT ACT 1936 - SECT 18 Accounting period Any person may, with the leave of the Commissioner, adopt an accounting period being the 12 months ending on some date other than 30 June. For the purposes of this Act, the person's accounting period in each succeeding year shall end on the corresponding date of that year, unless: (a) with the leave of the Commissioner some other date is adopted; or (b) the accounting period ends earlier under section 18A. INCOME TAX ASSESSMENT ACT 1936 - SECT 18A Accounting periods for VCLPs, ESVCLPs, AFOFs and VCMPs (1) If a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP on a particular day: (a) the accounting period during which that day occurs (the first accounting period) is taken to have ended immediately before that day; and (b) another accounting period is taken to have commenced at the beginning of that day. The other accounting period ends on the day on which the first accounting period would have ended if this section did not apply. Example: A partnership whose accounting periods ended on 30 June becomes a VCLP, an ESVCLP on 1 October 2002, and ceases to be a VCLP, an ESVCLP on 1 April 2003. The effect of becoming a VCLP, an ESVCLP: the accounting period that commenced on 1 July 2002 is taken under this section to end on 30 September 2002, and a second accounting period commences on 1 October 2002. The second accounting period is scheduled to end on 30 June 2003. The effect of ceasing to be a VCLP, an ESVCLP: the second accounting period is now taken under this section to end on 31 March 2003, and a third accounting period commences on 1 April 2003. The third accounting period is to end on 30 June 2003. (2) This section does not apply in relation to a partnership becoming, or ceasing to be, a VCLP, an ESVCLP, an AFOF or a VCMP on the day on which an accounting period commences. INCOME TAX ASSESSMENT ACT 1936 - SECT 21 Where consideration not in cash (1) Where, upon any transaction, any consideration is paid or given otherwise than in cash, the money value of that consideration shall, for the purposes of this Act, be deemed to have been paid or given. (2) This section has effect subject to section 21A. INCOME TAX ASSESSMENT ACT 1936 - SECT 21A Non-cash business benefits (1) For the purposes of this Act, in determining the income derived by a taxpayer, a non-cash business benefit that is not convertible to cash shall be treated as if it were convertible to cash. (2) For the purposes of this Act, if a non-cash business benefit (whether or not convertible to cash) is income derived by a taxpayer: (a) the benefit shall be brought into account at its arm's length value reduced by the recipient's contribution (if any); and (b) if the benefit is not convertible to cash--in determining the arm's length value of the benefit, any conditions that would prevent or restrict the conversion of the benefit to cash shall be disregarded. (3) Where: (a) a non-cash business benefit is income derived by a taxpayer in a year of income; and (b) if the taxpayer had, at the time the benefit was provided, incurred and paid unreimbursed expenditure in respect of the provision of the benefit equal to the amount of the arm's length value of the benefit--a once-only deduction would, or would but for section 82A, and Subdivisions F, GA and G of Division 3 of this Part, of this Act, and Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable to the taxpayer in respect of a percentage (in this subsection called the deductible percentage) of the expenditure; the amount that, apart from this subsection, would be applicable under subsection (2) of this section in respect of the benefit shall be reduced by the deductible percentage. (4) Where: (a) a non-cash business benefit is income derived by a taxpayer in a year of income; and (b) a percentage (in this subsection called the non-deductible entertainment percentage) of any expenditure incurred by the provider in respect of the provision of the benefit is non-deductible entertainment expenditure; the amount that, apart from this subsection, would be applicable under subsection (2) in respect of the benefit shall be reduced by the non-deductible entertainment percentage. (5) In this section: "arm's length value", in relation to a non-cash business benefit, means: (a) the amount that the recipient could reasonably be expected to have been required to pay to obtain the benefit from the provider under a transaction where the parties to the transaction are dealing with each other at arm's length in relation to the transaction; or (b) if such an amount cannot be practically determined--such amount as the Commissioner considers reasonable. "income derived by a taxpayer" means income derived by a taxpayer in carrying on a business for the purpose of gaining or producing assessable income. "non-cash business benefit" means property or services provided after 31 August 1988: (a) wholly or partly in respect of a business relationship; or (b) wholly or partly for or in relation directly or indirectly to a business relationship. "non-deductible entertainment expenditure" means expenditure to the extent to which: (a) section 32-5 of the Income Tax Assessment Act 1997 applies to the expenditure; and (b) but for that section, the expenditure would be deductible under section 8-1 of the Income Tax Assessment Act 1997. "provide": (a) in relation to property--includes dispose of (whether by assignment, declaration of trust or otherwise); and (b) in relation to services--includes allow, confer, give, grant or perform. "recipient's contribution", in relation to a non-cash business benefit, means the amount of any consideration paid to the provider by the recipient in respect of the provision of the benefit, reduced by the amount of any reimbursement paid to the recipient in respect of that consideration. "services" includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under: (a) an arrangement for or in relation to: (i) the performance of work (including work of a professional nature), whether with or without the provision of property; (ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or (iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; (b) a contract of insurance; or (c) an arrangement for or in relation to the lending of money. (6) Notwithstanding section 21, the consideration referred to in the definition of recipient's contribution in subsection (5) of this section is consideration in money. (7) This section does not apply to an ESS interest (within the meaning of the Income Tax Assessment Act 1997) to which Subdivision 83A-B or 83A-C of that Act (about employee share schemes) applies. INCOME TAX ASSESSMENT ACT 1936 - SECT 23AA Income of persons connected with certain projects of United States Government (1) In this section, unless the contrary intention appears: "approved project" means the establishment, maintenance or operation of the North West Cape naval communication station, of the Joint Defence Space Research Facility, of the Sparta project or of the Joint Defence Space Communications Station. "Australia" includes the Territories. "civilian accompanying the United States Forces" means a person (not being a member of the United States Forces, an Australian citizen or a person ordinarily resident in Australia) who: (a) is an employee: (i) of the United States Forces; or (ii) of, or of a body conducting, a club or other facility established for the benefit or welfare of members of the United States Forces or of persons accompanying those Forces and which is recognized by the Government of the United States of America as a non-appropriated fund activity; or (b) is serving with an organization that, with the approval of the Government of the Commonwealth, accompanies the United States Forces in Australia. "dependant", in relation to a person, means: (a) the spouse of that person; or (b) a relative, other than the spouse, of that person who is wholly or mainly dependent for support on that person; but, in the case of a person who, immediately before becoming such a spouse or relative, was ordinarily resident in Australia, does not include that person so long as that person continues to be ordinarily resident in Australia. "foreign contractor" means a person who is a party to a prescribed contract and is not: (a) a company incorporated in Australia; (b) an Australian citizen; or (c) a person, other than a company, who is ordinarily resident in Australia. "foreign employee" means a person who: (a) is an employee of a foreign contractor; or (b) is a director of a company that is a foreign contractor; and is not an Australian citizen or ordinarily resident in Australia. "prescribed contract" means: (a) a contract to which the Government of the United States of America is a party in connexion with an approved project; or (b) a contract made for purposes connected with the performance of a contract referred to in paragraph (a). "prescribed purposes" means: (a) in relation to a foreign contractor or foreign employee--purposes relating to the performance of a prescribed contract; (aa) in relation to a United States employee--purposes relating to an approved project; and (b) in relation to a member of the United States Forces or a civilian accompanying the United States Forces--purposes relating to the carrying on of activities agreed upon between the Government of the Commonwealth and the Government of the United States of America. "the Joint Defence Space Communications Station" means the undertaking the establishment of which is provided for by an agreement dated 10 November 1969 between the Government of the Commonwealth and the Government of the United States of America. "the Joint Defence Space Research Facility" means the undertaking the establishment of which is provided for by an agreement dated 9 December 1966 between the Government of the Commonwealth and the Government of the United States of America. "the North West Cape naval communication station" means the naval communication station the establishment of which is provided for by the agreement approved by the United States Naval Communication Station Agreement Act 1963. "the Sparta project" means the undertaking the establishment of which is provided for by a memorandum of arrangement dated 30 March 1966 between the Government of the Commonwealth, the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America. "the United States Forces" means the armed forces of the Government of the United States of America. "United States employee" means a person who is employed by the Government of the United States of America and is not: (a) a member of the United States Forces; (b) a civilian accompanying the United States Forces; (c) an Australian citizen; or (d) a person ordinarily resident in Australia. (2) For the purposes of this section, a foreign contractor, foreign employee or United States employee who is in Australia, or is carrying on business in Australia, solely for prescribed purposes does not cease to be in Australia solely for those purposes, or to be carrying on business in Australia solely for those purposes, by reason of anything undertaken or done by him or her in connexion with an undertaking in Australia of the Government of the United States of America, other than an approved project, agreed upon between the Government of the Commonwealth and the Government of the United States of America. (3) Where a person: (a) has been in Australia, or has carried on business in Australia, solely for prescribed purposes during a period when the person was a foreign contractor or foreign employee; (b) has been in Australia solely for prescribed purposes during a period when the person was a member of the United States Forces, a civilian accompanying the United States Forces or a United States employee; or (c) has been in Australia during a period when the person was a dependant of such a contractor, employee, member or civilian who was in Australia solely for prescribed purposes; that person shall, for the purposes of the provisions of this Act other than Subdivision A of Division 17, be deemed not to have been a resident of Australia during that period, and the presence of that person in Australia during that period shall be disregarded in determining, for the purposes of those provisions, whether the person was a resident of Australia at any other time. (4) Subsection (3) does not apply in respect of, or of a part of, a period when a person was, or was a dependant of, a foreign contractor, a foreign employee, a civilian accompanying the United States Forces or a United States employee if the person: (a) being a company--was not a domestic corporation for the purposes of the law of the United States of America relating to income tax; or (b) not being a company--was not a resident of the United States of America for the purposes of that law or a citizen of the United States of America; during that period or that part of that period, as the case may be. (5) Where: (a) a foreign contractor or a foreign employee has derived income wholly and exclusively from, or from employment in connexion with, the performance in Australia of a prescribed contract; (b) the income is not exempt from income tax imposed by Chapter One of Subtitle A of the Internal Revenue Code of 1986 of the United States of America; and (c) the foreign contractor or foreign employee was, at the time the income was derived, in Australia, or carrying on business in Australia, solely for prescribed purposes; the income shall, for the purposes of this Act, be deemed to have been derived from sources out of Australia. (6) Where: (a) a person has derived income in respect of service as a civilian accompanying the United States Forces or as a United States employee during a period when the person was in Australia solely for prescribed purposes; and (b) the income is not exempt from income tax imposed by Chapter One of Subtitle A of the Internal Revenue Code of 1986 of the United States of America; the income shall, for the purposes of this Act, be deemed to have been derived from sources out of Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 23AB Income of certain persons serving with an armed force under the control of the United Nations (1) In this section: "prescribed taxpayer" means a taxpayer who, being a resident of Australia, is, or is included in a class of persons that is, prescribed by the regulations for the purposes of this section. "tax deductions unapplied", in relation to a deceased person, means any amounts withheld under Part 2-5 in Schedule 1 to the Taxation Administration Act 1953 from work and income support related withholding payments and benefits derived by the deceased person in respect of United Nations service: (a) that have not been credited in payment of income tax; and (b) in respect of which a payment has not been made by the Commissioner. "the prescribed area" has the same meaning as in section 79A. "United Nations service" means service, other than service as a member of the Defence Force, performed, at the direction or with the approval of the Commonwealth, outside Australia with an armed force under the control of the United Nations, at a time when the person performing the service was a prescribed taxpayer. (2) The regulations may prescribe a person or a class of persons for the purposes of this section but shall not so prescribe a person or class of persons unless the salary, wages and allowances received by the person or by all the persons in that class, as the case may be, in respect of his, her or their United Nations service are paid, given or granted by the Commonwealth or by the United Nations for and on behalf of the Commonwealth. (3) A succeeding provision of this section does not apply in relation to a person if the regulations provide that that provision does not apply in relation to that person or in relation to a class of persons in which that person is included. (4) Regulations made for the purposes of subsection (2) or (3) may provide that the regulations shall be deemed to have taken effect on a date specified in the regulations, being a date before the date on which the regulations are notified in the Gazette, and, in that case, the regulations shall be deemed to have taken effect on the date so specified. (5) Where: (a) a payment of compensation under the Safety, Rehabilitation and Compensation Act 1988 is made in respect of the incapacity, impairment or death of a taxpayer; and (b) the incapacity, impairment or death of the taxpayer resulted from an occurrence that happened during the performance by the taxpayer of United Nations service; and (c) if the taxpayer had, at the time of the happening of the occurrence, been a member of the Defence Force rendering continuous full-time service outside Australia while the taxpayer was allotted for duty in an operational area described in item 4, 5, 6, 7 8, 9, 10, 11, 12, 13 or 14 of Column 1 of Schedule 2 to the Veterans' Entitlements Act 1986, the Commonwealth would be liable to pay a pension under that Act in respect of the incapacity, impairment or death of the taxpayer; the payment of compensation is exempt from income tax. (6) For the purposes of section 15-2 of the Income Tax Assessment Act 1997, the total value of all allowances, gratuities, compensations, benefits, bonuses and premiums (in this subsection referred to as living allowances) allowed, given or granted in meals, sustenance or the use of premises or quarters (including payment in lieu of one or more of those living allowances) to a taxpayer in respect of, or for or in relation directly or indirectly to, United Nations service shall be deemed to be an amount calculated at the rate of $2 for each week of that service in which any of those living allowances were so allowed, given or granted, or in which payment in lieu of any of those living allowances was made, to the taxpayer. (7) Subject to subsections (8), (8A) and (9A) and subsection 79B(4), a taxpayer is entitled to a rebate of tax in his or her assessment in respect of income of a year of income in which he or she has performed United Nations service and derived income by way of salary, wages or other allowances in respect of that service. The amount of the rebate is: (a) where the total period of that service performed by the taxpayer during the year of income is more than one-half of the year of income or where the taxpayer dies while performing that service during the year of income--an amount equal to the sum of: (i) $338; and (ii) an amount equal to 50% of the sum of the following rebates (if any) in respect of the year of income: (AA) any rebate to which the taxpayer would be entitled under section 159L, apart from section 159LA; (B) any rebate to which the taxpayer is entitled under section 159J in respect of a dependant included in class 5 or 6 in the table in subsection 159J(2); (BA) any rebate to which the taxpayer would be entitled under section 159J in respect of a dependant included in class 2 in the table in subsection 159J(2), apart from section 159JA; (C) any rebate to which the taxpayer would, disregarding subsection 159J(1A), be entitled under section 159J in respect of a dependant included in class 3 or 4 in the table in subsection 159J(2); (D) any rebate to which the taxpayer would be entitled under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2) if the assumptions in subsection (7A) of this section were made; and (iii) if the taxpayer was not entitled to a rebate under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2)--an amount equal to any rebate to which the taxpayer would be entitled under that section in respect of a dependant included in class 1 in the table if it were assumed that subsection 159J(1C) did not apply; (b) in any other case--such amount as, in the opinion of the Commissioner, is reasonable in the circumstances, being an amount not greater than the amount of the rebate to which the taxpayer would have been entitled under this subsection if paragraph (a) had applied to him or her in respect of the year of income. Note 1: Paragraph 23AB(7)(a) lets a taxpayer include the dependent spouse rebate (without child), the child-housekeeper rebate or the housekeeper rebate for the purpose of working out the amount of rebate under this section, even if the taxpayer or the taxpayer's spouse is eligible for family tax benefit at the Part B rate for the whole or part of a year. Note 2: Another effect of that paragraph (see sub-subparagraph (D)) is to let a taxpayer include the dependent spouse rebate (with child), despite its abolition by the A New Tax System (Family Assistance) (Consequential and Related Measures) Act (No. 1) 1999, for the purpose of working out the rebate amount under this section. (7A) The assumptions for the purposes of sub-subparagraph (7)(a)(ii)(D) are that: (a) subsection 159J(1B) also included a reference to any dependant included in class 1 in the table in subsection 159J(2) and the amount applicable to class 1 in that table was $2,440; and (b) subsection 159J(1C) did not apply; and (c) section 159JA did not apply. (8) For the purposes of subsection (7), but subject to subsection (8A), the total period of United Nations service of a taxpayer in any year of income shall be deemed to include any period in that year of income during which the taxpayer has resided, or has actually been, in the prescribed area. (8A) For the purposes of subsection (7), United Nations service does not include any period of service of the taxpayer in respect of which an exemption from income tax applies under section 23AG. (9) Where a rebate is allowable under subsection (7) in the assessment of a taxpayer in respect of income of a year of income and, but for this subsection, a rebate of a lesser amount would be allowable in that assessment under section 79A, a rebate under section 79A is not allowable in that assessment. (9A) Where a rebate is allowable under section 79A in the assessment of a taxpayer in respect of income of a year of income and, but for this subsection, a rebate of the same or a lesser amount would be allowable in that assessment under subsection (7), a rebate under subsection (7) is not allowable in that assessment. (9B) Subsection 79B(4) shall be disregarded in determining for the purposes of subsections (9) and (9A) of this section the amount of a rebate allowable to a taxpayer under subsection (7) of this section or under section 79A. (10) Where: (a) the trustee of the estate of a deceased person who has performed United Nations service is liable to pay income tax, in respect of a year of income, upon income that consists of or includes salary, wages or allowances derived by the deceased person in respect of that service; or (b) the death of the person resulted from an occurrence that happened during that service; and (c) if the person had, at the time of the happening of the occurrence, been a member of the Defence Force rendering continuous full-time service outside Australia while the taxpayer was allotted for duty in an operational area described in item 4, 5, 6, 7 or 8 of Column 1 of Schedule 2 to the Veterans' Entitlements Act 1986, the Commonwealth would be liable to pay a pension under that Act in respect of the death of the person; the trustee is, by force of this subsection, released from the payment of so much of that tax as remains after deducting any tax deductions unapplied: (d) if the assessable income of the deceased person of the year of income consists solely of the salary, wages or allowances derived in respect of that service--from the amount of income tax so payable by the trustee; or (e) if the assessable income of the deceased person of the year of income includes income other than the salary, wages or allowances derived in respect of that service: (i) from the amount of income tax so payable by the trustee; or (ii) from the amount by which the income tax payable in respect of the income of the year of income has been increased by the inclusion of the salary, wages or allowances so derived in the assessable income of the deceased person of the year of income; whichever is the less. (11) Nothing in subsection (10) shall be construed as authorizing or requiring the Commissioner to refund any amount paid as or for income tax by or on behalf of the deceased person or the trustee of his or her estate. INCOME TAX ASSESSMENT ACT 1936 - SECT 23AC Exemption of pay and allowances of members of Defence Force serving in operational areas (1) Pay and allowances earned by a person as a member of the Defence Force are exempt from income tax where: (a) the pay and allowances are earned during a period of operational service of the person; and (b) the person served in an operational area during the whole or a part of that period. (2) Subject to this section, the operational service of a member of the Defence Force, for the purposes of this section, is the member's service where all of the following conditions are satisfied: (a) the member's service was while: (i) a member of, or attached to, a body, contingent or detachment of the Naval, Military or Air Forces of the Commonwealth at a time when it was allotted for duty in an operational area; or (ii) a member of the Naval, Military or Air Forces of the Commonwealth allotted for duty in an operational area; or (iii) a member of the Naval, Military or Air Forces of the Commonwealth attached to a particular part of the armed forces of the United Kingdom or of the United States of America at a time when that part was allotted, by the appropriate authority of the country concerned, for duty in an operational area; (b) if the operational area is covered by subsection (6) and: (i) subparagraph (a)(i) or (ii) applies; or (ii) subparagraph (a)(iii) applies and the member was not serving in an operational area on 2 August 1990; there is in force a certificate in writing issued by the Chief of the Defence Force to the effect that the allotment concerned was in response to Iraq's invasion of Kuwait; (c) if the operational area is covered by subsection (6) and paragraph (b) does not apply--the member was serving in the operational area on 2 August 1990; (ca) if the operational area is covered by subsection (6A)--there is in force a certificate in writing issued by the Chief of the Defence Force to the effect that the allotment concerned was in response to Iraq's invasion of Kuwait; (cb) if the operational area is Cambodia--there is in force a certificate in writing issued by the Chief of the Defence Force to the effect that the allotment concerned was in respect of the member's service as part of: (i) the group called the United Nations Advance Mission in Cambodia; or (ii) the group called the United Nations Transitional Authority in Cambodia; (cc) if the operational area is the former Yugoslavia--there is in force a certificate in writing issued by the Chief of the Defence Force to the effect that the allotment concerned was in respect of the member's service as part of a United Nations peacekeeping force; (cd) if the operational area is Somalia--there is in force a certificate in writing issued by the Chief of the Defence Force to the effect that the allotment concerned was in respect of the member's service as part of: (i) the operation called Operation Restore Hope; or (ii) the operation called the United Nations Operation in Somalia; (d) the member's service was not as or under an attachÈ at an Australian embassy or legation. (2A) A certificate issued in accordance with paragraph (2)(cb), (cc) or (cd) shall cease to have force only in accordance with a certificate of revocation signed by the Chief of the Defence Force. (2B) A certificate of revocation made in accordance with subsection (2A) is a legislative instrument. (3) For the purposes of this section, the operational service of a member of the Defence Force allotted for duty in an operational area covered by subsection (6), (6A) or (6B): (a) is taken to have commenced: (i) if the member was in Australia at the time at which the member was allotted for duty in the operational area--at the time of the member's departure from the last port of call in Australia for duty in that area; (ii) if the member was outside Australia at the time at which the member was allotted for duty in the operational area--at the time at which the member was so allotted; (iii) if the member was allotted for duty in the area before the time at which it became an operational area and the member was in Australia at that time--at the time of the member's departure from the last port of call in Australia for duty in that area; or (iv) if the member was allotted for duty in the area before the time at which it became an operational area and the member was outside Australia at that time--at that time; (b) is taken to have ended at the earlier of the end of the termination date (if any) applicable to the operational area and: (i) on the member's returning to Australia--at the time at which the member arrived at the first port of call in Australia, unless the member left Australia for further duty in an operational area within 14 days after the member's arrival in Australia; or (ii) where the member was allotted for duty in an area outside Australia other than an operational area--at the time at which the member arrived in that area, or, if the member was in that area at the time at which the member was so allotted, at that time; and (c) is taken to include a period of hospital treatment consequent upon an illness contracted or injuries sustained during the person's operational service. (3A) For the purposes of this section, the operational service of a member of the Defence Force allotted for duty in an operational area to which subsection (6C) or (6D) applies: (a) is taken to have begun at the later of: (i) the time when the member arrived in the operational area; and (ii) the time when the member's allotment for the duty in the operational area began; and (b) is taken to have ended at the earliest of: (i) the time when the member departed from the operational area; and (ii) the time when the member's allotment for the duty in the operational area ended; and (iii) the end of any termination date (defined in subsection (7)) applicable to the operational area; and (c) is taken to include a period of hospital treatment resulting from an illness contracted, or injuries sustained, during the member's operational service. (4) The Chief of the Defence Force may, by signed instrument, delegate to an officer of the Defence Force the powers conferred by paragraph (2)(b), (ca), (cb), (cc) or (cd). (5) Applications may be made to the Tribunal for review of decisions of the Chief of the Defence Force under paragraph (2)(b), (ca), (cb), (cc) or (cd). (6) For the purposes of this section, the area comprising the following countries and sea areas: (a) Bahrain, Oman, Qatar, Saudi Arabia, the United Arab Emirates and the island of Cyprus; (b) the sea areas contained within the Gulf of Suez, the Gulf of Aqaba, the Red Sea, the Gulf of Aden, the Persian Gulf and the Gulf of Oman; (c) the sea area contained within the Arabian Sea north of the boundary formed by joining each of the following points to the next: (i) 20° 30x N 70° 40x E; (ii) 14° 30x N 67° 35x E; (iii) 8° 30x N 60° 00x E; (iv) 6° 20x N 53° 52x E; (v) 5° 48x N 49° 02x E; (d) the sea areas contained within the Suez Canal and the Mediterranean Sea east of 30° E; is taken to have become an operational area on 2 August 1990. (6A) For the purposes of this section, the area comprising Iraq and Kuwait is taken to have become an operational area on 23 February 1991. (6B) For the purposes of this section, the area comprising Cambodia is taken to have become an operational area on 20 October 1991. (6C) For the purposes of this section, the area comprising the former Yugoslavia is taken to have become an operational area on 12 January 1992. (6D) For the purposes of this section, the area comprising Somalia is taken to have become an operational area on 20 October 1992. (7) In this section: "operational area" has the meaning given by subsection (6), (6A), (6B), (6C) or (6D). "port" includes airport. "termination date" means: (a) in relation to an operational area covered by subsection (6) or (6A)--9 June 1991; or (b) in relation to an operational area covered by subsection (6B), (6C) or (6D)--the date prescribed by regulations (which may be a date before the commencement of the regulations) for the purposes of this definition as the termination date in respect of the operational area covered by that subsection. INCOME TAX ASSESSMENT ACT 1936 - SECT 23AD Exemption of pay and allowances of Defence Force members performing certain overseas duty Requirements for exemption (1) The pay and allowances earned by a person serving as a member of the Defence Force are exempt from tax if: (a) they are earned while there is in force a certificate in writing issued by the Chief of the Defence Force to the effect that the person is on eligible duty with a specified organisation in a specified area outside Australia; and (b) the eligible duty is not as, or under, an attache at an Australian embassy or legation. Eligible duty (2) The regulations may declare that duty with a specified organisation, in a specified area outside Australia and after a specified day, is eligible duty for the purposes of this section. Where paragraph (1)(a) certificate in force (3) A certificate under paragraph (1)(a): (a) comes into force at the later of: (i) the time specified in the certificate (which may be before the time when it is issued, but not before the end of the specified day under the regulations); and (ii) the time when the person arrives for duty in the specified area concerned; and (b) subject to paragraph (c), continues in force until the earliest of: (i) the time of the person's departure from the specified area; and (ii) the time when, in accordance with a certificate of revocation signed by the Chief of the Defence Force, it ceases to be in force; and (iii) any time prescribed by the regulations in relation to the eligible duty for the purposes of this subparagraph; and (c) is in force during any period of hospital treatment resulting from an illness contracted, or injuries sustained, during the person's eligible duty. Review of paragraph (1)(a) certificate (4) An application may be made to the Tribunal for review of a decision of the Chief of the Defence Force under paragraph (1)(a). Delegation of paragraph (1)(a) power (5) The Chief of the Defence Force may, by signed instrument, delegate to an officer of the Defence Force the power conferred by paragraph (1)(a). Revocation certificate is legislative instrument (6) A certificate of revocation referred to in subparagraph (3)(b)(ii) is a legislative instrument. INCOME TAX ASSESSMENT ACT 1936 - SECT 23AF Exemption of certain income derived in respect of approved overseas projects (1) Where a taxpayer, being a natural person, has been engaged on qualifying service on a particular approved project for a continuous period of not less than 91 days, any eligible foreign remuneration derived by the person that is attributable to that qualifying service is exempt from tax. (3) Subject to subsections (4) and (5), a person shall be taken for the purposes of this section to be engaged on qualifying service on an approved project during any period during which: (a) the person is outside Australia and is engaged in the performance of personal services in connection with the approved project; (b) the person is travelling between Australia and the site of the approved project; (c) by reason of an incapacity for work due to accident or illness occurring while the person was, by virtue of paragraph (a) or (b), to be taken to be engaged on qualifying service on the approved project, the person is absent from work; or (d) the person is on eligible leave, being leave that accrued in respect of a period during which the person was, by virtue of any of the preceding paragraphs, to be taken to be engaged on qualifying service on the approved project. (4) A person shall not be taken to have been engaged on qualifying service on a particular approved project while the person was travelling between Australia and the site of the approved project unless the Commissioner is satisfied that the time taken for the journey is reasonable. (5) A person shall not be taken to have been engaged on qualifying service on a particular approved project by virtue of paragraph (3)(c) during a period of incapacity for work unless the person is taken to have been engaged on qualifying service on that approved project by virtue of paragraph (3)(a), (b) or (d) during a period that commenced immediately after the incapacity ceased. (6) Where: (a) a person was engaged on qualifying service on a particular approved project; and (b) due to unforeseen circumstances, the person ceased to be engaged on qualifying service on that approved project; the period during which the person is to be taken to have been engaged on qualifying service on that approved project shall, except for the purpose of determining whether income derived by the person is eligible foreign remuneration, be taken to include the additional period after the person ceased to be engaged on qualifying service on that approved project during which the person would, in the opinion of the Commissioner, have continued to be engaged on qualifying service on that approved project but for those unforeseen circumstances. (7) Where: (a) a person (in this subsection referred to as the original person) was engaged on qualifying service on a particular approved project; (b) due to unforeseen circumstances, the original person ceased to be engaged on qualifying service on that approved project; and (c) as soon as practicable after the time when the original person ceased to be engaged on qualifying service on that approved project, another person (in this subsection referred to as the substituted person) commenced to be engaged on qualifying service on that approved project in lieu of the original person; the period during which the substituted person is to be taken to have been engaged on qualifying service on that approved project shall, except for the purpose of determining whether income derived by the substituted person is eligible foreign remuneration, be taken to include a period that ended immediately before the substituted person commenced to be engaged on qualifying service on that approved project in lieu of the original person and was of the same duration as the continuous period during which the original person was, immediately before the original person ceased to be engaged on qualifying service on that approved project, taken to have been engaged on qualifying service on that approved project. (8) Where: (a) during the period (in this subsection referred to as the total project period) commencing at the time when a person was first engaged on qualifying service on an approved project and ending at the time when the person was last engaged on qualifying service on that approved project, the person was in Australia during a period or periods (in this subsection referred to as the intervening period or intervening periods) during which the person was not engaged on qualifying service on that approved project; (b) the total number of days in the intervening period or intervening periods does not exceed one-sixth of the total number of days during the total project period during which the person was engaged on qualifying service on the approved project; and (c) at all times during the total project period, the person was engaged on qualifying service on the approved project or was in Australia; the periods during the total project period during which the person was engaged on qualifying service on the approved project shall together be taken to constitute a continuous period during which the person was engaged on qualifying service on the approved project. (9) Where, immediately before a person commences to take eligible leave, leave of the same kind as the eligible leave has accrued in relation to the person but has not been used and that unused leave consists of: (a) leave that accrued in respect of a period or periods when the person was engaged on qualifying service on an approved project and leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project; (b) leave that accrued in respect of 2 or more periods when the person was engaged on qualifying service on 2 or more different approved projects; or (c) leave that accrued in respect of 2 or more periods when the person was engaged on qualifying service on 2 or more different approved projects and leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project; the following provisions apply for the purposes of determining the extent to which the eligible leave taken by the person was eligible leave that accrued in respect of a period when the person was engaged on qualifying service on a particular approved project: (d) in a case to which paragraph (a) applies--the person shall be deemed first to have taken leave that accrued in respect of the period when the person was engaged on qualifying service on the approved project referred to in that paragraph; (e) in a case to which paragraph (b) applies--the leave shall be deemed to have been taken in the order that is reverse to the order in which it accrued; (f) in a case to which paragraph (c) applies: (i) the person shall be deemed not to have taken any of the leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project until the person had taken leave for a number of days equal to the number of days of leave referred to in that paragraph that had accrued in respect of periods when the person was engaged on qualifying service on approved projects; and (ii) the leave that had accrued in respect of periods when the person was engaged in qualifying service on approved projects shall be deemed to have been taken by the person in the order that is reverse to the order in which that leave accrued. (10) Where the amount of income derived by a person that: (a) is attributable to qualifying service on an approved project; and (b) would, apart from this subsection, be eligible foreign remuneration; exceeds the amount of income that the Commissioner considers would be reasonable remuneration in respect of that qualifying service, the amount of the excess is not eligible foreign remuneration for the purposes of this section. (11) Where the Trade Minister is satisfied that the undertaking of an eligible project that was commenced, or is proposed to be commenced, after 19 August 1980 is, or will be, in the national interest, that Minister may, by writing signed by that Minister, approve that eligible project for the purposes of this section. (12) The Trade Minister may, either generally or as otherwise provided by the instrument of delegation, by writing signed by that Minister, delegate to a person that Minister's power under subsection (11). (13) The power so delegated, when exercised by the delegate shall, for the purposes of this section, be deemed to have been exercised by the Trade Minister. (14) A delegation under subsection (12) does not prevent the exercise of a power by the Trade Minister. (15) Where: (a) a person has derived eligible foreign remuneration during a year of income; and (b) at the time of making an assessment in respect of income of the person of the year of income, the Commissioner is of the opinion that, at a later time, circumstances will exist by reason of which that eligible foreign remuneration will be exempt from tax by virtue of this section; the Commissioner may apply the provisions of this section as if those circumstances existed at the time of making the assessment. (16) Where, in the making of an assessment, this section has been applied on the basis that a circumstance that did not exist at the time of making the assessment would exist at a later time and the Commissioner, after making the assessment, becomes satisfied that that circumstance will not exist, then, notwithstanding anything contained in section 170, the Commissioner may amend the assessment at any time for the purposes of ensuring that this section shall be taken always to have applied on the basis that that circumstance did not exist. (17) For the purposes of this section, income is excluded income if: (a) the income is income to which section 23AG applies; or (aa) the income is a payment, consideration or amount that: (i) is included in assessable income under Division 82, section 83-295 or Division 301, 302, 304 or 305 of the Income Tax Assessment Act 1997; or (ii) is included in assessable income under Division 82 of the Income Tax (Transitional Provisions) Act 1997; or (iii) is mentioned in paragraph 82-135(e), (f), (g), (i) or (j) of the Income Tax Assessment Act 1997; or (iv) is an amount transferred to a fund, if the amount is included in the assessable income of the fund under section 295-200 of the Income Tax Assessment Act 1997; or (b) the income is derived from sources in a country other than Australia and: (i) is exempt from income tax in that country; and (ii) would not be exempt from income tax in that country apart from the operation of an agreement applying to Australia and that other country relating to the avoidance of double taxation or of a law of that other country giving effect to such an agreement; or (c) the income consists of: (i) payments in lieu of long service leave; or (ii) payments by way of superannuation or pension. (17A) If the income of a taxpayer of a year of income consists of an amount that is exempt from tax under this section (in this section called the exempt amount) and other income, the amount of tax (if any) payable in respect of the other income is calculated using the formula: where: "Notional gross tax" means the number of whole dollars in the amount of income tax that would be assessed under this Act in respect of the taxpayer's taxable income of the year of income if: (a) the exempt amount were not exempt income; and (aa) if the exempt amount is a payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997--the exempt amount (excluding any part of that amount that represented contributions made by the taxpayer) were assessable income of the taxpayer; and (b) the taxpayer were not entitled to any rebate of tax. "Notional gross taxable income" means the number of whole dollars in the amount that would have been the taxpayer's taxable income of the year of income if the exempt amount were not exempt income. "Other taxable income" means the amount (if any) remaining after deducting from so much of the other income as is assessable income: (d) any deductions allowable to the taxpayer in relation to the year of income that relate exclusively to that assessable income; and (e) so much of any other deductions (other than apportionable deductions) allowable to the taxpayer in relation to the year of income as, in the opinion of the Commissioner, may appropriately be related to that assessable income; and (f) the amount calculated using the formula in subsection (17B). (17B) The formula referred to in paragraph (17A)(f) is: where: "Apportionable deductions" means the number of whole dollars in the apportionable deductions allowable to the taxpayer in relation to the year of income. "Other taxable income" means the amount that, apart from paragraph (17A)(f), would be represented by the component Other taxable income in subsection (17A). "Notional gross taxable income" means the number of whole dollars in the amount that would have been the taxpayer's taxable income of the year of income if the exempt amount were not exempt income. (17C) Subsection (17A) applies to a taxpayer in respect of income of a year of income as if any payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 in relation to qualifying service that was made in respect of the taxpayer during that year of income were income of the taxpayer of that year of income that is exempt from tax under this section. (18) In this section, unless the contrary intention appears: "approved project" means a project in respect of which there is in force an approval granted under subsection (11). "eligible contractor" means: (a) a resident of Australia; (b) the Commonwealth, a State, a Territory, the government of a country other than Australia or an authority of the Commonwealth, of a State, of a Territory or of the government of a country other than Australia; (c) an organization: (i) of which Australia and a country or countries other than Australia are members; or (ii) that is constituted by a person or persons representing Australia and a person or persons representing a country or countries other than Australia; or (d) an agency of an organization to which paragraph (c) applies. "eligible foreign remuneration", in relation to a person, means income (not being excluded income) that is derived by the person at a time when the person is a resident, being: (a) income consisting of salary, wages, commission, bonuses or allowances, or of amounts included in a person's assessable income under Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes), derived by the person in his or her capacity as an employee of an eligible contractor; or (b) income, or amounts included in a person's assessable income under that Division, derived by the person under a contract with an eligible contractor, being a contract that is wholly or substantially for the personal services of the person; that is directly attributable to qualifying service by the person on an approved project and includes any payments received in lieu of eligible leave that accrued in respect of a period during which the person was a resident and was engaged on qualifying service on an approved project. "eligible leave" means leave other than long service leave. "eligible project" means: (a) a project for the design, supply or installation of any equipment or facilities; or (b) a project for the construction of works; or (c) a project for the development of an urban area or a regional area; or (d) a project for the development of agriculture; or (e) a project consisting of giving advice or assistance relating to the management or administration of a government department or of a public utility; or (f) a project included in a class of projects approved in writing for the purposes of this section by the Trade Minister. "employee" includes: (a) a person employed by the Commonwealth, by a State, by a Territory, by the government of a country other than Australia or by an authority of the Commonwealth, of a State, of a Territory or of the government of a country other than Australia; and (b) a member of the Defence Force. "long service leave" means long leave, furlough, extended leave or leave of a similar kind (however described). INCOME TAX ASSESSMENT ACT 1936 - SECT 23AG Exemption of income earned in overseas employment (1) Where a resident, being a natural person, has been engaged in foreign service for a continuous period of not less than 91 days, any foreign earnings derived by the person from that foreign service are exempt from tax. (1AA) However, those foreign earnings are not exempt from tax under this section unless the continuous period of foreign service is directly attributable to any of the following: (a) the delivery of Australian official development assistance by the person's employer; (b) the activities of the person's employer in operating a public fund covered by item 9.1.1 or 9.1.2 of the table in subsection 30-80(1) of the Income Tax Assessment Act 1997 (international affairs deductible gift recipients); (c) the activities of the person's employer, if the employer is exempt from income tax because of paragraph 50-50(c) or (d) of the Income Tax Assessment Act 1997 (prescribed institutions located or pursuing objectives outside Australia); (d) the person's deployment outside Australia as a member of a disciplined force by: (i) the Commonwealth, a State or a Territory; or (ii) an authority of the Commonwealth, a State or a Territory; (e) an activity of a kind specified in the regulations. (1A) A person is taken, for the purposes of subsection (1), to have been engaged in foreign service for a continuous period of 91 days if: (a) the person died at a time when he or she was engaged in foreign service for a continuous period of less than 91 days; and (b) he or she would have otherwise continued to be engaged in the foreign service; and (c) his or her continuous period of engagement in the foreign service would have otherwise been a period of at least 91 days. (2) An amount of foreign earnings derived in a foreign country is not exempt from tax under this section if the amount is exempt from income tax in the foreign country only because of any of the following: (a) a law of the foreign country giving effect to a double tax agreement; (b) a double tax agreement; (c) provisions of a law of the foreign country under which income covered by any of the following categories is generally exempt from income tax: (i) income derived in the capacity of an employee; (ii) income from personal services; (iii) similar income; (d) the law of the foreign country does not provide for the imposition of income tax on one or more of the categories of income mentioned in paragraph (c); (e) a law of the foreign country corresponding to the International Organisations (Privileges and Immunities) Act 1963 or to the regulations under that Act; (f) an international agreement to which Australia is a party and that deals with: (i) diplomatic or consular privileges and immunities; or (ii) privileges and immunities in relation to persons connected with international organisations; (g) a law of the foreign country giving effect to an agreement covered by paragraph (f). (2A) Subsection (2) does not apply in relation to foreign earnings to the extent that the person derived them from foreign service in Iraq after 31 December 2002 but before 1 May 2004. (3) If the income of a taxpayer of a year of income consists of an amount that is exempt from tax under this section (in this section called the exempt amount) and other income, the amount of tax (if any) payable in respect of the other income is calculated using the formula: where: "Notional gross tax" means the number of whole dollars in the amount of income tax that would be assessed under this Act in respect of the taxpayer's taxable income of the year of income if: (a) the exempt amount were not exempt income; and (aa) if the exempt amount is a payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997--the exempt amount (excluding any part of that amount that represented contributions made by the taxpayer) were assessable income of the taxpayer; and (b) the taxpayer were not entitled to any rebate of tax. "Notional gross taxable income" means the number of whole dollars in the amount that would have been the taxpayer's taxable income of the year of income if the exempt amount were not exempt income. "Other taxable income" means the amount (if any) remaining after deducting from so much of the other income as is assessable income: (d) any deductions allowable to the taxpayer in relation to the year of income that relate exclusively to that assessable income; and (e) so much of any other deductions (other than apportionable deductions) allowable to the taxpayer in relation to the year of income as, in the opinion of the Commissioner, may appropriately be related to that assessable income; and (f) the amount calculated using the formula in subsection (4). (4) The formula referred to in paragraph (3)(f) is: where: "Apportionable deductions" means the number of whole dollars in the apportionable deductions allowable to the taxpayer in relation to the year of income. "Other taxable income" means the amount that, apart from paragraph (3)(f), would be represented by the component Other taxable income in subsection (3). "Notional gross taxable income" means the number of whole dollars in the amount that would have been the taxpayer's taxable income of the year of income if the exempt amount were not exempt income. (5) Subsection (3) applies to a taxpayer in respect of income of a year of income as if any payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 that related to the termination of employment that was made in respect of the taxpayer during that year of income were income of the taxpayer of that year of income that is exempt from tax under this section. (6) For the purposes of this section, a period during which a person is engaged in foreign service includes any period during which the person is, in accordance with the terms and conditions of that service: (a) absent on recreation leave, other than: (i) leave wholly or partly attributable to a period of service or employment other than that foreign service; (ii) long service leave, furlough, extended leave or leave of a similar kind (however described); or (iii) leave without pay or on reduced pay; or (b) absent from work because of accident or illness. (6A) 2 or more periods in which a person has been engaged in foreign service are together taken to constitute a continuous period of foreign service until: (a) the end of the last of the 2 or more periods; or (b) a time (if any), since the start of the first of the 2 or more periods, when the person's total period of absence exceeds 1 /6 of the person's total period of foreign service; whichever happens sooner. Example: Kate is engaged in foreign service for 20 days, is absent for 2 days and is then engaged in foreign service for 10 days. These 2 periods of foreign service constitute a continuous period of foreign service, because the total period of absence is never more than 1 /10 of the total period of foreign service. Kate is then absent for 5 days before commencing a further period of foreign service. No matter how long the further period lasts, it can never constitute a continuous period of foreign service with the first 2 periods of foreign service, because on the fourth day of the second absence the total period of absence is 1 /5 of the total period of foreign service. (6B) In subsection (6A): "total period of absence", in relation to a particular time, means the number of days, in the period starting at the start of the first of the 2 or more periods and ending at that time, for which the person was not engaged in foreign service. "total period of foreign service", in relation to a particular time, means the number of days, in the period starting at the start of the first of the 2 or more periods and ending at that time, for which the person was engaged in foreign service. (6F) Where: (a) a person has derived foreign earnings during a year of income; and (b) at the time of making an assessment in respect of income of the person of the year of income, the Commissioner is of the opinion that, at a later time, circumstances will exist because of which those foreign earnings will be exempted from tax by this section; the Commissioner may apply the provisions of this section as if those circumstances existed at the time of making the assessment. (7) In this section: "double tax agreement" means: (a) double tax agreement within the meaning of Part X; or (b) the Timor Sea Treaty. "employee" includes: (a) a person employed by a government or an authority of a government or by an international organisation; or (b) a member of a disciplined force. "foreign earnings" means income consisting of earnings, salary, wages, commission, bonuses or allowances, or of amounts included in a person's assessable income under Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes), but does not include any payment, consideration or amount that: (a) is included in assessable income under Division 82 or Subdivision 83-295 or Division 301, 302, 304 or 305 of the Income Tax Assessment Act 1997; or (b) is included in assessable income under Division 82 of the Income Tax (Transitional Provisions) Act 1997; or (c) is mentioned in paragraph 82-135(e), (f), (g), (i) or (j) of the Income Tax Assessment Act 1997; or (d) is an amount transferred to a fund, if the amount is included in the assessable income of the fund under section 295-200 of the Income Tax Assessment Act 1997. "foreign service" means service in a foreign country as the holder of an office or in the capacity of an employee. "income tax", in relation to a foreign country: (a) in all cases--does not include a municipal income tax; and (b) in the case of a federal foreign country--does not include a State income tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 23AH Foreign branch income of Australian companies not assessable Objects (1) The objects of this section are: (a) to ensure that active foreign branch income derived by a resident company, and capital gains made by a resident company in disposing of non-tainted assets used in deriving foreign branch income, (except income and capital gains from the operation of ships or aircraft in international traffic) are not assessable income or exempt income of the company; and (b) to include in the assessable income of a resident company that part of its income and capital gains derived through a branch in a foreign country that is comparable to the amounts that would be included in an attributable taxpayer's assessable income for income and capital gains derived by a CFC resident in the same foreign country; and (c) to get the same outcomes where one or more partnerships or trusts are interposed between a resident company and a foreign branch. Foreign branch income not assessable (2) Subject to this section, foreign income derived by a company, at a time when the company is a resident in carrying on a business, at or through a PE of the company in a listed country or unlisted country is not assessable income, and is not exempt income, of the company. Foreign capital gains and losses disregarded (3) Subject to this section, a capital gain from a CGT event happening to a CGT asset is disregarded for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 if: (a) the gain is made by a company that is a resident; and (b) the company used the asset wholly or mainly for the purpose of producing foreign income in carrying on a business at or through a PE of the company in a listed country or unlisted country; and (c) the asset is not taxable Australian property. (4) Subject to this section, a capital loss from a CGT event happening to a CGT asset is disregarded for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 if: (a) the loss is made by a company that is a resident; and (b) the company used the asset wholly or mainly for the purpose of producing foreign income in carrying on a business at or through a PE of the company in a listed country or unlisted country; and (c) had the loss been a gain, it would be disregarded under subsection (3). Exceptions: listed country PE (5) Subsection (2) does not apply to foreign income derived by the company if: (a) the PE is in a listed country; and (b) the PE does not pass the active income test (see subsection (12)); and (c) the foreign income is both: (i) adjusted tainted income (see subsection (13)); and (ii) eligible designated concession income in relation to a listed country. (6) Subsection (3) or (4) does not apply to a capital gain or capital loss if: (a) the PE is in a listed country; and (b) for a capital gain--the gain is from a tainted asset and is eligible designated concession income in relation to a listed country; and (c) for a capital loss--the loss is from a tainted asset and would be eligible designated concession income in relation to a listed country if it were a capital gain. Exceptions: unlisted country PE (7) Subsection (2) does not apply to foreign income derived by the company if: (a) the PE is in an unlisted country; and (b) the PE does not pass the active income test (see subsection (12)); and (c) the foreign income is adjusted tainted income (see subsection (13)). (8) Subsection (3) or (4) does not apply to a capital gain or capital loss if: (a) the PE is in an unlisted country; and (b) the gain or loss is from a tainted asset. Income derived in disposing of a business (9) This section applies to foreign income derived by an entity in the course of disposing, in whole or in part, of a business carried on in a listed country or unlisted country at or through a PE of the entity in the listed country or unlisted country as if the foreign income had been derived in carrying on that business. Interposed partnerships or trusts (10) This section applies to any indirect interest (through one or more partnerships or trust estates) of a company in foreign income derived by a partnership or trustee through a PE of the partnership or trustee in a listed country or unlisted country as if that indirect interest were foreign income derived by the company through a PE of the company in that country. (11) This section applies to any indirect interest (through one or more partnerships or trust estates) of a company in a capital gain or capital loss made in relation to an asset of a partnership, or made by a trustee, in carrying on a business at or through a PE of the partnership or trustee in a listed country or unlisted country as if that indirect interest were a capital gain or capital loss made by the company through a PE of the company in that country. Active income test (12) A PE of an entity passes the active income test for a year of income if the entity would have passed the active income test in section 432 if: (a) the assumptions in subsection (14) were made; and (b) subsection 432(3) and 446(2) and paragraphs 432(1)(b) and (e) and 447(1)(b), (d) and (f) had not been enacted. Adjusted tainted income (13) For the purposes of this section, the adjusted tainted income of a PE of an entity is income or other amounts that would be adjusted tainted income of the entity for the purposes of Part X if: (a) the assumptions in subsection (14) were made; and (b) subsection 446(2) and paragraphs 447(1)(b), (d) and (f) had not been enacted. Assumptions for subsections (12) and (13) (14) The assumptions referred to in paragraphs (12)(a) and (13)(a) are: (a) except in applying paragraphs 447(1)(a), (c) and (e) and 450(6)(c), (7)(d) and (8)(b), the only income or other amounts derived by the entity were the income derived in carrying on business at or through the PE; and (b) the entity's statutory accounting periods were the same as the entity's years of income; and (c) in applying paragraphs 447(1)(a), (c) and (e) and 450(6)(c), (7)(d) and (8)(b): (i) the part of the entity's operations that consists of the business carried on at or through the PE were a company (the PE company); and (ii) the remaining part of the entity's operations were a separate company (the HQ company); and (iii) the PE company and the HQ company had carried out the transactions that they would have carried out if the PE company were engaged in the same or similar activities as the PE under the same or similar conditions as the PE and were dealing wholly independently with the HQ company; and (iv) any income derived by the HQ company were disregarded; and (d) if the entity is an AFI entity (within the meaning of subsection 326(2))--the entity were an AFI subsidiary; and (e) in applying paragraphs 447(1)(a), (c) and (e), the HQ company were an associate of the PE company. (14A) This section does not apply to foreign income, or to a capital gain or capital loss, of a company to the extent that the income, gain or loss is from: (a) the operation of ships or aircraft in international traffic at or through a PE of the company in a listed country or unlisted country; or (b) things that are ancillary to that operation. (14B) A company operates a ship or aircraft in international traffic if the company operates it for transporting passengers or goods between a place in one country and a place in another country. Definitions (15) In this section: "company" does not include a company in the capacity of a trustee. "double tax agreement" has the same meaning as in Part X. "eligible designated concession income" has the same meaning as in Part X. "foreign income" includes an amount that: (a) apart from this section, would be included in assessable income under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (CGT); and (b) is derived from sources in a listed country or unlisted country. "listed country" has the same meaning as in Part X. "permanent establishment, or PE", in relation to a listed country or unlisted country: (a) if there is a double tax agreement in relation to that country--has the same meaning as in the double tax agreement; or (b) in any other case--has the meaning given by subsection 6(1). "statutory accounting period" has the same meaning as in Part X. "tainted asset" has the same meaning as in Part X. "unlisted country" has the same meaning as in Part X. INCOME TAX ASSESSMENT ACT 1936 - SECT 23AI Amounts paid out of attributed income not assessable (1) Where: (a) either: (i) an attribution account payment of a kind referred to in paragraph 365(1)(a), (b), (c) or (e) is made to a taxpayer (other than a partnership or taxpayer in the capacity of trustee of a trust); or (ii) an attribution account payment of a kind referred to in paragraph 365(1)(d) is made to a taxpayer; and (b) on the making of the payment, an attribution debit arises, for the entity making the payment, in relation to the taxpayer; the following provisions have effect: (c) if the payment is of a kind referred to in paragraph 365(1)(a)--the payment is not assessable income, and is not exempt income, to the extent of the debit; (d) if the payment is of a kind referred to in paragraph 365(1)(b) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 92 in respect of an individual interest in the net income of the partnership of the year of income referred to in that paragraph--that amount is not assessable income, and is not exempt income, to the extent of the debit; (e) if the payment is of a kind referred to in paragraph 365(1)(c) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 97, 98A or 100 in respect of a share of the net income of the trust of the year of income referred to in that paragraph--that amount is not assessable income and is not exempt income, to the extent of the debit; (ea) if the payment is of a kind referred to in paragraph 365(1)(c) and, apart from this section, an amount would be assessable to the trustee of the trust referred to in that paragraph under section 98 in respect of a share of the net income of the trust of the year of income referred to in that paragraph--that amount is not so assessable to the extent of the debit; (f) if the payment is of a kind referred to in paragraph 365(1)(d)--the payment is not, to the extent of the debit, assessable to the taxpayer as mentioned in that paragraph; (g) if the payment is of a kind referred to in paragraph 365(1)(e) and, apart from this section, an amount would be included in the taxpayer's assessable income, of the year of income referred to in that paragraph, under section 99B in respect of the trust property referred to in that paragraph--that amount is not assessable income, and is not exempt income, to the extent of the debit. (2) This section is to be disregarded for the purposes of applying any other provision of this Act to determine allowable deductions. (3) In this section: "attribution account payment" has the same meaning as in Part X. "attribution debit" has the same meaning as in Part X. "company" has the same meaning as in Part X. "trust" has the same meaning as in Part X, but does not include a trust covered by subsection 371(7). INCOME TAX ASSESSMENT ACT 1936 - SECT 23AJ Certain non-portfolio dividends from foreign countries not assessable A non-portfolio dividend (as defined in section 317) paid to a company is not assessable income, and is not exempt income, of the company if: (a) the company is an Australian resident and does not receive the dividend in the capacity of a trustee; and (b) the company that paid the dividend is not a Part X Australian resident (as defined in that section). INCOME TAX ASSESSMENT ACT 1936 - SECT 23AK Amounts paid out of attributed foreign investment fund income not assessable When this section applies (1) This section applies if: (a) either: (i) a FIF attribution account payment of a kind referred to in former paragraph 603(1)(a), (b), (c), (d), (f), (g) or (h) is made to a taxpayer (other than a partnership or taxpayer in the capacity of trustee of a trust); or (ii) a FIF attribution account payment of a kind referred to in former paragraph 603(1)(e) is made to a taxpayer; and (b) on the making of the payment, a post FIF abolition debit arises, for the FIF attribution account entity making the payment, in relation to the taxpayer. Post FIF abolition debit arises (2) A post FIF abolition debit arises for a FIF attribution account entity (the eligible entity) in relation to a taxpayer if: (a) the eligible entity makes a FIF attribution account payment to the taxpayer or to a FIF attribution account entity; and (b) immediately before the eligible entity makes the FIF attribution account payment, there is a post FIF abolition surplus for the eligible entity in relation to the taxpayer. Amount of post FIF abolition debit (3) The amount of the post FIF abolition debit is the lesser of: (a) the post FIF abolition surplus; and (b) whichever of the following is applicable: (i) if the attribution account payment is made to the taxpayer--the FIF attribution account payment; (ii) in any other case--the taxpayer's FIF attribution account percentage (for the FIF attribution account entity to which the payment is made) of the FIF attribution account payment; reduced by any attribution debit that arises under section 372 for the entity in relation to the taxpayer as a result of the making of the payment. When the post FIF abolition debit arises (4) The post FIF abolition debit arises when the FIF attribution account payment is made. When a post FIF abolition surplus exists (5) A post FIF abolition surplus for a FIF attribution account entity in relation to a taxpayer exists at a particular time (the relevant time) if the sum of: (a) the entity's total FIF attribution credits (within the meaning of former section 605) that arose before the commencement of Schedule 1 to the Tax Laws Amendment (Foreign Source Income Deferral) Act (No. 1) 2010; and (b) the entity's total post FIF abolition credits arising before the relevant time in relation to the taxpayer; exceeds the sum of: (c) the entity's total FIF attribution debits (within the meaning of former section 606) that arose before that commencement in relation to the taxpayer; and (d) the entity's total post FIF abolition debits arising before the relevant time in relation to the taxpayer. Post FIF abolition credit arises (6) A post FIF abolition credit arises for a FIF attribution account entity (the eligible entity) in relation to a taxpayer if a FIF attribution account payment that requires a post FIF abolition debit for another entity in relation to the taxpayer is made to the eligible entity. Amount of post FIF abolition credit (7) The amount of the post FIF abolition credit is equal to the amount of the post FIF abolition debit for the other entity. When the post FIF abolition credit arises (8) The post FIF abolition credit arises when the FIF attribution account payment referred to in subsection (6) is made. Effect of this section applying (9) If this section applies, the following provisions have effect: (a) if the payment is of a kind referred to in former paragraph 603(1)(a) or (b)--the payment is not assessable income, and is not exempt income, to the extent of the debit; (b) if the payment is of a kind referred to in former paragraph 603(1)(c) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 92 in respect of an individual interest in the net income of the partnership of the year of income referred to in that paragraph--that amount is not assessable income, and is not exempt income, to the extent of the debit; (c) if the payment is of a kind referred to in former paragraph 603(1)(d) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 97, 98A or 100 in respect of a share of the net income of the trust of the year of income referred to in that paragraph--that amount is not assessable income, and is not exempt income, to the extent of the debit; (d) if the payment is of a kind referred to in former paragraph 603(1)(d) and, apart from this section, an amount would be assessable to the trustee of the trust referred to in that paragraph under section 98 in respect of a share of the net income of the trust of the year of income referred to in that paragraph--that amount is not so assessable to the extent of the debit; (e) if the payment is of a kind referred to in former paragraph 603(1)(e)--the payment is not, to the extent of the debit, assessable to the taxpayer as mentioned in that paragraph; (f) if the payment is of a kind referred to in former paragraph 603(1)(f) and, apart from this section, an amount would be included in the taxpayer's assessable income, of the year of income referred to in that paragraph, under section 99B in respect of the trust property referred to in that paragraph--that amount is not assessable income, and is not exempt income, to the extent of the debit; (g) if the payment is of a kind referred to in former paragraph 603(1)(g)--the payment is not assessable income, and is not exempt income, to the extent of the debit; (h) if the payment is of a kind referred to in former paragraph 603(1)(h)--the payment is not assessable income, and is not exempt income, to the extent of the debit. (10) This section is to be disregarded for the purposes of applying any other provision of this Act to determine allowable deductions. (11) In this section: "FIF attribution account entity" has the same meaning as in former Part XI. "FIF attribution account payment" has the same meaning as in former Part XI. "FIF attribution account percentage" has the same meaning as in former Part XI. "trust" has the same meaning as in former Part XI, but does not include a trust covered by former subsection 605(11). INCOME TAX ASSESSMENT ACT 1936 - SECT 23B Reduction of disposal consideration if FIF attributed income not distributed (1) If: (a) it is necessary, for the purposes of applying a provision of this Act in the assessment of a taxpayer for a year of income, to take into account: (i) the amount of consideration received, entitled to be received or taken to have been received, by the taxpayer in respect of the disposal of an asset; or (ii) the capital proceeds from a CGT event happening in relation to a CGT asset; being an asset that is an interest in a FIF attribution account entity; and (b) immediately before the disposal or CGT event takes place there is a post FIF abolition surplus for the FIF attribution account entity in relation to the taxpayer; then, for the purposes of this Act: (c) the consideration or capital proceeds that, apart from this section, would be taken into account under the provision referred to in paragraph (a) in respect of the disposal or CGT event is taken to be reduced by so much of the amount of the post FIF abolition surplus as does not exceed the consideration or capital proceeds; and (d) a post FIF abolition debit arises at the time of the disposal or the CGT event under this paragraph, in relation to the taxpayer, for the FIF attribution account entity; and (e) the amount of the post FIF abolition debit is equal to so much of the surplus as is taken into account under paragraph (c). (2) For the purposes of paragraph (1)(c), if the disposal of the asset or the CGT event causes the taxpayer's FIF attribution account percentage for the FIF attribution account entity to be reduced by a proportion, then only that proportion of the post FIF abolition surplus for the entity is to be taken into account under that paragraph. (3) In this section: "FIF attribution account entity" has the same meaning as in former Part XI. "FIF attribution account percentage" has the same meaning as in former Part XI. INCOME TAX ASSESSMENT ACT 1936 - SECT 23E Redemption of Special Bonds redeemable at a premium (1) An amount received by a person upon the redemption of a Special Bond, other than a part of that amount paid as accrued interest, is not assessable income and is not exempt income of the person. (2) Subsection (1) does not affect the operation of this Act in relation to the redemption of a Special Bond owned by a person where, if the Special Bond had been sold by that person at the time of the redemption: (a) the proceeds of the sale would have been included in the assessable income of that person; or (b) any profit arising from the sale would, disregarding section 26BB, have been included in the assessable income of that person. (3) In this section, Special Bond means security of the Commonwealth issued under the Commonwealth Inscribed Stock Act 1911 and bearing on its face the words "Special Bond". INCOME TAX ASSESSMENT ACT 1936 - SECT 23G Exemption of interest received by credit unions (1) In this section: "credit union" means a company in relation to which the following conditions are satisfied: (a) the company is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959; (b) the company has a consent under section 66 of that Act that allows it to assume or use the expression "credit union" or "credit society", or another expression (whether or not in English) that is of like import to either of those expressions. (2) Income derived during a year of income by a credit union that is an approved credit union in relation to that year of income, being interest paid to the credit union by members of the credit union not being companies in respect of loans made to those members, is exempt from income tax. (2A) Subsection (2) does not apply to a credit union in relation to a year of income if: (a) the credit union is a recognised medium credit union in relation to the year of income; or (b) the credit union is a recognised large credit union in relation to the year of income. (3) For the purposes of this section, a credit union is an approved credit union in relation to a year of income if, and only if, the Commissioner is satisfied that: (a) during that year of income the credit union did not enter into any transactions of a kind not ordinarily entered into by a company of a kind referred to in paragraph (a) of the definition of credit union in subsection (1); and (b) by comparison with the profits of other credit unions for that year of income and the amounts transferred by those credit unions out of those profits to reserves, and after making due allowance for differences in the numbers of transactions entered into by other credit unions and the first-mentioned credit union and the amounts to which the respective transactions related, the profit of the first-mentioned credit union for that year of income was not excessive and the first-mentioned credit union did not transfer an unreasonable part of that profit to a reserve. (4) In determining for the purposes of paragraph (3)(a) whether any transactions entered into by a credit union during a year of income were transactions of a kind referred to in that paragraph, the Commissioner may have regard to: (a) the circumstances in which, and the terms and conditions upon which, during that year of income: (i) moneys were lent to, invested with, or otherwise obtained by, the credit union; (ii) moneys were lent or otherwise made available by the credit union to its members or to other persons; and (iii) moneys were invested by the credit union; (b) the nature of the connexion (if any) between: (i) the credit union or any of its members and any of the persons by whom moneys were lent to, invested with, or otherwise made available to, the credit union during that year of income; (ii) the credit union or any of its members and any of the persons who owed moneys to the credit union at any time during that year of income; or (iii) any of the persons by whom moneys were lent to, invested with, or otherwise made available to, the credit union during that year of income and any of the persons who owed moneys to the credit union at any time during that year of income; and (c) any other relevant matters. INCOME TAX ASSESSMENT ACT 1936 - SECT 23J Sale of securities purchased at a discount (1) An amount received by a person upon the sale or redemption of eligible securities purchased or otherwise acquired at a discount on or before 30 June 1982, other than any part of that amount received as accrued interest, is not assessable income and is not exempt income of the person. (2) Subsection (1) does not apply in relation to an amount received by a person by virtue of a transaction that is part of, or is incidental to, the carrying on by the person of a business that includes buying and selling eligible securities of any kind. (3) Subsection (1) does not affect the operation of section 25A or 26C of this Act or section 15-15 of the Income Tax Assessment Act 1997. (4) In this section, eligible securities means: (a) bonds, debentures, stock or other securities; and (b) any other document evidencing or acknowledging the indebtedness of a person, whether or not the debt is secured. INCOME TAX ASSESSMENT ACT 1936 - SECT 23K Substitution of certain securities (1) In this section: "central borrowing authority" means: (a) the New South Wales Treasury Corporation; (b) the Victorian Public Authorities Finance Agency; (c) the Victoria Transport Borrowing Agency; (d) the Queensland Government Development Authority; (e) the Treasurer of the State of Western Australia; (f) the South Australian Government Financing Authority; (g) the Local Government Finance Authority of South Australia; (h) any other public authority of a State, being a public authority that is empowered to issue securities in the manner referred to in paragraph (2)(a). "public authority" includes a Minister of the Crown in right of a State, a municipal corporation and any other local government body. "security" means stock, a bond or debenture, or any other document evidencing the indebtedness of a person, whether or not the debt is secured. (2) For the purposes of this section, a person shall be taken to have issued a security (in this subsection referred to as the substituted security) to a taxpayer in substitution for another security (in this subsection referred to as the original security) held by the taxpayer if and only if: (a) the substituted security was issued by the person to the taxpayer in exchange for the surrender or transfer of, or otherwise in replacement or substitution for, the original security; and (b) the terms and conditions provided for by the substituted security were identical in all material respects to those provided for by the original security. (3) Where: (a) but for this subsection, a person would be taken to have issued a security (in this subsection referred to as the substituted security) to a taxpayer in substitution for another security (in this subsection referred to as the original security) held by the taxpayer; and (b) either or both of the following conditions is or are satisfied: (i) an amount was payable by the taxpayer by way of consideration for the issue of the substituted security; or (ii) an amount was payable to the taxpayer by way of consideration for the surrender, transfer, replacement or substitution of the original security; the person shall not be taken for the purposes of this section to have issued the substituted security in substitution for the original security. (4) Where: (a) under terms and conditions provided for by a security, the day on which interest is payable in respect of a period is different from that on which interest is payable in respect of the same period under another security; and (b) the terms and conditions provided for by the securities are otherwise identical in all material respects; the following provisions have effect: (c) if the days on which the interest is payable are separated by an interval not exceeding 31 days--the terms and conditions provided for by the 2 securities shall, for the purposes of paragraph (2)(b), be taken to be identical in all material respects; and (d) in any other case--the terms and conditions provided for by the 2 securities shall, for the purposes of paragraph (2)(b), be taken not to be identical in all material respects. (5) Where, on or after 8 August 1984, a central borrowing authority issued or issues a security (in this subsection referred to as the substituted security) to a taxpayer in substitution for another security (in this subsection referred to as the original security) held by the taxpayer that was issued by a public authority other than the central borrowing authority: (a) the substituted security shall, for the purposes of this Act, be deemed to be a continuation of the original security on the terms and conditions provided for by the substituted security; and (b) no amount shall, in respect of the issue of the substituted security or the surrender, transfer, replacement or substitution of the original security, be included in, allowable as a deduction from or taken into account in ascertaining any amount included in or allowable as a deduction from, the assessable income of any taxpayer in respect of any year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 23L Certain benefits in the nature of income not assessable (1) Income derived by a taxpayer by way of the provision of a fringe benefit is not assessable income and is not exempt income of the taxpayer. (1A) Income derived by a taxpayer by way of the provision of a benefit (other than a benefit to which section 15-70 of the Income Tax Assessment Act 1997 applies) that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986, would be a fringe benefit is exempt income of the taxpayer. (2) Where: (a) in a year of income, a taxpayer derives income consisting of one or more non-cash business benefits (within the meaning of section 21A); and (b) the total amount that is applicable under section 21A in respect of those benefits does not exceed $300; the income is exempt income. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AK Key principle A body that is a State/Territory body (an STB) is exempt from income tax under this Division unless it is an excluded STB. There are 5 different ways in which a body can be an STB. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AL Diagram--guide to work out if body is exempt under this Division The following diagram is a guide to help work out whether a body is exempt from income tax under this Division: INCOME TAX ASSESSMENT ACT 1936 - SECT 24AM Certain STBs exempt from tax The income of a State/Territory body (an STB) is exempt from income tax unless section 24AN applies to the STB. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AN Certain STBs not exempt from tax under this Division Income derived by an STB is not exempt from income tax under this Division if, at the time that it is derived, the STB is an excluded STB. Notes: 1. For the definition of excluded STB see section 24AT. 2. Even though an excluded STB is not exempt from income tax under this Division, it may still be exempt under another provision of this Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AO First way in which a body can be an STB A body is an STB if: (a) it is a company limited solely by shares; and (b) all the shares in it are beneficially owned by one or more government entities. Note: For the definition of government entity see section 24AT. Note that an excluded STB is not a government entity. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AP Second way in which a body can be an STB A body is an STB if: (a) it is established by State or Territory legislation; and (b) it is not a company limited solely by shares; and (c) the legislation provides that it must distribute all of its profits (if any) only to one or more government entities; and (d) if the legislation makes provision as to the way its net assets may be distributed if it is dissolved or wound up--the provision is that, if it is dissolved, all of its net assets (if any) must be distributed only to one or more government entities. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AQ Third way in which a body can be an STB A body is an STB if: (a) it is established by State or Territory legislation; and (b) it is not a company limited solely by shares; and (c) the legislation gives the power to appoint or dismiss its governing person or body only to one or more government entities. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AR Fourth way in which a body can be an STB A body is an STB if: (a) it is established by State or Territory legislation; and (b) it is not a company limited solely by shares; and (c) the legislation gives the power to direct its governing person or body as to the conduct of its affairs only to one or more government entities. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AS Fifth way in which a body can be an STB A body is an STB if: (a) it is not a company limited solely by shares; and (b) it is not established by State or Territory legislation; and (c) all the legal and beneficial interests (including, but not limited to, interests as to income, profits, dividends, capital and distributions of capital) in it are held only by one or more government entities; and (d) all the rights or powers (if any) to vote, appoint or dismiss its governing person or body and direct its governing person or body as to the conduct of its affairs are held only by one or more government entities. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AT What do excluded STB, government entity and Territory mean? In this Division: "excluded STB" means an STB that: (a) at a particular time, is prescribed as an excluded STB in relation to that time; or (b) is a municipal corporation or other local governing body (within the meaning of section 50-25 of the Income Tax Assessment Act 1997); or (c) is a public educational institution to which any of paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 applies; or (d) is a public hospital to which any of paragraphs 50-55(a) to (c) of the Income Tax Assessment Act 1997 applies; or (e) is a superannuation fund. "government entity" means: (a) a State; or (b) a Territory; or (ba) a municipal corporation or other local governing body (within the meaning of section 50-25 of the Income Tax Assessment Act 1997); or Note: The effect of this paragraph is that some bodies owned or controlled by a municipal corporation or other local governing body may be an STB even though the municipal corporation or other local governing body is an excluded STB. (c) another STB that is not an excluded STB. "Territory" means the Northern Territory or the Australian Capital Territory. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AU Governor, Minister and Department Head taken to be a government entity For the purposes of sections 24AQ, 24AR and 24AS, if the power to appoint, dismiss or direct the governing body is given to, or is held by: (a) a Governor of a State; or (b) a Minister of the Crown of a State; or (c) a Minister of a Territory; or (d) the head of a Department of a State or a Territory; or (e) any combination of paragraphs (a) to (d); the power is taken to be given to, or held by, a government entity. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AV Regulations prescribing excluded STBs States and Territories to consent to STBs being excluded STBs (1) The regulations may prescribe that an STB is an excluded STB only if all States and Territories consent to the STB being so prescribed. Regulations prescribing excluded STBs may be retrospective (2) Despite subsection 12(2) of the Legislative Instruments Act 2003, a regulation prescribing an STB as an excluded STB may provide that the STB is an excluded STB in relation to a time before the day of the notification of the regulation in the Gazette. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AW Body ceasing to be an STB If a body ceases to be an STB in a year of income (the cessation year), this Act applies to the body as if: (a) the cessation were a change which requires a company to calculate its taxable income and tax loss under Subdivision 165-B of the Income Tax Assessment Act 1997; and (b) the references in that Subdivision to "company" were references to "body"; and (c) if the body is not a company--there were no further requirement for the body to calculate its taxable income for the year of income under that Subdivision; and (d) the amount of any notional loss of the body calculated under section 165-50 of that Act for the period before the cessation were nil; and (e) the body's deductions for tax losses were attributed under section 165-55 of that Act to the period before the cessation and not to any other period; and (f) those deductions were taken not to be full year deductions under section 165-55 of that Act; and (g) the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 were modified, for the purposes of that Subdivision, in accordance with section 24AX of this Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AX Special provisions relating to capital gains and losses Period after cessation date--prior net capital losses to be disregarded (1) In determining if an amount is to be included in the assessable income of the body under Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 for a period that occurred after the cessation, any net capital losses incurred before the cessation are to be disregarded. Special cases where net capital gain before cessation and net capital loss after cessation (2) Subsections (3) and (4) apply if: (a) a net capital gain accrued in the period before the cessation; and (b) if the period from the cessation until the end of the year of income were treated as a year of income--a net capital loss would have accrued in that period. Special case 1--gain exceeds loss (3) If this subsection applies and the net capital gain exceeds the net capital loss: (a) the amount that is to be included in the assessable income of the body for the period that occurred before the cessation as a result of the net capital gain accruing to the body is taken to be the amount by which the net capital gain exceeds the net capital loss; and (b) no net capital gain is taken to have accrued, and no net capital loss is taken to have been incurred, in any period in the cessation year after the cessation; and (c) in determining if a net capital gain accrued to, or a net capital loss was incurred by, the body for the year following the cessation year, no net capital loss is taken to have been incurred by the body in the cessation year. Special case 2--loss equal to or exceeds gain (4) If this subsection applies and the net capital gain does not exceed the net capital loss: (a) no amount is to be included in the assessable income of the body for any period in the cessation year as a result of a net capital gain accruing to the body; and (b) in determining if a net capital gain accrued to, or a net capital loss was incurred by, the body for the year following the cessation year, the net capital loss that the body incurred in the cessation year is taken to be the amount (if any) by which the net capital loss exceeds the net capital gain. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AY Losses from STB years not carried forward (1) If a body is an STB on the last day of a year of income in which it incurs a tax loss, the tax loss is not allowable as a deduction from the body's assessable income of a later year of income unless the body is an STB on the first day of that later year of income. Note: This section prevents losses from years prior to the cessation year from being carried forward to years after the cessation year. (2) This section only applies to a tax loss incurred in the 1995-96 year of income or a later year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AYA Effect of unfunded superannuation liabilities (1) This section applies to a deduction under section 290-60 of the Income Tax Assessment Act 1997 in respect of a contribution made in relation to a person who was an employee of a prescribed excluded STB when it ceased to be an STB. (2) A deduction to which this section applies is not allowable to the body for any year of income unless the requirements of subsections (3) and (4) are complied with. (3) For the deduction to be allowable, the body must obtain a certificate by an authorised actuary stating the actuarial value, as at the time the body ceases to be an STB, of liabilities of the STB to provide superannuation benefits for, or for SIS dependants of, employees of the body, where the liabilities: (a) accrued after 30 June 1995 and before the time when the body ceased to be an STB; and (b) were, according to actuarial principles, unfunded at that time. (4) The certificate must be in a form approved in writing by the Commissioner. The body must obtain the certificate: (a) before the date of lodgment of its return of income of the year of income in which the body ceased to be an STB; or (b) within such further time as the Commissioner allows. (5) If the body obtains the certificate, a deduction to which this section applies is nevertheless not allowable for a year of income if the sum of all deductions to which this section applies for the year of income is less than or equal to the unfunded liability limit (see subsection (6)) for the year of income. (6) If the sum is greater than that limit, so much of the deduction as is worked out using the following formula is not allowable: where: "Unfunded liability limit" for a year of income is: (a) if the year of income is the one in which the body ceases to be an STB--the actuarial value of the liabilities set out in the actuary's certificate; or (b) in any other case--that actuarial value as reduced by the total amount of deductions to which this section applies that, because of subsection (5), have not been allowable to the body for all previous years of income. (7) Expressions used in this section that are also used in section 290-60 of the Income Tax Assessment Act 1997 have the same respective meanings as in that section. INCOME TAX ASSESSMENT ACT 1936 - SECT 24AZ Meaning of period and prescribed excluded STB In this Subdivision: "period" means any of the periods into which the cessation year is divided under section 165-45 of the Income Tax Assessment Act 1997. "prescribed excluded STB" means an STB that is an excluded STB as a result of regulations made for the purposes of paragraph (a) of the definition of excluded STB in section 24AT. INCOME TAX ASSESSMENT ACT 1936 - SECT 24B Interpretation (1) In this Division, unless the contrary intention appears: "prescribed person" means: (a) a person who is a Territory resident; (b) a person who is a trustee of a trust that is a Territory trust in relation to the year of income, being the person in his or her capacity as trustee of that trust; or (c) a company that is a Territory company in relation to the year of income. "prescribed Territory" means Norfolk Island. (2) For the purposes of this Division: (a) a reference to an agreement, right, power or option shall be construed as including a reference to an agreement, right, power or option that is not enforceable by legal proceedings whether or not it was intended to be so enforceable; and (b) an arrangement or understanding, whether formal or informal and whether expressed or implied, shall be deemed to be an agreement. (3) Where the effect of a provision of this Division that refers to the derivation of income by a person not being a company or to the application of income for the benefit of a person not being a company depends upon the determination of the question whether or not the person is a Territory resident, that question shall be determined as at the time of the derivation of the income by the person or of the application of the income for the benefit of the person, as the case may be. (4) This Division applies in relation to profits or gains of a capital nature in the same manner as it applies in relation to income. (5) For the purposes of this Division (other than section 24C), the adjacent area, within the meaning of the Sea Installations Act 1987, in relation to a prescribed Territory shall, after the commencement of this subsection, be taken to be part of the prescribed Territory. INCOME TAX ASSESSMENT ACT 1936 - SECT 24C Territory resident A reference in this Division to a Territory resident is a reference to a person, not being a company, who: (a) resides, and has his or her ordinary place of residence, in a prescribed Territory; and (b) would not, but for the operation of subsection 7A(2), be treated as a resident of Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 24D Territory company (1) Subject to this section, a company is, for the purposes of this Division, a Territory company in relation to the year of income if, and only if: (a) the company was incorporated in a prescribed Territory; (b) at all times during the year of income the company was managed and controlled wholly and exclusively in that Territory and was so managed and controlled by a person who was a Territory resident or by persons who were Territory residents; (c) at no time during the year of income was a shareholding interest in the company held by a person (not being a company) who was not a Territory resident; (d) at no time during the year of income was a person, or were 2 or more persons, in a position to affect any rights in connexion with the company of the holder of a shareholding interest in the company; and (e) no agreement was entered into before or during the year of income by virtue of which a person or persons would be in a position after the year of income to affect any rights in connexion with the company of the holder of a shareholding interest in the company. (2) For the purposes of this section, a person shall be deemed to have held a shareholding interest in a company at a particular time if at that time: (a) in the case of a company having a share capital--the person was beneficially entitled to, or to an interest in, any shares in the company (whether or not the whole or any part of the legal ownership of the shares was vested in the person); or (b) in the case of a company limited by guarantee or limited by both shares and guarantee--the person was a member of the company or had a beneficial interest in any right or interest of a member of the company in or in relation to the company. (3) For the purposes of this section, where at any time a person held a shareholding interest in a company and at that time that company held a shareholding interest in another company (including a shareholding interest that the first-mentioned company is deemed to have held by another application or other applications of this subsection), that person shall be deemed to have held at that time a shareholding interest in that other company. (4) For the purposes of paragraphs (1)(d) and (e), a person or persons shall be taken to have been, or to be, in a position at a particular time to affect rights in connexion with a company of the holder of a shareholding interest in the company if at that time that person had or has, or those persons had or have, a right, power or option (whether by virtue of any provision of the constituent document of the company or of any other company or by virtue of any agreement or instrument or otherwise) to do any act or thing that would divest the holder of that shareholding interest of all or any of those rights, to reduce the extent of all or any of those rights, to specify the manner in which all or any of those rights were or are to be exercised or to do any act or thing that would prevent the holder of that shareholding interest from exercising all or any of those rights for that holder's own benefit or receiving any benefits accruing by reason of the existence of all or any of those rights. (5) A reference in subsection (4) to the doing of any act or thing that would reduce the extent of any rights in connexion with a company of the holder of a shareholding interest in the company includes a reference to the doing of any act or thing that would reduce the proportion that those rights bear to the total number of the rights of the same kind in connexion with the company of all the holders of shareholding interests in the company. (6) A company that would, apart from this subsection, be a Territory company for the purposes of this Division in relation to the year of income shall be deemed not to be a Territory company for the purposes of this Division in relation to the year of income if the affairs or business operations of the company were to any extent managed or conducted in the year of income in the interests of persons other than the holders of shareholding interests in the company or are likely to be so managed or conducted in a later year of income. (7) In determining for the purposes of this section whether the affairs or business operations of a company were, or are likely to be, managed or conducted to any extent in the interests of persons other than the holders of shareholding interests in the company, regard shall be had to any act or thing done, or likely to be done, in the course of the management or conduct of those affairs or operations, irrespective of the purpose or purposes for which that act or thing was done, or is likely to be done, and notwithstanding that the doing of that act or thing took place, or is likely to take place, in the course of ordinary family or commercial dealing. Note: Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of subsection (7). (8) Where, but for this subsection, a company would not be a Territory company for the purposes of this Division in relation to a year of income by reason of a non-compliance of a temporary nature with the requirements of paragraph (1)(b) or (c), the Commissioner may disregard that non-compliance. (9) Where, but for this subsection, a company would not be a Territory company for the purposes of this Division in relation to a year of income by reason of a non-compliance with paragraph (1)(d) or (e) or by reason of subsection (6) but the Commissioner is of the opinion that, having regard to the general effect of the provisions of this section and to special circumstances that exist in relation to the company, it would be inappropriate not to regard the company as a Territory company in relation to that year of income, the Commissioner may regard the company as a Territory company for the purposes of this Division in relation to that year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 24E Territory trusts (1) A trust is, for the purposes of this Division, a Territory trust in relation to the year of income if: (a) the trust resulted from: (i) a will, a codicil or an order of a court that varied or modified the provisions of a will or codicil; or (ii) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; (b) the deceased person was a Territory resident immediately before his or her death; and (c) either of the following subparagraphs applies in relation to the trust: (i) the administration of the estate of the deceased person had not, before the end of the year of income, progressed to a stage that would give to any beneficiary a present entitlement to income that was derived by the trustee before or during the year of income; or (ii) at no time during the year of income was any person presently entitled to income derived by the trustee during the year of income and at the end of the year of income no person other than a Territory resident had any interest, whether vested or contingent, in any income derived by the trustee during the year of income or could by the exercise of a power conferred on any person obtain such an interest. (2) A trust is, for the purposes of this Division, a Territory trust in relation to the year of income if: (a) the trust was created by an instrument (not being a will or a codicil) executed in a prescribed Territory by a Territory resident; and (b) at no time during the year of income was any person presently entitled to income derived by the trustee during the year of income and at the end of the year of income no person other than a Territory resident had any interest, whether vested or contingent, in any income derived by the trustee during the year of income or could by the exercise of a power conferred on any person obtain such an interest. (3) A trust is not, for the purposes of this Division, a Territory trust in relation to the year of income except as provided by this section. (4) For the purposes of this Division: (a) where 2 or more beneficiaries are presently entitled to shares of any income derived by a trustee (whether or not any of those beneficiaries is under a legal disability), the respective shares of that income to which those beneficiaries are so entitled shall be deemed to be held by the trustee upon separate trusts for those beneficiaries; (b) if there is a share of any income derived by a trustee to which no beneficiary is presently entitled, the trustee shall be deemed to hold that share upon a trust separate from the trust or trusts upon which the trustee holds the remainder of that income; and (c) a reference to income derived by a trustee of a trust is a reference to income derived by the trustee in the trustee's capacity as trustee of that trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 24F Exemption from tax of certain income derived from sources outside Australia (1) Subject to subsections (2), (3) and (4), this section applies to: (a) income derived (otherwise than as a trustee) from sources outside Australia by a person being a Territory resident or by a company being a Territory company in relation to the year of income; and (b) income derived from sources outside Australia by a trustee of a trust that is a Territory trust in relation to the year of income. (2) This section does not apply to income consisting of a dividend paid by a company that is a resident of Australia other than a company that is a resident of Australia by reason only of the operation of subsection 7A(2). (3) Subject to subsection (4), this section does not apply to income if the Commissioner is satisfied that the income has been, or may be, applied for the benefit of a person not being a Territory resident, or for the benefit of a company not being a Territory company in relation to the year of income of the company in which the income has been or may be applied. (4) Subsection (3) does not exclude the operation of this section in relation to any income if the Commissioner is satisfied that the application of the income as mentioned in that subsection resulted, or would result, from an agreement or transaction that was a genuine commercial or family dealing and was not entered into or effected for the purpose, or for purposes that included the purpose, of avoiding liability to taxation. Note: Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of subsection (4). (5) Income to which this section applies is exempt from income tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 24G Exemption from tax of certain income derived from sources in a prescribed Territory (1) Subject to subsections (2) and (3), this section applies to: (a) income derived (otherwise than as a trustee) from sources in a prescribed Territory by a person who is a Territory resident; (b) income derived (otherwise than as a trustee) from sources in a prescribed Territory by a company that is a Territory company in relation to the year of income; (c) income derived from sources in a prescribed Territory by a trustee of a trust that is a Territory trust in relation to the year of income; (d) income derived from sources in a prescribed Territory by a trustee of a trust, being income to which a beneficiary who is under a legal disability and is a Territory resident is presently entitled; and (e) income derived by a person from an office or employment the duties of which are wholly or mainly performed in a prescribed Territory, if the Commissioner is satisfied that, at the time when the person commenced to perform duties of that office or employment in that Territory, he or she intended to remain in that Territory for a continuous period of more than 6 months. (2) Subject to subsection (3), this section does not apply to income if the Commissioner is satisfied that the income has been, or may be, applied for the benefit of a person not being a Territory resident, or for the benefit of a company not being a Territory company in relation to the year of income of the company in which the income has been or may be applied. (3) Subsection (2) does not exclude the operation of this section in relation to any income if the Commissioner is satisfied that the application of the income as mentioned in that subsection resulted, or would result, from an agreement or transaction that was a genuine commercial or family dealing and was not entered into or effected for the purpose, or for purposes that included the purpose, of avoiding liability to taxation. Note: Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of subsection (3). (4) Income to which this section applies is exempt from income tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 24H When income to be taken to be applied for benefit of a person (1) In determining for the purposes of this Division whether any income has been, or may be, applied for the benefit of a person, regard shall be had to all benefits that have accrued, or may accrue, as the case may be, at any time to the person (whether or not the person had, or may have, rights at law or in equity in or to those benefits) as a result of the derivation of, or in relation to, that income, irrespective of the nature or form of the benefits. (2) Without limiting the generality of subsection (1), income shall be taken, for the purposes of this Division, to have been applied for the benefit of a person if: (a) the income has been so dealt with that it will, at a future time, and whether in the form of income or not, enure for the benefit of the person; (b) the derivation of the income has operated to increase the value to the person of any property or rights of any kind held by or for the benefit of the person; (c) the person has received or become entitled to receive any benefit (including a loan or a repayment, in whole or in part, of a loan, or any other payment of any kind) provided out of the income or out of property or money that was available for the purpose by reason of the derivation of the income; (d) the person has power, by means of the exercise by the person of any power of appointment or revocation or otherwise, to obtain, whether with or without the consent of any other person, the beneficial enjoyment of the income; or (e) the person is able, in any manner whatsoever, and whether directly or indirectly, to control the application of the income. (3) Without limiting the generality of subsection (1), it shall be taken, for the purposes of this Division, that income may be applied for the benefit of a person if: (a) the income may be so dealt with that it will, at a future time, and whether in the form of income or not, enure for the benefit of the person; (b) the derivation of the income may operate to increase the value to the person of any property or rights of any kind held by or for the benefit of the person; (c) the person may receive or become entitled to receive any benefit (including a loan or a repayment, in whole or in part, of a loan, or any other payment of any kind) to be provided out of the income or out of property or money that is or will be available for the purpose by reason of the derivation of the income; (d) the person may, in the event of the exercise of any power vested in any other person, become entitled to the beneficial enjoyment of the income; or (e) the person may become able, in any manner whatsoever, and whether directly or indirectly, to control the application of the income. INCOME TAX ASSESSMENT ACT 1936 - SECT 24J Source of dividends (1) In this section: "prescribed income" means income consisting of Territory income or residual income, or both. "residual income" means income derived before 20 July 1972 from a source that, for the purposes of the Income Tax Assessment Act 1936 as amended and in force at the time when the income was derived, was a source outside Australia or was a source in a Territory that is a prescribed Territory. "Territory income" means income to which section 24F or 24G applies. (2) For the purposes of this Division, but subject to subsection (3), income consisting of a dividend shall be deemed to be derived from a source in a prescribed Territory if, and only if: (a) the dividend: (i) is paid by a company that is a Territory company in relation to the year of income of the company in which the dividend is paid; and (ii) is paid by that company wholly and exclusively out of the amount remaining after deducting from prescribed income of the company all losses and outgoings incurred in gaining or producing that income that would have been allowable deductions if that income had been assessable income; or (b) the dividend is paid by a company that was incorporated in a prescribed Territory but is not a Territory company in relation to the year of income of the company in which the dividend is paid, and is paid by that company: (i) wholly and exclusively out of the amount remaining after deducting from residual income of the company all losses and outgoings incurred in gaining or producing that income that would have been allowable deductions if that income had been assessable income; or (ii) wholly and exclusively out of the amount remaining after deducting from income, being a dividend, derived by the company, being a dividend that is deemed to be derived from a source in a prescribed Territory by another application or other applications of this paragraph, all losses and outgoings incurred in gaining or producing that income that would have been allowable deductions if that income had been assessable income. (3) Where: (a) a dividend derived by a prescribed person is attributable to residual income; and (b) the Commissioner is satisfied that the dividend would not have been derived by a prescribed person but for: (i) a change in the beneficial ownership of shares in a company that took place on or after 20 July 1972; or (ii) the making of any agreement or other instrument, the granting or assignment of, or the failure to exercise, any right, power or option, or the doing of any other act or thing, in relation to shares in a company on or after that date; the dividend shall be deemed, for the purposes of this Division, not to have been derived from a source in a prescribed Territory. (4) Subparagraph (3)(b)(i) does not apply in relation to a change in the beneficial ownership of shares resulting from: (a) a will, a codicil or an order of a court that varied or modified the provisions of a will or codicil; or (b) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate. (5) For the purposes of subsection (3), a dividend is attributable to residual income if the dividend is paid in whole or in part out of: (a) an amount ascertained in accordance with paragraph (2)(a), where the amount is so ascertained by reference to an amount of prescribed income of a company that includes residual income of the company; or (b) an amount ascertained in accordance with paragraph (2)(b). (6) Where a dividend paid by a company incorporated in a prescribed Territory to another company incorporated in a prescribed Territory is attributable to residual income, any dividend paid by the other company in whole or in part out of the first-mentioned dividend shall be deemed to be attributable to residual income. (7) The reference in subsection (6) to a dividend that is attributable to residual income includes a reference to a dividend that is deemed to be attributable to residual income by virtue of any other application or applications of that subsection. INCOME TAX ASSESSMENT ACT 1936 - SECT 24K Source of income from employment For the purposes of this Division, income derived from an office or employment shall be deemed to be derived from a source in a prescribed Territory: (a) if, and only if, the duties of that office or employment are wholly or mainly performed in a prescribed Territory; and (b) to such extent only as the Commissioner considers reasonable remuneration for the performance of those duties. INCOME TAX ASSESSMENT ACT 1936 - SECT 24L Source of interest or royalty (1) This section applies to income derived by a person who is a prescribed person, being income that consists of interest or a royalty that: (a) is paid to the prescribed person by the Commonwealth, by a State, by an authority of the Commonwealth or of a State or by a person who is, or by persons at least one of whom is, a resident and is not an outgoing wholly incurred by the Commonwealth, the State, the authority or that person or those persons in carrying on business in a country outside Australia at or through a permanent establishment of the Commonwealth, the State, the authority or that person or those persons in that country; or (b) is paid to the prescribed person by a person who is, or by persons each of whom is, a non-resident and is, or is in part, an outgoing incurred by that person or those persons in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia. (2) For the purposes of this Division, but subject to this section, income to which this section applies shall be deemed: (a) not to have been derived from a source in a prescribed Territory; and (b) not to have been derived from a source outside Australia. (3) Where: (a) income to which this section applies is paid to the prescribed person by whom it is derived by the Commonwealth, by a State, by an authority of the Commonwealth or of a State or by a person who is, or by persons at least one of whom is, a resident; and (b) the interest or royalty of which the income consists is, in part, an outgoing incurred by the Commonwealth, the State, the authority or that person or those persons in carrying on business in a country outside Australia at or through a permanent establishment of the Commonwealth, the State, the authority or that person or those persons in that country; subsection (2) has effect in relation to so much only of the income as is attributable to so much of the interest or royalty as is not an outgoing so incurred. (4) Where: (a) income to which this section applies is paid to the prescribed person by whom it is derived by a person who, or by persons each of whom, is a non-resident; and (b) the interest or royalty of which the income consists is, in part only, an outgoing incurred by the person or persons by whom it is paid in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia; subsection (2) has effect in relation to so much only of the income as is attributable to so much of the interest or royalty as is an outgoing so incurred. (4A) In subsection (4B), a reference to a relevant person is a reference to the Commonwealth, a State, an authority of the Commonwealth or of a State or a person who is, or persons at least 1 of whom is, a resident. (4B) For the purposes of paragraphs (1)(a) and (3)(b), where: (a) interest or royalty is paid, after the commencement of this subsection, to a prescribed person by a relevant person carrying on business in a country outside Australia; and (b) the interest, a part of the interest, the royalty or a part of the royalty: (i) is incurred by the relevant person in gaining or producing income that is derived by the relevant person otherwise than in carrying on business in a country outside Australia at or through a permanent establishment of the relevant person in that country or is incurred by the relevant person for the purpose of gaining or producing income to be so derived; or (ii) is incurred by the relevant person in carrying on business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the relevant person otherwise than in so carrying on business at or through a permanent establishment of the relevant person in a country outside Australia; the interest, the part of the interest, the royalty or the part of the royalty, as the case may be, is not an outgoing incurred by the relevant person in carrying on business in a country outside Australia at or through a permanent establishment of the relevant person in that country. (4C) For the purposes of paragraphs (1)(b) and (4)(b), where: (a) interest or royalty is paid, after the commencement of this subsection, to a prescribed person by another person or persons (in this subsection referred to as the payer), being: (i) another person who is carrying on business in Australia and is a non-resident; or (ii) other persons who are carrying on business in Australia and each of whom is a non-resident; and (b) the interest, a part of the interest, the royalty or a part of the royalty: (i) is incurred by the payer in gaining or producing income that is derived by the payer in carrying on business in Australia at or through a permanent establishment of the payer in Australia or is incurred by the payer for the purpose of gaining or producing income to be so derived; or (ii) is incurred by the payer in carrying on a business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the payer in so carrying on business at or through a permanent establishment of the payer in Australia; the interest, the part of the interest, the royalty or the part of the royalty, as the case may be, is an outgoing incurred by the payer in carrying on business in Australia at or through a permanent establishment of the payer in Australia. (5) In subsections (1), (3), (4), (4A), (4B) and (4C), Australia, resident and non-resident have the meanings that those expressions would have if subsection 7A(2) did not refer to Norfolk Island. (6) For the purposes of this section, interest or a royalty shall be deemed to have been paid by a person to another person although it is not actually paid over to the other person but is reinvested, accumulated, capitalized, carried to any reserve, sinking fund or insurance fund however designated, or otherwise dealt with on behalf of the other person or as the other person directs. INCOME TAX ASSESSMENT ACT 1936 - SECT 24M Certain income deemed not to be derived from sources in a prescribed Territory or outside Australia (1) Income (not being a dividend) that would, but for this subsection, be taken to be derived from a source in a prescribed Territory shall be deemed, for the purposes of this Division, not to be derived from such a source to the extent to which the income is received or accrues, directly or indirectly, in pursuance of an agreement or transaction that: (a) was not a genuine commercial or family agreement or transaction; or (b) was entered into for the purpose, or for purposes that included the purpose, of avoiding liability to taxation. Note: Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of paragraph (1)(a). (2) Income that would, but for this subsection, be taken to be derived from a source outside Australia shall be deemed, for the purposes of this Division, not to be derived from such a source to the extent to which the income is received or accrues, directly or indirectly, in pursuance of an agreement or transaction that: (a) was not a genuine commercial or family agreement or transaction; or (b) was entered into for the purpose, or for purposes that included the purpose, of avoiding liability to taxation. Note: Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of paragraph (2)(a). INCOME TAX ASSESSMENT ACT 1936 - SECT 24P Transitional capital gains tax provisions for certain Cocos (Keeling) Islands assets (1) Subject to an election under subsection (5), this section applies to a CGT asset held by a taxpayer where all of the following conditions are satisfied: (a) the asset was owned by the taxpayer at the end of 30 June 1991; (b) if there had been a disposal (within the meaning of former Part IIIA) of the asset by the taxpayer on 1 July 1991, that Part would have applied in respect of that disposal (ignoring former section 160ZZF and former Divisions 5A, 7A and 17 of that Part); (c) if: (i) there had been a disposal (within the meaning of former Part IIIA) of the asset by the taxpayer on 1 July 1991; and (ii) profits or gains of a capital nature had been derived by the taxpayer in respect of that disposal; and (iii) former section 24BB had not been enacted; and (iv) former section 24BA had applied in relation to the year of income in which disposal occurred; the profits or gains would have been exempt income under this Division. (2) For the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997: (a) except for the purposes of determining the cost base to the taxpayer of the asset--the asset is taken to have been acquired by the taxpayer on 30 June 1991; and (b) the first element of the asset's cost base in the hands of the taxpayer (at the end of 30 June 1991) is its market value at that time. (3) Despite Division 121 of the Income Tax Assessment Act 1997, the taxpayer is not required to keep records of the date of acquisition of the asset, or its cost base on 30 June 1991. (5) If, as at the date on which a CGT event happens in relation to the asset, the taxpayer has complied with former section 160ZZU of this Act and Division 121 of the Income Tax Assessment Act 1997 in relation to the asset, the taxpayer may elect that this section does not apply in relation to the asset. INCOME TAX ASSESSMENT ACT 1936 - SECT 25A Assessable income to include certain profits (1A) This section does not apply in respect of the sale of property acquired on or after 20 September 1985. (1B) This section does not apply to a profit arising in the 1997-98 year of income or a later year of income from the carrying on or carrying out of a profit-making undertaking or scheme, even if the undertaking or scheme was entered into, or began to be carried on or carried out, before the 1997-98 year of income. Note: Section 15-15 (Profit-making undertaking or plan) of the Income Tax Assessment Act 1997 deals with such a profit. (1) The assessable income of a taxpayer shall include profit arising from the sale by the taxpayer of any property acquired by the taxpayer for the purpose of profit-making by sale, or from the carrying on or carrying out of any profit-making undertaking or scheme. (2) Subject to subsection (3), where: (a) after 23 August 1983, a taxpayer sold or sells property (in this subsection referred to as the relevant property) being: (i) shares in a private company; (ii) an interest in a partnership; or (iii) an interest in a private trust estate; and (b) at the time of sale of the relevant property: (i) the company, partnership or trustee of the trust estate, as the case may be, held property that: (A) was acquired for the purpose of profit-making by sale by the company, partnership or trustee, as the case may be; and (B) was not excepted property of the company, partnership or trust estate, as the case may be; or (ii) the company, partnership or trustee of the trust estate, as the case may be, held an interest, through one or more interposed companies, partnerships or trusts, in property that: (A) was acquired for the purpose of profit-making by sale by another private company, partnership or trustee of a private trust estate; and (B) was not excepted property of that other company, partnership or trust estate, as the case may be; the taxpayer shall, for the purposes of the application of this Act (including any application of any other provision of this section), be deemed to have acquired the relevant property for the purpose of profit-making by sale. (3) Subsection (2) does not apply in relation to the sale by a taxpayer of property where the Commissioner, having regard to: (a) the extent to which the assets of the company, partnership or trust estate, as the case may be, referred to in paragraph (2)(a), immediately before the time of sale, consisted of the property referred to in subparagraph (2)(b)(i) or the interest referred to in subparagraph (2)(b)(ii), as the case may be; (b) the nature and extent, immediately before the time of sale, of the taxpayer's control of the company, partnership or trust estate, as the case may be, referred to in paragraph (2)(a) including, in the case of a company, the nature and extent of the taxpayer's shareholding in the company; (c) the circumstances surrounding any other sale, whether or not by the taxpayer, of shares in the company, or an interest in the partnership or trust estate, as the case may be, referred to in paragraph (2)(a), being a sale at a time when the property of that company, partnership or trust estate included the property referred to in subparagraph (2)(b)(i) or the interest referred to in subparagraph (2)(b)(ii), as the case may be; and (d) such other matters as the Commissioner considers relevant; considers that it is not appropriate that that subsection should apply in relation to the sale of the property by the taxpayer. (4) Where: (a) a taxpayer acquired or acquires property, being shares in a company, for the purpose of profit-making by sale; and (b) after 23 August 1983: (i) the company issued or issues other shares (in this subsection referred to as the bonus shares) to the taxpayer in satisfaction of a dividend (including an amount debited against an amount standing to the credit of a share premium account) payable to the taxpayer in respect of the shares referred to in paragraph (a); or (ii) by reason that the taxpayer was the owner of the shares referred to in paragraph (a), the company issued or issues to the taxpayer rights to acquire other shares in the company; the taxpayer shall, for the purposes of the application of this Act (including any other application of this subsection and any application of any other provision of this section), be deemed to have acquired the bonus shares or the rights, as the case may be, for the purpose of profit-making by sale. (5) Where, after 23 August 1983, property was or is acquired by a taxpayer as a result of a transfer in the prescribed manner by a person who acquired the property for the purpose of profit-making by sale, the taxpayer shall, for the purposes of the application of this Act (including any other application of this subsection and any application of any other provision of this section), be deemed to have acquired the property for the purpose of profit-making by sale. (6) Where: (a) after 23 August 1983, a taxpayer sold or sells property; and (b) the property sold was: (i) an interest in property, being property acquired by the taxpayer for the purpose of profit-making by sale; or (ii) property, or an interest in property, in which was merged an interest in property, being an interest acquired by the taxpayer for the purpose of profit-making by sale; the taxpayer shall, for the purposes of the application of this Act (including any application of any other provision of this section), be deemed to have acquired the property sold for the purpose of profit-making by sale. (7) For the purposes of subsection (2), where a company, partnership or trustee of a trust estate holds or held property (in this subsection referred to as the underlying property) consisting of: (a) an interest in property, being property acquired by the company, partnership or trustee for the purpose of profit-making by sale; or (b) property, or an interest in property, in which was merged an interest in property, being an interest acquired by the company, partnership or trustee for the purpose of profit-making by sale; the company, partnership or trustee, as the case may be, shall be deemed to have acquired the underlying property for the purpose of profit-making by sale. (8) Where: (a) property (in this subsection referred to as the acquired property) was or is acquired for the purpose of profit-making by sale; and (b) after 23 August 1983, property (in this subsection referred to as the transferred property) being: (i) an interest in the acquired property; or (ii) property, or an interest in property, in which was merged an interest in the acquired property; was or is transferred to a taxpayer in the prescribed manner; the taxpayer shall, for the purposes of the application of this Act (including any other application of this subsection and any application of any other provision of this section), be deemed to have acquired the transferred property for the purpose of profit-making by sale. (9) Where a taxpayer sold or sells property that, by virtue of any of the preceding provisions of this section, is deemed to have been acquired by the taxpayer for the purpose of profit-making by sale, so much (if any) of the proceeds of sale as, in the opinion of the Commissioner, is appropriate shall, for the purposes of this Act, be deemed to be profit arising from the sale by the taxpayer of the property. (10) For the purposes of the application of subsection (9) in relation to the sale of property (in this subsection referred to as the relevant property) by a taxpayer: (a) if: (i) the relevant property is deemed by subsection (2) to have been acquired by the taxpayer for the purpose of profit-making by sale; (ii) the property (in this paragraph referred to as the underlying property) to which sub-subparagraph (2)(b)(i)(A) or (2)(b)(ii)(A), as the case may be, applies was actually acquired for the purpose of profit-making by sale by the company, partnership or trustee referred to in that sub-subparagraph (which company, partnership or trustee is in this paragraph referred to as the underlying owner); and (iii) the relevant property was not transferred to the taxpayer in the prescribed manner; the Commissioner shall have regard to the extent to which, in the Commissioner's opinion, the proceeds of sale of the relevant property are attributable to the amount of any increase in the value of the underlying property during the period (in this paragraph referred to as the relevant period) when the underlying property was held by the underlying owner and the relevant property was held by the taxpayer reduced by the amount of any capital expenditure incurred by the underlying owner in respect of the underlying property during the relevant period (not including expenditure in respect of which a deduction has been allowed, or is allowable, to the underlying owner); (b) if the relevant property is deemed by subsection (5) to have been acquired by the taxpayer for the purpose of profit-making by sale and the relevant property was actually acquired for the purpose of profit-making by sale by the person (in this paragraph referred to as the transferor) who transferred the relevant property to the taxpayer in the prescribed manner--the Commissioner shall have regard to the extent to which the amount (if any) that would have been included in the assessable income of the transferor if the transferor had sold the relevant property at the time when it was sold by the taxpayer for an amount of consideration equal to the amount of the consideration received or receivable by the taxpayer in respect of the sale of the relevant property by the taxpayer exceeds the sum of: (i) any expenditure incurred by the taxpayer in respect of the relevant property, not including: (A) any consideration given by the taxpayer in respect of the transfer of the relevant property to the taxpayer; or (B) expenditure to which subparagraph (ii) applies; (ii) where the taxpayer incurred expenditure of a capital nature in respect of the relevant property otherwise than: (A) in acquiring property for the purpose of profit-making by sale; or (B) as part of a profit-making undertaking or scheme; an amount equal to so much of the consideration received or receivable by the taxpayer in respect of the sale of the relevant property by the taxpayer as exceeds the amount that, in the opinion of the Commissioner, would have been the consideration received or receivable by the taxpayer if the taxpayer had not incurred that capital expenditure; and (iii) the amount of any profit included in the assessable income of the transferor in respect of the transfer of the relevant property to the taxpayer; (c) if the relevant property is deemed to have been acquired by the taxpayer by virtue of the application of this section (either directly or indirectly) in relation to property (in this paragraph referred to as the related property) that was actually acquired by the taxpayer or by another person or other persons for the purpose of profit-making by sale--the Commissioner shall have regard to the extent to which the relevant property consists of, or is attributable to, the related property; (d) if the relevant property consists of rights to acquire shares in a company, being rights that the taxpayer is deemed by subsection (4) to have acquired for the purpose of profit-making by sale--the relevant property shall be deemed to have been acquired by the taxpayer at no cost; and (e) if the relevant property consists of bonus shares that the taxpayer is deemed by subsection (4) to have acquired for the purpose of profit-making by sale--the cost to the taxpayer of the relevant property shall be ascertained in accordance with section 6BA. (11) For the purposes of this section, property shall be taken to have been transferred to a person (in this subsection referred to as the transferee) in the prescribed manner if: (a) the following conditions are satisfied: (i) the property is transferred by way of gift or for consideration the amount or value of which is less than the amount that, in the opinion of the Commissioner, is the value of the property immediately before the time of transfer; (ii) the property is transferred otherwise than as a result of: (A) a will, a codicil or an order of a court that varied or modified the provisions of a will or a codicil; or (B) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; and (iii) the Commissioner is satisfied that the transferee and the person who transferred the property were not dealing with each other at arm's length in relation to the transfer of the property; or (b) the property: (i) is transferred by way of a distribution of property of a private company or private trust estate made (whether in the course of the winding up of the company or trust estate or otherwise) to the transferee in the transferee's capacity as a shareholder in the company or a beneficiary of the trust estate, as the case may be; and (ii) is not excepted property of the company or trust estate, as the case may be. (12) In this section: (a) a reference to excepted property of a company, partnership or trust estate is a reference to: (i) trading stock of the company, partnership or trustee; or (ii) property being plant within the meaning of section 45-40 of the Income Tax Assessment Act 1997 purchased for use by the company, partnership or trustee of the trust estate for the purpose of producing assessable income; (b) a reference to a private company is a reference to a company other than a company the shares in which are listed for quotation in the official list of a stock exchange in Australia or elsewhere; (c) a reference to a private trust estate is a reference to a trust estate other than a unit trust the units in which are listed for quotation in the official list of a stock exchange in Australia or elsewhere or are ordinarily available for subscription or purchase by the public; and (d) a reference to property generally or to a particular kind of property includes a reference to an estate or interest in property or in that kind of property, as the case may be. INCOME TAX ASSESSMENT ACT 1936 - SECT 26AB Assessable income--premium for lease (1A) For the purposes of assessments for the 1997-98 year of income and later years of income, this section applies only in relation to assignments of leases granted before 20 September 1985. Note: The Income Tax Assessment Act 1997 does not contain a rewritten version of this section. For the 1998-99 year of income and later years of income, Parts 3-1 and 3-3 (about CGT) deal with the income tax treatment of premiums for: * granting leases; and * assigning leases granted on or after 20 September 1985. For the 1997-98 year of income, former Part IIIA of this Act (about CGT) dealt with the income tax treatment of such premiums. (1) In this section, premium means a consideration payable in one amount, or each amount of a consideration payable in more than one amount, where the consideration is: (a) in the nature of a premium, fine or foregift payable for or in connexion with the grant or assignment of a lease; or (b) for or in connexion with an assent to the grant or assignment of a lease; but does not include an amount in respect of goodwill or a licence. (2) Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was not, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or the assignee or some other person wholly or partly for the purpose of gaining or producing assessable income, the assessable income of the taxpayer shall include the premium. (3) Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or assignee or some other person partly for the purpose of gaining or producing assessable income and partly for other purposes, the assessable income of the taxpayer shall include such part of the premium as the Commissioner considers may reasonably be attributed to the intended use of the property for purposes other than gaining or producing assessable income. (4) Where, in a case referred to in subsection (2) or (3), the taxpayer satisfies the Commissioner that, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, the taxpayer believed on reasonable grounds that the grantee or assignee intended a particular use of the property by the grantee or assignee or some other person for the purpose of gaining or producing assessable income, the Commissioner may apply this section on the basis that that intention existed. (5) This section does not apply in relation to: (b) a premium received in connexion with the assignment of a lease of land granted under a law of a State or Territory relating to mining; (c) a premium received in connexion with the grant or assignment of a lease that was, for the purposes of former section 88B, a grant or assignment for mining purposes; or (d) a premium received in connexion with the assignment from the Commonwealth or a State of a lease: (i) granted in perpetuity or for a term not less than 99 years; or (ii) with a right of purchase; or (iii) effecting improvements to be used for residential purposes only. INCOME TAX ASSESSMENT ACT 1936 - SECT 26AF Assessable income to include value of benefits received from or in connection with former paragraph 23(ja) funds or former section 23FB funds (1) Where: (a) in a year of income and after 19 August 1980, a taxpayer receives or obtains a benefit of any kind out of, or attributable to assets of, a paragraph 23(ja) fund or a section 23FB fund; (aa) if the fund is an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007)--the benefit was received or obtained by the taxpayer before the proclaimed superannuation standards day; (b) the benefit is received or obtained otherwise than in accordance with approved terms and conditions applicable to the fund at the time when the benefit is received or obtained; and (c) the Commissioner is satisfied that the taxpayer received or obtained the benefit: (i) by reason that the taxpayer was, or had been, a member of the fund; (ii) by reason that the taxpayer was, or had been, a dependant of a person who was, or had been, a member of the fund; or (iii) by reason that the taxpayer was, or had been, associated with a person who was, or had been, a member of the fund; the assessable income of the taxpayer of the year of income shall include the amount or value of that benefit. (2) Where, in a year of income and after 19 August 1980, a taxpayer receives valuable consideration in respect of the transfer by the taxpayer to another person (whether by assignment, by declaration of trust or by any other means) of a right (whether vested or contingent) to receive a benefit from a fund, being a paragraph 23(ja) fund or a section 23FB fund and not being an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007), the assessable income of the taxpayer of the year of income shall include the amount or value of that consideration. (3) In this section: "approved terms and conditions", in relation to a fund, means: (a) in the case of a paragraph 23(ja) fund--terms and conditions approved by the Commissioner under subparagraph 23(ja)(ii) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987; or (b) in the case of a section 23FB fund--terms and conditions approved by the Commissioner under subsection 23FB(2) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987. paragraph 23(ja) fund means a fund the income of which of any year of income is or has been exempt from tax by virtue of paragraph 23(ja) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 or would, but for the provisions of section 121C as in force at any time before the commencement of section 21 of the Taxation Laws Amendment Act 1985 and Division 9C, be, or have been, exempt from tax by virtue of that paragraph;section 23FB fund means: (a) a fund the income of which of any year of income is or has been exempt from tax by virtue of section 23FB as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 or would, but for the provisions of Division 9C, be, or have been, exempt from tax by virtue of that section; and (b) a fund that was a section 79 fund for the purposes of this section as in force at any time before the commencement of the Income Tax Assessment Amendment Act (No. 3) 1984. (4) For the purposes of this section, where either of the following paragraphs applies in relation to an exempt fund within the meaning of section 26AFB of this Act (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007) in relation to the year of income of the fund commencing on 1 July 1986 or a subsequent year of income: (a) the year of income ended before the proclaimed superannuation standards day and the income of the fund of the year of income would, but for the amendments made by the Taxation Laws Amendment Act (No. 4) 1987, have been exempt from tax under paragraph 23(ja) or section 23FB of this Act, as in force at any time before the commencement of section 1 of that Act; (b) the proclaimed superannuation standards day occurred during the year of income and, if the year of income had ended on the proclaimed superannuation standards day, the income of the fund of the year of income would have been exempt from tax under paragraph 23(ja) or section 23FB of this Act, as in force at any time before the commencement of section 1 of that Act; paragraph 23(ja) or section 23FB of this Act, as in force immediately before the commencement of section 1 of that Act, shall be taken to have continued to apply in relation to the fund in relation to the year of income of the fund. INCOME TAX ASSESSMENT ACT 1936 - SECT 26AFA Assessable income to include value of certain benefits received from or in connection with former section 23F funds (1) Where: (a) in a year of income and on or after 7 December 1983, a taxpayer receives or obtains a benefit of any kind out of, or attributable to assets of, a section 23F fund; (aa) if the fund is an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007)--the benefit was received or obtained by the taxpayer before the proclaimed superannuation standards day; (b) the benefit: (i) is not a benefit that the taxpayer has a right to receive from the fund; or (ii) is an excessive benefit; and (c) the Commissioner is satisfied that the taxpayer received or obtained the benefit: (i) by reason that the taxpayer was, or had been, a member of the fund; (ii) by reason that the taxpayer was, or had been, a dependant of a person who was, or had been, a member of the fund; (iii) by reason that the taxpayer was, or had been, associated with a person who was, or had been, a member of the fund; or (iv) by reason that the taxpayer was, or had been, associated with a person who had made contributions to the fund, being contributions to which Subdivision AA of Division 3 applied; the assessable income of the taxpayer of the year of income shall include the amount or value of that benefit. (2) Where: (a) subsection (1) would, but for this subsection, apply to the amount or value of an excessive benefit received or obtained by a taxpayer out of, or attributable to assets of, a section 23F fund; and (b) the Commissioner, having regard to: (i) the nature of the fund; (ii) the circumstances by reason of which the benefit is an excessive benefit; and (iii) such other matters relating to the receiving or obtaining of the benefit by the taxpayer as the Commissioner considers relevant; is satisfied that it would be unreasonable for subsection (1) to apply to the whole or part of the benefit; that subsection does not apply to the benefit, or to that part of the benefit, as the case may be. (3) Where, in a year of income and on or after 7 December 1983, a taxpayer receives valuable consideration in respect of the transfer by the taxpayer to another person (whether by assignment, by declaration of trust or by any other means) of a right (whether vested or contingent) to receive a benefit from a fund, being a section 23F fund and not being an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007), the assessable income of the taxpayer of the year of income shall include the amount or value of that consideration. (4) In this section: "dependant", in relation to a taxpayer, includes the spouse and any child of the taxpayer. "excessive benefit" means a benefit of any kind that is excessive in amount or value having regard to the matters mentioned in subparagraphs 23F(2)(h)(i), (ii), (iii) and (iv) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987.section 23F fund means a fund to which section 23F (as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987) applies, or has applied, in relation to any year of income. (5) For the purposes of this section, where either of the following paragraphs applies in relation to an exempt fund within the meaning of section 26AFB of this Act (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007) in relation to the year of income of the fund commencing on 1 July 1986 or a subsequent year of income: (a) the year of income ended before the proclaimed superannuation standards day and section 23F of this Act, as in force immediately before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987, would, but for the amendments made by that Act, have applied in relation to the fund in relation to the year of income; (b) the proclaimed superannuation standards day occurred during the year of income and, if the year of income had ended on the proclaimed superannuation standards day, section 23F of this Act, as in force immediately before the commencement of section 1 of that Act, would, but for the amendments made by that Act, have applied in relation to the fund in relation to the year of income; section 23F of this Act, as in force immediately before the commencement of section 1 of that Act, shall be taken to have continued to apply in relation to the fund in relation to the year of income of the fund. INCOME TAX ASSESSMENT ACT 1936 - SECT 26AG Certain film proceeds included in assessable income (1) Where: (a) under a contract entered into on or after 1 October 1980, a taxpayer has expended, or is deemed by former section 124ZAP to have expended, capital moneys in producing, or by way of contribution to the cost of producing, a film; (b) by reason of the moneys having been expended, the taxpayer became the owner of an interest in the copyright in the film; and (c) a deduction has been allowed, or is allowable, to the taxpayer under former section 124ZAF or 124ZAFA in respect of some or all of those moneys; this section applies, and shall be deemed always to have applied, in relation to the taxpayer in relation to a year of income (whether commencing before or after the commencement of this section), to: (d) any amount derived by the taxpayer in the year of income from sources in or out of Australia as consideration for the use of, or the right to use, the copyright or the film, to the extent to which the amount derived is attributable to the interest referred to in paragraph (b); and (e) any amount (other than an amount to which paragraph (d) applies) receivable by the taxpayer from sources in or out of Australia as consideration in respect of the disposal, in the year of income, of the whole or a part of the interest referred to in paragraph (b). (2) The assessable income of a taxpayer of a year of income shall include amounts to which this section applies in relation to the taxpayer in relation to the year of income. (3) Where: (a) for any reason, including: (i) the formation or dissolution of a partnership; or (ii) a variation in the constitution of a partnership or in the interests of the partners; a change has occurred in the ownership of, or in the interests of persons in, a copyright in a film; (b) the person, or one or more of the persons, who owned the copyright before the change has or have an interest in the copyright after the change; and (c) any person (in this subsection referred to as the relevant person) who had an interest in the copyright before the change: (i) did not have an interest in the copyright after the change; or (ii) had a lesser interest in the copyright after the change; the following provisions have effect: (d) if the relevant person did not have an interest in the copyright after the change, the relevant person shall be deemed, for the purposes of subsection (1), to have disposed of the whole of his or her interest in the copyright at the time when the change occurred for an amount of consideration equal to: (i) if the change occurred in pursuance of an agreement and the agreement specified, as the value of the copyright for the purposes of the agreement, an amount greater than the value of the copyright at the time when the change occurred--so much of the amount specified in the agreement as bears to that amount the same proportion as the value, at the time when the change occurred, of the interest deemed to have been disposed of bears to the value of the copyright at the time when the change occurred; and (ii) in any other case--the value, at the time when the change occurred, of the interest disposed of; (e) if the relevant person had a lesser interest in the copyright after the change, the relevant person shall be deemed, for the purposes of subsection (1), to have disposed of a part of his or her interest in the copyright at the time when the change occurred for an amount of consideration equal to: (i) if the change occurred in pursuance of an agreement and the agreement specified, as the value of the copyright for the purposes of the agreement, an amount greater than the value of the copyright at the time when the change occurred--so much of the amount specified in the agreement as bears to that amount the same proportion as the value, at the time when the change occurred, of the part of the interest deemed to have been disposed of bears to the value of the copyright at the time when the change occurred; and (ii) in any other case--the value, at the time when the change occurred, of the part of the interest disposed of. (4) For the purposes of this section, where, in pursuance of a judgment of a court or otherwise, an amount is paid to a taxpayer in respect of an infringement, or an alleged infringement, of a copyright in a film, the taxpayer shall be deemed to have disposed of a part of his or her interest in the copyright, at the time of payment, in consideration of the payment of that amount. (5) Subject to subsections (3) and (6), a reference in this section to the consideration receivable by a taxpayer in respect of the disposal of the whole or a part of the taxpayer's interest in a copyright (which whole or part is in this subsection referred to as the unit) is a reference to: (a) where the unit is disposed of for a specified price--that price less: (i) the expenses of the disposal; and (ii) if the disposal is a taxable supply--an amount equal to the GST payable on the supply; or (b) where the unit is disposed of together with other property and no separate price is allocated to the unit--such amount as the Commissioner determines. (6) Where: (a) a taxpayer disposes of the whole or a part of the taxpayer's interest in a copyright (which whole or part is in this subsection referred to as the unit) to another person; (b) the Commissioner is satisfied, having regard to any connection between the taxpayer and that other person or to any other relevant circumstances, that the taxpayer and that other person were not dealing with each other at arm's length in relation to the disposal; and (c) there was no amount receivable by the taxpayer in respect of the disposal or the amount receivable by the taxpayer in respect of the disposal was less than the value of the unit at the time of the disposal; the amount of the consideration receivable by the taxpayer in respect of the disposal shall be taken, for the purposes of this section, to be the amount that was the value of the unit at the time of the disposal. (8) If: (a) a non-resident taxpayer derives, from sources outside Australia, income in respect of a film; and (b) but for this subsection, subsection (2) would include the amount in the taxpayer's assessable income of a year of income; that subsection does not include in the taxpayer's assessable income so much of the amount as: (c) is attributable to the exhibition of the film in the country from sources in which the income was derived; and (d) is not exempt from income tax in the country from sources in which the income was derived. (9) Where: (a) an amount (in this subsection referred to as the relevant amount) is derived by a partnership in a year of income; and (b) if the relevant amount were derived by a partner in the partnership, the relevant amount, or a part of the relevant amount, would, by virtue of paragraph (1)(d), be an amount to which this section applies in relation to that partner in relation to the year of income; the following provisions have effect: (c) the relevant amount shall not be taken into account, for the purposes of any provision of this Act, in calculating the net income of the partnership, or the partnership loss, of any year of income in accordance with section 90; and (d) for the purposes of the application of this Act in relation to a taxpayer being a partner in the partnership, an amount equal to: (i) so much of the relevant amount as the partners have agreed is derived for the benefit of the taxpayer; or (ii) if the partners have not agreed as mentioned in subparagraph (i)--so much of the relevant amount as bears to the relevant amount the same proportion as the individual interest of the taxpayer in the net income of the partnership of the year of income in which the relevant amount was derived by the partnership bears to that net income or, as the case requires, the individual interest of the taxpayer in the partnership loss for that year of income bears to that partnership loss; shall be taken to have been derived by the taxpayer. (10) Where: (a) a partnership has disposed of the whole or a part of the copyright or of an interest in the copyright in a film; (b) an amount (in this subsection referred to as the relevant amount) is receivable by the partnership as consideration in respect of that disposal; and (c) if the relevant amount were receivable by a partner in the partnership, the relevant amount or a part of the relevant amount would, by virtue of paragraph (1)(e), be an amount to which this section applies in relation to that partner in relation to the year of income; the following provisions have effect: (d) the relevant amount shall not be taken into account, for the purposes of any provision of this Act, in calculating the net income of the partnership, or the partnership loss, of any year of income in accordance with section 90; (e) for the purposes of the application of this Act in relation to a taxpayer being a partner in the partnership, an amount equal to: (i) so much of the relevant amount as the partners have agreed is receivable for the benefit of the taxpayer; or (ii) if the partners have not agreed as mentioned in subparagraph (i)--so much of the relevant amount as bears to the relevant amount the same proportion as the individual interest of the taxpayer in the net income of the partnership of the year of income in which the disposal mentioned in paragraph (a) occurred bears to that net income, or, as the case requires, the individual interest of the taxpayer in the partnership loss for that year of income bears to that partnership loss; shall be taken to be receivable by the taxpayer; (f) where the taxpayer had an interest in the copyright before the disposal and did not have an interest in the copyright after the disposal or had a lesser interest in the copyright after the disposal, the amount deemed to be receivable by the taxpayer shall be deemed to be receivable in respect of the disposal by the taxpayer of his or her interest in the copyright or of a part of his or her interest in the copyright, as the case may be; (g) where the disposal is deemed to have occurred by virtue of subsection (4) or is a disposal to which paragraph (13)(a) applies, the amount deemed to be receivable by the taxpayer shall be deemed to be receivable, in respect of the disposal by the taxpayer of a part of his or her interest in the copyright. (11) In determining for the purposes of subsection (10) whether a partnership has disposed of the whole or part of a copyright or of an interest in a copyright and in determining the amount of consideration receivable by the partnership in respect of the disposal, subsections (4), (5), (6) and (13) apply as if the partnership were a taxpayer. (12) Where: (a) a taxpayer has disposed of the whole or a part of the taxpayer's interest in a copyright; (b) by reason of that disposal, an amount would, but for former subsection 124T(3), be included in the assessable income of the taxpayer of a year of income under former section 124P or would be applied, under former section 124N or 124S, in reducing the residual value, for the purposes of former Division 10B, of a unit of industrial property owned by the taxpayer; and (c) but for this subsection, this section would apply, in relation to a year of income, to the amount of the consideration receivable by the taxpayer in respect of the disposal; the amount to which this section applies by virtue of the disposal is the amount of the consideration referred to in paragraph (c) reduced by the amount that would be included in the assessable income of the taxpayer, or would be applied under former section 124N or 124S, as mentioned in paragraph (b). (13) In this section: (a) a reference to a disposal by a taxpayer of the whole or a part of the taxpayer's interest in a copyright in a film includes a reference to the assignment by the taxpayer of a right to receive amounts as consideration for the use of, or the right to use, the copyright or the film; (b) a reference to an amount derived by a taxpayer as consideration for the use of, or the right to use, a copyright in a film includes a reference to an amount derived as consideration for the granting of a licence in respect of copyright in the film that is to come into existence at a future time or upon the happening of a future event; (c) a reference to the value of property at a particular time shall, if there is insufficient evidence of the value of the property at that time, be read as a reference to such amount as, in the opinion of the Commissioner, is fair and reasonable; (d) a reference to the expenditure of capital moneys is a reference to the expenditure of moneys that is expenditure of a capital nature; (e) a reference to a taxpayer becoming the owner of an interest in copyright includes a reference to the taxpayer becoming the owner of the copyright; and (f) a reference to copyright, in relation to a film, is a reference to the copyright subsisting in the film by virtue of Part IV of the Copyright Act 1968 and includes a reference to copyright subsisting in, or in relation to, the film or in any work comprised in the film, under the law of a country other than Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 26AH Bonuses and other amounts received in respect of certain short-term life assurance policies (1) In this section, unless the contrary intention appears: "agreement" means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. "assurance year", in relation to an eligible policy, means the period of 12 months commencing on, or on any anniversary of, the date of commencement of risk of the policy. "date of commencement of risk", in relation to an eligible policy, means the date of commencement of the period in respect of which the first or only premium paid under the policy was paid or, if the first or only premium was not paid in respect of a period, the date on which that premium was paid. "eligible period", in relation to an eligible policy, means the period of 10 years commencing on the date of commencement of risk of the policy. "eligible policy" means a life assurance policy in relation to which the date of commencement of risk is after 27 August 1982, other than a funeral policy (as defined in the Income Tax Assessment Act 1997) issued on or after 1 January 2003. "eligible reckoning date", in relation to an eligible policy, means the date of commencement of an assurance year that, for the purposes of an application of subsection (13), is the premium increase year referred to in that subsection. (2) Where a paid-up life assurance policy is issued to a taxpayer in lieu of an eligible policy: (a) the paid-up policy shall, for the purposes of this section, be deemed to be a continuation of the eligible policy; and (b) no amount shall be taken for the purposes of subsection (4) to have been re-invested or otherwise dealt with on behalf of the taxpayer or as he or she directs in connection with the issue of the paid-up policy to the taxpayer in lieu of the eligible policy. (3) This section applies to any amount received after 27 August 1982 under an eligible policy. (4) For the purposes of this section, but subject to subsection (5), a taxpayer shall be taken to have received an amount under or in relation to an eligible policy although the amount is not actually paid to the taxpayer but is re-invested or otherwise dealt with on his or her behalf or as he or she directs. (5) Subsection (4) does not apply in relation to an amount in relation to an eligible policy if the amount is re-invested or otherwise dealt with on behalf of the taxpayer or as the taxpayer directs so as to increase the amount that might reasonably be expected to be received under the eligible policy on a surrender or maturity of the eligible policy. (6) Where, during the eligible period in relation to an eligible policy, a taxpayer receives an amount (in this subsection referred to as the relevant amount) under the policy as or by way of a bonus, being an amount that, but for this section, would not be included in the assessable income of the taxpayer of any year of income, the assessable income of the taxpayer of the year of income in which the relevant amount is received shall include: (a) if the relevant amount is received during the first 8 years of the eligible period--an amount equal to the relevant amount; (b) if the relevant amount is received during the ninth year of the eligible period--an amount equal to two-thirds of the relevant amount; or (c) if the relevant amount is received during the tenth year of the eligible period--an amount equal to one-third of the relevant amount. (6A) If, during the year of income, an amount referred to in subsection (6) is received during the eligible period in relation to an eligible policy held by the trustee of a non-complying superannuation fund: (a) subsection (6) does not apply to the amount; and (b) the amount is included in the assessable income of the fund of the year of income. (7) Subsection (6) does not apply to any amount received by a taxpayer in a year of income under an eligible policy where: (a) the amount is received in consequence of: (i) the death of the person on whose life the policy was effected; or (ii) an accident, illness or other disability suffered by the person on whose life the policy was effected; or (aa) the eligible policy is an RSA; or (b) the eligible policy is held by the trustee of: (i) a complying superannuation fund; or (ii) a complying approved deposit fund; or (iii) a pooled superannuation trust; or (ba) the eligible policy is issued by a life assurance company and the company's liabilities under the policy are to be discharged out of: (i) complying superannuation/FHSA assets within the meaning of the Income Tax Assessment Act 1997; or (ii) segregated exempt assets within the meaning of that Act; or (c) except where the policy was effected, purchased or taken on assignment with a view to it being forfeited, surrendered or otherwise terminated, or to it maturing, within 10 years--the amount was received by the taxpayer by reason of the forfeiture, surrender or other termination of the whole or a part of the policy in circumstances arising out of serious financial difficulties of the taxpayer. (8) Where: (a) subsection (6) would, but for this subsection, apply to an amount (in this subsection referred to as the relevant amount) received by a taxpayer by reason of the forfeiture, surrender or other termination of the whole or a part of an eligible policy; and (b) the Commissioner, having regard to: (i) the total amount of premiums paid under the eligible policy; (ii) the total amounts received by the taxpayer or by any other person under the eligible policy and the total amounts of bonuses included in the amounts so received; (iii) the amount of the surrender value of the eligible policy at the time when the forfeiture, surrender or other termination occurred; and (iv) such other matters as the Commissioner considers relevant, is of the opinion that it would be unreasonable for subsection (6) to apply to the relevant amount or to a part of the relevant amount; subsection (6) does not apply to the relevant amount, or to that part of the relevant amount, as the case may be. (9) Where: (a) otherwise than as or by way of a bonus, a taxpayer receives an amount (in this subsection referred to as the relevant amount) under an eligible policy; and (b) the Commissioner is of the opinion that the relevant amount or a part of the relevant amount represents the whole or part of: (i) a bonus that has accrued or has been declared in respect of the policy; or (ii) a bonus that can reasonably be expected to accrue in respect of the policy; the relevant amount or the part of the relevant amount, as the case may be, shall, for the purposes of subsection (6), be deemed to have been received by the taxpayer under the policy as or by way of a bonus. (10) Where: (a) subsection (9) applies by reason that the Commissioner has formed an opinion under paragraph (9)(b) that the whole or a part of an amount received by a taxpayer represents the whole or a part of a bonus; and (b) the taxpayer subsequently receives an amount (in this subsection referred to as the actual bonus), being the whole or a part of the bonus, or of the part of the bonus, as the case may be, referred to in paragraph (a) of this subsection; the following provisions have effect: (c) the operation of subsection (9) is not affected by the receipt of the actual bonus; and (d) no part of the actual bonus shall be included in the assessable income of the taxpayer. (11) Where, in relation to an eligible policy, a taxpayer receives an amount from the assurer, or from another person at the request of, or under an agreement with, the assurer, by way of an advance or loan in respect of which interest is not payable or in respect of which interest is payable at a rate less than the rate of interest that could reasonably be expected to be payable in respect of a loan of the same amount made on similar terms and conditions by the assurer or the other person, as the case may be, to a person with whom the assurer or that other person was dealing at arm's length, the amount shall, for the purposes of subsection (9), be deemed to be an amount to which paragraph (9)(a) applies. (12) Where an eligible policy, or any right to receive any benefits that have accrued, or will or may reasonably be expected to accrue, under an eligible policy, is sold or assigned in whole or in part by a taxpayer during the eligible period in relation to the policy: (a) the amount of any consideration received by the taxpayer in respect of that sale or assignment shall be deemed to be an amount to which paragraph (9)(a) applies; and (b) subsections (9) and (10) apply in relation to that consideration as if "represents" were omitted from paragraphs (9)(b) and (10)(a) and "is attributable" to were substituted. (13) Where the amount of the premiums payable under an eligible policy in relation to an assurance year (in this subsection referred to as the premium increase year) exceeds by more than 25% the amount of the premiums payable under the policy in relation to the immediately preceding assurance year, the eligible period in relation to the policy shall, for the purposes of: (a) the application of subsection (6) in relation to any amount received under the policy after the date of commencement of the premium increase year and before the first subsequent eligible reckoning date (if any) in relation to the eligible policy; and (b) the application of subsection (12) in relation to any sale or assignment of the policy after the date of commencement of the premium increase year and before the first subsequent eligible reckoning date (if any) in relation to the eligible policy; be reckoned from the date of commencement of the premium increase year. (14) This section has effect in relation to an eligible policy in relation to which the date of commencement of risk is on or before 7 December 1983 as if: (a) "10 years" were omitted from the definition of eligible period in subsection (1) and "4 years" were substituted; (b) "8 years", "ninth year" and "tenth year" were omitted from subsection (6) and "2 years", "third year" and "fourth year" respectively were substituted; and (c) "10 years" were omitted from paragraph (7)(c) and "4 years" were substituted. INCOME TAX ASSESSMENT ACT 1936 - SECT 26AJ Investment-related lottery winnings to be included in assessable income (1) If: (a) either: (i) a loan benefit is provided to a taxpayer, or to another person, in respect of a year of income (in this subsection called the current year of income); or (ii) an amount (other than loan principal) is paid or credited to a taxpayer, or to another person, during a year of income (in this subsection also called the current year of income); or (iii) other property or services are provided to a taxpayer, or to another person, during a year of income (in this subsection also called the current year of income); and (b) the making of a loan, the payment or crediting of the amount, or the provision of the property or services, as the case may be, is by way of winnings from: (i) betting (including pool betting); or (ii) a lottery or other form of gambling; or (iii) a game with prizes; and (c) the chance to participate in the betting, lottery, gambling or game (in this subsection called the betting chance) was provided: (i) wholly or partly in respect of an investment held by the taxpayer in or with a third person (who may be an associate of the taxpayer) (in this subsection called the investment body); or (ii) wholly or partly in relation directly or indirectly to such an investment; and (d) the betting, lottery, gambling or game was organised by, or on behalf of: (i) the investment body (either acting alone or together with one or more other persons); or (ii) an associate of the investment body (either acting alone or together with one or more other persons); and (e) if the recipient of the loan benefit, amount or property or services, as the case may be, is a person other than the taxpayer--either: (i) the other person is an associate of the taxpayer; or (ii) the loan benefit, amount or property or services, as the case may be, is provided under an arrangement to which the taxpayer, or an associate of the taxpayer, is a party; and (f) no part of the value of the betting chance is included in the assessable income of the taxpayer of any year of income; and (g) the provision of the betting chance is neither: (i) a fringe benefit; nor (ii) a benefit that, apart from paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986, would be a fringe benefit; then: (h) if subparagraph (a)(i) applies--the taxpayer's assessable income of the current year of income includes the amount (if any) by which the benchmark amount of interest in relation to the loan in respect of the current year of income exceeds the amount of interest that has accrued on the loan in respect of the current year of income; or (i) if subparagraph (a)(ii) applies--the taxpayer's assessable income of the current year of income includes the amount paid or credited; or (j) if subparagraph (a)(iii) applies--the taxpayer's assessable income of the current year of income includes the arm's length value of the property or services, reduced by the recipient's contribution (if any). (2) If: (a) apart from this subsection, an amount (in this subsection called the gross assessable amount) is included in a taxpayer's assessable income of a year of income under paragraph (1) (h) in respect of a loan benefit; and (b) assuming that: (i) the recipient of the loan benefit had, on the last day of the period (in this subsection called the loan period) during the year of income when the recipient was under an obligation to repay the whole or any part of the loan, incurred and paid unreimbursed interest (in this subsection called the gross interest), in respect of the loan, in respect of the loan period; and (ii) the amount of the gross interest was equal to the benchmark amount of interest in relation to the loan in respect of the year of income; a once-only deduction (in this subsection called the gross deduction) would, or would apart from section 82A, and Subdivisions F and GA of Division 3 of this Part, of this Act, and Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable to the recipient in respect of the gross interest; the gross assessable amount is reduced by: (c) if no interest accrued on the loan in respect of the loan period--the amount of the gross deduction; or (d) in any other case--the amount worked out using the formula: Gross deduction - Reducing amount where: Gross deduction means the amount of the gross deduction. Reducing amount means the amount (if any) that would, or that would apart from section 82A, and Subdivisions F and GA of Division 3 of this Part, of this Act, and Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable as a once-only deduction to the recipient in respect of the interest that accrued on the loan in respect of the loan period if that interest had been incurred and paid by the recipient on the last day of the loan period. (3) If: (a) apart from this subsection, an amount (in this subsection called the gross assessable amount) is included in a taxpayer's assessable income of a year of income under paragraph (1)(j) in respect of the provision of property or services; and (b) assuming that: (i) the recipient of the property or services had, at the time the property or services were provided, incurred and paid unreimbursed expenditure in respect of the provision of the property or services; and (ii) the expenditure was equal to the amount of the arm's length value of the property or services; a once-only deduction would, or would apart from section 82A, and Subdivisions F and GA of Division 3 of this Part, of this Act, and Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable to the recipient in respect of a percentage (in this subsection called the deductible percentage) of the expenditure; the gross assessable amount is reduced by the deductible percentage. (4) For the purposes of the application of this section to a taxpayer, if a person (in this subsection called the provider) makes a loan to another person (who may be the taxpayer) (in this subsection called the recipient): (a) the making of the loan is taken to constitute a loan benefit provided by the provider to the recipient; and (b) that loan benefit is taken to be provided in respect of each year of income of the taxpayer during the whole or part of which the recipient is under an obligation to repay the whole or any part of the loan. (5) For the purposes of this section, if a person (in this subsection called the provider) makes a deferred interest loan (in this subsection called the principal loan) to another person (in this subsection called the recipient): (a) the provider is taken, at the end of: (i) the period of 6 months commencing on the day on which the principal loan was made; and (ii) each subsequent period of 6 months; (being in either case a period during the whole of which the recipient is under an obligation to repay the whole or any part of the principal loan) to have made a loan (in this subsection called the deemed loan) to the recipient; and (b) the amount of the deemed loan is equal to the amount by which the interest (in this subsection called the accrued interest) that has accrued on the principal loan in respect of that period exceeds the amount (if any) paid in respect of the accrued interest before the end of that period; and (c) if any part of the accrued interest becomes payable or is paid after the time when the deemed loan is taken to have been made, the deemed loan is to be reduced accordingly; and (d) the deemed loan is taken to have been made at a nil rate of interest. (6) For the purposes of this section, if no interest is payable in respect of a loan, a nil rate of interest is taken to be payable in respect of the loan. (7) For the purposes of this section, a person is taken to be under an obligation to pay or repay an amount even though the amount is not due for payment or repayment. (8) For the purposes of this section, if a person does anything that results in the creation of property in another person, the first-mentioned person is taken to have provided that property to the other person at the time when the property comes into existence. (9) For the purposes of this section, if: (a) a particular mode of application of money by a taxpayer in relation to another person (in this subsection called the investment body) would not, apart from this subsection, be an investment; and (b) a chance to participate in: (i) betting (including pool betting); or (ii) a lottery or other form of gambling; or (iii) a game with prizes; is provided to the taxpayer or a third person: (iv) wholly or partly in respect of the mode of application of money by the taxpayer; or (v) wholly or partly in relation directly or indirectly to the mode of application of money by the taxpayer; and (c) if a cash payment had been provided by the investment body to the taxpayer instead of that chance, the payment would constitute, to any extent, a return on an investment held by the taxpayer in or with the investment body; the mode of application of money is taken to be an investment held by the taxpayer with the investment body. (10) If a ballot is held to determine the order in which loans are to be made by a Starr-Bowkett building society to its members, then the making of a loan in accordance with the ballot is not covered by paragraph (1)(b). (11) In this section: "arm's length value", in relation to property or services, means: (a) the amount that the recipient could reasonably have been expected to have been required to pay to obtain the property or services from the provider under a transaction where the parties to the transaction are dealing with each other at arm's length in relation to the transaction; or (b) if such an amount cannot be practically determined--such amount as represents a reasonable valuation of the property or services. "arrangement" means: (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. "associate" has the same meaning in relation to a person as that expression has in relation to a person in section 318. "benchmark amount of interest", in relation to a loan, in relation to a year of income, means the amount of interest that would have accrued on the loan in respect of the year of income if the interest was calculated on the daily balance of the loan at the benchmark interest rate in relation to the year of income. "benchmark interest rate", in relation to a year of income, means the predominant per cent per annum interest rate on new, variable interest rate housing loans to individuals for owner-occupation that is specified, for the June immediately preceding the financial year to which the year of income relates, in the "Interest Rates and Yields: Banks" table in the Statistical Directory of the Reserve Bank of Australia Bulletin dated July in that financial year. "deferred interest loan" means a loan in respect of which interest is payable at a rate exceeding nil, other than: (a) a loan where the whole of the interest is due for payment within 6 months after the loan is made; or (b) a loan where: (i) the interest is payable by instalments; and (ii) the intervals between instalments do not exceed 6 months; and (iii) the first instalment is due for payment within 6 months after the loan is made. "investment" means any mode of application of money for the purpose of gaining a return. "loan" includes: (a) an advance of money; and (b) the provision of credit or any other form of financial accommodation; and (c) the payment of an amount for, on account of, on behalf of or at the request of a person where there is an obligation (whether express or implied) to repay the amount; and (d) a transaction (whatever its terms or form) which in substance effects a loan of money. "loan benefit" has the meaning given by subsection (4). "person" means any of the following: (a) a company; (b) a partnership; (c) a person in the capacity of trustee; (d) any other person. "provide": (a) in relation to property--includes dispose of (whether by assignment, declaration of trust or otherwise); and (b) in relation to services--includes allow, confer, give, grant or perform. "recipient's contribution", in relation to property or services, means the amount of any consideration paid to the provider by the recipient in respect of the provision of the property or services, reduced by the amount of any reimbursement paid to the recipient in respect of that consideration. "return", in relation to an investment, includes interest, income or profit. "services" includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under: (a) an arrangement for or in relation to: (i) the performance of work (including work of a professional nature), whether with or without the provision of property; or (ii) the provision of, or the use of facilities for, entertainment, recreation or instruction; or (iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; or (b) a contract of insurance; or (c) an arrangement for or in relation to the lending of money. "unreimbursed expenditure" means expenditure no part of which has been reimbursed. "unreimbursed interest" means interest no part of which has been reimbursed. INCOME TAX ASSESSMENT ACT 1936 - SECT 26BB Assessability of gain on disposal or redemption of traditional securities (1) In this section: "acquire", in relation to a security, means acquire, on issue, purchase, transfer, assignment or otherwise, the security or the right to receive payment of the amount or amounts payable under the security. "connected entity" has the same meaning as in the Income Tax Assessment Act 1997. "dispose", in relation to a security, means sell, transfer, assign or dispose of in any way the security or the right to receive payment of the amount or amounts payable under the security. "eligible return" has the same meaning as in Division 16E. "periodic interest" has the same meaning as in Division 16E. "security" has the same meaning as in Division 16E. "traditional security", in relation to a taxpayer, means a security held by the taxpayer that: (a) is or was acquired by the taxpayer after 10 May 1989; (b) either: (i) does not have an eligible return; or (ii) has an eligible return, where: (A) the precise amount of the eligible return is able to be ascertained at the time of issue of the security; and (B) that amount is not greater than 11 /2 % of the amount calculated in accordance with the formula: where: Payments is the amount of the payment or of the sum of the payments (excluding any periodic interest) liable to be made under the security when held by any person; and Term is the number (including any fraction) of years in the term of the security. (c) is not a prescribed security within the meaning of section 26C; and (d) is not trading stock of the taxpayer. (2) Where a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed, the amount of any gain on the disposal or redemption shall be included in the assessable income of the taxpayer of the year of income in which the disposal or redemption takes place. (3) Where the Commissioner, having regard to any connection between the parties to the transaction by which the taxpayer disposed of the traditional security or by which it was redeemed, or by which the taxpayer acquired the traditional security, is satisfied that the parties were not dealing with each other at arm's length in relation to the transaction, then, for the purposes of determining under subsection (2) the amount of any gain on the disposal or redemption, the consideration for the transaction shall be taken to be: (a) the amount that might reasonably be expected for the transaction if the parties were independent parties dealing at arm's length with each other; or (b) where, for any reason it is not possible or practicable for the Commissioner to ascertain that amount--such amount as the Commissioner determines. (4) Subsection (2) does not apply to a gain on the disposal or redemption of a traditional security if: (a) the disposal or redemption occurs because the traditional security is converted into ordinary shares in a company that is: (i) the issuer of the traditional security; or (ii) a connected entity of the issuer of the traditional security; and (b) the traditional security was issued on the basis that it will or may convert into ordinary shares in: (i) the issuer of the traditional security; or (ii) the connected entity. (5) Subsection (2) does not apply to a gain on the disposal or redemption of a traditional security if: (a) the disposal or redemption is in exchange for ordinary shares in a company that is neither: (i) the issuer of the traditional security; nor (ii) a connected entity of the issuer of the traditional security; and (b) in the case of a disposal--the disposal is to: (i) the issuer of the traditional security; or (ii) a connected entity of the issuer of the traditional security; and (c) the traditional security was issued on the basis that it will or may be: (i) disposed of to the issuer of the traditional security or to the connected entity; or (ii) redeemed; in exchange for ordinary shares in the company. INCOME TAX ASSESSMENT ACT 1936 - SECT 26BC Securities lending arrangements (1) In this section: "convertible note": (a) in relation to a company--has the same meaning as in Division 3A; or (b) in relation to a unit trust--means a note issued by the trustee of the unit trust, being a note that, if the unit trust were a company, would be a convertible note issued by the company, and includes a note that would be a convertible note within the meaning of Division 3A if: (i) references in that Division to a company were references to a unit trust, or to the trustee of the unit trust, as the context requires; and (ii) references in that Division to shares were references to units. "debenture", in relation to a unit trust, means an instrument issued by the trustee of the unit trust, being an instrument that, if the unit trust were a company, would be a debenture issued by the company. "distribution" includes: (a) interest; or (b) a dividend; or (c) a share issued by a company to a shareholder in the company where the share is issued: (i) as a bonus share; or (ii) in the circumstances mentioned in subsection 6BA(1); or (d) an amount credited by the trustee of a unit trust to a unit holder as a unit holder; or (e) a unit issued by the trustee of a unit trust to which section 130-20 of the Income Tax Assessment Act 1997 applies (apart from subsection (4) of that section). "eligible security" means: (a) a share, bond, debenture, convertible note, right, option or similar financial instrument issued by a public company; or (b) a unit, bond, debenture, convertible note, right, option or similar financial instrument issued by the trustee of: (i) a listed unit trust; or (ii) a unit trust any of the units of which were offered to the public; or (c) a bond, debenture, right, option or similar financial instrument issued by a government or by an authority of a government. "government" means: (a) the Commonwealth, a State or a Territory; or (b) the government of, or of a part of, a foreign country. "listed company" means a company any of the shares of which are listed for quotation in the official list of a stock exchange in Australia or elsewhere. "listed unit trust" means a unit trust any of the units of which are listed for official quotation in the official list of a stock exchange in Australia or elsewhere. "option": (a) in relation to a company--means an option to acquire shares in the company; or (b) in relation to a unit trust--means an option to acquire units in the unit trust; or (c) in relation to a government or an authority of a government--means an option to acquire a bond, debenture or similar financial instrument issued by the government or by the authority. "public company" means: (a) a listed company; or (b) a mutual life assurance company; or (c) a company in which a government or an authority of a government has a controlling interest; or (d) a company that is a 100% subsidiary of a company covered by paragraph (a), (b) or (c). "right": (a) in relation to a company--means a right to acquire shares in the company or to acquire an option; or (b) in relation to a unit trust--means a right to acquire units in the unit trust or to acquire an option; or (c) in relation to a government or an authority of a government--means a right to acquire a bond, debenture or similar financial instrument issued by the government or by the authority or to acquire an option. (2) If an eligible security is held by a person as trustee for another person who is absolutely entitled to the eligible security as against the trustee, this section applies as if the eligible security were vested in the other person and any acts of the trustee were the acts of that other person. (3) This section applies where: (a) under a written agreement of the kind known as a securities lending arrangement, being an agreement that was entered into after 9 May 1990: (i) at a particular time (in this section called the original disposal time), a taxpayer (in this section called the lender) disposed of an eligible security (in this section called the borrowed security) to another taxpayer (in this section called the borrower); and (ii) at a later time (in this section called the re-acquisition time), being less than 12 months after the original disposal time, the lender: (A) re-acquired the borrowed security (which re-acquired security is in this section called the replacement security) from the borrower; or (B) acquired an identical security (which acquired security is in this section also called the replacement security) from the borrower; and (b) both the borrower and the lender were dealing with each other at arm's length in relation to each of the transactions mentioned in paragraph (a); and (c) if any of the following events occurred during the period (in this section called the borrowing period) commencing at the original disposal time and ending at the re-acquisition time: (i) the making or payment of a distribution (whether in property or money) in respect of the borrowed security; (ii) the issue, by the company, trustee, government or government authority concerned, of a right or option in respect of the borrowed security; (iii) if the borrowed security is a right or option: (A) the giving of a direction by the lender to the borrower to exercise the right or option; or (B) the giving of a direction by the lender to the borrower to exercise an identical right or option; then (even if the event occurred after the borrowed security was disposed of by the borrower to a third party), the lender receives from the borrower, under the agreement: (iv) if subparagraph (i) applies: (A) the distribution; or (B) if the distribution is in property--identical property; or (C) a payment (in this section called the compensatory payment) equal to the value to the lender of the distribution; or (v) if subparagraph (ii) applies: (A) the right or option; or (B) an identical right or option; or (C) a payment (in this section also called the compensatory payment) equal to the value to the lender of the right or option; or (vi) if subparagraph (iii) applies: (A) the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option; or (B) shares, units, bonds, debentures or financial instruments that are identical to those that resulted from, or that would have resulted from, exercising the right or option; or (C) a payment (in this section also called the compensatory payment) equal to the value to the lender of the shares, units, bonds, debentures or financial instruments that resulted from, or would have resulted from, exercising the right or option; and (d) if the total consideration payable or to be given by the borrower under the agreement consists of: (i) the transfer of, or the promise to transfer, the replacement security or replacement securities concerned; and (ii) other consideration (in this paragraph called the notifiable consideration); the agreement contains: (iii) if the notifiable consideration is wholly covered by one of the following categories: (A) a fee; (B) an adjustment for variations in the market value of eligible securities; (C) other consideration; a statement specifying the category concerned and setting out such information as will enable the amount or value of the notifiable consideration to be readily ascertained; or (iv) if the notifiable consideration is covered by 2 or more of the following categories: (A) a fee; (B) an adjustment for variations in the market value of eligible securities; (C) other consideration; a statement dissecting the notifiable consideration into those categories in such a manner as will enable the amount or value of each category to be readily ascertained; and (e) the lender does not dispose of (by transfer, declaration of trust or otherwise) the right to receive any part of the total consideration payable or to be given by the borrower under the agreement. (3A) For the purposes of paragraph (3)(c), if, apart from this subsection, either of the following events occurred after the commencement of the borrowing period: (a) the making or payment of a distribution (whether in property or money) in respect of the borrowed security; (b) the issue, by the company, trustee, government or government authority concerned, of a right or option in respect of the borrowed security; (even if the event occurred after the borrowed security was disposed of by the borrower to a third party), the event is taken to have occurred during the borrowing period if, and only if, (assuming that the borrower had held the borrowed security at all times during the borrowing period) the entitlement to the distribution or issue would have been attributable to the borrower's holding of the borrowed security at a particular time during the borrowing period. (4) In determining: (a) whether an amount (other than a fee payable under the securities lending arrangement) is included in the assessable income of the lender under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT); or (b) whether an amount is allowable as a deduction to the lender; in respect of either or both of the transactions covered by paragraph (3)(a), the lender is to be treated as if: (c) neither of those transactions had been entered into; and (d) the lender had held the borrowed security at all times during the borrowing period; and (e) if the replacement security is not the borrowed security--the replacement security were the borrowed security. (4A) If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(v)(C), then, in determining whether an amount is included in the assessable income of the lender under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997, the lender is to be treated as if: (a) the lender had held the borrowed security at all relevant times during the borrowing period; and (b) the right or option had been issued directly to the lender in respect of the borrowed security; and (c) the lender had disposed of the right or option immediately after its issue for a consideration equal to the compensatory payment. (4B) If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(vi)(C), then, in determining whether an amount is included in the assessable income of the lender under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997, the lender is to be treated as if: (a) the lender had held the right or option at all relevant times during the borrowing period; and (b) the lender had exercised the right or option; and (c) the lender had immediately disposed of the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option for a consideration equal to the compensatory payment. (5) In determining: (a) whether an amount is included in the assessable income of the borrower under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997; or (b) an amount (other than a fee payable under the securities lending arrangement) is allowable as a deduction to the borrower; in respect of either or both of the transactions covered by paragraph (3)(a): (c) if the borrowed security was disposed of by the borrower to a third party: (i) the borrower is to be treated as if the borrower had acquired the borrowed security from the lender for a consideration equal to the market value of the borrowed security at the time of its acquisition; and (ii) the borrower is to be treated as if the borrower had disposed of the replacement security to the lender for a consideration equal to the market value of the borrowed security at the time of its acquisition from the lender; or (d) in any other case--the borrower is to be treated as if neither of the transactions referred to in paragraph (3)(a) had been entered into. (6) Any capital gain or capital loss from the disposal of the borrowed security by the lender is disregarded. (6A) If the lender acquired the borrowed security before 20 September 1985, the lender is taken (for the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997) to have acquired the replacement security before that day. (6B) If the lender acquired the borrowed security on or after 20 September 1985, the first element of the cost base of the replacement security is the cost base of the borrowed security just before the acquisition of the replacement security. The reduced cost base of the replacement security is worked out similarly. (7) If: (a) the borrowed security was acquired on or after 20 September 1985; and (b) a CGT event (other than one involving a transaction covered by subsection (3)) happens in relation to the replacement security at least 12 months after the lender acquired a paired security in relation to the replacement security (otherwise than under a transaction covered by subsection (3)); section 114-10 of the Income Tax Assessment Act 1997 (about the requirement for 12 months ownership) does not apply to the CGT event. (8) For the purposes of subsection (7): (a) if CGT event A1 happens (involving a transaction covered by subsection (3)) by the lender disposing of an eligible security to the borrower, that security is a paired security in relation to the replacement security subsequently acquired or re-acquired by the lender; and (b) a security is a paired security in relation to a second security if the first security is a paired security in relation to a third security that is a paired security in relation to the second security (including a pairing with the second security by another application or other applications of this paragraph). (9) For the purpose of applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the borrower: (a) if the borrower disposes of the borrowed security to a third party: (i) the first element of the cost base and reduced cost base of the borrowed security (in the hands of the borrower) is taken to be its market value when the borrower acquired it; and (ii) when the borrower disposes of a replacement security to the lender, the capital proceeds from that CGT event are taken to be that market value; and (b) if no third party is involved--the transactions referred to in paragraph (3)(a) are ignored. (9A) For the purpose of applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the borrower, the incidental costs to the borrower of the acquisition of an eligible security covered by sub-subparagraph (3)(a)(ii)(B) include a compensatory payment incurred by the borrower (to the extent that the borrower has not deducted and cannot deduct it). (9B) For the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a right or option received by the lender as mentioned in subparagraph (3)(c)(v), the borrower and lender are to be treated as if the eligible security in respect of which the right or option was issued had been held by the lender at the time of the acquisition of the right or option. (9C) For the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a share, unit, bond, debenture or financial instrument received by the lender as mentioned in subparagraph (3)(c)(vi), the borrower and the lender are to be treated as if: (a) the share, unit, bond, debenture or financial instrument had been received as the result of the exercise of the borrowed security; and (b) the borrowed security had been held by the lender at the time of the exercise; and (c) the lender had exercised the borrowed security; and (d) the lender had exercised the borrowed security at the time the direction concerned was given; and (e) the amount of the contribution (if any) made by the lender to the borrower in respect of the carrying out of the direction were an amount paid as consideration by the lender in respect of the exercise. (9D) If a distribution covered by subparagraph (3)(c)(i) consists of one or more shares issued by a company to the borrower or to a third party in the circumstances mentioned in subsection 6BA(1), then, for the purposes of the applicaton of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a share (in this subsection called the notional bonus share) received by the lender in relation to the distribution in the circumstances mentioned in sub-subparagraph (3)(c)(iv)(A) or (B), the borrower and the lender are to be treated as if: (a) the company had issued the notional bonus share to the lender instead of the borrower or the third party, as the case requires; and (b) the notional bonus share had been issued in the circumstances mentioned in subsection 6BA(1); and (c) the notional bonus share had been issued in respect of the borrowed security; and (d) the lender had held the borrowed security at the time the notional bonus share was issued. (9E) If a distribution covered by subparagraph (3)(c)(i) consists of one or more units issued by the trustee of a unit trust to the borrower or to a third party in the circumstances covered by section 130-20 of the Income Tax Assessment Act 1997, then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a unit (in this subsection called the notional bonus unit) received by the lender in relation to the distribution in the circumstances mentioned in sub-subparagraph (3)(c)(iv)(A) or (B), the borrower and the lender are to be treated as if: (a) the trustee had issued the notional bonus unit to the lender instead of the borrower or the third party, as the case requires; and (b) the notional bonus unit had been issued in the circumstances covered by section 130-20 of the Income Tax Assessment Act 1997; and (c) the notional bonus unit had been issued in respect of the borrowed security; and (d) the lender had held the borrowed security at the time the notional bonus unit was issued. (9F) If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(v)(C), then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the lender, the lender is to be treated as if: (a) the lender had held the borrowed security at all relevant times during the borrowing period; and (b) the right or option had been issued directly to the lender in respect of the borrowed security; and (c) the lender had disposed of the right or option immediately after its issue and had received capital proceeds of an amount equal to the compensatory payment. (9G) If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(vi)(C), then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the lender, the lender is to be treated as if: (a) the lender had held the right or option at all relevant times during the borrowing period; and (b) the lender had exercised the right or option; and (c) the lender had immediately disposed of the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option and had received capital proceeds of an amount equal to the compensatory payment. (11A) If: (a) the lender receives from the borrower a distribution or identical property covered by subparagraph (3)(c)(iv); and (b) assuming that the borrowed security had continued to be held by the lender, an amount (in this subsection called the otherwise assessable amount) would have been included in the lender's assessable income of a year of income in respect of the distribution concerned; the lender's assessable income of the year of income includes an amount equal to the otherwise assessable amount. (11B) If: (a) the lender receives from the borrower a compensatory payment covered by sub-subparagraph (3)(c)(iv)(C); and (b) assuming that the borrowed security had continued to be held by the lender, an amount (in this subsection called the otherwise assessable amount) would have been included in the lender's assessable income of a year of income in respect of the distribution concerned; the lender's assessable income of the year of income includes an amount equal to the otherwise assessable amount. (12) Where: (a) a taxpayer has entered into a transaction of a kind referred to in subparagraph (3)(a)(i); and (b) at the time of making an assessment in respect of income of the taxpayer of the year of income in which the transaction occurred, the Commissioner is of the opinion that, at a later time, circumstances will exist because of which this section will apply in connection with that transaction; the Commissioner may apply the provisions of this section as if those circumstances existed at the time of making the assessment. (13) Where: (a) in the making of an assessment, this section has been applied on the basis that a circumstance that did not exist at the time of making the assessment would exist at a later time; and (b) after the making of the assessment, the Commissioner becomes satisfied that the circumstance will not exist; then, in spite of anything in section 170, the Commissioner may amend the assessment at any time for the purpose of ensuring that this section is to be taken always to have applied on the basis that the circumstance did not exist. INCOME TAX ASSESSMENT ACT 1936 - SECT 26C Disposal of certain securities (1) Where: (a) a taxpayer disposes of a prescribed security by sale, gift, conversion or otherwise and the value of the security on the day of the disposal exceeds the cost of the security to the taxpayer; or (b) a prescribed security owned by a taxpayer is redeemed and the amount received by the taxpayer upon the redemption exceeds the cost of the security to the taxpayer; an amount equal to the excess shall be included in the assessable income of the taxpayer. (2) For the purposes of this section: (a) where a prescribed security is disposed of to a person by sale, gift or otherwise, that person shall be deemed to have purchased it at a cost equal to its value on the day of the disposal; and (b) where a person who owns a prescribed security dies: (i) that person shall be deemed to have sold the security on the day of his or her death; and (ii) the person upon whom the security devolves by reason of the death shall be deemed to have purchased it at a cost equal to its value on the day of the death. (4) In this section: "prescribed security" means: (a) a seasonal security as defined by, section 4 of the Loan (Short-term Borrowings) Act 1959; or (b) any stock or other security issued by the Commonwealth that does not bear interest; and includes an interest in any such seasonal security, stock or other security. "stock" means Commonwealth Government Inscribed Stock or Australian Consolidated Inscribed Stock. INCOME TAX ASSESSMENT ACT 1936 - SECT 26E Income from RSAs (1) All benefits provided in respect of, and amounts that are paid from, an RSA (including amounts taken to be paid from an RSA under subsection (2)) are taken to have an Australian source. (2) If the premiums of an insurance policy are paid from an RSA, any amounts paid by the insurer under the policy are taken to be paid by the RSA provider as a benefit of the RSA. INCOME TAX ASSESSMENT ACT 1936 - SECT 27 Interest on loans raised in Australia by governments outside Australia (1) The interest on loans raised in Australia, after 31 December 1923, by the government of any country or dominion out of Australia, or by any authority constituted by or under any law of any such country or dominion, and received directly or indirectly by a resident, shall be deemed to be derived by the resident from a source in Australia, and shall be included in the resident's assessable income. (2) For the purposes of this section, a loan shall be deemed to have been raised in Australia if subscriptions to the loan were invited in Australia by public advertisement, by the issue of a prospectus, or otherwise. INCOME TAX ASSESSMENT ACT 1936 - SECT 27H Assessable income to include annuities and superannuation pensions (1) Subject to Division 54 of the Income Tax Assessment Act 1997, the assessable income of a taxpayer of a year of income shall include: (a) the amount of any annuity derived by the taxpayer during the year of income excluding, in the case of an annuity that has been purchased, any amount that, in accordance with the succeeding provisions of this section, is the deductible amount in relation to the annuity in relation to the year of income; and (b) the amount of any payment made to the taxpayer during the year of income as a supplement to an annuity, whether the payment is made voluntarily, by agreement or by compulsion of law and whether or not the payment is one of a series of recurrent payments. Note: Division 54 of the Income Tax Assessment Act 1997 provides a tax exemption for certain payments under structured settlements and structured orders. (2) Subject to subsections (3) and (3A), the deductible amount in relation to an annuity derived by a taxpayer during a year of income is the amount (if any) ascertained in accordance with the formula , where: "A" is the relevant share in relation to the annuity in relation to the taxpayer in relation to the year of income.B is the amount of the undeducted purchase price of the annuity. "C" is: (a) if there is a residual capital value in relation to the annuity and that residual capital value is specified in the agreement by virtue of which the annuity is payable or is capable of being ascertained from the terms of that agreement at the time when the annuity is first derived--that residual capital value; or (b) in any other case--nil; and "D" is the relevant number in relation to the annuity. (3) Subject to subsection (3A), where the Commissioner is of the opinion that the deductible amount ascertained in accordance with subsection (2) is inappropriate having regard to: (a) the terms and conditions applying to the annuity; and (b) such other matters as the Commissioner considers relevant; the deductible amount in relation to the annuity derived by the taxpayer during the year of income is so much of the annuity as, in the opinion of the Commissioner, represents the undeducted purchase price having regard to: (c) the terms and conditions applying to the annuity; (d) any certificate or certificates of an actuary or actuaries stating the extent to which, in the opinion of the actuary or actuaries, the amount of the annuity derived by the taxpayer during the year of income represents the undeducted purchase price; and (e) such other matters as the Commissioner considers relevant. (3A) For the purposes of this section, where the annuity derived by a taxpayer during a year of income is part of an annuity of which a part has been commuted in the year of income or a preceding year of income, the deductible amount ascertained under subsection (2) or (3) shall be reduced by such amount as, in the opinion of the Commissioner, is appropriate having regard to: (c) any deductible amount ascertained under this section in relation to the annuity in relation to a preceding year of income; and (d) such other matters as the Commissioner considers relevant. (4) In this section: "actuary" means a Fellow or Accredited Member of the Institute of Actuaries of Australia. "agreement" means any agreement, arrangement or understanding whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. "annuity" means an annuity, a pension paid from a foreign superannuation fund (within the meaning of the Income Tax Assessment Act 1997) or a pension paid from a scheme mentioned in paragraph 290-5(c) of that Act, but does not include: (a) an annuity that is a qualifying security for the purposes of Division 16E; or (b) a superannuation income stream (within the meaning of the Income Tax Assessment Act 1997). "life expectation factor", in relation to a person in relation to an annuity, means the number of years in the complete expectation of life of the person as ascertained by reference to the prescribed Life Tables at the time at the beginning of the period to which the first payment of the annuity relates. "purchase price" means: (a) in relation to a pension--the sum of: (i) contributions made by any person to a foreign superannuation fund to obtain the pension; and (ii) so much as the Commissioner considers reasonable of contributions made by any person to a foreign superannuation fund to obtain superannuation benefits including the pension; and (b) in relation to an annuity other than a pension--the sum of: (i) payments made solely to purchase the annuity; and (ii) so much as the Commissioner considers reasonable of payments made to purchase the annuity and to obtain other benefits. "relevant number", in relation to an annuity in relation to a year of income, means: (a) where the annuity is payable for a term of years certain--the number of years in the term; (b) where the annuity is payable during the lifetime of a person and not thereafter--the life expectation factor of the person; and (c) in any other case--the number that the Commissioner considers appropriate having regard to the number of years in the total period during which the annuity will be, or may reasonably be expected to be, payable. "relevant share", in relation to an annuity derived by a taxpayer during a year of income, means: (a) in a case where the annuity derived by the taxpayer is a share of an annuity (which annuity is in this paragraph referred to as the total annuity) payable to the taxpayer and another person or other persons--the fraction ascertained by dividing the number of whole dollars in the amount of the annuity derived by the taxpayer during the year of income by the number of whole dollars in the amount of the total annuity derived during the year of income by the taxpayer and the other person or persons; or (b) in any other case--the number 1. "residual capital value", in relation to an annuity, means the capital amount payable on the termination of the annuity. "undeducted purchase price", in relation to an annuity, has the meaning given by section 27A immediately before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007. (5) In the definition of purchase price in subsection (4): (a) a reference to contributions made by any person to a foreign superannuation fund to obtain a pension does not include a reference to contributions made to a foreign superannuation fund by an employer, or by another person under an agreement to which the employer is a party, for the purpose of providing superannuation benefits for, or for dependants of, an employee of the employer; and (b) a reference to payments made to purchase, or solely to purchase, an annuity (other than a pension) does not include a reference to payments made by an employer, or by another person under an agreement to which the employer is a party, to purchase, or solely to purchase, the annuity for, or for dependants of, an employee of the employer. (6) For the purposes of subsection (5), in determining whether a person is an employer of another person, treat the holding of an office by the other person as employment of that person. INCOME TAX ASSESSMENT ACT 1936 - SECT 43A Subdivision has effect subject to provisions of Division 216 of the Income Tax Assessment Act 1997 This Subdivision has effect subject to the provisions of Division 216 of the Income Tax Assessment Act 1997 (which describes cum dividend sales in which a distribution to a member of a corporate tax entity is treated as having been made to someone else). INCOME TAX ASSESSMENT ACT 1936 - SECT 43B Application of Subdivision to non-share dividends (1) This Subdivision: (a) applies to a non-share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non-share dividend in the same way as it applies to a dividend. (2) Subsection (1) does not apply to section 47A. (3) Paragraph (1)(c) does not apply to subsection 44(1). (4) Subsection (1) has effect subject to the special provision that is made for non-share dividends in subsection 44(1). INCOME TAX ASSESSMENT ACT 1936 - SECT 44 Dividends (1) The assessable income of a shareholder in a company (whether the company is a resident or a non-resident) includes: (a) if the shareholder is a resident: (i) dividends (other than non-share dividends) that are paid to the shareholder by the company out of profits derived by it from any source; and (ii) all non-share dividends paid to the shareholder by the company; and (b) if the shareholder is a non-resident: (i) dividends (other than non-share dividends) paid to the shareholder by the company to the extent to which they are paid out of profits derived by it from sources in Australia; and (ii) non-share dividends paid to the shareholder by the company to the extent to which they are derived from sources in Australia; and (c) if the shareholder is a non-resident carrying on business in Australia at or through a permanent establishment of the shareholder in Australia, and the company is a resident: (i) dividends (other than non-share dividends) that are paid to the shareholder by the company and are attributable to the permanent establishment, to the extent to which they are paid out of profits derived by the company from sources outside Australia; and (ii) non-share dividends that are paid to the shareholder by the company and are attributable to the permanent establishment, to the extent to which they are derived from sources outside Australia. This subsection does not apply to a dividend (or non-share dividend) to the extent to which another provision of this Act that expressly deals with dividends includes some or all of the dividend (or non-share dividend) in, or excludes some or all of the dividend (or non-share dividend) from, the shareholder's assessable income. Note 1: Some of the other provisions of this Act that expressly deal with dividends are sections 23AJ, 23AI, 23AK and 128D. Note 2: An amount declared to be conduit foreign income is not included in assessable income under paragraph (1)(b) or (c): see section 802-15 of the Income Tax Assessment Act 1997. (1A) For the purposes of this Act, a dividend paid out of an amount other than profits is taken to be a dividend paid out of profits. (1B) Where: (a) the amount of the moneys or of the value of other property of which a dividend paid by a company consists is debited against an amount standing to the credit of a share capital account of the company; or (b) a dividend paid by a company is a repayment by the company of an amount paid-up on a share; the dividend shall, for the purposes of this section, be deemed to have been paid by the company out of profits derived by it. (2) Subsections (3) and (4) apply to a demerger dividend unless the head entity elects in writing, within one month after it decides which of its shareholders will receive ownership interests in the demerged entity under the demerger, that those subsections do not apply to the total demerger dividend for all shareholders. (3) This section applies to the demerger dividend as if it had not been paid out of profits. (4) A demerger dividend is not assessable income or exempt income. (5) However, subsections (3) and (4) do not apply to a demerger dividend unless, just after the demerger, CGT assets owned by the demerged entity or a demerger subsidiary representing at least 50% by market value of all the CGT assets (or a reasonable approximation of market value) owned by the demerged entity and its demerger subsidiaries are used, directly or indirectly, in one or more businesses carried on by one or more of those entities. (6) In applying subsection (5), disregard any assets that are ownership interests in a demerger subsidiary unless they are used in a business referred to in that subsection. (7) In this section: "permanent establishment" of a person: (a) has the same meaning as in a double tax agreement (as defined in Part X) that relates to a foreign country and affects the person; or (b) has the meaning given by subsection 6(1), if there is no such agreement. INCOME TAX ASSESSMENT ACT 1936 - SECT 45 Streaming of bonus shares and unfranked dividends Application of section (1) This section applies in respect of a company that, whether in the same year of income or in different years of income, streams the provision of shares (other than shares to which subsection 6BA(5) applies) and the payment of minimally franked dividends to its shareholders in such a way that: (a) the shares are received by some shareholders but not all shareholders; and (b) some or all of the shareholders who do not receive the shares receive or will receive minimally franked dividends. (2) The value of the share at the time that the shareholder is provided with the share is taken, for the purposes of this Act, to be a dividend that is unfrankable (within the meaning of subsection 995-1(1) of the Income Tax Assessment Act 1997) and that is paid by the company, out of profits of the company, to the shareholder at that time. (3) A dividend is minimally franked if it is not franked, or is franked to less than 10%, in accordance with section 202-5 or 208-60 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 45A Streaming of dividends and capital benefits Application of section (1) This section applies in respect of a company that, whether in the same year of income or in different years of income, streams the provision of capital benefits and the payment of dividends to its shareholders in such a way that: (a) the capital benefits are, or apart from this section would be, received by shareholders (the advantaged shareholders) who would, in the year of income in which the capital benefits are provided, derive a greater benefit from the capital benefits than other shareholders; and (b) it is reasonable to assume that the other shareholders (the disadvantaged shareholders) have received, or will receive, dividends. However, it does not apply if section 45 applies in relation to the streaming or in the circumstances set out in subsection (5). Commissioner to determine that section 45C applies (2) The Commissioner may make, in writing, a determination that section 45C applies in relation to the whole, or a part, of the capital benefits. A determination does not form part of an assessment. Note: Subsection (6) limits the determination to a part of the capital benefit in certain cases. Meaning of provision of capital benefit (3) A reference to the provision of a capital benefit to a shareholder in a company is a reference to any of the following: (a) the provision to the shareholder of shares in the company; (b) the distribution to the shareholder of share capital or share premium; (c) something that is done in relation to a share that has the effect of increasing the value of a share (which may or may not be the same share) held by the shareholder. (3A) For the purposes of this section, a non-share distribution to an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non-share capital return. Meaning of greater benefit from capital benefits (4) The circumstances in which a shareholder would, in a year of income, derive a greater benefit from capital benefits than another shareholder include, but are not limited to, any of the following circumstances existing in relation to the first shareholder and not in relation to the other shareholder: (a) some or all of the shares in the company held by the shareholder were acquired, or are taken to have been acquired, before 20 September 1985; (b) the shareholder is a non-resident; (c) the cost base (for the purposes of Part IIIA) of the relevant share is not substantially less than the value of the applicable capital benefit; (d) the shareholder has a net capital loss for the year of income in which this capital benefit is provided; (e) the shareholder is a private company who would not have been entitled to a rebate under former section 46F if the shareholder had received the dividend that was paid to the disadvantaged shareholder; (f) the shareholder has income tax losses. Certain capital benefits not covered (5) This section does not apply where the capital benefit provided to the advantaged shareholders is the provision of shares and it is reasonable to assume that the disadvantaged shareholders have received, or will receive, fully franked dividends. Determination limited in certain cases (6) If the capital benefit provided to the advantaged shareholders is the provision of shares and it is reasonable to assume that the disadvantaged shareholders have received, or will receive, partly franked dividends, the Commissioner may only make a determination under subsection (2) in relation to so much of the capital benefit as the Commissioner considers relates to the unfranked part of the dividend. INCOME TAX ASSESSMENT ACT 1936 - SECT 45B Schemes to provide certain benefits Purpose of section (1) The purpose of this section is to ensure that relevant amounts are treated as dividends for taxation purposes if: (a) components of a demerger allocation as between capital and profit do not reflect the circumstances of a demerger; or (b) certain payments, allocations and distributions are made in substitution for dividends. Application of section (2) This section applies if: (a) there is a scheme under which a person is provided with a demerger benefit or a capital benefit by a company; and (b) under the scheme, a taxpayer (the relevant taxpayer), who may or may not be the person provided with the demerger benefit or the capital benefit, obtains a tax benefit; and (c) having regard to the relevant circumstances of the scheme, it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling a taxpayer (the relevant taxpayer) to obtain a tax benefit. Commissioner to determine that section 45BA or 45C applies (3) The Commissioner may make, in writing, a determination that: (a) section 45BA applies in relation to the whole, or a part, of the demerger benefit; or (b) section 45C applies in relation to the whole, or a part, of the capital benefit. A determination does not form part of an assessment. Note: If section 45BA applies in relation to the whole, or a part, of a demerger benefit, this benefit may be a capital benefit. Meaning of provided with a demerger benefit (4) A person is provided with a demerger benefit if in relation to a demerger: (a) a company provides the person with ownership interests in that or another company; or (b) something is done in relation to an ownership interest owned by the person that has the effect of increasing the value of an ownership interest (which may or may not be the same ownership interest) owned by the person. Meaning of provided with a capital benefit (5) A reference to a person being provided with a capital benefit is a reference to any of the following: (a) the provision of ownership interests in a company to the person; (b) the distribution to the person of share capital or share premium; (c) something that is done in relation to an ownership interest that has the effect of increasing the value of an ownership interest (which may or may not be the same interest) that is held by the person. (6) However, a person is not provided with a capital benefit to the extent that the provision of interests, the distribution or the thing done referred to in subsection (5) involves the person receiving a demerger dividend. (7) For the purposes of this section, a non-share distribution to an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non-share capital return. Meaning of relevant circumstances of scheme (8) The relevant circumstances of a scheme include: (a) the extent to which the demerger benefit or capital benefit is attributable to capital or the extent to which the demerger benefit or capital benefit is attributable to profits (realised and unrealised) of the company or of an associate (within the meaning in section 318) of the company; (b) the pattern of distributions of dividends, bonus shares and returns of capital or share premium by the company or by an associate (within the meaning in section 318) of the company; (c) whether the relevant taxpayer has capital losses that, apart from the scheme, would be carried forward to a later year of income; (d) whether some or all of the ownership interests in the company or in an associate (within the meaning in section 318) of the company held by the relevant taxpayer were acquired, or are taken to have been acquired, by the relevant taxpayer before 20 September 1985; (e) whether the relevant taxpayer is a non-resident; (f) whether the cost base (for the purposes of the Income Tax Assessment Act 1997) of the relevant ownership interest is not substantially less than the value of the applicable demerger benefit or capital benefit; (h) if the scheme involves the distribution of share capital or share premium--whether the interest held by the relevant taxpayer after the distribution is the same as the interest would have been if an equivalent dividend had been paid instead of the distribution of share capital or share premium; (i) if the scheme involves the provision of ownership interests and the later disposal of those interests, or an increase in the value of ownership interests and the later disposal of those interests: (i) the period for which the ownership interests are held by the holder of the interests; and (ii) when the arrangement for the disposal of the ownership interests was entered into; (j) for a demerger only: (i) whether the profits of the demerging entity and demerged entity are attributable to transactions between the entity and an associate (within the meaning in section 318) of the entity; and (ii) whether the assets of the demerging entity and demerged entity were acquired under transactions between the entity and an associate (within the meaning in section 318) of the entity; (k) any of the matters referred to in subparagraphs 177D(b)(i) to (viii). Meaning of obtaining a tax benefit (9) A relevant taxpayer obtains a tax benefit if an amount of tax payable, or any other amount payable under this Act, by the relevant taxpayer would, apart from this section, be less than the amount that would have been payable, or would be payable at a later time than it would have been payable, if the demerger benefit had been an assessable dividend or the capital benefit had been an assessable dividend. (10) In this section: "scheme" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 45BA Effect of determinations under section 45B for demerger benefits (1) If the Commissioner makes a determination under subsection 45B(3), the amount of the demerger benefit, or the part of the benefit, is taken not to be a demerger dividend for the purposes of this Act for the owner of the ownership interest or the relevant taxpayer at the time when the owner or relevant taxpayer is provided with the demerger benefit. (2) The amount of the demerger benefit is: (a) if the benefit is the provision of an ownership interest--the market value of the interest at the time that it is provided; or (b) if the benefit is an increase in the value of an ownership interest--the increase in the market value of the interest as a result of the change; or (c) if the benefit is a distribution to the shareholder of share capital or share premium--the amount debited to the share capital account or share premium account of the company in connection with the provision of the benefit. INCOME TAX ASSESSMENT ACT 1936 - SECT 45C Effect of determinations under sections 45A and 45B for capital benefits (1) If the Commissioner makes a determination under subsection 45A(2) or 45B(3), the amount of the capital benefit, or the part of the benefit, is taken, for the purposes of this Act, to be an unfranked dividend that is paid by the company to the shareholder or relevant taxpayer at the time that the shareholder or relevant taxpayer is provided with the capital benefit. (2) The dividend is taken to have been paid out of profits of the company. (3) If the Commissioner has made a determination under section 45B in respect of the whole or a part of a capital benefit and the Commissioner makes a further written determination that the capital benefit, or the part of the capital benefit, was paid under a scheme for which a purpose, other than an incidental purpose, was to avoid franking debits arising in relation to the distribution from the company: (a) on the day on which notice of the determination is served in writing on the company, a franking debit of the company arises in respect of the capital benefit; and (b) the amount of the franking debit is the amount that, if the company had paid a dividend of an amount equal to the amount of the capital benefit, or the part of the capital benefit, at the time when it was provided and had fully franked the dividend, would have been the franked amount of the dividend. (4) The amount of the capital benefit is: (a) if the benefit is the provision of an ownership interest--the market value of the interest at the time that it is provided; or (b) if the benefit is an increase in the market value of an ownership interest--the increase in the market value of the interest as a result of the change; or (c) if the benefit is a distribution to the shareholder of share capital or share premium--the amount debited to the share capital account or share premium account of the company in connection with the provision of the benefit. (4A) For the purposes of this section: (a) a non-share distribution to an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non-share capital return; and (b) the debit to the company's non-share capital account, in respect of the non-share distribution, is taken to be a debit to the company's share capital account. INCOME TAX ASSESSMENT ACT 1936 - SECT 45D Determinations under sections 45A, 45B and 45C Notice by Commissioner of determination (1) If the Commissioner makes a determination under section 45A, 45B or 45C, the Commissioner must give a copy of the determination to the company concerned (which, in the case of a demerger benefit referred to in section 45B, is the head entity of the demerger group). The notice may be included in a notice of assessment. Notice by company of determination (1A) That company must, in the case of a determination under section 45A or 45B, give a copy of the notice to: (a) the advantaged shareholder referred to in section 45A; or (b) the relevant taxpayer referred to in section 45B. Publication in national newspaper of determination in relation to listed public company (2) If the Commissioner makes a determination under section 45A, in respect of a dividend paid by a listed public company within the meaning of the Income Tax Assessment Act 1997, the Commissioner is taken to have served notice in writing of the determination on the advantaged shareholder if the Commissioner causes the notice to be published in a daily newspaper that circulates generally in each State, the Australian Capital Territory and the Northern Territory. The notice is taken to have been served on the day on which the publication takes place. Evidence of determination (3) The production of: (a) a notice of a determination; or (b) a document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of a determination; is conclusive evidence of: (c) the due making of the determination; and (d) except in proceedings under Part IVC of the Taxation Administration Act 1953 on an appeal or review relating to the determination, that the determination is correct. Objections (4) If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 46FA Deduction for dividends on-paid to non-resident owner Allowable deduction (1) An amount is allowable as a deduction from the assessable income of a company (the resident company) if: (a) the resident company is paid a dividend (the original dividend) that: (i) is paid by a company that is a resident; and (ii) is a non-portfolio dividend; and (iii) is not a fully-franked dividend; and (b) the resident company is not a group company in relation to the company that paid the original dividend in relation to the year of income in which the dividend is paid; and (ba) neither the resident company, nor the company that pays the dividend, is a prescribed dual resident; and (c) ignoring the amendments made by Schedule 1 to the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006, but for subsection 46AB(1) or 46AC(2) or subparagraph 46F(2)(a)(i) of this Act as in force just before the commencement of those amendments, the resident company would have been entitled to a rebate under section 46 of this Act as so in force in respect of the unfranked amount of the original dividend; and (d) the resident company pays a dividend (the flow-on dividend) to a company that is not a resident (the non-resident company); and (e) the flow-on dividend is not a fully-franked dividend; and (f) the resident company declares that the unfranked amount of the flow-on dividend is an on-payment of the unfranked amount of the original dividend to the extent of a specified percentage (not exceeding 100%); and (g) when the original dividend is paid, when the declaration is made and when the flow-on dividend is paid, the resident company is: (i) a resident; and (ii) wholly owned by the non-resident company. The deduction is from assessable income of the year of income in which the flow-on dividend is paid. The amount of the deduction is equal to the flow-on amount worked out using subsection (2). (2) The flow-on amount is: Flow-on declarations (3) The declaration under paragraph (1)(f) (the flow-on declaration) must be made: (a) in writing; and (b) before the flow-on dividend is paid. The declaration cannot be revoked or varied. (4) The flow-on declaration is effective only to the extent to which the flow-on amount does not exceed the surplus in the resident company's unfranked non-portfolio dividend account immediately before the declaration is made. Note: See section 46FB for the unfranked non-portfolio dividend account. Unfranked amount of flow-on dividend unfrankable (5) Part 3-6 of the Income Tax Assessment Act 1997 (the imputation system) applies to the unfranked amount of the flow-on dividend as if it were an unfrankable distribution within the meaning of section 202-45 of that Act if a deduction is allowed to the resident company in relation to the flow-on dividend. Wholly owned by non-resident company (6) The resident company is wholly owned by the non-resident company if all the shares in the resident company are held by and beneficially owned by the non-resident company. (7) However, the company is not wholly owned by the non-resident company if a person is in a position to affect rights, in relation to the resident company, of the non-resident company. (8) The resident company is also not wholly owned by the non-resident company if at some future time a person will be in a position to affect rights as described in subsection (7). A person in a position to affect rights (9) A person is in a position to affect rights of a company in relation to another company if the person has a right, power or option: (a) to acquire those rights from one or other of those companies; or (b) to do something that would prevent one or other of those companies from exercising its rights for its own benefit, or from receiving any benefit arising from having those rights. (10) It does not matter whether the person has the right, power or option because of the constitution of one or other of those companies, any agreement or otherwise. Definitions (11) In this section: "fully-franked dividend" means a dividend whose franking percentage (within the meaning of section 203-35 of the Income Tax Assessment Act 1997) is 100%. "group company" has the same meaning as in former section 160AFE as in force immediately before 1 July 2002. "non-portfolio dividend" has the same meaning as in section 317. "non-resident company" means a company that is not a resident. "unfranked amount" of a dividend (including an unfrankable distribution within the meaning of section 202-45 of the Income Tax Assessment Act 1997) means the amount of the dividend less the franked part. INCOME TAX ASSESSMENT ACT 1936 - SECT 46FB Unfranked non-portfolio dividend account Company may establish account (1) A company may establish an unfranked non-portfolio dividend account. Account surplus (2) An unfranked non-portfolio dividend account surplus exists for a company at a particular time if the company's total unfranked non-portfolio dividend credits arising before that time exceed its total unfranked non-portfolio dividend debits arising before that time. (3) The amount of the surplus is equal to the amount of the excess. Credits (4) An unfranked non-portfolio dividend credit arises for a company if: (a) the company is paid an unfranked non-portfolio dividend; and (b) the company is not a group company in relation to the company that paid the dividend in relation to the year of income in which the dividend is paid; and (c) ignoring the amendments made by Schedule 1 to the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006, but for subsection 46AB(1) or 46AC(2) or subparagraph 46F(2)(a)(i) of this Act as in force just before the commencement of those amendments, the company would have been entitled to a rebate under section 46 of this Act as so in force in respect of the unfranked amount of the dividend. The amount of the credit is the unfranked amount of the dividend. The credit arises when the dividend is paid to the company. Debits (5) An unfranked non-portfolio dividend debit arises for a company if the company makes a declaration under paragraph 46FA(1)(f) in relation to a dividend paid on a particular day. The amount of the debit is the flow-on amount under subsection 46FA(2). The debit arises when the declaration is made. Definitions (6) In this section: "group company" has the same meaning as in former section 160AFE as in force immediately before 1 July 2002. "non-portfolio dividend" has the same meaning as in section 317. "unfranked amount" of a dividend (including an unfrankable distribution within the meaning of section 202-45 of the Income Tax Assessment Act 1997) means the amount of the dividend less the franked part. INCOME TAX ASSESSMENT ACT 1936 - SECT 47 Distributions by liquidator (1) Distributions to shareholders of a company by a liquidator in the course of winding-up the company, to the extent to which they represent income derived by the company (whether before or during liquidation) other than income which has been properly applied to replace a loss of paid-up share capital, shall, for the purposes of this Act, be deemed to be dividends paid to the shareholders by the company out of profits derived by it. (1A) A reference in subsection (1) to income derived by a company includes a reference to: (a) an amount (except a net capital gain) included in the company's assessable income for a year of income; or (b) a net capital gain that would be included in the company's assessable income for a year of income if the Income Tax Assessment Act 1997 required a net capital gain to be worked out as follows: Method statement Step 1. Work out each capital gain (except a capital gain that is disregarded) that the company made during that year of income. Do so without indexing any amount used to work out the cost base of a CGT asset. Step 2. Total the capital gain or gains worked out under Step 1. The result is the net capital gain for that year of income. (2) Those distributions shall, to the extent to which they are made out of any profits or income, be deemed to have been paid wholly and exclusively out of those profits or that income. (2A) Where: (a) the business of a company has been, or is in the course of being, discontinued otherwise than in the course of a winding up of the company under any law relating to companies; (b) in connexion with the discontinuance, any moneys of the company have been or other property of the company has been, on or after 19 October 1967, distributed, otherwise than by the company, to shareholders of the company; and (c) the moneys or other property so distributed are not, for the purposes of this Act, dividends; the distribution shall, subject to subsection (2B), be deemed to be, for the purposes of this section, a distribution to the shareholders by a liquidator in the course of winding up the company. (2B) Where: (a) subsection (2A) would, but for this subsection, apply in relation to any moneys or other property of a company distributed to shareholders of the company; and (b) the company does not cease to exist within a period of 3 years after the distribution, or within such further period as the Commissioner allows; subsection (2A) shall not apply, and shall be deemed never to have applied, in relation to those moneys or that other property, and those moneys or that other property so distributed shall, for the purposes of this Act, be deemed to be dividends paid by the company to the shareholders out of profits derived by it. (3) For the purposes of this section, paid-up share capital includes capital which has been paid up in money or by other valuable consideration and which has been cancelled and has not been repaid by the company to the shareholders. INCOME TAX ASSESSMENT ACT 1936 - SECT 47A Distribution benefits--CFCs (1) Subject to subsection (2), if: (a) a company (in this section called the first company) has profits immediately before a distribution time for a distribution benefit in relation to the first company; and (b) the distribution time occurred after 3 June 1990; and (c) the first company is a CFC at the distribution time; and (d) the first company is a resident of an unlisted country at the distribution time; so much of the distribution payment in relation to the distribution time as would not otherwise be a dividend and does not exceed the amount of those profits is taken, for the purposes of this Act, to be a dividend paid by the first company: (e) to the recipient of the benefit as a shareholder in the first company; and (f) out of profits derived by the first company; and (g) at the distribution time. (2) If: (a) any of the following subparagraphs applies: (i) by virtue of subsection (1), the whole or a part of the distribution payment is included in the assessable income of a taxpayer of the year of income in which the distribution time occurred under section 44; (ii) by virtue of subsection (1), the whole or a part of the distribution payment would, apart from section 23AI or 23AJ, be included in the assessable income of a taxpayer of the year of income in which the distribution time occurred under section 44; and (b) both of the following subparagraphs apply: (i) the taxpayer's return of income for the year of income was not prepared on the basis that the distribution payment had the consequence specified in subsection (1); (ii) the taxpayer has not notified the Commissioner, in writing, within 12 months after the end of the year of income, that the distribution payment had the consequence specified in subsection (1); that subsection has effect in relation to the taxpayer and in relation to that distribution payment as if the reference in that subsection to the purposes of this Act were a reference to the purposes of this Act (other than section 365 of this Act and Division 770 of the Income Tax Assessment Act 1997). (3) Subject to subsections (9) and (12), a reference in this section to a distribution benefit in relation to the first company is a reference to an eligible benefit where the following conditions are satisfied: (a) the eligible benefit was provided to: (i) an associated entity in relation to the first company; or (ii) another entity that, immediately after the time of the provision of the eligible benefit, was an associated entity in relation to the first company; (b) the eligible benefit was provided by: (i) the first company; or (ii) an entity (in this subsection called the arranger) other than the first company under an arrangement between: (A) the first company; and (B) the arranger or another entity; (c) if subparagraph (b)(ii) applies--the first company made, or entered into an undertaking to make, one or more transfers of property or services to the arranger or to another entity (which transfers are in this section called the arrangement transfers) that are attributable, in whole or in part, to the provision of the eligible benefit. (4) Where the first company entered into an undertaking to make one or more arrangement transfers, the time of the arrangement transfers is the time the undertaking was entered into. (5) Where, at a particular time, an entity (in this subsection called the provider) waives or releases the obligation of another entity (in this subsection called the recipient) to pay or repay to the provider an amount: (a) the waiver or release is taken to constitute an eligible benefit provided at that time by the provider to the recipient; and (b) if the eligible benefit is a distribution benefit in relation to the first company--each of the following times is a distribution time for the eligible benefit: (i) if the eligible benefit was provided by the first company--the time of the provision of the eligible benefit; or (ii) in any other case--the time, or each of the times, of the arrangement transfers concerned; (c) if the eligible benefit is a distribution benefit in relation to the first company--the distribution payment in relation to the distribution time is: (i) if the benefit was provided by the first company--the amount the payment or repayment of which is waived or released; or (ii) in any other case--so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit. (6) For the purposes of subsection (5), an entity is taken to be under an obligation to pay or repay an amount even if the amount is not due for payment or repayment. (7) Where, at a particular time, an entity (in this subsection called the provider) makes a loan to another entity (in this subsection called the recipient), where: (a) the parties to the loan are not at arm's length with each other in relation to the loan; or (b) the purpose, or one of the purposes, of the making of the loan was to facilitate, directly or indirectly (through one or more interposed companies, partnerships or trusts), the payment of a dividend that is, or would be, non-assessable non-exempt income under section 23AJ (in whole or in part); or (c) the purpose, or one of the purposes, of the making of the loan was to facilitate, directly or indirectly, the provision of an eligible benefit by the recipient, being an eligible benefit that is a distribution benefit in relation to any company; the following provisions have effect: (d) the making of the loan is taken to constitute an eligible benefit provided by the provider to the recipient at that time; (e) if the eligible benefit is a distribution benefit in relation to the first company--each of the following times is a distribution time for the eligible benefit: (i) if the benefit was provided by the first company--the time of the provision of the benefit; or (ii) in any other case--the time, or each of the times, of the arrangement transfers concerned; (f) if the eligible benefit is a distribution benefit in relation to the first company--the distribution payment in relation to the distribution time is: (i) if the benefit was provided by the first company--the amount of the loan; or (ii) in any other case--so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit. (8) Where, at a particular time: (a) an entity (in this subsection called the provider) acquires from a company (in this subsection called the recipient): (i) a share in the recipient; (ii) a right to acquire a share in the recipient; (iii) an option to acquire a share in the recipient; or (b) an entity (in this subsection also called the provider) acquires from the trustee of a unit trust (in this subsection also called the recipient): (i) a unit in the recipient; (ii) a right to acquire a unit in the recipient; (iii) an option to acquire a unit in the recipient; the following provisions have effect: (c) the acquisition is taken to constitute an eligible benefit provided by the provider to the recipient at that time; (d) if the eligible benefit is a distribution benefit in relation to the first company--each of the following is a distribution time for the eligible benefit: (i) if the benefit was provided by the first company--the time of the provision of the benefit; or (ii) in any other case--the time, or each of the times, of the arrangement transfers concerned; (e) if the eligible benefit is a distribution benefit in relation to the first company--the distribution payment in relation to the distribution time is: (i) if the benefit was provided by the first company--the amount or market value of the consideration paid or given by the first company in respect of the acquisition; or (ii) in any other case--so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit; (f) if: (i) the eligible benefit is a distribution benefit in relation to the first company; and (ii) the provider transferred property or services to the recipient in respect of the acquisition; in determining the profits of the company immediately before the distribution time, or the first distribution time, as the case requires, for the distribution benefit, the following assumptions are to be made: (iii) if the benefit was provided by the first company--the assumption that, immediately before the distribution time, the company had: (A) disposed of the property or services to an entity other than the recipient; and (B) received, in respect of that disposal, consideration equal to the market value of the property or services; (iv) if subparagraph (iii) does not apply--the assumption that, immediately before the distribution time, the company had: (A) disposed of equivalent property or services to an entity other than the recipient or the entity who provided the eligible benefit; and (B) received, in respect of that disposal, consideration equal to the market value of the property or services. (9) An eligible benefit that is covered by subsection (8) and provided at a particular time is not a distribution benefit in relation to the first company if, at that time, there is no entity (other than the provider referred to in that subsection) who is: (a) either: (i) the holder of an eligible equity interest in the first company; or (ii) an associate of an entity who is the holder of an eligible equity interest in the first company; and (b) the holder of an eligible equity interest in the recipient referred to in that subsection. (10) Where: (a) an entity (in this subsection called the provider) transfers property or services to another entity (in this subsection called the recipient); and (b) the property or services are transferred: (i) for no consideration; or (ii) for a consideration less than the market value of the property or services; and (c) in the case of a transfer of services--the services do not consist of the making of a loan; and (d) in any case--the property or services are not transferred by way of consideration for the acquisition from a company of: (i) a share in the company; or (ii) a right to acquire a share in the company; or (iii) an option to acquire a share in the company; and (e) in any case--the property or services are not transferred in respect of the acquisition from the trustee of a unit trust of: (i) a unit in the unit trust; or (ii) a right to acquire a unit in the unit trust; or (iii) an option to acquire a unit in the unit trust; and (f) in the case of a transfer of property--the property does not consist of a payment in respect of a call on a share in a company; the following provisions have effect: (g) the transfer is taken to constitute an eligible benefit provided by the provider to the recipient at that time; (h) if the eligible benefit is a distribution benefit in relation to the first company--each of the following is a distribution time for the eligible benefit: (i) if the benefit was provided by the first company--the time of the provision of the benefit; or (ii) in any other case--the time, or each of the times, of the arrangement transfers concerned; (j) if the eligible benefit is a distribution benefit in relation to the first company--the distribution payment in relation to the distribution time is: (i) if the benefit was provided by the first company--the amount by which the amount or market value of the property or services exceeds the consideration (including nil consideration) mentioned in paragraph (b); or (ii) if subparagraph (i) does not apply and there is only one arrangement transfer--so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit; or (iii) if subparagraph (i) does not apply and there are 2 or more arrangement transfers--the amount worked out in relation to the arrangement transfer using the following formula: where: Total Excess means so much of the total amount or market value of all the arrangement transfers as is attributable to the provision of the eligible benefit. Arrangement transfer means the amount or market value of the arrangement transfer concerned. Total arrangement transfers means the total amount or market value of all of the arrangement transfers. (k) if the eligible benefit is a distribution benefit in relation to the first company--in determining the profits of the company immediately before a distribution time for the distribution benefit, the following assumptions are to be made: (i) if the benefit was provided by the first company--the assumption that, immediately before the distribution time, the company had: (A) disposed of the property or services to an entity other than the recipient; and (B) received, in respect of that disposal, consideration equal to the market value of the property or services; (ii) if subparagraph (i) does not apply and there is only one arrangement transfer--the assumption that, immediately before the distribution time, the company had: (A) disposed of the property or services covered by the arrangement transfer to an entity other than the entity who provided the eligible benefit; and (B) received, in respect of that disposal, consideration equal to the market value of the property or services; (iii) if subparagraph (i) does not apply and there are 2 or more arrangement transfers--the assumption that, immediately before each distribution time, the company had: (A) disposed of the property or services covered by the arrangement transfer concerned to an entity other than the entity who provided the eligible benefit; and (B) received, in respect of that disposal, consideration equal to the market value of the property or services. (10A) Subsection (10) does not apply to a transfer that is taken by section 70-30 or 70-110 of the Income Tax Assessment Act 1997 to have occurred. (11) Where, at a particular time, an entity (in this subsection called the provider) makes a payment to another entity, being a company (in this subsection called the recipient), in respect of a call on a share in the recipient: (a) the making of the payment is taken to constitute an eligible benefit provided by the provider to the recipient at that time; and (b) if the eligible benefit is a distribution benefit in relation to the first company--each of the following is a distribution time for the eligible benefit: (i) if the benefit was provided by the first company--the time of the provision of the benefit; or (ii) in any other case--the time, or each of the times, of the arrangement transfers concerned; (c) if the eligible benefit is a distribution benefit in relation to the first company--the distribution payment in relation to the distribution time is: (i) if the benefit was provided by the first company--the amount of the payment; or (ii) in any other case--so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit. (12) An eligible benefit that is covered by subsection (11) and provided at a particular time is not a distribution benefit in relation to the first company if, at that time, there is no entity (other than the provider referred to in that subsection) who is: (a) either: (i) the holder of an eligible equity interest in the first company; or (ii) an associate of an entity who is the holder of an eligible equity interest in the first company; and (b) the holder of an eligible equity interest in the recipient referred to in that subsection. (13) If: (a) apart from this subsection, a particular eligible benefit that is covered by subsection (8) or (11) and provided at a particular time is not a distribution benefit in relation to the first company only because of subsection (9) or (12); and (b) at a later time, there is an entity (other than the provider referred to in subsection (8) or (11), as the case may be) who is: (i) either: (A) the holder of an eligible equity interest in the first company; or (B) an associate of an entity who is the holder of an eligible equity interest in the first company; and (ii) the holder of an eligible equity interest in the recipient referred to in whichever of subsections (8) and (11) is applicable; and (ba) if the eligible benefit consists of the acquisition of a share or unit--at that later time, the share or unit has not been redeemed or bought back by the recipient mentioned in subsection (8) for a consideration equal to or greater than the arm's length value of the share or unit; the following provisions have effect: (c) this section has effect as if subsection (9) or (12), as the case requires, had never applied in relation to that eligible benefit; (d) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection. (14) If: (a) apart from this subsection, a particular eligible benefit (in this subsection called the first eligible benefit) that is covered by subsection (8) or (11) and provided at a particular time is not a distribution benefit in relation to the first company only because of subsection (9) or (12); and (b) the recipient referred to in whichever of subsections (8) and (11) is applicable provides an eligible benefit (in this subsection called the second eligible benefit) to: (i) the first company; or (ii) the provider referred to in whichever of those subsections is applicable; or (iii) an associated entity in relation to: (A) the first company; or (B) that provider; and (c) the provision of the first eligible benefit facilitated, directly or indirectly, the provision of the second eligible benefit; and (ca) if the second eligible benefit is covered by subsection (8) or (11): (i) the second eligible benefit is provided on or after 13 September 1990; or (ii) both: (A) the second eligible benefit was provided before 13 September 1990; and (B) the Commissioner is of the opinion that the provision of the second eligible benefit had, or would be likely to have, the effect of enabling any taxpayer to avoid tax; the following provisions have effect: (d) this section has effect as if subsection (9) or (12), as the case requires, had never applied in relation to the first eligible benefit; (e) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection. (15) In determining whether a company has profits at a particular time, it is to be assumed that the accounts of the company had been drawn up immediately before that time. (16) For the purposes of this section, where: (a) the first company has profits (in this subsection called the original profits) immediately before a distribution time for a distribution benefit in relation to the first company; and (b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer) of a year of income (in this subsection called the original year of income) under section 44 in respect of the distribution payment in relation to the distribution time; and (c) any of the following subparagraphs applies: (i) the original taxpayer is: (A) a resident at any time during the original year of income; and (B) a company or a natural person (other than a company or a natural person in the capacity of a trustee); (ii) the original taxpayer is the trustee of a corporate unit trust in relation to the original year of income; (iii) the original taxpayer is the trustee of a public trading trust in relation to the original year of income; (iv) the original taxpayer is the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the original year of income; (v) the original taxpayer is the trustee of a resident trust estate (within the meaning of Division 6) in relation to the year of income who is liable to be assessed and pay tax under section 99 or 99A in respect of a part of the net income of the trust estate; then, in determining the profits that the first company has at a later time, no account is to be taken of so much of the original profits as is equal to the original assessable amount. (17) For the purposes of this section, where: (a) the first company has profits (in this subsection called the original profits) immediately before a distribution time for a distribution benefit in relation to the first company; and (b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer) of a year of income (in this subsection called the original year of income) under section 44 in respect of the distribution payment in relation to the distribution time; and (c) all of the following conditions are satisfied: (i) the original taxpayer is the trustee of a trust estate who is liable to be assessed and pay tax under section 98 in respect of a share in the net income of the trust estate of the original year of income; (ii) the beneficiary who was entitled to that share was a resident at any time during the original year of income; (iii) the whole or a part (which whole or part is in this subsection called the beneficiary's portion of the original assessable amount) of the share of the net income is attributable to the original assessable amount; then, in determining the profits that the first company has at a later time, no account is to be taken of so much of the original profits as is equal to the beneficiary's portion of the original assessable amount. (18) For the purposes of this section, where: (a) the first company has profits (in this subsection called the original profits) immediately before a distribution time for a distribution benefit in relation to the first company; and (b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer) of a year of income (in this subsection called the original year of income) under section 44 in respect of the distribution payment in relation to the distribution time; and (c) the original taxpayer is the trustee of a trust estate or a partnership; and (d) the following conditions are satisfied in relation to another taxpayer (in this subsection called the actual taxpayer): (i) an amount is included in the assessable income of the actual taxpayer of a year of income (in this subsection called the assessment year of income) under subsection 92(1) or section 97 or 100; (ii) the actual taxpayer is: (A) a resident at any time during the assessment year of income, being a company or a natural person (other than a company or a natural person in the capacity of a trustee); or (B) the trustee of a corporate unit trust in relation to the assessment year of income; or (C) the trustee of a public trading trust in relation to the assessment year of income; or (D) the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the assessment year of income; or (E) the trustee of a trust estate who is liable to be assessed and pay tax under section 98 in respect of a share in the net income of a trust estate; or (F) the trustee of a trust estate who is liable to be assessed and pay tax under section 99 or 99A in respect of a part of the net income of a trust estate; or (G) the trustee of a trust estate where trustee beneficiary non-disclosure tax is payable under Division 6D on the whole or part of the net income of the trust estate; (iii) if sub-subparagraph (ii)(A), (B), (C) or (D) applies--the whole or a part of the amount so included in the actual taxpayer's assessable income (which whole or part is in this subsection called the actual taxpayer's portion of the original assessable amount) is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount; (iv) if sub-subparagraph (ii)(E) applies: (A) the beneficiary who was entitled to the share concerned was a resident at any time during the assessment year of income; and (B) the whole or a part (which whole or part is in this subsection also called the actual taxpayer's portion of the original assessable amount) of the share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount; (v) if sub-subparagraph (ii)(F) applies: (A) the trust estate was a resident trust estate (within the meaning of Division 6) in relation to the assessment year of income; and (B) the whole or a part (which whole or part is in this subsection also called the actual taxpayer's portion of the original assessable amount) of the part of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount; (vi) if sub-subparagraph (ii)(G) applies: (A) the trust estate was a resident trust estate (within the meaning of Division 6) in relation to the assessment year of income; and (B) the whole or a part (which whole or part is in this subsection also called the actual taxpayer's portion of the original assessable amount) of the whole or the part of the share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount; then, in determining the profits that the first company has at a later time, no account is to be taken of so much of the original profits as is equal to the actual taxpayer's portion of the original assessable amount. (18A) An assessment may be made of a taxpayer on the assumption that subsection (2) will not be applicable in relation to a particular distribution payment made during a year of income of the taxpayer. (18B) Where: (a) the assessment mentioned in subsection (18A) is made; and (b) after the making of the assessment, the Commissioner becomes aware that subsection (2) was applicable in relation to the distribution payment concerned; then, in spite of anything in section 170, the Commissioner may amend the assessment at any time for the purposes of ensuring that the assessment is made as if subsection (18A) of this section were disregarded. (19) The provisions of section 102AAJ apply for the purposes of this section in like manner as they apply for the purposes of Division 6AAA. (20) For the purposes of this section, the question whether a company is a resident of an unlisted country is to be determined in the same manner in which that question is determined for the purposes of Part X. (21) In this section: "arm's length value", in relation to the redemption or buy-back of a share in a company or a unit in a unit trust, means the amount that the company or trustee could reasonably be expected to have been required to pay to obtain the redemption or buy-back of the share or unit under a transaction where the parties to the transaction are dealing with each other at arm's length in relation to the transaction. "arrangement" means: (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 there are 2 or more parties or only one party involved. "associate" has the same meaning as in Part X. "associated entity", in relation to a company, means either of the following entities: (a) a shareholder in the company; (b) an entity who is an associate of a shareholder in the company. "CFC" has the same meaning as in Part X. "distribution benefit" has the meaning given by subsection (3) of this section. "eligible equity interest": (a) in relation to a company, means any of the following: (i) a share, or an interest in a share, in the company; (ii) a right to acquire a share, or an interest in a share, in the company; (iii) an option to acquire a share, or an interest in a share, in the company; or (b) in relation to a unit trust, means any of the following: (i) a unit, or an interest in a unit, in the unit trust; (ii) a right to acquire a unit, or an interest in a unit, in the unit trust; (iii) an option to acquire a unit, or an interest in a unit, in the unit trust; or "entity" has the same meaning as in Part X. "loan" includes: (a) an advance of money; and (b) the provision of credit or any other form of financial accommodation; and (c) the payment of an amount for, on account of, on behalf or at the request of an entity where there is an obligation (whether expressed or implied) to repay the amount; and (d) a transaction (whatever its terms or form) which in substance effects a loan of money. "property" has the same meaning as in Division 6AAA. "services" has the same meaning as in Division 6AAA. "statutory accounting period" has the same meaning as in Part X. "transfer" has the same meaning as in Division 6AAA. INCOME TAX ASSESSMENT ACT 1936 - SECT 51AAA Deductions not allowable in certain circumstances (1) Where: (a) an amount is included in the assessable income of a taxpayer of a year of income by section 102-5 of the Income Tax Assessment Act 1997 (about net capital gains) or subsection 124ZZB(1) of this Act (about notional capital gains of PDFs); (b) a deduction would, but for this section, be allowable under a provision listed in the table in subsection (2) to the taxpayer; and (c) if the amount had not been included in the assessable income the deduction would be not be allowable; the deduction is not allowable. (2) The table lists provisions allowing deductions that are affected by subsection (1). 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. Deduction provisions affected by net capital gains limit Item Provision Description 1 Subdivision A of Division 3 of Part III General 2 section 8-1 General deductions 3 Division 25 Some expenses you can deduct 4 Division 30 Gifts or contributions 5 Division 34 Non-compulsory uniforms 6 Division 36 Tax losses of earlier income years 7 Subdivision 40-F Facilities to conserve or convey water 8 Subdivision 40-F Establishing grapevines 9 Subdivision 40-G Landcare operations 10 Subdivision 40-G Mains electricity supply 11 Subdivision 40-G Telephone lines 12 Division 165 Income tax consequences of changing ownership or control of a company 13 Subdivision 170-A Transfer of tax losses within wholly-owned groups of companies 14 Division 230 Financial arrangements INCOME TAX ASSESSMENT ACT 1936 - SECT 51AD Deductions not allowable in respect of property used under certain leveraged arrangements (1) In this section: "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. "associate" has the same meaning in relation to a person as that expression has in relation to a person in section 318. "construction" includes manufacture. "control" means effectively control. "goods" includes whatever is capable of being owned or used. "hire-purchase agreement" means a hire purchase agreement to which Division 240 of the Income Tax Assessment Act 1997 applies. "lease", in relation to property, includes: (a) any arrangement under which a right to use the property is granted by the owner to another person; and (b) any arrangement under which a right to use the property, being a right derived directly or indirectly from a right referred to in paragraph (a), is granted by a person to another person; but does not include a hire-purchase agreement. "owner", in relation to property, includes a person who has taken, and holds, the property on hire under a hire-purchase agreement. "person" includes a person in the capacity of a trustee. "prescribed time" means one o'clock in the afternoon, by standard time in the Australian Capital Territory, on 24 June 1982.Note: This section 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. (1A) This section does not apply to property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997) if the tax preferred use: (a) starts on or after 1 July 2007; and (b) does not occur under a legally enforceable arrangement entered into before 1 July 2007. (1B) This section does not apply to property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997) if: (a) the tax preferred use starts on or after 1 July 2007; and (b) the tax preferred use occurs under a legally enforceable arrangement that was entered into before 1 July 2007; and (c) an election is made under item 71 of Schedule 1 to the Tax Laws Amendment (2007 Measures No. 5) Act 2007 to have subitem 71(2) of that Schedule apply to the property. (1C) This section does not apply to property on or after 1 July 2007 if: (a) Division 16D applied to the property immediately before 1 July 2007; or (b) this section did not apply to the property immediately before 1 July 2007 and Division 16D would apply to the property on or after 1 July 2007 but for subsection 159GH(2). For the purposes of applying paragraph (b), disregard the operation of section 159GL. (1D) Subparagraph (4)(a)(iii) and sub-subparagraph (4)(b)(ii)(D) do not apply to property acquired by a taxpayer if: (a) the property is acquired by the taxpayer on or after 1 July 2007; and (b) the property is not acquired under a legally enforceable arrangement entered into before 1 July 2007. (2) In this section, a reference to the acquisition of property by a person is a reference to: (a) the person becoming the owner of the property; or (b) the construction of the property for the person by another person or other persons on premises of the first-mentioned person. (3) In this section, a reference to property being held for use includes a reference to property that is installed ready for use and held in reserve. (3B) For the purpose of this section, 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 section applies as if the person who was the owner of the property before the transfer continues to be the owner after the transfer. (4) Subject to subsections (1A), (1B), (1C), (1D) and (8), this section applies, in relation to a taxpayer, to property acquired or constructed by the taxpayer, being property acquired by the taxpayer under a contract entered into after the prescribed time or property constructed by the taxpayer, construction having commenced after that time, if: (a) at a time when the property is owned by the taxpayer, a person (which person is in this section referred to as the end-user) holds rights as lessee under a lease of the property, and: (i) in a case where the end-user is not a resident of Australia--while the lease is in force, the property is, or is to be, used by a person other than the taxpayer wholly or principally outside Australia; (ii) while the lease is in force, the property is, or is to be, used by a person other than the taxpayer otherwise than wholly and exclusively for the purpose of producing assessable income; or (iii) in a case where the property was acquired by the taxpayer--the property was, prior to its acquisition by the taxpayer, owned, and used or held for use, by the end-user; or (b) in a case to which paragraph (a) does not apply: (i) at a time when the property is owned by the taxpayer, the property is, or is to be, used (whether or not by the taxpayer) wholly or partly in or in connection with the production, supply, carriage, transmission or delivery of goods or the provision of services; and (ii) a person other than the taxpayer (which person is in this section also referred to as the end-user) controls, will control, or is or will be able to control, directly or indirectly, that use of the property, and: (A) in a case where the end-user is not a resident of Australia--that use of the property takes place, or is to take place, wholly or principally outside Australia; (B) in a case where some or all of the goods are, or are to be, produced for the end-user or supplied, carried, transmitted or delivered to or for the end-user, or some or all of the services are, or are to be, provided to or for the end-user--any of those goods or services are, or are to be, used by the end-user otherwise than wholly and exclusively for the purpose of producing assessable income; (C) in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (i), the end-user derives, or is to derive, no income or income that is wholly or partly exempt from income tax; or (D) in a case where the property was acquired by the taxpayer--the property was, prior to its acquisition by the taxpayer, owned, and used or held for use, by the end-user. (5) In subparagraph (4)(a)(iii) and sub-subparagraph (4)(b)(ii)(D), a reference to the end-user is a reference to the end-user, any of the end-users (where there are 2 or more end-users), any associate of the end-user or of any of those end-users, or any 2 or more such persons. (6) For the purposes of subsection (4), property shall be taken not to have been, prior to its acquisition by the taxpayer, owned, and used or held for use, by a person if: (a) the property was first used or held for use by the person at a time within 6 months before the acquisition of the property by the taxpayer; and (b) at that time there was in existence an arrangement that the property would be sold to another person and leased by that person to the first-mentioned person. (7) Where: (a) the end-user consists of all or any of the partners in a partnership; and (b) a condition of paragraph (4)(a) or (b), as the case may be, is satisfied in relation to any of the partners in the partnership; that condition shall be taken to be satisfied in relation to all the partners in the partnership. (8) This section does not apply to property, in relation to a taxpayer, unless the whole or a predominant part of the cost of the acquisition or construction, as the case may be, of the property by the taxpayer is financed directly or indirectly by a debt or debts (which debt is, or debts are, referred to in this subsection as the non-recourse debt) and the rights of the creditor or creditors as against the taxpayer in the event of default in the repayment of principal or payment of interest: (a) are limited wholly or predominantly to any or all of the following: (i) rights (including the right to moneys payable) in relation to any or all of the following: (A) the property or the use of the property; (B) goods produced, supplied, carried, transmitted or delivered, or services provided, by means of the property; (C) the loss or disposal of the whole or a part of the property or of the taxpayer's interest in the property; (ii) rights in respect of a mortgage or other security over the property; (iii) rights arising out of any arrangement relating to the financial obligations of the end-user of the property towards the taxpayer, being financial obligations in relation to the property; (b) are in the opinion of the Commissioner capable of being so limited, having regard to either or both of the following: (i) the assets of the taxpayer; (ii) any arrangement to which the taxpayer is a party; or (c) where paragraphs (a) and (b) do not apply--are limited by reason that not all of the assets of the taxpayer (not being assets that are security for debts of the taxpayer other than the non-recourse debt) would be available for the purpose of the discharge of the whole of the non-recourse debt (including the payment of interest) in the event of any action or actions by the creditor or creditors against the taxpayer arising out of that debt. (9) Where: (a) property has been financed by a debt or debts as mentioned in subsection (8); and (b) the rights of the creditor or creditors as against the taxpayer are, or are capable of being, limited as mentioned in that subsection; the Commissioner may treat those rights as not being, or capable of being, so limited if the Commissioner is of the opinion, having regard to the circumstances in which the debt was, or debts were, incurred and any other matters that the Commissioner thinks relevant, that it would be reasonable to do so. (10) Subject to subsections (11), (12), (13) and (15), where this section has applied to property, in relation to a taxpayer, at any time, the taxpayer shall be deemed not to have occupied or used the property, or held the property for use, at that time, for the purpose of producing assessable income or in carrying on a business for that purpose. (11) Where this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of subparagraph (4)(a)(ii) or sub-subparagraph (4)(b)(ii)(B), and for any part of that time the end-user held, occupied or used the property referred to in that subparagraph, or held it for use, or used any goods or services referred to in that sub-subparagraph, as the case may be, partly for the purpose of producing assessable income, the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent that the Commissioner considers appropriate. (12) Where this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of sub-subparagraph (4)(b)(ii)(C), and for any part of that time the end-user derived assessable income in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (4)(b)(i), the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent that the Commissioner considers appropriate. (13) Where: (a) this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of subparagraph (4)(a)(ii) or sub-subparagraph (4)(b)(ii)(B) or (C); (b) the end-user referred to in that subparagraph or sub-subparagraph, as the case may be, consisted of all or any of the partners in a partnership; and (c) for any part of that time one or more of the partners in the partnership was a person in respect of whom, but for the operation of subsection (7), that subparagraph or sub-subparagraph, as the case may be, would not have applied; the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent that the Commissioner considers appropriate. (14) In considering, for the purposes of subsection (13), the extent to which the taxpayer shall be deemed to have held, occupied or used property, or held if for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, the Commissioner shall have regard: (a) to the interest or interests of the partner or partners referred to in paragraph (13)(c) in the net income, or the partnership loss, of the partnership of the year of income corresponding to the year of income referred to in paragraph (13)(a); (b) the extent to which, for any part of the time referred to in paragraph (13)(a), a partner or partners other than the partner or partners referred to in paragraph (13)(c) held, occupied or used the property, or held it for use, or used the goods or services referred to in sub-subparagraph (4)(b)(ii)(B), as the case may be, for the purpose of producing assessable income; and (c) the extent to which, for any part of the time referred to in paragraph (13)(a), a partner or partners other than the partner or partners referred to in paragraph (13)(c) derived assessable income in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (4)(b)(i). (15) Notwithstanding anything contained in subsections (10), (11) and (13), at any time when this section applies to property by reason of subparagraph (4)(a)(ii), the property shall be deemed not to be held, occupied or used, or held for use, by the taxpayer for the purpose of producing assessable income, or in carrying on a business for that purpose, if, at that time: (a) 2 or more end-users hold rights as lessees under the lease of the property; (b) one or more of the end-users (which end-user is, or end-users are, referred to in this subsection as the exempt end-user) is a company, or are companies, the income of which is ordinarily exempt from income tax; (c) the property is, or is to be, used wholly or principally in or in connection with the conduct of operations or transactions of a kind that the exempt end-user ordinarily engages in; (d) the exempt end-user controls, will control, or is or will be able to control, directly or indirectly, that use of the property; and (e) in relation to those operations or transactions, the exempt end-user derives, or is to derive, no income or income that is exempt from income tax. (16) Where a taxpayer has incurred expenditure for repairs to property to which this section applies or has applied in relation to the taxpayer and, but for this section, a deduction would be allowable under section 25-10 (Repairs) of the Income Tax Assessment Act 1997 in respect of that expenditure, so much of the expenditure as the Commissioner considers appropriate shall be deemed not to be allowable, having regard to: (a) the period for which the taxpayer owned the property before the repairs were commenced and any part of that period during which this section applies or applied to the property in relation to the taxpayer; and (b) in a case to which subsection (11), (12) or (13) of this section applies or applied--the extent to which, for the time during the part of the period referred to in paragraph (a), the taxpayer was deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose. (17) Where a taxpayer has incurred expenditure in borrowing money to finance the acquisition or construction of property to which this section applies or has applied in relation to the taxpayer and a deduction has been allowed, or would but for this section be allowable, under section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997 in relation to that expenditure, so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be, having regard to: (a) the period for which the money was borrowed or, by the operation of subsection 25-25(6) of that Act, is deemed to have been borrowed and any part of that period during which this section applies, applied or, in the opinion of the Commissioner, will apply to the property; and (b) in a case to which subsection (11), (12), or (13) of this section applies or applied--the extent to which, for the time during the part of the period referred to in paragraph (a), the taxpayer is, or in the opinion of the Commissioner will be, deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose. (18) Where a taxpayer has incurred expenditure for the preparation, registration and stamping of a lease, or of an assignment or surrender of a lease, of property to which this section applies or has applied in relation to the taxpayer and a deduction has been allowed, or would but for this section be allowable, under section 25-20 (Lease document expenses) of the Income Tax Assessment Act 1997 in respect of that expenditure, so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be, having regard to: (a) the period of the lease and any part of that period during which this section applies, applied or, in the opinion of the Commissioner, will apply to the property; and (b) in a case to which subsection (11), (12) or (13) of this section applies or applied--the extent to which, for the time during the part of the period mentioned in paragraph (a), the taxpayer is, or in the opinion of the Commissioner will be, deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose. (19) Where: (a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income); (b) a deduction was taken into account in calculating that net income or partnership loss; (c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction) would not have been taken into account for the purpose of that calculation if this section applied in relation to particular property acquired or constructed by the partnership; (d) this section does not apply in relation to the property by reason only that the property was acquired by the partnership under a contract entered into at or before the prescribed time or was constructed by the partnership, construction having commenced at or before that time; and (e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer after the prescribed time; there shall be included in the assessable income of the taxpayer of the relevant year of income an amount that bears to the amount of the relevant deduction the same proportion as the individual interest of the taxpayer in that net income bears to that net income or, as the case requires, as the individual interest of the taxpayer in that partnership loss bears to that partnership loss. (20) Where: (a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income); (b) a deduction was taken into account in calculating that net income or partnership loss; (c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction) would not have been taken into account for the purpose of that calculation if this section applied in relation to particular property acquired or constructed by the partnership; (d) this section does not apply in relation to the property by reason only that the property was acquired by the partnership under a contract entered into at or before the prescribed time or was constructed by the partnership, construction having commenced at or before that time; (e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer before the prescribed time; and (f) after the prescribed time, the taxpayer made or agreed to make a contribution or contributions (which contribution is or contributions are in this subsection referred to as the additional contribution) to the capital of the partnership in addition to any contribution or contributions to the capital of the partnership that, under a contract or contracts entered into at or before that time, the taxpayer had made or agreed to make; and (g) by reason of making or agreeing to make the additional contribution, the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss, is greater than it would otherwise have been; there shall be included in the assessable income of the taxpayer of the relevant year of income an amount ascertained in accordance with the formula A (B - C) , where: "A" is the amount of the relevant deduction. "B" is the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss; and "C" is the fraction that would be B if another partner, and not the taxpayer, had made or agreed to make the additional contribution. (21) For the purposes of determining if this section applies to property, the income of a prescribed excluded STB (within the meaning of Division 1AB) is taken to be exempt. INCOME TAX ASSESSMENT ACT 1936 - SECT 51AEA Meal entertainment--election under section 37AA of Fringe Benefits Tax Assessment Act 1986 to use 50/50 split method (1) If a meal entertainment fringe benefit arises for a taxpayer for an FBT year and the taxpayer elects that Division 9A of Part III of the Fringe Benefits Tax Assessment Act 1986 applies to the taxpayer for the FBT year, and has not elected that Subdivision C of that Division applies: (a) for each expense incurred in the FBT year by the taxpayer in providing meal entertainment, a deduction equal to 50% of that expense is allowable to the taxpayer for the year of income in which it is incurred; and (b) no other deduction under any provision of this Act is allowable to the taxpayer for the expense. (2) Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986. INCOME TAX ASSESSMENT ACT 1936 - SECT 51AEB Meal entertainment--election under section 37CA of Fringe Benefits Tax Assessment Act 1986 to use the 12 week register method (1) If a taxpayer has made an election under section 37CA of the Fringe Benefits Tax Assessment Act 1986: (a) for each expense incurred in the FBT year by the taxpayer in providing meal entertainment, a deduction equal to the amount worked out using the following formula is allowable to the taxpayer for the year of income in which it is incurred: (b) no other deduction under any provision of this Act is allowable to the taxpayer for the expense. (2) The register percentage is the percentage worked out using the formula: where: "Total deductions for register meal entertainment" means the total of deductions that would (but for this section and section 51AEA) be allowable to the taxpayer for expenses incurred by the taxpayer in providing meal entertainment in the 12 week period covered by the register kept by the employer under Subdivision C of Division 9A of the Fringe Benefits Tax Assessment Act 1986. "Total register meal entertainment expenses" means the total of expenses incurred by the taxpayer in providing meal entertainment during that 12 week period. (3) Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986. INCOME TAX ASSESSMENT ACT 1936 - SECT 51AEC Entertainment facility--election under section 152B of Fringe Benefits Tax Assessment Act 1986 to use 50/50 split method (1) If a taxpayer has made an election under section 152B of the Fringe Benefits Tax Assessment Act 1986: (a) for each entertainment facility leasing expense incurred in the FBT year by the taxpayer, a deduction equal to 50% of that expense is allowable to the taxpayer for the year of income in which it is incurred; and (b) no other deduction under any provision of this Act is allowable to the taxpayer for entertainment facility leasing expenses incurred in the FBT year. (2) Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986. INCOME TAX ASSESSMENT ACT 1936 - SECT 51AF Car expenses incurred by employee (1) Where: (a) during a particular period, an employer provides a car for the exclusive use of a person who is, or of persons any of whom is, an employee of the employer or a relative of such an employee; and (b) at any time during that period, the employee or a relative of the employee is entitled to use the car for private purposes; a deduction is not allowable under this Act in respect of a car expense that relates to the car and: (c) is incurred by the employee during that period; or (d) is incurred by the employee and is wholly or partly attributable to that period. (2) In this section: "car" has the meaning given by section 995-1 of the Income Tax Assessment Act 1997, but does not include a car covered by section 28-165 of that Act. "car expense" has the meaning given by section 28-13 of the Income Tax Assessment Act 1997, but does not include a car expense covered by section 28-165 of that Act. "employee" means a person who receives, or is entitled to receive, work and income support related withholding payments and benefits. "employer" means a person who pays or is liable to pay work and income support related withholding payments and benefits, and includes: (a) in the case of an unincorporate body of persons other than a partnership--the manager or other principal officer of that body; and (b) in the case of a partnership--each partner; and (c) an Australian government agency as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 51AGA No deduction to employee for certain car parking expenses No deduction (1) A deduction is not allowable to an employee under this Act in respect of expenditure to the extent to which it is incurred in respect of the provision of car parking facilities for a car on a day if: (a) on that day, the employee has a primary place of employment; and (b) on that day, the car is parked for one or more daylight periods exceeding 4 hours in total at, or in the vicinity of, that primary place of employment; and (c) the expenditure is in respect of the provision of the parking facilities to which that parking relates; and (d) on that day, the car was used in connection with travel by the employee between: (i) the place of residence of the employee; and (ii) that primary place of employment; and (e) the provision of parking facilities for the car during the period or periods is not taken, under the regulations, to be excluded from this section; and (f) the day is on or after 1 July 1993. Definitions (2) In this section: "car" has the same meaning as in the Fringe Benefits Tax Assessment Act 1986. "daylight period" has the same meaning as in the Fringe Benefits Tax Assessment Act 1986. "employee" has the same meaning as in the Fringe Benefits Tax Assessment Act 1986. place of residence has the same meaning as in the Fringe Benefits Tax Assessment Act 1986. "primary place of employment" has the same meaning as in the Fringe Benefits Tax Assessment Act 1986. INCOME TAX ASSESSMENT ACT 1936 - SECT 51AH Deductions not allowable where expenses incurred by employee are reimbursed (1) Where: (a) either of the following subparagraphs applies: (i) a person makes a payment in discharge, in whole or in part, of an obligation of the taxpayer to pay an amount to a third person in respect of an amount of a loss or outgoing incurred by the taxpayer; (ii) a person reimburses the taxpayer, in whole or in part, in respect of an amount of a loss or outgoing incurred by the taxpayer; (b) the payment or reimbursement, as the case may be, constitutes: (i) a fringe benefit; or (ii) a benefit that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986, would be a fringe benefit; and (c) in the case of a reimbursement--the amount of the reimbursement is not included in the taxpayer's assessable income under section 15-70 of the Income Tax Assessment Act 1997; the amount of the deduction that, but for this section, has been allowed or would be allowable in respect of the loss or outgoing shall be: (d) if it would be concluded that the amount of the payment or reimbursement would have been the same even if the loss or outgoing were not incurred in producing assessable income of the taxpayer--calculated as if the loss or outgoing were reduced by the amount of the payment or reimbursement; or (e) in any other case--reduced by the amount of the payment or reimbursement. (2) Expressions (other than "fringe benefit") used in this section and in the Fringe Benefits Tax Assessment Act 1986 have the same respective meanings in this section as they have in that Act. (3) This section does not apply to deductions under Division 40 of the Income Tax Assessment Act 1997 (about capital allowances). INCOME TAX ASSESSMENT ACT 1936 - SECT 51AJ Deductions not allowable for private component of contributions for fringe benefits etc. (1) Where: (a) any of the following benefits is provided in respect of the employment of an employee of an employer: (i) an airline transport benefit; (ii) a board benefit; (iii) a loan benefit; (iv) a property benefit; (v) a residual benefit; (b) the benefit is: (i) a fringe benefit; or (ii) a benefit that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986, would be a fringe benefit; (c) in the case of a loan benefit--the taxpayer, being the recipient or the employee, incurs interest (in this section called the recipients interest) in respect of the loan; (d) in the case of a benefit other than a loan benefit--the taxpayer, being the recipient or the employee, incurs consideration (in this section called the recipients contribution) to the provider or to the employer in respect of the provision of the recipients transport, the recipients meal, the recipients property or the recipients benefit, as the case may be; (e) it would be concluded that, in calculating the amount of the recipients interest, or the amount of the recipients contribution, as the case may be, the provider or the employer made an allowance for a particular level of application or use of the benefit in producing assessable income of the taxpayer; and (f) it would be concluded that the amount of the recipients interest, or the amount of the recipients contribution, as the case may be, would have been greater if it had been calculated without making that allowance; the following provisions have effect: (g) if the extent of the application or use of the benefit concerned in producing assessable income of the taxpayer is equal to, or less than, that level--a deduction is not allowable to the taxpayer under this Act in respect of the recipients interest or the recipients contribution; (h) if the extent of the application or use of the benefit concerned in producing assessable income of the taxpayer exceeds that level--the amount of the deduction that, but for this section, has been allowed or would be allowable to the taxpayer under this Act in respect of the recipients interest or the recipients contribution shall not exceed the amount calculated in accordance with the formula: D - A where: D is the amount of the deduction that, but for this section, would have been allowable to the taxpayer under this Act in respect of the amount of the recipients interest or the amount of the recipients contribution if it had been calculated without making that allowance; and A is the amount of that allowance. (2) Expressions (other than "recipients contribution" and "fringe benefit") used in this section and in the Fringe Benefits Tax Assessment Act 1986 have the same respective meanings in this section as they have in that Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 51AK Agreements for the provision of non-deductible non-cash business benefits (1) Subject to this section, where: (a) under an agreement: (i) a taxpayer incurs expenditure; and (ii) a non-cash business benefit is provided to the taxpayer or another person; and (b) that benefit is not exclusively for use or application for the purpose of producing assessable income of the taxpayer; the taxpayer shall be treated, for the purposes of this Act, as if so much of the expenditure as does not exceed the arm's length value of the benefit had been incurred by the taxpayer exclusively in respect of that benefit. (2) This section does not apply so as to treat particular expenditure, or the cost of particular property, to be a particular amount for a particular purpose if there is another provision of this Act that deems that expenditure, or the cost of that property, to be a lesser amount for that purpose. (3) A reference in this section to producing assessable income includes a reference to: (a) gaining assessable income; or (b) carrying on a business for the purpose of gaining or producing assessable income. (4) Expressions used in this section and in section 21A have the same respective meanings in this section as they have in that section. (5) In this section: "agreement" means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. "expenditure" includes a loss or outgoing. INCOME TAX ASSESSMENT ACT 1936 - SECT 52 Loss on property acquired for profit-making (1AA) This section does not apply to a loss arising in the 1997-98 year of income or a later year of income from the carrying on or carrying out of a profit-making undertaking or scheme, even if the undertaking or scheme was entered into, or began to be carried on or carried out, before the 1997-98 year of income. Note: Section 25-40 (Loss from profit-making scheme) of the Income Tax Assessment Act 1997 deals with such a loss. (1A) This section does not apply in respect of the sale of property acquired on or after 20 September 1985. (1) Any loss incurred by the taxpayer in the year of income upon the sale of any property or from the carrying on or carrying out of any undertaking or scheme, the profit (if any) from which sale, undertaking or scheme would have been included in the taxpayer's assessable income, shall be an allowable deduction: Provided that, in respect of property acquired by the taxpayer after the date of the commencement of this proviso, no deduction shall be allowable under this section (except where the Commissioner, being satisfied that the property was acquired by the taxpayer for the purpose of profit-making by sale or for the carrying on or carrying out of any profit-making undertaking or scheme, otherwise directs) unless the taxpayer, not later than the date upon which he or she lodges his or her first return under this Act after having acquired the property, notifies the Commissioner that the property has been acquired by the taxpayer for the purpose of profit-making by sale or for the carrying on or carrying out of any profit-making undertaking or scheme. (2) Where: (a) a taxpayer sells property (in this subsection referred to as the relevant property) that is deemed by subsection 25A(5) or (8) to have been acquired by the taxpayer for the purpose of profit-making by sale; (b) the Commissioner is satisfied that the relevant property has not been held or used by the taxpayer in a manner inconsistent with such a purpose; and (c) the Commissioner, having regard to: (i) the amount of the consideration paid by the person who transferred the relevant property or, in a case to which subsection 25A(8) applies, the property referred to in paragraph 25A(8)(b), to the taxpayer in respect of the purchase of the property so transferred; and (ii) such other matters as the Commissioner considers relevant; considers that it is appropriate that a loss be deemed to be incurred by the taxpayer upon the sale of the relevant property; the taxpayer shall be deemed, for the purposes of this section, to have incurred a loss upon the sale of the relevant property of such amount as the Commissioner considers appropriate. (3) Except as provided by subsection (2), a deduction is not allowable to a taxpayer under this section in respect of a loss incurred upon a sale of property to which paragraph (2)(a) applies. (4) Where: (a) a loss is incurred by a taxpayer upon the sale of property (in this subsection referred to as the relevant property); and (b) the taxpayer is deemed to have acquired the relevant property for the purpose of profit-making by sale by virtue of the application of subsection 25A(6) in accordance with subparagraph (b)(ii) of that subsection; the deduction that would, but for this subsection, be allowable to the taxpayer under subsection (1) in respect of the loss shall be reduced by such amount (if any) as the Commissioner considers reasonable having regard to the extent to which the relevant property is attributable to the interest in property that was acquired by the taxpayer for the purpose of profit-making by sale as mentioned in that subparagraph. (5) A deduction is not allowable to a taxpayer under subsection (1) in respect of a loss incurred by the taxpayer upon the sale of property if: (a) the sale is a transfer in the prescribed manner by the taxpayer for the purposes of section 25A; or (b) the property is deemed by subsection 25A(2) to have been acquired by the taxpayer for the purposes of profit-making by sale and was not actually acquired by the taxpayer for that purpose. INCOME TAX ASSESSMENT ACT 1936 - SECT 52A Certain amounts disregarded in ascertaining taxable income (1) Notwithstanding section 8-1 of the Income Tax Assessment Act 1997, losses or outgoings consisting of expenditure incurred by a taxpayer in the purchase or acquisition, after 7 April 1978, of any prescribed property as trading stock of the taxpayer shall, if the Commissioner considers that it would be unreasonable that a deduction be allowable to the taxpayer in respect of the whole of those losses or outgoings, be allowable as a deduction to the taxpayer to the extent only that the Commissioner considers that it is reasonable in the circumstances that a deduction be allowable to the taxpayer in respect of those losses or outgoings. (2) Where: (a) expenditure incurred by a taxpayer in the purchase or acquisition, after 7 April 1978, of any prescribed property that was purchased or acquired in the carrying on or carrying out of any profit-making undertaking or scheme would, but for this subsection, be taken into account for the purpose of ascertaining whether any profit arose, or any loss was incurred, from the carrying on or carrying out of the undertaking or scheme and for the purpose of ascertaining the amount of any such profit or loss; and (b) the Commissioner considers that it would be unreasonable that the whole of that expenditure be taken into account for those purposes; that expenditure shall be taken into account for those purposes to the extent only that the Commissioner considers that it is reasonable in the circumstances that the expenditure be taken into account for those purposes. (2A) Where: (a) prescribed property that was acquired by a taxpayer after 24 September 1978 and before the commencement of this subsection or is acquired after the commencement of this subsection was or is treated or used by the taxpayer as an asset of a business carried on by the taxpayer; (b) but for this subsection, a deduction would be allowable to the taxpayer in respect of the value of that property; and (c) the Commissioner considers that it would be unreasonable that a deduction be allowable to the taxpayer in respect of the value of the property to the extent to which, but for this subsection, a deduction would be allowable to the taxpayer in respect of the value of the property; a deduction shall be allowable to the taxpayer in respect of the value of the property to the extent only that the Commissioner considers that it is reasonable in the circumstances that a deduction be allowable to the taxpayer in respect of that value. (2B) Where: (a) the value of any prescribed property that: (i) was acquired by a taxpayer after 24 September 1978 and before the commencement of this subsection or is acquired after the commencement of this subsection; and (ii) was or is used by the taxpayer in the carrying on or carrying out of any profit-making undertaking or scheme; would, but for this subsection, be taken into account for the purpose of ascertaining whether or not any profit arose, or any loss was incurred, from the carrying on or the carrying out of the undertaking or scheme and for the purpose of ascertaining the amount of any such profit or loss; and (b) the Commissioner considers that it would be unreasonable that the value of the property be taken into account for those purposes to the extent to which the value would, but for this subsection, be taken into account for those purposes; the value of the property shall be taken into account for those purposes to the extent only that the Commissioner considers that it is reasonable in the circumstances that that value be taken into account for those purposes. (3) In forming an opinion for the purposes of subsection (1) or (2A) as to the extent to which it is reasonable that a deduction be allowable to a taxpayer in respect of expenditure incurred in the purchase or acquisition of prescribed property or in respect of the value of prescribed property, as the case may be, or in forming an opinion for the purposes of subsection (2) or (2B) as to the extent to which it is reasonable that expenditure incurred by a taxpayer in the purchase or acquisition of prescribed property should be taken into account for the purposes referred to in subsection (2) or that the value of prescribed property should be taken into account for the purposes referred to in subsection (2B), as the case may be: (a) if the taxpayer expended moneys in purchasing or acquiring the prescribed property--the Commissioner shall have regard to the circumstances in which, and the person or persons from whom, the taxpayer obtained moneys: (i) that were expended by the taxpayer in purchasing or acquiring the prescribed property; or (ii) that, in the opinion of the Commissioner, were obtained by, or paid to, the taxpayer to enable the taxpayer to expend moneys in purchasing or acquiring the prescribed property; (b) if the taxpayer borrowed from another person (in this paragraph referred to as the lender) moneys that were expended by the taxpayer in purchasing or acquiring the prescribed property or moneys that, in the opinion of the Commissioner, were obtained by, or paid to, the taxpayer to enable the taxpayer to expend moneys in purchasing or acquiring the prescribed property--the Commissioner shall have regard to: (i) the circumstances in which, and the terms and conditions on which, the taxpayer borrowed those moneys from the lender; and (ii) whether, in the opinion of the Commissioner, the taxpayer and the lender were dealing with each other at arm's length in connexion with the borrowing of those moneys by the taxpayer; (c) if, either before or after the purchase or acquisition of the prescribed property by the taxpayer, an agreement or arrangement (whether or not enforceable by legal proceedings and whether or not intended to be so enforceable) was entered into, or an understanding was reached, as a result of which there has been, or there could reasonably be expected to be, a substantial reduction in the value of the prescribed property--the Commissioner shall have regard to that agreement, arrangement or understanding; (d) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the transaction, operation, undertaking, scheme or arrangement, had not been entered into or carried out, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the transaction, operation, undertaking, scheme or arrangement had not been entered into or carried out--the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement; (e) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that the Commissioner is satisfied was by way of dividend stripping or was similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping--the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement; (f) if: (i) the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, money was to be paid, or other property was to be transferred or made available by a person other than the taxpayer, whether before or after the purchase or acquisition of the prescribed property, to the taxpayer, to the taxpayer and a person or persons other than the taxpayer or to a person or persons other than the taxpayer; (ii) the Commissioner is satisfied that the amount of money so to be paid, or the value of the property so to be transferred or made available, as the case may be, was to be not less than, or not substantially less than, the amount expended by the taxpayer in the purchase or acquisition of the prescribed property; the Commissioner shall have regard to the fact that the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of such a transaction, operation, undertaking, scheme or arrangement; (g) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, other prescribed property was to be issued or allotted by a company (whether to the taxpayer or any other person or persons) and it could reasonably be expected that, as a result of the issue or allotment of that other prescribed property, the value of the prescribed property purchased or acquired by the taxpayer would be substantially reduced--the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement; (h) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, rights in respect of the prescribed property or in respect of other prescribed property (whether that other prescribed property had been issued or allotted before the time of the purchase or acquisition by the taxpayer of the first-mentioned prescribed property or was to be issued or allotted at a later time) were to be withdrawn or varied and it could reasonably be expected that, as a result of a withdrawal or variation of those rights, the value of the prescribed property purchased or acquired by the taxpayer would be substantially reduced--the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement; and (j) the Commissioner shall have regard to any other matters that he or she considers relevant. (4) In this section, prescribed property means any chose in action. (4A) In the preceding provisions of this section, references to the value of any prescribed property shall, unless the contrary intention appears, be read as including references to part of the value of that prescribed property. (5) For the purposes of this section: (a) a person to whom prescribed property is issued or allotted by a company shall be taken to have acquired that prescribed property; (b) a person upon whom prescribed property devolves by reason of the death of a person shall be taken to have acquired that prescribed property; and (c) a person in whom prescribed property vests by the operation of any trust or the exercise of any power under a trust shall be taken to have acquired that prescribed property. (6) The reference in paragraph (3)(b) to terms and conditions shall be read as including a reference to implied terms and conditions and to terms and conditions that are not enforceable by legal proceedings whether or not they were intended to be so enforceable. (7) Where, by virtue of the application of the preceding provisions of this section, the amount (in this subsection referred to as the relevant amount) of the deduction that is allowable to a taxpayer in respect of losses or outgoings incurred by the taxpayer in the purchase or acquisition of prescribed property is less than the amount of those losses and outgoings, the cost of that prescribed property shall, for the purposes of the application of Divisions 70 (Trading stock) and 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the taxpayer, be taken to be an amount that is the same as the relevant amount. (8) References in this section to expenditure incurred by a taxpayer in the purchase or acquisition of any prescribed property shall, in the case of prescribed property being a share or stock in the capital of a company, be read as including references to any payment made or other consideration given by the taxpayer to the company in respect of the prescribed property, whether as a payment of unpaid capital in respect of the prescribed property or otherwise and whether on application for or allotment of the prescribed property, to meet calls or otherwise. (9) Subsection (8) applies to a non-share equity interest in the same way as it applies to a share. INCOME TAX ASSESSMENT ACT 1936 - SECT 63 Bad debts Where a debt in respect of the whole or a part of a payment that has, or will, become liable to be made under a qualifying security within the meaning of Division 16E is written off as a bad debt by a taxpayer during a year of income, then, for the purposes of paragraph 25-35(1)(a) of the Income Tax Assessment Act 1997, there is taken to have been included in the taxpayer's assessable income of a year of income so much of the debt as equals the amount (if any) ascertained in accordance with the formula A - B, where: "A" is the amount (if any) or the sum of the amounts (if any) included in the assessable income of the taxpayer of any year or years of income under section 159GQ that is or are attributable to the payment or to the part of the payment, as the case requires; and "B" is the amount (if any) or the sum of the amounts (if any) allowable as a deduction or deductions from the assessable income of the taxpayer of any year or years of income under section 159GQ that is or are attributable to the payment or to the part of the payment, as the case requires. INCOME TAX ASSESSMENT ACT 1936 - SECT 63D Bad debts etc. of money-lenders not allowable deductions where attributable to listed country or unlisted country branches (1) Subject to section 63F, if: (a) apart from this section and section 63F, a deduction would be allowable to a taxpayer: (i) under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of a debt as bad; or (ii) under section 63E of this Act in respect of a debt/equity swap in relation to a debt; and (b) the debt was created or acquired in the ordinary course of a money-lending business of the taxpayer who carries on that business; and (c) during any part or parts (the foreign country branch period) of the period since the debt was so created or acquired (the debt holding period), it is the case that, if income had been derived by the taxpayer in respect of the debt, the income would not, because of section 23AH of this Act, have been included in the assessable income of the taxpayer; then only a proportion of the deduction is allowable, being the proportion calculated using the formula: where: "debt holding period" means the number of days in the debt holding period. "eligible debt term" means: (a) where the debt was acquired from a person other than an associate, within the meaning of section 318 of this Act--the number of days in the debt holding period; or (b) in any other case--the number of days in the period beginning on the day on which the debt was created (whether by the taxpayer or another person) and ending at the end of the day on which it was written off. "foreign country branch period" means the number of days in the foreign country branch period. (2) Where a debt that is written off, or in respect of which there is a debt/equity swap (within the meaning of section 63E), was acquired from another person, the creation, and any previous acquisition, of the debt is to be disregarded for the purposes of applying subsection (1), other than paragraph (b) of the definition of eligible debt term in subsection (1). (3) Where a part of a debt is written off as bad, this section applies as if the part were an entire debt that is written off as bad. INCOME TAX ASSESSMENT ACT 1936 - SECT 63E Debt/equity swaps Meaning of debt/equity swap (1) For the purposes of this section, a debt/equity swap occurs if: (a) under an arrangement (defined in subsection (6)), a taxpayer discharges, releases or otherwise extinguishes the whole or part of a debt owed to the taxpayer in return for the issue by the debtor to the taxpayer of shares (other than redeemable preference shares), or units, in the debtor; and (b) the debtor is: (i) a company; or (ii) a trading trust (within the meaning of section 102N), or a public unit trust (within the meaning of section 102P), in relation to the year of income in which the units are issued; and (c) the debt either: (i) has been brought to account by the taxpayer as assessable income of any year of income; or (ii) is in respect of money lent in the ordinary course of the business of the lending of money by the taxpayer who carries on that business. Meaning of equity value and swap loss (2) For the purposes of this section: (a) the equity value of the shares or units is the greater of: (i) their market value at the time of their issue to the taxpayer; and (ii) their value shown in the accounts of the taxpayer as at the time of their issue to the taxpayer; and (b) a swap loss occurs if the amount of the whole or the part of the debt that is extinguished is greater than the equity value of the shares or units. Swap loss is deductible etc. (3) If a debt/equity swap occurs: (a) subject to section 63F, any swap loss is allowable as a deduction from the taxpayer's assessable income of the year of income in which the shares or units are issued; and (b) no amount is allowable as a deduction from the assessable income of the taxpayer of any year of income under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of the debt as bad in connection with the debt/equity swap; and (c) for the purposes of any application of Subdivision 20-A of the Income Tax Assessment Act 1997 in relation to the issue of the shares or units to the taxpayer, the amount received in respect of the issue is taken to be the same as the equity value of the shares or units. Effect of debt/equity swap on later equity disposal etc. (4) If a debt/equity swap occurs and the taxpayer later disposes of any of the shares or units or they are cancelled or redeemed: (a) except in accordance with paragraph (b), no amount is included in, or allowable as a deduction from, the taxpayer's assessable income of any year of income under this Act in respect of the later disposal, cancellation or redemption; and (b) if the consideration received or receivable by the taxpayer in respect of the disposal, cancellation or redemption is different from the equity value of the shares or units: (i) if the consideration is greater--the difference is included in the taxpayer's assessable income of the year of income in which the disposal, cancellation or redemption occurs; or (ii) if it is less--the difference is allowable as a deduction from that assessable income. Consideration of a nil amount (5) For the purposes of subsection (4), if no consideration is received or receivable by the taxpayer in respect of the disposal, cancellation or redemption, then consideration of a nil amount is taken to have been so received or receivable. (5A) Subdivisions 165-C, 166-C and 175-C of the Income Tax Assessment Act 1997 apply to an allowable deduction under this section in respect of the whole or part of a debt that is extinguished, in the same way as they apply to a debt (or part of a debt) that is written off as bad. Meaning of arrangement (6) In this section: "arrangement" means any agreement, arrangement, understanding, promise, undertaking or scheme, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings. INCOME TAX ASSESSMENT ACT 1936 - SECT 63F Limit on deductions where debt write offs and debt/equity swaps occur Situations where limit is to be applied (1) If: (a) apart from this section, a deduction (the current deduction) would be allowable to a taxpayer: (i) under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of a debt as bad; or (ii) under section 63E of this Act in respect of a debt/equity swap relating to the whole or part of a debt; and (b) a deduction (a previous deduction) was allowed or allowable to the taxpayer under any of those sections, under former section 51 of this Act or under section 63 in respect of any number of occurrences of either or both of the following: (i) a previous writing off as bad of the whole or part of a debt (a previous debt) that was the same as, or included, the debt mentioned in subparagraph (a)(i) or (ii); (ii) a previous debt/equity swap relating to a part of a debt (a previous debt) that was the same as, or included, the debt mentioned in subparagraph (a)(i) or (ii); and (c) the current deduction or at least one previous deduction is a deduction allowable under section 63E of this Act in respect of a debt/equity swap; then the current deduction is only allowable to the extent that it does not exceed the limit worked out under subsection (2). Calculation of limit (2) The limit is worked out as follows: Step 1: Take the amount of the previous debt in respect of the earliest or only writing off or debt/equity swap to which paragraph (1)(b) applies. Step 2: Reduce the amount by the previous deduction in respect of that writing off or debt/equity swap. Step 3: If one or more of the following events occur after the writing off or debt/equity swap, progressively reduce the balance of the amount in the way set out below and in the order in which the events occur: Event How balance reduced A writing off or debt/equity swap in respect of which there is a previous deduction. Reduce the balance by the amount of that previous deduction. If the reduced balance is higher than the level of the debt owing after the event, further reduce the balance to that lower level. Any other event (e.g. a repayment) that reduces the amount of debt owing, being an event that occurs before the writing off or debt/equity swap in respect of the current deduction. If the balance at the time of the event is higher than the level of the debt owing after the event occurs, reduce the balance to that lower level The limit is the resulting balance. INCOME TAX ASSESSMENT ACT 1936 - SECT 63G Bad debts etc. of trust not allowable in certain circumstances If: (a) a deduction is allowable from a trust's assessable income of any year of income: (i) under former section 51 of this Act, under section 63 of this Act or under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of a debt as bad; or (ii) under subsection 63E(3) or (4) in respect of the extinguishment of the whole or part of a debt; and (b) the debt was incurred as well as written off or extinguished on the last day of the year of income; the deduction is not allowable. Schedule 2F may also prevent a taxpayer deducting an amount in respect of a debt in other circumstances. INCOME TAX ASSESSMENT ACT 1936 - SECT 65 Payments to associated persons and relatives (1B) Where, by virtue of section 26-35 (Reduction of deduction for amounts paid to related entities) of the Income Tax Assessment Act 1997, an amount is not allowable as a deduction in calculating in accordance with section 90 of this Act the net income, or a partnership loss, of a partnership in which a company, being a private company in relation to the year of income of the company to which the individual interest of the company in the net income of the partnership or in the partnership loss relates, is a partner: (a) the company shall, for the purposes of this Act other than Division 11A, be deemed to have paid, on the last day of that year of income, a dividend of an amount ascertained in accordance with subsection (1C); and (b) subsection 26-35(4) of the Income Tax Assessment Act 1997 does not apply in relation to so much of the amount that is not so allowable as a deduction as is equal to the amount of the dividend that the company is to be so deemed to have paid. (1C) For the purposes of subsection (1B), the amount of the dividend that the company is to be deemed to have paid is: (a) where the effect of the disallowance of the deduction has been to increase the net income of the partnership--an amount equal to the difference between the amount of the individual interest of the company in the net income of the partnership and the amount that would have been the individual interest of the company in the net income of the partnership if the deduction had been allowed; (b) where the effect of the disallowance of the deduction has been to reduce the partnership loss--an amount equal to the difference between the amount of the individual interest of the company in the partnership loss and the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed; (c) where there is net income of the partnership and the amount of the deduction that was disallowed is equal to that net income--an amount equal to the individual interest of the company in the net income of the partnership; (d) where there is net income of the partnership and, but for the disallowance of the deduction, there would have been a partnership loss--an amount equal to the sum of the amount of the individual interest of the company in the net income of the partnership and the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed; and (e) where there is no net income of the partnership and, but for the disallowance of the deduction, there would have been a partnership loss--an amount equal to the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed. INCOME TAX ASSESSMENT ACT 1936 - SECT 70B Deduction for loss on disposal or redemption of traditional securities (1) Expressions used in this section that are also used in section 26BB have the same meanings in this section as in section 26BB. (2) Where a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed, the amount of any loss on the disposal or redemption is allowable as a deduction from the assessable income of the taxpayer of the year of income in which the disposal or redemption takes place. (2A) A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of traditional securities that are: (a) segregated exempt assets (for the purposes of the Income Tax Assessment Act 1997) of a life assurance company; or (b) segregated current pension assets (as defined in the Income Tax Assessment Act 1997) of a complying superannuation fund. (2B) A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of a traditional security if: (a) the disposal or redemption occurs because the traditional security is converted into ordinary shares in a company that is: (i) the issuer of the traditional security; or (ii) a connected entity of the issuer of the traditional security; and (b) the traditional security was issued on the basis that it will or may convert into ordinary shares in: (i) the issuer of the traditional security; or (ii) the connected entity. (2C) A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of a traditional security if: (a) the disposal or redemption is in exchange for ordinary shares in a company that is neither: (i) the issuer of the traditional security; nor (ii) a connected entity of the issuer of the traditional security; and (b) in the case of a disposal--the disposal is to: (i) the issuer of the traditional security; or (ii) a connected entity of the issuer of the traditional security; and (c) the traditional security was issued on the basis that it will or may be: (i) disposed of to the issuer of the traditional security or to the connected entity; or (ii) redeemed; in exchange for ordinary shares in the company. (3) Where the Commissioner, having regard to any connection between the parties to the transaction by which the taxpayer disposed of the traditional security or by which it was redeemed, or by which the taxpayer acquired the traditional security, is satisfied that the parties were not dealing with each other at arm's length in relation to the transaction, then, for the purposes of determining under subsection (2) the amount of any loss on the disposal or redemption, the consideration for the transaction shall be taken to be: (a) the amount that might reasonably be expected for the transaction if the parties were independent parties dealing at arm's length with each other; or (b) where, for any reason it is not possible or practicable for the Commissioner to ascertain that amount--such amount as the Commissioner determines. (4) If: (a) a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed; and (b) there is a loss on the disposal or redemption; and (c) in the case of a disposal or redemption of a marketable security: (i) the taxpayer did not acquire the security in the ordinary course of trading on a securities market; and (ii) at the time the taxpayer acquired the security, it was not open to the taxpayer to acquire an identical security in the ordinary course of trading on a securities market; and (d) in the case of a disposal of a marketable security--the disposal did not take place in the ordinary course of trading on a securities market; and (e) having regard to: (i) the financial position of the issuer of the security; and (ii) perceptions of the financial position of the issuer of the security; and (iii) other relevant matters; it would be concluded that the disposal or redemption took place for the reason, or for reasons that included the reason, that there was an apprehension or belief that the issuer was, or would be likely to be, unable or unwilling to discharge all liability to pay amounts under the security; a deduction is not allowable to the taxpayer under this section in respect of so much of the amount of the loss as is a loss of capital or a loss of a capital nature. (5) A reference in this section to the disposal by a taxpayer of a security, or to the redemption of a security of a taxpayer, does not include a reference to the waiver or release by the taxpayer of: (a) the whole or a part of the debt the subject of the security; or (b) any other right of the taxpayer under the security. (6) Subsection (5) does not, by implication, affect the meaning of an expression used in: (a) a provision of this Act other than this section; or (b) any other law of the Commonwealth. (7) In this section: "issuer", in relation to a security at a particular time, means the person who, if the amount or amounts payable under the security were due and payable at that time, would be liable to pay the amount or amounts. "marketable security" means a traditional security that is covered by paragraph (a) of the definition of security in subsection 159GP(1). "securities market" means a market, exchange or other place at which, or a facility by means of which, offers to sell, purchase or exchange marketable securities are regularly made or accepted. INCOME TAX ASSESSMENT ACT 1936 - SECT 73A Expenditure on scientific research (1A) This section has effect subject to Division 245 of the Income Tax Assessment Act 1997. (1) The following payments made, and expenditure incurred, during the year of income (other than any amount which is allowable as a deduction under any other section of this Act) by a person carrying on a business for the purpose of gaining or producing assessable income shall be allowable deductions: (a) Payments to: (i) an approved research institute for scientific research related to that business; or (ii) an approved research institute, the object of which is the undertaking of scientific research related to the class of business to which that business belongs; and (b) Expenditure of a capital nature on scientific research related to that business (except to the extent that it is expenditure on plant, machinery, land or buildings or on alterations, additions or extensions to buildings or in the acquisition of rights in or arising out of scientific research). (2) Where, on or after the first day of the year of income ending on 30 June 1946, a taxpayer carrying on a business for the purpose of gaining or producing assessable income incurs expenditure of a capital nature in the construction or acquisition of a building, or part of a building, or in making any alteration or addition to a building, in which scientific research related to that business is to be carried on by or on behalf of the taxpayer, and the building, part of a building, alteration or addition, as the case may be, is of use for scientific research purposes only, an amount equal to one-third of that expenditure shall be an allowable deduction: (a) from the assessable income of the year of income in which the building, part of a building, alteration or addition is first used by or on behalf of the taxpayer for such scientific research; and (b) from the assessable income of each of the 2 years of income next succeeding that year of income, if the taxpayer continues to carry on that business during the year in which that assessable income was derived. (2A) Subsection (2) does not apply to expenditure incurred by a taxpayer in the construction of a building or part of a building, in the making of an alteration or addition to a building or in the acquisition of a building or part of a building unless: (a) either of the following subparagraphs applies: (i) that construction or making commenced, or that acquisition occurred, before 21 November 1987; (ii) any contract in respect of that construction, making or acquisition was entered into before 21 November 1987; and (b) if the expenditure was incurred after 20 November 1987--the taxpayer intended, on 20 November 1987, that: (i) scientific research, being research related to a business carried on by the taxpayer for the purpose of gaining or producing assessable income, would be carried on by or on behalf of the taxpayer in the building; and (ii) the building, part of the building, alteration or addition, as the case may be, would be of use for scientific research purposes only. (3) Where any expenditure or payment to which this section refers is incurred or made outside Australia and the business in relation to which it is so incurred or made is carried on partly in and partly out of Australia, the deduction allowable under this section shall be such part of the amount which would otherwise be allowable as the Commissioner considers reasonable in the circumstances. (4) Where any expenditure has been allowed or is allowable as a deduction under subsection (2) and: (a) the taxpayer sells, transfers or otherwise disposes of the building or any part thereof; or (b) the building or any part thereof is destroyed; the termination value of the building or part shall, to the extent of the expenditure so allowed or allowable as a deduction, be included in the assessable income of the year of income in which the disposal or destruction occurs: Provided that where the Commissioner is of opinion that part only, or no part, of that termination value relates to the disposal or destruction of any property which was acquired or created by that expenditure, that part only, or no part, as the case may be, of the termination value shall be taken into account for the purposes of this subsection. (4A) If: (a) a person has purchased from another person a building, or part of a building, where the vendor had incurred capital expenditure of a kind in respect of which deductions are or have been allowable under subsection (2); and (b) it would be concluded that, having regard to any connection between the vendor and the purchaser or to any other relevant circumstances, those persons were not dealing with each other at arm's length; and (c) the purchase price is greater or lesser than the market value of the building, or the part of the building, at the time of the purchase; the purchase price is, for all purposes of the application of this Act in relation to the vendor, taken to have been the amount of the market value of the property at the time of the purchase. (5) If the purchase of the building is a creditable acquisition by the vendor, references in subsection (4A) to the purchase price are taken to be references to that price reduced by the amount of the net input tax credit to which the purchaser is entitled for the acquisition. (6) In this section: "an approved research institute" means the Commonwealth Scientific and Industrial Research Organization, or any university, college, institute, association or organization which is approved in writing for the purposes of this section by that Organization, by the Chief Executive Officer of the NHMRC or by the Research Secretary, as an institution, association or organization for undertaking scientific research which is or may prove to be of value to Australia. "NHMRC" means the National Health and Medical Research Council established by section 5B of the National Health and Medical Research Council Act 1992. "scientific research" means any activities in the fields of natural or applied science for the extension of knowledge. "termination value" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. (7) An approval for the purposes of subsection (6) may: (a) operate as from a date, whether before or after the date of the approval, specified in the instrument of approval; and (b) be withdrawn at any time. (8) In this section, any reference to scientific research related to a business or class of business shall be read as including a reference to: (i) any scientific research which may lead to or facilitate an extension, or an improvement in the technical efficiency, of that business, or, as the case may be, of businesses of that class; and (ii) any scientific research of a medical nature which is of special relation to the welfare of workers employed in that business or, as the case may be, in businesses of that class. (9) This section does not apply in relation to payments made, or expenditure incurred, after 30 June 1995. INCOME TAX ASSESSMENT ACT 1936 - SECT 73AA Section 73A roll-over relief in the case of certain CGT roll-overs Roll-over relief where CGT roll-over relief allowed (1) This section applies to the disposal of a building, or part of a building, by a taxpayer (in this section called the transferor) to another taxpayer (in this section called the transferee) if: (b) subject to subsection (7), deductions have been allowed or are allowable under subsection 73A(2) to the transferor in respect of the building or the part of the building; and (c) the disposal involves a CGT event; and (d) the conditions in an item in the table are satisfied. CGT roll-overs that qualify transferor for relief Item Type of CGT roll-over Conditions 1 Disposal of asset to wholly-owned company There is a roll-over under Subdivision 122-A of the Income Tax Assessment Act 1997 for the CGT event. 2 Disposal of asset by partnership to wholly-owned company The transferor is a partnership, the building or part is partnership property, and there is a roll-over under Subdivision 122-B of the Income Tax Assessment Act 1997 for the disposal by the partners of the CGT assets consisting of their interests in the building or part. 3 Marriage or relationship breakdown There is a roll-over under Subdivision 126-A of the Income Tax Assessment Act 1997 for the CGT event. 4 Disposal of asset to another member of the same wholly-owned group There is a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 for the CGT event. No balancing charges (2) Subsection 73A(4) (which deals with balancing charges) does not apply to the disposal of the building or the part of the building by the transferor. Transferee to inherit certain characteristics from transferor (3) Section 73A applies as if: (a) the transferee had acquired the building or the part of the building for a consideration equal to the cost of the building or the part of the building to the transferor; and (b) deductions were not allowable to the transferee under subsection 73A(2) in respect of: (i) so much of the cost of the building or the part of the building to the transferor as was allowed or allowable as a deduction to the transferor under that subsection in respect of the building or the part of the building; or (ii) if there have been 2 or more prior successive applications of this section--so much of the cost of the building or the part of the building to the transferor as was allowed or allowable as a deduction to the prior successive transferors under that subsection in respect of the building or the part of the building; and (c) deductions were not allowable to the transferor under subsection 73A(2) in respect of the building or the part of the building for the year of income in which the disposal took place or for a subsequent year of income. Subsection 73A(2A)--special rules (4) If subsection 73A(2A) applies to the transferor and in relation to the building or the part of the building, that subsection applies in relation to the transferee and in relation to the building or the part of the building. Disposal by transferee where no roll-over relief--inheritance of deductions (5) If: (a) after the disposal of the building or the part of the building to the transferee, the building or the part of the building is lost or destroyed or the transferee disposes of the building or the part of the building; and (b) in the case of a disposal by the transferee--this section does not apply to the disposal; then, for the purposes of the application of subsection 73A(4) in relation to the loss, destruction or disposal, the total of: (c) the deductions allowed or allowable to the transferor under subsection 73A(2) in relation to the building or the part of the building; and (d) if there have been 2 or more prior successive applications of this section--the deductions allowed or allowable to the prior successive transferors under subsection 73A(2) in relation to the building or the part of the building; are taken to have been deductions allowed or allowable to the transferee under subsection 73A(2) in relation to the building or the part of the building. Meaning of cost (6) A reference in this section to the cost of a building or of a part of a building to the transferor is a reference to expenditure of a capital nature incurred by the transferor in the construction or acquisition of the building or the part of the building, or in making any alteration or addition to the building or to the part of the building. Second or subsequent application of section--paragraph (1)(b) does not apply (7) If, apart from this subsection, this section has applied to the disposal of the building or the part of the building to the transferee, then, in working out whether this section applies to a subsequent disposal of the building or the part of the building by: (a) the transferee; or (b) one or more subsequent successive transferees; this section has effect as if paragraph (1)(b) (which deals with deductions) had not been enacted. INCOME TAX ASSESSMENT ACT 1936 - SECT 78A Certain gifts not to be allowable deductions (1) In this section: "agreement" includes any agreement, arrangement or understanding, whether formal or informal or express or implied, and whether or not enforceable by legal proceedings (whether or not the agreement, arrangement or understanding was intended to be so enforceable). "associate", in relation to the donor of a gift, means: (a) in the case of a donor being a natural person: (i) a relative of the donor; (ii) a partner of the donor; (iii) if a partner of the donor is a natural person--the spouse of that partner; (iv) a trustee of a trust estate where the donor or a person who is an associate of the donor by virtue of subparagraph (i), (ii), (iii) or (v) benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; or (v) a company where: (A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the donor, of a person who is an associate of the donor by virtue of subparagraph (i), (ii), (iii) or (iv) or of a company that is an associate of the donor by virtue of another application of this subparagraph; or (B) the donor is, the persons who are associates of the donor by virtue of subparagraphs (i), (ii), (iii) and (iv) are, or the donor and the persons who are associates of the donor by virtue of those paragraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company; or (b) in the case of a donor being a company: (i) a partner of the donor company; (ii) if a partner of the donor company is a natural person--the spouse of that partner; (iii) another person where: (A) the donor company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, whether those directions, instructions or wishes are communicated directly to the donor company or its directors, or through any interposed companies; or (B) that person is, or that person and the persons who, if that person were the donor, would be associates of that person by virtue of paragraph (a) or by virtue of another subparagraph of this paragraph are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the donor company; (iv) a trustee of a trust estate where the donor company or a person who is an associate of the donor company by virtue of subparagraph (i), (ii), (iii), (v) or (vi) benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; (v) another company where: (A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the donor company, of a person who is an associate of the donor company by virtue of subparagraph (i), (ii), (iii), (iv) or (vi) or of a company that is an associate of the donor company by virtue of another application of this subparagraph; or (B) the donor company is, the persons who are associates of the donor company by virtue of subparagraphs (i), (ii), (iii), (iv) and (vi) are, or the donor company and the persons who are associates of the donor company by virtue of those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or (vi) another person who, if a third person who is an associate of the donor company by virtue of subparagraph (iii) were the donor, would be an associate of that third person by virtue of paragraph (a) or by virtue of another subparagraph of this paragraph. (2) Subject to this section, a gift of money, or of property other than money, made by a person (in this section referred to as the donor) to a fund, authority, institution or person is not an allowable deduction under Division 30 of the Income Tax Assessment Act 1997 where: (a) by reason of any act, transaction or circumstance that has occurred, will occur, or may reasonably be expected to occur, being an act, transaction or circumstance occurring as part of, in connexion with or as a result of: (i) the making or receipt of the gift; or (ii) any agreement or scheme entered into in association with the making or receipt of the gift; the amount or value of the benefit derived by the fund, authority, institution or person as a consequence of the gift is, will be, or may reasonably be expected to be, less than the amount or value at the time when the gift was made of the property comprising the gift; (b) by reason of any act, transaction or circumstance of a kind referred to in paragraph (a), any fund, authority, institution or person other than the fund, authority, institution or person to which the gift was made, makes, becomes liable to make, or may reasonably be expected to make or to become liable to make, a payment, or transfers, becomes liable to transfer, or may reasonably be expected to transfer or to become liable to transfer, any property, to any person or incurs, becomes liable to incur, or may reasonably be expected to incur or to become liable to incur, any other detriment, disadvantage, liability or obligation; (c) by reason of any act, transaction or circumstance of a kind referred to in paragraph (a), the donor or an associate of the donor has obtained, will obtain or may reasonably be expected to obtain any benefit, advantage, right or privilege other than the benefit of any deduction that, but for this section, would be allowable from the assessable income of the donor under Division 30 of the Income Tax Assessment Act 1997; or (d) by reason of any agreement or scheme entered into as part of or in association with the making of the gift, any property, other than property comprising the gift, has been acquired or will be acquired, whether directly or indirectly, from the donor or an associate of the donor by that fund, authority, institution or person or by another fund, authority, institution or person. (3) Without limiting the application of subsection (2), where the terms and conditions on which a gift of property other than money is made are such that the fund, authority, institution or person to which the gift is made does not receive immediate custody and control of the property, does not have the unconditional right to retain custody and control of the property in perpetuity to the exclusion of the donor or an associate of the donor or does not obtain an immediate, indefeasible and unencumbered legal and equitable title to the property, paragraph (2)(c) shall be deemed to apply in relation to that gift. (4) Paragraph (2)(a) does not prevent a deduction under Division 30 of the Income Tax Assessment Act 1997 from being allowed from the assessable income of the donor where the amount or value of the benefit derived by the fund, authority, institution or person as a consequence of the gift is, will be, or may reasonably be expected to be, less than the amount or value at the time when the gift was made of the property comprising the gift by reason only that the fund, authority, institution or person has incurred, will incur, or may reasonably be expected to incur, expenses for the purpose of obtaining or soliciting the gift, being expenses that, in the opinion of the Commissioner, are reasonable in relation to the value of the gift. (5) This section does not prevent a deduction under section 30-15 of the Income Tax Assessment Act 1997 (because of item 4, 5 or 6 of the table in that section) from being allowed from the assessable income of the donor in respect of a gift of property other than money by reason only that the terms and conditions on which the gift was made are such, or the effect of any arrangement (within the meaning of that Act) entered into in association with the making or receipt of the gift is such, that the value of the gift may be reduced in accordance with section 30-220 of that Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 79A Rebates for residents of isolated areas (1) For the purpose of granting to residents of the prescribed area an income tax concession in recognition of the disadvantages to which they are subject because of the uncongenial climatic conditions, isolation and high cost of living in Zone A and, to a lesser extent, in Zone B, in comparison with parts of Australia not included in the prescribed area, a taxpayer (not being a company or a taxpayer in the capacity of a trustee) who is a resident of the prescribed area in the year of income is entitled, in the taxpayer's assessment in respect of income of that year of income, to a rebate of tax ascertained in accordance with this section. (2) Subject to subsections (2A) and 79B(4), the rebate allowable under this section in the assessment of a taxpayer in respect of income of the year of income is: (a) if the taxpayer is a resident of the special area in Zone A, or of the special area in Zone B, in the year of income--an amount equal to the sum of: (i) $1,173 increased by 50% of the relevant rebate amount in relation to the taxpayer in relation to the year of income; and (ii) if the taxpayer was not entitled to a rebate under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2)--the dependent spouse relevant rebate amount in relation to the taxpayer in relation to the income year; or (d) if the taxpayer is a resident of Zone A in the year of income but has not resided or actually been in the special area in Zone A or the special area in Zone B during any part of the year of income--an amount equal to the sum of: (i) $338 increased by 50% of the relevant rebate amount in relation to the taxpayer in relation to the year of income; and (ii) if the taxpayer was not entitled to a rebate under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2)--the dependent spouse relevant rebate amount in relation to the taxpayer in relation to the income year; or (e) if the taxpayer is a resident of Zone B in the year of income but has not resided or actually been in Zone A or the special area in Zone B during any part of the year of income--an amount equal to the sum of: (i) $57 increased by 20% of the relevant rebate amount in relation to the taxpayer in relation to the year of income; and (ii) if the taxpayer was not entitled to a rebate under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2)--the dependent spouse relevant rebate amount in relation to the taxpayer in relation to the income year; or (f) in any other case--such amount as, in the opinion of the Commissioner, is reasonable in the circumstances, being an amount not greater than the amount of the rebate to which the taxpayer would have been entitled under this section if paragraph (a) had applied to the taxpayer in respect of the year of income and not less than the amount of rebate to which the taxpayer would have been so entitled if paragraph (e) had so applied to the taxpayer. (2A) The amount of any rebate that would, but for this subsection, be allowable to a taxpayer under this section in the taxpayer's assessment in respect of income of a year of income shall be reduced by the amount of any prescribed allowance paid to the taxpayer in respect of the year of income. (3) Any alteration of the boundaries of any area referred to in Schedule 2 made (otherwise than by an amendment of this Act) after the commencement of this section shall not affect the operation of this section. (3A) This section has effect subject to section 23AB. (3B) For the purposes of this section, a taxpayer is a resident of a particular area, being the prescribed area, Zone A, Zone B, the special area in Zone A or the special area in Zone B (in this subsection referred to as the relevant area) in a year of income if: (a) the taxpayer resided in the relevant area in the year of income for a period of more than one-half of the year of income; (b) the taxpayer was actually in the relevant area in the year of income for a period of more than one-half of the year of income; (c) the taxpayer died during the year of income and at the date of his or her death resided in the relevant area; (d) the following conditions are satisfied: (i) the taxpayer resided, or actually was, in the relevant area in the year of income for a period of not more than one-half of the year of income; (ii) the taxpayer resided, or actually was, in the relevant area in the next preceding year of income for a period of not more than one-half of the next preceding year of income; (iii) for the purposes of this section, the taxpayer was not a resident of the relevant area in the next preceding year of income; and (iv) the sum of: (A) the number of days in the period mentioned in subparagraph (i); and (B) the number of days in the period mentioned in subparagraph (ii), other than days included in a period to which subsection 23AB(8) or 79B(3) applied in relation to the taxpayer in relation to the next preceding year of income; exceeds 182; or (e) the following conditions are satisfied: (i) the taxpayer resided in the relevant area in the year of income for a period of not more than one-half of the year of income, being a period that included the first day of the year of income; (ii) the taxpayer resided in the relevant area, in a relevant preceding year of income, for a period of not more than one-half of that relevant preceding year of income; (iii) for the purposes of this section, the taxpayer was not a resident of the relevant area in that relevant preceding year of income; (iv) the sum of: (A) the number of days in the period mentioned in subparagraph (i); and (B) the number of days in the period mentioned in subparagraph (ii), other than days included in a period to which subsection 23AB(8) or 79B(3) applied in relation to the taxpayer in relation to that relevant preceding year of income; exceeds 182; and (v) the taxpayer resided in the relevant area continuously from the commencement of the period mentioned in subparagraph (ii) until the end of the period mentioned in subparagraph (i). (3C) In subsection (3B), a reference to a taxpayer residing, or actually being, in a particular area in a year of income for a period of more than, or not more than, one-half of the year of income is a reference to the taxpayer: (a) residing, or actually being, in that area in the year of income for one period of more than, or not more than, as the case may be, one-half of the year of income; or (b) residing, or actually being, in that area in the year of income for 2 or more periods the aggregate of the lengths of which is more than, or not more than, as the case may be, one-half of the year of income. (3D) For the purposes of this section: (a) the special area within Zone A or Zone B is constituted by: (i) the points in that Zone that were not, as at 1 November 1981, situated at a distance of 250 kilometres or less by the shortest practicable surface route, from the centre point of the nearest urban centre (whether or not within that Zone) with a census population of not less than 2,500; and (ii) the points in that Zone that were within the special area in that Zone for the purposes of this section as in force immediately before the commencement of the Income Tax Assessment Amendment Act (No. 4) 1984; and (b) the distance, by the shortest practicable surface route, between a point in Zone A or Zone B and the centre point of an urban centre is: (i) where there is only one location within that urban centre from which distances between the urban centre and other places are usually measured--the distance, by the shortest practicable surface route, between that point in Zone A or Zone B and that location; and (ii) where there are 2 or more locations within that urban centre from which distances between parts of the urban centre and other places are usually measured--the distance, by the shortest practicable surface route, between that point in Zone A or Zone B and the one of those locations that is in the principal one of those parts. (3E) For the purposes of this section other than this subsection, the Commissioner may, if he or she considers it appropriate having regard to all the circumstances, treat a point in Zone A or Zone B that is not in the special area in that Zone but is adjacent to or in close proximity to the special area in that Zone as being a point in the special area in that Zone. (3F) For the purposes of this section, the census population of Nhulunbuy is taken to be less than 2,500. (4) In this section: "census population", in relation to an urban centre, means the population of that urban centre specified in the results of the Census of Population and Housing taken by the Australian Statistician on 30 June 1981, being the results published by the Australian Bureau of Statistics in the documents entitled "Persons and Dwellings in Local Government Areas and Urban Centres". "dependent spouse relevant rebate amount" means the amount of any rebate to which the taxpayer would be entitled under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2) if it were assumed that subsection 159J(1C) did not apply. "prescribed allowance" means: (a) so much of a payment under the Social Security Act 1991 or the Veterans' Entitlements Act 1986 as was included in the payment by way of remote area allowance; or (b) so much of an exceptional circumstances relief payment, or a payment of farm help income support, under the Farm Household Support Act 1992 as would have been included by way of remote area allowance if it had been a payment of newstart allowance under the Social Security Act 1991 instead of an exceptional circumstances relief payment, or a payment of farm help income support. "relevant preceding year of income", in relation to a year of income, means any of the next 4 preceding years of income other than the immediately preceding year of income. "relevant rebate amount", in relation to a taxpayer in relation to a year of income, means the sum of the following rebates (if any): (a) any rebate to which the taxpayer would be entitled under section 159K, apart from subsection 159K(1A); (aa) any rebate to which the taxpayer would be entitled under section 159L, apart from section 159LA; (b) any rebate to which the taxpayer is entitled under section 159J in respect of a dependant included in class 5 or 6 in the table in subsection 159J(2); (ba) any rebate to which the taxpayer would be entitled under section 159J in respect of a dependant included in class 2 in the table in subsection 159J(2), apart from section 159JA; (c) any rebate to which the taxpayer would, disregarding subsection 159J(1A), be entitled under section 159J in respect of a dependant included in class 3 or 4 in the table in subsection 159J(2); (d) any rebate to which the taxpayer would be entitled under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2) (ignoring subsection 159J(1C) and section 159JA) if subsection 159J(1B) also included a reference to any dependant included in class 1 of that table and the amount applicable to class 1 of that table were $2,440. Note 1: This definition lets a taxpayer include the dependent spouse rebate (without child), the child-housekeeper rebate or the housekeeper rebate for the purpose of working out the relevant rebate amount under this section, even if the taxpayer or the taxpayer's spouse is eligible for family tax benefit at the Part B rate for the whole or part of a year. Note 2: Another effect of the definition (see paragraph (d)) is to let a taxpayer include the dependent spouse rebate (with child), despite its abolition by the A New Tax System) (Consequential and Related Measures) Act (No. 1) 1999, for the purpose of working out the relevant rebate amount. "surface route" means a route other than an air route. "the prescribed area" means the area comprised in Zone A and Zone B. "urban centre" means an area that is described as an urban centre or bounded locality in the results of the Census of Population and Housing taken by the Australian Statistician on 30 June 1981, being the results published by the Australian Bureau of Statistics in the documents entitled "Persons and Dwellings in Local Government Areas and Urban Centres". "Zone A" means the area described in Part I of Schedule 2. "Zone B" means the area described in Part II of Schedule 2. INCOME TAX ASSESSMENT ACT 1936 - SECT 79B Rebates for members of Defence Force serving overseas (1) Subject to this section, a taxpayer who, during the year of income, serves as a member of the Defence Force at an overseas locality is entitled, in his or her assessment in respect of income of the year of income, to a rebate of tax ascertained in accordance with this section. (1A) A taxpayer is not entitled to a rebate under this section in relation to service: (a) as or under an attachè at an Australian Embassy or Legation in an overseas locality at a time as at which that locality was, or is deemed to have been, a specified locality for the purposes of this subsection; or (b) with the South-East Asia Treaty Organization Military Planning Office. (1B) Where the Chief of the Defence Force or a service chief or a person authorized by a chief of staff to give certificates under this subsection certifies, and the Treasurer is satisfied, that any service of a taxpayer in any locality was or will be performed in circumstances similar to those in which any service referred to in subsection (1A) is performed, the taxpayer is not entitled to a rebate under this section in relation to that service. (2) Subject to the succeeding provisions of this section, the rebate allowable under this section in the assessment of a taxpayer in respect of income of the year of income is: (a) where the total period of service of the taxpayer at overseas localities during the year of income is more than one-half of the year of income, or where the taxpayer dies at an overseas locality during the year of income--an amount equal to the sum of: (i) $338; and (ii) an amount equal to 50% of the concessional rebate amount; and (iii) if the taxpayer was not entitled to a rebate under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2)--an amount equal to the dependent spouse concessional rebate amount in relation to the taxpayer in relation to the income year; or (b) in any other case--such amount as, in the opinion of the Commissioner, is reasonable in the circumstances, being an amount not greater than the amount of the rebate to which the taxpayer would have been entitled under this section if paragraph (a) had applied to him or her in respect of the year of income. (3) For the purposes of subsection (2), the total periods of service of the taxpayer in any year of income at overseas localities shall be deemed to include any period of service of the taxpayer as a member of the Defence Force in that year of income in the prescribed area. (3A) For the purposes of subsection (2), the total periods of service of the taxpayer in any year of income at overseas localities shall be deemed not to include any period of service of the taxpayer in respect of which an exemption from income tax applies under section 23AC, 23AD or 23AG. (4) The aggregate of the rebates allowable under this section and section 23AB or under this section and section 79A in the assessment of a taxpayer in respect of income of a year of income shall not exceed an amount equal to the sum of: (a) $338; and (b) an amount equal to 50% of the concessional rebate amount; and (c) if the taxpayer was not entitled to a rebate under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2)--an amount equal to the dependent spouse concessional rebate amount in relation to the taxpayer in relation to the income year. (4A) Where: (a) but for subsection (4) and this subsection, a rebate would be allowable under this section and a rebate would be allowable under section 79A in the assessment of a taxpayer in respect of income of a year of income; and (b) the rebate allowable under section 79A exceeds an amount equal to the sum of: (i) $338; and (ii) an amount equal to 50% of the concessional rebate amount; and (iii) if the taxpayer was not entitled to a rebate under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2)--an amount equal to the dependent spouse concessional rebate amount in relation to the taxpayer in relation to the income year; the taxpayer is not entitled to a rebate under this section in that assessment and subsection (4) does not apply in relation to that assessment. (5) For the purposes of this section the Treasurer may, by writing signed by the Treasurer and deposited with the Commissioner, declare that a locality outside Australia specified in the declaration shall: (a) by reason of the uncongenial nature of service in that locality and the isolation of the locality, be, or be deemed to have been, as from a date, or during a period, (whether before or after the date of the declaration) specified in the declaration, a locality in relation to which this section applies; or (b) as from a date (whether before or after the date of the declaration) specified in the declaration, cease, or be deemed to have ceased, to be such a locality; and this section shall apply, or be deemed to have applied, and shall cease to apply, or be deemed to have ceased to apply, in relation to any such locality accordingly. (5A) The Treasurer may, by writing signed by the Treasurer and deposited with the Commissioner, declare that an overseas locality specified in the declaration shall become, or be deemed to have become, on a specified date, or shall cease, or be deemed to have ceased, on a specified date, to be, a specified locality for the purposes of subsection (1A). (5B) Nothing in section 170 prevents the amendment of an assessment at any time for the purpose of allowing a rebate to which the taxpayer has become entitled under this section after the making of the assessment. (6) For the purpose of this section: "concessional rebate amount", in relation to a taxpayer in relation to a year of income, means the sum of the following rebates (if any): (a) any rebate to which the taxpayer would be entitled under section 159K, apart from subsection 159K(1A); (aa) any rebate to which the taxpayer would be entitled under section 159L, apart from section 159LA; (b) any rebate to which the taxpayer is entitled under section 159J in respect of a dependant included in class 5 or 6 in the table in subsection 159J(2); (ba) any rebate to which the taxpayer would be entitled under section 159J in respect of a dependant included in class 2 in the table in subsection 159J(2), apart from section 159JA; (c) any rebate to which the taxpayer would, disregarding subsection 159J(1A), be entitled under section 159J in respect of a dependant included in class 3 or 4 in the table in subsection 159J(2); (d) any rebate to which the taxpayer would be entitled under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2) (ignoring subsection 159J(1C) and section 159JA) if subsection 159J(1B) also included a reference to any dependant included in class 1 of that table and the amount applicable to class 1 of that table were $2,440. Note 1: This definition lets a taxpayer include the dependent spouse rebate (without child), the child-housekeeper rebate or the housekeeper rebate for the purpose of working out the concessional rebate amount under this section, even if the taxpayer or the taxpayer's spouse is eligible for family tax benefit at the Part B rate for the whole or part of a year. Note 2: Another effect of this definition (see paragraph (d)) is to let a taxpayer include the dependent spouse rebate (with child), despite its abolition by the A New Tax System (Family Assistance) (Consequential and Related Measures) Act (No. 1) 1999, for the purpose of working out the concessional rebate amount. "dependent spouse concessional rebate amount" means any rebate to which the taxpayer would be entitled under section 159J in respect of a dependant included in class 1 in the table in subsection 159J(2) if it were assumed that subsection 159J(1C) did not apply. "locality" means an area of land or waters or an area of land and waters. "overseas locality" means, in relation to service during any period or death at any time, a locality in relation to which, during that period or at that time, this section applies or is deemed to have applied; and "the prescribed area" has the same meaning as that expression has in section 79A. INCOME TAX ASSESSMENT ACT 1936 - SECT 82 Double deductions Where the profit arising from the sale of any property is included in the assessable income of any person, or where the loss arising from the sale is an allowable deduction, and any expenditure incurred by the person in connexion with that property has been allowed or is allowable as a deduction under this Act, that expenditure shall not be deducted in ascertaining the amount of the profit or loss. INCOME TAX ASSESSMENT ACT 1936 - SECT 82A Deductions for expenses of self-education (1) Where a deduction is, or but for this section would be, allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of a year of income in respect of expenses of self-education, the deduction, or the aggregate of the deductions, so allowable to the taxpayer in respect of those expenses shall not be greater than the amount by which the net amount of expenses of self-education exceeds $250. (2) In this section: "educational assistance" means amounts (other than amounts in the nature of an allowance for maintenance or accommodation) payable under a scheme for the provision by the Commonwealth of assistance for secondary education, technical or tertiary education or post-graduate study. "expenses of self-education" means expenses necessarily incurred by the taxpayer for or in connection with a prescribed course of education but does not include: (ba) a student contribution amount within the meaning of the Higher Education Support Act 2003 paid to a higher education provider (within the meaning of that Act); or (bb) a payment made in respect of, or in respect of the reduction or discharge of, any indebtedness to the Commonwealth under Chapter 4 of that Act; or (c) a payment made in respect of, or in respect of the reduction or discharge of, any indebtedness to the Commonwealth or to a participating corporation under Chapter 2B of the Social Security Act 1991 or Part 4A of the Student Assistance Act 1973. "net amount of expenses of self-education" means the amount ascertained by subtracting from the total amount of expenses of self-education incurred by the taxpayer in the year of income the sum of: (a) any payment or payments of educational assistance that were capable of being claimed in the year of income by the taxpayer or by another person in respect of the taxpayer other than: (i) a payment the amount of which has been, or will be, included in the assessable income of the taxpayer of any year of income; or (ii) a payment that was capable of being claimed in a preceding year of income; and (b) any payment or payments (other than a payment the amount of which has been, or will be, included in the assessable income of the taxpayer of any year of income) received by the taxpayer, or that the taxpayer was entitled to receive, in the year of income, from the taxpayer's employer, or from any other person, in respect of: (i) expenses of self-education that were incurred by the taxpayer during the year of income; or (ii) expenses of self-education in respect of which a deduction has been allowed, or is allowable, or in respect of which a rebate of tax has been allowed, or is allowable, in an assessment in respect of income derived by the taxpayer in a preceding year of income. "prescribed course of education" means a course of education provided by a school, college, university or other place of education, and undertaken by the taxpayer for the purpose of gaining qualifications for use in the carrying on of a profession, business or trade or in the course of any employment. INCOME TAX ASSESSMENT ACT 1936 - SECT 82C Object The object of this Subdivision is to provide a deduction for certain expenditure incurred by approved companies in establishing a regional headquarters in Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 82CA Deduction for setup costs of RHQ companies RHQ setup costs incurred on or after 1 July 1994 by an RHQ company in a year of income are an allowable deduction from the assessable income of the RHQ company of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 82CB Interpretation (1) In this Subdivision: "associated company" has the meaning given by section 82CC. "management related services" include the following: (a) finance and treasury services; (b) business planning services; (c) marketing services; (d) accounting services; (e) research and development services. "RHQ company" means a company that the Treasurer, under section 82CE, has determined to be an RHQ company. "RHQ setup costs" means expenditure (whether or not of a capital nature) incurred by an RHQ company: (a) both: (i) in setting up the facilities referred to in subsection 82CD(1); and (ii) in the period starting 12 months before, and ending 12 months after, the company first derives assessable income from the provision of regional headquarters support from those facilities; or (b) in reimbursing expenditure incurred by a non-resident associated company of the RHQ company if the latter expenditure would have been covered by paragraph (a) if it had instead been incurred by the RHQ company at the time when it was incurred by the associated company; but does not include: (c) costs incurred in connection with feasibility studies in relation to the setting up of facilities in Australia to provide regional headquarters support; or (d) costs incurred in connection with moving facilities that provide regional headquarters support from one location in Australia to another location in Australia; or (e) the cost of depreciating assets, equipment, land, buildings or similar items. (2) A company provides regional headquarters support if: (a) the company provides to an associated company that is located in a country other than Australia; or (b) a part of the company provides to another part of the company that is located in a country other than Australia; any of the following: (c) management related services; or (d) data services; or (e) software support services. (3) A reference in this section to the provision of data services to a company, or a part of a company, is a reference to: (a) the substantial input, transmission or manipulation of data; or (b) the production of information from data; for, or on behalf of, that company or that part of that company. (4) A reference in this section to the provision of software support services to a company, or a part of a company, is a reference to the provision, to clients of that company or that part of that company, of advice and assistance in relation to computer software sold by that company or that part of that company. INCOME TAX ASSESSMENT ACT 1936 - SECT 82CC Associated companies For the purposes of this Subdivision, a company is an associated company of another company if: (a) either company controls at least 10% of the votes in the other company (either directly or through one or more interposed companies, partnerships or trust estates); or (b) a third company is an associated company (including by one or more applications of this paragraph) of both of the companies. INCOME TAX ASSESSMENT ACT 1936 - SECT 82CD Application to become an RHQ company (1) A company may, in writing, apply to the Treasurer to become an RHQ company if the company intends to establish facilities in Australia mainly for the purpose of providing regional headquarters support. (2) The Treasurer must publish the address to which applications must be sent. INCOME TAX ASSESSMENT ACT 1936 - SECT 82CE Determination of RHQ companies (1) Subject to subsection (3), the Treasurer may, on application by a company under section 82CD, determine, by legislative instrument, that the company is an RHQ company for the purposes of this Subdivision. (2) The determination must: (a) specify the day when the company commences to be an RHQ company; and (b) contain any other information the Treasurer considers appropriate. (3) A determination of the Treasurer under subsection (1): (a) may only be made if the Treasurer is satisfied that the company has the intention mentioned in subsection 82CD(1); and (b) must be made in accordance with guidelines determined by the Treasurer under this section. (4) The Treasurer must, by legislative instrument, determine guidelines for the making of determinations under subsection (1). The guidelines may require the Treasurer to take into account: (a) specified criteria; or (b) recommendations of particular bodies; or (c) any other factors. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KH Interpretation (1) In this Subdivision, unless the contrary intention appears: "additional benefit", in relation to an amount of eligible relevant expenditure, means the additional benefit, or the aggregate of the additional benefits, as the case may be, referred to in paragraph (1F)(b) in relation to that eligible relevant expenditure. "agreement" means any agreement, arrangement, understanding or scheme, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. "associate", in relation to a taxpayer, means: (a) in the case of a taxpayer who is a natural person, other than a taxpayer in the capacity of a trustee: (i) a relative of the taxpayer; (ii) a partner of the taxpayer; (iii) if a person who is an associate of the taxpayer by virtue of subparagraph (ii) is a natural person--the spouse or a child of that person; (iv) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; or (v) a company where: (A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer, of another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer by virtue of another application of this subparagraph or of any 2 or more such persons; or (B) the taxpayer is, the persons who are associates of the taxpayer by virtue of sub-subparagraph (A) and the preceding subparagraphs of this paragraph are, or the taxpayer and the persons who are associates of the taxpayer by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company; (b) in the case of a taxpayer being a company, other than a taxpayer in the capacity of a trustee: (i) a partner of the taxpayer; (ii) if a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person--the spouse or a child of that person; (iii) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; (iv) another person where: (A) the taxpayer company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, or of that person and another person or other persons, whether those directions, instructions or wishes are communicated directly to the taxpayer company or its directors, or through any interposed companies, partnerships or trusts; or (B) that person is, or that person and the persons who, if that person were the taxpayer, would be associates of that person by virtue of paragraph (a), by virtue of sub-subparagraph (A), by virtue of another subparagraph of this paragraph or by virtue of paragraph (c) are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the taxpayer company; (v) another company where: (A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer company, of a person who is an associate of the taxpayer company by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer company by virtue of another application of this subparagraph or of any 2 or more such persons; or (B) the taxpayer company is, the persons who are associates of the taxpayer company by virtue of sub-subparagraph (A) and the other subparagraphs of this paragraph are, or the taxpayer company and the persons who are associates of the taxpayer company by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or (vi) any other person who, if a third person who is an associate of the taxpayer company by virtue of subparagraph (iv) were the taxpayer, would be an associate of that third person by virtue of paragraph (a), by virtue of another subparagraph of this paragraph or by virtue of paragraph (c); (c) in the case of a taxpayer in the capacity of a trustee of a trust estate: (i) any person who benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust estate, either directly or through any interposed companies, partnerships or trusts; (ii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person--any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or this paragraph; or (iii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) or (ii) is a company--any person who, if that company were the taxpayer, would be an associate of that company by virtue of paragraph (b) or this paragraph; or (d) in the case of a taxpayer being a partnership: (i) a partner in the partnership; (ii) where any partner in the partnership is a natural person--any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or (c); or (iii) where any partner in the partnership is a company--any person who, if the company were the taxpayer, would be an associate of the company by virtue of paragraph (b) or (c). "consumable supplies" means property other than: (a) trading stock; or (b) choses in action. "expected tax saving", in relation to an amount of eligible relevant expenditure incurred by a taxpayer, means: (a) where only one amount is, under subsection (1B), a tax saving amount for the purposes of the application of this definition in relation to the eligible relevant expenditure--that tax saving amount; and (b) where 2 or more amounts are, under subsection (1B), tax saving amounts for the purposes of the application of this definition in relation to the eligible relevant expenditure--the sum of those tax saving amounts. "film" means an aggregate of images, or of images and sounds, embodied in any material. "market research" means: (a) the undertaking of research to ascertain the location, extent, value or other characteristics of the market, or the potential market, for goods or services; and (b) the provision of information, advice or assistance in connection with the marketing of particular goods or services or of goods or services generally. "property" includes a chose in action and also includes any estate, interest, right or power, whether at law or in equity, in or over property. "relevant expenditure", in relation to a taxpayer, means: (a) expenditure in respect of which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997; (b) expenditure in respect of which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 25-30 (Expenses of discharging a mortgage) of the Income Tax Assessment Act 1997; (c) a loss or outgoing incurred by the taxpayer in the purchase by the taxpayer of property (not being a chose in action) that, for the purposes of the application of this Act in relation to the taxpayer, is trading stock, to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing; (d) a loss or outgoing incurred by the taxpayer in respect of interest to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing; (e) a loss or outgoing incurred by the taxpayer in respect of rent to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing; (f) a bad debt incurred by the taxpayer in respect of money lent by the taxpayer in the course of carrying on a business to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 or section 25-35 of the Income Tax Assessment Act 1997 in respect of the bad debt; (g) a loss or outgoing incurred by the taxpayer in respect of: (i) the production, marketing or distribution of a film; or (ii) the acquisition of a copyright subsisting in a film; to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing; (h) expenditure incurred by the taxpayer in respect of a unit of industrial property, being a unit of industrial property that relates to copyright subsisting in a film, to the extent to which the amount of that expenditure is taken into account, or would, apart from former subsections 124R(2) and (3), be taken into account, in calculating the residual value of the unit of industrial property in ascertaining whether, apart from section 82KL, a deduction would be allowable to the taxpayer under former section 124M or 124N in respect of the residual value of the unit of industrial property; (ka) expenditure incurred by the taxpayer in respect of an item of intellectual property (as defined in of the Income Tax Assessment Act 1997) that relates to copyright subsisting in a film, but only to the extent described at the end of this definition; (k) a loss or outgoing incurred by the taxpayer in the purchase of consumable supplies to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing; (m) a loss or outgoing incurred by the taxpayer in respect of market research to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing; (n) expenditure incurred by the taxpayer in respect of the acquisition of a unit of industrial property, being a licence under a copyright subsisting in computer software, to the extent to which the amount of that expenditure is taken into account, or would, apart from former subsection 124R(3) be taken into account, in calculating the residual value of the unit of industrial property in ascertaining whether, apart from section 82KL, a deduction would be allowable to the taxpayer under former section 124M or 124N in respect of the residual value of the unit of industrial property; (oa) expenditure incurred by the taxpayer in respect of acquiring an item of intellectual property (as defined in of the Income Tax Assessment Act 1997) that is a licence under a copyright subsisting in computer software, but only to the extent described at the end of this definition; (o) a loss or outgoing or expenditure incurred by the taxpayer by way of commission for collecting assessable income of the taxpayer to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing or the expenditure; (p) a loss or outgoing incurred by the taxpayer in respect of the growing, care or supervision of trees on behalf of the taxpayer to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing; (pa) a loss or outgoing incurred by the taxpayer in respect of the establishment and tending of trees for felling on behalf of the taxpayer to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 394-10 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing; (q) a loss or outgoing incurred by the taxpayer for the purpose of increasing the value of shares in a company, being shares held or beneficially owned by the taxpayer as trading stock, to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing; (r) a loss or outgoing incurred by the taxpayer in respect of: (i) the production by another person of a master sound recording; or (ii) the procuration of the production by another person of a master sound recording; to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing; (s) calls paid by the taxpayer on shares owned by the taxpayer in respect of which a deduction would, apart from section 82KL, be allowable to the taxpayer under Division 30 (which is about gifts) of the Income Tax Assessment Act 1997; (v) expenditure (other than expenditure to which a preceding paragraph of this definition applies) incurred by the taxpayer in respect of a unit of industrial property to the extent to which the amount of that expenditure is taken into account, or would, apart from former subsections 124R(2) and (3), be taken into account, in calculating the residual value of the unit of industrial property in ascertaining whether, apart from section 82KL, a deduction would be allowable to the taxpayer under former section 124M or 124N in respect of the residual value of the unit of industrial property; or (wa) expenditure (unless covered by an earlier paragraph of this definition) incurred by the taxpayer in respect of an item of intellectual property (as defined in of the Income Tax Assessment Act 1997), but only to the extent described at the end of this definition; (w) a loss or outgoing (other than a loss or outgoing referred to in subsection 52A(1) or to which a preceding paragraph of this definition applies) incurred by the taxpayer to the extent to which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing. However, paragraph (ka), (oa) or (wa) only covers expenditure to the extent that: (x) it is taken into account in working out under Division 40 of the Income Tax Assessment Act 1997 the adjustable value of the item to the taxpayer in determining whether, apart from section 82KL of this Act, the taxpayer could deduct an amount under that Division for the item for a year of income; or (y) it would be so taken into account apart from item 8 in the table in subsection 40-180(2), or item 1 in the table in subsection 40-190(3) (both about non-arm's length transactions). "rent" means rent in respect of land or premises. "tax avoidance agreement" means an agreement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the agreement had not been entered into or carried out, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the agreement had not been entered into or carried out. "unit of industrial property" has the same meaning as in former Division 10B. (1A) In determining for the purposes of this Subdivision whether an agreement is a tax avoidance agreement, no regard shall be had to a purpose that is a merely incidental purpose. (1AA) A reference in this Subdivision to the incurring by a taxpayer of a bad debt shall be read as a reference to a debt, or a part of a debt, owed to the taxpayer becoming a bad debt. (1AB) A reference in: (a) subsection 82KL(2); or (b) former section 80 in relation to this Subdivision; to the incurring by a taxpayer of a loss or outgoing shall be read as including a reference to the incurring by a taxpayer of a bad debt. (1ABA) This section has the same effect in relation to an allowable deduction under section 63E in respect of the extinguishing of the whole or part of a debt as it has in respect of an allowable deduction under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of a debt as bad. (1AC) In this Subdivision: (a) a reference to a copyright subsisting in a film shall be read as including a reference to: (i) a licence under a copyright subsisting in a film; and (ii) an interest, whether at law or in equity, in respect of a copyright, or in respect of a licence under a copyright, subsisting in a film; and (b) a reference to a licence under a copyright subsisting in computer software shall be read as including a reference to an interest, whether at law or in equity, in a licence under a copyright subsisting in computer software. (1AD) A reference in this Subdivision to a tax benefit being allowed or allowable or not being allowed or allowable in respect of relevant expenditure incurred by a taxpayer shall be read as a reference to: (a) in a case where the relevant expenditure is relevant expenditure to which paragraph (h), (n) or (v) of the definition of relevant expenditure in subsection (1) applies--a deduction being allowed or allowable or not being allowed or allowable, as the case may be, to the taxpayer under former section 124M or 124N in respect of the residual value of a unit of industrial property where that residual value would be calculated by reference to the relevant expenditure; and (b) if paragraph (ka), (oa) or (wa) of the definition of relevant expenditure in subsection (1) covers the expenditure--the taxpayer deducting or being able to deduct, or not deducting or not being able to deduct, as appropriate, an amount under Division 40 of the Income Tax Assessment Act 1997 for an item of intellectual property for a year of income because the taxpayer's adjustable value of the item would be calculated under that Division by reference to the relevant expenditure; and (d) in any other case--a deduction being allowed or allowable or not being allowed or allowable, as the case may be, to the taxpayer in respect of the relevant expenditure. (1B) For the purposes of the application of the definition of expected tax saving in subsection (1) in relation to an amount of eligible relevant expenditure incurred by a taxpayer: (a) where: (i) if a tax benefit were not allowable in respect of any part of that eligible relevant expenditure, a person (whether the taxpayer or another person and whether in the capacity of a trustee of a trust estate or otherwise) would be liable to pay income tax in respect of a year of income; and (ii) if a tax benefit or tax benefits were allowable under this Act in respect of that eligible relevant expenditure, that person would be liable to pay a lesser amount of income tax in respect of that year of income; the amount by which the amount of the tax referred to in subparagraph (i) exceeds the amount of the tax referred to in subparagraph (ii) is a tax saving amount; and (b) where: (i) if a tax benefit were not allowable in respect of any part of that eligible relevant expenditure, a person (whether the taxpayer or another person and whether in the capacity of a trustee of a trust estate or otherwise) would be liable to pay income tax in respect of a year of income; and (ii) if a tax benefit or tax benefits were allowable under this Act in respect of that eligible relevant expenditure, that person would not be liable to pay income tax in respect of that year of income; the amount of the tax referred to in subparagraph (i) is a tax saving amount. (1BA) In the application of subsection (1B) in determining whether there is a tax saving amount in relation to an amount of eligible relevant expenditure incurred by a taxpayer in a case where, if a tax benefit or tax benefits were allowable in respect of that eligible relevant expenditure, a person (whether the taxpayer or another person and whether in the capacity of a trustee of a trust estate or otherwise) would: (a) have a tax loss for a year of income that the person would not have; or (b) have a greater tax loss for a year of income than the person would have; if a tax benefit were not allowable in respect of any part of that eligible relevant expenditure, apply Division 36 and former Subdivision 375-G of the Income Tax Assessment Act 1997 as if the amount were relevant expenditure but not eligible relevant expenditure. (1D) Subject to subsection (1E), where, in respect of any 2 or more amounts of eligible relevant expenditure (whether incurred by one taxpayer or by 2 or more taxpayers and whether incurred in one year of income or in 2 or more years of income), the following conditions are satisfied, namely: (a) if subsection (1B) were applied in relation to one of those amounts of eligible relevant expenditure in relation to a person (whether or not that person is the person or one of the persons who incurred the eligible relevant expenditure) in relation to a year of income on the assumption that no tax benefit is or was allowable in respect of any part of the other amount of eligible relevant expenditure, or in respect of any part of any of the other amounts of eligible relevant expenditure, as the case may be, the tax saving amount determined in accordance with that subsection would be greater than the tax saving amount that would be determined in accordance with that subsection in relation to that amount of eligible relevant expenditure in relation to that person in relation to that year of income if that subsection were applied on the assumption that a tax benefit or tax benefits were allowable under this Act in respect of the other amount of eligible relevant expenditure, or in respect of each of the other amounts of eligible relevant expenditure, as the case may be; and (b) if paragraph (a) of this subsection were applied in relation to that person in relation to that year of income in relation to the other amount of eligible relevant expenditure, or in relation to each of the other amounts of eligible relevant expenditure, as the case may be, the condition specified in that paragraph would be satisfied in relation to that other amount or in relation to each of those other amounts, as the case may be; then, in the application of subsection (1B) in calculating the tax saving amount in relation to that person in relation to the year of income in relation to any one of the amounts of eligible relevant expenditure first referred to in this subsection, it shall be assumed that no tax benefit is or was allowable in respect of any part of the other of those amounts or in respect of any part of any of the other of those amounts, as the case may be. (1E) Where: (a) but for this subsection, subsection (1D) would apply to require it to be assumed, for the purposes of the application of subsection (1B) in relation to an amount of eligible relevant expenditure, that no tax benefit is or was allowable in respect of any part of another amount of eligible relevant expenditure (in this subsection referred to as the allowable relevant expenditure); and (b) section 82KL does not and will not operate to deem a tax benefit not to be allowable and never to have been allowable in respect of any part of the allowable relevant expenditure; subsection (1D) shall not apply and shall be taken never to have applied so as to require it to be assumed, in the application of subsection (1B) in relation to an amount of eligible relevant expenditure other than the allowable relevant expenditure, that no tax benefit is or was allowable in respect of any part of the allowable relevant expenditure. (1F) For the purposes of this Subdivision, an amount of relevant expenditure incurred by a taxpayer shall be taken to be an amount of eligible relevant expenditure if: (a) that amount of relevant expenditure was incurred after 24 September 1978 by reason of, as a result of or as part of a tax avoidance agreement entered into after that date; (b) by reason of, as a result of or as part of the tax avoidance agreement the taxpayer has obtained, in relation to that relevant expenditure being incurred, a benefit or benefits in addition to: (i) in a case to which subparagraph (ii) does not apply: (A) the benefit in respect of which the relevant expenditure was incurred; and (B) any benefit that resulted directly or indirectly from the benefit in respect of which the relevant expenditure was incurred and is a benefit that, in the opinion of the Commissioner, might reasonably be expected to have resulted if the benefit in respect of which the relevant expenditure was incurred had been obtained otherwise than by reason of, as a result of or as part of a tax avoidance agreement; or (ii) in a case where the relevant expenditure is relevant expenditure to which paragraph (w) of the definition of relevant expenditure in subsection (1) applies--any benefit that resulted directly or indirectly from the incurring of the relevant expenditure and is a benefit that, in the opinion of the Commissioner, might reasonably be expected to have resulted if the relevant expenditure had been incurred otherwise than by reason of, as a result of or as part of a tax avoidance agreement; and (c) in a case where the relevant expenditure is relevant expenditure to which paragraph (s), (v) or (w) of the definition of relevant expenditure in subsection (1) applies--that amount of relevant expenditure was incurred by reason of, as a result of or as part of a tax avoidance agreement entered into before 28 May 1981. (1FA) For the purposes of the application of subsection (1F) in relation to an amount of relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies, any benefit obtained by the taxpayer in relation to the making of the loan in respect of which the bad debt is incurred shall be taken to be a benefit obtained by the taxpayer in relation to that relevant expenditure being incurred. (1G) The reference in subsection (1F) to the benefit in respect of which relevant expenditure was incurred by a taxpayer shall be read as a reference to: (a) in a case where the relevant expenditure is expenditure incurred by the taxpayer in borrowing money, being expenditure in respect of which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997--the making available to the taxpayer of the money borrowed by the taxpayer; (b) in a case where the relevant expenditure is expenditure incurred by the taxpayer in connection with the discharge of a mortgage, being expenditure in respect of which a deduction would, apart from section 82KL, be allowable to the taxpayer under section 25-30 (Expenses of discharging a mortgage) of the Income Tax Assessment Act 1997--the discharge of the mortgage; (c) in a case where the relevant expenditure was incurred by the taxpayer in the purchase of property that, for the purposes of the application of this Act in relation to the taxpayer, is or was trading stock--the acquisition of that property by the taxpayer; (d) in a case where the relevant expenditure was incurred by the taxpayer in respect of interest--the availability to the taxpayer of the money borrowed by the taxpayer; (e) in a case where the relevant expenditure was incurred by the taxpayer in respect of rent--the use of the property in respect of which the rent was paid; (f) in a case where the relevant expenditure incurred by the taxpayer was in respect of a bad debt--any interest received or receivable by the taxpayer in respect of the loan in respect of which the bad debt was incurred; (g) in a case where the relevant expenditure was incurred by the taxpayer in respect of the production, marketing or distribution of a film or the acquisition of a copyright subsisting in a film and is relevant expenditure to which paragraph (g) of the definition of relevant expenditure in subsection (1) applies--the production, marketing or distribution of the film, or the acquisition of the copyright by the taxpayer, as the case may be; (h) in a case where the relevant expenditure was incurred by the taxpayer in respect of a unit of industrial property, being a unit of industrial property that relates to copyright subsisting in a film, and is relevant expenditure to which paragraph (h) of the definition of relevant expenditure in subsection (1) applies--the ownership by the taxpayer of the unit of industrial property; (k) in a case where the relevant expenditure was incurred by the taxpayer in the purchase of consumable supplies--the acquisition of those consumable supplies by the taxpayer; (m) in a case where the relevant expenditure was incurred by the taxpayer in respect of market research--the undertaking of the research, or the provision of the information, advice or assistance, in respect of which the relevant expenditure was incurred; (n) in a case where the relevant expenditure was incurred by the taxpayer in respect of the acquisition of a unit of industrial property, being a licence under a copyright subsisting in computer software--the acquisition by the taxpayer of the unit of industrial property; (o) in a case where the relevant expenditure was incurred by the taxpayer by way of commission for collecting assessable income of the taxpayer--the collection on behalf of the taxpayer of assessable income of the taxpayer; (p) in a case where the relevant expenditure was incurred by the taxpayer in respect of the growing, care or supervision of trees on behalf of the taxpayer--the growing, care or supervision of the trees on behalf of the taxpayer; (pa) in a case where the relevant expenditure was incurred by the taxpayer in respect of the establishment and tending of trees for felling on behalf of the taxpayer--the establishment and tending of trees for felling on behalf of the taxpayer; (q) in a case where the relevant expenditure was incurred by the taxpayer for the purpose of increasing the value of shares in a company, being shares held or beneficially owned by the taxpayer as trading stock--the increase in the value of those shares; (r) in a case where the relevant expenditure was incurred by the taxpayer in respect of the production of, or the procuration of the production of, a master sound recording--any amount payable to the taxpayer in respect of the master sound recording, being an amount that, in the opinion of the Commissioner, would be payable to the taxpayer as a result of the incurring by the taxpayer of the relevant expenditure if that expenditure had been incurred by reason of, as a result of or as part of an agreement other than a tax avoidance agreement; (s) in a case where the relevant expenditure consists of calls paid by the taxpayer on shares owned by the taxpayer and is relevant expenditure to which paragraph (s) of the definition of relevant expenditure in subsection (1) applies--the satisfaction of any liability of the taxpayer to pay the calls and the taxpayer's continuing ownership of the shares; and (u) in a case where the relevant expenditure was incurred by the taxpayer in respect of a unit of industrial property and is relevant expenditure to which paragraph (v) of the definition of relevant expenditure in subsection (1) applies--the ownership by the taxpayer of the unit of industrial property. (1H) For the purposes of paragraph (1F)(b), but without limiting the generality of that paragraph, where: (a) an amount of relevant expenditure is incurred by a taxpayer by reason of, as a result of or as part of a tax avoidance agreement; (b) in relation to that relevant expenditure being incurred and by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, the taxpayer or an associate of the taxpayer acquires from another person the right to recover the amount of a debt that was owed to that other person; and (c) by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, no consideration was paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of that right or the amount or value of the consideration paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of that right was less than the amount of the debt; the taxpayer shall be deemed to have obtained, by reason of the tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer, a benefit having a value equal to: (d) in a case where no consideration was paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of the right to recover the amount of the debt--the amount of the debt; and (e) in any other case--the amount by which the amount of the debt exceeds the amount or value of the consideration paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of the right to recover the amount of the debt. (1J) For the purposes of paragraph (1F)(b), but without limiting the generality of that paragraph, where: (a) an amount of relevant expenditure is incurred by a taxpayer by reason of, as a result of or as part of a tax avoidance agreement; (b) in relation to that relevant expenditure being incurred and by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement: (i) a debt becomes owing by the taxpayer or an associate of the taxpayer; or (ii) a debt became owing, before or at the time of the incurring of the relevant expenditure, by the taxpayer or an associate of the taxpayer; and (c) it may reasonably be expected that, by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, the person to whom the debt is owed will release, abandon or fail to demand repayment of the debt or of a part of the debt; the taxpayer shall be deemed to have obtained, by reason of the tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer, a benefit of an amount equal to the amount of the debt or that part of the debt, as the case may be. (1JA) For the purposes of the application of subsection (1H) in relation to an amount of relevant expenditure incurred by a taxpayer, being relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies, a reference in paragraph (1H)(b) to the acquisition by the taxpayer or an associate of the taxpayer, in relation to that relevant expenditure being incurred, of the right to recover a debt shall be read as including a reference to the acquisition by the taxpayer or an associate of the taxpayer, in relation to the making by the taxpayer of the loan in respect of which the relevant expenditure was incurred, of such a right. (1JB) For the purposes of the application of subsection (1J) in relation to an amount of relevant expenditure incurred by a taxpayer, being relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies, a reference in paragraph (1J)(b) to a debt becoming owing, or having become owing, by the taxpayer or an associate of the taxpayer in relation to that relevant expenditure being incurred, shall be read as including a reference to a debt becoming owing, or having become owing, by the taxpayer or an associate of the taxpayer, in relation to the making by the taxpayer of the loan in respect of which the relevant expenditure was incurred. (1JE) For the purposes of paragraph (1F)(b), but without limiting the generality of that paragraph, where: (a) an amount of relevant expenditure is incurred by a taxpayer by reason of, as a result of or as part of a tax avoidance agreement; (b) that relevant expenditure consists of calls paid by the taxpayer on shares owned by the taxpayer and is relevant expenditure to which paragraph (s) of the definition of relevant expenditure in subsection (1) applies; and (c) in relation to that relevant expenditure being incurred and by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, consideration (in this subsection referred to as the relevant consideration) is paid or given to the taxpayer or an associate of the taxpayer in respect of the acquisition by any person from the taxpayer of: (i) all or any of those shares; (ii) the right to purchase all or any of those shares; or (iii) the right to require a person to vote, in a meeting of shareholders of the company, in favour of a resolution to vary the rights attached to all or any of those shares; the taxpayer shall be deemed to have obtained, by reason of the tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer, a benefit in addition to the benefits referred to in subparagraphs (1F)(b)(i) and (ii) having a value equal to the amount or value of the relevant consideration reduced by the amount or value of the part (if any) of that relevant consideration that, in the opinion of the Commissioner, is attributable to expenditure (other than the relevant expenditure) incurred by the taxpayer in respect of the shares. (1K) Where: (a) 2 or more amounts of relevant expenditure are incurred by a taxpayer (whether in the same year of income or in different years of income) by reason of, as a result of or as part of the same tax avoidance agreement; (b) the same paragraph of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts; and (c) those amounts were incurred in respect of the same benefit; those amounts shall, for the purposes of this Subdivision, be treated as together constituting one amount of relevant expenditure. (1L) For the purposes of subsection (1K), 2 or more amounts of relevant expenditure shall be taken to have been incurred in respect of the same benefit if: (a) in a case where paragraph (a) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same loan; (b) in a case where paragraph (b) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the discharge of the same mortgage; (c) in a case where paragraph (c) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in the purchase of the same property; (d) in a case where paragraph (d) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same loan; (e) in a case where paragraph (e) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same property; (f) in a case where paragraph (f) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same loan; (g) in a case where paragraph (g) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same film; (h) in a case where paragraph (h) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same film; (k) in a case where paragraph (k) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in the purchase of the same property; (m) in a case where paragraph (m) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same market research; (n) in a case where paragraph (n) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same unit of industrial property; (o) in a case where paragraph (o) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same source of assessable income; (p) in a case where paragraph (p) or paragraph (pa) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of trees on the same parcel of land; (q) in a case where paragraph (q) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same shares; (r) in a case where paragraph (r) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were payable to the same person; (s) in a case where paragraph (s) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were calls paid on shares in the same company; (v) in a case where paragraph (v) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same unit of industrial property; and (w) in a case where paragraph (w) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts--those amounts were incurred in respect of the same source of assessable income or in carrying on the same business. (1M) For the purposes of this Subdivision, a person who obtains a benefit by reason of an act, transaction or circumstance that occurs as part of, in connection with or as a result of a tax avoidance agreement shall be deemed to have obtained that benefit by reason of the tax avoidance agreement. (1N) Where, for the purposes of the application of any provision of this Subdivision, it is required to be assumed that a tax benefit is not or was not allowable in respect of any part of an amount of eligible relevant expenditure and that expenditure is expenditure that was incurred in the acquisition of property that, for the purposes of the application of this Act in relation to the person who incurred the expenditure, is or was trading stock, it shall also be assumed, for the purposes of the application of that provision, that, for the purposes of the application of Division 70 (Trading stock) or 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the person who incurred the expenditure, that the cost of that property is, and at all times was, nil. (1P) For the purposes of this Subdivision, any benefit that has been obtained by an associate of a taxpayer by reason of, as a result of or as part of a tax avoidance agreement, being a benefit that was obtained in relation to the incurring by the taxpayer, by reason of, as a result of or as part of that tax avoidance agreement, of relevant expenditure, not being relevant expenditure to which subsection (1Q) applies, shall be taken to be a benefit that was obtained by the taxpayer by reason of that tax avoidance agreement and in relation to that relevant expenditure being incurred by the taxpayer. (1Q) For the purposes of this Subdivision, any benefit that has been obtained by an associate of a taxpayer by reason of, as a result of or as part of a tax avoidance agreement, being a benefit that was obtained in relation to: (a) the incurring by the taxpayer, by reason of, as a result of or as part of that tax avoidance agreement, of relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies; or (b) the making by the taxpayer, by reason of, as a result of or as part of that tax avoidance agreement, of the loan in respect of which relevant expenditure to which that paragraph applies was incurred; shall be taken to be a benefit that was obtained by the taxpayer by reason of that tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer or that loan being made by the taxpayer, as the case may be. (1S) For the purposes of the application of this section in determining the amount of any additional benefit obtained by a taxpayer in relation to an amount of relevant expenditure to which paragraph (h) of the definition of relevant expenditure in subsection (1) applies being incurred, being expenditure that, by virtue of the expenditure of moneys (in this subsection referred to as the partnership moneys) by a partnership, is deemed by former section 124KA to have been incurred by the taxpayer: (a) the partnership shall be taken to be an associate of the taxpayer; (b) a reference to the relevant expenditure being incurred by the taxpayer shall be read as including a reference to the partnership moneys being expended by the partnership; and (c) any benefit obtained by the partnership in relation to the partnership moneys being expended by the partnership shall be taken to have been obtained by the taxpayer in relation to the relevant expenditure being incurred by the taxpayer to such extent only as the Commissioner considers fair and reasonable. (1T) Where: (a) a taxpayer expends moneys (in this subsection referred to as the film moneys) in producing, or by way of contribution to the cost of producing, a film; and (b) by virtue of the operation of former subsection 124K(2), a part only of the film moneys is taken to be an amount of relevant expenditure to which paragraph (h) of the definition of relevant expenditure in subsection (1) applies; for the purposes of the application of this section in determining the amount of any additional benefit obtained by the taxpayer in relation to the relevant expenditure being incurred: (c) a reference to the relevant expenditure being incurred by the taxpayer shall read as including a reference to the film moneys being expended by the taxpayer; and (d) any benefit obtained by the taxpayer in relation to the film moneys being expended by the taxpayer shall be taken to have been obtained by the taxpayer in relation to the relevant expenditure being incurred by the taxpayer to such extent only as the Commissioner considers fair and reasonable. (2) A reference in this Subdivision to the supply of goods or the provision of services shall be read as not including a reference to the making available of money by way of loan. (3) For the purposes of this Subdivision, an agreement shall be taken to have been entered into or carried out for a particular purpose, or for purposes that included a particular purpose, if any of the parties to the agreement entered into or carried out the agreement for that purpose, or for the purposes that included that purpose, as the case may be. (4) A reference in this Subdivision to a person shall be read as including a reference to a person in the capacity of a trustee. (5) A reference in this Subdivision to a provision of the Income Tax Assessment Act 1997 includes a reference to the corresponding provision of the Income Tax Assessment Act 1936. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KJ Deduction not allowable in respect of certain pre-paid outgoings Where: (a) a loss or outgoing in respect of which a deduction would, but for this Subdivision, be allowable, was incurred by a taxpayer after 19 April 1978 by reason of, as a result of or as part of a tax avoidance agreement; (b) having regard to the benefit in respect of which the loss or outgoing was incurred (but without regard to any benefit relating to the acquisition or possible acquisition of the property referred to in paragraph (c)), the amount of the loss or outgoing was greater than the amount (if any) that might reasonably be expected to have been incurred, at the time when the loss or outgoing was incurred, in respect of that benefit if the loss or outgoing had not been incurred by reason of, as a result of or as part of a tax avoidance agreement; (c) property has been, will be, or may reasonably be expected to be, acquired by the taxpayer or by an associate of the taxpayer as a result of, by reason of, or as part of the tax avoidance agreement; and (d) the consideration (if any) that was payable in respect of the acquisition of that property was less, or the consideration that may reasonably be expected to be payable in respect of the acquisition of that property is less, than the consideration that might reasonably be expected to have been payable, or to be payable, as the case may be, in respect of the acquisition of that property if the loss or outgoing had not been incurred; notwithstanding any other provision of this Act, a deduction is not allowable to the taxpayer in respect of the loss or outgoing. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KK Schemes designed to postpone tax liability (1) This section applies to a loss or outgoing incurred by a taxpayer if: (a) the loss or outgoing was incurred after 19 April 1978 and was incurred to an associate of the taxpayer; (b) a deduction is allowable to the taxpayer in respect of that loss or outgoing; and (c) the deduction allowable in respect of that loss or outgoing would, but for this section, be allowable to the taxpayer in the year of income in which the loss or outgoing was incurred and: (i) in a case where the loss or outgoing is in respect of interest that, if it had actually been paid, would be subject to withholding tax under Division 11A--the withholding tax payable in respect of the whole or a part of the interest is not payable until a time occurring in a subsequent year of income; and (ii) in any other case--the whole or a part of the amount incurred to the associate will not be included in the assessable income of the associate until a subsequent year of income. (2) Notwithstanding any other provision of this Act, where: (a) a taxpayer incurs in a year of income (in this subsection referred to as the relevant year of income) a loss or outgoing (not being a loss or outgoing in respect of the supply of goods or the provision of services at a time that occurs after, or during a period that occurs after or extends beyond, the end of the relevant year of income) and the loss or outgoing is a loss or outgoing to which this section applies; and (b) the loss or outgoing was incurred by reason of, as a result of, as part of or in connection with an agreement, course of conduct or course of business that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that: (i) in a case where the loss or outgoing is in respect of interest that, if it had actually been paid, would be subject to withholding tax under Division 11A--the withholding tax payable in respect of the whole or a part of the interest will not be payable until a time occurring in a subsequent year of income; and (ii) in any other case--the whole or a part of the amount incurred to the associate would not be included in the assessable income of the associate until a subsequent year of income; the loss or outgoing shall, for the purposes of this Act, be deemed to have been incurred by the taxpayer in the relevant year of income and in any subsequent year of income only to the extent to which the loss or outgoing represents an amount actually paid during the relevant year of income or that subsequent year of income by the taxpayer to the person to whom the loss or outgoing is incurred. (3) Notwithstanding any other provision of this Act but subject to subsection (4), where: (a) a taxpayer incurs in a year of income a loss or outgoing in respect of the supply of goods or the provision of services at a time that occurs after, or during a period that occurs after or extends beyond, the end of the year of income and the loss or outgoing is a loss or outgoing to which this section applies; and (b) the loss or outgoing was incurred by reason of, as a result of or as part of an agreement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that: (i) a deduction would be allowable to the taxpayer in a year of income in respect of the loss or outgoing; and (ii) the whole or a part of the amount of the loss or outgoing would not be included in the assessable income of the person to whom the loss or outgoing was incurred until a subsequent year of income; that loss or outgoing shall, for the purposes of this Act, be deemed to have been incurred by the taxpayer in the year of income in which, or in the years of income in which, goods to which the loss or outgoing relates are supplied or services to which the loss or outgoing relates are provided. (4) Where, by virtue of subsection (3), a loss or outgoing incurred by a taxpayer in respect of the supply of goods or the provision of services is deemed to have been incurred by the taxpayer in each of 2 or more years of income, there shall be allowable as a deduction to the taxpayer in each such year of income so much only of the amount that, apart from this section, would be allowable as a deduction in respect of the loss or outgoing as the Commissioner considers reasonable having regard to the extent to which the goods in respect of which the loss or outgoing was incurred were supplied or the services in respect of which the loss or outgoing was incurred were provided, in each of those years of income. (5) In determining whether paragraph (2)(b) or (3)(b) applies in relation to a loss or outgoing, no regard shall be had to a purpose that is a merely incidental purpose. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KL Tax benefit not allowable in respect of certain recouped expenditure (1) Where the sum of the amount or value of the additional benefit in relation to an amount of eligible relevant expenditure incurred by a taxpayer and the expected tax saving in relation to that amount of eligible relevant expenditure is equal to or greater than the amount of the eligible relevant expenditure, notwithstanding any other provision of this Act but subject to this section, a tax benefit is not and shall be deemed never to have been, allowable in respect of any part of that amount of eligible relevant expenditure. (2) Where, at any time, the Commissioner is of the opinion that, apart from this subsection, subsection (1) might reasonably be expected, at a later time, to operate to deem a tax benefit not to be allowable and never to have been allowable in respect of expenditure or a loss or outgoing incurred by a taxpayer then, notwithstanding any other provision of this Act but subject to this section, a tax benefit is not allowable and shall be deemed never to have been allowable in respect of that expenditure or that loss or outgoing, as the case may be. (3) Where, in the making of an assessment, subsection (2) has been applied by reason that the Commissioner was of the opinion that a particular circumstance would exist and the Commissioner later becomes satisfied that that circumstance will not exist, then, notwithstanding anything contained in section 170, the Commissioner may amend the assessment at any time for the purposes of ensuring that this Subdivision shall be taken always to have applied on the basis that that circumstance did not, and would not, exist. (4) Where: (a) an amount of eligible relevant expenditure is incurred by a partnership; (b) apart from this subsection, this section would not operate to deem a tax benefit not to be allowable and never to have been allowable in respect of any part of that amount of eligible relevant expenditure; and (c) the Commissioner is satisfied that any partner in the partnership became a partner in the partnership by reason of or as a result of an agreement (whether or not that agreement was the agreement by virtue of which the partner became a partner in the partnership) that was entered into by any of the parties to the agreement for the purpose, or primarily for the purpose, of ensuring that this section would not operate to deem a tax benefit not to be allowable and never to have been allowable in respect of any part of the amount of the eligible relevant expenditure; then, notwithstanding any other provision of this Act, a tax benefit is not allowable and shall be deemed never to have been allowable in respect of any part of that amount of eligible relevant expenditure. (5) Where: (a) in the making of an assessment, this section has been applied on the basis that a taxpayer was to be taken to have obtained a benefit by reason that it was reasonable to expect that a person to whom a debt was owed by the taxpayer or an associate of the taxpayer would release, abandon or fail to demand repayment of the debt or of a part of the debt; and (b) the whole or a part of that debt or of that part of the debt is repaid; then, notwithstanding anything contained in section 170, the Commissioner may amend the assessment at any time for the purposes of ensuring that this Subdivision shall be taken never to have applied on the basis that it was reasonable to expect that the person to whom the debt was owed would release, abandon or fail to demand repayment of the amount that was repaid. (6) Where subsection (1), (2) or (4) deems a tax benefit not to be and never to have been allowable in respect of a loss or outgoing incurred by a taxpayer in the purchase of property that, for the purposes of the application of this Act and the Income Tax Assessment Act 1997 in relation to the taxpayer is or was trading stock, then, notwithstanding any other provision of this Act or that Act, the cost or cost price of that property, for the purposes of the application of (Primary production) of the Income Tax Assessment Act 1997 Subdivision B of Division 2 of Part III of this Act or Division 70 (Trading stock) or 385 in relation to that property in relation to the taxpayer, shall be taken to be, and at all times to have been, nil. (7) Where, at any time after the making of an assessment in relation to a taxpayer, the taxpayer considers that the Commissioner ought to amend the assessment in accordance with subsection (3) or (5), the taxpayer may post to or lodge with the Commissioner a request in writing for an amendment of the assessment in accordance with subsection (3) or (5) or in accordance with subsections (3) and (5). (8) The Commissioner shall consider the request and shall serve on the taxpayer, by post or otherwise, a written notice of the Commissioner's decision on the request. (9) If the taxpayer is dissatisfied with the Commissioner's decision on the request, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZL Interpretation (1) In this Subdivision, unless the contrary intention appears: "agreement" means any agreement, arrangement, understanding or scheme, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. "associate" has the meaning given by section 318. "eligible service period", in relation to an amount of expenditure incurred under an agreement, means the period from the beginning of: (a) the day, or the first day, on which the thing to be done under the agreement in return for the amount of expenditure is required, or permitted, as the case may be, to commence being done; or (b) if the expenditure is incurred on a later day--the day on which the expenditure is incurred; until the end of: (c) the day, or the last day, on which the thing to be done under the agreement in return for the amount of expenditure is required, or permitted, as the case may be, to cease being done; or (d) if that day or last day ends more than 10 years after the beginning of the period--10 years after the beginning of the period. "excluded expenditure" means an amount of expenditure: (a) less than $1,000; or (b) required to be incurred by a law, or by an order of a court, of the Commonwealth, a State or a Territory; or (c) under a contract of service; or (d) to the extent that it is of a capital nature and cannot be deducted under: (i) section 355-205 (R&D expenditure); or (ii) section 355-480 (earlier year associate R&D expenditure); of the Income Tax Assessment Act 1997; or (da) to the extent that it is of a private or domestic nature; or (e) that has been or is incurred after 21 September 1999 by a general insurance company in connection with the issue of a general insurance policy and was related or relates to the gross premiums derived by the company in respect of the policy; or (f) that has been or is incurred after 21 September 1999 by a general insurance company in payment of reinsurance premiums in respect of the reinsurance of risks covered by general insurance policies, other than reinsurance premiums that were or are paid in respect of a particular class of insurance business where, under the contract of reinsurance, the reinsurer agrees, in respect of a loss incurred by the company that is covered by the relevant policy, to pay only some or all of the excess over an agreed amount. "pre-RBT obligation" means a contractual obligation that: (a) exists under an agreement at or before 11.45 am (by legal time in the Australian Capital Territory) on 21 September 1999; and (b) requires the payment of an amount for the doing of a thing under the agreement; and (c) requires the payment to be made before the doing of the thing; and (d) cannot be escaped by unilateral action by the party bound by the obligation to make the payment. R&D activities has the same meaning as in the Income Tax Assessment Act 1997. "transfer" includes assign. (2) Without otherwise limiting the generality of references in this Subdivision to expenditure being incurred under an agreement in return for the doing of a thing under the agreement: (a) where expenditure incurred under an agreement consists of a payment of loan interest or a payment of a similar kind, the expenditure shall, for the purposes of this Subdivision, be taken to be incurred in return for the making available or continued making available, as the case requires, of the loan principal, or other amount of a similar kind, under the agreement during the period to which the payment relates; and (b) where expenditure incurred under an agreement consists of a payment of rent, a lease payment or a payment of a similar kind, the expenditure shall, for the purposes of this Subdivision, be taken to be incurred in return for the making available or continued making available, as the case requires, of the thing rented or leased, or other thing of a similar kind, under the agreement during the period to which the payment relates; and (c) where expenditure incurred under an agreement consists of a payment of an insurance premium or a payment of a similar kind, the expenditure shall, for the purposes of this Subdivision, be taken to be incurred in return for the provision or continued provision, as the case requires, of insurance against the risk concerned, or of a thing of a similar kind, under the agreement during the period to which the payment relates. (3) This Subdivision has effect as if conducting R&D activities were carrying on a business. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZLA Subdivision does not apply to financial arrangements to which Subdivision 250-E applies To avoid doubt, this Subdivision does not apply to: (a) a Division 230 financial arrangement (within the meaning of the Income Tax Assessment Act 1997); or (b) a financial benefit (within the meaning of that Act) that is provided or received in relation to such an arrangement. Note: See section 250-210 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZLB How this Subdivision applies to deductible R&D expenditure incurred to associates in earlier income years In addition to its application apart from this section, this Subdivision applies to expenditure deductible under section 355-480 of the Income Tax Assessment Act 1997 as if: (a) references in this Subdivision to incurring the expenditure were references to paying the expenditure; and (b) references in this Subdivision to the expenditure year were references to the payment year. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZM Expenditure by small business entities and individuals incurring non-business expenditure (1) Where: (a) a taxpayer incurs expenditure under an agreement entered into after 25 May 1988; and (aa) at least one of the following applies: (i) the taxpayer is a small business entity for the year of income and has not chosen to apply section 82KZMD to the expenditure; (ii) the taxpayer is an individual and the expenditure is not incurred in carrying on a business; (iii) the expenditure meets a pre-RBT obligation (see subsection 82KZL(1)); and (b) the expenditure is not excluded expenditure; and (ba) either: (i) the eligible service period for the expenditure is longer than 12 months; or (ii) the eligible service period for the expenditure is 12 months or shorter but ends after the last day of the year of income after the one in which the expenditure was incurred; and (c) apart from this section, a deduction under: (i) section 8-1; or (ii) section 355-205 (R&D expenditure) or 355-480 (earlier year associate R&D expenditure); of the Income Tax Assessment Act 1997, in respect of the expenditure, would be allowable from the taxpayer's assessable income for the year of income in which the expenditure is incurred; then, for the purposes of this Act, instead of the deduction being allowable as mentioned in paragraph (c), a proportion of the deduction is allowable from the assessable income of the taxpayer of each year of income during which the whole or part of the eligible service period in relation to the expenditure occurs, being a proportion ascertained in accordance with the formula: where: "Period in year" is the number of days in the whole or the part of the eligible service period that occurs in the year of income. "Eligible service period" is the number of days in the eligible service period. (2) Subsection (1) has effect subject to Division 245 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZMA Application of section 82KZMD Overview (1) Section 82KZMD sets the amount and timing of deductions for expenditure that a taxpayer incurs in a year of income (the expenditure year), if: (a) apart from that section, the taxpayer could deduct the expenditure for the expenditure year under: (i) section 8-1; or (ii) section 355-205 (R&D expenditure) or 355-480 (earlier year associate R&D expenditure); of the Income Tax Assessment Act 1997; and (b) the requirements in subsections (2), (3), (4) and (5) are met. Requirements for taxpayer (2) The taxpayer: (a) must: (i) carry on a business; or (ii) be a taxpayer that is not an individual and that does not carry on a business; and (b) if the taxpayer is a small business entity for the expenditure year--must, before lodging its return of income for that year or within such further time as the Commissioner allows, choose to apply section 82KZMD to the expenditure. (3) The expenditure must be: (a) either: (i) incurred in carrying on a business; or (ii) incurred otherwise than in carrying on a business by a taxpayer that is not an individual; and (b) incurred under an agreement (see subsection 82KZL(1); and (c) incurred in return for the doing of a thing under the agreement that is not to be wholly done within the expenditure year. Requirement for expenditure not to be excluded expenditure (4) The expenditure must not be excluded expenditure (see subsection 82KZL(1)). Requirement for expenditure not to meet pre-RBT obligation (5) The expenditure must not meet a pre-RBT obligation (see subsection 82KZL(1)). Relationship with other provisions (6) Section 82KZMD has effect: (a) despite section 8-1 of the Income Tax Assessment Act 1997; and (b) subject to Division 245 of that Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZMD Business expenditure and non-business expenditure by non-individual (2) For each year of income containing all or part of the eligible service period for the expenditure, the taxpayer may deduct the amount worked out using the formula: Note: This section does not apply to expenditure incurred by a small business entity unless the small business entity chooses to apply this section to the expenditure: see paragraph 82KZMA(2)(b). INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZME Expenditure under some agreements (1) Section 82KZMF applies to set the amount and timing of deductions for expenditure that a taxpayer incurs in a year of income (the expenditure year) if: (a) apart from that section, the taxpayer could deduct the expenditure for the expenditure year under: (i) section 8-1; or (ii) section 355-205 (R&D expenditure) or 355-480 (earlier year associate R&D expenditure); of the Income Tax Assessment Act 1997; and (c) the requirements of subsections (2) and (3) are met. Note: There are some exceptions: see subsections (5), (6), (7), (8) and (9). General requirements for expenditure (2) The expenditure must be incurred: (a) after 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999 under an agreement; and (b) in return for the doing of a thing under the agreement that is not to be wholly done within the expenditure year. Requirements for agreement (3) There are these requirements for the agreement: (a) the taxpayer's allowable deductions for the expenditure year that are attributable to the agreement must exceed the taxpayer's assessable income (if any) for the expenditure year that is attributable to the agreement; and (b) the taxpayer does not have day to day control over the operation of the agreement (whether or not the taxpayer has the right to be consulted or give directions); and (c) at least one of these must be satisfied: (i) there is more than one participant in the agreement in the same capacity as the taxpayer; (ii) the person who manages, arranges or promotes the agreement, or an associate of that person, manages, arranges or promotes similar agreements for other taxpayers. Activities that relate to the agreement (4) Without affecting the operation of any other section in this Subdivision, an agreement referred to in this section includes all activities that relate to the agreement, including those that give rise to deductions or assessable income. Exception 1: certain negatively geared investments (5) The expenditure must not be: (a) a premium for building insurance, contents insurance or rent protection insurance; or (b) interest on money borrowed to acquire: (i) real property or an interest in real property; or (ii) shares that are listed for quotation in the official list of an approved stock exchange; or (iii) units in a trust that has at least 300 beneficiaries and is a widely held unit trust as defined in section 272-105 in Schedule 2F; where: (c) the taxpayer has obtained, or can reasonably be expected to obtain, rent, dividends or trust income from the agreement; and (d) the taxpayer has not obtained and will not obtain any other kind of assessable income from the agreement (except a capital gain or an insurance receipt); and (e) all aspects of the agreement have been conducted at arm's length. Exception 2: infrastructure borrowings (6) The expenditure must not be an allowable deduction because of section 159GZZZZF in respect of an infrastructure borrowing as defined in subsection 93D(1) of the Development Allowance Authority Act 1992. Exception 3: expenditure is excluded expenditure (7) The expenditure must not be excluded expenditure (see subsection 82KZL(1)). Exception 4: expenditure meets a pre-existing obligation (8) The expenditure by the taxpayer must not meet a contractual obligation that: (a) exists under an agreement at or before 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999; and (b) requires the payment of an amount for the doing of a thing under the agreement; and (c) requires the payment to be made before the doing of the thing; and (d) cannot be escaped by unilateral action by the taxpayer. Exception 5: agreement to which a product ruling applies (9) The expenditure must not be under an agreement to which a product ruling applies, describing expenditure under the agreement as being allowable as a deduction. (10) The product ruling must be made: (a) on or before 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999; or (b) in response to an application for a product ruling where: (i) the application was received by the Commissioner on or before the time specified in paragraph (a); and (ii) the Commissioner acknowledged receiving the application. (11) In this section: "product ruling" means a public ruling made under Part IVAAA of the Taxation Administration Act 1953 about a particular investment product. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZMF Proportional deduction (1) If this section applies to expenditure incurred by a taxpayer in a year of income: (a) the taxpayer cannot deduct all of the expenditure for the expenditure year; and (b) instead, the taxpayer can deduct, for each year of income during which part of the eligible service period for the expenditure occurs, an amount worked out using this formula: (2) This section has effect: (a) despite section 8-1 of the Income Tax Assessment Act 1997; and (b) subject to Division 245 of the Income Tax Assessment Act 1997. Note: Deductions under section 355-205 or 355-480 of the Income Tax Assessment Act 1997 for R&D expenditure are subject to this section (see subsection 8-5(2) and section 355-105 of that Act). INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZMG Deductions for certain forestry expenditure (1) Sections 82KZMD and 82KZMF do not affect the timing of a deduction for expenditure incurred by a taxpayer in a year of income (the expenditure year) to the extent that the requirements of this section are met. General requirements for expenditure (2) There are these requirements for the expenditure: (a) it must be incurred on or after 2 October 2001 and on or before 30 June 2008 under an agreement; and (b) the eligible service period for the expenditure must be 12 months or shorter and must end on or before the last day of the year of income after the expenditure year; and (c) it must be incurred in return for the doing of a thing under the agreement that is not to be wholly done within the expenditure year. Requirements for agreement (3) There are these requirements for the agreement: (a) the agreement must be for planting and tending trees for felling; and (b) the taxpayer must not have day to day control over the operation of the agreement (whether or not the taxpayer has the right to be consulted or give directions); and (c) at least one of these must be satisfied: (i) there is more than one participant in the agreement in the same capacity as the taxpayer; (ii) the person (the manager) who manages, arranges or promotes the agreement, or an associate of that person, manages, arranges or promotes similar agreements for other taxpayers. Requirements for expenditure (4) The expenditure incurred by the taxpayer must be paid for seasonally dependent agronomic activities undertaken by the manager during the establishment period for the relevant planting of trees for felling. Example: Examples of seasonally dependent agronomic activities include: * tending the seedlings prior to planting, and planting them; * ripping and mounding the site where the planting is to occur; * applying fertiliser, herbicide or pesticide in conjunction with the planting. (5) The establishment period for a particular planting of trees starts on the day when the first seasonally dependent agronomic activity for that planting is done and ends on the later of: (a) the day when the last seedling is planted as part of that planting, not including replacement of seedlings already planted; and (b) the day when any fertiliser, herbicide or pesticide is applied to the seedlings in conjunction with that planting. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZMGA Deductions for certain forestry expenditure (1) A taxpayer cannot deduct expenditure in relation to which the requirements in section 82KZMG (apart from paragraph 82KZMG(2)(a)) are met if: (a) the taxpayer holds the taxpayer's interest in the agreement mentioned in section 82KZMG as an initial participant in the agreement; and (b) a CGT event happens in relation to that interest within 4 years after the end of the year of income in which the taxpayer first incurred expenditure under the agreement; and (c) the expenditure is incurred on or before 30 June 2008. (1A) Paragraph (1)(b) does not apply to a CGT event if: (a) the CGT event happens because of circumstances outside the taxpayer's control; and Example: The interest is compulsorily acquired. (b) when the taxpayer acquired the interest, the taxpayer could not reasonably have foreseen the CGT event happening. (2) Despite section 170, the Commissioner may amend the taxpayer's assessment at any time within 2 years after the end of the year of income in which the CGT event happens, for the purpose of giving effect to this section. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZMGB CGT event in relation to interest in 82KZMG agreement (1) This section applies if: (a) a taxpayer holds an interest in an agreement mentioned in section 82KZMG as an initial participant in the agreement; and (b) at least one of these conditions is satisfied: (i) the taxpayer can deduct or has deducted an amount for a year of income in relation to the interest; (ii) the condition in subparagraph (i) would be satisfied if section 82KZMGA were disregarded; and (c) subsection 82KZMG(1) applies to the timing of the deduction (or would apply if section 82KZMGA were disregarded); and (d) a CGT event happens in relation to the interest, other than a CGT event that happens in respect of thinning. (2) The taxpayer's assessable income for the year of income in which the CGT event happens includes: (a) if, as a result of the CGT event, the taxpayer no longer holds the interest--the market value of the interest (worked out as at the time of the event); or (b) otherwise--the decrease (if any) in the market value of the interest as a result of the CGT event. (3) Any amount that the taxpayer actually receives because of the CGT event is not included in the taxpayer's assessable income (nor is it exempt income). INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZN Transfer etc. of rights under agreement Where: (a) under an agreement entered into either before or after the commencement of this section, a taxpayer (in this section called the original taxpayer) incurs expenditure in return for the doing of a thing during a period after the incurring of the expenditure; and (b) either: (i) the original taxpayer transfers to another taxpayer (in this section called the recipient taxpayer) all of his or her rights under the agreement in relation to the doing of the thing during the remainder of the period; or (ii) the agreement is discharged (whether by performance or otherwise) in so far as it relates to the doing of the thing during the remainder of the period; the following provisions have effect for the purpose of this Subdivision: (c) if the whole or part of a deduction under former section 51 of this Act or section 8-1 of the Income Tax Assessment Act 1997 in respect of the expenditure is, because of this Subdivision, allowable from the assessable income of the original taxpayer of any year of income occurring after the year of income in which the transfer or discharge occurs--that deduction is instead allowable from the assessable income of the year of income in which the transfer, assignment or discharge occurs; (d) if the recipient taxpayer incurs expenditure in return for the transfer--the recipient taxpayer shall be taken to have incurred, under an agreement entered into at the time of the transfer, so much of that expenditure as is not of a capital, private or domestic nature in return for the doing of the thing during the remainder of the period. INCOME TAX ASSESSMENT ACT 1936 - SECT 82KZO Partnership changes where entire interest in agreement rights is not transferred Where: (a) under an agreement entered into after 25 May 1988, a person (in this section called the original person), or the partners in a partnership (in this section called the original partnership), incurs or incur expenditure in return for the doing of a thing during a period after the incurring of the expenditure; (b) either of the following (in this section called a partnership change) happens: (i) a partnership is formed or the original partnership is dissolved, or both; or (ii) the constitution of the original partnership, or the interests of the partners in the original partnership, is or are varied; with the result that, after the partnership change: (iii) a person (in this section called the later person), or the partners in a partnership (in this section called the later partnership), holds or hold all of any rights under the agreement to have the thing done during the period after the partnership change; and (iv) the original person, or one or more of the partners in the original partnership, has an interest in the rights after the partnership change; and (c) the whole or part of a deduction under former section 51 of this Act or section 8-1 of the Income Tax Assessment Act 1997 in respect of the expenditure (which whole or part is in this section called a spread deduction) is, because of the application of this Subdivision, allowable from the assessable income of the original person or the original partnership of the year of income in which the partnership change happens or a subsequent year of income; the following provisions have effect: (d) if a spread deduction is allowable in relation to the year of income in which the partnership change occurs--the entitlement to the deduction shall, for the purposes of this Act but subject to any later application of this section, be apportioned between the original person or original partnership and the later person or later partnership according to the portions of the eligible service period in the year of income (or, if the case requires, of so much of the period as occurs after a partnership change resulting from a previous application of this section) that occur before and after the partnership change; (e) if a spread deduction relates to a subsequent year of income--the later person or later partnership, instead of the original person or original partnership, shall, for the purposes of this Act but subject to any later application of this section, be entitled to the deduction; (f) for the purposes of any later application of this section or section 82KZN, the later person or later partnership, instead of the original person or original partnership, shall be taken to have incurred the expenditure under the agreement. INCOME TAX ASSESSMENT ACT 1936 - SECT 82LA Application of Division (1) This Division applies only for the purposes of: (a) calculating an eligible CFC's attributable income for the purposes of Part X; and (b) defining convertible note. (2) A term used in paragraph (1)(a) has the same meaning as it has when used in Part X. INCOME TAX ASSESSMENT ACT 1936 - SECT 82L Interpretation (1) In this Division, unless the contrary intention appears: "attributable income" has the meaning given by Division 7 of Part X. "CFC or controlled foreign company" has the meaning given by section 340. "convertible note" includes a note issued by a company that provides, whether in pursuance of or by virtue of a trust deed or otherwise: (a) that the amount of the loan to the company that is evidenced, acknowledged or created by the note or to which the note relates: (i) whether with or without interest; (iii) whether at the option of the holder or owner of the note or of some other person or not; (iv) whether in whole or in part; or (v) whether exclusively or otherwise; is to be or may be converted into shares in the capital of the company or of another company or is to be or may be redeemed, repaid or satisfied by: (vi) the allotment or transfer of shares in the capital of the company or of some other company, whether to the holder or owner of the note or to some other person; (vii) the acquisition of such shares, whether by the holder or owner or by some other person, otherwise than as mentioned in subparagraph (vi); or (viii) application in or towards paying-up, in whole or in part, the balance unpaid on shares issued or to be issued by the company or by some other company, whether to the holder or owner or to some other person; or (b) that the holder or owner of the note is to have, or may have, any right or option to have allotted or transferred to him or her or to some other person, or for him or her or some other person otherwise to acquire, shares in the capital of the company or of some other company. "foreign loan" means a loan to a company raised outside Australia in a currency other than the currency of Australia. "instrument" includes debenture, bond, certificate, receipt or any other document or writing. "issued includes given and executed, and issue" has a corresponding meaning. "loan", in relation to a company, means: (a) a loan, advance or deposit of money to or with the company; (b) money subscribed to the company; or (c) any other form of debt or liability of the company; whether secured or unsecured and whenever redeemable, repayable or to be satisfied. "note" means a note or other instrument issued by a company that evidences, acknowledges, creates or relates to a loan to the company. "qualified person", in relation to the valuing of a share in the capital of a company, means a person registered as a company auditor under a law in force in a State or a Territory, but does not include: (a) a director, secretary or employee of the company; (b) a partner, employer or employee of a person referred to in paragraph (a); or (c) a partner or employee of an employee of a person so referred to. "the date of offer", in relation to a loan to a company means the earliest date on which, by any relevant prospectus, notice, circular, advertisement or other written invitation, any person was or persons were invited to subscribe to the loan: (a) in the case of a new loan--by the payment of money to the company; or (b) in the case of an approved replacement loan--by converting, in whole or in part, an earlier loan, or by converting, in whole or in part, an earlier loan and the payment of money to the company. "the maturity date", in relation to a loan to which a convertible note applies, means the date by which the whole of the loan is, under the terms applicable to the note, to be repaid, redeemed or satisfied. "the relevant valuation period", in relation to a share, means: (a) where neither paragraph (b) nor (c) applies in relation to the share--the period of one month ending on the date that is the valuation date in relation to the share; (b) where: (i) the share is included in a class of shares that, during the whole of the period of 2 months ending on the valuation date, was listed for quotation in the official list of a stock exchange that was a prescribed stock exchange during the whole of that period of 2 months, or in the official lists of 2 or more stock exchanges each of which was a prescribed stock exchange during the whole of that period of 2 months; and (ii) fully paid shares included in that class of shares were not recorded by that stock exchange or by any of those stock exchanges, as the case may be, as having been sold during the period of one month specified in paragraph (a) but were recorded by that stock exchange or by one or more of those stock exchanges, as the case may be, as having been sold during the period of one month immediately preceding the commencement of the period of one month so specified; that preceding period of one month; or (c) where: (i) the share is included in a class of shares that, during the whole of the period of 3 months ending on the valuation date, was listed for quotation in the official list of a stock exchange that was a prescribed stock exchange during the whole of that period of 3 months, or in the official lists of 2 or more stock exchanges each of which was a prescribed stock exchange during the whole of that period of 3 months; and (ii) fully paid shares included in that class of shares were not recorded by that stock exchange or by any of those stock exchanges, as the case may be, as having been sold during the period of 2 months ending on the valuation date but were recorded by that stock exchange or by one or more of those stock exchanges, as the case may be, as having been sold during the period of one month immediately preceding the commencement of that period of 2 months; that preceding period of one month. "the valuation date", in relation to a share, means the date that is earlier by 6 weeks than the date that is the date of offer in relation to the loan in respect of which the value of the share is to be ascertained. (2) Where the combined effect or operation of 2 or more related instruments, whether issued at the same time or not, would have the effect or operation of a convertible note, those instruments shall, for the purposes of this Division, be deemed to be together a convertible note. (3) Where: (a) a company issues a note that provides that the amount of the loan to the company that is evidenced, acknowledged or created by the note or to which the note relates: (i) whether with or without interest; (iii) whether at the option of the holder or owner of the note or of some other person or not; (iv) whether in whole or in part; or (v) whether exclusively or otherwise; is to be or may be redeemed, repaid or satisfied by the issue, whether by the same company or by another company, of an instrument or a series of instruments; and (b) that instrument, or any instrument in that series of instruments, is to provide, whether in pursuance of or by virtue of a trust deed or otherwise, as mentioned in paragraph (a) or (b) of the definition of convertible note in subsection (1); that note and the instrument, or that note and each of the instruments in the series of instruments, shall, for the purposes of this Division, be deemed to be a convertible note. (4) For the purposes of this Division, a convertible note issued by a company applies to a loan to a company if it evidences, acknowledges or creates the loan. (5) A reference in this Division to the terms, or a term, applicable to a convertible note shall be read as including a reference to terms, or a term, that so apply or applies in pursuance of or by virtue of a trust deed or otherwise. INCOME TAX ASSESSMENT ACT 1936 - SECT 82M New loans and replacement loans (1) Where: (a) a loan to a company is made, and is wholly made, by money being paid to the company at the time when the loan is made; and (b) the loan is not part of or related to a transaction, or is not one of a series of related transactions, under which the person making the loan is to receive or has received, for the purpose of enabling him or her to make, or of assisting him or her in making, the loan, any money or other property from the company, or from another company or person as a result of arrangements made with that other company or person by the first-mentioned company; the loan shall, for the purposes of this Division, be treated as a new loan. (2) Where: (a) a loan to a company is, under subsection (1), to be treated as a new loan for the purposes of this Division; (b) the loan is not evidenced, acknowledged or created by a convertible note or is not a loan to which a convertible note otherwise applies; (c) the loan is for a fixed period; (d) the rate of interest payable in respect of the loan is the same in respect of all periods occurring before the date by which the whole of the loan is to be repaid, redeemed or satisfied; and (e) the loan is, in whole or in part, converted into another loan to the company or to another company, or the loan is, in whole or in part, converted into a part of another loan to the company or to another company and the remainder of the other loan: (i) is made by money being paid to the company or other company at the time when the loan is made; and (ii) would, if it were a separate loan, be a loan that, under subsection (1), is to be treated as a new loan for the purposes of this Division; that other loan shall, for the purposes of this Division, be treated as an approved replacement loan. INCOME TAX ASSESSMENT ACT 1936 - SECT 82N Prescribed stock exchanges For the purposes of this Division, a stock exchange is a prescribed stock exchange during a particular period or at a particular time if, in the regulations as in force during that period or at that time, it is specified as a prescribed stock exchange for the purposes of this Division or if it is declared by the regulations to have been a prescribed stock exchange for the purposes of this Division during that period or a period that includes that period or to have been a prescribed stock exchange for the purposes of this Division during a period that includes that time, as the case may be. INCOME TAX ASSESSMENT ACT 1936 - SECT 82P Bonus share allotments (1) For the purposes of this section, the making of a bonus share allotment by a company is the allotment by the company of shares (in this section referred to as bonus shares) in the capital of the company (being shares all of which are of the same class as each other) to persons who are the holders of other shares (in this section referred to as qualifying shares) in the capital of the company or in the capital of another company (being shares all of which are of the same class as each other but which are not necessarily of the same class as the bonus shares), being an allotment made to the holders of all shares of the same class as the qualifying shares or an allotment made in pursuance of applications for the allotment of the bonus shares by the holders of the qualifying shares in accordance with an invitation to apply for the allotment of shares given to the holders of the qualifying shares and the holders of all other shares of the same class as the qualifying shares. (2) Where: (a) the option to convert that exists under a convertible note is an option to have shares allotted to the holder or owner of the note; and (b) the terms applicable to the note are such that, if a bonus share allotment is made by the company that issued the note or by another company in respect of qualifying shares that are of the same class as the shares that are to be allotted to the holder or owner of the note upon the exercise of the option to convert, the holder or owner of the note is to have the right to have allotted to him or her shares in the capital of the company or of that other company, as the case may be, of the same class as the bonus shares on terms and conditions that are the same as or correspond with, or are no more favourable to him or her than, the terms and conditions on which bonus shares are allotted to any holder of qualifying shares; that right shall, for the purposes of subparagraph 82SA(1)(d)(ii), be deemed to be an approved right relating to the allotting or transfer of bonus shares to the holder or owner of the convertible note. (3) Where: (a) the option to convert that exists under a convertible note is an option to have shares transferred to the holder or owner of the note; and (b) the terms applicable to the note are such that, if a bonus share allotment is made by the company that issued the note or by another company, being an allotment the qualifying shares relating to which include the shares that are to be transferred to the holder or owner of the note upon the exercise of the option to convert, and bonus shares allotted in respect of the qualifying shares to be so transferred are allotted to the holder of those shares on terms and conditions that are the same as or correspond with, or are no more favourable to him or her than, the terms and conditions on which bonus shares are allotted to any other holder of qualifying shares, the holder or owner of the note is to have the right to have the bonus shares allotted to that person transferred to him or her upon the payment by him or her, where a consideration was paid or is payable in respect of the allotment of the bonus shares to the other person, of a consideration not less than that consideration; that right shall, for the purposes of subparagraphs 82S(1)(d)(ii) and 82SA(1)(d)(ii), be deemed to be an approved right relating to the allotting or transfer of bonus shares to the holder or owner of the convertible note. INCOME TAX ASSESSMENT ACT 1936 - SECT 82Q Classes of shares (1) Shares in the capital of a company to which there are attached the same rights, including the following rights: (a) rights in respect of voting; (b) rights in respect of dividends; (c) rights in respect of distribution of share capital in consequence of a reduction of share capital; (d) rights in respect of distribution of the property of the company in the event of the winding up of the company; constitute a class of shares for the purposes of this Division, and no other shares in the capital of the company constitute a class of shares for such purposes. (2) Notwithstanding anything contained in subsection (1), a share in the capital of a company to be allotted upon the exercise of the option to convert given under the terms applicable to a convertible note shall not, for the purposes of this Division, be deemed to be a share of a different class from a share in the capital of the company already allotted by reason only that during the period of one year after the allotment of the first-mentioned share, any dividend payable in respect of the share will or may be less than any dividend payable in respect of the second-mentioned share. INCOME TAX ASSESSMENT ACT 1936 - SECT 82R Interest on certain convertible notes not to be an allowable deduction (1) Subject to section 82SA, this section applies to a convertible note issued by a company, not being: (a) a convertible note issued on or before 15 November 1960; or (b) a convertible note: (i) the terms of the issue of which were announced by the company on or before that date; or (ii) that the company was, in pursuance of an agreement made on or before that date, bound to issue. (2) Where, in pursuance of the terms upon which any convertible notes were issued by a company, a person was entitled to have a convertible note issued to him or her by that company, the company shall, for the purposes of subsection (1), be deemed to have issued the convertible note to that person at the time when the person first became entitled to have the convertible note issued to him or her. (3) An outgoing consisting of interest, or a payment in the nature of interest, under a convertible note to which this section applies shall be deemed not to be an allowable deduction from the assessable income of the company. (4) Where a payment has been made by a person (whether under a guarantee or otherwise) that represents, in effect, a payment of interest under a convertible note to which this section applies and the company has incurred an outgoing by way of making good the first-mentioned payment to that person, whether by way of indemnification or otherwise, the amount of that outgoing shall, for the purposes of this section, be deemed to be an outgoing consisting of interest under the convertible note. (5) Section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997 does not apply to the expenditure incurred by the company in borrowing money by means of convertible notes to which this section applies. INCOME TAX ASSESSMENT ACT 1936 - SECT 82SA Interest on certain convertible notes to be an allowable deduction--where loan made on or after 1 January 1976 (1) Subject to the succeeding provisions of this section, section 82R does not apply in relation to a convertible note issued by a company where: (a) the loan to the company to which the note applies is, under section 82M, to be treated as a new loan or an approved replacement loan for the purposes of this Division; (b) the loan was made on or after 1 January 1976; (c) the convertible note was issued before the expiration of 2 months after the loan was made; and (d) the terms applicable to the convertible note are, at the time the note was issued and at all subsequent times, such that: (i) an option is given to the holder or owner of the convertible note (in this Division referred to as the option to convert) to have allotted or transferred to him or her shares in the capital of the company or of another company; (ii) no provision is made for the allotting or transferring of shares in the capital of the company or of another company to the holder or owner of the convertible note except in pursuance of the exercise of the option to convert or except in pursuance of a right that, under section 82P, is an approved right relating to the allotting or transfer of bonus shares to the holder or owner of the note; (iii) the convertible note would not, but for the option to convert and any right of the kind referred to in subparagraph (ii), be a convertible note; (iv) the earliest date on which the option to convert may be exercised is a date not later than 2 years after the date of offer; (v) the latest date on which the option to convert may be exercised is a date not later than the maturity date of the loan or, if the date of offer is more than 10 years earlier than the maturity date, a date not later than 10 years after the date of offer; (vi) the rate of interest payable in respect of the loan is, subject to subsection (5), the same in respect of all periods occurring before the maturity date of the loan; (vii) subject to subsection (6), the obligations and rights of the holder or owner of the convertible note (including, but without limiting the generality of the foregoing, obligations and rights with respect to the amount payable on repayment, redemption or satisfaction of the loan and the terms on which shares are to be allotted or transferred in pursuance of the exercise of the option to convert) do not vary in his or her favour by reason that he or she exercises the option, or he, she or the company exercises any other right in relation to the note, at a later rather than at an earlier time after the issue of the note; (viii) the rights of the holder or owner of the convertible note with respect to the amount payable on repayment, redemption or satisfaction of the loan do not vary according to whether or not he or she exercises the option to convert; (ix) the shares to be allotted or transferred upon the exercise of the option to convert: (A) are to be allotted or transferred within 2 months after the exercise of the option; (B) in the case of shares to be allotted, are, upon payment of the amount payable in respect of the allotment, to be fully paid shares or, in the case of shares to be transferred, are, at the time of transfer, to be fully paid shares; and (C) are to be shares of the same class as shares in the capital of the company that, not later than 6 weeks before the date that is the date of offer in relation to the loan, had been allotted and were fully paid; (x) the shares to be allotted or transferred upon the exercise of the option to convert are to be shares with respect to which no provision is made (whether by the memorandum, or memorandum and articles, of the company, or other instrument constituting or defining the constitution of the company, or otherwise) for changing or converting them into shares of another class, except for the purpose of enabling, in accordance with any law relating to companies, the consolidation and division of all or any of the share capital of the company or of another company or the sub-division of all or any of the shares in the capital of the company or of another company; and (xi) the amount payable in respect of the allotment or transfer of a share in pursuance of the exercise of the option to convert is to be paid not later than 1 month after the allotment or transfer, and is to be not less than 90% of the amount that, in accordance with section 82T, is the value as at the valuation date of a fully paid share included in the class of shares in which the share to be allotted or transferred will be, or is, included. (2) Where subsection (1) ceases to have effect in relation to a convertible note by reason of a change in the terms applicable to the note (not being a change resulting from a compromise or arrangement approved by a court), subsection (1) shall be deemed never to have had effect in relation to the note. (3) Where a note is a convertible note in relation to which subsection (1) has effect and the right to exercise the option to convert relating to the note becomes exercisable by a person other than the holder or owner of the note by reason of an assignment of that right, the assignment shall, for the purposes of this section, be disregarded. (4) Where, in relation to a convertible note issued by a company, the company or a director of the company does any act or thing for the purpose of, or purposes that include the purpose of, and having the effect of, causing the amount that, for the purposes of subsection (1), is the minimum amount applicable to a share to be allotted or transferred in pursuance of the exercise of the option to convert relating to the note, to be less than it would otherwise have been, subsection (1) does not have effect in relation to the note. (5) Where, under the terms applicable to a convertible note, the rate of interest payable in respect of the loan to which the note applies is to be varied from time to time (otherwise than with retrospective effect) in accordance with changes, or changes exceeding a specified percentage, in the rate of interest prevailing from time to time: (a) where the loan is a foreign loan, at a specified place outside Australia in respect of a specified class of transactions; or (b) where the loan is not a foreign loan, in respect of a specified class of Commonwealth securities; the term shall, for the purposes of subparagraph (1)(d)(vi), be deemed not to be a term providing for a variation in the rate of interest payable in respect of the loan. (6) For the purposes of subparagraph (1)(d)(vii), the obligations and rights of the holder or owner of a convertible note shall not be deemed to vary in a manner referred to in that subparagraph by reason only that any dividend payable in respect of a share in the capital of a company to be allotted upon the exercise of the option to convert relating to the note, being a dividend payable during the period of 1 year after the allotment of the share, will or may vary according to the time when, in relation to the period to which the dividend relates, the option to convert is exercised. INCOME TAX ASSESSMENT ACT 1936 - SECT 82T Value of shares (1) For the purposes of section 82SA, the value of a fully paid share as at the valuation date is: (a) where: (i) the share is included in a class of shares that, during the whole of the relevant valuation period, was listed for quotation in the official list of a stock exchange that was a prescribed stock exchange during the whole of that period, or in the official lists of 2 or more stock exchanges each of which was a prescribed stock exchange during the whole of that period; and (ii) fully paid shares included in that class of shares were recorded by that stock exchange, or by one or more of those stock exchanges, as the case may be, as having been sold during that period; an amount ascertained by dividing the total consideration paid or payable in respect of those sales by the total number of shares so recorded as having been sold; and (b) in any other case--the amount that a person who is a qualified person in relation to the valuing of the share certifies that, on a true and fair view of the state of the company's affairs, would, in respect of a sale at the end of the relevant valuation period between a willing but not anxious seller and a willing but not anxious buyer, be expected to be the consideration paid for the share, on the assumption, in a case where the class of shares in which that share is included was not, at the end of the relevant valuation period, listed for quotation in the official list of a stock exchange that, at that time, was a prescribed stock exchange, that the memorandum, or memorandum and articles, of the company, or other instrument constituting or defining the constitution of the company, satisfied, at that time, such of the requirements of a stock exchange that, at that time, was a prescribed stock exchange as it would have been necessary to satisfy to enable that class of shares to be listed for quotation in the official list of that stock exchange. INCOME TAX ASSESSMENT ACT 1936 - SECT 90 Interpretation In this Division: "exempt income", in relation to a partnership, means the exempt income of the partnership calculated as if the partnership were a taxpayer who was a resident. "net income", in relation to a partnership, means the assessable income of the partnership, calculated as if the partnership were a taxpayer who was a resident, less all allowable deductions except deductions allowable under section 290-150 or Division 36 of the Income Tax Assessment Act 1997. "non-assessable non-exempt income", in relation to a partnership, means the non-assessable non-exempt income of the partnership calculated as if the partnership were a taxpayer who was a resident. "partnership loss", in relation to a partnership, means the excess (if any) of the allowable deductions, other than deductions allowable under section 290-150 or Division 36 of the Income Tax Assessment Act 1997, over the assessable income of the partnership calculated as if the partnership were a taxpayer who was a resident. INCOME TAX ASSESSMENT ACT 1936 - SECT 91 Liability of partnerships A partnership shall furnish a return of the income of the partnership, but shall not be liable to pay tax thereon. INCOME TAX ASSESSMENT ACT 1936 - SECT 92 Income and deductions of partner (1) The assessable income of a partner in a partnership shall include: (a) so much of the individual interest of the partner in the net income of the partnership of the year of income as is attributable to a period when the partner was a resident; and (b) so much of the individual interest of the partner in the net income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia. (2) Subject to section 830-45 of the Income Tax Assessment Act 1997, if a partnership loss is incurred by a partnership in a year of income, there shall be allowable as a deduction to a partner in the partnership: (a) so much of the individual interest of the partner in the partnership loss as is attributable to a period when the partner was a resident; and (b) so much of the individual interest of the partner in the partnership loss as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia. (2AA) However, if: (a) the partner is a limited partner in a partnership; and (b) the partnership is a VCLP, an ESVCLP, an AFOF or a VCMP during the year of income; the amount allowable under subsection (2), in respect of the year of income, as a deduction must not exceed the amount worked out as follows: Method statement Step 1. Work out the sum of the amounts that the partner has contributed (the partner's contribution) to the partnership. Step 2. Subtract the sum of all the amounts (if any) of the partner's contribution that are repaid to the partner. Step 3. Subtract the sum of all deductions allowed to the partner for losses of the partnership in previous years of income. Step 4. Subtract the sum of the amounts of all the debt interests issued by the partner to the extent that they are secured by the partner's interest in the partnership. Example: A limited partner contributes $100,000 to a VCLP, having borrowed $80,000. Because the lender values the partner's interest in the partnership at $70,000, the partner also provides, as additional security, other assets valued at $10,000. If none of the partner's contribution has been repaid and the partner has not been allowed deductions for partnership losses in previous years of income, the amount allowable to the partner for a partnership loss cannot exceed $30,000. (2A) Subsection (2) does not apply to a partnership loss if the partner's interest in the partnership at the end of the year of income is: (a) a segregated exempt asset (as defined in the Income Tax Assessment Act 1997) of a life assurance company; or (b) a segregated current pension asset (as defined in the Income Tax Assessment Act 1997) of a complying superannuation fund. (3) The exempt income of a partner in a partnership shall include: (a) so much of the individual interest of the partner in the exempt income of the partnership of the year of income as is attributable to a period when the partner was a resident; and (b) so much of the individual interest of the partner in the exempt income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia. (4) The non-assessable non-exempt income of a partner in a partnership shall include: (a) so much of the individual interest of the partner in the non-assessable non-exempt income of the partnership of the year of income as is attributable to a period when the partner was a resident; and (b) so much of the individual interest of the partner in the non-assessable non-exempt income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 92A Deductions in respect of outstanding subsection 92(2AA) amounts (1) If: (a) the partner is a limited partner in a partnership; and (b) the partnership is a VCLP, an ESVCLP, an AFOF or a VCMP during the year of income; and (c) the amount allowable under subsection 92(2) as a deduction to the partner for partnership losses incurred by the partnership in the year of income is not reduced because of subsection 92(2AA); and (d) the partner has an outstanding subsection 92(2AA) amount for the year of income; there is allowable as a deduction to the partnership an amount worked out as follows: Method statement Step 1. Subtract the amount allowable under subsection 92(2) as a deduction to the partner for partnership losses incurred by the partnership in the year of income from the amount worked out using the method statement in subsection 92(2AA). Step 2. If the amount worked out under step 1 is greater than or equal to the outstanding subsection 92(2AA) amount for the year of income, the amount of the deduction allowable under this section is the outstanding subsection 92(2AA) amount. Step 3. If the amount worked out under step 1 is less than the outstanding subsection 92(2AA) amount for the year of income, the amount of the deduction allowable under this section is the amount worked out under step 1. (2) The partner has an outstanding subsection 92(2AA) amount for a year of income if: (a) an amount allowable under subsection 92(2) as a deduction to the partner for partnership losses incurred by the partnership in a previous year of income was reduced because of subsection 92(2AA); and (b) the difference between: (i) the sum of all reductions made under subsection 92(2AA) to amounts allowable under subsection 92(2) as deductions to the partner for partnership losses incurred by the partnership in previous years of income; and (ii) the sum of all amounts allowable under this section, in respect of previous years of income, as deductions to the partner in relation to those reductions; is greater than zero. The amount of that difference is the partner's outstanding subsection 92(2AA) amount for the year of income. (3) To avoid doubt, a partner's outstanding subsection 92(2AA) amount for a year of income cannot form part of a tax loss for the purposes of Division 36 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 94 Partner not having control and disposal of share in partnership income (1) Subject to this section, where: (a) a share in the net income of a partnership of a year of income is included in the assessable income of a partner in the partnership, not being: (i) a company; (ii) a person in the capacity of a trustee; or (iii) a person who was under the age of 18 years on the last day of the year of income of the person that corresponds with the year of income of the partnership; and (b) the partnership is so constituted or controlled, or its operations are so conducted, that the partner has not the real and effective control and disposal of that share or of a part of that share; this section applies to that share or that part of that share, as the case may be. (2) Subject to the succeeding provisions of this section, where: (a) a partnership is so constituted or controlled, or its operations are so conducted, that a partner in the partnership, being a trustee of a trust estate, has not the real and effective control and disposal of his or her share in the net income of the partnership of a year of income or of a part of that share (which share or part of a share, as the case may be, is in this subsection referred to as uncontrolled partnership income); and (b) in calculating in accordance with section 95 the net income of that trust estate or of any other trust estate, there is included in the assessable income of the trust estate any uncontrolled partnership income; then: (c) if: (i) a beneficiary, not being a company or a person who was under the age of 18 years on the last day of the year of income of the person that corresponds with the year of income of the partnership, is presently entitled to the whole of the income of the trust estate otherwise than in the capacity of a trustee; or (ii) there is no part of the net income of the trust estate that is included in the assessable income of a beneficiary in pursuance of section 97 or in respect of which the trustee is assessed and liable to pay tax in pursuance of section 98; this section applies to the portion of the net income of the trust estate that was derived from uncontrolled partnership income; (d) if a beneficiary, not being a company or a person who was under the age of 18 years on the last day of the year of income of the person that corresponds with the year of income of the partnership, is presently entitled to a share of the income of the trust estate otherwise than in the capacity of a trustee, this section applies to so much of that share of the net income of the trust estate as bears to that share the same proportion as the portion of the net income of the trust estate that was derived from uncontrolled partnership income bears to the net income of the trust estate; and (e) if there is a part of the net income of the trust estate that is not included in the assessable income of a beneficiary in pursuance of section 97 and in respect of which the trustee is not assessed and is not liable to pay tax in pursuance of section 98, this section applies to so much of that part of the net income of the trust estate as bears to that part the same proportion as the portion of the net income of the trust estate that was derived from uncontrolled partnership income bears to the net income of the trust estate. (5) For the purposes of this section: (a) where: (i) the assessable income of a trust estate includes the net income or a share of the net income of another trust estate; and (ii) the assessable income of the other trust estate by reference to which that net income is calculated included income of a particular class (including an amount that is to be deemed by an application or applications of this paragraph to be income of a particular class); the assessable income of the first-mentioned trust estate shall be deemed to include income of that class of an amount equal to so much of the net income or share of the net income of the other trust estate that is included in the assessable income of the first-mentioned trust estate as bears to that net income or share of that net income the same proportion as the portion of the net income of the other trust estate that was derived from income of that class bears to the net income of the other trust estate; and (b) the portion of the net income of a trust estate that is derived from income of a particular class that is included in the assessable income of the trust estate is the amount remaining after deducting from the income of that class that is included in the assessable income of the trust estate: (i) any prescribed deductions that relate exclusively to that income of that class; (ii) so much of any other prescribed deductions (other than apportionable deductions) as, in the opinion of the Commissioner, may appropriately be related to that income of that class; and (iii) the amount that bears to the prescribed deductions (being apportionable deductions) the same proportion as the amount that, but for this subparagraph, would be the portion of the net income of the trust estate that is derived from that income of that class bears to the sum of the net income of the trust estate and those last-mentioned prescribed deductions. (6) Where the assessable income of a trust estate includes, or, by virtue of paragraph (5)(a), is to be deemed to include, income of a particular class but the Commissioner is of the opinion that it would be unreasonable to treat each part or share of the net income of the trust estate that is included in the assessable income of a beneficiary, or on or in respect of which the trustee is assessed and liable to pay tax, as including a proportionate part of the portion of the net income of the trust estate that is derived from income of that class, the amount: (a) that is the amount of a part or share of the net income of the trust estate to which this section applies by virtue of paragraph (2)(d) or (e); or (b) that is, by virtue of paragraph (5)(a), the amount of the income of that class that is to be deemed to be included in the assessable income of another trust estate; is, in lieu of the amount that, but for this subsection, would be the amount of that part or share of that net income or the amount of that income of that class, as the case may be, such amount as the Commissioner considers reasonable in the circumstances. (8) Where the Commissioner is of the opinion that, by reason of special circumstances, it would be unreasonable that this section should apply to any income, this section does not apply to that income. (8A) In forming an opinion for the purposes of subsection (8) as to whether it is unreasonable that this section should apply in relation to any of the net income of a trust estate, the Commissioner shall take into consideration the extent (if any) to which that net income represents income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia. (9) Where the assessable income of a taxpayer, other than a taxpayer in the capacity of a trustee, includes income to which this section applies, the taxpayer shall be assessed and is liable to pay further tax, in accordance with subsection (10A) or (10B), upon the portion (in this section referred to as the eligible portion) of his or her taxable income that is derived from income to which this section applies. (10) For the purposes of subsection (9), the portion of the taxable income of a taxpayer that is derived from income to which this section applies is the amount remaining after deducting from the income to which this section applies that is included in his or her assessable income: (a) any deductions allowed or allowable in his or her assessment that relate exclusively to the income to which this section applies that is included in his or her assessable income; (b) so much of any other deductions allowed or allowable in his or her assessment (other than apportionable deductions) as, in the opinion of the Commissioner, may appropriately be related to the income to which this section applies that is included in his or her assessable income; and (c) the amount that bears to the apportionable deductions allowed or allowable in his or her assessment the same proportion as the amount that, but for this paragraph, would be the portion of his or her taxable income that is derived from income to which this section applies bears to the sum of his or her taxable income and those apportionable deductions. (10A) Where Division 392 (Long-term averaging of primary producers' tax liability) of the Income Tax Assessment Act 1997 does not apply in relation to the income of a taxpayer of the year of income, the taxpayer is liable to pay further tax upon the eligible portion of his or her taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (9) in respect of the relevant part of the taxable income. (10B) Where Division 392 (Long-term averaging of primary producers' tax liability) of the Income Tax Assessment Act 1997 applies in relation to the income of a taxpayer of the year of income, the taxpayer is liable to pay further tax upon the relevant part of the eligible portion of his or her taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (9) in respect of the relevant part of the taxable income and is, in addition, liable to pay further tax upon the prescribed part of the eligible portion of his or her taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (9) in respect of the prescribed part of the taxable income. (10C) For the purposes of subsections (10A) and (10B): (a) the prescribed part of the eligible portion of the taxable income of a taxpayer of a year of income is: (i) in a case to which subparagraph (ii) does not apply--the sum of: (A) the amount ascertained by deducting from so much of the assessable primary production income of the taxpayer as is also income to which this section applies so much of the deductions allowable in his or her assessment as constitutes primary production deductions and is also deductible in accordance with subsection (10) from income to which this section applies; and (B) the amount (if any) ascertained in accordance with the formula , where: A is the amount shown in the following table: Value of A for formula Item Taxpayer's taxable non-primary production income Value of A 1 Nil Nil 2 Not more than $5,000 (but more than nil) Difference between basic taxable income and taxable primary production income 3 Between $5,000 and $10,000 $10,000 taxable non-primary production income 4 At least $10,000 Nil B is the number of whole dollars in the amount ascertained by deducting from the eligible portion the amount calculated in accordance with sub-subparagraph (A); and C is the number of whole dollars in the amount ascertained by deducting from the taxable income of the taxpayer of the year of income the taxable primary production income of the taxpayer of the year of income; and (ii) in a case where the taxpayer's primary production deductions for the year of income exceed the taxpayer's assessable primary production income for that year--the amount ascertained in accordance with the formula , where: A is the amount shown in the following table: Value of A for formula Item Taxpayer's taxable non-primary production income Value of A 1 Nil Nil 2 Not more than $5,000 (but more than nil) Basic taxable income 3 Between $5,000 and $10,000 Non-primary production shade-out amount worked out under subsection 392-90(3) of the Income Tax Assessment Act 1997 4 At least $10,000 Nil B is the number of whole dollars in the eligible portion. C is the number of whole dollars in the taxable income of the taxpayer of the year of income; and D is the number of whole dollars in the difference between the taxpayer's primary production deductions for the year of income and the taxpayer's assessable primary production income for that year; and (b) the relevant part of the eligible portion of the taxable income of the taxpayer is the amount ascertained by deducting from the amount of that eligible portion so much of that eligible portion as is the prescribed part of that eligible portion. (11) Where: (a) section 98 applies in relation to the net income of a trust estate or a share of that net income; and (b) this section applies to a portion (in this subsection referred to as the relevant portion) of that net income or of that share of that net income, as the case may be; the trustee of the trust estate shall be assessed and is liable to pay further tax, in accordance with subsection (12A) or (12B), upon the relevant portion of that net income or of that share of that net income, as the case may be. (12) Where: (a) section 99 applies in relation to the net income of a trust estate or a part of that net income; and (b) this section applies to a portion (in this section referred to as the eligible trust portion) of that net income or of that part of that net income, as the case may be; the trustee of the trust estate shall be assessed and is liable to pay further tax, in accordance with subsection (12A) or (12B), upon the eligible trust portion. (12A) Where Division 16 does not apply in respect of the net income of a trust estate of which the eligible trust portion is a portion, the trustee is liable to pay further tax upon the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (11) or (12) in respect of the relevant part of the net income of a trust estate. (12B) Where Division 16 applies in respect of the net income of a trust estate of which the eligible trust portion is a portion, the trustee is liable to pay further tax upon the relevant part of the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (11) or (12) in respect of the relevant part of the net income of a trust estate and is, in addition, liable to pay further tax upon the prescribed part of the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (11) or (12) in respect of the prescribed part of the net income of a trust estate. (12C) For the purposes of subsections (12A) and (12B): (a) the prescribed part of the eligible trust portion in relation to a trust estate in relation to a year of income is: (i) in a case to which subparagraph (ii) does not apply--the sum of: (A) the amount ascertained by deducting from so much of the assessable primary production income of the trust estate of the year of income as is also income that was taken into account in determining the amount of the eligible trust portion so much of the deductions allowable in the assessment of the trustee of the trust estate as constitutes relevant primary production deductions and was also deductible in accordance with subsection (5) in determining the amount of the eligible trust portion; and (B) the amount (if any) ascertained in accordance with the formula , where: A is the amount of the notional net income from primary production of the trust estate of the year of income. B is the number of whole dollars in the amount ascertained by deducting from the eligible trust portion the amount calculated in accordance with sub-subparagraph (A); and C is the number of whole dollars in the amount ascertained by deducting from the net income of the trust estate of which the eligible trust portion is a portion the actual net income from primary production of the trust estate of the year of income; and (ii) in a case where the aggregate of the relevant primary production deductions allowable in calculating the net income of the trust estate of the year of income exceeds the assessable primary production income of the trust estate of the year of income--the amount ascertained in accordance with the formula , where: A is the amount of the notional net income from primary production of the trust estate of the year of income. B is the number of whole dollars in the eligible trust portion. C is the number of whole dollars in the net income of the trust estate of which the eligible trust portion is a portion; and D is the number of whole dollars in the amount by which the net income of the trust estate of which the eligible trust portion is a portion would have been increased if the aggregate of the relevant primary production deductions allowable in calculating the net income of the trust estate of the year of income had been equal to the assessable primary production income of the trust estate of the year of income; and (b) the relevant part of the eligible trust portion in relation to a trust estate is the amount ascertained by deducting from that eligible trust portion so much of that eligible trust portion as is the prescribed part of that eligible trust portion. (13) In this section: "prescribed deductions", in relation to a trust estate, means the deductions that are allowable in calculating in accordance with section 95 the net income of the trust estate. "share in the net income of a partnership", in relation to a partner, means: (a) so much of the individual interest of the partner in the net income of the partnership and of any income derived by the partner from the partnership otherwise than as a partner as is attributable to a period when the partner was a resident; and (b) so much of the individual interest of the partner in the net income of the partnership and of any income derived by the partner from the partnership otherwise than as a partner as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia. (14) In this section, actual net income from primary production, assessable primary production income, notional net income from primary production and relevant primary production deductions have the same respective meanings as in section 156. (15) In this section, the following terms have the same meanings that they have in Division 392 (Long-term averaging of primary producers' tax liability) of the Income Tax Assessment Act 1997: (a) assessable primary production income; (b) basic taxable income; (c) non-primary production shade-out amount; (d) primary production deductions; (e) taxable non-primary production income; (f) taxable primary production income. INCOME TAX ASSESSMENT ACT 1936 - SECT 94A Object The object of this Division is to provide for certain limited partnerships to be treated as companies for tax purposes. INCOME TAX ASSESSMENT ACT 1936 - SECT 94B Interpretation In this Division: "income tax law" means: (a) this Act (other than this Division and Division 830 of the Income Tax Assessment Act 1997); and (b) an Act that imposes any tax payable under this Act; and (c) the Income Tax Rates Act 1986; and (d) the Taxation Administration Act 1953, so far as it relates to an Act covered by paragraph (a), (b) or (c); and (e) any other Act, so far as it relates to an Act covered by paragraph (a), (b), (c) or (d); and (f) regulations under an Act covered by any of the preceding paragraphs. "year of income" means (except in paragraph 94L(b)) the year of income in which 19 August 1992 occurred or a later year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 94C Continuity of limited partnership not affected by changes in composition For the purposes of this Division, a change in the composition of a limited partnership does not affect the continuity of the partnership. INCOME TAX ASSESSMENT ACT 1936 - SECT 94D Corporate limited partnerships (1) For the purposes of this Division, a limited partnership is a corporate limited partnership in relation to a year of income of the partnership if: (a) the year of income is the 1995-96 year of income or a later year of income; or (b) the partnership was formed on or after 19 August 1992; or (c) both: (i) the partnership was formed before 19 August 1992; and (ii) the partnership does not pass the continuity of business test set out in section 94E; or (d) all of the following apply: (i) the partnership was formed before 19 August 1992; (ii) a change in the composition of the partnership occurs during the period: (A) beginning on 19 August 1992; and (B) ending at the end of the year of income; (iii) the partners do not elect, in accordance with section 94F, that the partnership is not to be treated as a corporate limited partnership in relation to the year of income. (2) However, a partnership that is a VCLP, an ESVCLP, an AFOF or a venture capital management partnership cannot be a corporate limited partnership. Note 1: This subsection can apply without the partnership meeting the applicable registration requirements under the Venture Capital Act 2002. It must be registered under that Act in order to be a VCLP, an ESVCLP or an AFOF, but it is possible for it to remain registered while the requirements are not met. Note 2: VCLPs, ESVCLPs, AFOFs and VCMPs are taxed as ordinary partnerships under Division 5. Note 3: If the partnership's registration as a VCLP, ESVCLP or AFOF is unconditional, some partners' share in capital gains and losses from CGT events relating to some investments may be disregarded: see Subdivision 118-F of the Income Tax Assessment Act 1997. (3) A venture capital management partnership is a limited partnership that: (a) is a general partner of one or more of the following: (i) one or more VCLPs; (ia) one or more ESVCLPs; (ii) one or more AFOFs; and (b) only carries on activities that are related to being such a general partner. A limited partnership ceases to be a venture capital management partnership if it ceases to meet the requirements of paragraphs (a) and (b). Note: In this Act, the term "venture capital management partnership" is usually abbreviated to "VCMP". (4) The place of residence of a VCMP is the place at which the partnership has its central management and control. (5) A limited partnership that is a foreign hybrid limited partnership in relation to a year of income because of subsection 830-10(1) of the Income Tax Assessment Act 1997 is not a corporate limited partnership in relation to the year of income. Note: As result, both the normal partnership provisions and special provisions relating to foreign hybrid limited partnerships will apply to the entity. (6) If, for the purpose of applying this Act and the Income Tax Assessment Act 1997 in relation to a partner's interest in a limited partnership, the partnership is a foreign hybrid limited partnership in relation to a year of income because of subsection 830-10(2) of that Act, the partnership is not a corporate limited partnership in relation to the partner's interest in relation to the year of income. Note: As result, both the normal partnership provisions and special provisions relating to foreign hybrid limited partnerships will apply to the entity, but only in relation to the partner's interest. INCOME TAX ASSESSMENT ACT 1936 - SECT 94E Continuity of business test In determining whether a limited partnership is a corporate limited partnership in relation to a year of income, the partnership passes the continuity of business test if, and only if: (a) at all times during the period: (i) beginning on 19 August 1992; and (ii) ending at the end of the year of income; the partnership carried on the same business as it carried on immediately before the beginning of that period; and (b) the partnership did not, at any time during that period, derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before that period. INCOME TAX ASSESSMENT ACT 1936 - SECT 94F Change in composition of limited partnership--election that partnership not be treated as an eligible limited partnership An election referred to in paragraph 94D(1)(d) in relation to a limited partnership and in relation to a year of income has no effect unless: (a) the partnership passes the continuity of ownership test set out in section 94G; and (b) the election is made: (i) within 6 months after the end of the later of the following years of income: (A) the year of income to which the election relates; (B) the year of income in which the Taxation Laws Amendment Act (No. 6) 1992 received the Royal Assent; or (ii) within such further period as the Commissioner allows. INCOME TAX ASSESSMENT ACT 1936 - SECT 94G Continuity of ownership test In determining whether a limited partnership is a corporate limited partnership in relation to a year of income, the partnership passes the continuity of ownership test if, and only if: (a) at all times during the period: (i) beginning on 19 August 1992; and (ii) ending at the end of the year of income; more than 50% of the interests in the partnership were held by persons who, immediately before that period, held more than 50% of the interests in the partnership; or (b) the condition set out in paragraph (a) is not satisfied only because of the acquisition during so much of that period as occurred before 1 July 1993 of interests in the partnership, where the acquisitions are in response to, and in accordance with the terms of: (i) a prospectus, offer or invitation issued before 19 August 1992; or (ii) if that prospectus, offer or invitation was varied before 19 August 1992--that prospectus, offer or invitation as so varied. INCOME TAX ASSESSMENT ACT 1936 - SECT 94H Corporate tax modifications applicable to corporate limited partnerships If a partnership is a corporate limited partnership in relation to a year of income, the income tax law has effect, in relation to the partnership and in relation to the year of income, subject to the changes set out in the following provisions of this Subdivision. INCOME TAX ASSESSMENT ACT 1936 - SECT 94J Company includes corporate limited partnership A reference in the income tax law (other than the definitions of dividend, and resident or resident of Australia, in section 6 of this Act and other than Division 355 of the Income Tax Assessment Act 1997) to a company or to a body corporate includes a reference to the partnership. INCOME TAX ASSESSMENT ACT 1936 - SECT 94K Partnership does not include corporate limited partnership A reference in the income tax law to a partnership does not include a reference to the partnership. INCOME TAX ASSESSMENT ACT 1936 - SECT 94L Dividend includes distribution of corporate limited partnership A reference in the income tax law to a dividend or to a dividend within the meaning of section 6: (a) includes a reference to a distribution made by the partnership, whether in money or in other property, to a partner in the partnership; and (b) does not include a reference to a distribution to the extent to which the distribution is attributable to profits or gains arising during a year of income in relation to which the partnership was not a corporate limited partnership. INCOME TAX ASSESSMENT ACT 1936 - SECT 94M Drawings etc. deemed to be dividends paid out of profits (1) If the partnership pays or credits an amount to a partner in the partnership: (a) against the profits or anticipated profits of the partnership; or (b) otherwise in anticipation of the profits of the partnership; (whether or not the amount of the profits or anticipated profits is ascertainable), the amount paid or credited is taken, for the purposes of the income tax law, to be a dividend paid by the partnership to the partner out of profits derived by the partnership. (2) If the partnership makes a subsequent distribution, the Commissioner must take such steps (if any) as are necessary to ensure that the partner is not subject to double taxation. INCOME TAX ASSESSMENT ACT 1936 - SECT 94N Private company does not include corporate limited partnership A reference in the income tax law to a private company in relation to the year of income does not include a reference to the partnership. Note: Division 7A (Distributions to entities connected with a private company) applies to certain corporate limited partnerships in the same way as it applies to private companies: see section 109BB. INCOME TAX ASSESSMENT ACT 1936 - SECT 94P Share includes interest in corporate limited partnership A reference in the income tax law to a share includes a reference to an interest in the partnership. INCOME TAX ASSESSMENT ACT 1936 - SECT 94Q Shareholder includes partner in corporate limited partnership A reference in the income tax law to a shareholder includes a reference to a partner in the partnership. INCOME TAX ASSESSMENT ACT 1936 - SECT 94R Liquidator may include partner in corporate limited partnership For the purposes of the income tax law: (a) a reference to the liquidator of the partnership includes a reference to a partner in the partnership who carries out the winding-up of the partnership; and (b) a reference to distributions made by a liquidator in the course of winding up the partnership includes a reference to distributions made by such a partner to himself or herself in the course of winding-up the partnership. INCOME TAX ASSESSMENT ACT 1936 - SECT 94S Continuity of corporate limited partnership not affected by changes in composition For the purposes of the income tax law, a change in the composition of the partnership does not affect the continuity of the partnership. INCOME TAX ASSESSMENT ACT 1936 - SECT 94T Residence of corporate limited partnership For the purposes of the income tax law, the partnership is: (a) a resident; and (b) a resident within the meaning of section 6; and (c) a resident of Australia; and (d) a resident of Australia within the meaning of section 6; if and only if: (e) the partnership was formed in Australia; or (f) either: (i) the partnership carries on business in Australia; or (ii) the partnership's central management and control is in Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 94U Incorporation For the purposes of the income tax law, the partnership is taken to have been incorporated: (a) in the place where it was formed; and (b) under a law in force in that place. INCOME TAX ASSESSMENT ACT 1936 - SECT 94V Obligations and offences (1) The application of the income tax law to the partnership as if the partnership were a company is subject to the following changes: (a) obligations that would be imposed on the partnership are imposed instead on each partner, but may be discharged by any of the partners; (b) the partners are jointly and severally liable to pay any amount that would be payable by the partnership; (c) any offence against the income tax law that would otherwise be committed by the partnership is taken to have been committed by each of the partners. (2) In a prosecution of a person for an offence that the person is taken to have committed because of paragraph (1)(c), it is a defence if the person proves that the person: (a) did not aid, abet, counsel or procure the relevant act or omission; and (b) was not in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the person). INCOME TAX ASSESSMENT ACT 1936 - SECT 94X Modification of loss provisions Subdivisions 165-A and 165-B of the Income Tax Assessment Act 1997 apply in relation to the partnership as if the provisions relating to voting power had not been enacted. INCOME TAX ASSESSMENT ACT 1936 - SECT 95AAA Simplified outline of the relationship between this Division, Division 6E and Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997 The following is a simplified outline of the relationship between this Division, Division 6E and Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997. This Division sets out the basic income tax treatment of the net income of the trust estate. Generally: (a) it has the result of assessing beneficiaries on a share of the net income of the trust estate based on their present entitlement to a share of the income of the trust estate; and (b) it has the result of assessing the trustee directly on any residual net income; and (c) as a collection mechanism, it has the result of assessing the trustee in respect of some beneficiaries, such as non-residents or those under a legal disability. If the trust estate has capital gains, franked distributions or franking credits, this basic treatment is modified as described below. Division 6E modifies the operation of this Division for the purpose of excluding amounts relevant to capital gains, franked distributions and franking credits from the calculations of assessable amounts under sections 97, 98, 99, 99A and 100. Division 6E does not modify the operation of this Division (or any other provision of this Act) for any other purpose. For example: (a) it does not modify the operation of this Division for the purposes of applying section 100A; and (b) it does not modify amounts taxed in the hands of the trustee under Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997. Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997 provide the corresponding taxation treatment for those capital gains, franked distributions and franking credits. Specifically: (a) Subdivision 115-C of that Act has the effect that an amount corresponding to each of those capital gains is taxed in the hands of the beneficiaries of the trust (as a capital gain) and, if necessary, assessed to the trustee. (b) Subdivision 207-B of that Act has the effect that an amount corresponding to each of those franked distributions is taxed in the hands of the beneficiaries of the trust and, if necessary, the trustee. It also has the effect that the entity in whose hands those distributions are taxed can take advantage of the relevant amount of related franking credits. INCOME TAX ASSESSMENT ACT 1936 - SECT 95AAB Adjustments under Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997--references in this Act to assessable income under section 97, 98A or 100 (1) Subsection (2) applies if an amount is included in the assessable income of a beneficiary of a trust estate because of Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997. (2) For the purposes of a provision of this Act (other than a provision mentioned in subsection (3)), treat the amount as being included in the beneficiary's assessable income in relation to the net income of the trust estate under section 97, 98A or 100 (as the case requires). (3) The provisions are as follows: (a) sections 97, 98A (other than subsection 98A(2)) and 100 (other than subsections 100(2) and (3)); (b) sections 98, 99 and 99A; (c) Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997. (4) To avoid doubt, subsection (2) applies despite subsection 6(1AA). INCOME TAX ASSESSMENT ACT 1936 - SECT 95AAC Adjustments under Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997--references in this Act to liabilities under section 98, 99 or 99A (1) Subsection (2) applies if an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 98 in respect of the beneficiary is increased because of Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997. (2) For the purposes of a provision of this Act (other than a provision mentioned in subsection (5)), treat the amount of the increase as being an amount in respect of which the trustee is liable to be assessed (and pay tax) under section 98 in respect of the beneficiary's interest in or share of the net income of the trust estate. (3) Subsection (4) applies if an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 99 or 99A is increased because of Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997. (4) For the purposes of a provision of this Act (other than a provision mentioned in subsection (5)), treat the amount of the increase as being an amount in respect of which the trustee is liable to be assessed (and pay tax) under section 99 or 99A in respect of the net income of the trust estate. (5) The provisions are as follows: (a) sections 97, 98A (other than subsection 98A(2)) and 100 (other than subsections 100(2) and (3)); (b) sections 98, 99 and 99A; (c) Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997. (6) To avoid doubt, subsections (2) and (4) apply despite subsection 6(1AA). INCOME TAX ASSESSMENT ACT 1936 - SECT 95 Interpretation (1) In this Division: adjusted Division 6 percentage, of an entity that is a beneficiary or trustee of a trust estate, means the entity's Division 6 percentage of the income of the trust estate calculated on the assumption that the amount of a capital gain or franked distribution to which any beneficiary or the trustee of the trust estate is specifically entitled were disregarded in working out the income of the trust estate. "adjusted net income", in relation to a trust estate, has the meaning given by subsection 100AB(4).Division 6 percentage: (a) a beneficiary of a trust estate has a Division 6 percentage of the income of the trust estate equal to the share (expressed as a percentage) of the income of the trust estate to which the beneficiary is presently entitled; and (b) the trustee of a trust estate has a Division 6 percentage of the income of the trust estate equal to the share (expressed as a percentage) of the income of the trust estate to which no beneficiary is presently entitled. However, if the income of a trust estate is nil: (c) a beneficiary of a trust estate has a Division 6 percentage of the income of the trust estate of 0%; and (d) the trustee of a trust estate has a Division 6 percentage of the income of the trust estate of 100%. "exempt income", in relation to a trust estate, means the exempt income of the trust estate calculated as if the trustee were a taxpayer who was a resident.Note: See also Division 54 of the Income Tax Assessment Act 1997 (in particular, the provisions in section 54-70 about trusts), which provides a tax exemption for certain payments under structured settlements and structured orders. "net income", in relation to a trust estate, means the total assessable income of the trust estate calculated under this Act as if the trustee were a taxpayer in respect of that income and were a resident, less all allowable deductions, except deductions under Division 393 of the Income Tax Assessment Act 1997 (Farm management deposits) and except also, in respect of any beneficiary who has no beneficial interest in the corpus of the trust estate, or in respect of any life tenant, the deductions allowable under Division 36 of the Income Tax Assessment Act 1997 in respect of such of the tax losses of previous years as are required to be met out of corpus.A trust may be required to work out its net income in a special way by Division 266 or 267 in Schedule 2F to this Act or Division 275 of the Income Tax Assessment Act 1997. "non-assessable non-exempt income", in relation to a trust estate, means the non-assessable non-exempt income of the trust estate calculated as if the trustee were a taxpayer who was a resident. "specifically entitled" has the same meaning as in the Income Tax Assessment Act 1997. (2) For the purposes of this Division, a trust estate shall be taken to be a resident trust estate in relation to a year of income if: (a) a trustee of the trust estate was a resident at any time during the year of income; or (b) the central management and control of the trust estate was in Australia at any time during the year of income. (3) In this Division, a trust estate that is not a resident trust estate in relation to a year of income is referred to as a non-resident trust estate in relation to that year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 95AA Division does not apply in relation to FHSA trust This Division does not apply in relation to a trust estate that is an FHSA trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 95AB Modifications for special disability trusts (1) This Division applies with the modifications set out in this section in relation to a year of income in relation to a trust estate that is a special disability trust at the end of the year of income. (2) Treat the principal beneficiary of the trust estate as being presently entitled to all of the income of the trust estate of the year of income. (3) If the principal beneficiary of the trust estate is a resident of Australia at the end of the year of income treat that person as being under a legal disability throughout the year of income. (4) If there is no income of the trust estate assume that: (a) there is income of the trust estate of the year of income; and (b) the principal beneficiary of the trust estate is presently entitled to all of the income of the trust estate of the year of income. (5) If the amount to be deducted under subsection 100(2) from the income tax assessed against the principal beneficiary is greater than the amount of the income tax assessed against the principal beneficiary, the Commissioner must pay to the principal beneficiary an amount equal to the difference between those 2 amounts. Note: The tax offset is subject to the refundable tax offset rules: see section 67-23 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 95A Special provisions relating to present entitlement (1) For the purposes of this Act, where a beneficiary of a trust estate is presently entitled to any income of the trust estate, the beneficiary shall be taken to continue to be presently entitled to that income notwithstanding that the income is paid to, or applied for the benefit of, the beneficiary. (2) For the purposes of this Act, where a beneficiary has a vested and indefeasible interest in any of the income of a trust estate but is not presently entitled to that income, the beneficiary shall be deemed to be presently entitled to that income of the trust estate. INCOME TAX ASSESSMENT ACT 1936 - SECT 95B Certain beneficiaries deemed not to be under legal disability For the purposes of this Act, a beneficiary of a trust estate who is presently entitled to a share of the income of the trust estate in the capacity of a trustee of another trust estate shall, in respect of his or her present entitlement to that share, be deemed not to be under a legal disability. INCOME TAX ASSESSMENT ACT 1936 - SECT 96 Trustees Except as provided in this Act, a trustee shall not be liable as trustee to pay income tax upon the income of the trust estate. INCOME TAX ASSESSMENT ACT 1936 - SECT 97 Beneficiary not under any legal disability (1) Subject to Division 6D, where a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate: (a) the assessable income of the beneficiary shall include: (i) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and (ii) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia; and (b) the exempt income of the beneficiary shall include: (i) so much of the individual interest of the beneficiary in the exempt income of the trust estate as is attributable to a period when the beneficiary was a resident; and (ii) so much of the individual interest of the beneficiary in the exempt income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia; except to the extent to which the exempt income to which that individual interest relates was taken into account in calculating the net income of the trust estate; and (c) the non-assessable non-exempt income of the beneficiary shall include: (i) so much of the individual interest of the beneficiary in the non-assessable non-exempt income of the trust estate as is attributable to a period when the beneficiary was a resident; and (ii) so much of the individual interest of the beneficiary in the non-assessable non-exempt income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia. (2) A reference in this section to income of a trust estate to which a beneficiary is presently entitled shall be read as not including a reference to income of a trust estate: (a) to which a beneficiary is deemed to be presently entitled by virtue of the operation of subsection 95A(2) where the beneficiary: (i) is a natural person; (ii) is a resident at the end of the year of income; (iii) is not, in respect of that income, a beneficiary in the capacity of a trustee of another trust estate; and (iv) is not a beneficiary to whom subsection 97A(1) or (1A) applies in relation to the year of income; or (b) to which a beneficiary is presently entitled where the beneficiary: (i) is a non-resident at the end of the year of income; (ii) is not a beneficiary to whom subsection (3) of this section or subsection 97A(1) or (1A) applies in relation to the year of income; and (iii) is not, in respect of that income, a beneficiary in the capacity of a trustee of another trust estate. (3) Where: (a) a beneficiary of a trust estate is presently entitled to a share of the income of the trust estate; (b) the beneficiary is a non-resident at the end of the year of income; and (c) the beneficiary is: (i) a body, association, fund or organization the income of which is exempt from tax by virtue of the operation of Subdivision 50-A or section 51-5, 51-10 or 51-30 of the Income Tax Assessment Act 1997; or (ii) an organization the income of which is exempt from tax by virtue of a regulation in force under the International Organisations (Privileges and Immunities) Act 1963; that beneficiary is, for the purposes of the application of this Division in relation to that beneficiary in relation to that year of income, a beneficiary to whom this subsection applies. INCOME TAX ASSESSMENT ACT 1936 - SECT 97A Beneficiaries who are owners of farm management deposits (1) Where a beneficiary who is under a legal disability: (a) is presently entitled to a share of the income of a trust estate derived during a year of income of the beneficiary; and (b) is the owner of a farm management deposit made during the year of income; this Division applies in relation to the beneficiary in relation to the year of income as if the beneficiary were not under any legal disability. (1A) Where a beneficiary who is deemed by subsection 95A(2) to be presently entitled to any income of a trust estate derived during a year of income of the beneficiary: (a) is not under a legal disability; and (b) is the owner of a farm management deposit made during the year of income; the beneficiary is, for the purposes of the application of this Division in relation to that beneficiary in relation to that year of income, a beneficiary to whom this subsection applies. Note: This section applies to certain beneficiaries as if they were individuals who are carrying on a primary production business: see subsections 393-25(3), (4), (5) and (6) of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 98 Liability of trustee (1) Where a beneficiary of a trust estate who is under a legal disability is presently entitled to a share of the income of the trust estate, the trustee of the trust estate shall be assessed and liable to pay tax in respect of: (a) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and (b) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia; as if it were the income of an individual and were not subject to any deduction. (2) Where a beneficiary of a trust estate: (a) is deemed to be presently entitled to a share of the income of the trust estate of a year of income by virtue of the operation of subsection 95A(2); (aa) is a natural person and is not, in respect of that share of the income of the trust estate, a beneficiary in the capacity of a trustee of another trust estate; (b) is not a beneficiary to whom subsection 97A(1) or (1A) applies in relation to the year of income; and (c) is not under a legal disability; the trustee of the trust estate shall be assessed and liable to pay tax in respect of: (d) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and (e) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia; as if it were the income of an individual and were not subject to any deduction. (2A) If: (a) a beneficiary of a trust estate who is presently entitled to a share of the income of the trust estate: (i) is a non-resident at the end of the year of income; and (ii) is not, in respect of that share of the income of the trust estate, a beneficiary in the capacity of a trustee of another trust estate; and (iii) is not a beneficiary to whom section 97A applies in relation to the year of income; and (iv) is not a beneficiary to whom subsection 97(3) applies; and (b) the trustee of the trust estate is not assessed and is not liable to pay tax under subsection (1) or (2) in respect of any part of that share of the net income of the trust estate; subsection (3) applies to the trustee in respect of: (c) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and (d) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia. (3) A trustee to whom this subsection applies in respect of an amount of net income is to be assessed and is liable to pay tax: (a) if the beneficiary is not a company--in respect of the amount of net income as if it were the income of an individual and were not subject to any deduction; or (b) if the beneficiary is a company--in respect of the amount of net income at the rate declared by the Parliament for the purposes of this paragraph. Note: If the trust estate's net income includes a net capital gain, and the beneficiary is a company, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee. (4) If: (a) a beneficiary of a trust estate (the first trust estate) who is presently entitled to a share of the income of the first trust estate: (i) is, in respect of that share of the income of the first trust estate, a beneficiary in the capacity of a trustee of another trust estate; and (ii) is not a beneficiary to whom subsection 97(3) applies; and (b) a trustee of the other trust estate is a non-resident at the end of the year of income; the trustee of the first trust estate is to be assessed and is liable to pay tax in respect of so much of that share of the net income of the first trust estate as is attributable to sources in Australia at the rate declared by the Parliament for the purposes of this subsection. Note: If the trust estate's net income includes a net capital gain, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee. INCOME TAX ASSESSMENT ACT 1936 - SECT 98A Non-resident beneficiaries assessable in respect of certain income (1) Where the trustee of a trust estate is assessed and is liable to pay tax in respect of the whole or a part of a share of the net income of a trust estate of a year of income in pursuance of subsection 98(3), the assessable income of the beneficiary who is presently entitled to that share of the income of the trust estate shall include: (a) so much of the individual interest of the beneficiary in the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and (b) so much of the individual interest of the beneficiary in the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia. (2) Where the trustee of a trust estate is assessed and is liable to pay tax in respect of the whole or a part of a share of the net income of a trust estate of a year of income in pursuance of subsection 98(3): (a) there shall be deducted from the income tax assessed against the beneficiary the amount (in this subsection referred to as the relevant amount) of the tax paid by the trustee in respect of the beneficiary's interest in the net income of the trust estate; and (b) if the relevant amount is greater than the amount of the income tax assessed against the beneficiary--the Commissioner shall pay to the beneficiary an amount equal to the difference between those 2 amounts. Note: See Division 3A of Part IIB of, and section 105-65 in Schedule 1 to, the Taxation Administration Act 1953 for the rules about how the Commissioner must pay the entity. Division 3 of Part IIB allows the Commissioner to apply the amount owing as a credit against tax debts that the entity owes to the Commonwealth. (3) If a beneficiary of a trust estate who is presently entitled to a share of the income of the trust estate: (a) is not, in respect of that share of the income of the trust estate, a beneficiary in the capacity of a trustee of another trust estate; and (b) is a non-resident at the end of the year of income; the assessable income of the beneficiary includes so much of the individual interest of the beneficiary in the net income of the trust estate as is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and is liable to pay tax under subsection 98(4). (4) To the extent that subsection (3) includes an amount in the assessable income of a beneficiary of a trust estate, the amount is not included by subsection (1) or section 100. INCOME TAX ASSESSMENT ACT 1936 - SECT 98B Deduction from beneficiary's tax (1) This section applies to a beneficiary of a trust estate for a year of income if the assessable income of the beneficiary of the year of income includes an amount covered by subsection (2). (2) This subsection covers an amount (the assessable amount) if: (a) the amount is included in the assessable income of the beneficiary under one of the following: (i) section 97; (ii) subsection 98A(3); (iii) section 100; and (b) the amount does not represent income of the trust estate to which the beneficiary is presently entitled in the capacity of a trustee of another trust estate; and (c) the amount is reasonably attributable to an amount (the taxed net income) in respect of which the trustee of another trust estate is assessed and liable to pay tax (the subsection 98(4) tax) under subsection 98(4). (3) A proportion of the subsection 98(4) tax is to be deducted from the income tax assessed against the beneficiary of the year of income. That proportion is the same as the proportion of the taxed net income that gave rise to the assessable amount. Note: To work out the proportion of the taxed net income that gives rise to assessable income for a beneficiary of another trust estate, you would have regard to the share of the income of each interposed trust estate to which a beneficiary (including a beneficiary in the capacity of a trustee) is presently entitled. Example: The P Trust has two non-resident trustee beneficiaries, the trustees of the S Trust and the H Trust. Each trustee is presently entitled to a 1/2 share of the income of the P Trust. The net income of the P Trust is $100,000. The trustee of the P Trust pays tax of $22,500 under subsection 98(4) in respect of the trustee of the S Trust's interest and $22,500 under subsection 98(4) in respect of the trustee of the H Trust's interest. The S Trust has a non-resident beneficiary, G, who is presently entitled to a 1/3 share of the income of the S Trust. The net income of the S Trust is $30,000. Subsection 98A(3) includes $10,000 in G's assessable income. The taxed net income of the P trust is $50,000. The proportion of that taxed net income that gave rise to the $10,000 being included in G's assessable income is 1/3.This is because G had a 1/3 share of the income of the S Trust. $7,500 (1/3 x $22,500) is deducted from the income tax assessed against G. If section 97, subsection 98A(3) or section 100 also includes amounts in the assessable income of any beneficiaries of the H Trust, each of those beneficiaries also works out the amount of the deduction against the income tax assessed against them in the same way. (4) If the amount to be deducted under subsection (3) is greater than the amount of the income tax assessed against the beneficiary, the Commissioner must pay to the beneficiary an amount equal to the difference between those 2 amounts. Note: See Division 3A of Part IIB of, and section 105-65 in Schedule 1 to, the Taxation Administration Act 1953 for the rules about how the Commissioner must pay the entity. Division 3A of Part IIB allows the Commissioner to apply the amount owing as a credit against tax debts that the entity owes to the Commonwealth. INCOME TAX ASSESSMENT ACT 1936 - SECT 99 Certain trust income to be taxed as income of an individual (1) This section applies in relation to a trust estate in relation to a year of income only if section 99A does not apply in relation to that trust estate in relation to that year of income. (2) Where there is no part of the net income of a resident trust estate: (a) that is included in the assessable income of a beneficiary of the trust estate in pursuance of section 97; (b) in respect of which the trustee of the trust estate is assessed and liable to pay tax in pursuance of section 98; or (c) that represents income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia; the trustee shall be assessed and is liable to pay tax on the net income of the trust estate as if it were the income of an individual who was a resident and were not subject to any deduction. (3) Where there is a part of the net income of a resident trust estate: (a) that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97; (b) in respect of which the trustee is not assessed and is not liable to pay tax in pursuance of section 98; and (c) that does not represent income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia; the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate as if it were the income of an individual who was a resident and were not subject to any deduction. (4) Where there is no part of the net income of a trust estate that is not a resident trust estate: (a) that is included in the assessable income of a beneficiary of the trust estate in pursuance of section 97; (b) in respect of which the trustee of the trust estate is assessed and liable to pay tax in pursuance of section 98; or (c) that is attributable to sources out of Australia; the trustee shall be assessed and is liable to pay tax on the net income of the trust estate as if it were the income of an individual and were not subject to any deduction. (5) Where there is a part of the net income of a trust estate that is not a resident trust estate: (a) that is attributable to sources in Australia; (b) that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97; and (c) in respect of which the trustee of the trust estate is not assessed and is not liable to pay tax in pursuance of section 98; the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate as if it were the income of an individual and were not subject to any deduction. INCOME TAX ASSESSMENT ACT 1936 - SECT 99A Certain trust income to be taxed at special rate (2) This section does not apply in relation to a trust estate in relation to a year of income, being a trust estate: (a) that resulted from: (i) a will, a codicil or an order of a court that varied or modified the provisions of a will or a codicil; or (ii) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; (b) that consists of the property of a person who has become bankrupt, being property that has vested in The Official Receiver in Bankruptcy, or in a registered trustee, under the Bankruptcy Act 1966; (c) that is administered under Part XI of the Bankruptcy Act 1966; or (d) that consists of property of a kind referred to in paragraph 102AG(2)(c); if the Commissioner is of the opinion that it would be unreasonable that this section should apply in relation to that trust estate in relation to that year of income. (3) In forming an opinion for the purposes of subsection (2): (a) the Commissioner shall have regard to the circumstances in which and the conditions, if any, upon which, at any time, property (including money) was acquired by or lent to the trust estate, income was derived by the trust estate, benefits were conferred on the trust estate or special rights or privileges were conferred on or attached to property of the trust estate, whether or not the rights or privileges have been exercised; (b) if a person who has, at any time, directly or indirectly: (i) transferred or lent any property (including money) to, or conferred any benefits on, the trust estate; or (ii) conferred or attached any special right or privilege, or done any act or thing, either alone or together with another person or persons, that has resulted in the conferring or attaching of any special right or privilege, on or to property of the trust estate whether or not the right or privilege has been exercised; has not, at any time, directly or indirectly: (iii) transferred or lent any property (including money) to, or conferred any benefits on, another trust estate; or (iv) conferred or attached any special right or privilege, or done any act or thing, either alone or together with another person or persons, that has resulted in the conferring or attaching of any special right or privilege, on or to property of another trust estate, whether or not the right or privilege has been exercised; the Commissioner shall have regard to that fact; and (c) the Commissioner shall have regard to such other matters, if any, as he or she thinks fit. (3A) For the purposes of the application of paragraph (3)(a) in relation to a trust estate of the kind referred to in paragraph (2)(a), a reference in that first-mentioned paragraph to the trust estate shall be read as including a reference to the person as a result of whose death the trust estate arose. (4) Where there is no part of the net income of a resident trust estate: (a) that is included in the assessable income of a beneficiary of the trust estate in pursuance of section 97; (b) in respect of which the trustee of the trust estate is assessed and liable to pay tax in pursuance of section 98; or (c) that represents income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia; the trustee shall be assessed and is liable to pay tax on the net income of the trust estate at the rate declared by the Parliament for the purposes of this section. Note: If the trust estate's net income includes a net capital gain, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee. (4A) Where there is a part of the net income of a resident trust estate: (a) that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97; (b) in respect of which the trustee is not assessed and is not liable to pay tax in pursuance of section 98; and (c) that does not represent income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia; the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate at the rate declared by the Parliament for the purposes of this section. Note: If the trust estate's net income includes a net capital gain, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee. (4B) Where there is no part of the net income of a trust estate that is not a resident trust estate: (a) that is included in the assessable income of a beneficiary of the trust estate in pursuance of section 97; (b) in respect of which the trustee of the trust estate is assessed and liable to pay tax in pursuance of section 98; or (c) that is attributable to sources out of Australia; the trustee shall be assessed and is liable to pay tax on the net income of the trust estate at the rate declared by the Parliament for the purposes of this section. Note: If the trust estate's net income includes a net capital gain, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee. (4C) Where there is a part of the net income of a trust estate that is not a resident trust estate: (a) that is attributable to sources in Australia; (b) that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97; and (c) in respect of which the trustee of the trust estate is not assessed and is not liable to pay tax in pursuance of section 98; the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate at the rate declared by the Parliament for the purposes of this section. Note: If the trust estate's net income includes a net capital gain, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee. INCOME TAX ASSESSMENT ACT 1936 - SECT 99B Receipt of trust income not previously subject to tax (1) Where, at any time during a year of income, an amount, being property of a trust estate, is paid to, or applied for the benefit of, a beneficiary of the trust estate who was a resident at any time during the year of income, the assessable income of the beneficiary of the year of income shall, subject to subsection (2), include that amount. (2) The amount that, but for this subsection, would be included in the assessable income of a beneficiary of a trust estate under subsection (1) by reason that an amount, being property of the trust estate, was paid to, or applied for the benefit of, the beneficiary shall be reduced by so much (if any) of the amount, as represents: (a) corpus of the trust estate (except to the extent to which it is attributable to amounts derived by the trust estate that, if they had been derived by a taxpayer being a resident, would have been included in the assessable income of that taxpayer of a year of income); (b) an amount that, if it had been derived by a taxpayer being a resident, would not have been included in the assessable income of that taxpayer of a year of income; (ba) an amount that is non-assessable non-exempt income of the beneficiary because of section 802-17 of the Income Tax Assessment Act 1997; (c) an amount: (i) that is or has been included in the assessable income of the beneficiary in pursuance of section 97; or (ii) in respect of which the trustee of the trust estate is or has been assessed and liable to pay tax in pursuance of section 98, 99 or 99A; or (iii) that is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and is liable to pay tax under subsection 98(4); (d) an amount that is or has been included in the assessable income of any taxpayer (other than a company) under section 102AAZD; or (e) if the beneficiary is a company--an amount that is or has been included in the assessable income of the beneficiary under section 102AAZD. (2A) An amount that is not included in a beneficiary's assessable income because of paragraph (2)(d) or (e) is not assessable income and is not exempt income. (3) In paragraphs (2)(d) and (e): "company" means a company other than a company in the capacity of a trustee. INCOME TAX ASSESSMENT ACT 1936 - SECT 99C Determining whether property is applied for benefit of beneficiary (1) In determining for the purposes of section 99B whether any amount has been applied for the benefit of a beneficiary of a trust estate, regard shall be had to all benefits that have accrued at any time to the beneficiary (whether or not the beneficiary had rights at law or in equity in or to those benefits) as a result of the derivation of, or in relation to, that amount, irrespective of the nature or form of the benefits. (2) Without limiting the generality of subsection (1), an amount shall be taken, for the purposes of section 99B, to have been applied for the benefit of a beneficiary if: (a) whether by re-investment, accumulation, capitalization or otherwise, and whether directly or indirectly, the amount has been so dealt with that it will, at a future time, and whether in the form of income or not, enure for the benefit of the beneficiary; (b) the derivation of the amount has operated to increase the value to the beneficiary of any property or rights of any kind held by or for the benefit of the beneficiary; (c) the beneficiary has received or become entitled to receive any benefit (including a loan or a repayment, in whole or in part, of a loan, or any other payment of any kind) provided directly or indirectly out of that amount or out of property or money that was available for the purpose by reason of the derivation of the amount; (d) the beneficiary has power, by means of the exercise by the beneficiary of any power of appointment or revocation or otherwise, to obtain, whether with or without the consent of any other person, the beneficial enjoyment of the amount; or (e) the beneficiary has directly or indirectly assigned to another person his or her interest in the amount or is able, in any manner whatsoever, and whether directly or indirectly, to control the application of that interest. INCOME TAX ASSESSMENT ACT 1936 - SECT 99D Refund of tax to non-resident beneficiary (1) Where: (a) a trustee of a trust estate has been assessed and was liable to pay tax in pursuance of subsection 99(2) or (3) or subsection 99A(4) or (4A) in respect of the net income or a part of the net income of the trust estate of a year of income (in this subsection referred to as the relevant year of income), being the year of income that commenced on 1 July 1978 or a subsequent year of income; (b) the amount (in this subsection referred to as the relevant tax amount) of the tax so assessed in respect of that net income or that part of that net income has been paid; (c) the trustee of the trust estate has, in accordance with the terms of the trust, paid an amount (in this subsection referred to as the distributed amount) of the income of the trust estate of the relevant year of income to a beneficiary of the trust estate; (d) before the expiration of 60 days after the date on which the payment was made, or within such further period as the Commissioner allows, the beneficiary, by writing signed by or on behalf of the beneficiary, makes an application to the Commissioner for a refund under this section in relation to the distributed amount; and (e) the beneficiary satisfies the Commissioner that the whole or a part (which whole or part, as the case may be, is in this subsection referred to as the non-Australian distributed amount) of the distributed amount: (i) is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia; (ii) was taken into account in calculating the net income of the trust estate of the relevant year of income; and (iii) is not income that, by the operation of section 100A, is deemed not to have been paid to or applied for the benefit of the beneficiary or to be income to which the beneficiary is not presently entitled; the Commissioner shall, subject to subsection (2), refund to the beneficiary so much (if any) of the relevant tax amount as is attributable to the non-Australian distributed amount, reduced by so much of any refund or credit to which the trustee is or was entitled in respect of the relevant tax amount as is attributable to the non-Australian distributed amount. (2) The Commissioner may refuse to make a refund of tax in relation to an amount paid to a beneficiary of a trust estate if the Commissioner considers that the whole or a part of that amount was paid to the beneficiary by the trustee for the purpose or for purposes that included the purpose of enabling the beneficiary to become entitled to a refund of tax under this section in relation to that amount. INCOME TAX ASSESSMENT ACT 1936 - SECT 99E Later trust not taxed on income already taxed under subsection 98(4) Sections 98, 99 and 99A do not apply to so much of the net income of a trust estate of a year of income as is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and is liable to pay tax under subsection 98(4). INCOME TAX ASSESSMENT ACT 1936 - SECT 99G Amounts covered by withholding requirement Subsection 98(4) does not apply to so much of the net income of a trust estate as represents income to which a beneficiary is presently entitled and gives rise to an amount from which an entity is required to withhold an amount under Subdivision 12-H in Schedule 1 to the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 99H Late payments (1) This section applies if: (a) a beneficiary of a trust estate that is a managed investment trust is presently entitled to a share of the income of the trust estate of a year of income; and (b) the beneficiary is a non-resident at the end of the year of income; and (c) all or part of that share of the net income of the trust estate (the late amount) has not been paid to the beneficiary by the end of the period applicable under subsection 12-405(4) in Schedule 1 to the Taxation Administration Act 1953; and Note: That subsection requires payments to be made before the end of 3 months after the end of the relevant year of income or within a longer period allowed by the Commissioner. (d) if the late amount had been paid to the beneficiary within that period, the payment would have been a fund payment made by the trustee of the managed investment trust. (2) This Division applies as if that portion of the beneficiary's income that represents the late amount were income to which no beneficiary was presently entitled. (3) In working out the net income of the trust estate for the year of income for the purposes of subsection (1), disregard these amounts (excluded amounts): (a) a dividend (as defined in Division 11A of Part III) that is subject to, or exempted from, a requirement to withhold under Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953; (b) interest (as so defined) that is subject to, or exempted from, such a requirement; (c) a royalty that is subject to, or exempted from, such a requirement; (d) a capital gain or capital loss from a CGT event that happens in relation to a CGT asset that is not taxable Australian property; (e) amounts that are not from a source in Australia; and disregard deductions relating to excluded amounts. INCOME TAX ASSESSMENT ACT 1936 - SECT 100 Beneficiary assessable in respect of certain trust income (1) The assessable income of any beneficiary who: (a) is under a legal disability or is deemed to be presently entitled to any of the income of a trust estate by virtue of the operation of subsection 95A(2); and (b) is a beneficiary in more than one trust estate or derives income from any other source; shall include: (c) so much of the individual interest of the beneficiary in the net income of the trust estate or of each of the trust estates as is attributable to a period when the beneficiary was a resident; and (d) so much of the individual interest of the beneficiary in the net income of the trust estate or of each of the trust estates as is attributable to a period when the beneficiary was not a resident and is also attributed to sources in Australia. Note: An amount is not included in assessable income under this section to the extent that subsection 98A(3) already includes it: see subsection 98A(4). (1AA) If an amount is included in the assessable income of a beneficiary of a trust estate because of Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997, for the purposes of paragraph (1)(b), treat the beneficiary as deriving income from another source. (1A) If: (a) a beneficiary in a trust estate is under a legal disability or is deemed to be presently entitled to any of the income of the trust estate by virtue of the operation of subsection 95A(2); and (b) the beneficiary is not a beneficiary in any other trust estate and does not derive income from any other source; and (c) the beneficiary would receive a refund of tax offsets under Division 67 of the Income Tax Assessment Act 1997 for a particular year of income if the following amounts were included in the assessable income of the beneficiary for that year: (i) so much of the individual interest of the beneficiary in the net income of the trust estate for that year as is attributable to a period when the beneficiary was a resident; (ii) so much of the individual interest of the beneficiary in the net income of the trust estate for that year as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia; then those amounts are included in the assessable income of the beneficiary for that year. (1B) If a beneficiary in a trust estate who is under a legal disability or is deemed to be presently entitled to any of the income of the trust estate by virtue of the operation of subsection 95A(2): (a) is a resident at the end of the year of income; and (b) is not a beneficiary in any other trust estate and does not derive income from any other source; the assessable income of the beneficiary includes so much of the individual interest of the beneficiary in the net income of the trust estate as is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and is liable to pay tax under subsection 98(4). Note 2: A credit is available under section 98B for an appropriate part of the subsection 98(4) tax. Note 3: An amount is not included in assessable income under this section to the extent that subsection 98A(3) already includes it: see subsection 98A(4). (1C) If a beneficiary in a trust estate who is under a legal disability or is deemed to be presently entitled to any of the income of the trust estate by virtue of the operation of subsection 95A(2): (a) is a resident at the end of the year of income; and (b) is not a beneficiary in any other trust estate and does not derive income from any other source; the assessable income of the beneficiary includes so much of the individual interest of the beneficiary in the net income of the trust estate as is represented by or reasonably attributable to a payment from which an entity was required to withhold an amount under Subdivision 12-H in Schedule 1 to the Taxation Administration Act 1953. Note: A credit is available under section 18-50 in Schedule 1 to the Taxation Administration Act 1953 for an appropriate part of the amount withheld. (2) There shall be deducted from the income tax assessed against a beneficiary to whom subsection (1) or (1A) applies (or a beneficiary under a legal disability whose assessable income is increased as a result of Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997) the tax paid or payable by any trustee in respect of that beneficiary's interest in the net income of the trust estate. (3) However, an amount of tax is not to be deducted under subsection (2) from the income tax assessed against a beneficiary to the extent that the amount is deducted under section 98B from the income tax assessed against the beneficiary. INCOME TAX ASSESSMENT ACT 1936 - SECT 100AA Failure to pay or notify present entitlement of exempt entity (1) Subsection (3) applies if: (a) an exempt entity is presently entitled to an amount of the income of a trust estate; and (b) the exempt entity is not an exempt Australian government agency (within the meaning of the Income Tax Assessment Act 1997); and (c) at the end of 2 months after the end of the relevant income year, the trustee has failed to notify the exempt entity in writing of the present entitlement. (2) For the purposes of this section, treat the trustee as giving the exempt entity notice in writing of the present entitlement at a time to the extent that the trustee pays the exempt entity the amount of the present entitlement at that time. (3) For the purposes of this Act, treat the exempt entity as not being presently entitled, and having never been presently entitled, to the amount mentioned in paragraph (1)(a) of the income of the trust estate, to the extent that the trustee failed to notify the exempt entity of that amount as mentioned in paragraph (1)(c). (4) However, subsection (3) does not apply if the Commissioner decides that the failure mentioned in paragraph (1)(c) of the trustee should be disregarded. (5) In making a decision under subsection (4) (or refusing to make such a decision), the Commissioner must have regard to the following: (a) the circumstances that led to the failure mentioned in paragraph (1)(c); (b) the extent to which the trustee has taken action to try to correct the failure and if so, how quickly that action was taken; (c) whether this section has operated previously in relation to the trustee, and if so, the circumstances in which this occurred; (d) any other matters that the Commissioner considers relevant. (6) If subsection (3) applies, for the purposes of any application of section 99A in relation to the trust estate in relation to the relevant year of income, treat the trust estate as a resident trust estate. (7) This section does not apply in relation to a trust estate that: (a) is a managed investment trust (within the meaning of the Income Tax Assessment Act 1997) in relation to a year of income; or (b) is treated in the same way as a managed investment trust in relation to a year of income for the purposes of Division 275 of that Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 100AB Adjusted Division 6 percentage exceeding benchmark percentage: present entitlement of exempt entity (1) Subsection (2) applies if: (a) an exempt entity is presently entitled to an amount of the income of a trust estate; and (b) the exempt entity is not an exempt Australian government agency (within the meaning of the Income Tax Assessment Act 1997); and (c) the exempt entity's adjusted Division 6 percentage of the income of the trust estate exceeds the benchmark percentage determined under subsection (3). (2) Subject to subsection 100AA(3), for the purposes of this Act, treat the exempt entity as not being presently entitled, and having never been presently entitled, to the amount of the income of the trust estate mentioned in paragraph (1)(a) of this section, to the extent that ensures that the exempt entity's adjusted Division 6 percentage of the income of the trust estate equals the benchmark percentage determined under subsection (3) of this section. (3) Determine the benchmark percentage by working out the following fraction (expressed as a percentage): (4) A trust estate's adjusted net income for a year of income is its net income for that year of income, with the following adjustments: (a) firstly, in determining that net income, disregard any capital gain or franked distribution to the extent to which a beneficiary of the trust estate or the trustee is specifically entitled to that gain or distribution; (b) next, in determining the net capital gain (if any) of the trust for the year of income, disregard steps 3 and 4 of the method statement in subsection 102-5(1) (CGT discount and small business concessions); (c) next, reduce that net income by amounts (if any) that do not represent net accretions of value to the trust estate in that year of income (other than amounts included in that net income under Part IVA). (5) Subsection (2) does not apply in relation to a trust estate in relation to a year of income if the Commissioner is of the opinion that it would be unreasonable that the subsection should apply in relation to that trust estate in relation to that year of income. (6) In forming an opinion for the purposes of subsection (5), the Commissioner must consider the following matters: (a) the circumstances that led to the exempt entity's adjusted Division 6 percentage exceeding the benchmark percentage determined under subsection (3); (b) the extent to which the exempt entity's adjusted Division 6 percentage exceeds that benchmark percentage; (c) the extent to which the exempt entity actually received distributions from the trust estate in respect of the year of income; (d) the extent to which other beneficiaries of the trust estate were entitled to receive distributions of, or otherwise benefit from, amounts representing the adjusted net income of the trust estate; (e) any other matters that the Commissioner considers relevant. (7) If subsection (2) applies, for the purposes of any application of section 99A in relation to the trust estate in relation to the relevant year of income, treat the trust estate as a resident trust estate. (8) This section does not apply in relation to a trust estate that: (a) is a managed investment trust (within the meaning of the Income Tax Assessment Act 1997) in relation to a year of income; or (b) is treated in the same way as a managed investment trust in relation to a year of income for the purposes of Division 275 of that Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 100A Present entitlement arising from reimbursement agreement (1) Where: (a) apart from this section, a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate; and (b) the present entitlement of the beneficiary to that share or to a part of that share of the income of the trust estate (which share or part, as the case may be, is in this subsection referred to as the relevant trust income) arose out of a reimbursement agreement or arose by reason of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement; the beneficiary shall, for the purposes of this Act, be deemed not to be, and never to have been, presently entitled to the relevant trust income. (2) Where: (a) apart from this section, a beneficiary of a trust estate who is not under any legal disability would, by reason that income of the trust estate was paid to, or applied for the benefit of, the beneficiary, be deemed to be presently entitled to income of the trust estate; and (b) that income or a part of that income (which income or part, as the case may be, is in this subsection referred to as the relevant trust income) was paid to, or applied for the benefit of, the beneficiary as a result of a reimbursement agreement or as a result of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement; the relevant trust income shall, for the purposes of this Act, be deemed not to have been paid to, or applied for the benefit of, the beneficiary. (3) In the preceding provisions of this section: (a) a reference to income of a trust estate to which a beneficiary is, apart from this section, presently entitled shall be read as not including a reference to: (i) income of the trust estate to which the beneficiary is presently entitled in the capacity of a trustee of another trust estate, being income that was paid to, or applied for the benefit of, the beneficiary before 6 March 1980; or (ii) income that was paid to, or applied for the benefit of, the beneficiary before 12 June 1978; and (b) a reference to income of a trust estate that was paid to, or applied for the benefit of, a beneficiary of the trust estate shall be read as not including a reference to: (i) income of the trust estate that, before 6 March 1980, was paid to, or applied for the benefit of, the beneficiary in the capacity of a trustee of another trust estate; or (ii) income of the trust estate that was paid to, or applied for the benefit of, the beneficiary before 12 June 1978. (3A) Where: (a) apart from this section, a beneficiary (in this subsection referred to as the trustee beneficiary) of a trust estate is presently entitled to a share of the income of the trust estate in the capacity of a trustee of another trust estate (in this subsection referred to as the interposed trust estate); (b) apart from this subsection, the trustee beneficiary would, by virtue of subsection (1), be deemed not to be, and never to have been, presently entitled to that share or a part of that share of the income of the first-mentioned trust estate (which share or part is in this subsection referred to as the relevant trust income); and (c) apart from this section, a beneficiary of the interposed trust estate is or was, or beneficiaries of the interposed trust estate are or were, presently entitled, or deemed to be presently entitled, to any income of the interposed trust estate (in this subsection referred to as the distributable trust income) that is attributable to the relevant trust income; subsection (1) does not apply, and shall be deemed never to have applied, in relation to the trustee beneficiary, in relation to any part of the relevant trust income to which the distributable trust income is attributable. (3B) Where: (a) apart from this section, a beneficiary (in this subsection referred to as the trustee beneficiary) of a trust estate would, by reason that income of the trust estate was paid to, or applied for the benefit of, the trustee beneficiary, be deemed to be presently entitled to income of the trust estate in the capacity of a trustee of another trust estate (in this subsection referred to as the interposed trust estate); (b) apart from this subsection, that income or a part of that income (which income or part is in this subsection referred to as the relevant trust income) would, by virtue of subsection (2), be deemed not to have been paid to, or applied for the benefit of, the trustee beneficiary; and (c) apart from this section, a beneficiary of the interposed trust estate is or was, or beneficiaries of the interposed trust estate are or were, presently entitled, or deemed to be presently entitled, to any income of the interposed trust estate (in this subsection referred to as the distributable trust income) that is attributable to the relevant trust income; subsection (2) does not apply, and shall be deemed never to have applied, in relation to the trustee beneficiary, in relation to any part of the relevant trust income to which the distributable trust income is attributable. (3C) A reference in paragraph (3A)(c) or (3B)(c) to a beneficiary of a trust estate shall be read as not including a reference to a beneficiary who is under a legal disability. (4) Where subsection (1) or (2) applies in relation to any income of a trust estate of a year of income: (a) in the application of this Division in relation to the trust estate in relation to the year of income, section 99A shall be read as if subsections (2), (3) and (3A) of that section were omitted; and (b) for the purposes of any application of section 99A in relation to the trust estate in relation to the year of income, the trust estate shall be deemed to be a resident trust estate. (5) For the purposes of subsection (1), but without limiting the generality of that subsection, where: (a) a reimbursement agreement was entered into at or after the time when a person became a beneficiary of a trust estate (whether the person became a beneficiary of the trust estate before or after the commencement of this section); and (b) the amount (in this subsection referred to as the increased amount) of the share of the income of the trust estate to which the beneficiary is presently entitled exceeds the amount (in this subsection referred to as the original amount) of the income of the trust estate to which the beneficiary would have been, or could reasonably be expected to have been, presently entitled if the reimbursement agreement had not been entered into or if an act, transaction or circumstance that occurred in connection with, or as a result of, the reimbursement agreement had not occurred; the present entitlement of the beneficiary to so much of the increased amount as exceeds the original amount shall be taken to have arisen out of the reimbursement agreement. (6) For the purposes of subsection (2), but without limiting the generality of that subsection, where: (a) a reimbursement agreement was entered into at or after the time when a person became a beneficiary of a trust estate (whether the person became a beneficiary of the trust estate before or after the commencement of this section); and (b) income of the trust estate was paid to, or applied for the benefit of, the beneficiary and the amount (in this subsection referred to as the increased amount) of that income exceeds the amount (in this subsection referred to as the original amount) that would have been, or could reasonably be expected to have been, paid to, or applied for the benefit of, the beneficiary if the reimbursement agreement had not been entered into or if an act, transaction or circumstance that occurred in connection with, or as a result of, the reimbursement agreement had not occurred; so much of the increased amount as exceeds the original amount shall be taken to be income of the trust estate that was paid to, or applied for the benefit of, the beneficiary as a result of the reimbursement agreement. (6A) Where: (a) subsection (1) or (2) applies, or would but for subsection (3A) or (3B) apply, in relation to a beneficiary of a trust estate in relation to a reimbursement agreement in relation to any income of the trust estate; and (b) as part of, under or in connection with the reimbursement agreement, the beneficiary incurred or incurs a loss or outgoing after 5 March 1980 in respect of which a deduction has been allowed or would, but for this subsection, be allowable; then, notwithstanding any other provision of this Act, a deduction shall be deemed not to have been, or not to be, allowable, as the case may be, in respect of that loss or outgoing. (6B) Where subsection (6A) deems a deduction not to have been, or not to be, allowable in respect of a loss or outgoing incurred by a taxpayer in the acquisition of property that, for the purposes of the application of this Act and the Income Tax Assessment Act 1997 in relation to the taxpayer is or was trading stock, then, notwithstanding any other provision of this Act or that Act, the cost or cost price of that property, for the purposes of the application of Subdivision B of Division 2 of Part III of this Act or Division 70 (Trading stock) or 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the taxpayer, shall be taken to be, and at all times to have been, nil. (7) Subject to subsection (8), a reference in this section, in relation to a beneficiary of a trust estate, to a reimbursement agreement shall be read as a reference to an agreement, whether entered into before or after the commencement of this section, that provides for the payment of money or the transfer of property to, or the provision of services or other benefits for, a person or persons other than the beneficiary or the beneficiary and another person or other persons. (8) A reference in subsection (7) to an agreement shall be read as not including a reference to an agreement that was not entered into for the purpose, or for purposes that included the purpose, of securing that a person who, if the agreement had not been entered into, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the agreement had not been entered into. (9) For the purposes of subsection (8), an agreement shall be taken to have been entered into for a particular purpose, or for purposes that included a particular purpose, if any of the parties to the agreement entered into the agreement for that purpose, or for purposes that included that purpose, as the case may be. (10) A reference in subsection (7) to the payment of money to a person or persons shall be read as including a reference to the payment of money to a person or persons by way of loan. (11) A reference in this section to a person shall be read as including a reference to a person in the capacity of a trustee. (12) For the purposes of this section, an agreement that provides for a person to release, abandon, fail to demand payment of or postpone payment of, a debt owed by another person shall be deemed to be an agreement that provides for the payment of money to that other person. (13) In this section: "agreement" means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings, but does not include an agreement, arrangement or understanding entered into in the course of ordinary family or commercial dealing.Note: Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of the definition of agreement. "property" includes a chose in action and also includes an estate, interest, right or power, whether at law or in equity, in or over property. INCOME TAX ASSESSMENT ACT 1936 - SECT 101 Discretionary trusts For the purposes of this Act, where a trustee has a discretion to pay or apply income of a trust estate to or for the benefit of specified beneficiaries, a beneficiary in whose favour the trustee exercises the trustee's discretion shall be deemed to be presently entitled to the amount paid to the beneficiary or applied for the beneficiary's benefit by the trustee in the exercise of that discretion. INCOME TAX ASSESSMENT ACT 1936 - SECT 101A Income of deceased received after death (1) Where in the year of income, the trustee of the estate of a deceased person receives any amount which would have been assessable income in the hands of the deceased person if it had been received by him or her during his or her lifetime, that amount shall be included in the assessable income of that year of the trust estate and shall be deemed to be income to which no beneficiary is presently entitled. (2) Subsection (1) does not apply in relation to an amount received by the trustee of the estate of a deceased person to the extent to which, if it had been received by the deceased person during his or her lifetime, it would have been included in the assessable income of that person by virtue of section 83-10 or 83-80 of the Income Tax Assessment Act 1997. (3) To avoid doubt, if in the year of income an amount is included in the assessable income of a deceased taxpayer under Division 82 or 302 of the Income Tax Assessment Act 1997 in respect of a payment received by the trustee of the estate of the deceased taxpayer, that amount shall be included in the assessable income of that year of income of the trust estate. (4) This section does not apply in relation to any amount received by the trustee of the estate of a deceased person if the amount is a farm management deposit, of which the deceased person was the owner, that has become repayable. INCOME TAX ASSESSMENT ACT 1936 - SECT 102 Revocable trusts (1) Where a person has created a trust in respect of any income or property (including money) and: (a) the person has power, whenever exercisable, to revoke or alter the trusts so as to acquire a beneficial interest in the income derived by the trustee during the year of income, or the property producing that income, or any part of that income or property; or (b) income is, under that trust, in the year of income, payable to or accumulated for, or applicable for the benefit of a child or children of that person who is or are under the age of 18 years; the Commissioner may assess the trustee to pay income tax, under this section, and the trustee shall be liable to pay the tax so assessed. (2) The amount of the tax payable in pursuance of this section shall be the amount by which the tax actually payable on the person's own taxable income by the person who created the trust is less than the tax which would have been payable by the person if he or she had received, in addition to any other income derived by the person, so much of the net income of the trust estate as: (a) is attributable to the property in which he or she has power to acquire the beneficial interest; (b) represents the income, or the part of the income, in which he or she has power to acquire the beneficial interest; or (c) is payable to or accumulated for, or applicable for the benefit of, a child or children of that person who is or are under the age of 18 years. (2A) Where any property the subject of a trust has been converted into other property, this section shall apply in the same way as if the trust had originally been created in respect of that other property. (2B) In the application of subsection (2) in determining the amount of tax that is payable by a trustee of a trust estate in pursuance of this section, the reference in that subsection to the net income of the trust estate shall be read as a reference to that net income reduced by: (a) so much (if any) of that net income as is attributable to a period when the person who created the trust was not a resident and is also attributable to sources out of Australia; and (b) so much (if any) of that net income as is not covered by paragraph (a) and represents an amount included in the assessable income of any taxpayer under section 102AAZD. (3) Where this section is applied to the assessment of the income of a trust estate or part thereof derived in the year of income, no beneficiary shall be assessed in his or her individual capacity in respect of his or her individual interest in the income or part to which this section has been so applied, and the trustee shall not be assessed in respect of that income or part otherwise than under this section. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAA Object of Division The object of this Division is to set out rules relating to the following: (a) the payment of interest on distributions from certain non-resident trust estates (Subdivision B); (b) the winding-up of certain non-resident trust estates in existence on 12 April 1989 (Subdivision C); (c) an accruals system of taxation of certain non-resident trust estates (Subdivision D). INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAB Interpretation In this Division, unless the contrary intention appears: 1 July 1990 net worth, in relation to a trust estate, means the market value, as at the beginning of 1 July 1990, of the assets of the trust estate, reduced by the liabilities of the trust estate as at the beginning of that day. "accounts" has the same meaning as in Part X. "actual transfer", in relation to property or services, means a transfer of the property or services other than a transfer that is taken to have been made because of subsection 102AAK(1), (2), (5), (6), (8), (10) or (11). "arm's length amount", in relation to an actual transfer of property or services to a trust estate, means the amount that the trustee could reasonably be expected to have been required to pay to obtain the property or the services concerned from the transferor under a transaction where the parties to the transaction are dealing with each other at arm's length in relation to the transaction. "associate" has the same meaning as in Part X. "attributable income", in relation to a trust estate, has the meaning given by section 102AAU. "attributable taxpayer" has the meaning given by section 102AAT. "attribution account payment" has the same meaning as in Part X. "attribution debit" has the same meaning as in Part X. "Australian entity" has the same meaning as in Part X. "Australian trust" has the same meaning as in Part X. "base interest rate" for a day has the same meaning as in section 8AAD of the Taxation Administration Act 1953. "CFC" has the same meaning as in Part X. "controlled foreign trust" has the same meaning as in Part X. "corporate unit trust", in relation to a year of income, means a unit trust that is a corporate unit trust in relation to the year of income for the purposes of Division 6B.de facto relationship means: (a) a relationship between 2 persons (whether of the same sex or different sexes) that is registered under a law of a State or Territory prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; or (b) a relationship between 2 persons (whether of the same sex or different sexes) who, although not legally married to each other, live with each other on a genuine domestic basis in a relationship as a couple. "depreciation provision" means: (a) any provision of Division 40 of the Income Tax Assessment Act 1997 (other than Subdivision 40-E); or (b) any provision of Division 43 of that Act. "designated concession income" has the same meaning as in Part X. "discretionary trust estate" means a trust estate where: (a) both of the following conditions are satisfied: (i) a person (who may include the trustee) is empowered (either unconditionally or on the fulfilment of a condition) to exercise any power of appointment or other discretion; (ii) the exercise of the power or discretion, or the failure to exercise the power or discretion, has the effect of determining, to any extent, either or both of the following: (A) the identities of those who may benefit under the trust; (B) how beneficiaries are to benefit, as between themselves, under the trust; or (b) one or more of the beneficiaries under the trust have a contingent or defeasible interest in some or all of the corpus or income of the trust estate; or (c) the trustee of another trust estate, being a trust estate where both of the conditions in paragraph (a) are satisfied, benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the first-mentioned trust estate. "eligible designated concession income" has the same meaning as in Part X. "entity" means any of the following: (a) a company; (b) a partnership; (c) a person in the capacity of trustee; (d) any other person. "exempt income", in relation to a trust estate, means the exempt income of the trust estate calculated as if the trustee were a taxpayer who was a resident. "IP time" means 7.30 p.m., by standard time in the Australian Capital Territory, on 12 April 1989. "listed country" has the same meaning as in Part X. "listed country trust estate" has the meaning given by section 102AAE. "net income", in relation to a trust estate, in relation to a year of income, means: (a) if the trust estate is a corporate unit trust in relation to the year of income--the net income (within the meaning of Division 6B) of the corporate unit trust of the year of income; or (b) if the trust estate is a public trading trust in relation to the year of income--the net income (within the meaning of Division 6C) of the public trading trust of the year of income; or (c) in any other case--the net income (within the meaning of Division 6) of the trust estate. "non-attributable year of income", in relation to a trust estate, means a non-resident year of income of the trust estate where no amount calculated by reference to the attributable income of the trust estate of that year of income is included in the assessable income of any taxpayer under subsection 102AAZD(1). "non-discretionary trust estate" means a trust estate other than a discretionary trust estate. "non-resident family trust" has the meaning given by section 102AAH. "non-resident trust estate" (except in section 102AAA), in relation to a year of income, means a trust estate that is not a resident trust estate in relation to the year of income. "non-resident year of income", in relation to a trust estate, means a year of income in relation to which the trust estate is a non-resident trust estate. "profits" includes gains, whether of an income or capital nature. "property" includes money. "public trading trust", in relation to a year of income, means a unit trust that is a public trading trust in relation to the year of income for the purposes of Division 6C. "public unit trust" has the meaning given by section 102AAF. "resident trust estate", in relation to a year of income, means: (a) a resident trust estate in relation to the year of income within the meaning of Division 6; or (b) a unit trust that is a corporate unit trust, or a public trading trust, in relation to the year of income; or (c) a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the year of income. "scheme" means: (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 there are 2 or more parties or only one party involved. "services" includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a benefit, right, privilege, service or facility that is, or is to be, provided under: (a) an arrangement for or in relation to: (i) the performance of work (including work of a professional nature), whether with or without the provision of property; or (ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or (iii) the conferring of benefits, rights or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; or (b) a contract of insurance; or (c) an arrangement for or in relation to the lending of money. "subject to tax" has the same meaning as in Part X. "tax accounting period" has the same meaning as in Part X. "tax law", in relation to a listed country or an unlisted country, has the same meaning as in Part X. "tax offset" has the same meaning as in the Income Tax Assessment Act 1997. "transfer": (a) in relation to property--includes dispose of (whether by assignment, declaration of trust or otherwise) or provide; and (b) in relation to services--includes allow, confer, give, grant, perform or provide. "trust estate", in relation to a transfer of property or services, means the trust estate or, as the case requires, the trustee of the trust estate. "underlying transfer", in relation to a transfer of property or services to a trust estate, means: (a) if that transfer was an actual transfer--the actual transfer; or (b) if that transfer was taken to have been made because of subsection 102AAK(1)--the actual transfer referred to in that subsection; or (c) if that transfer was taken to have been made because of subsection 102AAK(2)--the actual transfer referred to in paragraph 102AAK(2)(d); or (d) if that transfer was taken to have been made because of subsection 102AAK(5)--the actual transfer referred to in paragraph 102AAK(5)(b); or (e) if that transfer was taken to have been made because of the application of subsection 102AAK(6) or (8) to an actual transfer--the actual transfer; or (f) if that transfer was taken to have been made because of the application of subsection 102AAK(6) or (8) to a transfer that was taken to have been made because of subsection 102AAK(1)--the actual transfer referred to in subsection 102AAK(1); or (g) if that transfer was taken to have been made because of the application of subsection 102AAK(6) or (8) to a transfer that was taken to have been made because of subsection 102AAK(5)--the actual transfer referred to in paragraph 102AAK(5)(b); or (h) if that transfer was taken to have been made because of subsection 102AAK(10)--the actual transfer referred to in paragraph 102AAK(10)(b); or (j) if that transfer was taken to have been made because of one or more applications of subsection 102AAK(11) to an actual transfer--the actual transfer; or (k) if that transfer was taken to have been made because of one or more applications of subsection 102AAK(11) to a transfer (in this paragraph called the deemed transfer) that was taken to have been made because of subsection 102AAK(1), (2), (5), (6), (8) or (10)--the actual transfer that, under a preceding paragraph of this definition, is the underlying transfer in relation to the deemed transfer. "underlying transferor", in relation to a transfer of property or services to a trust estate, means the entity who made the underlying transfer concerned. "unlisted country" has the same meaning as in Part X. "weighted statutory interest rate", in relation to a year of income, means: (a) if there is only one base interest rate in relation to the year of income--that rate; or (b) if there are 2 or more base interest rates in relation to the year of income--the weighted average of the base rates for the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAC Each listed country and unlisted country to be treated as a separate foreign country For the purposes of the application of section 6AB to this Division, each listed country and each unlisted country is to be treated as a separate foreign country. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAD Subject to tax--application of subsection 324(2) Subsection 324(2) applies in relation to this Division in a corresponding way to the way in which it applies in relation to Part X. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAE Listed country trust estates (1) For the purposes of this Division, a trust estate is taken to be a listed country trust estate in relation to a year of income if, and only if, either of the following paragraphs applies to each item of income or profit derived by the trust estate in the year of income: (a) the income or profit is either: (i) subject to tax in a listed country in a tax accounting period ending before the end of the year of income or commencing during the year of income; or (ii) designated concession income in relation to any listed country; (b) both of the following conditions are satisfied: (i) a part of the income or profit is either: (A) subject to tax in a listed country in a tax accounting period ending before the end of the year of income or commencing during the year of income; or (B) designated concession income in relation to any listed country; (ii) the remaining part, or each of the remaining parts, of the income or profit: (A) is subject to tax in another listed country or in different listed countries, as the case may be, in a tax accounting period ending before the end of the year of income or commencing during the year of income; or (B) is designated concession income in relation to any listed country. (2) For the purposes of the application of subparagraph (1)(b)(ii) to a trust estate, if a particular part of an item of income or profit (which part is in this subsection called the item part) derived by the trust estate is included, or would apart from Subdivision 50-A or section 51-5, 51-10 or 51-30 of the Income Tax Assessment Act 1997 be included, in the assessable income of the trust estate of a year of income (in this subsection called the trust's year of income) and one of the following paragraphs applies: (a) both of the following conditions are satisfied: (i) the trustee of the trust estate is liable to be assessed and pay tax under section 98, 99 or 99A in respect of a part of, or a share in, the net income of the trust estate of the trust's year of income; (ii) the whole or a part of the part or share of the net income is attributable to the item part; (b) all of the following conditions are satisfied: (i) an amount is included in the assessable income of another taxpayer of the trust's year of income or the next following year of income (which taxpayer is in this subsection called the actual taxpayer) under subsection 92(1) or section 97, 98A or 100; (ii) the actual taxpayer is: (A) a company or a natural person (other than a company or a natural person in the capacity of a trustee); or (B) the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the year of income concerned; or (C) the trustee of a corporate unit trust in relation to the year of income concerned; or (D) the trustee of a public trading trust in relation to the year of income concerned; or (E) the trustee of a trust estate who is liable to be assessed and pay tax under section 98, 99 or 99A in respect of a part of, or a share in, the net income of a trust estate; (iii) if sub-subparagraph (ii)(A), (B), (C) or (D) applies--the whole or a part of the amount so included in the actual taxpayer's assessable income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the item part; (iv) if sub-subparagraph (ii)(E) applies--the whole or a part of the part or share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the item part; (c) both of the following conditions are satisfied: (i) trustee beneficiary non-disclosure tax is payable under Division 6D on the whole or part (the net income amount) of a share of the net income of the trust estate of the trust's year of income; (ii) the whole or part of the net income amount is attributable to the item part; the item part is to be treated as if it were subject to tax in a listed country in a tax accounting period ending before the end of the trust's year of income. (3) For the purposes of this section, where a part of a particular item of income or profits derived by an entity would, if it were a separate item of income or profits, be taken to be subject to tax in a listed country in a particular tax accounting period, that part is taken to be subject to tax in that listed country in that tax accounting period. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAF Public unit trusts (1) Subject to this section, for the purposes of this Division, a unit trust is a public unit trust at all times during a year of income if either of the following conditions are satisfied: (a) at any time during the year of income: (i) any of the units in the unit trust were listed for quotation in the official list of a stock exchange in Australia or elsewhere; or (ii) any of the units in the unit trust were offered to the public; (b) at all times during the year of income, the units in the unit trust were held by not fewer than 50 persons. (2) In determining whether a unit trust is a public unit trust at all times during a year of income for the purposes of this Division, subsections 102G(2) to (8) (inclusive) and (10) apply: (a) as if a reference in those subsections to Division 6B were a reference to this Division; and (b) as if a reference in those subsections to subsection 102G(1) were a reference to subsection (1) of this section; and (c) as if a reference in those subsections to a public unit trust in relation to a year of income were a reference to a public unit trust at all times during a year of income. (3) In determining whether a unit trust (in this subsection called the first unit trust) is a public unit trust at all times during a year of income for the purposes of this Division, the following provisions have effect: (a) the following entities are taken to be one person: (i) an entity, whether or not it holds units in the first unit trust; and (ii) the entity or entities who are the associate or associates of the entity; (b) where any units in the first unit trust are held by the trustee of another trust that, apart from this paragraph, is a public unit trust at all times during the year of income--a person who has a beneficial interest in property of that other trust that consists of those units is taken to hold those units; (c) where any units in the first unit trust are held by the trustee of another trust that: (i) apart from paragraph (b); or (ii) by virtue of the application of paragraph (b); is a public unit trust at all times during the year of income--a person who has a beneficial interest in the property of that other trust that consists of those units (whether or not that beneficial interest is taken to be held by virtue of the application of this paragraph) is taken to hold those units. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAG When entity is in a position to control a trust estate (1) For the purposes of this Division, an entity is taken to be in a position to control a trust estate if, and only if: (a) a group in relation to the entity had the power by means of the exercise by the group of any power of appointment or revocation or otherwise, to obtain, with or without the consent of any other entity, the beneficial enjoyment of the corpus or income of the trust estate; or (b) a group in relation to the entity was able in any manner whatsoever, whether directly or indirectly, to control the application of the corpus or income of the trust estate; or (c) a group in relation to the entity was capable under a scheme of gaining the enjoyment or the control referred to in paragraph (a) or (b); or (d) a trustee of the trust estate was accustomed or under an obligation (whether formally or informally) or might reasonably be expected to act in accordance with the directions, instructions or wishes of a group in relation to the entity; or (e) a group in relation to the entity was able to remove or appoint the trustee, or any of the trustees, of the trust estate. (2) In subsection (1), a reference to a group in relation to an entity is a reference to: (a) the entity acting alone; or (b) an associate of the entity acting alone; or (c) the entity and one or more associates of the entity acting together; or (d) 2 or more associates of the entity acting together. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAH Non-resident family trusts (1) Subject to subsections (4) and (5), for the purposes of this Division, a trust estate is a non-resident family trust in relation to a natural person at a particular time if, and only if, at that time: (a) the trust estate is either: (i) a post-marital or post-relationship family trust in relation to the natural person; or (ii) a family relief trust in relation to the natural person; and (b) the trust is constituted by: (i) a deed of trust or other instrument; or (ii) an order or declaration of a court. (2) For the purposes of this section, a trust estate is a post-marital or post-relationship family trust in relation to a natural person at a particular time if: (a) either of the following conditions is satisfied: (i) the trust was created pursuant to: (A) a decree or order of dissolution or annulment of marriage, being a dissolution or annulment that, because of the Family Law Act 1975, has effect, or continues to have effect in Australia or is recognised as valid in Australia; or (B) a decree or order of judicial separation or a similar decree or order; (ii) the trust was created in consequence of the break-down of a de facto relationship; and (b) at that time, the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust (which persons are in subsections (4) and (5) called the primary potential beneficiaries) are natural persons who: (i) are non-residents at that time; and (ii) are covered by any of the following categories: (A) the spouse or former spouse of the natural person; (B) a child of the natural person; (C) a child of the former spouse of the natural person, being a child who was such a child at a time when the former spouse was the spouse of the natural person; (D) a child of the spouse of the natural person. (3) For the purposes of this section, a trust estate is a family relief trust in relation to a natural person at a particular time (in this subsection called the test time) if: (a) the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust (which persons are in subsections (4) and (5) called the primary potential beneficiaries) are natural persons who: (i) are identified by name in the trust deed or instrument, or in the court order or declaration, constituting the trust; and (ii) are non-residents at that time; and (iii) are covered by any of the following categories: (A) the spouse or former spouse of the natural person; (B) a parent of the natural person or of the natural person's spouse or former spouse; (C) a child of the natural person or of the natural person's spouse or former spouse; (D) a grandparent of the natural person; (E) a grandchild of the natural person; (F) a brother or sister of the natural person or of the natural person's spouse or former spouse; (G) a child of a brother or sister mentioned in sub-subparagraph (F); and (b) the trust was established, and is operated, for the relief of persons who are in necessitous circumstances; and (c) any of the following conditions is satisfied: (i) at the test time, the assets of the trust are not excessive having regard to the requirements, or likely requirements, of the primary potential beneficiaries; (ii) no transfers of property or services to the trust estate were made during the period (in this paragraph called the test period) commencing at the IP time and ending at the test time; (iii) immediately after each transfer of property or services to the trust estate made during the test period, the assets of the trust were not excessive having regard to the requirements, or likely requirements, of the beneficiaries at the time of the transfer. Note: Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining relationships for the purposes of subparagraph (3)(a)(iii). (4) Subsection (1) does not prevent a trust estate from being a non-resident family trust in relation to a natural person at a particular time if, in the event of the death of a particular primary potential beneficiary at that time, one or more natural persons (which persons are in subsection (5) called the secondary potential beneficiaries) who: (a) are non-residents at that time; and (b) are children of the primary potential beneficiary; would benefit, or be capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust. (5) Subsections (1) and (4) do not prevent a trust estate from being a non-resident family trust in relation to a natural person at a particular time if, in the event of the death of all of the primary potential beneficiaries and all of the secondary potential beneficiaries at that time, there are one or more funds, authorities or institutions in Australia covered by an item in any of the tables in Subdivision 30-B of the Income Tax Assessment Act 1997, or item 2 of the table in section 30-15 of that Act, that would benefit, or be capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust. (6) For the purposes of this section, if, at a particular time, an entity holds an interest in, or right to benefit under, a trust that is dependent on the death of one or more natural persons, then, the entity is taken to be an entity who, in the event of the death of that natural person or those natural persons immediately after that time, would benefit under the trust. (7) A reference in this section to a natural person does not include a reference to a natural person in the capacity of a trustee. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAJ Transfer of property or services (1) A reference in this Division to the transfer of property or services to a trust estate includes a reference to the transfer of such property or services by way of the creation of the trust estate. (2) For the purposes of this Division, where an entity acquires property that did not previously exist, the property is taken to have existed immediately before the acquisition and to have been transferred by the entity who created the property. (3) For the purposes of this Division, property or services are taken to have been transferred to an entity if the property or services have been applied for the benefit of, or in accordance with the directions of, the entity. (4) Without limiting the generality of subsection (3), a reference in that subsection to the application of property or services for the benefit of an entity includes a reference to the application of property or services in the discharge, in whole or in part, of a debt due by the entity. (5) Unless the contrary intention appears, a reference in this Division to a transfer of property or services includes a reference to a transfer made before the commencement of this Division. (6) A reference in this Division to a transfer of property or services made before the IP time includes a reference to a transfer made at the IP time. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAK Deemed transfers of property or services to trust estate (1) For the purposes of this Division, where an entity (in this subsection called the prime entity) causes another entity to actually transfer property or services to a trust estate, the prime entity is taken to have transferred the property or services (instead of the other entity). (2) For the purposes of this Division, where: (a) the trustee of a trust estate issues units in the trust to an entity (in this subsection called the first entity) in the first entity's capacity as a manager, underwriter or dealer in relation to the marketing or placement of the units; and (b) in the course of the marketing or placement of the units, the units are disposed of by the first entity to another entity (in this subsection called the second entity); and (c) at a particular time (in this subsection called the second entity's transfer time), the second entity transfers property or services to the first entity as consideration for the acquisition of the units; and (d) the first entity has actually transferred, or actually transfers, property or services (in this subsection called the original property or services) to the trust estate for the sole purpose of acquiring the units; the second entity is taken to have transferred the original property or services (instead of the first entity) at the second entity's transfer time. (3) A reference in subsection (2) to a unit in a trust estate is a reference to an interest (however described) in any of the income or property of the trust estate. (4) Subsections (1) and (2) do not limit the operation of subsection (5). (5) Where, under a scheme: (a) an entity (in this subsection called the scheme entity) actually transfers property or services to another entity; and (b) property or services are actually transferred to a trust estate at a particular time otherwise than by the scheme entity; the Commissioner may, for the purposes of this Division, treat the property or services mentioned in paragraph (b) as having been transferred by the scheme entity to the trust estate (instead of by any other entity) at that time to such extent as the Commissioner considers reasonable. (6) For the purposes of this Division, if (apart from subsections (8), (10) and (11)) an entity, being a partnership, transfers property or services to a trust estate at a particular time: (a) each partner in the partnership is taken to have transferred a part of the property or services to the trust estate at that time; and (b) the market value of the part transferred by a particular partner is calculated using the formula: where: "Market value" means the market value, immediately before the transfer, of the property or services transferred by the partnership.Partner's interest means: (i) the partner's percentage interest in the profits of the partnership as at that time; or (ii) the partner's percentage interest in the property of the partnership as at that time; or, if they are different, whichever is the higher. (7) Nothing in paragraph (6)(a) affects the application of this Division to the transfer made by the partnership concerned. (8) For the purposes of this Division, if: (a) apart from this subsection, subsections (6), (10) and (11), an entity being the trustee of a trust estate (in this subsection called the transferor trust estate) transfers property or services (in this subsection called the transferred property or services) to another trust estate (in this subsection called the transferee trust estate) at a particular time (in this subsection called the transfer time); and (b) the transferor trust estate was an Australian trust, or a controlled foreign trust, at the transfer time; and (c) the transferor trust estate was a discretionary trust estate at the transfer time; and (d) apart from this subsection, subsections (6), (10) and (11), one or more other entities transferred property or services to the transferor trust estate at or before the transfer time; each of those other entities is taken to have transferred the transferred property or services to the transferee trust estate at the transfer time. (9) Nothing in subsection (8) affects the application of this Division to the transfer mentioned in paragraph (8)(a). (10) For the purposes of this Division, where: (a) any of the following subparagraphs applies: (i) any of the following events occurs in relation to a company (which company is in this subsection called the transferor): (A) the company passes a resolution for its winding-up; (B) an order is made for the winding-up of the company; (C) any similar event; (ii) a partnership (in this subsection also called the transferor) ceases to exist for the purposes of this Act; (iii) either of the following sub-subparagraphs applies in relation to the trustee of a trust estate (in this subsection also called the transferor): (A) the trust estate commences to be wound-up; (B) the trust estate ceases to exist for the purposes of this Act; and (b) an actual transfer of property or services is made to a trust estate (in this subsection called the transferee) as a consequence of the transferor being wound-up or ceasing to exist; the transferor is taken to have transferred to the transferee the property or services concerned. (11) For the purposes of this Division, where: (a) the following subparagraphs apply to an entity (in this subsection called the defunct entity): (i) the defunct entity is a company, a partnership or the trustee of a trust estate; (ii) the defunct entity transferred property or services to a trust estate (including a transfer that was taken to have been made because of another application or other applications of this subsection) at a particular time; (iii) if the defunct entity is a company--any of the following events occurs: (A) the company passes a resolution for its winding-up; (B) an order is made for the winding-up of the company; (C) any similar event; (iv) if the defunct entity is a partnership--the partnership ceases to exist for the purposes of this Act; (v) if the defunct entity is a trustee of a trust estate--either of the following sub-subparagraphs applies: (A) the trust estate commences to be wound-up; (B) the trust estate ceases to exist for the purposes of this Act; and (b) the Commissioner is satisfied that another entity (in this subsection called the successor entity) has benefited or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting (either directly or indirectly through one or more interposed companies, partnerships or trusts) by, or as a result of: (i) a transfer of property or services made by the defunct entity; or (ii) a transfer of property or services made as a consequence of the defunct entity being wound-up or ceasing to exist; and (c) the Commissioner is of the opinion that it is appropriate to apply this subsection to the successor entity; the assessable income of the successor entity of the year of income in which the event, or the earliest event, mentioned in subparagraph (a)(iii), (iv) or (v) occurred and of each subsequent year of income is to be determined as if the successor entity had transferred to the trust estate mentioned in subparagraph (a)(ii), at the time mentioned in that subparagraph: (d) the whole of the property or services mentioned in that subparagraph; or (e) if the Commissioner thinks it appropriate--a part of the property or services referred to in that subparagraph. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAL Division not to apply to transfers by trustees of deceased estates A reference in this Division to a transfer of property or services to a trust estate does not include a reference to a transfer made by the trustee of the estate of a deceased person under: (a) the terms of the deceased person's will or codicil; or (b) an order of a court that varied or modified the provisions of the deceased person's will or codicil; unless: (c) the transfer was made in or as the result of the exercise (by the trustee or any other person) of a power of appointment or any other discretion; or (d) under subsection 102AAK(1), the property or services are taken to have been transferred by an entity other than the trustee, instead of by the trustee; or (e) under subsection 102AAK(5), the Commissioner treats the property or services as having been (to any extent) transferred by an entity other than the trustee, instead of by the trustee. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAM Payment of interest by taxpayer on distributions from certain non-resident trust estates (1) For the purposes of this section, if: (a) an amount is included in the assessable income of a taxpayer of a year of income (which year of income is in this section called the current year of income), being the year of income commencing on 1 July 1990 or a subsequent year of income, under section 99B in relation to a trust estate; and (b) the whole or a part of the amount so included in the taxpayer's assessable income (which whole or part is in this section called the distributed amount) is attributable to: (i) if the trust estate was a listed country trust estate in relation to a particular non-resident year of income of the trust estate (in this section called the non-resident trust's year of income)--so much of the income and profits of the trust estate of the non-resident trust's year of income as represents eligible designated concession income in relation to any listed country in relation to the non-resident trust's year of income; or (ii) if the trust estate was not a listed country trust estate in relation to a particular non-resident year of income of the trust estate (in this section also called the non-resident trust's year of income)--so much of the income and profits of the trust estate of the non-resident trust's year of income as has not been subject to tax in any listed country in a tax accounting period: (A) ending before the end of the non-resident trust's year of income; or (B) commencing during the non-resident trust's year of income; then: (c) the distributed amount is the distributed amount of the non-resident trust's year of income; and (d) the taxpayer is the original taxpayer in relation to the distributed amount of the non-resident trust's year of income. (1A) For the purposes of subsection (1), unless the contrary is established by the taxpayer: (a) a distributed amount in relation to a listed country trust estate in relation to a non-resident trust's year of income is taken to be wholly attributable to income and profits of the trust estate of that year of income that represent eligible designated concession income in relation to a listed country; and (b) a distributed amount in relation to a trust estate that was not a listed country trust estate in relation to a non-resident trust's year of income is taken to be wholly attributable to income and profits of the trust estate of that year of income that have not been subject to tax in any listed country in a tax accounting period. (1B) This section does not apply to a distributed amount that is attributable to income or profits of the estate of a deceased person if the amount was paid to, or applied for the benefit of, the taxpayer within 3 years after the death of that person. (1C) This section does not apply to a distributed amount that was included in the assessable income of a taxpayer of a year of income under section 99B in relation to a trust estate if, at all times during the year of income, the trust: (a) was a public unit trust; and (b) was not a controlled foreign trust. (2) Subject to this section, if the original taxpayer in relation to the distributed amount of the non-resident trust's year of income is: (a) a company or a natural person (other than a company or a natural person in the capacity of a trustee); or (b) the trustee of a corporate unit trust in relation to the current year of income; or (c) the trustee of a public trading trust in relation to the current year of income; or (d) the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the current year of income; the taxpayer is liable to pay interest to the Commissioner in respect of the distributed amount of the non-resident trust's year of income, calculated under subsection (5), on the amount calculated using the formula: where: "Distributed amount" means the distributed amount of the non-resident trust's year of income. "Applicable rate of tax" has the meaning given by subsection (10). "FITO" (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the distributed amount of the non-resident trust's year of income. (3) Subject to this section, if: (a) the original taxpayer in relation to the distributed amount of the non-resident trust's year of income is the trustee of a trust estate who is liable to be assessed and pay tax under section 98, 99 or 99A in respect of a part of, or a share in, the net income of the trust estate; and (b) the whole or a part (which whole or part is in this subsection called the taxpayer's portion of the distributed amount of the non-resident trust's year of income) of the part or share of the net income is attributable to the distributed amount of the non-resident trust's year of income; the taxpayer is liable to pay interest to the Commissioner in respect of the taxpayer's portion of the distributed amount of the non-resident trust's year of income, calculated under subsection (5), on the amount calculated using the formula: where: "Taxpayer's portion of the distributed amount" means the taxpayer's portion of the distributed amount of the non-resident trust's year of income. "Applicable rate of tax" has the meaning given by subsection (10). "FITO" (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the taxpayer's portion of the distributed amount of the non-resident trust's year of income. (4) Subject to this section, if: (a) the original taxpayer in relation to the distributed amount of the non-resident trust's year of income is the trustee of a trust estate or a partnership; and (b) the following conditions are satisfied in relation to another taxpayer (in this subsection called the actual taxpayer): (i) an amount is included in the assessable income of the actual taxpayer of a year of income under subsection 92(1) or section 97, 98A or 100; (ii) the actual taxpayer is: (A) a company or a natural person (other than a company or a natural person in the capacity of a trustee); or (B) the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the year of income; or (C) the trustee of a corporate unit trust in relation to the year of income; or (D) the trustee of a public trading trust in relation to the year of income; or (E) the trustee of a trust estate who is liable to be assessed and pay tax under section 98, 99 or 99A in respect of a part of, or a share in, the net income of a trust estate; (iii) if sub-subparagraph (ii)(A), (B), (C) or (D) applies--the whole or a part of the amount so included in the actual taxpayer's assessable income (which whole or part is in this subsection called the taxpayer's portion of the distributed amount of the non-resident trust's year of income) is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the distributed amount of the non-resident trust's year of income; (iv) if sub-subparagraph (ii)(E) applies--the whole or a part (which whole or part is in this subsection also called the taxpayer's portion of the distributed amount of the non-resident trust's year of income) of the part or share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the distributed amount of the non-resident trust's year of income; the actual taxpayer is liable to pay interest to the Commissioner in respect of the taxpayer's portion of the distributed amount of the non-resident trust's year of income, calculated under subsection (5), on the amount calculated using the formula: where: "Taxpayer's portion of the distributed amount" means the taxpayer's portion of the distributed amount of the non-resident trust's year of income. "Applicable rate of tax" has the meaning given by subsection (10). "FITO" (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the taxpayer's portion of the distributed amount of the non-resident trust's year of income. (4A) If: (a) paragraph 102UK(2)(b) or 102UM(2)(b) has the effect that the whole or a part of a share of the net income of a trust estate (the first trust estate) is not included in the assessable income of the trustee of another trust estate (the second trust estate); and (b) the whole or the part of the share (which whole or part is in this subsection called the taxpayer's portion of the distributed amount of the non-resident trust's year of income) is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the distributed amount of the non-resident trust's year of income; and (c) if paragraph 102UK(2)(b) or 102UM(2)(b) were ignored, the second trust estate would be an interposed trust mentioned in applying subparagraph (4)(b)(iii) or (iv) of this section; and (d) this subsection does not also apply to the trustee of a trust interposed between the first trust estate and the non-resident trust; the trustee of the first trust estate is liable to pay interest to the Commissioner in respect of the taxpayer's portion of the distributed amount of the non-resident trust's year of income, calculated under subsection (5), on the amount calculated using the formula: where: "applicable rate of tax" has the meaning given by subsection (10). "FITO" (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the trustee of the first trust would be entitled, in respect of the taxpayer's portion of the distributed amount of the non-resident trust's year of income, if the taxpayer's portion of the distributed amount of the non-resident trust's income were an amount in respect of which the trustee were liable to be assessed and to pay tax under section 99A. "taxpayer's portion of the distributed amount" means the taxpayer's portion of the distributed amount of the non-resident trust's year of income. (5) Interest payable by a taxpayer under this section is to be calculated: (a) in respect of the period commencing at whichever of the following times is the latest: (i) the beginning of the first year of income of the taxpayer that begins after the end of the non-resident trust's year of income; (ii) the beginning of the year of income of the taxpayer commencing on 1 July 1990; (iii) if the taxpayer is a natural person (other than a natural person in the capacity of a trustee) who first commenced to be a resident of Australia at a time (in this subparagraph called the first residence time) on or after 1 July 1990--the beginning of the year of income of the taxpayer next following the year of income of the taxpayer in which the first residence time occurred; and ending at the end of the assessment year of income; and (b) at the base interest rate. (6) Where the assessable income of a taxpayer of a year of income includes one or more of the following amounts in relation to one or more non-resident years of income of a particular trust estate (which amounts are in this subsection called the principal amounts): (a) the distributed amount of the non-resident trust's year of income; (b) the taxpayer's portion of the distributed amount of the non-resident trust's year of income; the aggregate of the interest payable by the taxpayer in respect of the principal amounts is not to exceed the difference between: (c) the aggregate of the principal amounts; and (d) so much of the tax payable in respect of the year of income as is attributable to the aggregate of the principal amounts (ignoring any tax offset under Part 3-6 of the Income Tax Assessment Act 1997). (7) For the purposes of this section, the extent to which an amount (in this subsection called the section 99B amount) included in the assessable income of a taxpayer of a year of income under section 99B in relation to a trust estate is attributable to an amount (in this subsection called the trust amount) covered by subparagraph (1)(b)(i) or (ii) is to be determined in accordance with the following paragraphs: (a) in all cases--distributions of income and profits of the trust estate are to be taken to have been made in the following order: (i) first, from income and profits of the earliest non-resident year of income; (ii) then, successively from income and profits of successive subsequent years of income; (b) if subparagraph (1)(b)(i) applies--the extent to which the amount (in this paragraph called the adjusted section 99B amount), being so much of the section 99B amount as is attributable to the income and profits of the trust estate of the non-resident trust's year of income, represents eligible designated concession income in relation to any listed country in relation to the non-resident trust's year of income is calculated using the formula: where: Adjusted section 99B amount means the adjusted section 99B amount. "Eligible designated concession income" means the number of dollars in the amount, being so much of the income and profits of the trust estate of the non-resident trust's year of income as represents eligible designated concession income in relation to any listed country in relation to the non-resident trust's year of income. "Total income" means the number of dollars in the income and profits of the trust estate of the non-resident trust's year of income. (c) if subparagraph (1)(b)(ii) applies--the extent to which the amount (in this paragraph called the adjusted section 99B amount), being so much of the section 99B amount as is attributable to the income and profits of the trust estate of the non-resident trust's year of income, represents income and profits that have not been subject to tax in a listed country in a tax accounting period mentioned in that subparagraph is calculated using the formula: where: Adjusted section 99B amount means the adjusted section 99B amount. "Untaxed income" means the number of dollars in the amount, being so much of the income and profits of the trust estate of the non-resident trust's year of income as is not subject to tax in any listed country in a tax accounting period mentioned in that subparagraph. "Total income" means the number of dollars in the income and profits of the trust estate of the non-resident trust's year of income. (8) For the purposes of subsection (7), an amount of income or profits of a trust estate is to be taken to be distributed if the amount is paid to, or applied for the benefit of (within the meaning of section 99B), a beneficiary of the trust estate. (9) Where, apart from this subsection, the amount of interest that would be payable under this section by a taxpayer in respect of the distributed amount of a non-resident trust's year of income, or in respect of the taxpayer's portion of the distributed amount of a non-resident trust's year of income, is less than 50 cents, interest is not payable by the taxpayer under this section. (10) For the purposes of this section, the applicable rate of tax in relation to a taxpayer is: (a) if the taxpayer is a company (other than a company in the capacity of a trustee)--the corporate tax rate for the year of tax to which the assessment year of income relates; or (b) in any other case--the maximum rate specified in the table in Part I of Schedule 7 of the Income Tax Rates Act 1986 that applies for the assessment year of income. (11) For the purposes of the application of this section to a taxpayer, the assessment year of income is: (a) if subsection (2) or (3) applies--the current year of income; or (b) if subsection (4) applies--the year of income referred to in subparagraph (4)(b)(i). (12) For a taxpayer who is not a full self-assessment taxpayer for the assessment year of income, the Commissioner must make an assessment of the interest payable by the taxpayer under this section. (13) Nothing in this Act precludes notice of an assessment made in respect of a taxpayer under subsection (12) from being incorporated in a notice of any other assessment made in respect of the taxpayer under this Act. (13A) If: (a) a taxpayer is a full self-assessment taxpayer for the assessment year of income; and (b) the taxpayer lodges a return for that year; then: (c) the Commissioner is taken to have made an assessment of the interest payable by the taxpayer under this section for the year, equal to the amount specified in the return as the interest so payable; and Note: If any interest is so payable, the return must specify the amount: see section 161AA. (d) the assessment is taken to have been made on the day on which the return is lodged; and (e) the return is taken to be a notice of that assessment given to the taxpayer by the Commissioner on that day. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAN Collection etc. of interest Sections 170, 172, 174, 254 and 255 of this Act, and Division 5 of the Income Tax Assessment Act 1997 (How to work out when to pay your income tax), apply to interest payable under section 102AAM in the same way as they apply to income tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAS Object of Subdivision The object of this Subdivision is to set out rules relating to the following: (a) the determination of attributable taxpayer status (section 102AAT); (b) the calculation of the attributable income of a trust estate (sections 102AAU to 102AAZC (inclusive)); (c) the inclusion of amounts in assessable income (sections 102AAZD, 102AAZE and 102AAZF); (d) the keeping of associated records (section 102AAZG). INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAT Accruals system of taxation--attributable taxpayer (1) Subject to this Division, for the purposes of this Division, an entity is an attributable taxpayer in relation to a year of income of the entity (which year of income is in this section called the entity's current year of income) and in relation to a particular trust estate if, and only if: (a) either of the following subparagraphs applies: (i) all of the following conditions are satisfied: (A) the trust estate was a discretionary trust estate at any time during the entity's current year of income; (B) the trust estate was not a public unit trust at all times during the entity's current year of income; (C) the entity has transferred property or services to the trust estate at a time (in this subparagraph called the transfer time) before or during the entity's current year of income; (D) if the underlying transfer was made in the course of carrying on a business--it is not the case that, at or about the time of the underlying transfer, identical or similar property or services were transferred by the underlying transferor in the ordinary course of business to ordinary clients or customers under arm's length transactions and in similar circumstances and subject to identical or similar terms and conditions as those that applied in relation to the underlying transfer of the property or services concerned; (E) if the underlying transfer was made under an arm's length transaction otherwise than in the course of carrying on a business--the entity was in a position, at any time after the transfer time and before the end of the entity's current year of income, to control the trust estate; (F) if the transfer was made before the IP time and the trust estate was in existence, and was a discretionary trust estate, at the IP time--the entity was in a position, at any time after the IP time and before the end of the entity's current year of income, to control the trust estate; (ii) all of the following conditions are satisfied: (A) the trust estate was a non-discretionary trust estate, or a public unit trust, at all times during the entity's current year of income when the trust estate was in existence; (B) the entity has transferred property or services to the trust estate after the IP time and before or during the entity's current year of income; (C) the underlying transfer was made for no consideration or for a consideration less than the arm's length amount in relation to the underlying transfer; (D) it is not the case that the sole purpose of the underlying transfer was the acquisition of units in the trust estate where the parties to the underlying transfer were at arm's length with each other in relation to the underlying transfer and the trust estate was a public unit trust at all times during the entity's current year of income when the trust estate was in existence; and (b) if the entity is a natural person (other than a natural person in the capacity of a trustee): (i) if: (A) the natural person first commenced to be a resident of Australia at a time (in this subparagraph called the first residence time) after the IP time and before the end of the entity's current year of income; and (B) the transfer, or each of the transfers, covered by paragraph (a) was made before the first residence time; the trust estate was not a non-resident family trust in relation to the natural person at all times: (C) after the beginning of the first year of income of the natural person after the first residence time; and (D) before the end of the entity's current year of income; when the trust estate was in existence; or (ii) in any other case--the trust estate was not a non-resident family trust in relation to the natural person at all times after the beginning of the year of income of the taxpayer commencing on 1 July 1990 and before the end of the entity's current year of income when the trust estate was in existence; and (c) it is not the case that: (i) the entity is a natural person (other than a natural person in the capacity of a trustee) who first commenced to be a resident of Australia at a time (in this paragraph called the first residence time) after the IP time and before the end of the entity's current year of income; and (ii) the transfer was made before the first residence time; and (iii) the entity was not in a position to control the trust estate at any time during the period: (A) commencing at the beginning of the first year of income of the entity after the first residence time; and (B) ending at the end of the entity's current year of income. (2) For the purposes of this section, if: (a) an entity (in this subsection called the transferor) being a partnership is an attributable taxpayer in relation to the entity's current year of income and in relation to a particular trust estate (in this subsection called the transferee trust estate) because of one or more transfers (being actual transfers or transfers taken to have been made because of subsection 102AAK(1), (2) or (5)) of property or services made by the transferor to the transferee trust estate; or (b) an entity (in this subsection also called the transferor) being a trust estate is an attributable taxpayer in relation to the entity's current year of income and in relation to another trust estate (in this subsection also called the transferee trust estate) because of one or more transfers (being actual transfers or transfers taken to have been made because of subsection 102AAK(1), (2) or (5)) of property or services made by the transferor to the transferee trust estate; the question whether any other entity is an attributable taxpayer in relation to the same year of income and in relation to the transferee trust estate is to be determined as if: (c) if paragraph (a) applies--subsection 102AAK(6) did not apply in relation to any of the transfers mentioned in that paragraph; or (d) if paragraph (b) applies--subsection 102AAK(8) did not apply in relation to any of the transfers mentioned in that paragraph. (3) If: (a) apart from this subsection, an entity, being a natural person (other than a natural person in the capacity of a trustee), is not an attributable taxpayer in relation to the entity's current year of income and in relation to a trust estate; and (b) apart from paragraph (1)(b), the entity would have been such an attributable taxpayer; and (c) apart from subparagraph 102AAH(2)(b)(i) or (3)(a)(ii), the trust estate was not a non-resident family trust in relation to the natural person at some time after the entity's current year of income when the natural person was alive and the trust estate was in existence; the following provisions have effect: (d) subsection (1) has effect as if paragraph (1)(b) had applied; (e) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection. (4) If: (a) apart from this subsection, an entity is not an attributable taxpayer in relation to the entity's current year of income and in relation to a trust estate; and (b) apart from sub-subparagraph (1)(a)(i)(E) or (F) or paragraph (1)(c), the entity would have been such an attributable taxpayer; and (c) the entity was in a position to control the trust estate at some time after the entity's current year of income when the trust estate was in existence; the following provisions have effect: (d) subsection (1) has effect as if sub-subparagraph (1)(a)(i)(E) or (F) or paragraph (1)(c), as the case may be, had applied; (e) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAU Attributable income of a trust estate (1) Subject to this Subdivision, the attributable income of a non-resident trust estate of a year of income is: (a) if the non-resident trust estate is not a listed country trust estate in relation to the year of income--the net income of the non-resident trust estate of the year of income; or (b) if the non-resident trust estate is a listed country trust estate in relation to the year of income--the amount that would have been the net income of the non-resident trust estate of the year of income if the exempt income of the trust estate included all income and profits of the trust estate, other than eligible designated concession income in relation to any listed country in relation to the year of income; reduced by: (c) so much (if any) of the amount covered by paragraph (a) or (b) as represents: (i) an amount: (A) that is or has been included in the assessable income of a beneficiary under section 97; or (B) in respect of which the trustee of the non-resident trust estate is or has been assessed and liable to pay tax under section 98, 99 or 99A; or (C) on which trustee beneficiary non-disclosure tax is payable under Division 6D; or (ii) an amount: (A) that is paid to a beneficiary, being a resident of a listed country, during the period of 13 months commencing at the beginning of the year of income; and (B) subject to tax in a listed country in a tax accounting period ending before the end of the year of income or commencing during the year of income; or (iii) an amount that consists of, or is attributable to, the franked part of a distribution, or the part of a distribution that has been franked with an exempting credit; or (v) if an amount is or has been included in the assessable income of any taxpayer under section 102AAZD because the taxpayer is an attributable taxpayer in relation to any year of income (in this subparagraph called the taxpayer's year of income) and in relation to a trust estate other than the non-resident trust estate--so much of an amount paid to the trustee of the non-resident trust estate as represents the attributable income of that other trust estate of the taxpayer's year of income; or (vii) if: (A) an attribution account payment is made to the trustee of the trust estate during the year of income; and (B) the making of the attribution account payment gives rise to an attribution debit, in relation to any taxpayer, for the entity making the payment; the amount of the attribution debit; or (viii) an amount of income or profits of the trust estate: (A) that is subject to tax in any listed country in a tax accounting period ending before the end of the year of income or commencing during the year of income; and (B) that is not eligible designated concession income in relation to any listed country in relation to the year of income; and (d) so much of any foreign tax or Australian tax paid by the trustee or a beneficiary as is attributable to so much of the amount covered by paragraph (a) or (b), as the case requires, as remains after the reduction or reductions covered by paragraph (c). (2) The attributable income of a resident trust estate of a year of income is 0. (3) For the purposes of sub-subparagraph (1)(c)(ii)(A), a beneficiary is to be taken to be a resident of a listed country if, and only if, the beneficiary is treated as a resident of the listed country for the purposes of the tax law of the listed country. (4) If the tax law of a listed country adopts some criterion other than treatment as a resident as the criterion for applying a worldwide source tax base to a beneficiary, then, subsection (3) has effect, in relation to that tax law, as if that criterion were the same as treatment as a resident of the listed country for the purposes of that tax law. (5) For the purposes of this section, where, because of section 101, a beneficiary is presently entitled to a particular amount, the amount is taken to have been paid to the beneficiary. (6) For the purposes of this section, the extent to which an amount referred to in subparagraph (1)(c)(i) or (ii) (in this subsection called the taxed amount) represents the amount covered by paragraph (1)(b) (in this subsection called the listed country trust amount) is calculated using the formula: where: "Listed country trust amount" means the number of dollars in the listed country trust amount. "Taxed amount" means the taxed amount. "Net income" means the number of dollars in the net income of the non-resident trust estate concerned of the year of income concerned. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAV Double tax agreements to be disregarded In calculating the attributable income of a trust estate, the International Tax Agreements Act 1953 is to be disregarded, except for the purpose of references in this Act to that Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAW Certain provisions to be disregarded in calculating attributable income (1) For the purpose of applying this Act in calculating the attributable income of a trust estate, sections 23AI, 128D, 456, 457, and 459A of this Act and section 802-15 of the Income Tax Assessment Act 1997 are to be disregarded. (2) For the purpose of applying this Act in calculating the attributable income of a trust estate: (aa) Division 230 of the Income Tax Assessment Act 1997; and (a) Division 974 of the Income Tax Assessment Act 1997; and (b) the operation of any provision of this Act to the extent to which that operation depends on an expression whose meaning is given by a Division mentioned in paragraph (aa) or (a); are to be disregarded. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAY Modified application of trading stock provisions When applying this Act and the Income Tax Assessment Act 1997 in calculating the attributable income of the trust estate, Division 70 of the Income Tax Assessment Act 1997 has effect as if the cost of the item of trading stock were the value to be taken into account at the start of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAZ Modified application of depreciation provisions (1) For the purpose of determining the attributable income of a trust estate of a year of income (in this section called the attributable year of income), where property has been held by the trustee of the trust estate in a non-attributable year of income before the attributable year of income, then, in relation to the application of a depreciation provision to the property, subsection (2) applies. (2) Such amount as the Commissioner considers appropriate to take account of the holding of the property as mentioned in subsection (1) is, under the depreciation provision: (a) an allowable deduction to the trustee of the trust estate; or (b) included in the assessable income of the trust estate; as the case requires, for the attributable year of income in substitution for any amount that would otherwise be so included or allowable. (4) For the purpose of exercising the Commissioner's power under subsection (2) in relation to deductions allowable under Division 40 of the Income Tax Assessment Act 1997, the Commissioner must assume that the property was used by the trustee of the trust estate during any non-attributable year of income wholly and exclusively for a taxable purpose (within the meaning of that Division). INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAZA Modified application of Division 13 of Part III In calculating the attributable income of a trust estate of a year of income: (a) for the purposes of section 136AC, if the trust estate is a non-resident trust estate in relation to the year of income--the trustee is taken to be a non-resident, within the meaning of that section, without regard to the assumption about the trustee's residence that is made in whichever of the following provisions is applicable: (i) the definition of net income in subsection 95(1); (ii) the definition of net income in subsection 102D(1); (iii) the definition of net income in section 102M; (iv) section 295-10 of the Income Tax Assessment Act 1997; and (b) section 136AF applies as if: (i) the reference in subsection 136AF(1) to the application of section 136AD in relation to a taxpayer were a reference both to: (A) the application of that section in relation to any trust estate in calculating its attributable income or in relation to any CFC in calculating its attributable income under Division 7 of Part X; and (B) the actual application of that section in relation to any taxpayer in calculating the taxable income of the taxpayer apart from this Division; and (ii) the references in paragraphs 136AF(1)(a) and (b) to assessable income or allowable deductions in relation to the relevant taxpayer were references to assessable income, or to allowable deductions, taken into account in calculating the attributable income of the trust estate. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAZB General modifications--CGT For the purposes of applying this Act in calculating the attributable income of a trust estate, Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT) apply as if: (a) sections 118-12 (about assets used to produce non-assessable income) and 855-50 (about a trust becoming a resident trust) were disregarded; and (b) the trust estate were a resident trust for CGT purposes. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAZBA Modified application of CGT--effect of certain changes of residence For the purposes of applying this Act in calculating the attributable income of a trust estate of a year of income (in this section called the attributable income year), where: (a) disregarding the assumption in paragraph 102AAZB(b), at any time (in this section called the residence-change time) during the attributable income year or an earlier year of income, the trust estate ceased to be a resident trust for CGT purposes and became a non-resident trust estate; and (b) the trust estate owned a CGT asset at the residence-change time; and (c) a CGT event happens in relation to the asset during the attributable income year; and (d) section 104-170 of the Income Tax Assessment Act 1997 (CGT event I2) applies to the asset in respect of the change of residence for the purposes of the application of this Act apart from this Subdivision; then sections 411 to 414 (inclusive) apply to the asset as if: (e) those sections had effect for the purposes of calculating attributable income under this Subdivision instead of Part X; and (f) any reference in those sections to an eligible CFC were a reference to the trust estate; and (g) any reference in those sections to a commencing day asset were a reference to the asset; and (h) any reference in those sections relating to the eligible CFC's commencing day or the day following the eligible CFC's commencing day were a reference relating respectively to the residence-change time or a time immediately after the residence-change time; and (j) subsections 412(2) and (3), and paragraphs 414(3)(b) and (4)(b), referred only to the market value of the asset concerned. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAZC Modified application of loss provisions--pre-1990-91 losses In calculating the attributable income of a trust estate of a year of income, no deductions are allowable under Division 36 of the Income Tax Assessment Act 1997 in respect of tax losses of a year of income earlier than the year of income commencing on 1 July 1990. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAZD Assessable income of attributable taxpayer to include attributable income of trust estate to which taxpayer has transferred property or services (1) Subject to section 102AAZE and to this section, if: (a) an entity is an attributable taxpayer: (i) in relation to the year of income of the taxpayer commencing on 1 July 1990 (which year of income is in this section called the taxpayer's current year of income) or in relation to a subsequent year of income of the taxpayer (which year of income is in this section also called the taxpayer's current year of income); and (ii) in relation to a trust estate; and (b) any part of a non-resident year of income of the trust estate occurs during the taxpayer's current year of income; and (c) the taxpayer is a resident at any time during the taxpayer's current year of income; the assessable income of the taxpayer of the taxpayer's current year of income includes: (d) if the taxpayer is a resident at all times during the taxpayer's current year of income--the whole of the notional attributable income of the trust estate of the taxpayer's current year of income; or (e) if the taxpayer is a resident for only part of the taxpayer's current year of income--the amount calculated using the formula: where: "Notional attributable income" means the notional attributable income of the trust estate of the taxpayer's current year of income. "Days in residency period" means the number of whole days during the taxpayer's current year of income when the taxpayer was a resident. "Days in year of income" means the number of whole days in the taxpayer's current year of income. (2) A reference in subsection (1) to the notional attributable income of the trust estate of the taxpayer's current year of income is a reference to: (a) if there is a year of income of the trust estate that begins at the same time as the beginning of the taxpayer's current year of income--the attributable income of the trust estate of that year of income; or (b) in any other case--the amount obtained: (i) by calculating, for each year of income of the trust estate (in this paragraph called the trust's year of income) any part of which occurs during the taxpayer's current year of income, the amount calculated using the formula: where: "Attributable income" means the attributable income of the trust estate of the trust's year of income. "Days in overlapping period" means the number of whole days in the trust's year of income that occurred during the taxpayer's current year of income. "Days in trust's year of income" means the number of whole days in the trust's year of income; and (ii) by adding together the amounts calculated under subparagraph (i). (3) If: (a) an amount is included in the assessable income of an attributable taxpayer of the taxpayer's current year of income under subsection (1); and (b) before or during the taxpayer's current year of income, one or more entities other than the taxpayer have transferred property or services to the trust estate concerned; and (c) the taxpayer gives to the Commissioner, in accordance with the approved form, such information in connection with the operation of this Division as is required by the form to be set out; the Commissioner may reduce the amount included in the taxpayer's assessable income of the taxpayer's current year of income under subsection (1) having regard to: (d) the extent to which the attributable income of the trust estate is, in the opinion of the Commissioner, attributable to property or services transferred by the taxpayer; and (e) such other matters as the Commissioner considers relevant. (4) If: (a) apart from this subsection, an amount would be included in the assessable income of an attributable taxpayer of the taxpayer's current year of income under subsection (1) in relation to a particular trust estate; and (b) the taxpayer could not reasonably be expected to obtain the information required to determine the attributable income of the trust estate; the following provisions have effect: (c) no amount is to be included in the assessable income of the taxpayer of the taxpayer's current year of income under subsection (1) in relation to the trust estate; (d) the assessable income of the taxpayer of the taxpayer's current year of income includes the amount obtained: (i) if any of the transfers that were taken into account in determining whether the taxpayer was an attributable taxpayer in relation to the taxpayer's current year of income and in relation to the trust estate were made by the taxpayer to the trust estate after the IP time--by calculating, for each such transfer, the amount calculated using the formula: where: "Adjusted value of the transfer" has the meaning given by subsection (5). "Weighted statutory interest rate" means the weighted statutory interest rate in relation to the taxpayer's current year of income; and (ii) if any of the transfers that were taken into account in determining whether the taxpayer was an attributable taxpayer in relation to the taxpayer's current year of income and in relation to the trust estate were made by the taxpayer to the trust estate before the IP time--the amount calculated using the formula: where: "Adjusted net worth of trust estate" has the meaning given by subsection (6). "Weighted statutory interest rate" means the weighted statutory interest rate in relation to the taxpayer's current year of income; and (iii) by adding together the amounts calculated under subparagraphs (i) and (ii). (5) For the purposes of subsection (4), the adjusted value of a transfer of property or services made by an attributable taxpayer to a trust estate is: (a) if the transfer occurred during the taxpayer's current year of income--the amount calculated using the formula: where: "Market value of transferred property or services" means the market value, immediately before the transfer, of the property or services. "Days after transfer" means the number of whole days in the taxpayer's current year of income after the day on which the transfer took place. "Days in year of income" means the number of whole days in the taxpayer's current year of income; or (b) if the transfer of the property or services occurred before the taxpayer's current year of income--the sum of: (i) the market value, immediately before the transfer, of the property or services; and (ii) the amount obtained: (A) by calculating, in respect of the transfer, for each year of income preceding the taxpayer's current year of income, the amount ascertained using the formula in subparagraph (4)(d)(i); and (B) by adding together the amounts calculated under sub-subparagraph (A). (6) For the purposes of the application of subsection (4) in relation to a transfer of property or services made by an attributable taxpayer to a trust estate, the adjusted net worth of the trust estate is: (a) if the taxpayer's current year of income is the year of income commencing on 1 July 1990--the 1 July 1990 net worth of the trust estate; or (b) in any other case--the sum of: (i) the 1 July 1990 net worth of the trust estate; and (ii) the amount obtained: (A) by calculating, in respect of the transfer, for each year of income preceding the taxpayer's current year of income, the amount ascertained using the formula in subparagraph (4)(d)(ii); and (B) by adding together the amounts calculated under sub-subparagraph (A). (7) If: (a) subsection (4) applies to an attributable taxpayer in relation to the taxpayer's current year of income; and (b) any of the transfers taken into account in determining whether the taxpayer was an attributable taxpayer in relation to the taxpayer's year of income and in relation to the trust estate concerned were made before the IP time; and (c) the taxpayer gives to the Commissioner, in accordance with the approved form, such information in connection with the operation of this Division as is required by the form to be set out; the Commissioner may reduce the amount included in the taxpayer's assessable income of the taxpayer's current year of income under subsection (4) having regard to: (d) the extent to which the market value, as at the beginning of the taxpayer's current year of income, of the assets of the trust estate is, in the opinion of the Commissioner, attributable to property or services transferred by the taxpayer before the IP time; and (e) such other matters as the Commissioner considers relevant. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAZE Accruals system of taxation does not apply to small amounts An amount is not to be included in the assessable income of the taxpayer of a year of income under section 102AAZD in relation to a trust estate that is a listed country trust estate in relation to the year of income if the amount obtained by: (a) identifying each trust estate in relation to which the taxpayer is an attributable taxpayer in relation to the year of income; and (b) calculating the attributable income of the year of income of each such trust estate; and (c) adding the amounts calculated under paragraph (b); does not exceed the lesser of the following amounts: (d) $20,000; (e) 10% of the total of the net incomes of each of those trust estates of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAZF Only resident partners, beneficiaries etc. liable to be assessed as a result of attribution Section 460 applies to an amount included in the assessable income of a taxpayer under section 102AAZD in a corresponding way to the way in which section 460 applies to an amount included in the assessable income of a taxpayer under section 456 or 457 and, for the purposes of that corresponding application, references in sections 336, 338 and 460 to a Part X Australian resident are to be read as references to a resident within the meaning of section 6. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AAZG Keeping of records (1) Subject to this section, a person who is an attributable taxpayer: (a) in relation to the year of income of the person commencing on 1 July 1990 or in relation to a subsequent year of income of the person; and (b) in relation to a particular trust estate; must keep records (in Australia or elsewhere) containing particulars of: (c) the acts, transactions and other circumstances that resulted in the person being an attributable taxpayer in relation to that year of income and in relation to that trust estate; and (d) except where subsection 102AAZD(4) applies in relation to the trust estate and in relation to the year of income of the person--the basis of the calculation of the attributable income of the trust estate for each year of income of the trust estate any part of which occurred during the year of income of the person; and (e) the basis of the calculation of the amounts (including nil amounts) included in the assessable income of the person of the year of income of the person under section 102AAZD. Note: There is an administrative penalty if you do not keep or retain records as required by this section: see section 288-25 in Schedule 1 to the Taxation Administration Act 1953. (2) A person who contravenes subsection(1) is guilty of an offence punishable on conviction by a fine not exceeding 30 penalty units. Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. (2A) An offence under subsection (2) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (3) A person who is required by this section to keep records must: (a) keep the records in writing in the English language or so as to enable the records to be readily accessible and convertible into writing in the English language; and (b) keep the records so as to enable the person's liability under this Act to be readily ascertained. (4) This section does not require a person to keep a record of information if: (a) the person did not know, and had no reasonable grounds to suspect, that the person was an attributable taxpayer of the kind mentioned in subsection (1); or (b) the person did not know that, and made all reasonable efforts to ascertain whether, the person was an attributable taxpayer as mentioned in subsection (1); or (c) the person did not know, and made all reasonable efforts to obtain, the information. Note: A defendant bears an evidential burden in relation to the matters in subsection (4), see subsection 13.3(3) of the Criminal Code. (5) Subject to subsections (6) and (7), the following provisions apply to a partnership as if the partnership were a person: (a) subsections (1) to (4) (inclusive) of this section; (b) subsections 262A(4) and (5), in so far as those subsections apply to records kept under or for the purposes of this section; (c) Part III of the Taxation Administration Act 1953, in so far as that Part of that Act relates to the provisions covered by paragraph (a) or (b) of this subsection. (6) Where, by virtue of subsection (5), an offence is taken to have been committed by a partnership, that offence is taken to have been committed by each of the partners. (7) In a prosecution of a person for an offence by virtue of subsection (6), it is a defence if the person proves that the person: (a) did not aid, abet, counsel or procure the act or omission by virtue of which the offence was taken to have been committed; and (b) was not in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, an act or omission by virtue of which the offence is taken to have been committed. Note 1: The defence under subsection (7) does not apply in relation to offences under Part 2.4 of the Criminal Code. Note 2: A defendant bears a legal burden in relation to the matters in subsection (7), see section 13.4 of the Criminal Code. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AA Interpretation (1) In this Division, unless the contrary intention appears: "agreement" means any agreement, arrangement, understanding or scheme, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. "occupation" includes any office, employment, trade, business, profession, vocation or calling, but does not include a course of education at a school, college, university or similar institution. "property" means property whether real or personal, and includes money. (2) In this Division: (a) a reference to the derivation by a person of assessable income shall be read as including a reference to the inclusion of an amount in the assessable income of the person; and (b) a reference to the derivation by a person of any assessable income from particular property shall be read as including a reference to the inclusion of an amount in the assessable income of the person in respect of that property. (3) In this Division, a reference to the share of a beneficiary of the net income of a trust estate shall be read as a reference to a share of the beneficiary of the net income of a trust estate: (a) that is included in the assessable income of the beneficiary under section 97 or 100; or (b) in respect of which the trustee of the trust estate is liable to be assessed and to pay tax in pursuance of section 98. (4) A reference in this Division to income that is derived from particular property shall be read as including a reference to income that is derived from property that, in the opinion of the Commissioner, represents that property. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AB Application of Division This Division applies in relation to the year of income that commenced on 1 July 1979 and in relation to all subsequent years of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AC Persons to whom Division applies (1) For the purposes of this Division, a person is a prescribed person in relation to a year of income if: (a) the person is less than 18 years of age on the last day of the year of income; and (b) the person is not an excepted person in relation to the year of income. (2) Subject to this section, a person (in this subsection referred to as the minor) is an excepted person in relation to a year of income for the purposes of this Division if, and only if: (b) the minor was engaged in a full-time occupation on the last day of the year of income; (c) the minor is a person: (i) in respect of whom a carer allowance under the Social Security Act 1991 was payable in respect of a period that included the last day of the year of income; or (ii) to whom a disability support pension under that Act was payable in respect of a period that included the last day of the year of income; or (d) the Commissioner: (i) has received a certificate issued by a legally qualified medical practitioner certifying that the minor is: (A) a disabled child, or a disabled adult, within the meaning of Part 2.19 of the Social Security Act 1991; or (B) a person who has a continuing inability to work within the meaning of Part 2.3 of the Social Security Act 1991 or is permanently blind; and (ii) is satisfied that, on the last day of the year of income, the minor was a person of the kind mentioned in sub-subparagraph (i)(A) or (B); (da) the minor is the principal beneficiary of a special disability trust; (e) a double orphan pension was payable in respect of the minor under the Social Security Act 1991 in respect of a period that included the last day of the year of income; (f) but for section 1003 of the Social Security Act 1991, a double orphan pension would have been payable in respect of the minor under that Act in respect of a period that included the last day of the year of income; or (g) the Commissioner: (i) has received a certificate issued by a legally qualified medical practitioner certifying that the minor is a person who, by reason of a permanent disability, is unlikely to be able to engage in a full-time occupation; and (ii) is satisfied that, on the last day of the year of income, the minor was such a person. (3) Where: (a) a double orphan pension was payable, or would, but for section 1003 of the Social Security Act 1991, have been payable, in respect of a person under that Act in respect of a period during a year of income, being a period that included the last day of the year of income; and (b) during the whole of the period referred to in paragraph (a), the person was wholly or substantially dependent for support on a relative or relatives of the person; that person shall not be taken by virtue of paragraph (2)(e) or (f) to be an excepted person in relation to the year of income. (4) Where: (a) the Commissioner is of the opinion that, during a period during a year of income, being a period that included the last day of the year of income, a person was a person who, by reason of a permanent disability, was unlikely to be able to engage in a full-time occupation; and (b) during the whole of the period referred to in paragraph (a), the person was wholly or substantially dependent for support on a relative or relatives of the person; that person shall not be taken, by virtue of paragraph (2)(g), to be an excepted person in relation to the year of income. (5) For the purposes of subsections (3) and (4), a person shall be taken to have been wholly or substantially dependent for support on a relative or relatives of the person during any period during which that person resided with a relative or relatives of the person unless the contrary is established to the satisfaction of the Commissioner. (6) Subject to this section, a person shall be taken, for the purposes of subsection (2), to have been engaged in a full-time occupation on the last day of a year of income if, and only if: (a) the person was, on the last day of the year of income, a person engaged in a full-time occupation; or (b) in a case to which paragraph (a) does not apply--the person was engaged in a full-time occupation during the year of income for a period of not less than 3 months or for periods the aggregate of which is not less than 3 months. (7) Where: (a) during a period during a year of income, a person was engaged in a full-time occupation; and (b) during the year of income and after the expiration of that period, the person was engaged in a course of full-time education at a school, college, university or similar institution; no regard shall be had to that period in determining whether the person is to be taken, by virtue of paragraph (6)(b), to have been engaged in a full-time occupation on the last day of the year of income. (8) A person shall not be taken to have been engaged in a full-time occupation on the last day of a year of income unless the Commissioner is satisfied that, on that day: (a) the person had the intention of engaging in a full-time occupation or full-time occupations during the whole or a substantial part of the next succeeding year of income; and (b) the person did not have the intention of engaging in a course of full-time education at a school, college, university or similar institution at any time during the next succeeding year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AD Taxable income to which Division applies The eligible taxable income of a year of income of a person who is a prescribed person in relation to the year of income is the amount (if any) remaining after deducting from the eligible assessable income of the person of the year of income: (a) any deductions allowable to the person in relation to the year of income that relate exclusively to that eligible assessable income; (b) so much of any other deductions (other than apportionable deductions) allowable to the person in relation to the year of income as, in the opinion of the Commissioner, may appropriately be related to that eligible assessable income; and (c) the amount that bears to the apportionable deductions allowable to the person in relation to the year of income the same proportion as the amount that, but for this paragraph, would be the eligible taxable income of the person of the year of income bears to the sum of: (i) the taxable income of the person of the year of income; and (ii) the apportionable deductions allowable to the person in relation to the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AE Eligible assessable income (1) For the purposes of this Division, the eligible assessable income of a year of income of a person is so much of the assessable income of the person of the year of income as is not excepted assessable income. (2) Subject to this section, an amount included in the assessable income of a person (in this subsection referred to as the minor) is excepted assessable income to the extent to which the amount: (a) is employment income or business income; (b) is derived by the minor from the investment of any property transferred to the minor: (i) by way of, or in satisfaction of a claim for, damages in respect of: (A) loss by the minor of parental support; or (B) personal injury to the minor, any disease suffered by the minor or any impairment of the minor's physical or mental condition; (ii) pursuant to any law relating to worker's compensation; (iii) pursuant to any law relating to the payment of compensation in respect of criminal injuries; (iv) directly as the result of the death of another person and under the terms of a life assurance policy; (v) directly as the result of the death of another person and out of a provident, benefit, superannuation or retirement fund; (vi) directly as the result of the death of another person by an employer of the deceased person; (vii) out of a public fund established and maintained exclusively for the relief of persons in necessitous circumstances; or (viii) as the result of a family breakdown (see section 102AGA); (c) is derived by the minor from the investment of any property: (i) that devolved upon the minor from the estate of a deceased person; (ii) that was transferred to the minor by another person out of property that devolved upon that other person from the estate of a deceased person and was so transferred within 3 years after the date of the death of the deceased person; or (iii) that was acquired by the minor as the beneficial owner of a verifiable prize in a legally authorized and conducted lottery; (d) not being business income, is included in the assessable income of the minor under section 92; (e) is included in the assessable income of the minor under section 97 or 100; or (f) is derived by the minor from the investment of any property that, in the opinion of the Commissioner, represents accumulations of: (i) excepted assessable income derived by the minor during a year of income in relation to which this Division applies; (ii) assessable income derived by the minor during a year of income in relation to which this Division does not apply, being assessable income that would, in the opinion of the Commissioner, have been excepted assessable income if this Division were applicable in relation to the year of income during which the assessable income was derived; or (iii) exempt income derived by the minor to which subparagraph (i) or (ii) would, in the opinion of the Commissioner, apply if that exempt income had been assessable income. (3) A reference in paragraph (2)(d) to an amount (not being business income) that is included in the assessable income of a person under section 92 in respect of the individual interest of the person in the net income of a partnership shall be read as a reference to so much of an amount so included in that assessable income as, in the opinion of the Commissioner, is attributable to so much of the assessable income of the partnership as would, in the opinion of the Commissioner, have been excepted assessable income if the assessable income of the partnership had been derived by that person. (4) A reference in paragraph (2)(e) to an amount included in the assessable income of a person under section 97 or 100 shall be read as not including a reference to any part to which this Division applies of an amount included in that assessable income under either of those sections. (5) Subject to subsections (6) and (7), a reference in paragraph (2)(a), in relation to a person (in this subsection referred to as the minor), to business income shall, in relation to any business income derived by the minor during a year of income from the carrying on of a business, be read as a reference to: (a) in a case where during the year of income, the business was carried on by the minor either alone or in partnership with another person who was, or other persons each of whom was, under the age of 18 years on the first day of the year of income--so much of that business income as the Commissioner considers fair and reasonable having regard to: (i) the extent to which, during the year of income, the minor had the real and effective conduct and control of the business and participated in the operations and activities of the business; (ii) the extent to which the minor had the real and effective control over the disposal of income derived by the minor from the business during the year of income; (iii) the extent to which the capital of the business consisted of property contributed by the minor, being property the income from which would, in the opinion of the Commissioner, be excepted assessable income in relation to the minor; and (iv) such other matters (if any) as the Commissioner thinks fit; and (b) in any other case--the amount that, in the opinion of the Commissioner, is reasonable remuneration by way of salary or wages for any services rendered by the minor during the year of income in the production of assessable income of the business increased by such amount (if any) as, in the opinion of the Commissioner, is reasonable, having regard to the extent to which the capital of the business consisted of property contributed by the minor the income from which would, in the opinion of the Commissioner, be excepted assessable income in relation to the minor. (6) Subject to subsection (7), if any 2 or more parties to: (a) the derivation of the excepted assessable income mentioned in subsection (2); or (b) any act or transaction directly or indirectly connected with the derivation of that excepted assessable income; were not dealing with each other at arm's length in relation to the derivation, or in relation to the act or transaction, the excepted assessable income is only so much (if any) of that income as would have been derived if they had been dealing with each other at arm's length in relation to the derivation, or in relation to the act or transaction. (7) Subsection (2) does not apply in relation to assessable income derived by a person directly or indirectly under or as a result of an agreement that was entered into or carried out by any person (whether before or after the commencement of this subsection) for the purpose, or for purposes that included the purpose, of securing that that assessable income would not be eligible assessable income. (8) In determining whether subsection (7) applies in relation to an agreement, no regard shall be had to a purpose that is a merely incidental purpose. (9) Where: (a) any assessable income is derived by a person from the investment of any property transferred to the person by way of, or in satisfaction of a claim for, damages in respect of: (i) loss by the person of parental support; or (ii) personal injury to the person, any disease suffered by the person or any impairment of the person's physical or mental condition; and (b) that property was transferred to that person otherwise than in pursuance of an order of a court; paragraph (2)(b) applies only to so much (if any) of that assessable income as the Commissioner considers fair and reasonable. (10) Where: (a) the assessable income of a person (in this subsection referred to as the minor) of a year of income: (i) includes an amount derived by the minor from property that: (A) was transferred to the minor by another person out of property that devolved upon that other person from the estate of a deceased person; and (B) was so transferred within 3 years after the date of the death of the deceased person; but does not include any amount that: (C) was derived by the minor from property that devolved upon the minor from the estate of that deceased person; or (D) is included in the assessable income of the minor under section 97 or 100 in respect of the share of the minor of the net income of a trust estate that resulted from a will or codicil of that deceased person, an order of a court that varied or modified the provisions of a will or codicil of that deceased person, a partial intestacy of that deceased person or an order of a court that varied or modified the application, in relation to the estate of that deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; or (ii) includes an amount derived by the minor from property that: (A) was transferred to the minor by another person out of property that devolved upon that other person from the estate of a deceased person; and (B) was so transferred within 3 years after the date of death of the deceased person; and also includes an amount or amounts to which sub-subparagraph (i)(C) or (D) applies; and (b) the amount to which subparagraph (a)(i) applies or the sum of the amounts to which subparagraph (a)(ii) applies, as the case may be, exceeds the amount that, in the opinion of the Commissioner, would have been included in the assessable income of the minor of the year of income in respect of an amount or amounts derived by the minor from property that, in the opinion of the Commissioner, would have devolved upon or for the benefit of the minor from the estate of that deceased person if that deceased person had died intestate; the amount of the assessable income of the minor of the year of income that would, apart from this subsection, have been excepted assessable income by virtue of subparagraph (2)(c)(ii) shall be reduced by the amount of that excess. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AF Employment income and business income (1) A reference in this Division to employment income is to be read as a reference to: (a) work and income support related withholding payments and benefits; and (b) payments made for services rendered or to be rendered; and (c) compensation, sickness or accident payments: (i) made to an individual because of the individual's or another's incapacity for work; and (ii) calculated at a periodical rate. (3) In this Division, a reference, in relation to a person in relation to a year of income, to business income shall be read as a reference to income derived by the person during the year of income from carrying on of a business either alone or together with another person or other persons. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AG Trust income to which Division applies (1) Where a beneficiary of a trust estate is a prescribed person in relation to a year of income, this Division applies to so much of the share of the beneficiary of the net income of the trust estate of the year of income as, in the opinion of the Commissioner, is attributable to assessable income of the trust estate that is not, in relation to that beneficiary, excepted trust income. (2) Subject to this section, an amount included in the assessable income of a trust estate is excepted trust income in relation to a beneficiary of the trust estate to the extent to which the amount: (a) is assessable income of a trust estate that resulted from: (i) a will, codicil or an order of a court that varied or modified the provisions of a will or codicil; or (ii) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; (b) is employment income; (c) is derived by the trustee of the trust estate from the investment of any property transferred to the trustee for the benefit of the beneficiary: (i) by way of, or in satisfaction of a claim for, damages in respect of: (A) loss by the beneficiary of parental support; or (B) personal injury to the beneficiary, any disease suffered by the beneficiary or any impairment of the beneficiary's physical or mental condition; (ii) pursuant to any law relating to worker's compensation; (iii) pursuant to any law relating to the payment of compensation in respect of criminal injuries; (iv) directly as the result of the death of a person and under the terms of a policy of life insurance; (v) directly as the result of the death of a person and out of a provident, benefit, superannuation or retirement fund; (vi) directly as the result of the death of a person by an employer of the deceased person; (vii) out of a public fund established and maintained exclusively for the relief of persons in necessitous circumstances; or (viii) as the result of a family breakdown (see section 102AGA); (d) is derived by the trustee of the trust estate from the investment of any property: (i) that devolved for the benefit of the beneficiary from the estate of a deceased person; (ii) that was transferred to the trustee for the benefit of the beneficiary by another person out of property that devolved upon that other person from the estate of a deceased person and was so transferred within 3 years after the date of the death of the deceased person; or (iii) being a verifiable prize in a legally authorized and conducted lottery and being a prize of which the beneficiary is the beneficial owner; or (e) is derived by the trustee of the trust estate from the investment of any property that, in the opinion of the Commissioner, represents accumulations of: (i) assessable income derived by the trustee during a year of income in relation to which this Division applies, being assessable income that, in relation to the beneficiary, is excepted trust income; (ii) assessable income derived by the trustee during a year of income in relation to which this Division does not apply, being assessable income that would, in the opinion of the Commissioner, have been excepted trust income in relation to the beneficiary if this Division were applicable in relation to the year of income during which the assessable income was derived; or (iii) exempt income derived by the trustee to which subparagraph (i) or (ii) would, in the opinion of the Commissioner, apply if that exempt income had been assessable income. (2A) Paragraph (2)(c) or subparagraph (2)(d)(ii) does not apply unless the beneficiary of the trust concerned will, under the terms of the trust, acquire the trust property (other than as a trustee) when the trust ends. (3) Subject to subsection (4), if any 2 or more parties to: (a) the derivation of the excepted trust income mentioned in subsection (2); or (b) any act or transaction directly or indirectly connected with the derivation of that excepted trust income; were not dealing with each other at arm's length in relation to the derivation, or in relation to the act or transaction, the excepted trust income is only so much (if any) of that income as would have been derived if they had been dealing with each other at arm's length in relation to the derivation, or in relation to the act or transaction. (4) Subsection (2) does not apply in relation to assessable income derived by a trustee directly or indirectly under or as a result of an agreement that was entered into or carried out by any person (whether before or after the commencement of this subsection) for the purpose, or for purposes that included the purpose, of securing that that assessable income would be excepted trust income. (5) In determining whether subsection (4) applies in relation to an agreement, no regard shall be had to a purpose that is a merely incidental purpose. (5A) In the application of paragraph 102AF(1)(b) for the purposes of the application of paragraph (2)(b) of this section in relation to a beneficiary of a trust estate, payments made for services rendered or to be rendered shall not be taken to be employment income unless the services are rendered or to be rendered by the beneficiary. (6) Where: (a) any assessable income is derived by a trustee of a trust estate from the investment of any property transferred to the trustee for the benefit of a beneficiary of the trust estate by way of, or in satisfaction of a claim for, damages in respect of: (i) loss by the beneficiary of parental support; or (ii) personal injury to the beneficiary, any disease suffered by the beneficiary or any impairment of the beneficiary's physical or mental condition; and (b) that property was transferred to the trustee otherwise than in pursuance of an order of a court; paragraph (2)(c) applies only to so much (if any) of that assessable income as the Commissioner considers fair and reasonable. (7) Where: (a) any assessable income is derived by a trustee of a trust estate from the investment of any property transferred to the trustee for the benefit of a beneficiary of the trust estate by another person out of property that devolved upon that other person from the estate of a deceased person and was so transferred to the trustee within 3 years after the date of death of the deceased person; and (b) the amount referred to in paragraph (a) or, if the assessable income of that beneficiary of the year of income includes any amount that: (i) was derived by the beneficiary from property that was transferred to the beneficiary by another person out of property that devolved upon that other person from the estate of that deceased person and was so transferred within 3 years after the date of death of that deceased person; (ii) was derived by the beneficiary from property that devolved upon the beneficiary from the estate of that deceased person; or (iii) is included in that assessable income under section 97 or 100 in respect of the share of that beneficiary of the net income of another trust estate, being a trust estate that resulted from a will or codicil of that deceased person, an order of a court that varied or modified the provisions of a will or codicil of that deceased person, a partial intestacy of that deceased person or an order of a court that varied or modified the application, in relation to the estate of that deceased person, of the provisions of the law relating to the distribution of estates of persons who die intestate; the sum of the amount referred to in paragraph (a) and the amount or amounts applicable by virtue of subparagraphs (i), (ii) and (iii) of this paragraph, exceeds the amount that, in the opinion of the Commissioner, would have been included in the assessable income of the beneficiary of the year of income in respect of an amount or amounts derived by the beneficiary from property that, in the opinion of the Commissioner, would have devolved directly upon that beneficiary if that deceased person had died intestate; the amount of the assessable income of the trust estate that would, apart from this subsection, have been excepted trust income in relation to that beneficiary by virtue of subparagraph (2)(d)(ii) shall be reduced by the amount of that excess. (8) For the purposes of this section, where: (a) any property is transferred to the trustee of a trust estate; and (b) the trustee has a discretion to pay or apply the income derived from that property to or for the benefit of specified beneficiaries or beneficiaries included in a specified class of beneficiaries; that property shall be taken to have been transferred to the trustee for the benefit of each of those specified beneficiaries or for each of the beneficiaries in that specified class of beneficiaries, as the case may be. INCOME TAX ASSESSMENT ACT 1936 - SECT 102AGA Transfer of property as the result of a family breakdown (1) For the purposes of subparagraph 102AE(2)(b)(viii) or 102AG(2)(c)(viii), the transfer of property (the subject property) by a person (the transferor): (a) to the minor mentioned in subparagraph 102AE(2)(b)(viii); or (b) to the trustee mentioned in subparagraph 102AG(2)(c)(viii) for the benefit of the beneficiary mentioned in that subparagraph; is as the result of a family breakdown if the requirements of subsection (2) or (3) of this section are met. (2) The transfer will be as the result of a family breakdown if: (a) a person ceases to live with another person as the spouse of that person; and (b) at least one of the persons: (i) is the parent; or (iv) has legal custody or guardianship; of the minor or the beneficiary; and (c) an order, determination or assessment of a court, person or body (whether or not in Australia) is made wholly or partly because the person has ceased to live as the spouse of the other person; and (d) the effect of the order, determination or assessment is that a person (whether one of the spouses, the transferor or any other person) becomes subject to a legal obligation to maintain, transfer property to, or do some other thing for the benefit of, the minor or beneficiary or one of the spouses; and (e) the transferor transfers the subject property to the minor, or to the trustee for the benefit of the beneficiary, in giving effect to the legal obligation (including in discharging the legal obligation if it falls on someone else, and whether or not the legal obligation could have been given effect in some other way). (3) The transfer will also be as a result of a family breakdown if: (a) when the minor or beneficiary is born, his or her parents are not living together as spouses; and (b) an order, determination or assessment of a court, person or body (whether or not in Australia) is made wholly or partly because the parents are not living together as mentioned in paragraph (a); and (c) the effect of the order, determination or assessment is that a person (whether one of the parents, the transferor or any other person) becomes subject to a legal obligation to maintain, transfer property to, or do some other thing for the benefit of, the minor or beneficiary or one of the parents of the minor or beneficiary; and (d) the transferor transfers the subject property to the minor, or to the trustee for the benefit of the beneficiary, in giving effect to the legal obligation (including in discharging the legal obligation if it falls on someone else, and whether or not the legal obligation could have been given effect in some other way). INCOME TAX ASSESSMENT ACT 1936 - SECT 102A Interpretation (1) In this Division: "associate", in relation to a person, means any person who is an associate, within the meaning of section 318, in relation to the person. "interest", in relation to property, means any legal or equitable estate or interest in the property. "property" means any property whether real or personal. "right to receive income from property" means a right to have income that will or may be derived from property paid to, or applied or accumulated for the benefit of, the person owning the right. "the prescribed date", in relation to a person who transfers to another person a right to receive income from property, means the day preceding the seventh anniversary of the date on which income from the property is first paid to, or applied or accumulated for the benefit of, the other person by reason of the transfer. (2) A reference in this Division to a transfer of an interest in property or of a right to receive income from property shall be read as a reference to any such transfer, whether made for valuable consideration or not. (3) For the purposes of this Division, any income that will or may be derived by a trust estate from a business carried on by the trustee of the trust estate shall be deemed to be income that will or may be derived from property. (4) For the purposes of this Division: (a) where a person: (i) declares that he or she holds a right to receive income from property upon trust for another person; or (ii) transfers such a right to a trustee to be held upon trust for another person; the right shall be deemed to be transferred to that other person; and (b) where a person: (i) declares that he or she holds a right to receive income from property upon trust for 2 or more other persons in succession; or (ii) transfers such a right to, or to a trustee to be held upon trust for, 2 or more other persons in succession; the right shall be deemed to be separately transferred to each of those other persons for the respective periods for which the right is held upon trust for, or transferred to, those persons. (5) Where an interest in property or a right to receive income from property is transferred by 2 or more persons jointly, each of those persons shall, for the purposes of this Division, be deemed to have transferred an interest in that property or a right to receive income from that property, as the case may be. (6) In this Division, unless the contrary intention appears: (a) a reference to the arm's length consideration in respect of a transfer of a right to receive income from property is a reference to the consideration that might reasonably be expected to have been received or receivable in respect of the transfer if the right had been transferred under an agreement between independent parties dealing at arm's length with each other in relation to the agreement and transfer; and (b) a reference to the amount of consideration is, in a case where consideration is paid or given otherwise than in cash, a reference to the money value of the consideration. INCOME TAX ASSESSMENT ACT 1936 - SECT 102B Certain income transferred for short periods to be included in assessable income of transferor (1) Subject to this section, where a right to receive income from property is transferred, otherwise than by a will or codicil, by a person (in this subsection referred to as the transferor) to an associate of the transferor for a period that will, or may for any reason other than the death of any person or the associate becoming under a legal disability, terminate before the prescribed date, any income that: (a) is derived from the property; (b) is paid to, or applied or accumulated for the benefit of: (i) the associate; or (ii) any other associate of the transferor to whom a right to receive income from the property has been transferred (whether by the first-mentioned associate or any other person) after the first-mentioned transfer; and (c) would, if the first-mentioned transfer had not been made, have been included in the assessable income of the transferor; shall be treated for the purposes of this Act as if the first-mentioned transfer had not been made. (2) Subsection (1) (other than subparagraph (1)(b)(ii)) does not apply in relation to a transfer of a right to receive income from property where: (a) the right was not a right that arose from the ownership by the transferor of an interest in the property; (b) the right arose from the ownership by the transferor of an interest in the property and, before or at the time of the first-mentioned transfer, the transferor transferred that interest to the transferee or another person; or (c) consideration has been received or is receivable in respect of the transfer and the amount of that consideration is not less than the arm's length consideration in respect of the transfer. (3) Where, on a particular day, a person who has transferred to another person a right to receive income from property: (a) in any case--transfers to the other person or to a third person an interest in the property, being the interest from the ownership of which by the transferor the right arose; (b) in the case of a natural person--dies; or (c) in the case of a company--ceases to exist; subsection (1) (other than subparagraph (1)(b)(ii)) does not apply, in relation to the transfer of the right to receive income, in relation to income that is derived from the property after that day. (4) Subsection (1) does not apply in relation to income derived by a person in pursuance of a transfer to that person of a right to receive income from property where, by reason of subsection 51-50(3) of the Income Tax Assessment Act 1997, the income so derived by the person is not exempt from tax under section 51-30 of that Act. (4A) Where: (a) subsection (1) (other than subparagraph (1)(b)(ii)) applies in relation to a transfer by a person of a right to receive income from property; and (b) consideration has been received or is receivable in respect of the transfer; then, notwithstanding any other provision of this Act (other than a provision of Part IVA), the amount of the consideration shall not be included in the assessable income of the person of a year of income. (5) Nothing in any other provision of this Act prevents the amendment of an assessment at any time for the purpose of excluding from the assessable income of a person income that is, by virtue of subsection (1), to be included in the assessable income of another person. (6) Where there is excluded from the assessable income of a person an amount that, in pursuance of subsection (1) was previously treated as assessable income of that person, nothing in any other provision of this Act prevents the amendment of any assessment at any time to give effect to the inclusion in the assessable income of another person of an amount that, in pursuance of that subsection, was treated as not being so included for the purposes of the assessment. INCOME TAX ASSESSMENT ACT 1936 - SECT 102C Effect of certain transfers of rights to receive income from property Where: (a) any income is paid to, or applied or accumulated for the benefit of, a person (in this section referred to as the transferee) by reason of the transfer to the person of a right to receive income from property; and (b) the income so paid, applied or accumulated is, by virtue of section 102B, to be included in the assessable income of another person (in this section referred to as the transferor); then: (c) for the purposes of the application of this Act other than this Division in relation to the transferor, an amount equal to the income so paid, applied or accumulated: (i) shall be deemed to have been paid by the transferor to the transferee at the time at which the income was paid to, or applied or accumulated for the benefit of, the transferee; and (ii) shall be deemed to have been so paid for the purpose for which the right was transferred; and (d) where, if the right had not been transferred, but the transferor had paid to the transferee, at the time at which the income was so paid to, or applied or accumulated for the benefit of, the transferee and for the purpose for which the right was transferred, an amount (in this paragraph referred to as the notional amount) equal to the amount of the income so paid, applied or accumulated, the notional amount or a part of the notional amount would have been included in the assessable income of the transferee--there shall be included in that assessable income an amount equal to the notional amount or that part of the notional amount, as the case may be. INCOME TAX ASSESSMENT ACT 1936 - SECT 102CA Consideration in respect of transfer to be included in assessable income of transferor in certain cases (1) Subject to this section, where: (a) a right to receive income from property is transferred, otherwise than by a will or codicil, by a person to another person; (b) consideration has been received or is receivable in respect of the transfer; and (c) immediately after the transfer, subsection 102B(1) (other than subparagraph 102B(1)(b)(ii)) does not apply in relation to the transfer; the assessable income of the transferor of the year of income in which the right is transferred shall include the amount of the consideration. (2) Subsection (1) does not apply in relation to a transfer of a right to receive income from property where: (a) the right was not a right that arose from the ownership by the transferor of an interest in the property; or (b) the right arose from the ownership by the transferor of an interest in the property and, before or at the time of the first-mentioned transfer, the transferor transferred that interest to the transferee; or (c) the right is, or is part of, a Division 230 financial arrangement (within the meaning of the Income Tax Assessment Act 1997). (3) Where, by reason of subsection 51-50(3) of the Income Tax Assessment Act 1997, income derived by a person pursuant to a transfer to the person of a right to receive income from property is not exempt from tax under section 51-30 of that Act, subsection (1) does not apply in relation to the transfer. INCOME TAX ASSESSMENT ACT 1936 - SECT 102D Interpretation (1) In this Division, unless the contrary intention appears: "arrangement" means an agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. "net income", in relation to a corporate unit trust, means the total assessable income of the corporate unit trust calculated under this Act as if the trustee were a taxpayer in respect of that income and were a resident, less all allowable deductions.A corporate unit trust may be required to work out its net income in a special way by Division 266 or 267 in Schedule 2F. "prescribed trust estate" means a trust estate that is, or has been, a corporate unit trust in relation to any year of income. "property" includes a chose in action and also includes any estate, interest, right or power, whether at law or in equity, in or over property. "relevant year of income" means the year of income that commenced on 1 July 1980 or a subsequent year of income. "unit", in relation to a prescribed trust estate, includes a beneficial interest, however described, in any of the income or property of the trust estate. "unitholder", in relation to a prescribed trust estate, means the holder of a unit or units in the prescribed trust estate. "unit trust dividend" means: (a) any distribution made by the trustee of a prescribed trust estate, whether in money or in other property, to a unitholder; and (b) any amount credited by the trustee of a prescribed trust estate to a unitholder as a unitholder; but does not include: (c) moneys paid or credited, or property distributed, by the trustee of a prescribed trust estate to the extent to which the moneys are attributable, or the property is attributable, to profits arising during a year of income in relation to which the prescribed trust estate was not a corporate unit trust; or (d) moneys paid or credited, or property distributed, by the trustee of a prescribed trust estate in respect of the cancellation, extinguishment or redemption of a unit to the extent to which: (i) the moneys paid or credited or the property distributed represent or represents moneys paid to, or property transferred to, the trustee for the purpose of the creation or issue of that unit; and (ii) the amount of the moneys paid or credited or the value of the property distributed, as the case may be, does not exceed the amount of the moneys paid to the trustee, or the value, at the time of transfer, of the property transferred to the trustee, for the purpose of the creation or issue of that unit. (2) A reference in this Division to an associate of a company or of the trustee of a unit trust (which company or trustee is in this subsection referred to as the primary entity) shall be read as a reference to a company or the trustee of a trust estate (which company or trustee is in this subsection referred to as the associate) where: (a) the affairs or operations of the primary entity are, or are able to be, controlled, either directly or indirectly, by the associate; (b) the affairs or operations of the associate are, or are able to be, controlled, either directly or indirectly, by the primary entity; or (c) the operations of the primary entity are, or are able to be, controlled, either directly or indirectly, by a person who controls or is able to control, or by persons who control or are able to control, either directly or indirectly, the operations of the associate. (3) A reference in subsection (2) to the affairs or operations of a primary entity or of an associate, shall, in a case where the primary entity or the associate is a trustee, include a reference to the administration of the trust estate by the trustee. INCOME TAX ASSESSMENT ACT 1936 - SECT 102E Prescribed arrangements (1) A reference in this Division, in relation to a unit trust, to an arrangement that is a prescribed arrangement in relation to a company is a reference to an arrangement under which: (a) a shareholder in the company was, by reason of being a shareholder in the company, to be granted a right or an option to acquire, either directly or indirectly through any interposed companies or trusts, a unit or units in the unit trust; and (b) the units in the unit trust were to be held or dealt with, or the income or property of the unit trust was to be applied, during any year of income, in such a way that, in the opinion of the Commissioner, if section 102G were applied in relation to the unit trust in relation to the year of income, the unit trust would be a public unit trust in relation to the year of income. (2) Without limiting the generality of subsection (1), a reference in that subsection to an arrangement under which a shareholder in a company was, by reason of being a shareholder in the company, to be granted a right or an option to acquire a unit or units in a unit trust includes a reference to an arrangement under which a shareholder in the company was, by reason of being a shareholder in the company, to be given a preference or advantage in relation to: (a) the allocation of a unit or units in the unit trust or the acceptance of moneys by any person in relation to the allocation of a unit or units in the unit trust; or (b) the acquisition of a unit or units in the unit trust. (3) A reference in this Division, in relation to a unit trust (in this subsection and subsection (4) referred to as the second unit trust), to an arrangement that is a prescribed arrangement in relation to another unit trust (in this subsection and subsection (4) referred to as the first unit trust) is a reference to an arrangement under which: (a) a unitholder in the first unit trust was, by reason of being a unitholder in the first unit trust, to be granted a right or an option to acquire, either directly or indirectly through any interposed companies or trusts, a unit or units in the second unit trust; and (b) the units in the second unit trust were to be held or dealt with, or the property of the second unit trust was to be applied, during any year of income, in such a way that, in the opinion of the Commissioner, if section 102G were applied in relation to the second unit trust in relation to the year of income, the second unit trust would be a public unit trust in relation to the year of income. (4) Without limiting the generality of subsection (3), a reference in that subsection to an arrangement under which a unitholder in the first unit trust was, by reason of being a unitholder in the first unit trust, to be granted a right or an option to acquire a unit or units in the second unit trust includes a reference to an arrangement under which a unitholder in the first unit trust was, by reason of being a unitholder in the first unit trust, to be given a preference or advantage in relation to: (a) the allocation of a unit or units in the second unit trust or the acceptance of moneys by any person in relation to the allocation of a unit or units in the second unit trust; or (b) the acquisition of a unit or units in the second unit trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 102F Eligible unit trusts (1) For the purposes of this Division, a unit trust is an eligible unit trust in relation to a year of income if: (a) property that, at any time during the year of income or a preceding year of income, was property of the unit trust became property of the unit trust in pursuance of an arrangement that is a prescribed arrangement in relation to a company and, at any time before the property became property of the unit trust, the property was the property of the company or an associate of the company; or (b) in pursuance of an arrangement that is a prescribed arrangement in relation to a company, the trustee of the unit trust has, at any time during the year of income or a preceding year of income, carried on a business that, at any time before that time, had been carried on by the company or an associate of the company. (2) For the purposes of this Division, a unit trust (in this subsection referred to as the relevant unit trust) is also an eligible unit trust in relation to a year of income if: (a) property that, at any time during the year of income or a preceding year of income, was property of the relevant unit trust became property of the relevant unit trust in pursuance of an arrangement that is a prescribed arrangement in relation to another unit trust and, at any time before the property became the property of the relevant unit trust, the property was the property of that other unit trust or of an associate of the trustee of that other unit trust; or (b) in pursuance of an arrangement that is a prescribed arrangement in relation to another unit trust, the trustee of the relevant unit trust has, at any time during the year of income or a preceding year of income, carried on a business that, at any time before that time, had been carried on by the trustee of that other unit trust or an associate of the trustee of that other unit trust; and that other unit trust is in relation to the year of income, or was in relation to a preceding year of income, an eligible unit trust. (3) A reference in subsection (1) or (2), in relation to a company or trustee of a unit trust, to the property of an associate shall, in a case where the associate is the trustee of a trust estate, be read as a reference to property of that trust estate. (4) Ownership interests in a unit trust or a company that is part of a scheme for reorganising the affairs of stapled entities referred to in Subdivision 124-Q of the Income Tax Assessment Act 1997 is not property for the purposes of applying subsections (1) and (2). INCOME TAX ASSESSMENT ACT 1936 - SECT 102G Public unit trusts (1) For the purposes of this Division, but subject to the succeeding provisions of this section, a unit trust is a public unit trust in relation to a year of income if, at any time during the year of income: (a) any of the units in the unit trust were listed for quotation in the official list of a stock exchange in Australia or elsewhere; (b) any of the units in the unit trust were offered to the public; or (c) the units in the unit trust were held by not fewer than 50 persons. (2) A unit trust shall not be taken to be a public unit trust in relation to a year of income by reason that units in the unit trust were offered to the public at any time during the year of income if the Commissioner is of the opinion that any of those units were offered to the public for the purpose, or for purposes that included the purpose, of enabling the unit trust to be treated as a public unit trust for the purposes of this Division in relation to the year of income. (3) Notwithstanding subsection (1) but subject to subsection (4), a unit trust that, but for this subsection and subsection (6), would be a public unit trust in relation to a year of income shall be deemed not to be a public unit trust in relation to the year of income if, at any time during the year of income, one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, a unit or units in the unit trust that entitled the holder or holders thereof to not less than 75% of: (a) the beneficial interests in the income of the unit trust; or (b) the beneficial interests in the property of the unit trust. (4) Subject to subsection (6), where by virtue of subsection (3), a unit trust would, but for this subsection, be deemed not to be a public unit trust in relation to a year of income by reason that, at any time during the year of income, one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, the unit or units referred to in subsection (3) and the Commissioner is of the opinion that, having regard to: (a) the length of the period or the aggregate of the lengths of the periods in the year of income during which one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, the unit or units referred to in subsection (3); and (b) any other matters that the Commissioner considers relevant; it is reasonable that the unit trust should be treated as a public unit trust in relation to the year of income, the unit trust shall be deemed to be a public unit trust in relation to the year of income. (5) For the purposes of subsections (3) and (4), a person (in this subsection referred to as the transferee) to whom a right to acquire or become the holder of a unit in a unit trust is granted or transferred shall be deemed not to have such a right if the Commissioner is of the opinion, having regard to the financial circumstances of the transferee and to any other matters that the Commissioner considers relevant, that it was not intended by the person who granted or transferred the right to the transferee that the right would be exercised by the transferee. (6) Notwithstanding any of the preceding provisions of this section but subject to subsection (7), a unit trust that, but for this subsection, would be a public unit trust in relation to a year of income, shall be deemed not to be a public unit trust in relation to that year of income if: (a) not less than 75% of the total of moneys paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders, was paid or credited to one person or persons not more than 20 in number; or (b) the Commissioner is of the opinion that, by reason of: (i) any provision in the instrument by which the trust was created, or any contract, agreement or instrument authorizing the variation or abrogation of the rights attaching to any of the units in the unit trust or relating to the conversion, cancellation, extinguishment or redemption of any such units; (ii) any contract, agreement, option or instrument under which a person has power to acquire a unit or units in the unit trust; or (iii) any power, authority, or discretion in a person in relation to the rights attaching to any of the units in the unit trust; the rights attaching to any of the units in the unit trust were, at any time during the year of income, capable of being varied or abrogated in such a manner (notwithstanding that they were not in fact varied or abrogated in that manner) that: (iv) units in the unit trust that entitled the holder or holders thereof to not less than 75% of: (A) the beneficial interests in the income of the unit trust; or (B) the beneficial interests in the property of the unit trust; would have been held by one person or persons not more than 20 in number; (v) not less than 75% of the total of moneys paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders would have been paid or credited to one person or persons not more than 20 in number; or (vi) in the case where no moneys were paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders--if moneys had been so paid or credited by the trustee of the unit trust during the year of income, not less than 75% of the amount of those moneys would have been paid or credited to one person or persons not more than 20 in number. (7) A unit trust shall not be deemed by subsection (6) not to be a public unit trust in relation to a year of income by reason that rights attaching to any of the units in the unit trust were, at any time during the year of income, capable of being varied in the manner mentioned in paragraph (6)(b) if the Commissioner is of the opinion that the person or persons who were able to vary the rights in that manner intended not to vary the rights in that manner during the year of income. (8) For the purposes of subsections (1) and (2), units in a unit trust shall be taken to be offered to the public if and only if: (a) an offer is made to the public or to a section of the public to subscribe for or purchase the units; or (b) an invitation is issued to the public or to a section of the public to make offers to subscribe for or purchase the units. (9) For the purposes of this section, where any units in a unit trust are held by the trustee of another trust estate, a person who has a beneficial interest in property of that other trust estate that consists of those units (whether or not that beneficial interest is deemed to be held by virtue of the application of this subsection) shall be deemed to hold those units. (10) For the purposes of this section, a distribution of property of a unit trust to a unitholder shall be taken to be a payment of money to the unitholder of an amount equal to the value of the property. (11) For the purposes of this section: (a) a person, whether or not he or she holds units in the unit trust concerned; (b) his or her relatives; and (c) in relation to any units in respect of which they are such nominees, his or her nominees and the nominees of any of his or her relatives; shall be deemed to be one person. INCOME TAX ASSESSMENT ACT 1936 - SECT 102H Resident unit trusts For the purposes of this Division, a unit trust is a resident unit trust in relation to a year of income if, at any time during the year of income: (a) either of the following conditions was satisfied: (i) any property of the unit trust was situated in Australia; (ii) the trustee of the unit trust carried on business in Australia; and (b) either of the following conditions was satisfied: (i) the central management and control of the unit trust was in Australia; (ii) a person who was a resident or persons who were residents held more than 50% of: (A) the beneficial interests in the income of the unit trust; or (B) the beneficial interests in the property of the unit trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 102J Corporate unit trusts (1) A unit trust is a corporate unit trust in relation to a relevant year of income if: (a) where the relevant year of income is the year of income that commenced on 1 July 1980, the year of income that commenced on 1 July 1981 or the year of income commencing on 1 July 1982: (i) the unit trust was established after 11 July 1980; (ii) the unit trust is an eligible unit trust in relation to the relevant year of income; (iii) the unit trust is a public unit trust in relation to the relevant year of income; and (iv) either of the following conditions is satisfied: (A) the unit trust is a resident unit trust in relation to the relevant year of income; (B) the unit trust was a corporate unit trust in relation to a year of income preceding the relevant year of income; or (b) where the relevant year of income is the year of income commencing on 1 July 1983 or a subsequent year of income: (i) the unit trust is an eligible unit trust in relation to the relevant year of income; (ii) the unit trust is a public unit trust in relation to the relevant year of income; and (iii) either of the following conditions is satisfied: (A) the unit trust is a resident unit trust in relation to the relevant year of income; (B) the unit trust was a corporate unit trust in relation to a year of income preceding the relevant year of income. (2) Where a unit trust that was established on or before 11 July 1980 is an eligible unit trust in relation to the year of income that commenced on 1 July 1980, the year of income that commenced on 1 July 1981, or the year of income commencing on 1 July 1982 by virtue of a prescribed arrangement in relation to a company or unit trust that was entered into or carried out after 11 July 1980 then, whether or not the unit trust is also an eligible unit trust in relation to any of those years of income by virtue of a prescribed arrangement in relation to a company or unit trust that was entered into or carried out on or before 11 July 1980, the unit trust shall be taken, for the purposes of subparagraph (1)(a)(i), to have been established after 11 July 1980. INCOME TAX ASSESSMENT ACT 1936 - SECT 102K Taxation of net income of corporate unit trust The trustee of a unit trust that is a corporate unit trust in relation to a relevant year of income shall be assessed and is liable to pay tax on the net income of the corporate unit trust of the relevant year of income at the rate declared by the Parliament for the purposes of this section. INCOME TAX ASSESSMENT ACT 1936 - SECT 102L Modified application of Act in relation to certain unit trusts (1) For the purpose of the application of this Act in relation to the imposition, assessment and collection of tax in respect of: (a) the net income of a corporate unit trust; and (b) the income or assessable income of a unitholder in a prescribed trust estate; the following provisions of this section have effect. Note: Under Subdivision 713-C of the Income Tax Assessment Act 1997, this Act applies differently in relation to a corporate unit trust that chooses to form a consolidated group. (3) For the purposes of the application of sections 46A and 46B in accordance with subsection (2), the Commissioner may be satisfied, in relation to a unit trust dividend, that a transaction, operation, undertaking, scheme or arrangement was by way of dividend stripping or similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping if the Commissioner would have been satisfied, had the unit trust dividend been a dividend paid by a company, that the transaction, operation, undertaking, scheme or arrangement would have been a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping or, as the case requires, would have been similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping. (3A) For the purposes of subsections (2) and (3): (a) the reference in paragraph (2)(a) to a prescribed trust estate includes a reference to a trust estate that is a prescribed trust estate for the purposes of Division 6C; (b) the reference in paragraph (2)(b) to a corporate unit trust includes a reference to a unit trust that is a public trading trust for the purposes of Division 6C; and (c) references in those subsections to a unit trust dividend include references to a unit trust dividend within the meaning of Division 6C. (3B) Section 67AA applies, mutatis mutandis, in relation to the trustee of a corporate unit trust. (5) For the purposes of the application of the definition of year of income in subsection 6(1), the reference in that definition to a company (except a company in the capacity of a trustee) shall be read as including a reference to a corporate unit trust or, as the context requires, to the trustee of a corporate unit trust. (6) A reference in the definition of person in subsection 6(1) to a company shall be read as including a reference to a corporate unit trust or, as the context requires, to the trustee of a corporate unit trust. (7) The reference in section 158 to the taxable income of a company except income in respect of which it is assessable as trustee shall be read as including a reference to the net income of a corporate unit trust. (10) A reference in subsection 44(1) or section 128B of this Act, in subsection 840-805(3) of the Income Tax Assessment Act 1997, in Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 (except section 12-225) or in subsection 12-390(10) in that Schedule, to a company or to a company that is a resident shall be read as including a reference to a prescribed trust estate or, as the context requires, to the trustee of a prescribed trust estate. (11) A reference in the definition of paid in subsection 6(1) or in subsection 44(1), section 128A or section 128B of this Act, or in Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 (except section 12-225), to a dividend shall be read as including a reference to a unit trust dividend. (12A) Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 applies in respect of units in a prescribed trust estate in the same way as it applies in respect of shares. (13) A reference in subsection 44(1) to a shareholder in relation to a company shall be read as including a reference to a unitholder in a prescribed trust estate. (15) A reference in section 6B, Division 6 or subsection 128A(3) or 157(3) of this Act, Subdivision 840-M of the Income Tax Assessment Act 1997 or Subdivision 12-H in Schedule 1 to the Taxation Administration Act 1953 to a trust estate or to a trustee shall be read as not including a reference to a trust estate that is a corporate unit trust or to the trustee of a corporate unit trust, as the case may be. (18) For the purposes of subsection 44(1), a unit trust dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate shall, to the extent to which the unit trust dividend is attributable to profits derived by the trustee, be taken to be paid out of those profits. (19) For the purposes of section 128B, a unit trust dividend paid to a unitholder in a prescribed trust estate shall be deemed to be income derived by the unitholder at the time at which the unit trust dividend is paid. Non-unit dividend (20) Subsections (2), (3), (3A) and (19) apply as if references in those subsections to a unit trust dividend included a reference to a non-unit dividend. (21) For the purposes of subsection 44(1), a non-unit dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate is taken, to the extent to which the non-unit dividend is attributable to a source in Australia, to be derived from a source in Australia. (21A) For the purposes of subsection 44(1), a non-unit dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate is taken, to the extent to which the non-unit dividend is attributable to a source outside Australia, to be derived from a source outside Australia. (22) If a provision of this Act that applies to a dividend: (a) is taken under this section to apply to a unit trust dividend; and (b) applies to a non-share dividend in the same way as it applies to a dividend; that provision also applies to a non-unit dividend in the same way as it applies to a dividend. Non-unit equity interest (23) If a provision of this Act that applies to a share: (a) is taken under this section to apply to a unit in a corporate unit trust; and (b) applies to a non-share equity interest in a company in the same way as it applies to a share; that provision also applies to a non-unit equity interest in a corporate unit trust in the same way as it applies to a share. Equity holder (24) Subsections (1), (2), (17) and (19) apply as if references in those subsections to a unitholder included a reference to an equity holder who is not a unitholder. (25) If a provision of this Act that applies to a shareholder: (a) is taken because of this section to apply to a unitholder in a corporate unit trust; and (b) applies to an equity holder in a company who is not a shareholder in the same way as it applies to a shareholder; that provision also applies to an equity holder in a corporate unit trust who is not a unitholder in the same way as it applies to a shareholder. Definitions (26) In this section: "equity holder" in a prescribed trust estate means the holder of an equity interest in the prescribed trust estate. "equity interest" in a prescribed trust estate means: (a) a unit in the prescribed trust estate; or (b) any other interest that would be an equity interest in the prescribed trust estate if references in Division 974 of the Income Tax Assessment Act 1997 to a company included references to a prescribed trust estate or, as the context requires, to the trustee of a prescribed trust estate. "non-unit dividend" means a unit trust distribution that is not a unit trust dividend. "non-unit equity interest" in a prescribed trust estate means an equity interest in the prescribed trust estate that is not a unit in the prescribed trust estate. "unit trust distribution means a distribution, or an amount credited, that would be a unit trust dividend if references in the definition of unit trust dividend" in subsection 102D(1) to a unitholder were references to an equity holder. INCOME TAX ASSESSMENT ACT 1936 - SECT 102M Interpretation In this Division, unless the contrary intention appears: "arrangement" has the same meaning as in the Income Tax Assessment Act 1997. "eligible investment business" means one or more of: (a) investing in land for the purpose, or primarily for the purpose, of deriving rent; or (b) investing or trading in any or all of the following: (i) secured or unsecured loans (including deposits with a bank or other financial institution); (ii) bonds, debentures, stock or other securities; (iii) shares in a company, including shares in a foreign hybrid company (as defined in the Income Tax Assessment Act 1997); (iv) units in a unit trust; (v) futures contracts; (vi) forward contracts; (vii) interest rate swap contracts; (viii) currency swap contracts; (ix) forward exchange rate contracts; (x) forward interest rate contracts; (xi) life assurance policies; (xii) a right or option in respect of such a loan, security, share, unit, contract or policy; (xiii) any similar financial instruments; or (c) investing or trading in financial instruments (not covered by paragraph (b)) that arise under financial arrangements, other than arrangements excepted by section 102MA. "excluded rent" means rent worked out by reference to the profits or receipts of an entity that uses any of the relevant land under an arrangement that is designed to result in the transfer of all, or substantially all, of what would otherwise be the profits of the entity to another party to the arrangement. "financial arrangement" has the same meaning as in the Income Tax Assessment Act 1997. "land" includes an interest in land and fixtures on land. "net income", in relation to a public trading trust, means the total assessable income of the trust calculated under this Act as if the trustee were a taxpayer in respect of that income and were a resident, less all allowable deductions.A public trading trust may be required to work out its net income in a special way by Division 266 or 267 in Schedule 2F. "prescribed trust estate" means a trust estate that is, or has been, a public trading trust in relation to any year of income. "property" includes a chose in action and also includes any estate, interest, right or power, whether at law or in equity, in or over property. "relevant year of income" means the year of income that commenced on 1 July 1985 or a subsequent year of income. "trading business" means a business that does not consist wholly of eligible investment business. "unit", in relation to a prescribed trust estate, includes a beneficial interest, however described, in any of the income or property of the trust estate. "unitholder", in relation to a prescribed trust estate, means the holder of a unit or units in the prescribed trust estate. "unit trust dividend" means: (a) any distribution made by the trustee of a prescribed trust estate, whether in money or in other property, to a unitholder; and (b) any amount credited by the trustee of a prescribed trust estate to a unitholder as a unitholder; but does not include: (c) money paid or credited, or property distributed, by the trustee of a prescribed trust estate to the extent to which the money or property is attributable to profits arising during a year of income in relation to which the prescribed trust estate was not a public trading trust; or (d) money paid or credited, or property distributed, by the trustee of a prescribed trust estate in respect of the cancellation, extinguishment or redemption of a unit to the extent to which: (i) the money paid or credited or the property distributed represents money paid to, or property transferred to, the trustee for the purpose of the creation or issue of that unit; and (ii) the amount of the money paid or credited or the value of the property distributed, as the case may be, does not exceed the amount of the money paid to the trustee, or the value, at the time of transfer, of the property transferred to the trustee, for the purpose of the creation or issue of that unit. INCOME TAX ASSESSMENT ACT 1936 - SECT 102MA Arrangements not covered (1) For the purposes of paragraph (c) of the definition of eligible investment business in section 102M, the excepted arrangements are those specified in this section. Note: This section does not affect an arrangement that satisfies paragraph (a) or (b) of that definition. Leasing or property arrangement (2) A right or obligation arising under: (a) an arrangement to which Division 42A (about leases of luxury cars) in Schedule 2E applies; or (b) an arrangement to which Division 240 of the Income Tax Assessment Act 1997 (about arrangements treated as a sale and loan) applies; or (c) a financial arrangement in the form of a loan that is taken to exist by subsection 250-155(1) of the Income Tax Assessment Act 1997; or (d) an arrangement that, in substance or effect, depends on the use of a specific asset that is: (i) real property; or (ii) goods or a personal chattel (other than money or a money equivalent); or (iii) intellectual property; and gives a right to control the use of the asset; or (e) an arrangement that is a licence to use: (i) real property; or (ii) goods or a personal chattel (other than money or a money equivalent); or (iii) intellectual property. Interest in partnership or trust estate (3) A right carried by an interest in a partnership or a trust estate, or an obligation that corresponds to such a right, if: (a) there is only one class of interest in the partnership or trust estate; or (b) the interest is an equity interest in the partnership or trust estate; or (c) for a right or obligation relating to a trust estate--the trust estate is managed by a funds manager or custodian, or a responsible entity (as defined in the Corporations Act 2001) of a registered scheme (as so defined). General insurance policies (4) A right or obligation under a general insurance policy. Guarantees and indemnities (5) A right or obligation under a guarantee or indemnity unless: (a) the financial arrangement is one where: (i) its value changes in response to changes in a specified variable or variables (such as an interest rate, foreign exchange rate, credit rating, index or commodity or financial instrument price); and (ii) there is no requirement for a net investment, or there is such a requirement but the net investment is smaller than would be required for other types of financial arrangement that would be expected to have a similar response to changes in market factors; or (b) the guarantee or indemnity is given or entered into in relation to a financial arrangement. Superannuation and pension income (6) A right to receive, or an obligation to provide, a financial benefit (as defined in the Income Tax Assessment Act 1997) if the right or obligation arises from a person's membership of a superannuation or pension scheme. Retirement village arrangements (7) A right or obligation arising under: (a) a contract that gives rise to a right to occupy residential premises in a retirement village (as defined in the A New Tax System (Goods and Services Tax) Act 1999); or (b) a contract under which a resident of such a retirement village is provided with general or personal services in the retirement village. INCOME TAX ASSESSMENT ACT 1936 - SECT 102MB Investing in land Moveable property (1) For the purposes of this Division, investments in moveable property, being property that is: (a) incidental to and relevant to the renting of land; and (b) customarily supplied or provided in connection with the renting of land; and (c) ancillary to the ownership and use of land; are taken to be investments in land. Safe harbour rule (2) For the purposes of this Division, an entity's investments in land are taken to be for the purpose, or primarily for the purpose, of deriving rent during a year of income if: (a) each of those investments is for purposes (other than the purpose of trading) that include a purpose of deriving rent; and (b) at least 75% of the gross revenue from those investments for the year of income consists of rent (except excluded rent); and (c) none of the remaining gross revenue from those investments for the year of income is: (i) excluded rent; or (ii) from the carrying on of a business that is not incidental and relevant to the renting of the land. (3) In working out the gross revenue referred to in paragraph (2)(b), payments for the provision of services that: (a) are incidental to and relevant to the renting of land; and (b) are ancillary to the ownership and use of the land; are taken to be rent derived from the land. Example: Payments as reimbursement for expenses incurred by the lessor in providing security services for a shopping centre would be covered by this subsection. (4) In working out the gross revenue referred to in subsection (2), disregard any capital gains and capital losses from a CGT event arising from a disposal or other realisation of ownership of land. Meaning of entity (5) In this section: "entity" has the same meaning as in the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 102MC When trading business not carried on A trustee of a unit trust that would, apart from this section, carry on a trading business at a time during a year of income is taken for the purposes of this Division not to carry on a trading business at a time during that year if, for that year, not more than 2% of the gross revenue of the trustee (as trustee of the unit trust) was income from things other than eligible investment business (except from the carrying on of a business that is not incidental and relevant to the eligible investment business). INCOME TAX ASSESSMENT ACT 1936 - SECT 102MD Application of Division to trustees etc. of exempt life assurance funds and superannuation funds This Division applies to the person in whom the assets of a fund are vested (whether or not as trustee) in the same way as this Division applies to an exempt entity, if the fund is: (a) a fund maintained by a life assurance company solely in respect of a class of life assurance business that consists of business of, or in relation to, the issuing of, or the undertaking of liability under: (i) exempt life insurance policies (within the meaning of the Income Tax Assessment Act 1997); or (ii) complying superannuation/FHSA life insurance policies (within the meaning of that Act); or (b) a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 102N Trading trusts (1) For the purposes of this Division, a unit trust is a trading trust in relation to a year of income if, at any time during the year of income, the trustee: (a) carried on a trading business; or (b) controlled, or was able to control, directly or indirectly, the affairs or operations of another person in respect of the carrying on by that other person of a trading business. (2) Despite paragraph (1)(b), a unit trust is not a trading trust only because it has acquired ownership interests (including a controlling interest) in, or controls: (a) a foreign entity whose business, when considered together with the businesses of entities that the foreign entity controls or is able to control, directly or indirectly, consists primarily of investing in land outside Australia for the purpose, or primarily for the purpose, of deriving rent; or (b) a foreign entity controlled, or able to be controlled, directly or indirectly, by an entity covered by paragraph (a). (3) In this section: "entity" has the same meaning as in the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 102NA Certain interposed trusts not trading trusts (1) A unit trust is not a trading trust for the purposes of this Division in relation to a year of income if: (a) the trust is an interposed trust in relation to a scheme for reorganising the affairs of stapled entities referred to in Subdivision 124-Q of the Income Tax Assessment Act 1997 in relation to the year of income or an earlier year of income; and (b) a roll-over was obtained by any entity under that Subdivision of that Act in relation to the scheme for the year of income or that earlier year of income; and (c) the condition in subsection (2) is satisfied. (2) The trustee of the trust must not, at any time during the year of income: (a) carry on a trading business; or (b) control, or be able to control, directly or indirectly, the affairs or operations of another entity that carries on a trading business, other than: (i) a company that was, before the scheme was completed, one of the stapled entities referred to in Subdivision 124-Q of the Income Tax Assessment Act 1997; or (ii) a subsidiary of one of those stapled entities that is a company, or an entity that is controlled or able to be controlled, directly or indirectly, by that company; or (iii) a trust whose trustee was, before the scheme was completed, assessed and liable to pay tax under Division 6B or this Division and that was, before the scheme was completed, one of those stapled entities; or (iv) an entity that is controlled or able to be controlled, directly or indirectly, by the trust referred to in subparagraph (iii); in relation to the year of income or an earlier year of income. (3) In this section: "entity" has the same meaning as in the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 102P Public unit trusts (1) For the purposes of this Division, but subject to the succeeding provisions of this section, a unit trust is a public unit trust in relation to a year of income if, at any time during the year of income: (a) any of the units in the unit trust were listed for quotation in the official list of a stock exchange in Australia or elsewhere; (b) any of the units in the unit trust were offered to the public; or (c) the units in the unit trust were held by not fewer than 50 persons. (2) For the purposes of this Division, but subject to the succeeding provisions of this section, a unit trust is also a public unit trust in relation to a year of income if: (a) at any time during the year of income, an exempt entity or exempt entities held, or had the right to acquire or become the holder or holders of, a unit or units in the unit trust that entitled the holder or holders to not less than 20% of: (i) the beneficial interests in the income of the unit trust; or (ii) the beneficial interests in the property of the unit trust; (b) not less than 20% of the total of money paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders was paid or credited to an exempt entity or exempt entities; or (c) by reason of: (i) any provision in the instrument by which the trust was created, or any contract agreement or instrument authorising the variation or abrogation of the rights attaching to any of the units in the unit trust or relating to the conversion, cancellation, extinguishment or redemption of any such units; (ii) any contract, agreement, option or instrument under which a person has power to acquire a unit or units in the unit trust; or (iii) any power, authority or discretion in a person in relation to the rights attaching to any of the units in the unit trust; the rights attaching to any of the units in the unit trust were, at any time during the year of income, capable of being varied or abrogated in such a manner (notwithstanding that they were not in fact varied or abrogated in that manner) that: (iv) units in the unit trust that entitled the holder or holders to not less than 20% of: (A) the beneficial interests in the income of the unit trust; or (B) the beneficial interests in the property of the unit trust; would have been held by an exempt entity or exempt entities; (v) not less than 20% of the total of money paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders would have been paid or credited to an exempt entity or exempt entities; or (vi) in the case where no money was paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders--if money had been so paid or credited by the trustee of the unit trust during the year of income, not less than 20% of the amount of that money would have been paid or credited to an exempt entity or exempt entities. (3) A unit trust shall not be taken to be a public unit trust in relation to a year of income by reason that units in the unit trust were offered to the public at any time during the year of income if the Commissioner is of the opinion that any of those units were offered to the public for the purpose, or for purposes that included the purpose, of enabling the unit trust to be treated as a public unit trust for the purposes of this Division in relation to the year of income. (4) Subject to subsection (5), a unit trust that, but for this subsection and subsection (7), would be a public unit trust in relation to a year of income by virtue only of subsection (1) shall be deemed not to be a public unit trust in relation to the year of income if, at any time during the year of income, one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, a unit or units in the unit trust that entitled the holder or holders thereof to not less than 75% of: (a) the beneficial interests in the income of the unit trust; or (b) the beneficial interests in the property of the unit trust. (5) Subject to subsection (7), where by virtue of subsection (4), a unit trust would, but for this subsection, be deemed not to be a public unit trust in relation to a year of income by reason that, at any time during the year of income, one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, the unit or units referred to in subsection (4) and the Commissioner is of the opinion that, having regard to: (a) the length of the period or the aggregate of the lengths of the periods in the year of income during which one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, the unit or units referred to in subsection (4); and (b) any other matters that the Commissioner considers relevant; it is reasonable that the unit trust should be treated as a public unit trust in relation to the year of income, the unit trust shall be deemed to be a public unit trust in relation to the year of income. (6) For the purposes of subsections (4) and (5), a person (in this subsection referred to as the transferee) to whom a right to acquire or become the holder of a unit in a unit trust is granted or transferred shall be deemed not to have such a right if the Commissioner is of the opinion, having regard to the financial circumstances of the transferee and to any other matters that the Commissioner considers relevant, that it was not intended by the person who granted or transferred the right to the transferee that the right would be exercised by the transferee. (7) Subject to subsection (8), a unit trust that, but for this subsection, would be a public unit trust in relation to a year of income by virtue only of subsection (1), shall be deemed not to be a public unit trust in relation to that year of income if: (a) not less than 75% of the total of money paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders was paid or credited to one person or persons not more than 20 in number; or (b) by reason of: (i) any provision in the instrument by which the trust was created, or any contract, agreement or instrument authorising the variation or abrogation of the rights attaching to any of the units in the unit trust or relating to the conversion, cancellation, extinguishment or redemption of any such units; (ii) any contract, agreement, option or instrument under which a person has power to acquire a unit or units in the unit trust; or (iii) any power, authority or discretion in a person in relation to the rights attaching to any of the units in the unit trust; the rights attaching to any of the units in the unit trust were, at any time during the year of income, capable of being varied or abrogated in such a manner (notwithstanding that they were not in fact varied or abrogated in that manner) that: (iv) units in the unit trust that entitled the holder or holders thereof to not less than 75% of: (A) the beneficial interests in the income of the unit trust; or (B) the beneficial interests in the property of the unit trust; would have been held by one person or persons not more than 20 in number; (v) not less than 75% of the total of money paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders would have been paid or credited to one person or persons not more than 20 in number; or (vi) in the case where no money was paid or credited by the trustee of the unit trust during the year of income to unitholders as unitholders--if money had been so paid or credited by the trustee of the unit trust during the year of income, not less than 75% of the amount of that money would have been paid or credited to one person or persons not more than 20 in number. (8) A unit trust shall not be deemed by subsection (7) not to be a public unit trust in relation to a year of income by reason that rights attaching to any of the units in the unit trust were, at any time during the year of income, capable of being varied in the manner mentioned in paragraph (7)(b) if the Commissioner is of the opinion that the person or persons who were able to vary the rights in that manner intended not to vary the rights in that manner during the year of income. (9) For the purposes of subsections (1) and (3), units in a unit trust shall be taken to be offered to the public if and only if: (a) an offer is made to the public or to a section of the public to subscribe for or purchase the units; or (b) an invitation is issued to the public or to a section of the public to make offers to subscribe for or purchase the units. (10) For the purposes of this section, where any units in a unit trust (except a foreign entity to which subsection 102N(2) applies) are held by the trustee of another trust estate, a person who has a beneficial interest in property of that other trust estate that consists of those units (whether or not that beneficial interest is deemed to be held by virtue of the application of this subsection) shall be deemed to hold those units. (11) For the purposes of this section, a distribution of property of a unit trust to a unitholder shall be taken to be a payment of money to the unitholder of an amount equal to the value of the property. (12) For the purposes of this section: (a) a person, whether or not he or she holds units in the unit trust concerned; (b) his or her relatives; and (c) in relation to any units in respect of which they are such nominees, his or her nominees and the nominees of any of his or her relatives; shall be deemed to be one person. INCOME TAX ASSESSMENT ACT 1936 - SECT 102Q Resident unit trusts For the purposes of this Division, a unit trust is a resident unit trust in relation to a year of income if, at any time during the year of income: (a) either of the following conditions was satisfied: (i) any property of the unit trust was situated in Australia; (ii) the trustee of the unit trust carried on business in Australia; and (b) either of the following conditions was satisfied: (i) the central management and control of the unit trust was in Australia; (ii) a person who was a resident or persons who were residents held more than 50% of: (A) the beneficial interests in the income of the unit trust; or (B) the beneficial interests in the property of the unit trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 102R Public trading trusts (1) A unit trust is a public trading trust in relation to a relevant year of income if: (a) where the relevant year of income is the year of income that commenced on 1 July 1985, the year of income commencing on 1 July 1986 or the year of income commencing on 1 July 1987: (i) the unit trust was established after 19 September 1985; (ii) the unit trust is a public unit trust in relation to the relevant year of income; (iii) the unit trust is a trading trust in relation to the relevant year of income; (iv) either of the following conditions is satisfied: (A) the unit trust is a resident unit trust in relation to the relevant year of income; (B) the unit trust was a public trading trust in relation to a year of income preceding the relevant year of income; and (v) the unit trust is not a corporate unit trust within the meaning of Division 6B in relation to the relevant year of income; or (b) where the relevant year of income is the year of income commencing on 1 July 1988 or a subsequent year of income: (i) the unit trust is a public unit trust in relation to the relevant year of income; (ii) the unit trust is a trading trust in relation to the relevant year of income; (iii) either of the following conditions is satisfied: (A) the unit trust is a resident unit trust in relation to the relevant year of income; (B) the unit trust was a public trading trust in relation to a year of income preceding the relevant year of income; and (iv) the unit trust is not a corporate unit trust within the meaning of Division 6B in relation to the relevant year of income. (2) Where: (a) a unit trust would, but for this subsection, be a unit trust established on or before 19 September 1985; (b) the unit trust was not a trading trust on 19 September 1985; and (c) the unit trust became a trading trust on a day after 19 September 1985; the unit trust shall be taken, for the purposes of this section, to have been established after 19 September 1985. (3) For the purposes of subsection (2), a unit trust is a trading trust on a particular day if, on that day, the trustee: (a) carries on a trading business; or (b) controls or is able to control, directly or indirectly, the affairs or operations of another person in respect of the carrying on by that other person of a trading business. (4) Where: (a) a unit trust would, but for this subsection, be a unit trust established on or before 19 September 1985; (b) if the year of income in which 19 September 1985 occurred had ended on that date, the unit trust would not have been a public unit trust in relation to that year of income; and (c) the Commissioner is satisfied that, at no time on or before that date, was it the intention of the trustee of the unit trust that the unit trust would become a public unit trust in relation to a year of income; the unit trust shall be taken, for the purposes of this section, to have been established after 19 September 1985. INCOME TAX ASSESSMENT ACT 1936 - SECT 102S Taxation of net income of public trading trust The trustee of a unit trust that is a public trading trust in relation to a relevant year of income shall be assessed and is liable to pay tax on the net income of the public trading trust of the relevant year of income at the rate declared by the Parliament for the purposes of this section. INCOME TAX ASSESSMENT ACT 1936 - SECT 102T Modified application of Act in relation to certain unit trusts (1) For the purpose of the application of this Act in relation to the imposition, assessment and collection of tax in respect of: (a) the net income of a public trading trust; and (b) the income or assessable income of a unitholder in a prescribed trust estate; the following provisions of this section have effect. Note: Under Subdivision 713-C of the Income Tax Assessment Act 1997, this Act applies differently in relation to a public trading trust that chooses to form a consolidated group. (3) For the purposes of the application of sections 46A and 46B in accordance with subsection (2), the Commissioner may be satisfied, in relation to a unit trust dividend, that a transaction, operation, undertaking, scheme or arrangement was by way of dividend stripping or similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping if the Commissioner would have been satisfied, had the unit trust dividend been a dividend paid by a company, that the transaction, operation, undertaking, scheme or arrangement would have been a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping or, as the case requires, would have been similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping. (4) For the purposes of subsections (2) and (3): (a) the reference in paragraph (2)(a) to a prescribed trust estate includes a reference to a trust estate that is a prescribed trust estate for the purposes of Division 6B; (b) the reference in paragraph (2)(b) to a public trading trust includes a reference to a unit trust that is a corporate unit trust for the purposes of Division 6B; and (c) references in those subsections to a unit trust dividend include references to a unit trust dividend within the meaning of Division 6B. (6) For the purposes of the application of the definition of year of income in subsection 6(1), the reference in that definition to a company (except a company in the capacity of a trustee) shall be read as including a reference to a public trading trust or, as the context requires, to the trustee of a public trading trust. (7) A reference in the definition of person in subsection 6(1) to a company shall be read as including a reference to a public trading trust or, as the context requires, to the trustee of a public trading trust. (8) The reference in section 158 to the taxable income of a company except income in respect of which it is assessable as trustee shall be read as including a reference to the net income of a public trading trust. (9) A reference in section 355-35 of the Income Tax Assessment Act 1997 to a body corporate is to be read as including a reference to a body corporate acting in its capacity as trustee of a public trading trust. (11) A reference in subsection 44(1) or section 128B of this Act, in subsection 840-805(3) of the Income Tax Assessment Act 1997, in Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 (except section 12-225) or in subsection 12-390(10) in that Schedule, to a company or to a company that is a resident shall be read as including a reference to a prescribed trust estate or, as the context requires, to the trustee of a prescribed trust estate. (12) A reference in the definition of paid in subsection 6(1) or 44(1), or in section 128A or 128B, of this Act, or in Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 (except section 12-225), to a dividend shall be read as including a reference to a unit trust dividend. (13A) Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 applies in respect of units in a prescribed trust estate in the same way as it applies in respect of shares. (14) A reference in subsection 44(1) to a shareholder in relation to a company shall be read as including a reference to a unitholder in a prescribed trust estate. (16) A reference in section 6B, Division 6 or subsection 128A(3) or 157(3) of this Act, Subdivision 840-M of the Income Tax Assessment Act 1997 or Subdivision 12-H in Schedule 1 to the Taxation Administration Act 1953 to a trust estate or to a trustee shall be read as not including a reference to a trust estate that is a public trading trust or to the trustee of a public trading trust, as the case may be. (19) For the purposes of subsection 44(1), a unit trust dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate shall, to the extent to which the unit trust dividend is attributable to profits derived by the trustee, be taken to be paid out of those profits. (20) For the purposes of section 128B, a unit trust dividend paid to a unitholder in a prescribed trust estate shall be deemed to be income derived by the unitholder at the time at which the unit trust dividend is paid. Non-unit dividend (21) Subsections (2), (3), (4) and (20) apply as if references in those subsections to a unit trust dividend included a reference to a non-unit dividend. (22) For the purposes of subsection 44(1), a non-unit dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate is taken, to the extent to which the non-unit dividend is attributable to a source in Australia, to be derived from a source in Australia. (22A) For the purposes of subsection 44(1), a non-unit dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate is taken, to the extent to which the non-unit dividend is attributable to a source outside Australia, to be derived from a source outside Australia. (23) If a provision of this Act that applies to a dividend: (a) is taken under this section to apply to a unit trust dividend; and (b) applies to a non-share dividend in the same way as it applies to a dividend; that provision also applies to a non-unit dividend in the same way as it applies to a dividend. Non-unit equity interest (24) If a provision of this Act that applies to a share: (a) is taken under this section to apply to a unit in a prescribed trust estate; and (b) applies to a non-share equity interest in a company in the same way as it applies to a share; that provision also applies to a non-unit equity interest in a prescribed trust estate in the same way as it applies to a share. Equity holder (25) Subsections (1), (2), (18) and (20) apply as if references in those subsections to a unitholder included a reference to an equity holder who is not a unitholder. (26) If a provision of this Act that applies to a shareholder: (a) is taken because of this section to apply to a unitholder in a prescribed trust estate; and (b) applies to an equity holder in a company who is not a shareholder in the same way as it applies to a shareholder; that provision also applies to an equity holder in a prescribed trust estate who is not a unitholder in the same way as it applies to a shareholder. Definitions (27) In this section: "equity holder" in a prescribed trust estate means the holder of an equity interest in the prescribed trust estate. "equity interest" in a prescribed trust estate means: (a) a unit in the prescribed trust estate; or (b) any other interest that would be an equity interest in the prescribed trust estate if references in Division 974 of the Income Tax Assessment Act 1997 to a company included references to a prescribed trust estate or, as the context requires, to the trustee of a prescribed trust estate. "non-unit dividend" means a unit trust distribution that is not a unit trust dividend. "non-unit equity interest" in a prescribed trust estate means an equity interest in the prescribed trust estate that is not a unit in the prescribed trust estate. "unit trust distribution means a distribution, or an amount credited, that would be a unit trust dividend if references in the definition of unit trust dividend" in section 102M to a unitholder were references to an equity holder. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UA What this Division is about (1) The main purpose of this Division is to ensure that the trustee of a closely held trust with one or more trustee beneficiaries that are presently entitled to a share of the income or of a tax-preferred amount of the trust advises the Commissioner soon after the end of the year of income of certain details about those trustee beneficiaries. This will allow the Commissioner to check whether the assessable income of the trustee beneficiaries includes the correct share of net income, and whether the net assets of the trustee beneficiaries reflect the receipt of the tax-preferred amounts. (2) To achieve this purpose, the Division: (a) provides for the trustee to correctly identify the trustee beneficiaries within a specified period after the end of the year of income; and (b) if the trustee fails to do so, provides for taxation at a penalty rate (in the case of net income) or offences under the Taxation Administration Act 1953 (in the case of tax-preferred amounts). (3) This Division also provides that, where the trustee of the closely held trust becomes presently entitled to an amount that is reasonably attributable to the whole or a part of the share of the net income of the closely held trust, there will also be taxation at a penalty rate. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UB Definitions--general In this Division: "closely held trust" has the meaning given by subsection 102UC(1). "correct TB statement" has the meaning given by section 102UG. "present entitlement" has a meaning affected by section 102UJ. "tax offset" has the same meaning as in the Income Tax Assessment Act 1997. "tax-preferred amount" has the meaning given by section 102UI. "TB statement period" has the meaning given by section 102UH. "trustee beneficiary" has the meaning given by section 102UD. "trustee beneficiary non-disclosure tax" means tax payable under paragraph 102UK(2)(a) or 102UM(2)(a). "untaxed part", of a share of the net income of a closely held trust, has the meaning given by section 102UE. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UC Closely held trust (1) A closely held trust is: (a) a trust where an individual has, or up to 20 individuals have between them, directly or indirectly, and for their own benefit, fixed entitlements to a 75% or greater share of the income, or a 75% or greater share of the capital, of the trust; or (b) a discretionary trust; except where the trust is an excluded trust. Trustees of discretionary trusts treated as individuals (2) For the purposes of paragraph (1)(a), if: (a) a trustee of a discretionary trust holds a fixed entitlement to a share of the income or capital of the trust mentioned in that paragraph directly or indirectly; and (b) no person holds that fixed entitlement directly or indirectly through the discretionary trust; the trustee is taken to hold that fixed entitlement directly or indirectly as an individual and for the individual's own benefit. Individuals treated as single individual (3) For the purposes of paragraph (1)(a), all of the following are taken to be a single individual: (a) an individual, whether or not the individual holds fixed entitlements directly in the trust mentioned in that paragraph; (b) the individual's relatives; (c) in relation to any fixed entitlements in respect of which other individuals are nominees of the individual or of the individual's relatives--those other individuals. Definitions (4) In this section: "discretionary trust" means a trust that is not a fixed trust within the meaning of section 272-65 in Schedule 2F. "excluded trust" means: (a) a trust to which paragraph (b), (c) or (d) of the definition of excepted trust in section 272-100 in Schedule 2F applies; or (b) a unit trust whose units are listed on the stock market operated by ASX Limited; or (c) a family trust; or (d) a trust in relation to which an interposed entity election has been made and is in force in accordance with section 272-85 in Schedule 2F; or (e) a trust that is covered by subsection 272-90(5) in Schedule 2F. "fixed entitlement" has the meaning given by sections 272-5, 272-10, 272-15 and 272-40 in Schedule 2F. "indirectly" has the meaning given by section 272-20 in Schedule 2F. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UD Trustee beneficiary A person is a trustee beneficiary of a closely held trust if the person is a beneficiary of the trust in the capacity of trustee of another trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UE Meaning of untaxed part (1) The untaxed part of a share of the net income of a closely held trust is so much of that share as is not covered by subsection (2). (2) The share of the net income of the closely held trust is covered by this subsection to the extent that: (a) the trustee of the closely held trust is assessed and liable to pay tax under subsection 98(4) in respect of the share; or (b) the share is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and liable to pay tax under subsection 98(4); or (c) the share is represented by or reasonably attributable to an amount from which an entity was required to withhold an amount under Subdivision 12-H in Schedule 1 to the Taxation Administration Act 1953; or (d) the share is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate was liable to pay trustee beneficiary non-disclosure tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UG Correct TB statement Share of net income case (1) This section applies if a share of the net income of a closely held trust for a year of income is included in the assessable income of a trustee beneficiary of the trust under section 97 and the share comprises or includes an untaxed part. Tax-preferred amount case (2) This section also applies if a trustee beneficiary of a closely held trust is presently entitled at the end of a year of income to a share of a tax-preferred amount of the trust. Correct TB statement (3) If this section applies, the trustee of the closely held trust makes a correct TB statement about the share if the trustee correctly states, in the approved form: (a) if the trustee beneficiary is a resident at the end of the year of income: (i) the name and tax file number of the trustee beneficiary; and (ii) the amount of the untaxed part of the share or the amount of the share of the tax-preferred amount; and (b) if the trustee beneficiary is a non-resident at the end of the year of income: (i) the name and address of the trustee beneficiary; and (ii) the amount of the untaxed part of the share or the amount of the share of the tax-preferred amount. Note: If a closely held trust has multiple trustee beneficiaries, the requirements in subsection (3) will have to be met for each of them for the trustee of the closely held trust to avoid paying any trustee beneficiary non-disclosure tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UH TB statement period The TB statement period, for the trustee of a trust in relation to a year of income, is the period from the end of the year of income until the end of: (a) the period within which the trustee is required to give to the Commissioner the trust's return of income for the year of income; or (b) such further period as the Commissioner allows. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UI Tax-preferred amount The expression "tax-preferred amount" of a trust means: (a) income of the trust that is not included in its assessable income in working out its net income; or (b) capital of the trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UJ Extended concept of present entitlement to capital of a trust For the purposes of this Division, section 95A applies in relation to capital of a trust in the same way as it applies to income of the trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UK Trustee beneficiary non-disclosure tax where no correct TB statement (1) Subject to subsection (2A), this section applies if: (a) a share of the net income of a closely held trust for a year of income is included in the assessable income of a trustee beneficiary of the trust under section 97; and (b) the share comprises or includes an untaxed part; and (c) the trustee of the closely held trust is not covered by a determination under subsection (1A) for the year of income; and (d) during the TB statement period in relation to the year of income, the trustee of the closely held trust does not make and give to the Commissioner a correct TB statement about the share. Determination that a class of trustees is not required to give a correct TB statement (1A) The Commissioner may, by legislative instrument, determine that a specified class of trustees is not required to make a correct TB statement for a year of income. (1B) A determination under subsection (1A): (a) may be expressed to be subject to conditions; and (b) may be for one or more years of income. Consequences of section applying (2) If this section applies: (a) either: (i) if the trustee of the closely held trust is the only person in the trustee group (see subsection (3))--the trustee is liable to pay tax; or (ii) if the trustee of the closely held trust is not the only person in the trustee group--the persons in the trustee group are jointly and severally liable to pay tax; as imposed by the Taxation (Trustee Beneficiary Non-disclosure Tax) Act (No. 1) 2007, on the untaxed part; and (b) except for the purposes of sections 99, 99A and 99B and this Division, the untaxed part is not included in the assessable income of the trustee beneficiary under section 97. Note: Provisions dealing with the payment etc. of the tax under paragraph (a) (known as trustee beneficiary non-disclosure tax) are set out in Subdivision D. Amendment of incorrect statement (2A) If: (a) during the TB statement period in relation to a year of income, the trustee of a closely held trust makes and gives to the Commissioner a statement, that the trustee believes on reasonable grounds is a correct TB statement, about a share of the net income of the trust; and (b) the statement is not a correct TB statement about the share, with the result that, apart from this subsection, this section applies; and (c) either: (i) the trustee could not reasonably have foreseen the event that caused the statement not to be a correct TB statement; or (ii) the statement is not a correct TB statement because of an inadvertent error; and (d) either: (i) before any trustee beneficiary non-disclosure tax becomes due and payable on the untaxed part as a result of this section applying; or (ii) before the end of 4 years after any such tax becomes due and payable; the trustee advises the Commissioner in writing of any change that is necessary to make the statement a correct TB statement about the share; this section does not apply, and is taken never to have applied, to the untaxed part. Trustee group (3) The trustee group consists of the following: (a) the trustee of the closely held trust; (b) if the trustee of the closely held trust is a company--the directors of the company. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UL Exclusion of directors of closely held trust from liability to pay tax (1) This section applies if a director of a company that is the trustee of the closely held trust is included in the trustee group under section 102UK. Director not taking part in statement decision because of illness or other good reason (2) If, because of illness or for some other good reason, the director did not take part in any decision not to make the correct TB statement, the director is not included in the trustee group. Director otherwise not taking part in statement decision (3) If: (a) the director did not take part in any decision not to make the correct TB statement; and (b) either: (i) the director was not aware of the proposal to make such a decision; or (ii) the director was aware and took reasonable steps to prevent the making of the decision; the director is not included in the trustee group. Director taking part in statement decision (4) If: (a) the director took part in any decision not to make a correct TB statement; and (b) the director voted against, or otherwise disagreed with the decision; and (c) the director took reasonable steps to ensure that a correct TB statement would be made; the director is not included in the trustee group. Where no statement decision (5) If: (a) no decision was made not to make a correct TB statement; and (b) either: (i) the director, because of illness or for some other good reason, was not involved in the management of the company during the TB statement period in relation to the year of income; or (ii) the director took reasonable steps to ensure that a correct TB statement would be made; the director is not included in the trustee group. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UM Trustee beneficiary non-disclosure tax where share is distributed to trustee of closely held trust (1) This section applies if: (a) a share of the net income of a closely held trust for a year of income is included in the assessable income of a trustee beneficiary of the trust under section 97; and (b) the trustee of the closely held trust becomes presently entitled to an amount that is reasonably attributable to the whole or a part of the untaxed part of the share; and (c) trustee beneficiary non-disclosure tax is not payable by the trustee of the closely held trust on the untaxed part under paragraph 102UK(2)(a). Consequences of section applying (2) If this section applies: (a) either: (i) if the trustee of the closely held trust is the only person in the trustee group (see subsection (3))--the trustee is liable to pay tax; or (ii) if the trustee of the closely held trust is not the only person in the trustee group--the persons in the trustee group are jointly and severally liable to pay tax; as imposed by the Taxation (Trustee Beneficiary Non-disclosure Tax) Act (No. 2) 2007, on the whole or that part of the untaxed part; and (b) except for the purposes of sections 99, 99A and 99B and this Division, the whole or that part of the untaxed part is not included in the assessable income of the trustee beneficiary under section 97. Note: Provisions dealing with the payment etc. of the tax under paragraph (a) (known as trustee beneficiary non-disclosure tax) are set out in Subdivision D. Trustee group (3) The trustee group consists of the following: (a) the trustee of the closely held trust; (b) if the trustee of the closely held trust is a company--the directors of the company. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UN Amount of trustee beneficiary non-disclosure tax reduced by notional tax offset (1) This section applies to trustee beneficiary non-disclosure tax that a trustee group would otherwise be liable to pay on the whole or part of a share of the net income of a closely held trust. (2) The amount of the trustee beneficiary non-disclosure tax is reduced by the amount of any tax offset to which the trustee of the closely held trust would be entitled in an assessment under section 99A if it were assumed that the trustee were assessed and liable to pay tax under that section on the whole or the part of the share of the net income. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UO Payment of trustee beneficiary non-disclosure tax Due date (1) Trustee beneficiary non-disclosure tax is due and payable at the end of: (a) 21 days after the TB statement period concerned ends; or (b) such later day as the Commissioner, in special circumstances, allows. Debt due (2) Trustee beneficiary non-disclosure tax, when it becomes due and payable, is a debt due to the Commonwealth and payable to the Commissioner. (3) Any unpaid trustee beneficiary non-disclosure tax may be sued for and recovered in a court of competent jurisdiction by the Commissioner suing in his or her official name. Application (4) Subsections (2) and (3) do not apply in relation to any trustee beneficiary non-disclosure tax that becomes due and payable on or after 1 July 2000. Note: For provisions about collection and recovery of trustee beneficiary non-disclosure tax and other amounts on or after 1 July 2000, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UP Late payment of trustee beneficiary non-disclosure tax If any of the trustee beneficiary non-disclosure tax which a person is liable to pay remains unpaid 60 days after the day by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that: (a) started at the beginning of the 60th day after the day by which the trustee beneficiary non-disclosure tax was due to be paid; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the trustee beneficiary non-disclosure tax; (ii) general interest charge on any of the trustee beneficiary non-disclosure tax. Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UR Notice of liability (1) The Commissioner may give a person or persons, by post or otherwise, a notice specifying: (a) the amount of any trustee beneficiary non-disclosure tax that the Commissioner has ascertained is payable by the person or persons; and (b) the day on which that tax became or will become due and payable. Effect of notice on liability etc. (2) The amount of the liability of a person or persons to trustee beneficiary non-disclosure tax, and the due date for payment of the tax, are not dependent on, or in any way affected by, the giving of a notice. Amendment of notice (3) The Commissioner may at any time amend a notice. An amended notice is a notice for the purposes of this section. Inconsistency between notices (4) If there is an inconsistency between notices that relate to the same subject matter, the later notice prevails to the extent of the inconsistency. Objections (5) A person who is or persons who are dissatisfied with a notice made in relation to the person or persons may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 102URA Request for notice of liability (1) A person or persons may make a written request to the Commissioner to be given a notice under subsection 102UR(1) in respect of specified circumstances in which trustee beneficiary non-disclosure tax may be payable. Compliance with request (2) The Commissioner must, subject to subsection (3) of this section, comply with the request. Further information (3) If the Commissioner considers that the notice cannot be given unless the person or persons give the Commissioner further information, the Commissioner must request the person or persons to give the Commissioner the information. Failure to give information (4) If the person or persons do not give the information, the Commissioner is not required to comply with the request to give the notice. INCOME TAX ASSESSMENT ACT 1936 - SECT 102US Evidentiary effect of notice of liability (1) The production of: (a) a notice given under section 102UR; or (b) a document that is signed by the Commissioner and appears to be a copy of such a notice; is conclusive evidence that: (c) the notice was duly given; and (d) the amount of trustee beneficiary non-disclosure tax specified in the notice became due and payable by the person or persons to whom it was given on the day specified. (2) Subsection (1) does not apply in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the review. INCOME TAX ASSESSMENT ACT 1936 - SECT 102USA Recovery of trustee beneficiary non-disclosure tax from trustee beneficiaries providing incorrect information etc. to head trustee (1) This section applies if the requirements in subsections (2) and (3) are satisfied. Requirement for payment of trustee beneficiary non-disclosure tax (2) A requirement for this section to apply is that: (a) the trustee of a closely held trust does not make a correct TB statement about a share of the net income of the trust of a year of income during the TB statement period in relation to the year of income; and (b) as a result, the trustee becomes liable, or the persons in the trustee group become jointly and severally liable, under section 102UK to pay trustee beneficiary non-disclosure tax; and (c) the trustee or any of the persons in the trustee group pays an amount (the recoverable amount), being some or all of the tax or any general interest charge under section 102UP in relation to the tax. Requirement for refusal etc. to provide information or for incorrect statement (3) A requirement for this section to apply is that: (a) either: (i) the trustee of the closely held trust was unable to make a correct TB statement about the share of the net income during the TB statement period because the trustee beneficiary in whose assessable income the share is included under section 97, when requested to do so, refused or failed to give information to the trustee; or (ii) the trustee of the closely held trust purported to make a correct TB statement about the share of the net income during the TB statement period but the statement was not a correct TB statement because it contained incorrect information given to the trustee of the closely held trust by the trustee beneficiary in whose assessable income the share is included under section 97, and the trustee honestly believed on reasonable grounds that the information was correct; and (b) the trustee of the closely held trust distributed to the trustee beneficiary an amount representing some or all of the share of the net income without withholding an amount under section 254 in respect of the recoverable amount. Consequences of section applying (4) If this section applies, the trustee or the person in the trustee group mentioned in paragraph (2)(c) may, in a court of competent jurisdiction, sue for the recoverable amount and recover it from the trustee beneficiary. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UT Requirement to make correct TB statement about trustee beneficiaries of tax-preferred amounts (1) If, at the end of a year of income: (a) a trustee beneficiary of a closely held trust is presently entitled to a share of a tax-preferred amount of the trust; and (b) the trustee of the closely held trust is not covered by a determination under subsection 102UK(1A) for the year of income; the trustee of the closely held trust must, during the TB statement period, make and send to the Commissioner a correct TB statement covering the share. (2) For the purposes of the Taxation Administration Act 1953, if the trustee contravenes the requirement in subsection (1) of this section to make and send a statement to the Commissioner, then, subject to subsection (3) of this section, the trustee is guilty of an offence against section 8C of that Act. (3) The trustee is not guilty of an offence against section 8C of the Taxation Administration Act 1953 as a result of a contravention of the requirement if: (a) the trustee did not know all the information required to be included in the statement; and (b) the trustee had taken reasonable steps to ascertain the information that he or she did not know; and (c) if the trustee did know some of the information, he or she included it in a statement that he or she sent to the Commissioner during the TB statement period. (4) The only burden of proof that the trustee bears in respect of subsection (3) is the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter in question existed. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UU Trustee beneficiary may quote tax file number to trustee of closely held trust A trustee beneficiary in respect of: (a) a share of the net income of a closely held trust for a year of income that is included in the assessable income of the trustee beneficiary of the trust under section 97; or (b) a share of a tax-preferred amount of a closely held trust to which the trustee beneficiary of the trust is presently entitled at the end of a year of income; may quote his or her tax file number to the trustee of the closely held trust in connection with that trustee making a correct TB statement about that share. Note: Section 8WA of the Taxation Administration Act 1953 makes it an offence for a person to require or request another person to quote the other person's tax file number unless provision is made by a taxation law for the other person to quote the number. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UV Trustee of closely held trust may record etc. tax file number (1) This section applies if a trustee beneficiary in respect of: (a) a share of the net income of a closely held trust for a year of income that is included in the assessable income of the trustee beneficiary of the trust under section 97; or (b) a share of a tax-preferred amount of a closely held trust to which the trustee beneficiary of the trust is presently entitled at the end of a year of income; quotes his or her tax file number to the trustee of the closely held trust in connection with that trustee making a correct TB statement about that share. (2) Section 8WB of the Taxation Administration Act 1953 does not prohibit the trustee of the closely held trust from: (a) recording the tax file number or maintaining such a record; or (b) using the tax file number in a manner connecting it with the identity of the trustee beneficiary; or (c) divulging or communicating the tax file number to a third person; in connection with that trustee making a correct TB statement about that share. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UW Application of Division This Division applies if: (a) the net income of a trust estate exceeds nil; and (b) any of the following things are taken into account in working out the net income of the trust estate: (i) a capital gain (to the extent that an amount of the capital gain remained after applying steps 1 to 4 of the method statement in subsection 102-5(1) of the Income Tax Assessment Act 1997); (ii) a franked distribution (to the extent that an amount of the franked distribution remained after reducing it by deductions that were directly relevant to it); (iii) a franking credit. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UX Adjustment of Division 6 assessable amount in relation to capital gains, franked distributions and franking credits (1) Make the assumptions in the following subsections for the purposes of working out in accordance with Division 6 an amount: (a) included in the assessable income of a beneficiary of a trust estate under section 97, 98A or 100; or (b) in respect of which a trustee of a trust estate is liable to pay tax under section 98, in relation to a beneficiary of the trust estate; or (c) in respect of which a trustee of a trust estate is liable to pay tax under section 99 or 99A. Note: Those assumptions are made only for the purposes of working out the amounts mentioned in paragraphs (a), (b) and (c). They are not made for any other purposes (for example, determining the income of a trust estate, the net income of a trust estate, or the amount of a present entitlement of a beneficiary of a trust estate to the income of the trust estate). (2) Assume that the income of the trust estate were equal to the Division 6E income of the trust estate. (3) Assume that the net income of the trust estate were equal to the Division 6E net income of the trust estate. (4) Assume that the amount of a present entitlement of a beneficiary of the trust estate to the income of the trust estate were equal to the amount of the beneficiary's Division 6E present entitlement to the income of the trust estate. INCOME TAX ASSESSMENT ACT 1936 - SECT 102UY Interpretation (1) Expressions used in this Division have the same meaning as in Division 6. (2) The Division 6E income, of the trust estate, is the income of the trust estate worked out on the assumption that amounts attributable to the things mentioned in paragraph 102UW(b) were disregarded. The Division 6E income of the trust estate cannot be less than nil. (3) The Division 6E net income, of the trust estate, is the net income of the trust estate worked out on the assumption that the things mentioned in paragraph 102UW(b) were disregarded. The Division 6E net income of the trust estate cannot be less than nil. (4) A beneficiary of the trust estate has an amount of a Division 6E present entitlement to the income of the trust estate that is equal to the amount of the beneficiary's present entitlement to the income of the trust estate, decreased by: (a) for each capital gain taken into account as mentioned in paragraph 102UW(b)--so much of the beneficiary's share of the capital gain as was included in the income of the trust estate; and (b) for each franked distribution taken into account as mentioned in paragraph 102UW(b)--so much of the beneficiary's share of the franked distribution as was included in the income of the trust estate. (5) The following expressions in this Division have the same meaning as in the Income Tax Assessment Act 1997: (a) share of a capital gain (see section 115-227 of that Act); (b) share of a franked distribution (see section 207-55 of that Act). INCOME TAX ASSESSMENT ACT 1936 - SECT 102V Application of Division to non-share dividends (1) This Division: (a) applies to a non-share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non-share dividend in the same way as it applies to a dividend. (2) Subsection (1) does not apply to section 103A. INCOME TAX ASSESSMENT ACT 1936 - SECT 103 Interpretation (1) In this Division, unless the contrary intention appears: "the relevant holding company or holding companies", in relation to another company in relation to a year of income of that other company, means: (a) if the other company would, apart from subsection 103A(4D), be a subsidiary of a public company for the purposes of section 103A in relation to that year of income by virtue of subsection 103A(4)--the public company or public companies referred to in paragraph 103A(4)(a); or (b) if the other company would, apart from subsection 103A(4D), be a subsidiary of a public company for the purposes of section 103A in relation to that year of income by virtue of subsection 103A(4B)--the listed company or listed companies referred to in paragraphs 103A(4B)(a) and (b). (2) For the purposes of this Division, a person is the nominee of another person in relation to shares if that first-mentioned person may be required to exercise his or her voting power in relation to those shares at the direction of, or holds those shares directly or indirectly on behalf of or for the benefit of, that second-mentioned person. (3) For the purposes of this Division, shares in a company shall be deemed to be held indirectly on behalf of or for the benefit of a person (not being a private company, trustee or partnership) if, in the event of the payment of a dividend on those shares, that person would, otherwise than as a shareholder of the company, receive the whole or a part of that dividend if there were successive distributions of the relative parts of that dividend to and by each of any private companies, trustees or partnerships interposed between the company paying the dividend and that person. (4) For the purposes of this Division, a company shall be taken to have been a listed company during a period that was included in a year of income of another company (in this subsection referred to as the relevant year of income) where: (a) if the period was included in the year of income of the first-mentioned company (in this subsection referred to as the corresponding year of income) that corresponded with the relevant year of income--the first-mentioned company was by virtue of paragraph 103A(2)(a), a public company for the purposes of subsection 103A(1) in relation to the corresponding year of income; or (b) if the period was included in the year of income of the first-mentioned company that immediately preceded or immediately followed the corresponding year of income--the first-mentioned company was, by virtue of paragraph 103A(2)(a), a public company for the purposes of subsection 103A(1) in relation to that preceding or following year of income, as the case may be. (5) A reference in this Division to a right, power, option, agreement or instrument shall be read as including a reference to a right, power, option, agreement or instrument that is not enforceable by legal proceedings whether or not it was intended to be so enforceable. (6) For the purposes of this Division, an arrangement or understanding, whether formal or informal and whether express or implied, shall be deemed to be an agreement. INCOME TAX ASSESSMENT ACT 1936 - SECT 103A Private companies (1) For the purposes of this Division, a company is a private company in relation to the year of income if the company is not a public company in relation to the year of income. (2) For the purposes of subsection (1), a company is, subject to the succeeding provisions of this section, a public company in relation to the year of income if: (a) shares in the company, not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits, were listed for quotation in the official list of a stock exchange, being a stock exchange in Australia or elsewhere, as at the last day of the year of income; (b) at all times during the year of income, the company was a co-operative company as defined by section 117; (c) the company has not, at any time since its formation, been carried on for the purposes of profit or gain to its individual members and was, at all times during the year of income, prohibited by the terms of its constituent document from making any distribution, whether in money, property or otherwise, to its members or to relatives of its members; or (d) the company is: (i) a mutual life assurance company; (ii) a friendly society dispensary; (iii) a body constituted by a law of the Commonwealth or of a State or Territory and established for public purposes, not being a company within the meaning of the law in force in a State or Territory relating to companies; (iv) a company in which a Government or a body referred to in subparagraph (iii) had a controlling interest on the last day of the year of income; or (v) in relation to the year of income, a subsidiary of a public company. (3) Subject to subsection (5), a company is not, by virtue of paragraph (2)(a) or (b), a public company for the purposes of subsection (1) in relation to the year of income where: (a) at any time during the year of income, one person or persons not more than 20 in number held, or had the right to acquire or become the holder or holders of, shares representing not less than three-quarters of the value of the shares in the company, other than shares entitled to a fixed rate of dividend only; (b) at any time during the year of income, not less than three-quarters of the voting power in the company was capable of being exercised by one person or by persons not more than 20 in number; (c) not less than three-quarters of: (i) the amount of any dividend paid by the company during the year of income; or (ii) if more than one dividend was paid by the company during the year of income--the total amount of all the dividends paid by the company during the year of income; was paid to one person or to persons not more than 20 in number; or (d) a dividend was not paid by the company during the year of income but the Commissioner is of the opinion that, if a dividend had been paid by the company at any time during the year of income, not less than three-quarters of the amount of that dividend would have been paid to one person or to persons not more than 20 in number. (3A) Subject to subsection (3B), a company shall not be taken for the purposes of subsection (1) to be a public company in relation to a year of income by reason that a body constituted and established as mentioned in subparagraph (2)(d)(iii) (in this subsection referred to as the public body) had a controlling interest in the company on the last day of the year of income if: (a) by reason of: (i) any of the provisions contained in the constituent document of the company as in force on the last day of the year of income; or (ii) any right, power, option or agreement in existence on the last day of the year of income that related to the management or conduct of the affairs of the company, including any right, power, option or agreement that related to the issue, allotment or redemption of shares, or the grant, withdrawal or variation of rights in respect of shares; the exercise by the public body of any right or power in connexion with the company (being a right or power relating to the exercise by the public body of a controlling interest in the company), whether on the last day of the year of income or at any later time, could have been prevented; (b) rights or powers of the public body in connexion with the company were exercised during the year of income otherwise than for the benefit of the public body or were not exercised in circumstances where it might reasonably have been expected that they would have been exercised; (c) any shares in the company that were held by the public body on the last day of the year of income were acquired by the public body for no consideration or for a consideration that, in the ordinary course of commercial dealing, would be considered inadequate; (d) in pursuance of any agreement entered into before the end of the year of income, the public body agreed to dispose of all or any of the shares in the company that were held by the public body on the last day of the year of income, being a disposal that was to take place at any time after the last day of the year of income; (e) a dividend was paid by the company at a time during the year of income when the public body had a controlling interest in the company, and less than one-half of the amount of that dividend was paid to the public body; or (f) a dividend was not paid by the company at a time during the year of income when the public body had a controlling interest in the company but the Commissioner is of the opinion that, if a dividend had been paid by the company at such a time, less than one-half of the amount of the dividend would have been paid to the public body. (3B) Subsection (3A) does not apply in relation to a company in relation to a year of income if the Commissioner is satisfied that no shares in the company that were held by the public body referred to in that subsection on the last day of the year of income were allotted or transferred to the public body for the purpose, or for purposes that included the purpose, of enabling the company to be treated as a public company in relation to the year of income for the purposes of subsection (1), or in pursuance of an agreement entered into, or a course of conduct engaged in, for the purpose, or for purposes that included the purpose, of enabling the company to be so treated. (3C) Paragraph (3A)(c) does not apply to an acquisition that is taken by section 70-30 or 70-110 of the Income Tax Assessment Act 1997 to have occurred. (4) Subject to subsection (4D), a company is, for the purposes of this section, a subsidiary of a public company in relation to the year of income if: (a) at all times during the year of income all the shares in the first-mentioned company were beneficially owned by a company which, or companies each of which, is a public company for the purposes of subsection (1) in relation to the year of income of that company (in this subsection referred to as the corresponding year of income) that corresponds with the first-mentioned year of income but which is not, or none of which is: (i) a company to which paragraph (2)(c) applies in relation to the corresponding year of income; or (ii) a subsidiary of a public company for the purposes of this section in relation to the corresponding year of income by reason of subsection (4B); (b) the corresponding year of income, or each of the corresponding years of income, referred to in paragraph (a) ended on the same day as the year of income first-mentioned in that paragraph; (c) at no time during the year of income was a person or were 2 or more persons in a position to affect rights of the relevant holding company or holding companies in connexion with the first-mentioned company so as to prevent the relevant holding company or holding companies from exercising for its or their own benefit the whole of the voting power in the first-mentioned company or from receiving for its or their own benefit the whole of any dividends that might be paid by the first-mentioned company or of any distribution that might be made of capital of the first-mentioned company; and (d) no agreement was entered into before or during the year of income by virtue of which a person or 2 or more persons would be in a position after the year of income so to affect rights of the relevant holding company or holding companies in connexion with the first-mentioned company. (4A) For the purposes of paragraphs 4(c) and (d), a person shall be taken to have been, or to be, in a position at a particular time to affect any rights of the relevant holding company or holding companies in connexion with the company first-mentioned in subsection (4) (in this subsection referred to as the first-mentioned company) if at that time that person had or has a right, power or option (whether by virtue of any provision in the constituent document of the first-mentioned company or by virtue of any agreement or instrument or otherwise) to acquire those rights or to do an act or thing that would prevent the relevant holding company or holding companies from exercising those rights for its or their own benefit or receiving any benefits accruing by reason of those rights. (4B) Subject to subsection (4D), a company that is not, by virtue of subsection (4), a subsidiary of a public company for the purposes of this section in relation to the year of income is, for the purposes of this section, a subsidiary of a public company in relation to the year of income if: (a) at all times during the year of income the voting power in the first-mentioned company was controlled, or was capable of being controlled, by a listed company or listed companies, either directly or through one or more companies, trustees or partnerships interposed between the first-mentioned company and the listed company or listed companies; (b) at all times during the year of income a listed company or listed companies had a right to receive, either directly or through one or more companies, trustees or partnerships interposed between the first-mentioned company and the listed company or listed companies, more than one-half of any dividends that might be paid by the first-mentioned company and more than one-half of any distribution that might be made of capital of the first-mentioned company; (c) at no time during the year of income was a person or were 2 or more persons in a position to affect rights of the listed company or listed companies in connexion with the first-mentioned company so as to prevent the listed company or listed companies from exercising for its or their own benefit control of the voting power in the first-mentioned company or from receiving for its or their own benefit more than one-half of any dividends that might be paid by the first-mentioned company or of any distribution that might be made of capital of the first-mentioned company; and (d) no agreement was entered into before or during the year of income by virtue of which a person or 2 or more persons would be in a position after the year of income so to affect rights of the listed company or listed companies in connexion with the first-mentioned company. (4C) For the purposes of paragraphs (4B)(c) and (d), a person shall be taken to have been, or to be, in a position at a particular time to affect any rights of a listed company or listed companies in connexion with another company if at that time that person had, or has, a right, power or option (whether by virtue of any provision in the constituent document of the other company or of any company interposed between the listed company or listed companies and the other company or by virtue of any agreement or instrument or otherwise) to acquire those rights or to do an act or thing that would prevent the listed company or listed companies from exercising those rights for its or their own benefit or receiving any benefits accruing by reason of those rights. (4D) A company (in this subsection and subsection (4E) referred to as the company concerned) that would, apart from this subsection, be a subsidiary of a public company for the purposes of this section in relation to the year of income shall be deemed, for the purposes of this section, not to be a subsidiary of a public company in relation to the year of income if the Commissioner is satisfied that: (a) where the company concerned would, apart from this subsection, be such a subsidiary in relation to the year of income by virtue of subsection (4)--the affairs of the company concerned were managed or conducted in the year of income in the interests of persons other than the relevant holding company or holding companies; or (b) where the company concerned would, apart from this subsection, be such a subsidiary in relation to the year of income by virtue of subsection (4B)--the affairs of the company concerned were managed or conducted in the year of income without proper regard to the interests of the relevant holding company or holding companies. (4E) In considering whether the affairs of the company concerned were managed or conducted in the year of income as mentioned in subsection (4D), the Commissioner shall have regard to: (a) the circumstances in which the relevant holding company or holding companies acquired a direct or indirect beneficial interest or interests in shares in the company concerned (whether the interest was, or the interests were, acquired before or during the year of income) and, in particular, whether those circumstances were capable of explanation by reference to ordinary commercial dealing; (b) the provisions of the constituent document of the company concerned as in force during the year of income that related to the management or conduct of the affairs of that company, including the provisions of the constituent document that related to the appointment or removal of directors, the issue, allotment or redemption of shares, the grant, withdrawal or variation of rights in respect of shares, the payment of dividends and the investment or other application of moneys of that company; (c) the nature and extent of any right, power, option or agreement in existence during the year of income that related to the management or conduct of the affairs of the company concerned, including any right, power, option or agreement that related to the appointment or removal of directors, the issue, allotment or redemption of shares, the grant, withdrawal or variation of rights in respect of shares, the payment of dividends and the investment or other application of moneys of that company; (d) whether rights of the relevant holding company or holding companies in connexion with the company concerned were exercised during the year of income otherwise than for the benefit of the relevant holding company or holding companies or were not exercised in circumstances where it might reasonably have been expected that they would have been exercised; (e) the nature and source of the income derived by the company concerned during the year of income and whether the derivation by that company of that income was capable of explanation by reference to ordinary commercial dealing; (f) the manner in which the moneys of the company concerned were applied during the year of income and, in particular, whether they were lent to, or invested or otherwise made available for the use or benefit of, a person or persons other than the relevant holding company or holding companies and, if any such moneys were so lent, invested or made available: (i) the terms and conditions upon which the moneys were so lent, invested or made available; (ii) whether the lending, investment or making available of those moneys was capable of explanation by reference to ordinary commercial dealing; and (iii) the connexion (if any) between that person or those persons, the directors of the company concerned and the directors of, or the beneficial owners of the shares in, the company from which the company concerned received dividends before or during the year of income; (g) the respective amounts of any dividends in respect of shares in the company concerned that were paid during the year of income or might reasonably be expected to be paid after that year by that company and the circumstances in which those dividends were, or might be expected to be, paid; and (h) any other relevant matters. (5) Where a company would not, under the preceding provisions of this section, be a public company for the purposes of subsection (1) in relation to the year of income but the Commissioner is of the opinion that, having regard to: (a) the number of persons who were, at any time during the year of income, capable of controlling the company and whether any of those persons was a public company; (b) the market value of the shares issued by the company before the end of the year of income; (c) the number of persons who beneficially owned shares in the company at the end of the year of income; and (d) any other matters that the Commissioner thinks relevant; it is reasonable that the company should be treated as a public company for the purposes of subsection (1) in relation to the year of income, the company shall be deemed to be a public company for those purposes in relation to the year of income. (5A) The Commissioner may, under subsection (5), form an opinion that it is reasonable that a company should be treated as a public company for the purposes of subsection (1) in relation to a year of income notwithstanding that the forming of such an opinion by the Commissioner would impose on the company a liability to pay a greater amount of income tax than the company would otherwise be liable to pay. (6) Notwithstanding anything in the preceding provisions of this section, the Commissioner may treat a company as not being, by virtue of paragraph (2)(a) or (b), a public company for the purposes of subsection (1) in relation to the year of income if the Commissioner is of the opinion that, by reason of: (a) any provisions in the company's constituent document, or in any contract, agreement or instrument, authorizing the variation or abrogation of the voting rights or rights to dividends in respect of any shares in the company or relating to the conversion, exchange or redemption of any such shares; (b) any contract, agreement, option or instrument under which a person has power to acquire shares in the company; or (c) any power or authority in a person in relation to the voting rights or rights to dividends in respect of any shares in the company; the voting rights or rights to dividends in respect of any shares in the company were, at any time during the year of income, capable of being varied or abrogated in such a manner (notwithstanding that they were not in fact varied or abrogated in that manner) that: (d) not less than three-quarters of the voting power in the company would have been capable of being exercised by one person or by persons not more than 20 in number; (e) not less than three-quarters of: (i) the amount of any dividend paid by the company during the year of income; or (ii) if more than one dividend was paid by the company during the year of income--the total amount of all the dividends paid by the company during the year of income; would have been paid to one person or to persons not more than 20 in number; or (f) in the case where the company did not pay a dividend during the year of income--if a dividend had been paid by the company at any time during the year of income, not less than three-quarters of the amount of that dividend would have been paid to one person or to persons not more than 20 in number. (7) For the purposes of this section: (a) a person, whether or not he or she holds shares in the company concerned; (b) his or her relatives; and (c) in relation to any shares in respect of which they are such nominees, his or her nominees and the nominees of any of his or her relatives; shall be deemed to be one person. INCOME TAX ASSESSMENT ACT 1936 - SECT 109 Excessive payments to shareholders, directors and associates deemed to be dividends (1) If a private company pays or credits to an associated person an amount (in this subsection called the excessive amount) that is, or purports to be: (a) remuneration for services rendered by the associated person; or (b) an allowance, gratuity or compensation in consequence of the retirement of the associated person from an office or employment held by the associated person in the company, or upon the termination of any such office or employment; so much (if any) of the excessive amount as exceeds an amount that, in the opinion of the Commissioner, is reasonable: (c) is not an allowable deduction; and (d) shall, for the purposes of this Act other than Division 11A of Part III, be deemed to be a dividend paid by the company: (i) to the associated person as a shareholder in the company; (ii) out of profits derived by the company; and (iii) on the last day of the year of income of the company in which the excessive payment or credit is made. Note: This section does not apply to an amount if the amount is paid to a CGT concession stakeholder under subsection 152-325(1) of the Income Tax Assessment Act 1997 (see subsection 152-325(11)). (2) For the purposes of this section: (a) a transfer of property shall be deemed to be the payment of an amount equal to the value of the property; and (b) a reference to an associated person, in relation to a company, is a reference to: (i) a person who is, or has been, a shareholder in, or director of, the company; or (ii) a person who is an associate, within the meaning of section 318, of a person who is, or has been, a shareholder in, or director of, the company. INCOME TAX ASSESSMENT ACT 1936 - SECT 109B Simplified outline of this Division The following is a simplified outline of this Division: This Division treats 3 kinds of amounts as dividends paid by a private company: • amounts paid by the company to a shareholder or shareholder's associate (see section 109C); • amounts lent by the company to a shareholder or shareholder's associate (see sections 109D and 109E); • amounts of debts owed by a shareholder or shareholder's associate to the company that the company forgives (see section 109F). This treatment makes the amounts assessable income of the shareholder or associate (under section 44). However, some payments, loans and forgiven debts are not treated as dividends. (See Subdivisions C and D.) Also, this Division does not apply to demerger dividends. (See Subdivision DA.) An amount may be treated as a dividend even if it is paid or lent by the company to the shareholder or associate through one or more interposed entities. (See Subdivision E.) An amount may also be included in the assessable income of a shareholder or shareholder's associate if: (a) a company has an unpaid present entitlement to income of a trust; and (b) the trustee makes a payment or loan to, or forgives a debt of, the shareholder or associate. (See Subdivisions EA and EB.) If the total of the amounts is more than the company's distributable surplus, only the part of the total equal to the distributable surplus is treated as dividends. (See section 109Y.) This Division applies to non-share equity interests and non-share dividends in the same way it applies to shares and dividends. INCOME TAX ASSESSMENT ACT 1936 - SECT 109BA Application of Division to non-share dividends This Division: (a) applies to a non-share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non-share dividend in the same way as it applies to a dividend. INCOME TAX ASSESSMENT ACT 1936 - SECT 109BB Application of Division to closely-held corporate limited partnerships This Division applies to a corporate limited partnership in relation to a year of income in the same way as it applies to a private company in relation to a year of income, if, any time during the year of income: (a) the partnership has fewer than 50 members; or (b) any entity has, directly or indirectly, and for the entity's own benefit, an entitlement to a 75% or greater share of the income or capital of the partnership. Example: Michael has an entitlement to an 80% share of the income of 2 fixed trusts. The 2 fixed trusts have, between them, an entitlement to 100% of the income of a corporate limited partnership. For the purposes of paragraph (b), Michael has, indirectly, and for his own benefit, an entitlement to a 75% or greater share of the income of the partnership. INCOME TAX ASSESSMENT ACT 1936 - SECT 109BC Application of Division to non-resident companies (1) This Division applies, in relation to a payment, loan or debt forgiveness, in relation to a private company that is a non-resident as if: (a) references in this Division to a year of income of the company were references to a tax accounting period in relation to the company in relation to a foreign tax imposed by a tax law of: (i) if the company is a resident of only one foreign country--that foreign country; or (ii) otherwise--the foreign country to which subsection (2) applies; and (b) references in this Division to the lodgment day for the year of income were references to the due date for lodgment of the company's return of income for the tax accounting period under that tax law. (2) For the purposes of subparagraph (1)(a)(ii), this subsection applies to a foreign country (the relevant country) if: (a) the company is a resident of the relevant country; and (b) of all the tax accounting periods: (i) in relation to the company in relation to the foreign taxes imposed by the tax laws of the foreign countries of which the company is resident; and (ii) during which the payment, loan or debt forgiveness is made; the tax accounting period under the tax law of the relevant country ends first; and (c) if more than one of the tax accounting periods mentioned in paragraph (b) end first--the due date for lodgment of the company's return of income for the tax accounting period under the tax law of the relevant country is not later than the due date for lodgment for any of the other tax accounting periods that end first. (3) In this section: "tax accounting period" has the meaning given by section 317. "tax law" has the meaning given by section 317.Note: Section 109L prevents amounts from being included in assessable income under this Division if the amounts are included in, or excluded from, assessable income under another provision of this Act, such as the rules relating to CFCs and FIFs. INCOME TAX ASSESSMENT ACT 1936 - SECT 109C Payments treated as dividends When private company is taken to pay a dividend (1) A private company is taken to pay a dividend to an entity at the end of the private company's year of income if the private company pays an amount to the entity during the year and either: (a) the payment is made when the entity is a shareholder in the private company or an associate of such a shareholder; or (b) a reasonable person would conclude (having regard to all the circumstances) that the payment is made because the entity has been such a shareholder or associate at some time. Note 1: Some payments do not give rise to dividends under Subdivision D. This section also does not give rise to a dividend if the amount is paid to a CGT concession stakeholder under subsection 152-325(1) of the Income Tax Assessment Act 1997 (see subsection 152-325(11)). Note 2: A private company is treated as making a payment to a shareholder or shareholder's associate if an interposed entity makes a payment to the shareholder or associate. See Subdivision E. Amount of dividend (2) The dividend is taken to equal the amount paid, subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company's distributable surplus. What is a payment to an entity? (3) In this Division, payment to an entity means: (a) a payment to the extent that it is to the entity, on behalf of the entity or for the benefit of the entity; and (b) a credit of an amount to the extent that it is: (i) to the entity; or (ii) on behalf of the entity; or (iii) for the benefit of the entity; and (c) a transfer of property to the entity. Note: See also section 109CA (Payment includes provision of asset). Loans are not payments (3A) However, a loan to an entity is not a payment to the entity. Note: Payments converted to loans before the private company's lodgment day are treated as loans (see subsection 109D(4A)). Value of payment by transfer of property (4) The amount of a payment consisting of a transfer of property is the amount that would have been paid for the transfer by parties dealing at arm's length less any consideration given by the transferee for the transfer. (The amount of a payment is nil if the consideration given by the transferee equals or exceeds the amount that would have been paid at arm's length for the transfer.) INCOME TAX ASSESSMENT ACT 1936 - SECT 109CA Payment includes provision of asset (1) In this Division, payment to an entity includes the provision of an asset for use by the entity. Note: This includes provision under a lease or licence. Example: Yacht builder Mainbrace Enterprises Pty Ltd owns a yacht for the purpose of sales demonstrations. With the private company's permission, one of its shareholders uses the yacht on weekends. The company has made a payment to the shareholder, unless one of the exceptions to subsection (1) applies. (2) The time the payment is made is the time the entity first: (a) uses the asset with the permission of the provider of the asset; or (b) has a right to use the asset (whether alone or together with other entities), at a time when the provider of the asset does not have a right: (i) to use the asset; or (ii) to provide the asset for use by another entity. Example: Paragraph (a) could apply if a shareholder were driving a company car with the company's permission. Paragraph (b) could apply if the shareholder had the car parked at his or her house or at another place of his or her choosing. (3) However, if the use or right continues into another income year of the entity, treat the provision of the asset for use in the other income year as being a separate payment made at the start of that year. Exceptions (4) Subsection (1) does not apply if the provision of the asset would, if done in respect of the employment of an employee, be a minor benefit under section 58P of the Fringe Benefits Tax Assessment Act 1986. (5) Subsection (1) does not apply to the extent that, if the entity had incurred and paid expenditure in respect of the provision of the asset, a once-only deduction would have been allowable to the entity in respect of the expenditure, ignoring: (a) section 82A (Deductions for expenses of self-education); and (b) Divisions 28 (Car expenses) and 900 (Substantiation rules) of the Income Tax Assessment Act 1997. (6) Subsection (1) does not apply to the provision of a dwelling, if: (a) the entity, or an associate of the entity, carries on a business; and (b) the entity or associate: (i) uses; or (ii) is granted or has a lease, licence or other right to use; land, water or a building for the purpose of carrying on the business; and (c) the provision of the dwelling to the entity is connected with that use or with that lease, licence or other right. Note: For the meaning of land, see section 2B of the Acts Interpretation Act 1901. (7) Subsection (1) does not apply to the provision of a dwelling, if: (a) the dwelling is the main residence of the entity; and (b) the provider of the dwelling is a private company; and (c) the private company acquired the dwelling before 1 July 2009; and (d) the private company would meet the conditions in section 165-12 of the Income Tax Assessment Act 1997 (which is about the company maintaining the same owners) if, despite subsection 165-12(1), the ownership test period were the period: (i) starting when the company acquired the dwelling; and (ii) ending at the time of payment, worked out under subsection (2) of this section. (7A) Subsection (1) does not apply to the provision of a dwelling to the entity if: (a) the dwelling is a flat or home unit that is part of a complex of 2 or more flats or home units; and (b) the provider of the dwelling is a company that owns a legal or equitable interest in the land on which the complex is erected; and (c) there is more than one share in the company, and each share (whether singly or as part of a parcel of shares) gives the relevant shareholder the right to occupy a flat or home unit in the complex; and (d) each flat or home unit in the complex is covered by a share, or a parcel of shares, in the company; and (e) the dwelling is provided to the entity because a shareholder holds such a share, or parcel of shares; and (f) the company does not have legal or equitable interests in any assets other than legal or equitable interests in: (i) the complex, and the land on which it is erected; and (ii) any related land and buildings; and (iii) any related plant, machinery, equipment, furniture or fittings; and (iv) any assets relating to the matters mentioned in paragraph (g); and (g) the assessable income of the company is derived predominantly from: (i) managing and maintaining the complex (including the assets mentioned in subparagraphs (f)(i), (ii) and (iii)); and (ii) interest and dividends relating to income derived from managing and maintaining the complex (including the assets mentioned in those subparagraphs). (7B) Subsection (7A) does not apply in a case to which Subdivision E (about interposed entities) applies, if the company mentioned in that subsection is interposed between: (a) a private company; and (b) a shareholder, or an associate of a shareholder, of the private company. (8) Section 118-120 of the Income Tax Assessment Act 1997 (Extension to adjacent land) applies in relation to subsections (6) to (7A) of this section in the same way as it applies in relation to Subdivision 118-B of that Act. (9) Subsection (1) does not apply if the provision of the asset to the entity is a transfer of property to the entity. Note: For transfers of property, see paragraph 109C(3)(c). Value of payment (10) Subject to subsection (11), the amount of the payment is: (a) the amount that would have been paid for the provision of the asset by the parties dealing at arm's length; less (b) any consideration given for the provision of the asset by the entity. (11) The amount of the payment is nil if the consideration given by the entity equals or exceeds the amount that would have been paid at arm's length for the provision of the asset. INCOME TAX ASSESSMENT ACT 1936 - SECT 109D Loans treated as dividends Loans treated as dividends in year of making (1) A private company is taken to pay a dividend to an entity at the end of one of the private company's years of income (the current year) if: (a) the private company makes a loan to the entity during the current year; and (b) the loan is not fully repaid before the lodgment day for the current year; and (c) Subdivision D does not prevent the private company from being taken to pay a dividend because of the loan at the end of the current year; and (d) either: (i) the entity is a shareholder in the private company, or an associate of such a shareholder, when the loan is made; or (ii) a reasonable person would conclude (having regard to all the circumstances) that the loan is made because the entity has been such a shareholder or associate at some time. Note 1: Some repayments cannot be counted for the purpose of this subsection. See section 109R. Note 2: A private company is treated as making a loan to a shareholder or shareholder's associate if an interposed entity makes a loan to the shareholder or associate. See Subdivision E. Amount of dividend (1AA) The amount of the dividend taken under subsection (1) to have been paid is the amount of the loan that has not been repaid before the lodgment day for the current year, subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company's distributable surplus. Loans treated as dividends in year following that of making (1A) A private company is taken to pay a dividend to an entity at the end of the private company's year of income (the current year) if: (a) the private company made a loan to the entity during the previous year of income; and (b) it made the loan in the course of a winding-up of the private company by a liquidator; and (c) the loan is not fully repaid by the end of the current year; and (d) either: (i) the entity is a shareholder in the private company, or an associate of such a shareholder, when the loan is made; or (ii) a reasonable person would conclude (having regard to all the circumstances) that the loan is made because the entity has been such a shareholder or associate at some time. Subdivision D (other than section 109R) does not apply to loans covered by this subsection. Amount of dividend (2) The amount of the dividend taken under subsection (1A) to have been paid is the amount of the loan that has not been repaid at the end of the current year, subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company's distributable surplus. What is a loan? (3) In this Division, loan includes: (a) an advance of money; and (b) a provision of credit or any other form of financial accommodation; and (c) a payment of an amount for, on account of, on behalf of or at the request of, an entity, if there is an express or implied obligation to repay the amount; and (d) a transaction (whatever its terms or form) which in substance effects a loan of money. In which year of income is a loan made? (4) For the purposes of this Division, a loan is made to an entity at the time the amount of the loan is paid to the entity by way of loan or anything described in subsection (3) is done in relation to the entity. Payment converted to loan before lodgment day (4A) If: (a) a private company makes a payment to an entity at a time in a year of income; and (b) the payment is converted to a loan before the end of the private company's lodgment day for the year of income; for the purposes of this Division, treat the events mentioned in paragraphs (a) and (b) as the private company making a loan to the entity at the time mentioned in paragraph (a). Loans made before 4 December 1997 (5) If the terms of a loan made before 4 December 1997 are varied on or after that day by extending the term of the loan or increasing its amount, this Division applies to the loan as if it were made on the new terms when the variation occurred. When is the lodgment day? (6) In this Division, the lodgment day for a private company's year of income is the earlier of: (a) the due date for lodgment of the private company's return of income for the year of income; and (b) the date of lodgment of the private company's return of income for the year of income. Note: For the lodgment day for a private company that is a non-resident, see section 109BC. INCOME TAX ASSESSMENT ACT 1936 - SECT 109E Amalgamated loan from a previous year treated as dividend if minimum repayment not made Amalgamated loan treated as dividend in first year in which payment is less than minimum yearly repayment (1) A private company is taken to pay a dividend to an entity at the end of one of the private company's years of income (the current year) if: (a) the private company made an amalgamated loan to the entity in an earlier year of income; and (b) the amalgamated loan is not repaid at the end of the current year; and (c) the amount (if any) paid to the private company during the current year in relation to the amalgamated loan falls short of the minimum yearly repayment of the amalgamated loan worked out under subsection (5) for the current year; and (d) section 109Q does not apply in relation to the current year. Note: The amalgamated loan does not give rise to a dividend for that year if the minimum yearly repayment is not made and the entity satisfies the Commissioner that treating the loan as a dividend would cause hardship. See section 109Q. Amount of dividend (2) The amount of the dividend is taken to be the amount of the shortfall mentioned in paragraph (1)(c), subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company's distributable surplus. What is an amalgamated loan? (3) For the purposes of this Division, a private company is taken to make a loan (the amalgamated loan) to a single entity during a year of income if the private company makes one or more loans (constituent loans) to the entity during the year, each of which: (a) is not fully repaid before the lodgment day for the year; and (b) would cause the company to be taken under section 109D to pay a dividend to the entity at the end of the year, apart from section 109N; and (c) has the same maximum term for the purposes of that section. The amount of the amalgamated loan is the sum of the amounts of the constituent loans that have not been repaid before the lodgment day for the year of income in which the amalgamated loan is made. (3A) Subsection (3B) applies if: (a) a private company is taken to have made an amalgamated loan (the old amalgamated loan) during a year of income (the original year of income); and (b) the maximum term of the old amalgamated loan under subsection 109N(3) was 7 years; and (c) in a later year of income (the later year of income): (i) a constituent loan taken account of by the old amalgamated loan becomes secured by a mortgage over real property; and (ii) the term of the constituent loan is extended; and (d) as a result of the mortgage, the maximum term of the constituent loan under subsection 109N(3) is 25 years; and (e) the term of the constituent loan after the extension (including the period before the extension during which the constituent loan was in existence) does not exceed 25 years. (3B) For the purposes of this Division in relation to the later year of income and subsequent years of income: (a) treat the constituent loan as a new amalgamated loan that takes account of that constituent loan; and (b) treat the new amalgamated loan as having been made just before the start of the later year of income; and (c) treat the amount of the new amalgamated loan just before the start of the later year of income as the amount of the constituent loan that had not been repaid at that time; and (d) unless paragraph (e) applies--reduce the amount of the old amalgamated loan just before the start of the later year of income by the amount of the new amalgamated loan at that time; and (e) if the constituent loan was the only constituent loan taken account of by the old amalgamated loan--disregard the old amalgamated loan. Payments in relation to constituent loans treated as payments in relation to amalgamated loan (4) For the purposes of this Division, a payment to the private company in relation to a constituent loan in a year of income after the one in which the constituent loan was made is taken to be a payment in relation to the amalgamated loan that takes account of the constituent loan. Minimum yearly repayment (5) The minimum yearly repayment of an amalgamated loan for a year of income is the amount worked out using the formula in subsection (6). However, the minimum yearly repayment of an amalgamated loan for a year of income is the amount worked out under the regulations, if they provide for working it out. Formula for minimum yearly repayment (6) The formula for the minimum yearly repayment for a year of income is: where: "current year's benchmark interest rate" is the benchmark interest rate for the year of income for which the minimum yearly repayment is being worked out. "remaining term" is the difference between: (a) the number of years in the longest term of any of the constituent loans that the amalgamated loan takes account of; and (b) the number of years between the end of the private company's year of income in which the loan was made and the end of the private company's year of income before the year of income for which the minimum yearly repayment is being worked out; rounded up to the next higher whole number if the difference is not already a whole number. Note: Section 109R provides that certain payments relating to a loan are not to be taken into account for the purposes of working out the minimum yearly repayment. Benchmark interest rate used to work out how much of a payment relating to amalgamated loan is a repayment (7) Work out the amount of an amalgamated loan repaid by the end of a year of income on the basis that interest is payable on the balance of the loan from time to time in a year of income at a rate equal to the benchmark interest rate for the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 109F Forgiven debts treated as dividends Forgiven debt treated as dividend (1) A private company is taken to pay a dividend to an entity at the end of the private company's year of income if all or part of a debt the entity owed the private company is forgiven in that year and either: (a) the amount is forgiven when the entity is a shareholder in the private company, or an associate of such a shareholder; or (b) a reasonable person would conclude (having regard to all the circumstances) that the amount is forgiven because the entity has been such a shareholder or associate at some time. Note: In some cases forgiving a debt does not give rise to a dividend. See section 109G. Amount of dividend (2) The amount of the dividend equals the amount of debt forgiven, subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company's distributable surplus. When is a debt forgiven? (3) An amount of a debt is forgiven for the purposes of this Division if and when the amount would be forgiven under section 245-35 or 245-37 of the Income Tax Assessment Act 1997, assuming the amount were a debt to which Subdivisions 245-C to 245-G of that Act apply. Note: Division 245 of the Income Tax Assessment Act 1997 applies to forgiveness of certain commercial debts. Discharge of debt by transfer of property is not forgiveness (4) Despite subsection (3), an amount of debt is not forgiven for the purposes of this Division if the obligation to pay the amount is discharged by a payment to the creditor consisting of a transfer of property. Note: Subsection 109C(4) explains how to work out the value of a payment consisting of a transfer of property. Debt forgiveness by debt parking (5) An amount of debt an entity (the debtor) owes a private company is also forgiven for the purposes of this Division if: (a) the private company assigns the right to receive payment of the amount to another entity (the new creditor) who is either: (i) an associate of the debtor; or (ii) a party to an arrangement with the debtor about the assignment; and (b) a reasonable person would conclude (having regard to all the circumstances) that the new creditor will not exercise the assigned right. Debt forgiveness by failure to rely on obligation to pay (6) An amount of debt an entity (the debtor) owes a private company is also forgiven for the purposes of this Division if a reasonable person would conclude (having regard to all the circumstances) that the private company will not insist on the entity paying the amount or rely on the entity's obligation to pay the amount. (The amount is forgiven when a reasonable person would first reach that conclusion.) Forgiveness of amalgamated loan debt (7) If a private company forgives an amount of debt resulting from a constituent loan taken into account in working out the amount of an amalgamated loan under subsection 109E(3), the private company is taken to forgive the same amount of the debt resulting from the amalgamated loan. This section operates on only the earliest debt forgiveness (8) If the same debt is forgiven for the purposes of this Division at different times under different provisions of this section, this section operates on the first forgiveness only. Example: Subsection (3) of this section provides that a debt is forgiven if it has not been paid by the time a statute of limitations prevents recovery of the debt. (It does this by applying paragraph 245-35(b) of the Income Tax Assessment Act 1997.) The debt might already have been forgiven under subsection (6) of this section (because a reasonable person would have concluded earlier that the private company was not going to insist on payment). This section would apply to the forgiveness under subsection (6) but not the forgiveness under subsection (3). INCOME TAX ASSESSMENT ACT 1936 - SECT 109G Debt forgiveness that does not give rise to a dividend Forgiveness of debt owed by company generally not treated as dividend (1) A private company is not taken under this Division to pay a dividend because a debt owed to it by another company is forgiven. Note: This does not apply to a debt owed by a company as trustee. (See section 109ZE.) Forgiveness of debts under Bankruptcy Act not treated as dividends (2) A private company is not taken under this Division to pay a dividend because a debt is forgiven because the debtor becomes a bankrupt or because of Part X of the Bankruptcy Act 1966. Forgiveness of loan debt does not give rise to dividend if loan gives rise to dividend under section 109D (3) A private company is not taken under section 109F to pay a dividend at the end of a year of income because of the forgiveness of an amount of a debt resulting from a loan if, because of the loan, the private company is taken: (a) under section 109D to pay a dividend at the end of that year or an earlier one; or (b) under former subsection 108(1) to pay a dividend on the last day of that year or an earlier one. Reduced dividend for forgiveness of loan debt if loan causes dividend under section 109E (3A) Subsection (3B) applies if: (a) a private company is taken under section 109F to pay a dividend at the end of a year of income because of the forgiveness of an amount of a debt resulting from a loan; and (b) the private company is taken under section 109E to pay a dividend at the end of an earlier year of income in relation to the loan. (3B) The amount of the dividend mentioned in paragraph (3A)(a) is reduced by the amount of the dividend mentioned in paragraph (3A)(b) (but not below zero). Note: There may be more than one reduction under this subsection if the private company has been taken under section 109E to pay more than one dividend in relation to the loan. Commissioner may treat forgiveness as not giving rise to dividend (4) A private company is not taken under this Division to pay a dividend because of the forgiveness of a debt owed by an entity if the Commissioner is satisfied that: (a) the debt was forgiven because payment of the debt would have caused the entity undue hardship; and (b) when the entity incurred the debt, the entity had the capacity to pay the debt; and (c) the entity lost the ability to pay the debt in the foreseeable future as a result of circumstances beyond the entity's control. INCOME TAX ASSESSMENT ACT 1936 - SECT 109H Simplified outline of this Subdivision The following is a simplified outline of this Subdivision: This Subdivision sets out rules about payments and loans that are not treated as dividends. The following sorts of payments are not treated as dividends: • payments of genuine debts (section 109J); • payments to other companies (section 109K); • payments that are otherwise assessable or that are specifically excluded from assessable income (section 109L). The following sorts of loans are not treated as dividends: • loans to other companies (section 109K); • loans that are otherwise assessable (section 109L); • loans made in the ordinary course of business on ordinary commercial terms (section 109M); • loans that meet criteria for minimum interest rate and maximum term (section 109N); • certain loans and distributions by liquidators (section 109NA); • loans that are for the purpose of funding the purchase of certain ESS interests under an employee share scheme (section 109NB). An amalgamated loan may not be treated as a dividend if the Commissioner is satisfied that doing so would cause undue hardship. (See section 109Q.) This Subdivision also provides for some loan repayments and interest payments to private companies to be disregarded if they are made with the intention of borrowing a similar amount from a private company later. (See section 109R.) INCOME TAX ASSESSMENT ACT 1936 - SECT 109J Payments discharging pecuniary obligations not treated as dividends A private company is not taken under section 109C to pay a dividend because of the payment of an amount, to the extent that the payment: (a) discharges an obligation of the private company to pay money to the entity; and (b) is not more than would have been required to discharge the obligation had the private company and entity been dealing with each other at arm's length. INCOME TAX ASSESSMENT ACT 1936 - SECT 109K Inter-company payments and loans not treated as dividends A private company is not taken under section 109C or 109D to pay a dividend because of a payment or loan the private company makes to another company. Note: This does not apply to a payment or loan to a company in its capacity as trustee. (See section 109ZE.) INCOME TAX ASSESSMENT ACT 1936 - SECT 109L Certain payments and loans not treated as dividends (1) A private company is not taken under section 109C or 109D to pay a dividend because of a payment or loan the private company makes to an entity, to the extent that the payment or loan would be included in the entity's assessable income apart from this Division (as it operates in conjunction with section 44). (2) In addition, a private company is not taken under section 109C or 109D to pay a dividend because of a payment or loan that the private company made to an entity to the extent that a provision of this Act (other than this Division) has the effect that the payment or loan is not included in the entity's assessable income even though it would otherwise be included. INCOME TAX ASSESSMENT ACT 1936 - SECT 109M Loans made in the ordinary course of business on arm's length terms not treated as dividends A private company is not taken under section 109D to pay a dividend because of a loan made: (a) in the ordinary course of the private company's business; and (b) on the usual terms on which the private company makes similar loans to parties at arm's length. INCOME TAX ASSESSMENT ACT 1936 - SECT 109N Loans meeting criteria for minimum interest rate and maximum term not treated as dividends Criteria (1) A private company that makes a loan to an entity in one of the private company's years of income is not taken under section 109D to pay a dividend at the end of the year of income because of the loan if, before the lodgment day for the year of income: (a) the agreement that the loan was made under is in writing; and (b) the rate of interest payable on the loan for years of income after the year in which the loan is made equals or exceeds the benchmark interest rate for the year; and (c) the term of the loan does not exceed the term (the maximum term) for that kind of loan worked out under subsection (3). Benchmark interest rate (2) The benchmark interest rate for the year of income is the Indicator Lending Rates--Bank variable housing loans interest rate last published by the Reserve Bank of Australia before the start of the year of income. However, the benchmark interest rate is the rate worked out under the regulations, if they provide for working it out. Maximum term (3) The maximum term is: (a) 25 years for a loan if: (i) 100% of the value of the loan is secured by a mortgage over real property that has been registered in accordance with a law of a State or Territory; and (ii) when the loan is first made, the market value of that real property (less the amounts of any other liabilities secured over that property in priority to the loan) is at least 110% of the amount of the loan; and (b) 7 years for any other loan. However, the maximum term for a loan is the period worked out under the regulations, if they provide for working out the maximum term for that kind of loan. (3A) Reduce the maximum term under paragraph (3)(a) for a loan (the new loan) in accordance with subsection (3B) if: (a) the new loan results from the refinancing of another loan (the old loan); and (b) the maximum term of the old loan under subsection (3) was 7 years; and (c) the maximum term of the new loan under subsection (3) is 25 years (disregarding this subsection). (3B) The amount of the reduction is equal to the length of the period: (a) starting when the old loan was made; and (b) ending when the old loan was refinanced. (3C) Reduce the maximum term under paragraph (3)(b) for a loan (the new loan) in accordance with subsection (3D) if: (a) the new loan results from the refinancing of another loan (the old loan); and (b) the maximum term of the old loan under subsection (3) was 25 years; and (c) the maximum term of the new loan under subsection (3) is 7 years (disregarding this subsection); and (d) the length of the period: (i) starting when the old loan was made; and (ii) ending when the old loan was refinanced; exceeds 18 years. (3D) The amount of the reduction is the excess mentioned in paragraph (3C)(d). Regulations may adopt rate as published from time to time (4) Regulations made for the purposes of subsection (2) may apply, adopt or incorporate a rate published in an instrument after they are made or take effect, or a rate contained in an instrument from time to time despite any other Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 109NA Certain liquidator's distributions and loans not treated as dividends A private company is not taken under section 109C or subsection 109D(1) to pay a dividend because of a distribution or loan made in the course of the winding-up of the company by a liquidator. Note: However, if such a loan is not fully repaid by the end of the following year of income, the company will be taken to have paid a dividend under subsection 109D(1A). INCOME TAX ASSESSMENT ACT 1936 - SECT 109NB Loans to purchase shares under employee share schemes not treated as dividends A private company is not taken under section 109D to pay a dividend because of a loan made solely for the purpose of enabling the shareholder, or an associate of the shareholder, to acquire an ESS interest under an employee share scheme (within the meaning of the Income Tax Assessment Act 1997) to which: (a) Subdivision 83A-B and subsections 83A-35(3) to (9) of that Act apply; or (b) Subdivision 83A-C of that Act applies. INCOME TAX ASSESSMENT ACT 1936 - SECT 109P Amalgamated loans not treated as dividends in the year they are made A private company is not taken under section 109D to pay a dividend because of an amalgamated loan it makes. Note: A shortfall in a minimum yearly repayment of an amalgamated loan may be treated as a dividend under section 109E. INCOME TAX ASSESSMENT ACT 1936 - SECT 109Q Commissioner may allow amalgamated loan not to be treated as dividend (1) A private company is not taken under section 109E to pay a dividend at the end of one of its years of income (the current year) because of an amalgamated loan to an entity if: (a) the amount paid to the private company by the entity in the current year in relation to the loan is less than the minimum yearly repayment of the loan for the current year worked out under subsection 109E(5); and (b) the entity satisfies the Commissioner that: (i) that amount was less than the minimum yearly repayment because of circumstances beyond the entity's control; and (ii) the entity would suffer undue hardship if the private company were taken under section 109E to pay a dividend to the entity at the end of the current year because of the loan. (2) In deciding whether he or she is satisfied, the Commissioner must consider: (a) the entity's capacity, at the end of the year of income in which the amalgamated loan was made, to repay the loan; and (b) any circumstances that have reduced the entity's capacity to repay the loan; and (c) whether the entity took all reasonable steps to make payments relating to the amalgamated loan during the current year equal to the minimum yearly repayment of the loan for the current year; and (d) whether the entity has made payments relating to the loan as soon as possible after the current year equalling the difference between: (i) the minimum yearly repayment for the current year; and (ii) the amount of payments made during the current year relating to the loan. INCOME TAX ASSESSMENT ACT 1936 - SECT 109R Some payments relating to loans not taken into account (1) This section provides for some payments to a private company in relation to a loan the private company made to an entity not to be taken into account for the purpose of working out: (a) how much of the loan has been repaid for the purposes of sections 109D and 109E (which treat amounts of loans that have not been repaid as dividends); or (b) the minimum yearly repayment for the loan under subsection 109E(5). (2) A payment must not be taken into account if: (a) a reasonable person would conclude (having regard to all the circumstances) that, when the payment was made, the entity intended to obtain a loan or loans from the private company of a total amount similar to, or larger than, the payment; or (b) both of the following subparagraphs apply: (i) the entity obtained, before the payment was made, a loan or loans from the private company of a total amount similar to, or larger than, the amount of the payment; (ii) a reasonable person would conclude (having regard to all the circumstances) that the entity obtained the loan or loans in order to make the payment. (3) Subsection (2) does not apply to a payment made by setting off against an amount payable in relation to the loan: (a) a dividend payable by the private company to the entity; or (b) work and income support related withholding payments and benefits payable by the private company to the entity; or (ba) payments covered by section 12-55 in Schedule 1 to the Taxation Administration Act 1953; or (c) if the entity has transferred property to the private company--an amount equalling the difference between: (i) the amount that a party at arm's length from the entity would have paid for the transfer of the property to the party; and (ii) the amount that the private company has already paid the entity (by way of set-off or otherwise) for the transfer. (4) Nor does subsection (2) apply to a payment made on behalf of the entity (the borrower) by another entity paying to the private company an amount that: (a) is payable by the other entity to the borrower; and (b) is assessable income of the borrower for the year of income in which the payment was made or an earlier year of income. (5) Subsection (2) does not apply to a payment if: (a) the payment is made to refinance the loan mentioned in subsection (1) (the old loan); and (b) the entity to which the old loan was made has another loan (the primary loan) from another entity; and (c) the old loan becomes subordinated to the primary loan; and (d) the refinancing of the old loan mentioned in paragraph (a) took place in connection with that subordination; and (e) that subordination arose as a result of circumstances beyond the control of the entity to which the old loan was made; and (f) the entity to which the old loan was made and the other entity dealt with each other at arm's length in relation to that subordination; and (g) the private company and the other entity dealt with each other at arm's length in relation to that subordination. (6) Subsection (2) does not apply to a payment if: (a) the payment is made to refinance the loan mentioned in subsection (1) (the old loan); and (b) the refinancing results in another loan (the new loan); and (c) the maximum term of the old loan under subsection 109N(3) was 7 years; and (d) the maximum term of the new loan under subsection 109N(3) is 25 years (reduced in accordance with subsection 109N(3B)). (7) Subsection (2) does not apply to a payment if: (a) the payment is made to refinance the loan mentioned in subsection (1) (the old loan); and (b) the refinancing results in another loan (the new loan); and (c) the maximum term of the old loan under subsection 109N(3) was 25 years; and (d) the maximum term of the new loan under subsection 109N(3) is: (i) unless subparagraph (ii) applies--7 years; or (ii) if subsection 109N(3D) applies--7 years reduced in accordance with that subsection. INCOME TAX ASSESSMENT ACT 1936 - SECT 109RA Demerger dividends not treated as dividends This Division does not apply to a demerger dividend to which section 45B does not apply. INCOME TAX ASSESSMENT ACT 1936 - SECT 109RB Commissioner may disregard operation of Division or allow dividend to be franked (1) The Commissioner may make a decision under subsection (2) if: (a) this Division (disregarding this section) operates with the result that: (i) a private company is taken to pay a particular dividend to a particular entity (the recipient) under this Division; or (ii) a particular amount is included, as if it were a dividend, in the assessable income of a particular entity (also the recipient) in relation to a private company under Subdivision EA; and (b) the result mentioned in paragraph (a) arises because of an honest mistake or inadvertent omission by any of the following entities: (i) the recipient; (ii) the private company; (iii) any other entity whose conduct contributed to that result. (2) The Commissioner may decide in writing that: (a) the result mentioned in paragraph (1)(a) should be disregarded (see subsection (4)); or (b) the dividend mentioned in subparagraph (1)(a)(i) may be franked in accordance with Part 3-6 of the Income Tax Assessment Act 1997 (see subsection (6)). (3) In making a decision under subsection (2) (or refusing to make such a decision), the Commissioner must have regard to the following: (a) the circumstances that led to the mistake or omission mentioned in paragraph (1)(b); (b) the extent to which any of the entities mentioned in paragraph (1)(b) have taken action to try to correct the mistake or omission and if so, how quickly that action was taken; (c) whether this Division has operated previously in relation to any of the entities mentioned in paragraph (1)(b), and if so, the circumstances in which this occurred; (d) any other matters that the Commissioner considers relevant. (4) The Commissioner may make a decision under subsection (2) subject to any of the following kinds of condition: (a) a condition that the recipient or another entity must make specified payments to the private company or another entity within a specified time; (b) a condition that a specified requirement in this Division must be met within a specified time. (5) This Division is taken not to operate with the result mentioned in paragraph (1)(a) if: (a) the Commissioner makes a decision under paragraph (2)(a); and (b) if the Commissioner makes the decision subject to a condition under subsection (4)--the condition is satisfied. (6) If the Commissioner makes a decision under paragraph (2)(b), subparagraph 202-45(g)(i) of the Income Tax Assessment Act 1997 does not make the dividend mentioned in subparagraph (1)(a)(i) unfrankable. (7) Despite subsection 33(3A) of the Acts Interpretation Act 1901, each decision made under subsection (2) must relate only to one amount that would (disregarding this section): (a) be taken to be a dividend paid by the private company; or (b) be included, as if it were a dividend, in the assessable income of an entity. INCOME TAX ASSESSMENT ACT 1936 - SECT 109RC Dividend may be franked if taken to be paid because of family law obligation (1) This section applies if a dividend is taken to be paid under this Division because of a family law obligation. (2) Subparagraph 202-45(g)(i) of the Income Tax Assessment Act 1997 does not make the amount of the dividend unfrankable. (3) The dividend can be franked in accordance with Part 3-6 of the Income Tax Assessment Act 1997 only if: (a) the dividend is franked at the private company's benchmark franking percentage for the franking period in which the dividend is taken to be paid; or (b) if the private company does not have a benchmark franking percentage for the period--the dividend is franked at a franking percentage of 100%. (4) For the purposes of subsection (3), if the recipient of the dividend is not a member of the private company for the purposes of Part 3-6 of the Income Tax Assessment Act 1997, treat that recipient as such a member. INCOME TAX ASSESSMENT ACT 1936 - SECT 109RD Commissioner may extend period for repayments of amalgamated loan (1) The Commissioner may make a decision under subsection (2) if: (a) section 109E operates with the result that a private company is taken to pay a particular dividend to a particular entity (the recipient); and (b) the shortfall mentioned in paragraph 109E(1)(c) arises because the recipient is unable to pay the private company the minimum yearly repayment mentioned in that paragraph because of circumstances beyond the recipient's control. (2) The Commissioner may decide in writing that the result mentioned in paragraph (1)(a) should be disregarded (see subsection (4)) if the recipient pays the private company the amount of the shortfall within a specified time. (3) In making a decision under subsection (2) (or refusing to make such a decision), the Commissioner must have regard to the following: (a) the nature of the circumstances mentioned in paragraph (1)(b); (b) any other matters that the Commissioner considers relevant. (4) This Division is taken not to operate with the result mentioned in paragraph (1)(a) if: (a) the Commissioner makes a decision under subsection (2); and (b) the recipient pays the private company the amount of the shortfall within the specified time. (5) Despite subsection 33(3A) of the Acts Interpretation Act 1901, each decision made under subsection (2) must relate only to one amount that would be taken to be a dividend paid by the private company (disregarding this section). INCOME TAX ASSESSMENT ACT 1936 - SECT 109S Simplified outline of this Subdivision The following is a simplified outline of this Subdivision: This Subdivision allows a private company to be taken under Subdivision B to pay a dividend to an entity (the target entity) if an entity interposed between the private company and the target entity makes a payment or loan to the target entity under an arrangement involving the private company. This result is achieved by treating the private company as making a payment or loan of an amount determined by the Commissioner to the target entity (according to whether the interposed entity made a payment or loan to the target entity). (See sections 109V (for payments) and 109W (for loans).) The arrangement must involve the private company and one or more interposed entities in making payments or loans or giving loan guarantees for the purpose of the target entity receiving a payment or loan from an interposed entity. (See sections 109T, 109U and 109UA.) If the target entity repays a fraction of the loan made by the interposed entity, the target entity is treated as repaying the same fraction of the loan taken to have been made by the private company. (See subsection 109W(3).) Some provisions that prevent payments or loans from giving rise to dividends do not apply to payments or loans this Subdivision treats a private company as making. (See section 109X.) INCOME TAX ASSESSMENT ACT 1936 - SECT 109T Payments and loans by a private company to an entity through one or more interposed entities (1) This Division operates as if a private company makes a payment or loan to an entity (the target entity) as described in section 109V or 109W if: (a) the private company makes a payment or loan to another entity (the first interposed entity) that is interposed between the private company and the target entity; and (b) a reasonable person would conclude (having regard to all the circumstances) that the private company made the payment or loan solely or mainly as part of an arrangement involving a payment or loan to the target entity; and (c) either: (i) the first interposed entity makes a payment or loan to the target entity; or (ii) another entity interposed between the private company and the target entity makes a payment or loan to the target entity. This section operates regardless of certain factors (2) For the purposes of this section, it does not matter: (a) whether the interposed entity made the payment or loan to the target entity before, after or at the same time as the first interposed entity received the payment or loan from the private company; or (b) whether or not the interposed entity paid or lent the target entity the same amount as the private company paid or lent the first interposed entity. This section does not operate if the payment or loan to the first interposed entity is treated as a dividend (3) This Division does not operate as described in subsection (1) (and sections 109V and 109W) if the private company is taken under Subdivision B (as it applies apart from this Subdivision) to pay a dividend as a result of the payment or loan to the first interposed entity. INCOME TAX ASSESSMENT ACT 1936 - SECT 109U Payments and loans through interposed entities relying on guarantees (1) This Division operates as if a private company makes a payment to an entity (the target entity) as described in section 109V if: (a) during a year of income the private company guarantees a loan made by another entity (the first interposed entity); and (b) a reasonable person would conclude (having regard to all the circumstances) that the private company gave the guarantee solely or mainly as part of an arrangement involving a payment or loan to the target entity; and (c) either: (i) the first interposed entity that is a private company makes a loan to the target entity; or (ii) another entity that is a private company interposed between the private company and the target entity makes a payment or loan to the target entity; and (d) the amount of the payment or the loan is greater than the amount worked out using the formula: (2) The amount of the payment from the private company to the target entity (as worked out under section 109V) is to be reduced by the amount worked out using the formula: (3) In the formulas in paragraph (1)(d) and subsection (2): "distributable surplus" means the distributable surplus (worked out under subsection 109Y(2)) for the interposed entity that made the payment or loan to the target entity for the year of income.subsection 109Y(3) amount means the total of any amounts calculated under subsection 109Y(3) in relation to that interposed entity for the year of income (apart from as a result of the operation of this section).This section operates regardless of certain factors (4) For the purposes of this section, it does not matter: (a) whether the interposed entity made the payment or loan to the target entity before, after or at the same time as the first interposed entity received the guarantee from the private company; or (b) whether or not the interposed entity paid or lent the target entity the same amount as the private company guaranteed. INCOME TAX ASSESSMENT ACT 1936 - SECT 109UA Certain liabilities under guarantees treated as payments (1) Section 109T operates as if one entity (the first entity) makes a payment to a second entity if the first entity guarantees a loan the second entity makes to a third entity (the target entity) and, as a result of the guarantee, the first entity has a liability (other than a contingent liability) to make a payment to the second entity. Example: A private company guarantees a loan that a bank makes to a shareholder in the private company and the shareholder defaults on the loan. As a result, the company has a presently existing liability to make a payment to the bank. Section 109T operates as if the private company had made a payment to the bank, so the company is treated by section 109V as making a payment to the shareholder (because the bank is interposed between company and shareholder). (2) The amount of the payment (as worked out under section 109V) is to be reduced by any amount treated as a dividend as a result of the operation of section 109U in relation to the payment or loan made by the interposed entity to the target entity. (3) A private company is not taken under this Division to pay a dividend because of the operation of subsection (1) in relation to a guarantee if the Commissioner is satisfied that: (a) the target entity would suffer undue hardship if the private company were taken to pay a dividend to the entity because of the liability; and (b) when the target entity entered into the loan, the entity had the capacity to pay the loan. (4) This section does not the limit the operation of section 109T. (5) Subsection (1) does not apply if: (a) as a result of the first entity's liability mentioned in that subsection, the target entity has a liability (other than a contingent liability) to make a payment to the first entity; and (b) because of section 109N, the liability to make a payment to the first entity is not treated under this Division as giving rise to a dividend paid to the first entity. INCOME TAX ASSESSMENT ACT 1936 - SECT 109V Amount of private company's payment to target entity through one or more interposed entities Private company taken to pay if target entity is paid (1) If the target entity is paid an amount by the interposed entity, this Division operates as if the private company had paid the amount (if any) determined by the Commissioner to the target entity when the interposed entity paid the target entity. Determining the amount of the private company's payment (2) In determining the amount of the payment the private company is taken to have made, the Commissioner must take account of: (a) the amount the interposed entity paid the target entity; and (b) how much (if any) of that amount the Commissioner believes represented consideration payable to the target entity by the private company or any of the interposed entities for anything (assuming that the consideration payable equals that for similar transactions at arm's length). INCOME TAX ASSESSMENT ACT 1936 - SECT 109W Private company's loan to target entity through one or more interposed entities Private company taken to lend if target entity receives loan (1) If the target entity is lent an amount by the interposed entity, this Division operates as if the private company had made a loan (the notional loan) of the amount (if any) determined by the Commissioner to the target entity when the interposed entity made the loan to the target entity. Note: Subsection 109D(4) specifies the time at which a loan is made. How big is the notional loan? (2) In determining the amount of the notional loan, the Commissioner must take account of: (a) the amount the interposed entity lent the target entity; and (b) how much (if any) of that amount the Commissioner believes represented consideration payable to the target entity by the private company or any of the interposed entities for anything (assuming that the consideration payable equals that for similar transactions at arm's length). Notional repayments of notional loan (3) When working out whether the private company is taken under section 109D to pay a dividend as a result of the notional loan, and the amount of any such dividend, assume that the target entity repays an amount of the notional loan equal to the amount worked out using the formula: where: "amount actually lent to target entity" is the amount the interposed entity lent to the target entity. "repayment made by target entity to lender" is the amount of any repayment made by the target entity of the loan the interposed entity made to the target entity. INCOME TAX ASSESSMENT ACT 1936 - SECT 109X Operation of Subdivision D in relation to payment or loan Payment or loan not affected by being made through interposed entity (1) Despite sections 109K and 109L, a private company may be taken under section 109C or 109D to pay a dividend as a result of this Subdivision treating the private company as making a payment or loan to an entity (the target entity), even if: (a) the private company is treated that way because it makes a payment or loan to an entity that is a company interposed between the private company and the target entity; or (b) some or all of the amount paid or lent by a private company to an entity interposed between the private company and the target entity is included in the interposed entity's assessable income for a year of income. (2) Subsections (3) and (4) apply if a notional loan arises under section 109W because an entity interposed between the private company and the target entity makes a loan (the actual loan) to the target entity. (3) For the purposes of section 109N, treat the agreement under which the actual loan was made as the agreement under which the notional loan was made. (4) For the purposes of section 109E: (a) treat the notional loan as an amalgamated loan from the private company to the target entity; and (b) treat the amount of the notional loan worked out under subsection 109W(1) as the amount of the amalgamated loan; and (c) treat the agreement under which the actual loan was made as the agreement under which the amalgamated loan was made; and (d) treat repayments by the target entity of the amount of the notional loan worked out under subsection 109W(3) as payments by the target entity to the private company in relation to the amalgamated loan. INCOME TAX ASSESSMENT ACT 1936 - SECT 109XA Payments, loans and debt forgiveness by a trustee in favour of a shareholder etc. of a private company with an unpaid present entitlement Payments (1) Section 109XB applies if: (a) a trustee makes a payment (including a payment through an interposed entity as described in section 109XF) to a shareholder or an associate of a shareholder of a private company (except a shareholder or associate that is a company) (the actual transaction); and (b) the payment is a discharge of or a reduction in a present entitlement of the shareholder or associate that is wholly or partly attributable to an amount that is an unrealised gain; and (c) either: (i) the company is presently entitled to an amount from the net income of the trust estate at the time the actual transaction takes place, and the whole of that amount has not been paid to the company before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place; or (ii) the company becomes presently entitled to an amount from the net income of the trust estate after the actual transaction takes place, but before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place, and the whole of the amount has not been paid to the company before the earlier of those dates. Note: For entitlements through interposed trusts, see section 109XI. Loan repayments (1A) Disregard paragraph (1)(b) if: (a) subsection (1) has previously applied because the trustee made a payment (the original transaction) to the shareholder, or to an associate of the shareholder, during a previous year of income; and (b) the shareholder, or an associate of the shareholder, makes a loan or loans to the trustee on or after 1 July 2009; and (c) either: (i) a reasonable person would conclude (having regard to all the circumstances) that at the time the original transaction took place the shareholder, or an associate of the shareholder, intended to make the loan or loans to the trustee; or (ii) the shareholder, or an associate of the shareholder, made the loan or loans to the trustee before the time the original transaction took place and a reasonable person would conclude (having regard to all the circumstances) that the trustee obtained the loan or loans in order to make the payment; and (d) the actual transaction is applied to repay all or a part of the loan or loans. (1B) For the purposes of applying section 109XB in a case covered by subsections (1) and (1A) of this section, disregard section 109J (Payments discharging pecuniary obligations not treated as dividends). Loans (2) Section 109XB applies if: (a) a trustee makes a loan (including a loan through an interposed entity as described in section 109XG) to a shareholder or an associate of a shareholder of a private company (except a shareholder or associate that is a company) (the actual transaction); and (b) either: (i) the company is presently entitled to an amount from the net income of the trust estate at the time the actual transaction takes place, and the whole of that amount has not been paid to the company before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place; or (ii) the company becomes presently entitled to an amount from the net income of the trust estate after the actual transaction takes place, but before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place, and the whole of the amount has not been paid to the company before the earlier of those dates. Note: For entitlements through interposed trusts, see section 109XI. Forgiven debts (3) Section 109XB applies if: (a) all or part of a debt owed to a trustee by a shareholder or an associate of a shareholder of a private company is forgiven (except where the shareholder or associate is a company) (the actual transaction); and (b) either: (i) the company is presently entitled to an amount from the net income of the trust estate at the time the actual transaction takes place, and the whole of that amount has not been paid to the company before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place; or (ii) the company becomes presently entitled to an amount from the net income of the trust estate after the actual transaction takes place, but before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place, and the whole of the amount has not been paid to the company before the earlier of those dates. Note: For entitlements through interposed trusts, see section 109XI. Amount involved in the actual transaction (4) The amount involved in the actual transaction is the lesser of: (a) the amount actually involved in the actual transaction; and (b) the amount worked out using the formula: where: "previous transactions" means the sum of: (a) the amounts that, because of previous applications of section 109UB (as in force before the commencement of this section) have been taken to be loans; and (b) the amounts that, because of previous applications of this Subdivision, have been included in an entity's assessable income; in relation to the unpaid present entitlement. "unpaid present entitlement" means: (a) in a case mentioned in subparagraph (1)(c)(i), (2)(b)(i) or (3)(b)(i)--the amount of the present entitlement that remained unpaid on the earlier of the dates mentioned in that subparagraph; and (b) in a case mentioned in subparagraph (1)(c)(ii), (2)(b)(ii) or (3)(b)(ii)--the amount of the present entitlement that remained unpaid on the earlier of the dates mentioned in that subparagraph. The amount of the actual transaction where the entitlement is only partly attributable to an unrealised gain (5) For the purposes of subsection (4), where the actual transaction was a payment and that payment was only partly attributable to an amount that is an unrealised gain, the amount of the actual transaction is taken to be the amount of the payment that was attributable to the amount that is the unrealised gain. Creation of a present entitlement is not a payment (6) The creation of a present entitlement to the capital or income of a trust estate is not, of itself, a payment for the purposes of this Subdivision. Meaning of unrealised gain (7) In this section: "unrealised gain", in relation to a trust estate and an actual payment, means any unrealised gain, whether of a capital or income nature, but does not include an unrealised gain to the extent that it has been or would be included in the assessable income of the trust, apart from this Division, for: (a) a year of income before the year in which the actual payment was made; or (b) the year of income in which the actual payment was made; or (c) the year of income following the year in which the actual payment was made. INCOME TAX ASSESSMENT ACT 1936 - SECT 109XB Amounts included in assessable income (1) An amount is included, as if it were a dividend paid by the company at the end of the year of income of the company in which the actual transaction took place, in the assessable income of the shareholder or associate referred to in subsection 109XA(1), (2) or (3) if: (a) had the actual transaction been done by a private company (the notional company); and (b) had the shareholder or associate been a shareholder of the notional company at the time the actual transaction took place; an amount (the Division 7A amount) would have been included in the shareholder's or associate's assessable income because of a provision of this Division outside this Subdivision. (2) Subject to section 109Y, the amount that is included under subsection (1) is the Division 7A amount. Note: There are some modifications of this Division for the purposes of working out the Division 7A amount: see section 109XC. INCOME TAX ASSESSMENT ACT 1936 - SECT 109XC Modifications Modifications for this Subdivision only (1) The modifications in this section have effect for the purposes of the operation of this Subdivision. General modifications (2) This Division (but not this Subdivision) applies to an actual transaction done by a trustee of a trust estate with these modifications: (a) a reference (except in section 109Y) to an amount paid to a private company has effect as a reference to an amount paid to the trustee; and (b) a reference to a year of income of a private company has effect as a reference to the corresponding year of income of the trust estate; and (c) a reference to the ordinary course of a private company's business has effect as a reference to the ordinary course of the trust estate's business. Modified operation of section 109J (4) Section 109J does not apply to a payment to the extent that it is a discharge of or a reduction in a present entitlement. Modified operation of section 109R (6) For the purposes of applying section 109R to an actual transaction: (a) a reference in that section to obtaining a loan from a private company has effect as a reference to obtaining a loan from the trustee; and (b) a reference in that section to property transferred to a private company has effect as a reference to property transferred to the trustee; and (c) a reference in that section to an amount paid by a private company for a transfer of property has effect as a reference to an amount paid by the trustee for a transfer of property. Modified operation of section 109Y (7) Section 109Y applies to the Division 7A amount in this way: (a) assume that the private company referred to in subsection 109XA(1), (2) or (3) had been taken to have paid a dividend to the shareholder or associate referred to in that subsection equal to the Division 7A amount; and (b) assume that the dividend was taken to have been paid at the end of the year of income of the company in which the actual transaction took place; and (c) a reference in that section to a private company's distributable surplus has effect as a reference to the distributable surplus of the private company referred to in paragraph (a). Certain provisions do not apply (8) Subsection 109D(1A), sections 109K, 109NA and 109NB and paragraph 109R(3)(a) do not apply to an actual transaction. INCOME TAX ASSESSMENT ACT 1936 - SECT 109XD Forgiveness of loan debt does not give rise to assessable income if loan gives rise to assessable income An amount is not included in the assessable income for a year of income of the shareholder or associate referred to in subsection 109XA(3) because of the forgiveness of an amount of a debt resulting from a loan if, because of the loan, an amount was included in the assessable income of the shareholder or associate under section 109XB (or former section 109UB) in that or an earlier year of income. Subdivision EB--Unpaid present entitlements --interposed entities INCOME TAX ASSESSMENT ACT 1936 - SECT 109XE Simplified outline of this Subdivision The following is a simplified outline of this Subdivision: Payments and loans This Subdivision allows an amount to be included in an entity's (the target entity's) assessable income under Subdivision EA if an entity interposed between a trustee and the target entity makes a payment or loan to the target entity under an arrangement involving the trustee. This result is achieved by treating the trustee as making a payment or loan of an amount determined by the Commissioner to the target entity. The arrangement must involve the trustee and one or more interposed entities in making payments or loans for the purpose of the target entity receiving a payment or loan from an interposed entity. If the target entity repays a fraction of the loan made by the interposed entity, the target entity is treated as repaying the same fraction of the loan taken to have been made by the trustee. Some provisions that prevent payments or loans from giving rise to assessable income do not apply to payments or loans this Subdivision treats a trustee as making. Present entitlements This Subdivision similarly allows an amount to be included in an entity's assessable income under Subdivision EA if a private company is or becomes presently entitled to an amount from the net income of a trust estate interposed between the private company and another trust estate (the target trust) under an arrangement involving the target trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 109XF Payments through interposed entities (1) For the purposes of paragraphs 109XA(1)(a) and (1A)(a), a trustee is taken to have made a payment to a shareholder, or to an associate of a shareholder, (the target entity) of a private company if: (a) the trustee makes a payment or loan to another entity (the first interposed entity) that is interposed between: (i) the trustee; and (ii) the target entity; and (b) a reasonable person would conclude (having regard to all the circumstances) that the trustee made the payment or loan solely or mainly as part of an arrangement involving a payment to the target entity; and (c) either: (i) the first interposed entity makes a payment to the target entity; or (ii) another entity interposed between the trustee and the target entity makes a payment to the target entity. (2) For the purposes of this section, it does not matter: (a) whether the interposed entity made the payment to the target entity before, after or at the same time as the first interposed entity received the payment or loan from the trustee; or (b) whether or not the interposed entity paid the target entity the same amount as the trustee paid or lent the first interposed entity. (3) Treat the reference in paragraph 109XA(1)(b) to a payment as being a reference to the payment to the target entity mentioned in paragraph (1)(c) of this section. INCOME TAX ASSESSMENT ACT 1936 - SECT 109XG Loans through interposed entities Loans by a trustee through interposed entities (1) For the purposes of paragraph 109XA(2)(a), a trustee is taken to have made a loan (the notional loan) to a shareholder, or to an associate of a shareholder, (the target entity) of a private company if: (a) the trustee makes a payment or loan to another entity (the first interposed entity) that is interposed between: (i) the trustee; and (ii) the target entity; and (b) a reasonable person would conclude (having regard to all the circumstances) that the trustee made the payment or loan solely or mainly as part of an arrangement involving a loan to the target entity; and (c) either: (i) the first interposed entity makes a loan to the target entity; or (ii) another entity interposed between the trustee and the target entity makes a loan to the target entity. (2) For the purposes of this section, it does not matter: (a) whether the interposed entity made the loan to the target entity before, after or at the same time as the first interposed entity received the payment or loan from the trustee; or (b) whether or not the interposed entity lent the target entity the same amount as the trustee paid or lent the first interposed entity. Notional loans (3) When working out whether an amount is included in the assessable income of the target entity under section 109XB as a result of the notional loan under subsection (1) of this section, and the amount included in assessable income, assume that the target entity repays an amount of the notional loan equal to the amount worked out using the formula: where: "amount actually lent to target entity" is the amount the interposed entity lent to the target entity. "repayment made by target entity to lender" is the amount of any repayment made by the target entity of the loan the interposed entity made to the target entity. (4) For the purposes of section 109E (Amalgamated loan from a previous year treated as dividend if minimum repayment not made): (a) treat the notional loan as an amalgamated loan from the private company to the target entity; and (b) treat the amount of the notional loan worked out under section 109XH as the amount of the amalgamated loan; and (c) treat the agreement under which the actual loan was made as the agreement under which the amalgamated loan was made; and (d) treat repayments by the target entity of the amount of the notional loan worked out under subsection (3) of this section as payments by the target entity to the private company in relation to the amalgamated loan. (5) For the purposes of section 109N (about certain loans not being treated as dividends), treat the agreement under which the actual loan was made as the agreement under which the notional loan was made. INCOME TAX ASSESSMENT ACT 1936 - SECT 109XH Amount and timing of payment or loan through interposed entities Amount of payment or loan (1) The amount the trustee is taken under section 109XF or 109XG to have paid or lent the target entity is the amount (if any) determined by the Commissioner. (2) In determining the amount of the payment or loan, the Commissioner must take account of: (a) the amount the interposed entity paid or lent the target entity; and (b) how much (if any) of that amount the Commissioner believes represented consideration payable to the target entity by: (i) the trustee; or (ii) any of the interposed entities; for anything (assuming that the consideration payable equals that for similar transactions at arm's length). (3) The total of the amounts determined under subsection (1) for payments and loans in relation to which section 109XB applies because of the same present entitlement mentioned in paragraph 109XA(1)(c), (2)(b) or (3)(b) must not exceed the unpaid present entitlement mentioned in subsection 109XA(4). Timing of payment or loan (4) The trustee is taken under section 109XF or 109XG to have made the payment or loan at the time the interposed entity made the payment or loan mentioned in paragraph 109XF(1)(c) or 109XG(1)(c) to the target entity. INCOME TAX ASSESSMENT ACT 1936 - SECT 109XI Entitlements to trust income through interposed trusts Entitlements through interposed trusts (1) For the purposes of paragraphs 109XA(1)(c), (2)(b) and (3)(b), a private company is taken to be or to become entitled to an amount from the net income of a trust estate (the target trust) if: (a) the company is or becomes presently entitled to an amount from the net income of another trust estate (the first interposed trust) that is interposed between the target trust and the company; and (b) a reasonable person would conclude (having regard to all the circumstances) that the company is or becomes so entitled solely or mainly as part of an arrangement involving an entitlement to an amount from the target trust; and (c) either: (i) the first interposed trust is or becomes presently entitled to an amount from the net income of the target trust; or (ii) another trust interposed between the target trust and the company is or becomes presently entitled to an amount from the net income of the target trust. This section operates regardless of certain factors (2) For the purposes of this section, it does not matter: (a) whether the company became or becomes entitled to the amount from the net income of the first interposed trust before, after or at the same time as the interposed trust became or becomes presently entitled to an amount from the net income of the target trust; or (b) whether or not the company became presently entitled to the same amount as the amount to which the interposed trust become entitled. This section does not operate to the extent Subdivision EA would otherwise apply (3) Subsection (1) does not apply to the extent that an amount is included in the assessable income of a shareholder, or an associate of a shareholder, of the company under Subdivision EA (as it applies apart from this section) as a result of the present entitlement of any interposed trust. Amount of entitlement (4) The amount the private company is taken to be or to become entitled to from the net income of the target trust is the amount (if any) determined by the Commissioner. (5) The total amount determined under subsection (4) for present entitlements to which that subsection applies because of the same present entitlement to an amount from the net income of the target trust mentioned in paragraph (1)(c) must not exceed that amount. (6) In determining the amount of the entitlement, the Commissioner must take account of: (a) the amount the private company is or becomes entitled to from the net income of the first interposed trust; and (b) how much (if any) of that amount the Commissioner believes represented consideration payable to the private company by: (i) the target trust; or (ii) any of the interposed trusts; for anything (assuming that the consideration payable equals that for similar transactions at arm's length). Timing of entitlement (7) The company is taken to be or to become entitled to the amount from the net income of the target trust at the time the company is or becomes entitled to the amount from the net income of the first interposed trust mentioned in paragraph (1)(a). INCOME TAX ASSESSMENT ACT 1936 - SECT 109Y Proportional reduction of dividends so they do not exceed distributable surplus Reduction of amounts of dividends (1) If, apart from this section, the sum of all the dividends a private company is taken under this Division to pay at the end of the year of income would be more than the company's distributable surplus for that year, the amount of each of those dividends is the amount worked out under subsection (3). Distributable surplus (2) A private company's distributable surplus for its year of income is the amount worked out using the formula: where: Division 7A amounts is the total of any amounts the company is taken under section 109C or 109F to have paid as dividends in the year of income apart from this section. "net assets" means the amount (if any), at the end of the company's year of income, by which the company's assets (according to the company's accounting records) exceed the sum of: (a) the present legal obligations of the company to persons other than the company; and (b) the following provisions (according to the company's accounting records): (i) provisions for depreciation; (ii) provisions for annual leave and long service leave; (iii) provisions for amortisation of intellectual property and trademarks; (iv) other provisions prescribed under regulations made for the purposes of this subparagraph. If the Commissioner considers that the company's accounting records significantly undervalue or overvalue its assets or undervalue or overvalue its provisions, the Commissioner may substitute a value that the Commissioner considers is appropriate. "non-commercial loans" means the total of: (a) any amounts that: (i) the company is taken under former section 108, or section 109D or 109E, to have paid as dividends in earlier years of income; and (ii) are shown as assets in the company's accounting records at the end of year of income; and (b) any amounts that are included in the assessable income of shareholders, or associates of shareholders, of the company under section 109XB as if the amounts were dividends paid by the company in earlier years of income. Note: The total amount worked out under paragraph (b) might be reduced under subsection (2A). "paid-up share value" is the paid-up share capital of the company at the end of its year of income. "repayments of non-commercial loans" means the total of: (a) any repayments to the company of loans or amounts that have been taken by former section 108, or section 109D or 109E, to be dividends; and (b) amounts set off against loans that have been taken by former section 108, or section 109D or 109E, to be dividends, other than such amounts that are set off as a result of: (i) a dividend (being a later dividend for the purposes of section 109ZC or a subsequent dividend for the purposes of former subsection 108(2)) being paid by the company to the extent of the unfranked part of the dividend; or (ii) a loan, or a part of a loan, being forgiven. (2A) Reduce the total of the amounts worked out under paragraph (b) of the definition of non-commercial loans in subsection (2) by the total of the unfranked parts of any dividends: (a) that are distributed by the company; and (b) to which section 109ZCA applies. (3) The amount of a dividend that a private company is taken under this Division to pay is worked out using the formula: where: "provisional dividend" is the amount of the dividend that the private company would be taken to pay apart from this section. "total of provisional dividends" is the sum of all the dividends the private company is taken under this Division to pay at the end of the year of income apart from this section.Requirement for private company to provide statement (4) If this section sets the amount of a dividend taken under this Division to be paid by a private company to an entity at the end of a year of income, the private company must give the entity a written statement as soon as possible after the end of the year of income. What the statement must contain (5) The statement must set out: (a) the private company's distributable surplus for the year of income; and (b) the total amount the company would be taken under this Division to pay as dividends in the year of income apart from this section. INCOME TAX ASSESSMENT ACT 1936 - SECT 109Z Characteristics of dividends taken to be paid under this Division If a private company is taken under this Division to have paid a dividend to an entity, the dividend is taken for the purposes of this Act to be paid: (a) to the entity as a shareholder in the private company; and (b) out of the private company's profits. INCOME TAX ASSESSMENT ACT 1936 - SECT 109ZA No dividend taken to be paid for withholding tax purposes If a private company is taken under this Division to have paid a dividend to an entity, disregard the dividend for the purposes of: (a) Division 11A of Part III (which deals with withholding tax on dividends paid to non-residents and some other people); and (c) Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 (which deals with PAYG withholding). INCOME TAX ASSESSMENT ACT 1936 - SECT 109ZB Amount treated as dividend is not a fringe benefit (1) This Division applies to a loan of an amount to an entity by a private company, even if the loan is made: (a) to the entity in its capacity as an employee (as defined in the Fringe Benefits Tax Assessment Act 1986) or an associate of such an employee; or (b) in respect of the employment of an employee (as defined in that Act). Note: This helps ensure that a loan is not a fringe benefit for the purposes of that Act. (2) This Division applies to a private company's forgiveness of a debt owed by an entity to the private company, even if: (a) the entity owed the debt in its capacity as an employee (as defined in the Fringe Benefits Tax Assessment Act 1986) or an associate of such an employee; or (b) the forgiveness occurs in respect of the employment of an employee (as defined in that Act). Note: This helps ensure that the forgiveness of a debt is not a fringe benefit for the purposes of that Act. (3) However, this Division does not apply to a payment made to a shareholder, or an associate of a shareholder, in their capacity as an employee (as defined in the Fringe Benefits Tax Assessment Act 1986) or an associate of such an employee. INCOME TAX ASSESSMENT ACT 1936 - SECT 109ZC Treatment of dividend that is reduced on account of an amount taken under this Division to be a dividend (1) This section sets out special rules for dealing with a dividend (the later dividend) distributed by a private company if some or all of the later dividend is set off against some or all of an amount taken under this Division to be a dividend previously paid by the company. Example: Some or all of a dividend distributed by a private company to a shareholder might be set off to reduce a loan the company had previously made to the shareholder that was treated as a dividend under Subdivision B. (1A) This section also sets out special rules for dealing with a dividend (also the later dividend) distributed by a private company if: (a) the private company distributes the later dividend to a shareholder in the company; and (b) the shareholder applies the amount of the dividend to repay all or part of a loan: (i) that was obtained from the private company by an associate of the shareholder; and (ii) in relation to which a dividend was previously taken under this Division to have been paid by the private company. (2) The amount of the later dividend set off or applied is taken not to be a dividend for the purposes of this Act, except Part 3-6 of the Income Tax Assessment Act 1997 (which deals with franking of distributions). However, if the amount set off or applied exceeds the amount of the later dividend that is not either the franked part of that dividend, or the part of that dividend that has been franked with an exempting credit, the excess is still a dividend. Note: This prevents double taxation by ensuring that the entity's assessable income does not include the amount of the later dividend that is not paid to the entity (except to the extent that that amount is franked). (3) An amount that is taken not to be a dividend under subsection (2) is not assessable income and is not exempt income. INCOME TAX ASSESSMENT ACT 1936 - SECT 109ZCA Treatment of dividend that is reduced on account of an amount included in assessable income under Subdivision EA (1) This section sets out special rules for dealing with a dividend (the later dividend) distributed by a private company if: (a) an amount is included in the assessable income of a shareholder, or an associate of a shareholder, of the company under section 109XB because of a loan made to the shareholder or associate by a trustee in relation to a present entitlement of the company to an amount from the net income of the trust estate; and (b) subsection 109XA(2) applied to the loan; and (c) some or all of the later dividend is applied to repay all or a part of the loan. (2) The amount of the later dividend applied is taken not to be a dividend for the purposes of this Act, except Part 3-6 of the Income Tax Assessment Act 1997 (which deals with franking of distributions). (3) However, if the amount set off or applied exceeds the amount of the later dividend that is neither: (a) the franked part of that dividend; nor (b) the part of that dividend that has been franked with an exempting credit; the excess is still a dividend. Note: This prevents double taxation by ensuring that the entity's assessable income does not include the amount of the later dividend that is not paid to the entity (except to the extent that that amount is franked). (4) An amount that is taken not to be a dividend under subsection (2) is not assessable income and is not exempt income. INCOME TAX ASSESSMENT ACT 1936 - SECT 109ZD Defined terms In this Division: "amalgamated loan" has the meaning given by subsection 109E(3). "arrangement" has the meaning given by section 995-1 of the Income Tax Assessment Act 1997. "associate" has the meaning given by section 318. "benchmark franking percentage" has the same meaning as in the Income Tax Assessment Act 1997. "benchmark interest rate" for a year of income has the meaning given by subsection 109N(2). "deficit" has the same meaning as in the Income Tax Assessment Act 1997. "distributable surplus" of a company for a year of income has the meaning given by subsection 109Y(2). "entity" has the meaning given by section 960-100 of the Income Tax Assessment Act 1997. "family law obligation" means an order, agreement or award mentioned in paragraph 126-5(1)(a), (b), (d), (e) or (f) of the Income Tax Assessment Act 1997. "forgive" a debt has the meaning given by section 109F. "franking account" has the same meaning as in the Income Tax Assessment Act 1997. "franking percentage" has the same meaning as in the Income Tax Assessment Act 1997. "franking period" has the same meaning as in the Income Tax Assessment Act 1997. "guarantee", in relation to a loan, includes providing security for the loan. "loan" has the meaning given by subsection 109D(3). "lodgment day" for a private company's year of income has the meaning given by subsection 109D(6). "payment" has the meaning given by subsection 109C(3) and section 109CA. "unfrankable" has the same meaning as in the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 109ZE Interpretation rules about entities The rules in section 960-100 of the Income Tax Assessment Act 1997 about entities apply to this Division. INCOME TAX ASSESSMENT ACT 1936 - SECT 117 Co-operative companies (1) In this Division, co-operative company means a company, not being a friendly society dispensary, the rules of which limit the number of shares which may be held by, or by and on behalf of, any one shareholder, and prohibit the quotation of the shares for sale or purchase at any stock exchange or in any other public manner whatever, and includes a company, not being a friendly society dispensary, which has no share capital, and which in either case is established for the purpose of carrying on any business having as its primary object or objects one or more of the following: (a) the acquisition of commodities or animals for disposal or distribution among its shareholders; (b) the acquisition of commodities or animals from its shareholders for disposal or distribution; (c) the storage, marketing, packing or processing of commodities of its shareholders; (d) the rendering of services to its shareholders; (e) the obtaining of funds from its shareholders for the purpose of making loans to its shareholders to enable them to acquire land or buildings to be used for the purpose of residence or of residence and business. (2) A company is not a co-operative company within the meaning of this Division in relation to a year of income if the company is, for the purposes of section 23G, an approved credit union in relation to that year of income. (3) Subsection (2) does not apply to a credit union in relation to a year of income if: (a) the credit union is a recognised medium credit union in relation to the year of income; or (b) the credit union is a recognised large credit union in relation to the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 118 Company not co-operative if less than 90% of business with members If, in the ordinary course of business of a company in the year of income, the value of commodities and animals disposed of to, or acquired from, its shareholders by the company, or the amount of its receipts from the storage, marketing, packing and processing of commodities of its shareholders, or from the rendering of services to them, or the amount lent by it to them, is less respectively than 90% of the total value of commodities and animals disposed of or acquired by the company, or of its receipts from the storage, marketing, packing and processing of commodities, or from the rendering of services, or of the total amount lent by it, that company shall in respect of that year be deemed not to be a co-operative company. INCOME TAX ASSESSMENT ACT 1936 - SECT 119 Sums received to be taxed (1) The assessable income of a co-operative company shall include all sums received by it, whether from shareholders or from other persons, for the storage, marketing, packing or processing of commodities, or for the rendering of services, or in payment for commodities or animals or land sold, whether on account of the company or on account of its shareholders. (2) For the purposes of subsection (1), if a credit union (within the meaning of section 23G) receives a payment of, or in the nature of, interest, the payment is taken to be for the rendering of services. (3) Subsection (2) does not limit the generality of subsection (1). INCOME TAX ASSESSMENT ACT 1936 - SECT 120 Deductions allowable to co-operative company (1) So much of the assessable income of a co-operative company as: (a) is distributed among its shareholders as rebates or bonuses based on business done by shareholders with the company; (b) is distributed among its shareholders as interest or dividends on shares; or (c) in the case of a company having as its primary object that specified in paragraph 117(1)(b)--is applied by the company for or towards the repayment of any moneys loaned to the company by a government of the Commonwealth or a State to enable the company to acquire assets which are required for the purpose of carrying on the business of the company or to pay that government for assets so required which the company has taken over from that government; shall be an allowable deduction: Provided that the deduction under paragraph (c) shall not be allowed unless shares representing not less than 90% of the value of the company are held by persons who supply the company with the commodities or animals which the company requires for the purposes of its business. (2) No such rebate or bonus based on purchases made by a shareholder from the company shall be included in his or her assessable income except where the amount of such purchases is allowable as a deduction in ascertaining his or her taxable income of any year. (3) It is hereby declared to be the intention of the Parliament that paragraph (1)(c) applies to loans taken out for the purpose of acquiring assets from: (a) government sources; or (b) non-government sources. (4) No deduction is allowable under subsection (1) to the extent that the assessable income of a co-operative company is distributed as the franked part of a franked distribution. (5) For the purposes of this section, in determining whether the assessable income of a co-operative company is distributed as the franked part of a franked distribution, if: (a) an amount is distributed by the co-operative company as a franked distribution; and (b) the franking percentage (within the meaning of the Income Tax Assessment Act 1997) for the distribution is less than 100%; and (c) a part of the distribution is attributable to sources other than the assessable income of the co-operative company; it is to be assumed that the franked part of the distribution is attributable, to the greatest extent possible, to those other sources. (6) If a co-operative company distributes assessable income among its shareholders within the period of 3 months (or such longer period as the Commissioner decides) starting at the end of a year of income, the co-operative company may elect that the distribution is to be taken, for the purposes of this section only, to have been made on the last day of the year of income. (7) In this section: "franked distribution" has the same meaning as in the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 121 Mutual insurance associations (1) An association of persons formed for the purpose of insuring those persons against loss, damage or risk of any kind is taken, for the purposes of this Act, to be a company carrying on the business of insurance. (2) The assessable income of such a company includes all premiums derived by it, whether from its members or not. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AA What this Division is about Basically, if an insurance company demutualises and its policyholders or members dispose of their listed shares in the company, for tax purposes the acquisition cost of the shares is based on the lesser of: (a) the embedded value or net tangible asset value of the company; and (b) the value of the company based on the total first trading day price of all shares in the company. Other tax consequences result from disposals of other interests and from other events in connection with the demutualisation. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AB Insurance company definitions (1) A mutual insurance company is an insurance company: (a) whose profits are divisible only among its policyholders; or (b) that satisfies all of the following conditions: (i) it is limited by guarantee; (ii) it did not divide its profits among its members during the 10 years ending on 9 May 1995; (iii) on a winding-up, its profits are not divisible among its members; or (c) that satisfies all of the following conditions: (i) at 7.30 pm, by legal time in the Australian Capital Territory, on 9 May 1995, it was a friendly society (within the meaning of this Act as in force at that time); (ii) it was an insurance company on 1 July 1999; (iii) it does not have capital divided into shares held by its members. (2) An insurance company is a life insurance company or a general insurance company. (3) A life insurance company is a company registered under section 21 of the Life Insurance Act 1995. (4) A general insurance company is a company whose sole or principal business is insurance business within the meaning of subsection 3(1) of the Insurance Act 1973, but does not include a life insurance company. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AC Mutual affiliate company A mutual affiliate company is a company that satisfies the following conditions: (a) it is limited by guarantee; (b) it is not an insurance company; (c) at least 75% of the policyholders of a mutual insurance company are members of it; (d) it did not divide its profits among its members during the 10 years ending on 9 May 1995; (e) on a winding-up, its profits are not divisible among its members in their capacity as such. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AD Demutualisation and demutualisation resolution day (1) A mutual insurance company demutualises if it ceases to be a mutual insurance company: (a) in any case--other than by ceasing to be an insurance company; or (b) if it is a life insurance company--because the whole of its life insurance business is transferred to another company under a scheme confirmed by the Federal Court of Australia. (2) A mutual affiliate company demutualises if it ceases to be a mutual affiliate company other than by ceasing to be a company. (3) The demutualisation resolution day, in relation to the demutualisation of a company, is: (a) if paragraph (b) does not apply--the day on which the resolution to proceed with the demutualisation is passed; or (b) if paragraph (1)(b) applies to the demutualisation--the day on which the transfer of the whole of the company's life insurance business takes place. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AE Demutualisation methods, the policyholder/member group and the listing period Demutualisation methods 1 to 6 (1) There are 6 methods by which the demutualisation of a mutual insurance company, where a mutual affiliate company is not also demutualised, may be implemented that are relevant for the purposes of this Division. They are described in sections 121AF to 121AK as demutualisation methods 1 to 6. Demutualisation method 7 (2) There is one method by which the demutualisation of both a mutual insurance company and a mutual affiliate company may be implemented that is relevant for the purposes of this Division. It is described in section 121AL as demutualisation method 7. Demutualisation methods (3) Each of the methods described in sections 121AF to 121AL is a demutualisation method. Policyholder/member group (4) The policyholder/member group, in relation to the demutualisation of a mutual insurance company under any of demutualisation methods 1 to 6, consists of the following persons: (a) in the case of a mutual insurance company covered by paragraph 121AB(1)(a)--policyholders (other than trustees covered by paragraph (d) or (e)) in the company immediately before the demutualisation; (b) in the case of any other mutual insurance company--members (other than trustees covered by paragraph (d) or (e)) of the company immediately before the demutualisation; (c) in any case--any of the following who, in connection with the demutualisation, are entitled to the same rights to shares or the proceeds of the sale of shares as the policyholders (in a paragraph (a) case) or the members (in a paragraph (b) case): (i) employees of the company or a wholly-owned subsidiary of the company; (ii) persons who ceased to be such policyholders or members before the demutualisation; (iii) charities; (iv) persons who are entitled to the rights because of the death of the policyholders or members; (d) in any case--each person who satisfies the following requirements: (i) the person is a member of a regulated superannuation fund (as defined by section 19 of the Superannuation Industry (Supervision) Act 1993), other than a standard employer-sponsored member (as defined by subsection 16(5) of that Act); (ii) the trustee of the fund holds a policy or policies in the mutual insurance company; (iii) the trustee of the fund is a company that is a wholly-owned subsidiary of the mutual insurance company; (iv) the person's benefits in the fund consist solely of the proceeds of the policy or policies; (v) in connection with the demutualisation, the person, rather than the trustee, has the right to shares or the proceeds of the sale of shares in respect of the policy or policies held by the trustee; (e) in any case--each person who satisfies the following requirements: (i) the person is the member of a single-member superannuation fund; (ii) the trustee of the fund holds a policy or policies in the mutual insurance company; (iii) in connection with the demutualisation, the person, rather than the trustee, has the right to shares or the proceeds of the sale of shares in respect of the policy or policies held by the trustee. (5) The policyholder/member group, in relation to the demutualisation of a mutual insurance company and a mutual affiliate company under demutualisation method 7, consists of the following persons: (a) if the mutual insurance company is covered by paragraph 121AB(1)(a)--policyholders (other than trustees covered by paragraph (e) or (f)) in the mutual insurance company immediately before the demutualisation; (b) in the case of any other mutual insurance company--members (other than trustees covered by paragraph (e) or (f)) of the company immediately before the demutualisation; (c) members (other than trustees covered by paragraph (e) or (f)) of the mutual affiliate company immediately before the demutualisation; (d) any of the following who, in connection with the demutualisation, are entitled to the same rights to shares or the proceeds of the sale of shares as the members: (i) employees of the mutual insurance company, the mutual affiliate company or a wholly-owned subsidiary of either company; (ii) persons who ceased to be such members before the demutualisation; (iii) charities; (iv) persons who are entitled to the rights because of the death of members; (e) in any case--each person who satisfies the following requirements: (i) the person is a member of a regulated superannuation fund (as defined by section 19 of the Superannuation Industry (Supervision) Act 1993), other than a standard employer-sponsored member (as defined by subsection 16(5) of that Act); (ii) the trustee of the fund holds a policy or policies in the mutual insurance company; (iii) the trustee of the fund is a company that is a wholly-owned subsidiary of the mutual insurance company; (iv) the person's benefits in the fund consist of the proceeds of the policy or policies; (v) in connection with the demutualisation, the person, rather than the trustee, has the right to shares or the proceeds of the sale of shares in respect of the policy or policies held by the trustee; (f) in any case--each person who satisfies the following requirements: (i) the person is the member of a single-member superannuation fund; (ii) the trustee of the fund holds a policy or policies in the mutual insurance company; (iii) in connection with the demutualisation, the person, rather than the trustee, has the right to shares or the proceeds of the sale of shares in respect of the policy or policies held by the trustee. (6) The listing period is the period ending 2 years after the demutualisation resolution day, or at such later time as the Commissioner, before the end of the 2 years, allows. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AEA Replacement of policyholders by persons exercising certain rights If, as a result of the exercise of any power under the articles of association of an insurance company, persons are entitled to exercise rights in place of policyholders, then, to the extent that the Commissioner considers it appropriate, the persons are treated for the purposes of this Division as replacing the policyholders. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AF Demutualisation method 1 (1) Under demutualisation method 1, in connection with the implementation of the demutualisation: (a) all membership rights in the mutual insurance company are extinguished; and (b) shares (the ordinary shares) of only one class in the mutual insurance company are issued to each person in the policyholder/member group; and (c) the ordinary shares are listed within the listing period. Note: Other things may also happen in connection with the implementation of the demutualisation. (2) The following diagram shows, where this demutualisation method is used, the issue of the shares to the policyholder/member group. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AG Demutualisation method 2 (1) Under demutualisation method 2, in connection with the implementation of the demutualisation: (a) all membership rights in the mutual insurance company are extinguished; and (b) not more than 10 shares (the special shares) in the mutual insurance company are issued to a trustee to hold for the benefit of the policyholder/member group, where: (i) the issue takes place before the issue of the ordinary shares mentioned in paragraph (c); and (ii) on the issue of all the ordinary shares, the rights attaching to the special shares become the same as those attaching to the ordinary shares; and (c) a greater number of shares (the ordinary shares) of only one class in the mutual insurance company are either: (i) issued, at the election of each person in the policyholder/member group, to the person or to a trustee to sell on behalf of the person; or (ii) issued to a trustee, at the election of each person in the policyholder/member group, to distribute to the person or to sell on behalf of the person; and (d) the trustee sells the ordinary shares and distributes the proceeds to the person, or distributes the ordinary shares to the person; and (e) the ordinary shares are listed within the listing period. Note: Other things may also happen in connection with the implementation of the demutualisation. (2) The following diagram shows the main events, where this demutualisation method is used involving an election covered by subparagraph (1)(c)(ii). INCOME TAX ASSESSMENT ACT 1936 - SECT 121AH Demutualisation method 3 (1) Under demutualisation method 3, in connection with the implementation of the demutualisation: (a) all membership rights in the mutual insurance company are extinguished; and (b) shares in the mutual insurance company are issued to another company (the holding company); and (c) shares (the ordinary shares) of only one class in: (i) the holding company; or (ii) another company (the ultimate holding company) of which the holding company is a wholly-owned subsidiary, either directly or through one or more other wholly-owned subsidiaries (each of which is an interposed holding company); are issued to each person in the policyholder/member group; and (d) the ordinary shares are listed within the listing period. Note: Other things may also happen in connection with the implementation of the demutualisation. (2) The following diagram shows the main events, where this demutualisation method is used. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AI Demutualisation method 4 (1) Under demutualisation method 4, in connection with the implementation of the demutualisation: (a) all membership rights in the mutual insurance company are extinguished; and (b) shares in the mutual insurance company are issued to another company (the holding company); and (c) not more than 10 shares (the special shares) in: (i) the holding company; or (ii) another company (the ultimate holding company) of which the holding company is a wholly-owned subsidiary, either directly or through one or more other wholly-owned subsidiaries (each of which is an interposed holding company); are issued to a trustee to hold for the benefit of the policyholder/member group; and (d) the issue of the special shares takes place before the issue of the ordinary shares mentioned in paragraph (e), and on the issue of all the ordinary shares, the rights attaching to the special shares become the same as those attaching to the ordinary shares; and (e) a greater number of shares (the ordinary shares) of only one class in the holding company or ultimate holding company are either: (i) issued, at the election of each person in the policyholder/member group, to the person or to a trustee to sell on behalf of the person; or (ii) issued to a trustee, at the election of each person in the policyholder/member group, to distribute to the person or to sell on behalf of the person; and (f) the trustee sells the ordinary shares and distributes the proceeds of sale to the person, or distributes the ordinary shares to the person; and (g) the ordinary shares are listed within the listing period. Note: Other things may also happen in connection with the implementation of the demutualisation. (2) The following diagram shows the main events, where this demutualisation method is used involving 2 trustees and an election covered by subparagraph (1)(e)(ii). INCOME TAX ASSESSMENT ACT 1936 - SECT 121AJ Demutualisation method 5 (1) Under demutualisation method 5, in connection with the implementation of the demutualisation: (a) all membership rights in the mutual insurance company are extinguished; and (b) shares in the mutual insurance company are issued to another company (the holding company); and (c) shares (the ordinary shares) of only one class in: (i) the holding company; or (ii) another company (the ultimate holding company) of which the holding company is a wholly-owned subsidiary, either directly or through one or more other wholly-owned subsidiaries (each of which is an interposed holding company); are either: (iii) issued, at the election of each person in the policyholder/ member group, to the person or to a trustee to sell on behalf of the person; or (iv) issued to a trustee, at the election of each person in the policyholder/member group, to distribute to the person or to sell on behalf of the person; and (d) the trustee sells the ordinary shares and distributes the proceeds of sale to the person, or distributes the ordinary shares to the person; and (e) the ordinary shares are listed within the listing period. Note: Other things may also happen in connection with the implementation of the demutualisation. (2) The following diagram shows the main events, where this demutualisation method is used involving an election covered by subparagraph (1)(c)(iv). INCOME TAX ASSESSMENT ACT 1936 - SECT 121AK Demutualisation method 6 (1) Under demutualisation method 6, in connection with the implementation of the demutualisation of a life insurance company: (a) all membership rights in the company are extinguished; and (b) the whole of the life insurance business of the company is, under a scheme confirmed by the Federal Court of Australia, transferred to another company formed for the purpose; and (c) shares (the ordinary shares) of only one class in the other company are: (i) issued, at the election of each person in the policyholder/member group, to the person or to a trustee to sell on behalf of the person; or (ii) issued to a trustee, at the election of each person in the policyholder/member group, to distribute to the person or to sell on behalf of the person; and (d) the trustee sells the ordinary shares and distributes the proceeds of sale to the person or distributes the ordinary shares to the person; and (e) the ordinary shares are listed within the listing period. Note: Other things may also happen in connection with the implementation of the demutualisation. (2) The following diagram shows the main events, where this demutualisation method is used. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AL Demutualisation method 7 (1) Under demutualisation method 7, in connection with the implementation of the demutualisation of both a mutual insurance company and a mutual affiliate company: (a) all membership rights in both companies are extinguished; and (b) shares in the mutual insurance company and the mutual affiliate company are issued to another company (the holding company); and (c) shares (the ordinary shares) of only one class in: (i) the holding company; or (ii) another company (the ultimate holding company) of which the holding company is a wholly-owned subsidiary, either directly or through one or more other wholly-owned subsidiaries (each of which is an interposed holding company); are either: (iii) issued, at the election of each person in the policyholder/member group to the person or to a trustee to sell on behalf of the person; or (iv) issued to a trustee, at the election of each person in the policyholder/member group, to distribute to the person or to sell on behalf of the person; and (d) the trustee sells the ordinary shares and distributes the proceeds of the sale to the person, or distributes the ordinary shares to the person; and (e) the ordinary shares are listed within the listing period. Note: Other things may also happen in connection with the implementation of the demutualisation. (2) The following diagram shows the main events, where this demutualisation method is used involving an election covered by subparagraph (1)(c)(iv). INCOME TAX ASSESSMENT ACT 1936 - SECT 121AM Embedded value of a mutual life insurance company (1) The embedded value of a mutual life insurance company that demutualises using a demutualisation method is, in accordance with this section, the sum of its existing business value and its adjusted net worth on the applicable accounting day (see subsection (3)). Eligible actuary and Australian actuarial practice (2) The sum is to be worked out by an eligible actuary (see subsection 121AO(3)) according to Australian actuarial practice. Applicable accounting day (3) The applicable accounting day is: (a) if an accounting period of the company ends on the demutualisation resolution day--that day; or (b) in any other case--the last day of the most recent accounting period of the company ending before the demutualisation resolution day. Adjustment for changes after applicable accounting day (4) In a case covered by paragraph (3)(b), if any significant change in the amount of the existing business value or adjusted net worth occurs between the applicable accounting day and the demutualisation resolution day, the amount is to be adjusted to take account of the change. Continued business assumption (5) In working out the existing business value or the adjusted net worth, it is to be assumed: (a) that after the applicable accounting day the company will continue to conduct its life insurance business and any other activity in the same way as it did before that day, and that it will not conduct any different business or other activity; and (b) that the demutualisation will not occur. Discount rate assumption (6) In working out the existing business value or adjusted net worth, the annual discount rate to be used in respect of each future accounting period is worked out using the formula: where: 10 year Treasury bond rate means the Treasury bond rate (see subsection 121AO(1)) for the applicable accounting day in respect of bonds with a 10 year term. "Capital reserve adequacy shortfall percentage" means: (a) if, for any future accounting period, the capital reserves of the company are projected to fall below the capital reserve adequacy level (see subsection 121AO(2)) by 1% or more at both the beginning and end of the accounting period--the percentage worked out by averaging the percentages worked out under each of the following subparagraphs: (i) 0.2% for each 1% by which the capital reserves are projected to fall below the level at the beginning of the period; (ii) 0.2% for each 1% by which the capital reserves are projected to fall below the level at the end of the period; or (b) in any other case--nil. Annual inflation rate assumption (7) In working out the existing business value, the annual inflation rate to be applied is worked out using the formula: Expenditure assumption (8) In working out the existing business value, it is to be assumed that expenditure that the company will incur, in conducting its life insurance business, on recurring items after the demutualisation resolution day will be of the same kinds and amounts (increased to take account of any inflation, using the annual inflation rate in subsection (7)) as the company incurred in the accounting period, or part of an accounting period, ending on the demutualisation resolution day. Investment return assumption (9) In working out the existing business value or the adjusted net worth, it is to be assumed that the annual rate of return on each investment of the company is: (a) if the investment is a security with a term less than 2 years or is cash--the Treasury bond rate (see subsection 121AO(1)) for the applicable accounting day in respect of bonds with a 26 week term; or (b) if the investment is any other kind of security--the Treasury bond rate for the applicable accounting day in respect of bonds with a 10 year term; or (c) in any other case--the rate mentioned in paragraph (b), plus 3%. Future distributable profits assumption (10) In working out the existing business value or the adjusted net worth, the future distributable profits are to be determined on the assumption that the company: (a) will not distribute its profits so as to cause its capital reserves to fall below the capital reserve adequacy level (see subsection 121AO(2)) applicable to the company; and (b) will distribute all of its profits except to the extent necessary for its capital reserves not to fall below the capital reserve adequacy level. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AN Net tangible asset value of a general insurance company or mutual affiliate company (1) The net tangible asset value of a general insurance company, or a mutual affiliate company, that demutualises using a demutualisation method is, in accordance with this section: (a) the amount of its assets on the applicable accounting day (see subsection (4)); reduced by: (b) the amount of its liabilities (including future liabilities) arising from its business conducted before that day. Australian accounting practice (2) The amount of the company's assets and liabilities (other than future liabilities) is to be worked out according to Australian accounting practice. Eligible actuary and Australian actuarial practice (3) The amount of the company's future liabilities is to be worked out by an eligible actuary (see subsection 121AO(3)) according to Australian actuarial practice. Applicable accounting day (4) The applicable accounting day is: (a) if an accounting period of the company ends on the demutualisation resolution day--that day; or (b) in any other case--the last day of the most recent accounting period of the company ending before the demutualisation resolution day. Adjustment for changes after applicable accounting day (5) In a case covered by paragraph (4)(b), if any significant change in the amount of the company's assets or liabilities occurs between the applicable accounting day and the demutualisation resolution day, that amount is to be adjusted to take account of the change. Continued business assumption (6) In working out the net tangible asset value, it is to be assumed: (a) that after the applicable accounting day the company will continue to conduct its business and any other activity in the same way as it did before that day, and that it will not conduct any different business or other activity; and (b) that the demutualisation will not occur. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AO Treasury bond rate, capital reserve adequacy level, eligible actuary and security Treasury bond rate (1) The Treasury bond rate for the applicable accounting day in respect of bonds with a particular term is: (a) if any Treasury bonds with that term were issued on the applicable accounting day--the annual yield on those bonds; or (b) in any other case--the annual yield on Treasury bonds with that term, as published by the Reserve Bank of Australia and applicable to the accounting day. Capital reserve adequacy level (2) The capital reserve adequacy level for a life insurance company that demutualises is: (a) if, after 1 July 1995 and before the applicable accounting day mentioned in subsection 121AM(3) or 121AN(4), a prudential standard made under section 230B of the Life Insurance Act 1995 in relation to capital adequacy applied to the company--the level of capital reserves required by that standard; or (b) in any other case--the level of capital reserves required to provide adequate capital for the conduct of the life insurance business and other activities of the company. Eligible actuary (3) An eligible actuary is a Fellow or Accredited Member of the Institute of Actuaries of Australia who is not an employee of: (a) the mutual insurance company or, where demutualisation method 7 applies, the mutual insurance company or the mutual affiliate company; or (b) a subsidiary of that company or, where demutualisation method 7 applies, of either company. Security (4) A security is: (a) a bond, debenture, certificate of entitlement, bill of exchange or promissory note; or (b) a deposit with a bank or other financial institution; or (c) a secured or unsecured loan. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AP Subsidiary and wholly-owned subsidiary Subsidiary (1) A company (the test company) is a subsidiary of another company (the holding company) if at least half of the shares in the test company are beneficially owned by: (a) the holding company; or (b) a company that is, or 2 or more companies each of which is, a subsidiary of the holding company; or (c) the holding company and a company that is, or 2 or more companies each of which is, a subsidiary of the holding company. (2) If a company is a subsidiary of another company (including because of this subsection), every company that is a subsidiary of the first-mentioned company is a subsidiary of the other company. Wholly-owned subsidiary (3) A company is a wholly-owned subsidiary of another company if it would, under subsection (1) or (2), be a subsidiary of the other company assuming that the reference in subsection (1) to at least half of the shares were instead a reference to all of the shares. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AQ Other definitions In this Division: "annuity" has the same meaning as in section 10 of the Superannuation Industry (Supervision) Act 1993. "first trading day price", in relation to a listed share, means the price on the stock market operated by ASX Limited, as published by that company, at which the share was last traded on the trading day on which it was listed. "general insurance business" means insurance business (within the meaning of the Insurance Act 1973) other than life insurance business. "life insurance business" has the same meaning as in the Life Insurance Act 1995. "listed" means listed for quotation in the official list of ASX Limited. "superannuation interest" has the same meaning as in the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AR List of definitions The following table lists the expressions defined in this Division and shows the provisions in which they are defined: Definition Provision annuity 121AQ applicable accounting day 121AM(3) and 121AN(4) capital reserve adequacy level 121AO(2) eligible actuary 121AO(3) embedded value 121AM(1) demutualise 121AD(1) and (2) demutualisation method 121AE(3) demutualisation method 1 to 121AF to 121AL demutualisation method 7 demutualisation resolution day 121AD(3) first trading day price 121AQ general insurance business 121AQ general insurance company 121AB(4) insurance company 121AB(2) life insurance business 121AQ life insurance company 121AB(3) listed 121AQ listing period 121AE(6) mutual affiliate company 121AC mutual insurance company 121AB(1) net tangible asset value 121AN(1) policyholder/member group 121AE(4) and (5) security 121AO(4) subsidiary 121AP(1) and (2) superannuation interest 121AQ Treasury bond rate 121AO(1) wholly-owned subsidiary 121AP(3) INCOME TAX ASSESSMENT ACT 1936 - SECT 121AS CGT consequences of demutualisation The table below sets out modifications of the application of Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 in respect of events that are described in, or relate to events that are described in, particular demutualisation methods. TABLE 1--MODIFICATIONS OF CGT RULES Item Event Modifications 1 Any demutualisation method: Extinguishment of membership rights as mentioned in paragraph (1)(a) of sections 121AF to 121AL. A capital gain or capital loss arising from a CGT event constituted by the extinguishment is disregarded. 2 Demutualisation method 6: The whole of the life insurance business of the life insurance company is transferred to the other company as mentioned in paragraph 121AK(1)(b). Subdivision 126-B of the Income Tax Assessment Act 1997 as in force immediately before 21 October 1999 (about roll-overs for transfers) applies as if the life insurance company and the other company were members of the same wholly-owned group within the meaning of that Act. 3 Any demutualisation method: A person (the disposer) in the policyholder/member group disposes of a right to have ordinary shares issued or distributed to the person, or the proceeds of sale of ordinary shares distributed to the person, as mentioned in paragraph 121AF(1)(b), 121AG(1)(c) or (d), 121AH(1)(c), 121AI(1)(e) or (f), 121AJ(1)(c) or (d), 121AK(1)(c) or (d) or 121AL(1)(c) or (d). 1. A capital loss that the disposer makes from the disposal is disregarded if the disposal takes place before the demutualisation listing day (see note 4 to this table). 2. For the purpose of working out whether the disposer made a capital gain, or made a capital loss (where modification 1 does not apply), from the disposal, he or she is taken: (a) to have paid, as consideration for the acquisition of the right disposed of, an amount worked out using the following formula: ; and (b) to have paid the amount in paragraph (a), and to have acquired the right disposed of, on the demutualisation resolution day. 4 Demutualisation method 2, 4, 5, 6 or 7: A person (the disposer) in the policyholder/member group disposes of an asset consisting of all or part of the person's interest in the trust property of the trustee mentioned in paragraph 121AG(1)(b) or (c), 121AI(1)(c) or (e), 121AJ(1)(c), 121AK(1)(c) or 121AL(1)(c). 1. A capital loss that the disposer makes from the disposal is disregarded if the disposal takes place before the demutualisation listing day (see note 4 to this table). 2. For the purpose of working out whether the disposer made a capital gain, or made a capital loss (where modification 1 does not apply), from the disposal, he or she is taken: (a) to have paid, as consideration for the acquisition of the interest disposed of, an amount worked out using the following formula: ; and (b) to have paid the amount in paragraph (a), and to have acquired the interest disposed of, on the demutualisation resolution day. 5 Demutualisation method 3, 4 or 5 After the issue of the shares (each of which is a demutualisation share) in the mutual insurance company as mentioned in paragraph 121AH(1)(b), 121AI(1)(b) or 121AJ(1)(b), the holding company (the disposer) disposes of an asset consisting of: (a) a demutualisation share, or an interest in such a share; or (b) another share (a non-demutualisation bonus share) in the mutual insurance company, or an interest in such a share, where the share is a bonus share mentioned in Division 8 of former Part IIIA and any of the demutualisation shares are the original shares mentioned in that Division. 1. A capital loss that the disposer makes from the disposal of the demutualisation share or interest in such a share is disregarded if the disposal takes place before the demutualisation listing day (see note 4 to this table). 2. If the disposal is of a demutualisation share (other than a demutualisation original share) or an interest in such a share then, for the purpose of working out whether the disposer made a capital gain, or made a capital loss (where modification 1 does not apply), from the disposal, the disposer is taken: (a) to have paid as consideration for the acquisition of the share or interest both: (i) the amount worked out using the formula: (For the purposes of the modifications relating to this item, if any of the original shares mentioned in Division 8 of former Part IIIA is a demutualisation share, it is called a demutualisation original share.) ; and (ii) any consideration actually paid or given for the acquisition; and (b) to have paid the amount in subparagraph (a)(i) on the demutualisation resolution day and the amount in subparagraph (a)(ii) when it was actually paid; and (c) to have acquired the share or interest on the demutualisation resolution day. 3. If the disposal is of either: (a) a demutualisation original share, or an interest in such a share; or (b) a non-demutualisation bonus share, or an interest in such a share; then, for the purpose of working out whether the disposer made a capital gain, or made a capital loss (where modification 1 does not apply), from the disposal: (c) for the purposes of applying section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997, the consideration for the acquisition of all of the demutualisation original shares to be taken into account under that section is taken to consist of both: (i) if the disposal and all previous disposals of the demutualisation original shares and the non-demutualisation bonus shares, or interests in them, take place after the demutualisation listing day--the amount worked out using the formula: ; and (ii) if subparagraph (i) does not apply--the amount worked out using the formula: ; and (iii) any consideration actually paid or given for the acquisition of the share or interest disposed of; and (d) if the disposal is of a demutualisation original share or an interest in such a share, the disposer is taken: (i) to have paid the amount in subparagraph (c)(i) or (ii) on the demutualisation resolution day and the amount in subparagraph (c)(iii) when it was actually paid; and (ii) to have acquired the share or interest on the demutualisation resolution day. 6 Demutualisation method 7: After the issue of the shares (each of which is a demutualisation share) in the mutual insurance company and the mutual affiliate company as mentioned in paragraph 121AL(1)(b), the holding company (the disposer) disposes of an asset consisting of: (a) a demutualisation share, or an interest in such a share; or (b) another share (a non-demutualisation bonus share) in the mutual insurance company or the mutual affiliate company, or an interest in such a share, where the share is a bonus share mentioned in section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 and any of the demutualisation shares are the original shares mentioned in that section. 1. A capital loss that the disposer makes from the disposal of the demutualisation share or interest in such a share is disregarded if the disposal takes place before the demutualisation listing day (see note 4 to this table). 2. If the disposal is of a demutualisation share (other than a demutualisation original share) or an interest in such a share then, for the purpose of working out whether the disposer made a capital gain, or made a capital loss (where modification 1 does not apply), from the disposal, the disposer is taken: (a) to have paid as consideration for the acquisition of the share or interest both: (i) the amount worked out using the formula: (For the purposes of the modifications relating to this item, if any of the original shares mentioned in that section is a demutualisation share, it is called a demutualisation original share.) ; and (ii) any consideration actually paid or given for the acquisition; and (b) to have paid the amount in subparagraph (a)(i) on the demutualisation resolution day and the amount in subparagraph (a)(ii) when it was actually paid; and (c) to have acquired the share or interest on the demutualisation resolution day. 3. If the disposal is of either: (a) a demutualisation original share, or an interest in such a share; or (b) a non-demutualisation bonus share, or an interest in such a share; then, for the purpose of working out whether the disposer made a capital gain, or made a capital loss (where modification 1 does not apply), from the disposal: (c) for the purposes of applying section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997, the consideration for the acquisition of all of the demutualisation original shares to be taken into account under that section is taken to consist of both: (i) the amount worked out using the formula: ; and (ii) any consideration actually paid or given for the acquisition of the share or interest disposed of; and (d) if the disposal is of a share connected with the demutualisation or interest in such a share, the disposer is taken: (i) to have paid the amount in subparagraph (c)(i) on the demutualisation resolution day and the amount in subparagraph (c)(ii) when it was actually paid; and (ii) to have acquired the share or interest on the demutualisation resolution day. 7 Demutualisation method 3, 4, 5 or 7: After the issue of the shares in the mutual insurance company to the holding company as mentioned in paragraph 121AH(1)(b), 121AI(1)(b), 121AJ(1)(b), or in the mutual insurance company and the mutual affiliate company as mentioned in paragraph 121AL(1)(b): (a) the ultimate holding company (the disposer) disposes of an asset consisting of either of the following shares in the holding company or an interposed holding company: (i) a share (a demutualisation share) acquired before the issue of the shares in the mutual insurance company, or an interest in such a share; or The same modifications apply as for item 5. (ii) another share (a non-demutualisation bonus share), or an interest in such a share, where the share is a bonus share mentioned in section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 and any of the demutualisation shares (whether or not disposed of at the time) are the original shares mentioned in that section; or (b) the interposed holding company, or any of the interposed holding companies, (the disposer) disposes of an asset consisting of either of the following shares in the holding company or an interposed holding company: (i) a share (a demutualisation share) acquired before the issue of the shares in the mutual insurance company, or an interest in such a share; or (ii) another share (a non-demutualisation bonus share), or an interest in such a share, where the share is a bonus share mentioned in section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 and any of the demutualisation shares (whether or not disposed of at the time) are the original shares mentioned in that section. (For the purposes of the modifications relating to this item, if any of the original shares mentioned in that section is a demutualisation share, it is called a demutualisation original share.) (The ultimate holding company and interposed holding company are those mentioned in paragraph 121AH(1)(c), 121AI(1)(c), 121AJ(1)(c) or 121AL(1)(c)). 8 Demutualisation method 2 or 4: The rights attaching to the special shares held by the trustee become the same as those attaching to the ordinary shares as mentioned in subparagraph 121AG(1)(b)(ii) or paragraph 121AI(1)(d). A capital gain or capital loss arising from a CGT event constituted by the change in the rights is disregarded. 9 Demutualisation method 2, 4, 5, 6 or 7: The trustee (the disposer): (a) sells an ordinary share (a demutualisation share) in the company as mentioned in paragraph 121AG(1)(d), 121AI(1)(f), 121AJ(1)(d), 121AK(1)(d) or 121AL(1)(d); or (b) sells another share (a non-demutualisation bonus share), where the share is a bonus share mentioned in section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 and any of the demutualisation shares (whether or not sold at the time) are the original shares mentioned in that section. (For the purposes of the modifications relating to this item, if any of the original shares mentioned in that section is a demutualisation share, it is called a demutualisation original share.) 1. The person in the policyholder/member group, instead of the trustee, is taken: (a) to have sold the demutualisation share or non-demutualisation bonus share; and (b) to have paid, given and received any consideration that was paid, given or received by the trustee in respect of either share; and (c) to have done any other act in relation to either share that was done by the trustee. 2. The modifications in item 5 apply to the sale of the demutualisation share or non-demutualisation bonus share in the same way as they do to the disposal of such shares covered by that item. 10 Demutualisation method 2, 4, 5, 6 or 7: The trustee distributes an ordinary share as mentioned in paragraph 121AG(1)(d), 121AI(1)(f), 121AJ(1)(d), 121AK(1)(d) or 121AL(1)(d). A capital gain or capital loss arising from a CGT event constituted by the distribution is disregarded. 11 Any demutualisation method: A person (the disposer) in the policyholder/member group disposes of an asset consisting of: (a) a share (a demutualisation share), or an interest in such a share, issued or distributed to the person as mentioned in paragraph 121AF(1)(b), 121AG(1)(c) or (d), 121AH(1)(c), 121AI(1)(e) or (f), 121AJ(1)(c) or (d), 121AK(1)(c) or (d) or 121AL(1)(c) or (d); or The same modifications apply as for item 5. (b) another share (a non-demutualisation bonus share) in the same company, or an interest in such a share, where the share is a bonus share mentioned in section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 and any of the demutualisation shares (whether or not disposed of at the time) are the original shares mentioned in that section. (For the purposes of the modifications relating to this item, if any of the original shares mentioned in that section is a demutualisation share, it is called a demutualisation original share.) 12 Various demutualisation methods A disposal of an asset takes place before the demutualisation listing day, where: (a) modification 1 of item 3, 4, 5, 6, 7 or 11 of this table applies to the disposal; and (b) a roll-over provision (see note 5 to this table) applies to the disposal. 1. If the person who is taken to acquire the asset under the roll-over provision disposes of it before the demutualisation listing day, a capital loss that the person makes from the disposal is disregarded. 2. If the person disposes of the asset on or after the demutualisation listing day, then for the purposes of applying the roll-over provision to that disposal, the modifications in the item in this table apply as if modification 1 were not made. Notes: 1. For the purposes of the table, the applicable company valuation amount, in relation to the disposal of an asset or the allocation of an amount to a member in the records of a superannuation fund, is: (a) if the asset is disposed of, or the amount is allocated, before the demutualisation listing day--the pre-listing day company valuation amount; or (b) in any other case--the listing day company valuation amount. 2. The pre-listing day company valuation amount is: (a) in relation to demutualisation methods 1 to 6, where the mutual insurance company is a life insurance company--the embedded value of the company; or (b) in relation to demutualisation methods 1 to 6, where the mutual insurance company is a general insurance company--the net tangible asset value of the company; or (c) in relation to demutualisation method 7--the sum of the net tangible asset values of the general insurance company and the mutual affiliate company. 3. The listing day company valuation amount is the lesser of: (a) the pre-listing day company valuation amount; and (b) the amount worked out using the formula: 4. The demutualisation listing day is the day on which the ordinary shares mentioned in the demutualisation method concerned are listed. 5. A roll-over provision is: * any of these Subdivisions of the Income Tax Assessment Act 1997: 122-A, 122-B, 124-B, 124-C, 124-D, 124-E, 124-F, 124-G, 124-H, 124-I, 126-A, 126-B; or * section 128-10 or 128-15 of that Act. 6. A trustee who gets a roll-over under Subdivision 124-M of the Income Tax Assessment Act 1997 for an original interest consisting of shares issued as part of a demutualisation may be eligible for a further roll-over under Subdivision 126-E of that Act when a beneficiary becomes absolutely entitled to the replacement shares. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AT Other tax consequences of demutualisation The table below sets out modifications of the application of this Act (except Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997) in respect of events that are described in, or relate to events that are described in, particular demutualisation methods. TABLE 2--MODIFICATIONS OF THIS ACT (EXCEPT CGT RULES) Item Event Modifications 1 Event described in item 1 of Table 1. No amount is included in, or allowable as a deduction from, assessable income in respect of the extinguishment. 2 Event described in item 3 or 4 of Table 1. 1. If the disposal takes place before the demutualisation listing day (see note 4 to Table 1): (a) no loss is allowable as a deduction from the disposer's assessable income in respect of the disposal; and (b) any deduction allowable from the disposer's assessable income in respect of the acquisition of the right or interest does not exceed the amount included in the disposer's assessable income in respect of the disposal. 2. Paragraphs 2(a) and (b) of the modifications column for item 3 or 4 in Table 1 apply for the purposes of working out: (a) the amount of any profit included in the disposer's assessable income in respect of the disposal; or (b) the amount of any deduction allowable from the disposer's assessable income in respect of the acquisition of the right or interest. 3 Event that would be described in item 5 of Table 1 if the references in that item to bonus shares and original shares mentioned in section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 were instead references to bonus shares and original shares mentioned in section 6BA. 1. If the disposal is of a demutualisation share, or interest in such a share, and the disposal takes place before the demutualisation listing day: (a) no loss is allowable as a deduction from the disposer's assessable income in respect of the disposal; and (b) any deduction allowable from the disposer's assessable income in respect of the acquisition of the share or interest does not exceed the amount included in the disposer's assessable income in respect of the disposal. 2. If the disposal is of a demutualisation share (other than a demutualisation original share), or an interest in such a share, then paragraphs 2(a) to (c) of the modifications column for item 5 in Table 1 apply for the purposes of working out: (a) the amount of any profit included in, or loss (where modification 1 does not apply) allowable as a deduction from, the disposer's assessable income in respect of the disposal; or (b) the amount of any deduction allowable (where modification 1 does not apply) from the disposer's assessable income in respect of the acquisition of the share or interest 3. If the disposal is of either: (a) a demutualisation original share, or an interest in such a share; or (b) a non-demutualisation bonus share, or an interest in such a share; then paragraphs 3(c) and (d) of the modifications column for item 5 in Table 1 apply for the purpose of working out: (c) the amount of any profit included in, or loss (where modification 1 does not apply) allowable as a deduction from, the disposer's assessable income in respect of the disposal; or (d) the amount of any deduction allowable (where modification 1 does not apply) from the disposer's assessable income in respect of the acquisition of the share or interest. In applying paragraph 3(c) of the modifications column for item 5 in Table 1, the reference to section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 is taken instead to be a reference to section 6BA. 4 Event that would be described in item 6 of Table 1 if the references in that item to bonus shares and original shares mentioned in section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 were instead references to bonus shares and original shares mentioned in section 6BA. 1. If the disposal is of a demutualisation share, or interest in such a share, and the disposal takes place before the demutualisation listing day: (a) no loss is allowable as a deduction from the disposer's assessable income in respect of the disposal; and (b) any deduction allowable from the disposer's assessable income in respect of the acquisition of the share or interest does not exceed the amount included in the disposer's assessable income in respect of the disposal 2. If the disposal is of a demutualisation share (other than a demutualisation original share), or an interest in such a share, then paragraphs 2(a) to (c) of the modifications column for item 6 in Table 1 apply for the purposes of working out: (a) the amount of any profit included in, or loss (where modification 1 does not apply) allowable as a deduction from, the disposer's assessable income in respect of the disposal; or (b) the amount of any deduction allowable (where modification 1 does not apply) from the disposer's assessable income in respect of the acquisition of the share or interest. 3. If the disposal is of either: (a) a demutualisation original share, or interest in such a share; or (b) a non-demutualisation bonus share, or an interest in such a share; then paragraphs 3(c) and (d) of the modifications column for item 6 in Table 1 apply for the purpose of working out: (c) the amount of any profit included in, or loss (where modification 1 does not apply) allowable as a deduction from, the disposer's assessable income in respect of the disposal; or (d) the amount of any deduction allowable (where modification 1 does not apply) from the disposer's assessable income in respect of the acquisition of the share or interest. In applying paragraph 3(c) of the modifications column for item 6 in Table 1, the reference to section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 is taken instead to be a reference to section 6BA. 5 Event that would be described in item 7 of Table 1 if the references in that item to bonus shares and original shares mentioned in section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 were instead references to bonus shares and original shares mentioned in section 6BA. The same modifications as for item 3 of this table apply. 6 Event described in item 8 of Table 1. No amount is included in, or allowable as a deduction from, assessable income in respect of the change in the rights. 7 Event that would be described in item 9 of Table 1 if the references in that item to bonus shares and original shares mentioned in section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 were instead references to bonus shares and original shares mentioned in section 6BA. 1. The person in the policyholder/member group, instead of the trustee is taken: (a) to have sold the demutualisation share or non-demutualisation bonus share; and (b) to have paid, given and received any consideration that was paid, given or received by the trustee in respect of either share; and (c) to have done any other act in relation to either share that was done by the trustee. 2. The modifications in item 3 of this table apply to the sale of the demutualisation share or non-demutualisation bonus share in the same way as they do to the disposal of such shares covered by that item. 8 Event that would be described in item 11 of Table 1 if the references in that item to bonus shares and original shares mentioned in section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 were instead references to bonus shares and original shares mentioned in section 6BA. The same modifications as for item 3 of this table apply. 9 Under demutualisation method 6, the whole of the life insurance business of a life insurance company is transferred to another company as mentioned in paragraph 121AK(1)(b). The other company is taken to continue to carry on the transferred life insurance business of the mutual life insurance company. 10 An ordinary share is issued or distributed to a person in the policyholder/member group as mentioned in paragraph 121AF(1)(b), 121AG(1)(c) or (d), 121AH(1)(c), 121AI(1)(e) or (f), 121AJ(1)(c) or (d), 121AK(1)(c) or (d) or 121AL(1)(c) or (d). No amount is included in, or allowable as a deduction from, assessable income of the person in respect of the issue or distribution of the share, except where the share is issued in consideration for services provided, or to be provided, by the person. 11 Ordinary shares in the company are issued or distributed as mentioned in paragraph 121AF(1)(b), 121AG(1)(c) or (d), 121AH(1)(c), 121AI(1)(e) or (f), 121AJ(1)(c) or (d), 121AK(1)(c) or (d) or 121AL(1)(c) or (d) to a person in the policyholder/member group who is the trustee of a superannuation fund to hold on behalf of a member of the fund. The trustee within 30 days allocates to the member, in the records of the fund, an amount representing the member's contributions in respect of the shares (the allocation shares). If the trustee pays a superannuation benefit to the member, the tax free component (within the meaning of the Income Tax Assessment Act 1997) of the superannuation interest (within the meaning of that Act) from which the benefit is paid is increased by the amount worked out using the formula: 12 A resolution is passed to proceed, in accordance with one of the demutualisation methods, with the demutualisation of: (a) a mutual insurance company that is a general insurance company; or (b) both such a mutual insurance company and a mutual affiliate company. The franking surplus is reduced to nil at the beginning of the demutualisation resolution day. Immediately before the demutualisation resolution day: (a) in the case of any demutualisation method--the general insurance company or any wholly-owned subsidiary of the general insurance company; or (b) in the case of demutualisation method 7--the mutual affiliate company, a wholly-owned subsidiary of the mutual affiliate company, or a company all of whose shares are beneficially owned by the general insurance company and the mutual affiliate company; has a franking surplus . 13 A resolution is passed to proceed with the demutualisation of a mutual insurance company or both a mutual insurance company and a mutual affiliate company. A dividend that was declared before the demutualisation resolution day is paid on or after the demutualisation resolution day to: (a) in the case of any demutualisation method--the mutual insurance company or any wholly-owned subsidiary of the mutual insurance company; or (b) in the case of demutualisation method 7--the mutual affiliate company, a wholly-owned subsidiary of the mutual affiliate company, or a company all of whose shares are beneficially owned by the general insurance company and the mutual affiliate company. No franking credit arises for the company or the subsidiary in relation to the payment of the dividend on or after the demutualisation resolution day. INCOME TAX ASSESSMENT ACT 1936 - SECT 121AU This Subdivision does not apply to demutualisation of friendly society health or life insurers This Subdivision does not apply in relation to the demutualisation of a company in relation to whose demutualisation Division 316 (Demutualisation of friendly society health or life insurers) of the Income Tax Assessment Act 1997 applies. Note: Section 316-5 of the Income Tax Assessment Act 1997 explains which demutualisations of entities Division 316 of that Act applies to. INCOME TAX ASSESSMENT ACT 1936 - SECT 121A Object The object of this Division is to provide for concessional taxing, at the rate of 10%, of the offshore banking (OB ) income of an offshore banking unit (OBU). INCOME TAX ASSESSMENT ACT 1936 - SECT 121B Simplified outline Scope of section (1) The following is a simplified outline of the Division. Main concepts (2) Subdivision B sets out the concepts used in the Division, the most important being: (a) OB activity (section 121D) together with the related definition of offshore person (section 121E) and the OBU requirement in section 121EA; and (b) special assessable income and allowable deduction definitions relating to OB activities (sections 121EE and 121EF). Operative provisions (3) Subdivision C contains the operative provisions. Basically, they provide as follows: (a) an OBU's income from OB activities is taxed at only 10%; (b) there is a loss of the concession where there is excessive use of non-OB money; (d) income from OB activities is taken to be Australian sourced; (e) a deemed interest penalty applies to equity provided by an OBU's resident owner; (f) income of OBU offshore investment trusts is exempt from tax; (g) income derived by overseas charitable institutions from OBUs is exempt from tax; (h) certain adjustments are made to the capital gains and losses that flow from disposals of certain interests in trusts of which an OBU is the trustee. INCOME TAX ASSESSMENT ACT 1936 - SECT 121C Interpretation In this Division: "adjusted assessable OB income" has the meaning given by subsection 121EE(4). "adjusted total assessable income" has the meaning given by subsection 121EE(5). "allowable OB deduction" has the meaning given by subsection 121EF(2). "apportionable OB deduction" has the meaning given by subsection 121EF(5). "assessable OB income" has the meaning given by subsections 121EE(2) and (3A). "associate" has the meaning given by section 318. "Australian thing" has the meaning given by subsection 121DA(5). "average Australian asset percentage" has the meaning given by subsection 121DA(2). "borrow" includes raise finance by the issue of a security. "eligible contract" means a futures contract, a forward contract, an options contract, a swap contract, a cap, collar, floor or similar contract or a loan contract. "exclusive non-OB deduction" has the meaning given by subsection 121EF(6). "exclusive OB deduction" has the meaning given by subsection 121EF(3). "general OB deduction" has the meaning given by subsection 121EF(4). "lend" includes provide finance by the purchase of a security. "loss deduction" has the meaning given by subsection 121EF(7). "monthly Australian asset percentage" has the meaning given by subsection 121DA(3). "non-OB money", in relation to an OBU, means money of the OBU other than: (a) money received by the OBU in carrying on an OB activity; or (b) OBU resident-owner money of the OBU; or (c) money paid to the OBU by a non-resident (other than in carrying on business in Australia at or through a permanent establishment of the non-resident) by way of subscription for, or a call on, shares in the OBU; (an example of non-OB money being money borrowed from a resident whose lending of the money does not occur in carrying on business in a country outside Australia at or through a permanent establishment of the resident). "non-resident trust" means a unit trust that is not a resident unit trust within the meaning of section 102Q. "OB activity" has the meaning given by section 121D. "OBU" (offshore banking unit) means an offshore banking unit within the meaning of Division 11A of Part III.Note: In this Division, the head company of a consolidated group or MEC group may be treated for certain purposes as an OBU at a time when a subsidiary member of the group is an OBU (see Subdivision 717-O of the Income Tax Assessment Act 1997). "OBU resident-owner money" has the meaning given by section 121EC. "offshore person" has the meaning given by section 121E. "overseas charitable institution" means a non-resident institution the income of which: (a) would be exempt from tax under item 1.1 of section 50-5 of the Income Tax Assessment Act 1997 (and not under any other item of that section) if the institution had a physical presence in Australia and incurred its expenditure and pursued its objectives principally in Australia; and (b) is exempt in the country in which it is resident. "owner", in relation to a company, means a person who, alone or together with an associate or associates, is the beneficial owner of all of the shares in the company. "portfolio investment" has the meaning given by subsection 121DA(1). "related person", in relation to an OBU, means: (a) an associate of the OBU; or (b) a permanent establishment referred to in paragraph 121EB(1)(b) in relation to the OBU. "security" means a bond, debenture, debt interest, bill of exchange, promissory note or other security or similar instrument. "trade with a person" has the meaning given by section 121ED.90-day bank bill rate, at a particular time, means: (a) if the Reserve Bank of Australia has published a rate described as the 90-day bank accepted bill rate in respect of a period in which the particular time occurs--that rate; or (b) in any other case--the rate declared by regulations for the purposes of this definition to be the 90-day bank accepted bill rate in respect of a period in which the particular time occurs. INCOME TAX ASSESSMENT ACT 1936 - SECT 121D Meaning of OB activity Kinds of OB activity (1) Each of the following things done by an OBU is an OB activity (offshore banking activity) of the OBU, provided that the requirement relating to the OBU in section 121EA is met: (a) a borrowing or lending activity described in subsection (2); or (b) a guarantee-type activity described in subsection (3); or (c) a trading activity described in subsection (4); or (d) an eligible contract activity described in subsection (5); or (e) an investment activity described in subsection (6), (6A) or (6B); or (f) an advisory activity described in subsection (7); or (g) a hedging activity described in subsection (8); or (h) any other activity involving an offshore person, being an activity declared by regulations for the purposes of this paragraph to be an OB activity. Borrowing or lending activity (2) For the purposes of paragraph (1)(a), a borrowing or lending activity is: (a) borrowing money from an offshore person where, if that person is a related person or a person to whom paragraph 121E(b) applies and is not an OBU, the money is not Australian currency; or (b) lending money to an offshore person where, if that person is a person to whom paragraph 121E(b) applies and is not an OBU, the money is not Australian currency; or (c) borrowing gold from an offshore person; or (d) lending gold to an offshore person. Guarantee-type activity (3) For the purposes of paragraph (1)(b), a guarantee-type activity is: (a) providing a guarantee or letter of credit to an offshore person in relation to activities that are, or will be, conducted wholly outside Australia; or (b) underwriting a risk for an offshore person in relation to activities that are, or will be, conducted wholly outside Australia in respect of property outside Australia or an event that can only happen outside Australia; or (c) syndicating a loan for an offshore person; or (d) issuing a performance bond to an offshore person; where, if the offshore person is a related person, any money payable under the guarantee, letter, underwriting, loan or bond is not Australian currency. Trading activity (4) For the purposes of paragraph (1)(c), a trading activity is: (a) trading with an offshore person in: (i) securities issued by non-residents; or (ii) eligible contracts, under which any amounts payable are payable by non-residents; or (b) trading with an offshore person in: (i) shares in non-resident companies; or (ii) units in non-resident trusts; or (c) trading with an offshore person in options or rights in respect of securities, eligible contracts, shares or units referred to in paragraph (a) or (b); or (d) trading (including on behalf of an offshore person) on the Sydney Futures Exchange in futures contracts, or options contracts, under which any money payable is not Australian currency; or (e) trading in currency, or options or rights in respect of currency, with any person, where the currency is not Australian currency; or (ea) trading in currency, or options or rights in respect of currency, with an offshore person; or (f) trading in gold bullion, or in options or rights in respect of such bullion: (i) with an offshore person where the money or moneys payable or receivable is or are in any currency; or (ii) a person other than an offshore person where the money or moneys payable or receivable is or are in a currency other than Australian currency; or (g) trading with an offshore person in silver, platinum or palladium bullion, or in options or rights in respect of such bullion; or (h) trading with an offshore person in base metals. (5) For the purposes of paragraph (1)(d), an eligible contract activity is entering into an eligible contract (other than a loan contract) with an offshore person. Investment activity (6) For the purposes of paragraph (1)(e), an investment activity is making (but not managing), as broker or agent for, or trustee for the benefit of, an offshore person to whom paragraph 121E(a) applies, an investment with an offshore person to whom that paragraph applies, where: (a) the currency in which the investment is made is not Australian currency; and (b) if the investment involves the purchase of any thing: (i) if the thing is a share in a company--the company is a non-resident company; or (ii) if the thing is a unit in a unit trust--the unit trust is a non-resident trust; or (iii) if the thing is land or a building--the land or building is not in Australia; or (iv) in any other case--the thing is located outside Australia. Investment activity--portfolio investment (6A) For the purposes of paragraph (1)(e), an investment activity is also the managing by an OBU of a portfolio investment (see subsection 121DA(1)) for the whole or part (the investment management period) of a year of income, where: (a) the portfolio investment is managed as broker, agent or custodian for, or trustee for the benefit of, a non-resident; and (b) the portfolio investment was made by the OBU or the non-resident; and (c) the portfolio investment was made with a non-resident (except to the extent that making the investment consisted of making a loan or purchasing an Australian thing); and (d) the currency in which the portfolio investment was made was not Australian currency; and (e) if the portfolio investment consists of only a single thing--the thing is not an Australian thing (see subsection 121DA(5)); and (f) if paragraph (e) does not apply--the average Australian asset percentage (see subsection 121DA(2)) of the portfolio investment is not more than 10%. Investment activity--portfolio investment for overseas charitable institutions (6B) For the purposes of paragraph (1)(e), an investment activity is also the managing by an OBU of a portfolio investment (see subsection 121DA(1)) for the whole or part (the investment management period) of a year of income, where: (a) the portfolio investment is managed as broker, agent or custodian for, or trustee for the benefit of, an overseas charitable institution; and (b) the portfolio investment was made by the OBU or the overseas charitable institution. Advisory activity (7) For the purposes of paragraph (1)(f), an advisory activity is giving investment or other financial advice to an offshore person where, if the advice is about the making of a particular investment, the investment is of a kind referred to in subsection (6). This does not exclude giving advice about a particular investment of a different kind if doing so is incidental to advising on an investment of a kind referred to in subsection (6), for example for the purpose of comparison or because the investments are commercially related. Hedging activities (8) For the purposes of paragraph (1)(g), a hedging activity is entering into a financial arrangement (within the meaning of the Income Tax Assessment Act 1997) with an offshore person for the sole purpose of eliminating or reducing the risk of adverse financial consequences that might result to the OBU from: (a) interest rate exposure of the OBU in respect of borrowing or lending activities (described in subsection (2)) of the OBU; or (b) currency exposure of the OBU in respect of borrowing or lending activities (described in subsection (2)) of the OBU. Effect of subsection (8) (9) Subsection (8) does not limit the scope of any other OB activity of the OBU (for example the trading activity mentioned in paragraph (4)(e)). INCOME TAX ASSESSMENT ACT 1936 - SECT 121DA Meaning of expressions relevant to investment activity Portfolio investment (1) If, under a contract or trust instrument, an OBU manages one or more investments as broker an agent or custodian for, or trustee for the benefit of, a non-resident, the investment, or all of the investments, constitute a portfolio investment. Average Australian asset percentage (2) The average Australian asset percentage of a portfolio investment is the average, for all months that wholly or partly fall within the investment management period (see subsection 121D(6A) or (6B)), of the monthly Australian asset percentages (see subsection (3)) of all of the things comprising the portfolio investment. Monthly Australian asset percentage (3) For the purposes of subsection (2), the monthly Australian asset percentage of the things for a month is the percentage of the total value of all of the things comprising the portfolio investment, for the month, that is represented by the value of Australian things. Basis for working out percentage (4) The percentage in subsection (3) must be worked out according to reasonable accounting practice that applies on the same basis for all months falling wholly or partly within the investment management period. Australian thing (5) A thing is an Australian thing at a particular time if: (a) where the thing is a share in a company--the company is a resident company at the time; or (b) where the thing is a unit in a unit trust--the unit trust is a resident trust (within the meaning of section 102Q) in relation to the year of income in which the time occurs; or (c) where the thing is land or a building--the land or building is in Australia; or (d) where the thing is a loan--the loan was made to an Australian resident; or (e) in any other case--the thing is located in Australia at the time. INCOME TAX ASSESSMENT ACT 1936 - SECT 121E Meaning of offshore person For the purposes of section 121D, a reference in that section to an offshore person, in relation to the doing of any thing by an OBU (the first OBU), is a reference to: (a) a non-resident whose involvement in the doing of the thing does not occur in carrying on business in Australia at or through a permanent establishment of that person; or (b) a resident whose involvement in the doing of the thing occurs in carrying on business in a country outside Australia at or through a permanent establishment of the person; or (c) another OBU (the second OBU), where, if the doing of the thing involves the payment of any money (for example a loan of money) by the second OBU to the first OBU, the second OBU gives, at or before the time of the payment, a statement in writing to the first OBU to the effect that none of the money is non-OB money of the second OBU. INCOME TAX ASSESSMENT ACT 1936 - SECT 121EA OBU requirement For a thing done by an OBU to be an OB activity, it is necessary that, when the thing is done: (a) the OBU is a resident and the thing is not done in carrying on business in a country outside Australia at or through a permanent establishment of the OBU; or (b) the OBU is a non-resident and the thing is done in carrying on business in Australia at or through a permanent establishment of the OBU. INCOME TAX ASSESSMENT ACT 1936 - SECT 121EB Internal financial dealings of an OBU Permanent establishments treated as separate persons (1) If an OBU consists of: (a) one or more permanent establishments in Australia at or through which the OBU carries on what are OB activities apart from this section; and (b) one or more other permanent establishments either in Australia or outside Australia; then sections 121D to 121EA (inclusive) apply as if: (c) the OBU consisted only of the permanent establishments referred to in paragraph (a); and (d) the permanent establishments referred to in paragraph (b) were separate persons. Head office can be permanent establishment (2) For the purpose of determining under subsection (1) whether something is a permanent establishment, it does not matter whether it is a head office or not. (3) To avoid doubt, this section applies for the purposes of applying Subdivision 230-A of the Income Tax Assessment Act 1997 to a financial arrangement (within the meaning of that Act). Note: This means that it is possible for financial arrangements to be entered into between the bank and the branch and for the bank or the branch to have a gain or loss from such an arrangement dealt with under Division 230 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 121EC Meaning of OBU resident-owner money Money is OBU resident-owner money of an OBU if it is paid to the OBU by a resident owner of the OBU by way of a subscription for, or a call on, shares in the OBU, except if the shares are redeemable preference shares. INCOME TAX ASSESSMENT ACT 1936 - SECT 121ED Meaning of trade with a person A person (the trader) is said to trade with another person in a thing if: (a) the trader, for the purpose of trading in the thing, acquires it on issue from the other person; or (b) the trader, for the purpose of trading in the thing, buys it from the other person; or (c) the trader, in trading in the thing, sells it to the other person. INCOME TAX ASSESSMENT ACT 1936 - SECT 121EE Definitions relating to assessable income of an OBU Purpose of section (1) This section sets out certain definitions used in this Division that relate to the assessable income of an OBU of a year of income. Assessable OB income (2) Subject to subsection (3A), the assessable OB income of an OBU is so much of the OBU's assessable income (other than amounts included under Part 3-1 of the Income Tax Assessment Act 1997) of the year of income as is: (a) derived from OB activities of the OBU or the part of the OBU to which paragraph 121EB(1)(c) applies; or (b) included in the assessable income because of such activities; except to the extent that the money lent, invested or otherwise used in carrying on the activities is non-OB money of the OBU. Typical example of amount excluded from assessable OB income (3) A typical example of an amount covered by the exception in subsection (2) is interest derived from the OB activity of lending money to an offshore person, where the money lent is non-OB money. Reduction of assessable OB income because of certain investment activities (3A) If OB activities of the OBU or the part of the OBU to which paragraph 121EB(1)(c) applies include an investment activity within the meaning of subsection 121D(6A) or (6B), any assessable income derived from the investment activity that would otherwise be taken into account under subsection (2) is reduced by the average Australian asset percentage (within the meaning of subsection 121DA(2)) of the portfolio investment concerned. Adjusted assessable OB income (4) The adjusted assessable OB income of an OBU is the OBU's assessable OB income of the year of income reduced by the sum of the OBU's exclusive OB deductions for interest (including a discount in the nature of interest). Adjusted total assessable income (5) The adjusted total assessable income of an OBU is the OBU's assessable income of the year of income reduced by the sum of the OBU's exclusive OB deductions, and exclusive non-OB deductions, for interest (including a discount in the nature of interest). INCOME TAX ASSESSMENT ACT 1936 - SECT 121EF Definitions relating to allowable deductions of an OBU Purpose of section (1) This section sets out certain definitions used in this Division relating to allowable deductions of an OBU in relation to a year of income. Allowable OB deduction (2) An allowable OB deduction is any of the following 3 kinds of allowable deduction: (a) an exclusive OB deduction; (b) a general OB deduction; (c) an apportionable OB deduction. Exclusive OB deduction (3) An exclusive OB deduction is any deduction (other than a loss deduction) allowable from the OBU's assessable income of the year of income that relates exclusively to assessable OB income. General OB deduction (4) A general OB deduction is so much of any deduction (other than a loss deduction, an apportionable deduction, an exclusive OB deduction or an exclusive non-OB deduction) allowable from the OBU's assessable income of the year of income as is calculated using the formula: Apportionable OB deduction (5) An apportionable OB deduction is so much of any apportionable deduction allowable from the OBU's assessable income of the year of income as is calculated by multiplying the deduction by the following fraction: Exclusive non-OB deduction (6) An exclusive non-OB deduction is any deduction (other than a loss deduction) allowable from the OBU's assessable income of the year of income that relates exclusively to assessable income that is not assessable OB income. Loss deduction (7) A loss deduction is any allowable deduction under Division 36 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 121EG Reduction of assessable OB income, allowable OB deductions and foreign income tax paid Only eligible fraction of assessable OB income is assessable (1) Subject to section 121EH, the assessable income of an OBU includes only the eligible fraction of each amount of assessable OB income derived by the OBU. Only eligible fraction of allowable OB deductions is allowable (2) Subject to section 121EH, only the eligible fraction of each allowable OB deduction of an OBU is an allowable deduction of the OBU. Remaining amounts not exempt income etc. (3) For the purposes of this Act: (a) any amount of assessable OB income of an OBU that, because of subsection (1), is not included in its assessable income is taken not to be exempt income of the OBU; and (b) any part of an allowable OB deduction of an OBU that, because of subsection (2), is not an allowable deduction of the OBU is taken not to be an expense or outgoing incurred in deriving exempt income of the OBU. Only eligible fraction of foreign income tax is taken to be paid (3A) Subject to section 121EH, this Act applies to an OBU as if only the eligible fraction of each amount of foreign income tax (within the meaning of the Income Tax Assessment Act 1997) the OBU paid in respect of an amount of assessable OB income had been paid in respect of that income. Meaning of eligible fraction (4) In this section: "eligible fraction" means 10 divided by the number of percent in the corporate tax rate. INCOME TAX ASSESSMENT ACT 1936 - SECT 121EH Loss of special treatment where excessive use of non-OB money If: (a) the subsection 121EE(2) exception in respect of the lending, investing or other use of non-OB money of an OBU in carrying on activities did not apply to exclude amounts from its assessable OB income; and (b) as a result, more than 10% of what would then be the OBU's assessable OB income of any year of income would be attributable to that lending, investing or other use of non-OB money; then: (c) subsection 121EG(1) (which limits the OBU's assessable income) does not apply to the OBU's assessable OB income of the year of income; and (d) subsection 121EG(2) (which limits the OBU's allowable deductions) does not apply to so much of each allowable OB deduction of the OBU for the year of income as is calculated using the formula: (where each amount is worked out ignoring the assumption in paragraph (a)); and (e) subsection 121EG(3A) (which limits the OBU's foreign income tax) does not apply to the OBU in relation to an amount of foreign income tax (within the meaning of the Income Tax Assessment Act 1997) the OBU paid in respect of an amount of the OBU's assessable OB income of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 121EJ Source of income derived from OB activities For the purposes of this Act, income of an OBU that is derived from OB activites of the OBU is taken to be derived from a source in Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 121EK Deemed interest on 90% of certain OBU resident-owner money Deemed interest (1) If: (a) an owner of an OBU pays an amount of money to the OBU and, because of section 121EC, the amount becomes OBU resident-owner money of the OBU; and (b) the OBU uses, or holds ready for use, the whole or part of the amount (which whole or part is called the OB use amount) in carrying on any of its OB activities during the whole or part of any year of income (which whole or part is called the OB use period); then the assessable income of the owner of the year of income includes deemed interest as described in subsection (2). Amount of deemed interest (2) The deemed interest is: (a) applied to 90% of the OB use amount; and (b) applied on a daily-rests basis for the OB use period at a rate that is 2% above the 90-day bank bill rate from time to time during that period. Deduction for deemed interest (3) A deduction is allowable from the OBU's assessable income, equal to the amount included in the owner's assessable income, for the year of income. The deduction is taken to be an exclusive OB deduction for interest. INCOME TAX ASSESSMENT ACT 1936 - SECT 121EL Exemption of income etc. of OBU offshore investment trusts (1) If: (a) an OBU is a trustee, or is the central manager and controller, of a trust estate; and (b) the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust are non-residents; and (c) the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6) or (6A); then: (d) any income of the trust estate derived from an investment activity covered by subsection 121D(6) is exempt from income tax; and (e) any capital gain or capital loss made by the trust estate from a CGT event happening in relation to a CGT asset of the trust estate in the course of, or in connection with, an investment activity covered by subsection 121D(6) is disregarded; and (f) any income of the trust estate derived from an investment activity covered by subsection 121D(6A) is exempt from income tax, in so far as the income exceeds the average Australian asset percentage (within the meaning of subsection 121DA(2)) for the portfolio investment concerned; and (g) if, apart from this section, the trust estate would make a capital gain or capital loss from a CGT event happening in relation to a CGT asset of the trust estate in the course of, or in connection with, an investment activity covered by subsection 121D(6A)--the trust estate makes only the average Australian asset percentage (for the portfolio investment concerned) of the gain or loss. (2) If: (a) an OBU is a trustee, or is the central manager and controller, of a trust estate; and (b) the only person who benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust is an overseas charitable institution; and (c) the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6B); then: (d) any income of the trust estate derived from an investment activity covered by subsection 121D(6B) is exempt from income tax; and (e) any capital gain or capital loss made by the trust estate from a CGT event happening in relation to a CGT asset of the trust estate in the course of, or in connection with, an investment activity covered by subsection 121D(6B) is disregarded. INCOME TAX ASSESSMENT ACT 1936 - SECT 121ELA Exemption of income etc. of overseas charitable institutions Investment with OBU (1) Income, derived by an overseas charitable institution, is exempt to the extent that it is: (a) a payment or outgoing from an OBU as part of the OB activities of the OBU; or (b) a distribution of income that is exempt under subsection 121EL(2). Capital gains and losses (2) If: (a) an OBU is a trustee, or is the central manager and controller, of a unit trust estate; and (b) the only person who benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust is an overseas charitable institution; and (c) the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6B); and (d) the overseas charitable institution disposes of its interest in the trust; then the overseas charitable institution makes no capital gain or capital loss from a CGT event happening in relation to the disposal. INCOME TAX ASSESSMENT ACT 1936 - SECT 121ELB Adjustment of capital gains and losses from disposal of units in OBU offshore investment trusts Trust with subsection 121D(6) investment activities (1) If: (a) an OBU is a trustee, or is the central manager and controller, of a unit trust estate; and (b) the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust are non-residents; and (c) all units in the trust are held by non-residents; and (d) the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6); and (e) a non-resident disposes of a unit in the trust; then the non-resident makes no capital gain or capital loss from a CGT event happening in relation to the disposal. Trust with subsection 121D(6A) investment activities (2) If: (a) an OBU is a trustee, or is the central manager and controller, of a unit trust estate; and (b) the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust are non-residents; and (c) all units in the trust are held by non-residents; and (d) the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6A); and (e) a non-resident disposes of a unit in the trust; and (f) the average Australian asset percentage for the portfolio investment concerned was 10% or less; then if, apart from this section, the non-resident would make a capital gain or capital loss from a CGT event happening in relation to the disposal, the non-resident makes only the average Australian asset percentage of the gain or loss. (3) In working out the average Australian asset percentage for the purposes of subsection (2), the investment management period is taken to be the period during the 12 months before the disposal during which the non-resident held the unit. INCOME TAX ASSESSMENT ACT 1936 - SECT 121F Interpretation (1) In this Division, unless the contrary intention appears: "agreement" means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. "consideration" includes a benefit of any kind. "diverted income", in relation to a taxpayer, means all the amounts that are included under this Division in the diverted income of the taxpayer. "diverted trust income", in relation to a trustee of a trust estate, means all the amounts that are included under this Division in the diverted trust income of the trust estate. "income" includes all amounts that, apart from the operation of the relevant exempting provisions, would be assessable income. "property" includes: (a) a chose in action; (b) any estate, interest, right or power, whether at law or in equity, in or over property; and (c) any right to receive income. "public company rate" means the rate of tax payable in respect of the taxable income of a company that is not a private company. "relevant exempting provision" means any of the following provisions: (aa) section 50-5, 50-10, 50-15, 50-20, 50-25, 50-30, 50-40 or 50-45 of the Income Tax Assessment Act 1997; (b) paragraph 23(ja) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987; (baa) paragraph 23(x) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1988; (ba) section 23F, 23FA or 23FB, as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987; (bb) paragraph 23(jaa) or section 23FC or 23FD, as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1989; (bc) section 24AM; (c) paragraph 320-37(1)(a) of the Income Tax Assessment Act 1997; (cb) regulations under the International Organisations (Privileges and Immunities) Act 1963, insofar as those regulations provide that an organisation is not liable to income tax; and (d) any provision of an Act other than this Act to the effect that income of a particular person or body is not subject to taxation under any law of the Commonwealth or to the effect that a particular person or body is not subject to taxation under any law of the Commonwealth. "right to receive income", in relation to a person, means a right of the person to have income that will or may be derived (whether from property or otherwise) paid to, or applied or accumulated for the benefit of, the person. "tax avoidance agreement" means an agreement that was entered into after 24 June 1980 and was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the agreement had not been entered into or carried out, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the agreement had not been entered into or carried out. "taxpayer" does not include a partnership. (2) In determining for the purposes of this Division whether an agreement is a tax avoidance agreement, no regard shall be had to a purpose that is a merely incidental purpose. (3) For the purposes of this Division, an agreement shall be taken to have been entered into or carried out for a particular purpose, or for purposes that included a particular purpose, if any of the parties to the agreement entered into or carried out the agreement for that purpose, or for purposes that included that purpose, as the case may be. (4) A reference in this Division to a person shall be read as including a reference to a person in the capacity of a trustee. (5) For the purposes of the application of this Division in relation to property acquired under a tax avoidance agreement, a reference to income that is derived from that property shall be read as including a reference to income that is derived from the disposal of that property, of any part of that property or of any interest in that property. INCOME TAX ASSESSMENT ACT 1936 - SECT 121G Diverted income and diverted trust income (1) Where: (a) a taxpayer, not being a taxpayer in the capacity of a trustee, has acquired property (in this subsection referred to as the relevant property) under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason that the taxpayer derives any income from the relevant property, an amount (in this subsection referred to as the relevant amount) would, apart from the operation of the relevant exempting provisions, be included in the assessable income of the taxpayer of a year of income otherwise than under Division 5, section 97, section 99B or section 100; (c) apart from this Division, the relevant amount would not be included in the assessable income of the taxpayer of the year of income; and (d) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted income of the taxpayer of the year of income shall include the relevant amount. (2) Where: (a) a taxpayer, not being a taxpayer in the capacity of a trustee, has acquired property (in this subsection referred to as the relevant property), being an interest in a partnership, under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason of the ownership by the taxpayer of the relevant property, an amount (in this subsection referred to as the relevant amount) would, apart from the operation of the relevant exempting provisions, be included, under Division 5, in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income); (c) apart from this Division, the relevant amount would not be included in the assessable income of the taxpayer of the relevant year of income; and (d) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted income of the taxpayer of the relevant year of income shall include the relevant amount. (3) Where: (a) a taxpayer, not being a taxpayer in the capacity of a trustee, has acquired property (in this subsection referred to as the relevant property), being a beneficial interest in a trust estate, under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason of the ownership by the taxpayer of the relevant property, an amount (in this subsection referred to as the relevant amount) would, apart from the operation of the relevant exempting provisions, be included, under Division 6, in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income); (c) apart from this Division, the relevant amount would not be included in the assessable income of the taxpayer of the relevant year of income; and (d) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted income of the taxpayer of the relevant year of income shall include the relevant amount. (4) Where: (a) a taxpayer, being a taxpayer in the capacity of a trustee of a trust estate, has acquired property (in this subsection referred to as the relevant property) under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason that the taxpayer derives any income from the relevant property, an amount (in this subsection referred to as the relevant amount) would, apart from the operation of the relevant exempting provisions, be included in the assessable income of the trust estate of a year of income otherwise than under Division 5, section 97, section 99B or section 100; (c) apart from this Division, the relevant amount would not be included in the assessable income of the trust estate of the year of income; and (e) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted trust income of the trust estate of the year of income shall include the relevant amount. (5) Where: (a) a taxpayer, being a taxpayer in the capacity of a trustee of a trust estate, has acquired property (in this subsection referred to as the relevant property), being an interest in a partnership, under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason of the ownership by the taxpayer of the relevant property, an amount (in this subsection referred to as the relevant amount) would, apart from the operation of the relevant exempting provisions, be included, under Division 5, in the assessable income of the trust estate of a year of income (in this subsection referred to as the relevant year of income); (c) apart from this Division, the relevant amount would not be included in the assessable income of the trust estate of the relevant year of income; and (e) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted trust income of the trust estate of the relevant year of income shall include the relevant amount. (6) Where: (a) a taxpayer, being a taxpayer in the capacity of a trustee of a trust estate (in this subsection referred to as the relevant trust estate), has acquired property (in this subsection referred to as the relevant property), being a beneficial interest in another trust estate, under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason of the ownership by the taxpayer of the relevant property, an amount (in this subsection referred to as the relevant amount) would, apart from the operation of the relevant exempting provisions, be included, under section 97, 99B or 100, in the assessable income of the relevant trust estate of a year of income (in this subsection referred to as the relevant year of income); (c) apart from this Division, the relevant amount would not be included in the assessable income of the relevant trust estate of the relevant year of income; and (e) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted trust income of the relevant trust estate of the relevant year of income shall include the relevant amount. (8) Where: (a) a deduction is allowable or deductions are allowable, in calculating the net income of a partnership or trust estate of a year of income, in respect of losses or outgoings (in this subsection referred to as the relevant losses or outgoings) incurred under or in connection with a tax avoidance agreement; (b) if no deduction were allowable, in calculating that net income, in respect of the relevant losses or outgoings and no relevant exempting provisions were applicable in relation to a taxpayer, an amount would be included in the assessable income of the taxpayer of a year of income by reason that the taxpayer owned an interest in the partnership or a beneficial interest in the trust estate or owned an interest in any other partnership or a beneficial interest in any other trust estate; and (c) if the deduction or deductions were allowed, in calculating that net income, in respect of the relevant losses or outgoings and no relevant exempting provision were applicable in relation to the taxpayer: (i) no amount would be included in the assessable income of the taxpayer of the year of income by reason that the taxpayer owned an interest in a partnership or a beneficial interest in a trust estate as mentioned in paragraph (b); or (ii) an amount would be included in the assessable income of the taxpayer of the year of income by reason that the taxpayer owned an interest in a partnership or a beneficial interest in a trust estate as mentioned in paragraph (b) but the amount that would be so included in that assessable income would be less than the amount referred to in paragraph (b); then, for the purposes of the application of subsections (2), (3), (5) and (6) in relation to the taxpayer in relation to the tax avoidance agreement, no deduction shall be allowed in respect of the relevant losses or outgoings in calculating the net income of the partnership or trust estate referred to in paragraph (a). (10) For the purposes of the application of subsection (8), a reference to a deduction that is allowable in calculating the net income of a partnership does not include a reference to a deduction allowable to the partnership in respect of expenditure taken under sections 70-90 and 70-95 and subsection 70-100(3) of the Income Tax Assessment Act 1997 to have been incurred in the acquisition of trading stock by the partnership. (11) In determining for the purposes of this section the amount or value of the consideration that might reasonably be expected to have been provided by a taxpayer in respect of the acquisition of property by the taxpayer if the taxpayer were liable to pay tax in respect of any income derived by the taxpayer from the property at the public company rate applicable for the financial year in which the taxpayer acquired the property, the possibility that the taxpayer would be entitled to a rebate of tax in respect of any of that income shall be disregarded. (12) In determining for the purposes of this section whether an amount would, apart from the operation of the relevant exempting provisions, be included in the assessable income of a taxpayer or a trust estate of a year of income, section 128D of this Act and section 802-15 of the Income Tax Assessment Act 1997 shall be disregarded. (13) For the purposes of this section, where: (a) a taxpayer acquired property, being an interest in a trust estate or partnership, before the time when a tax avoidance agreement was entered into; and (b) under the tax avoidance agreement, or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, the amount of the share (in this subsection referred to as the relevant share) of the taxpayer of the income of the trust estate or partnership of any year of income was or is increased; the following provisions apply: (c) the property referred to in paragraph (a) shall be taken to have been acquired by the taxpayer under the tax avoidance agreement; and (d) any consideration provided by the taxpayer in respect of the increase in the amount of the relevant share shall be taken to be consideration provided by the taxpayer in respect of the acquisition of the property referred to in paragraph (a). (14) For the purposes of the application of this section in relation to the acquisition of property by a person under a tax avoidance agreement, the Commissioner may be satisfied that consideration provided by the person under or in connection with the tax avoidance agreement was provided by the person in respect of the acquisition of the property notwithstanding, in a case where the person acquired property from another person, that the consideration was not provided to that other person. INCOME TAX ASSESSMENT ACT 1936 - SECT 121H Assessment of diverted income and diverted trust income (1) A taxpayer, not being a taxpayer in the capacity of a trustee of a trust estate, shall be assessed and is liable to pay tax, at the rate declared by the Parliament for the purposes of this Division, upon the diverted income of the taxpayer of the year of income. (2) A taxpayer in the capacity of a trustee of a trust estate shall be assessed and is liable to pay tax, at the rate declared by the Parliament for the purposes of this Division, upon the diverted trust income of the trust estate of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 121J Ascertainment of diverted income or diverted trust income deemed to be an assessment The ascertainment of the amount of the diverted income or diverted trust income and of the tax payable thereon shall, for all purposes of this Act be deemed to be an assessment. INCOME TAX ASSESSMENT ACT 1936 - SECT 121K Application of International Tax Agreements Act For the purposes of sections 15 and 16 of the International Tax Agreements Act 1953, any amount that is included in the diverted income or diverted trust income of a taxpayer of a year of income shall be deemed to be included in the assessable income of the taxpayer of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 121L Division applies notwithstanding exemption under other laws This Division has effect notwithstanding anything contained in any law of the Commonwealth other than this Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZM Treatment distributions to shareholders in PDF Unfranked part of distribution exempt from income tax (1) If a company makes a distribution to a shareholder at a time when the company is a PDF, the unfranked part of the distribution is exempt from income tax. Rest of section deals with franked part (2) The rest of this section applies to the franked part of the distribution. Usual case (3) Subsection (4) applies if the assessable income of a year of income of a taxpayer who or that is: (a) a company or a natural person (other than a company or natural person in the capacity of a trustee); or (b) a corporate unit trust in relation to that year of income; or (c) a public trading trust in relation to that year of income; or (d) a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to that year of income; or (da) an FHSA trust; would (apart from subsection (4)) include: (e) the franked part of the distribution; or (f) any of the franked part of the distribution that flows indirectly to the taxpayer. This subsection does not apply to cases dealt with in subsections (5) and (6). (4) Subject to subsection (7), the following is exempt income of the taxpayer: (a) if paragraph (3)(e) applies--the franked part; (b) if paragraph (3)(f) applies--so much of the franked part of the distribution as flows indirectly to the taxpayer. Taxpayers who qualify for venture capital franking tax offset (5) If a taxpayer (other than a life assurance company) is entitled to a tax offset in relation to the distribution under section 210-170 of the Income Tax Assessment Act 1997, then: (a) so much of the franked part of the distribution as equals the part of the distribution that is franked with a venture capital credit is exempt income of the taxpayer; and (b) if the franked part exceeds the amount so exempt--the excess is, subject to subsection (7), exempt income of the taxpayer. (6) If a life assurance company is entitled to a tax offset in relation to the distribution under section 210-170 of the Income Tax Assessment Act 1997, then: (a) so much of the franked part of the distribution as equals the amount worked out using the following formula is exempt income of the life assurance company: where: complying superannuation/FHSA class of taxable income is the life assurance company's complying superannuation/FHSA class of taxable income, within the meaning of subsection 995-1(1) of the Income Tax Assessment Act 1997, for the year of income in which the distribution is made. venture capital franked part is the part of the distribution that is franked with a venture capital credit. total income is the life assurance company's assessable income for the year of income in which the distribution is made; and (b) if the franked part exceeds the amount so exempt--the excess is, subject to subsection (7), exempt income of the life assurance company. No exemption if return prepared on basis that amount assessable (7) Subsection (4) and paragraphs (5)(b) and (6)(b) do not exempt, and are taken never to have exempted, an amount if the taxpayer's return of income of the year of income is prepared on the basis that the amount is included in the taxpayer's assessable income of that year. Where partner entitled to deduction for amount flowing indirectly (8) If: (a) any of the franked part of the distribution flows indirectly to a taxpayer who is a partner in a partnership; and (b) apart from this subsection, the amount that flows indirectly would be allowable as a deduction from the taxpayer's assessable income of a year of income; and (c) the taxpayer is of a kind mentioned in any of paragraphs (3)(a) to (d); the amount that flows indirectly is not allowable as a deduction from that assessable income. (9) Subsection (8) does not prevent, and is taken never to have prevented, an amount from being allowable as a deduction if the taxpayer's return of income of the year of income is prepared on the basis that the amount is so allowable. Where trustee assessed on amount flowing indirectly (10) If: (a) any of the franked part of the distribution flows indirectly to the trustee of a trust estate; and (b) apart from this subsection, the trustee would be liable under section 98, 99 or 99A to be assessed and pay tax on the amount that flows indirectly; the trustee is not liable under that section to be assessed and to pay tax on the amount that flows indirectly. (11) Subsection (10) does not prevent, and is taken never to have prevented, the trustee from being liable under that section to be assessed and to pay tax on an amount if the trustee elects to be so liable. (12) An election must be made in the trustee's return of income of the trust estate for the year of income concerned. Interpretation (13) In this section: "flows indirectly" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "part of a distribution that is franked with a venture capital credit" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZN Exemption of income from sale of shares in a PDF Income derived by a taxpayer from selling shares in a company is exempt from income tax if the company is a PDF at the time of the sale. Note: Any capital gain or capital loss from a disposal of shares in a PDF is disregarded: see section 118-13 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZO Shares in a PDF are not trading stock Shares in a PDF are not trading stock for the purposes of this Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZQ Effect of company becoming a PDF (1) This section applies to shares in a company that a taxpayer holds when the company becomes a PDF. (2) In determining for the purposes of this Act whether an amount is or was allowable as a deduction to the taxpayer in respect of acquiring the shares, the shares are taken to have been shares in a PDF throughout the period beginning immediately before the taxpayer acquired them and ending when the company became a PDF. (3) For the purposes of this Act, the shares are taken to have been trading stock of the taxpayer at no time during that period. (4) Section 170 does not prevent an assessment from being amended to give effect to this section. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZR Effect of company ceasing to be a PDF (1) This section applies to shares in a company that a taxpayer holds when the company ceases to be a PDF. (2) For the purposes of this Act (except Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997), the taxpayer is taken: (a) to have sold the shares immediately before the company ceased to be a PDF; and (b) to have rebought the shares immediately after the company so ceased; for a consideration equal to the market value of the shares immediately after the company so ceased. (3) Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 apply as if the taxpayer: (a) had disposed of the CGT assets constituted by the shares, and had done so immediately before the company ceased to be a PDF; and (b) had re-acquired those assets immediately afterwards; for an amount equal to the shares' market value immediately after the company so ceased. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZS Definitions In this Subdivision: "non-CGT assessable income" means an amount included in assessable income otherwise than under Part 3-1 or 3-3 (about CGT) of the Income Tax Assessment Act 1997 or Subdivision C of this Division. "SME investment" means an investment other than an unregulated investment.Note: SME stands for small and medium enterprises. "unregulated investment" has the same meaning as in the Pooled Development Funds Act 1992. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZTA Taxable income in first year as PDF if PDF component is nil (1) This section applies if: (a) a company becomes a PDF during a year of income and is still a PDF at the end of the year of income; and (b) the PDF component for the year of income is a nil amount; and (c) the year of income is the 1997-98 year of income or a later one. (2) The company's taxable income of the year of income is the amount that, if the period (the notional year) beginning at the start of the year of income and ending immediately before the company becomes a PDF were a year of income of the company, would be the company's taxable income of the notional year. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZT SME assessable income SME assessable income (1) A company's SME assessable income of a year of income is the sum of: (a) so much of the company's non-CGT assessable income of the year of income as was derived: (i) from, or from the disposal of, an SME investment of the company; and (ii) at a time when the company was a PDF; and (b) any assessable income allocated to the company's SME assessable income under section 124ZZB. Note: Section 124ZZB deals with capital gains etc. When assessable income derived (2) For the purposes of paragraph (1)(a), if an amount is derived by a company during, but not at a particular time during, a year of income, the amount is taken to have been derived by the company on the last day of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZU SME income component Full-year PDFs (1) The SME income component of a year of income of a company that is a PDF throughout the year of income is so much of the company's taxable income of the year of income as does not exceed the amount (if any) remaining after deducting from the company's SME assessable income of the year of income any deductions allowable to the company in relation to the year of income. Part-year PDFs (2) The SME income component of a year of income of a company that becomes a PDF during the year of income and is still a PDF at the end of the year of income is so much of the company's adjusted taxable income of the year of income as does not exceed the amount (if any) remaining after deducting from the company's SME assessable income of the year of income any deductions where both of the following conditions are satisfied: (a) the deductions were allowable to the company in relation to the year of income; (b) the deductions were taken into account in working out the company's PDF component of the year of income. For this purpose, adjusted taxable income means so much of the company's taxable income of the year of income as does not exceed its PDF component of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZV Unregulated investment component Full-year PDFs (1) The unregulated investment component of a year of income of a company that is a PDF throughout the year of income is the amount (if any) remaining after deducting from the company's taxable income of the year of income the company's SME income component of the year of income. Part-year PDFs (2) The unregulated investment component of a year of income of a company that becomes a PDF during the year of income and is still a PDF at the end of the year of income is the amount (if any) remaining after deducting from the company's adjusted taxable income of the year of income the company's SME income component of the year of income. For this purpose, adjusted taxable income means so much of the company's taxable income of the year of income as does not exceed its PDF component of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZW Definitions In this Subdivision: "accumulated net capital loss for a year of income (the loss year") means the amount (if any) by which the total of: (a) the total of the overall capital losses for all classes of assessable income for the loss year; and (b) any accumulated net capital loss for the last year of income before the loss year; exceeds: (c) the total of the overall capital gains for all classes of assessable income for the loss year (before section 116GB is applied). "class", in relation to assessable income, means a class specified in section 124ZY. "company" does not include a company in a capacity of trustee. "non-CGT assessable income" means an amount included in assessable income otherwise than under Part 3-1 or 3-3 (about CGT) of the Income Tax Assessment Act 1997 or this Subdivision. "ordinary capital gain" for a CGT event means any capital gain that would (apart from this Subdivision) arise from the event. "ordinary capital loss" for a CGT event means any capital loss that would (apart from this Subdivision) arise from the event. "overall capital gain" for a class of assessable income means: (a) the amount by which the total ordinary capital gain for that class exceeds the total ordinary capital loss for that class; or (b) if an amount has been applied under subsection 124ZZB(2) to reduce an overall capital gain previously worked out under this definition--that gain as so reduced. "overall capital loss" for a class of assessable income means the amount by which the total ordinary capital gain for that class is less than the total ordinary capital loss for that class. "residual overall capital gain" means so much of an overall capital gain as remains after applying subsection 124ZZB(2). "SME assessable income" has the meaning given by Subdivision B. "SME investment" means an investment other than an unregulated investment. "total ordinary capital gain" for a class means the total of so much of any ordinary capital gains as has been allocated to that class under section 124ZZA. "total ordinary capital loss" for a class means the total of so much of any ordinary capital losses as has been allocated to that class under section 124ZZA. "unregulated investment" has the same meaning as in the Pooled Development Funds Act 1992. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZX Companies to which this Subdivision applies This Subdivision applies to a company in relation to a year of income if: (a) the company is a PDF throughout the year of income; or (b) the company becomes a PDF during the year of income and is still a PDF at the end of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZY Classes of assessable income Classes (1) The classes of assessable income of the company are as follows: (a) SME assessable income (see section 124ZT); (b) other assessable income (see subsection(2)). Other assessable income (2) The company's other assessable income of the year of income is the sum of: (a) so much of the company's non-CGT assessable income of the year of income as is not included in the company's SME assessable income of the year of income; and (b) any assessable income allocated to the company's other assessable income under section 124ZZB. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZZ Treatment of capital gains Nothing is to be included in the company's assessable income of the year of income under section 102-5 of the Income Tax Assessment Act 1997 (about net capital gains). INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZZA Allocation of gain amounts and loss amounts to classes of assessable income Disposals of SME investments (1) If: (a) there is an ordinary capital gain amount, or an ordinary capital loss amount, in respect of a disposal of an SME investment of the company; and (b) the company was a PDF at the time of the disposal; the ordinary capital gain amount or ordinary capital loss amount, as the case may be, is taken into account in determining the overall capital gain or overall capital loss for the class known as SME assessable income. Disposals of assets other than SME investments (2) If: (a) there is an ordinary capital gain amount, or an ordinary capital loss amount, in respect of a disposal of an asset of the company; and (b) subsection (1) does not apply to the disposal; the ordinary capital gain amount or the ordinary capital loss amount, as the case may be, is taken into account in determining the overall capital gain or overall capital loss for the class known as other assessable income. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZZB Assessable income etc. in relation to capital gains (1) The assessable income of each class includes the amount (if any) that is left over after the overall capital gain for that class has been reduced in accordance with this section. (2) If there is an overall capital loss for a particular class of assessable income, the loss is to be applied in reduction of overall capital gains for the remaining class. (3) Any accumulated net capital loss for the immediately preceding year of income is to be applied in reduction of residual overall capital gains for the classes of assessable income in the following order: (a) SME assessable income; (b) other assessable income. INCOME TAX ASSESSMENT ACT 1936 - SECT 124ZZD No net capital loss The company does not make a net capital loss for the year of income, despite section 102-10 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 126 Interest paid by a company on bearer debentures (1) If: (a) a company pays or credits an amount of interest in respect of a debenture payable to bearer; and (b) the interest is not, to any extent, subject to withholding tax under Division 11A; and (c) neither of sections 128F (to the extent it applies to non-residents who are not engaged in carrying on a business in Australia at or through a permanent establishment in Australia) and 128GB applies to the interest; and (d) the interest is not interest that, because of section 159GZZZZE (which deals with infrastructure borrowings), is not included in assessable income; and (e) the company does not give the Commissioner the name and address of the holder of the debenture; the company is liable to pay income tax, as imposed by the Income Tax (Bearer Debentures) Act 1971, on the amount paid or credited, or, if the company makes a deduction under subsection (2), the amount that otherwise would have been paid or credited. (1A) Subsection (1) does not affect any other liability of the company to pay income tax. (2) The company may deduct and retain for its own use from an amount payable to a person in respect of which the company is liable to pay tax in accordance with subsection (1) an amount equal to that tax. (3) Where the Commissioner is satisfied that that person is not liable to furnish a return, the Commissioner must refund to that person the amount of tax paid by the company in respect of his or her debentures. INCOME TAX ASSESSMENT ACT 1936 - SECT 127 Credit for tax paid by company (1) Where the company pays tax under this Division on any interest, and that interest is included in the assessment of the person to whom it was paid or credited, the proportionate amount of tax paid by the company in respect of the interest shall be deducted from the total tax payable by that person. INCOME TAX ASSESSMENT ACT 1936 - SECT 128 Assessments of tax An assessment of tax payable in accordance with this Division by a company may be an assessment of the amount of tax so payable upon interest in respect of a number of debentures, whether held by the one holder or not. INCOME TAX ASSESSMENT ACT 1936 - SECT 128AAA Application of Division to non-share dividends (1) This Division: (a) applies to a non-share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non-share dividend in the same way as it applies to a dividend. (2) Subsection (1) does not apply to: (a) section 128AE; and (b) section 128F; and (ba) section 128FA. INCOME TAX ASSESSMENT ACT 1936 - SECT 128A Interpretation (1) In this Division, unless the contrary intention appears: "ADI" means a body corporate that is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959. "dividend": (a) includes part of a dividend; and (b) (except when used in paragraph (d) of the definition of interest in subsection (1AB)) does not include a dividend paid in respect of a non-equity share. "enterprise" means a business or other industrial or commercial undertaking. "entity" means: (a) the Commonwealth, a State or an authority of the Commonwealth or of a State; (b) a natural person; (c) a company; (d) the partners in a partnership, in their capacity as partners; (e) the persons carrying on a joint venture, in their capacity as such persons; or (f) the trustees of a trust, in their capacity as such trustees. "foreign bank" means a non-resident company that carries on a banking business. "joint venture" means an enterprise carried on by 2 or more persons in common otherwise than as partners. "non-ADI financial institution" means a corporation that: (a) is a registered entity within the meaning of the Financial Sector (Collection of Data) Act 2001; and (b) is included in Category D (Money Market Corporation) in a list kept under section 11 of that Act; and (c) carries on a general business of providing finance (within the meaning of that Act) on a commercial basis. "nostro account" means an account that: (a) an ADI or non-ADI financial institution holds with a foreign bank and maintains for the sole purpose of settling international transactions; and (b) operates on the basis that: (i) amounts deposited in the account are held in the account for no more than 10 days; and (ii) amounts advanced by way of an overdraft on the account are repaid within 10 days. (1AA) In this Division and in an Act imposing withholding tax: "income" includes a royalty and a dividend. (1AB) For the purposes of this Division: "interest" includes an amount, other than an amount referred to in subsection 26C(1): (a) that is in the nature of interest; or (b) to the extent that it could reasonably be regarded as having been converted into a form that is in substitution for interest; or (c) to the extent that it could reasonably be regarded as having been received in exchange for interest in connection with a washing arrangement; or (d) that is a dividend paid in respect of a non-equity share; or (e) if regulations under the Income Tax Assessment Act 1997 are made having the effect that instruments known as upper tier 2 capital instruments, or a class of instruments of that kind, are debt interests--that is paid on such a debt interest and is not a return of an investment; but does not include an amount to the extent to which it is a return on an equity interest in a company. "washing arrangement" means an arrangement under which the title to a security is transferred to a resident shortly before an interest payment is made where the sole or dominant purpose of the arrangement is to reduce the amount of withholding tax payable by a person. (1AC) An example of an amount in the nature of interest is an amount representing a discount on a security. (1AD) An example of an amount in substitution for interest is a lump sum payment made instead of payments of interest. (1AE) For the purposes of this Division, if a lender assigns a loan, or the right to interest under a loan, any payment from the borrower to the assignee that represents an amount that would have been interest if the assignment had not taken place is taken to be a payment of interest. (1AF) For the purposes of this Division, if a person acquires a security, or the right to interest under a security, any payment from the issuer of the security to that person that represents an amount that would have been interest if the acquisition had not taken place is taken to be a payment of interest. (1A) Subject to subsection (1B), for the purposes of this subsection and sections 128AA, 128AB, 128AD, 128C, 128NA and 128NBA: (a) a reference to the reduced issue price of a security that has been partially redeemed on one or more occasions is a reference to the issue price of the security reduced by the amount of the partial redemption or the sum of the amounts of the partial redemptions, as the case may be; (b) expressions used in this subsection or those sections that are also used in Division 16E have the same respective meanings as in that Division; and (c) sections 159GV (other than subsection 159GV(2)) and 159GZ apply as if references in those sections to "this Division" were references to "subsection 128A(1A) and sections 128AA, 128AB, 128AD, 128C, 128NA and 128NBA". (1B) Subsection (1A) applies as if: (a) paragraph (c) of the definition of qualifying security in subsection 159GP(1) were omitted; and (b) paragraph (a) of the definition of security in that subsection included a reference to debt interests. (2) For the purposes of this Division, interest or a royalty shall be deemed to have been paid by a person to another person although it is not actually paid over to the other person but is reinvested, accumulated, capitalized, carried to any reserve, sinking fund or insurance fund however designated, or otherwise dealt with on behalf of the other person or as the other person directs. (3) For the purposes of this Division, a beneficiary who is presently entitled to a dividend, to interest or to a royalty included in the income of a trust estate shall be deemed to have derived income consisting of that dividend, interest or royalty at the time when he or she became so entitled. (4) In section 260, income tax or tax includes withholding tax. (5) For the purposes of this Division: (a) the borrowing of moneys by a company by means of the issue of a number of debentures or debt interests in one borrowing operation shall be deemed to be the raising of a loan; (b) subject to paragraph (a), each receipt of moneys by a borrower under a contract under which moneys are to be, or may be, advanced by way of loan shall be deemed to be the raising of a loan; and (c) the moneys received by the raising of a loan, less the expenses of borrowing, shall be deemed to be the loan moneys in respect of the loan. (6) A reference in this Division to beneficial interests in relation to an entity shall be read: (a) in the case of an entity being a company or the partners in a partnership--as a reference to beneficial interests in respect of the capital of, and in respect of any profits or income of, the company or partnership; (b) in the case of an entity being persons carrying on a joint venture--as a reference to beneficial interests in respect of the enterprise; and (c) in the case of an entity being the trustees of a trust--as a reference to beneficial interests under the trust. (7) A reference in this Division to the use of moneys for the purposes of an enterprise shall be read as not including use of those moneys in the course of carrying on an enterprise: (a) by way of providing capital for another enterprise; or (b) by way of the making of loans. (9) For the purposes of this Division: (a) a reference to particular loan moneys (including the reference in paragraph (b)) includes a reference to moneys that, in the opinion of the Commissioner, represent those loan moneys; and (b) without limiting the generality of paragraph (a): (i) moneys received by way of repayment of a loan made out of particular loan moneys; and (ii) moneys received in respect of shares in the capital of a company, being shares purchased or subscribed for by the expenditure of particular loan moneys, upon a sale of the shares, a return of capital by the company or liquidation of the company; shall be deemed to represent those loan moneys. (10) For the purposes of this Division, the trustee of a provident, benefit, superannuation or retirement fund is a non-resident at a particular time if, and only if, the fund is a foreign superannuation fund at that time. (11) If, apart from this subsection, there is, in relation to a fund, no person who is a trustee of the fund for the purposes of this Division, the person, or each of the persons, who manages the fund is taken, for the purposes of this Division, to be the trustee, or a trustee, as the case requires, of the fund. INCOME TAX ASSESSMENT ACT 1936 - SECT 128AA Deemed interest in respect of transfers of certain securities (1) Where: (a) a person transfers a qualifying security; and (b) the transfer price of the security exceeds the issue price or, where the security has been partially redeemed, the reduced issue price of the security; so much of the transfer price as equals the excess referred to in paragraph (b) shall, for the purposes of this Division, be deemed to be income that consists of interest. (2) For the purposes of references to the transfer price, issue price or reduced issue price of a qualifying security in subsection (1), any application of subsection 159GP(2) shall be disregarded. INCOME TAX ASSESSMENT ACT 1936 - SECT 128AB Certificates relating to issue price of certain securities (1) Where: (a) a qualifying security is or was transferred either before or after the commencement of this section; and (b) at the time of transfer either: (i) the transferor is or was a resident; or (ii) the transferor is or was a non-resident and the transfer price is or was derived from a source in Australia; the transferee may at any time after the transfer (including a time after the transferee ceases to be the holder of the security) apply to the Commissioner for the issue of a certificate under this section. (2) An application under subsection (1) shall be in accordance with the form required by the Commissioner, by notice in writing published in the Gazette, for the purposes of applications under that subsection. (3) Where the Commissioner is satisfied that the requirements of paragraph (1)(b) are satisfied in relation to the transfer of the qualifying security to which an application under subsection (1) relates and that the security was transferred on a particular date and for a particular consideration to the applicant, the Commissioner shall issue to the applicant a certificate that: (a) is expressed to be issued under this section; (b) identifies the security to which it relates; (c) specifies that date as the date of transfer; (d) specifies that consideration, or, where subsection 159GP(2) applies, the amount that is taken under that subsection to be the consideration for the transfer, as the transfer price; and (e) specifies the name of the applicant as the transferee. (4) Where the Commissioner issues a certificate under this section in relation to a qualifying security that has been transferred to a person, the following provisions have effect: (a) for the purposes of the application of this Division in relation to the first subsequent transfer (if any) of the qualifying security by the person: (i) the amount specified in the certificate shall be taken to be the issue price of the security; and (ii) where the security was partially redeemed before the transfer to the person--any such partial redemption shall be taken not to have occurred; (b) if the security is redeemed or partially redeemed without having been subsequently transferred by the person--in determining for the purposes of the application of this Division the extent (if any) to which the redemption payment comprises an amount that is interest by reason only of the definition of interest in subsection 128A(1AB): (i) the amount specified in the certificate as the transfer price shall be taken to be the issue price of the security; and (ii) where the security was partially redeemed before the transfer to the person--any such partial redemption shall be taken not to have occurred. (5) If the Commissioner refuses an application under subsection (1), the Commissioner shall serve on the applicant, by post or otherwise, notice in writing that the application has been refused. INCOME TAX ASSESSMENT ACT 1936 - SECT 128AC Deemed interest in respect of hire-purchase and certain other agreements (1) In this section: "agreement" means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. "attributable agreement payment", in relation to a relevant agreement, means so much of any payment made or liable to be made under the agreement as represents consideration for the use, sale or disposal of the relevant agreement property. "carry forward interest", in relation to an attributable agreement payment in relation to a relevant agreement, means so much (if any) of the notional interest in relation to the payment as exceeds the amount of the payment. "eligible value", in relation to the relevant agreement property in relation to a relevant agreement, means the market value of the property at the time at which the agreement commences or commenced to apply in relation to the property. "formula interest", in relation to an attributable agreement payment in relation to a relevant agreement, means the amount ascertained in accordance with the formula , where: "A" is the total interest in relation to the relevant agreements. "B" is the total number of attributable agreement payments liable to be made under the relevant agreements; and "C is the number that is B", reduced by the number of attributable agreement payments made under the relevant agreement before the attributable agreement payment concerned. "notional interest", in relation to an attributable agreement payment in relation to a relevant agreement, means the sum of the formula interest (if any) in relation to the payment and the carry forward interest (if any) in relation to the immediately preceding attributable agreement payment in relation to the relevant agreement. "relevant agreement" means an agreement entered into after 16 December 1984, being: (a) a hire-purchase agreement; or (b) a lease or any other agreement relating to the use by a person of property owned by another person, being a lease or agreement under which: (i) the lessee or person using the property is entitled to purchase or require the transfer of the lease property or property subject to the agreement on the termination or expiration of the lease or agreement; or (ii) the lease term or term of the agreement is for all, or substantially all, of the effective life of the lease property or property subject to the agreement. "relevant agreement property", in relation to a relevant agreement, means: (a) in the case of a hire-purchase agreement--the property that is the subject of the agreement; and (b) in any other case--the property in relation to which subparagraph (b)(i) or (ii) of the definition of relevant agreement applies. "total interest", in relation to a relevant agreement, means the sum of all of the attributable agreement payments liable to be made under the relevant agreement, reduced by the eligible value of the relevant agreement property. (2) Where an agreement (including a hire-purchase agreement and a lease) relates to the use by a person of 2 or more items of property owned by another person, this section applies as if, instead of the single agreement, there were separate agreements relating to the use of each of the items of property having such of the terms of the first-mentioned agreement as are relevant. (3) Where a variation is or was made in the terms of, or liability to make payments under, a relevant agreement, then, for the purposes of the application of this section: (a) the relevant agreement shall be taken to be, or to have been, terminated at the time at which the variation has effect; and (b) a new relevant agreement shall be taken to be, or to have been, entered into at the time at which the variation has effect and on the terms of the first-mentioned relevant agreement as so varied. (4) Where any right or option under an agreement to extend the term of, or otherwise vary the effect of, the agreement is or was exercised, then, for the purposes of this section, the exercise of that right or option shall be taken to be a variation of the terms of the agreement to provide for the extension or other effect. (5) Where an attributable agreement payment in relation to a relevant agreement is made, so much of the attributable agreement payment as does not exceed the notional interest in relation to the payment shall, for the purposes of this Division, be deemed to be income that consists of interest. (6) Where: (a) a relevant agreement is entered into after the commencement of this section; and (b) at the time at which the relevant agreement is entered into, the total interest in relation to the relevant agreement exceeds the sum of all amounts that, if all of the attributable agreement payments liable to be made under the relevant agreement were made, would, disregarding this subsection, be deemed to be income that consists of interest under subsection (5) in relation to the relevant agreement; the amount of the notional interest in relation to the first attributable agreement payment in relation to the relevant agreement shall, for the purposes of this section, be increased by an amount equal to the excess referred to in paragraph (b). (7) For the purposes of section 128D, where withholding tax is payable on a part of an attributable agreement payment that is taken under subsection (5) of this section to be an amount of interest, the withholding tax shall be taken to be payable on the whole of the attributable agreement payment. INCOME TAX ASSESSMENT ACT 1936 - SECT 128AD Indemnification etc. agreements in relation to bills of exchange and promissory notes (1) Where: (a) the drawer of a bill of exchange issued after the day on which this section comes into operation pays an amount (in this subsection referred to as the indemnification amount) to the acceptor of the bill to indemnify, reimburse or otherwise compensate the acceptor in respect of the whole or a part of an amount (which whole or part is in this subsection referred to as the eligible presentment amount) that the acceptor has, or will, become liable to pay to the payee under the bill on presentment of the bill; (b) no part of the indemnification amount is, or will be, included in the assessable income of the acceptor of any year of income; and (c) the whole or a part (in this subsection referred to as the eligible presentment interest) of the eligible presentment amount consists or will consist of interest; so much of the indemnification amount as indemnifies, reimburses or otherwise compensates the acceptor in respect of the eligible presentment interest shall, for the purposes of this Division, be deemed to be income that consists of interest. (2) Where: (a) a person (in this subsection referred to as the indemnifier) pays an amount (in this subsection referred to as the indemnification amount) to the issuer of a promissory note issued after the day on which this section comes into operation to indemnify, reimburse or otherwise compensate the issuer in respect of the whole or a part of an amount (which whole or part is in this subsection referred to as the eligible presentment amount) that the issuer has, or will, become liable to pay to the payee under the note on presentment of the note; (b) no part of the indemnification amount is, or will be, included in the assessable income of the issuer of any year of income; and (c) the whole or a part (in this subsection referred to as the eligible presentment interest) of the eligible presentment amount consists or will consist of interest; so much of the indemnification amount as indemnifies, reimburses or otherwise compensates the issuer in respect of the eligible presentment interest shall, for the purposes of this Division, be deemed to be income that consists of interest. INCOME TAX ASSESSMENT ACT 1936 - SECT 128AE Interpretation provisions relating to offshore banking units (1) In this Division, unless the contrary intention appears: "borrow" includes raise finance by the issue of a security. "lend" includes provide finance by the purchase of a security. "OB activity" has the same meaning as in section 121D. "offshore banking unit" has the meaning given by this section. "offshore borrowing" means: (a) a borrowing in any currency, by a person who is or has been an offshore banking unit, from a non-resident who is not a related person (within the meaning of Division 9A); or (b) a borrowing in a currency other than Australian currency, by a person who is or has been an offshore banking unit, from a resident or a related person (within the meaning of Division 9A). "offshore gold borrowing" means borrowing gold from an offshore person within the meaning of section 121E. "prevailing borrowing rate", in relation to a person who is or has been an offshore banking unit, in relation to a particular time, means the effective annual interest rate that the Commissioner considers was payable by the person on borrowings at or about that time or, where there were none, by offshore banking units generally at or about that time. "prevailing borrowing term", in relation to a person who is or has been an offshore banking unit, in relation to a particular time, means the period that the Commissioner considers was the usual term of borrowings by the person at or about that time or, where there were none, by offshore banking units generally at or about that time. "security" means a bond, debenture, debt interest, bill of exchange, promissory note or other security or similar instrument. "tax exempt gold" means gold that is tax exempt gold under this section. "tax exempt loan money" means an amount that is tax exempt loan money under this section. "transfer to a person" includes apply an amount for the benefit of a person. (2) The Treasurer may, by notice published in the Gazette, declare a person being: (a) a body corporate that is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959; or (b) a public authority constituted by a law of a State, being a public authority that carries on the business of State banking; or (ba) a company in which all of the equity interests are beneficially owned by an offshore banking unit (other than one to which paragraph (c) applies); or (c) a person whom the Treasurer is satisfied is appropriately authorised to carry on business as a dealer in foreign exchange; or (d) a life insurance company registered under section 21 of the Life Insurance Act 1995; or (e) a company incorporated under the Corporations Act 2001 that provides funds management services on a commercial basis (other than solely to related persons): (i) that is, under the Financial Sector (Collection of Data) Act 2001, a registered entity included in the category for money market corporations; or (ii) all of the shares which are beneficially owned by a company covered by subparagraph (i); or (iii) a financial services licensee (as defined by section 761A of the Corporations Act 2001) whose licence covers dealing in securities (as defined by subsection 92(3) of the Corporations Act 2001), providing financial advice in relation to such securities or operating a managed investment scheme (as defined by section 9 of the Corporations Act 2001); or (f) a company that the Treasurer determines, in writing, to be an OBU under subsection (2AA); to be an offshore banking unit for the purposes of this Division. (2AA) The Treasurer may, on written application by a company, make a written determination that the company is an OBU. (2AB) The determination must: (a) specify the day when the company commences to be an OBU; and (b) contain any other information the Treasurer considers appropriate. (2AC) A determination of the Treasurer under subsection (2AA) must be made in accordance with guidelines determined by the Treasurer under subsection (2AD). (2AD) The Treasurer must, by legislative instrument, determine guidelines for the making of determinations under subsection (2AA). The guidelines may require the Treasurer to take into account: (a) specified criteria; or (b) recommendations of particular bodies; or (c) any other factors. (2A) If a person who is an offshore banking unit for the purposes of this Division: (a) is convicted of an offence against section 8L, 8N, 8Q, 8T or 8U of the Taxation Administration Act 1953, or against Division 136 or 137 of the Criminal Code in relation to a taxation law (within the meaning of the Taxation Administration Act 1953); or (b) incurs a tax liability, within the meaning of that Act, by way of a penalty equal to 90% of an amount; the Treasurer may declare, by notice published in the Gazette, that the person is no longer an offshore banking unit for the purposes of this Division. (2B) If the Treasurer makes such a declaration in respect of a company that is an offshore banking unit only because of paragraph (2)(ba), the offshore banking unit mentioned in that paragraph, and in any previous application of that paragraph that was necessary for it to apply to the company, is no longer an offshore banking unit from the time when the declaration comes into force. (2C) If a person who is an offshore banking unit ceases to be a person of a kind mentioned in any of paragraphs (2)(a), (b), (ba) and (c), the Treasurer must declare, by notice published in the Gazette, that the person is no longer an offshore banking unit for the purposes of this Division. (2D) Except as mentioned in subsection (2A), (2B) or (2C), a person does not cease to be an offshore banking unit for the purposes of this Division. (3) A declaration under subsection (2), (2A) or (2C) shall not come into force before the day on which the notice containing the declaration is published in the Gazette. (4) Where: (a) a person who is an offshore banking unit makes an offshore borrowing or offshore gold borrowing; and (b) the lender would, but for section 128GB, be liable to pay withholding tax on income consisting of interest on the offshore borrowing or offshore gold borrowing; then, for the purposes of this Division, the amount borrowed is tax exempt loan money or tax exempt gold of the person. (5) Where: (a) a person who is or has been an offshore banking unit makes a loan of tax exempt loan money or tax exempt gold where the loan is an OB activity or would be if the person were an OBU; and (b) the loan is repaid; the amount repaid is, for the purposes of this Division, deemed to be tax exempt loan money or tax exempt gold of the person. (7) Where a person who is or has been an offshore banking unit transfers an amount of tax exempt loan money or tax exempt gold to another person, the following provisions have effect for the purposes of this Division: (a) subject to subsections (10) and (11), the amount transferred ceases to be tax exempt loan money or tax exempt gold of the person; and (b) the amount transferred does not become tax exempt loan money or tax exempt gold of the other person. (8) Where a person who is or has been an offshore banking unit transfers to another person an amount of money or gold that, in the opinion of the Commissioner, includes tax exempt loan money or tax exempt gold, so much of the amount transferred as the Commissioner considers was tax exempt loan money or tax exempt gold is deemed, for the purposes of this Division, to have been tax exempt loan money or tax exempt gold of the person. (9) Where a person who is or has been an offshore banking unit deals with an amount of tax exempt loan money or tax exempt gold of the person under the person's internal accounting arrangements in such a way that the amount becomes available for possible transfer to other persons (other than by way of payment in carrying on an OB activity, or what would be an OB activity if the person were an OBU, or repayment of an offshore borrowing or an offshore gold borrowing), the following provisions have effect for the purposes of this Division: (a) the person is, when the amount so becomes available, deemed to make a transfer of the amount to another person, other than by way of payment in carrying on an OB activity (or what would be an OB activity if the person were an OBU) or repayment of an offshore borrowing or an offshore gold borrowing; (b) any actual transfer of the amount by the person to another person shall be disregarded. (10) For the purposes of this Division, where a person who is or has been an offshore banking unit transfers tax exempt loan money to another person in exchange for an equivalent amount in a different currency: (a) the amount received in exchange shall be taken to be the same money as was transferred; and (b) the transfer shall be taken not to have occurred. (11) For the purposes of this Division, where a person who is or has been an offshore banking unit transfers tax exempt loan money or tax exempt gold to another person by way of a deposit for the purposes of temporary safe-keeping pending the making of an offshore loan or repayment of an offshore borrowing or an offshore gold borrowing: (a) the amount held on deposit and upon being repaid shall be taken to be the same money as was transferred; and (b) the transfer shall be taken not to have occurred. (12) For the purposes of this section, an amount: (a) deposited in an account with a bank or other financial institution; or (b) paid by way of consideration for the issue of a security; shall be taken to have been lent to, and borrowed by, the bank, financial institution or issuer of the security. (13) If an offshore banking unit consists of: (a) one or more permanent establishments in Australia at or through which the offshore banking unit carries on what are OB activities within the meaning of Division 9A; and (b) one or more other permanent establishments either in Australia or outside Australia; then this section and section 128NB apply as if: (c) the offshore banking unit consisted only of the permanent establishments referred to in paragraph (a); and (d) the permanent establishments referred to in paragraph (b) were separate persons. INCOME TAX ASSESSMENT ACT 1936 - SECT 128AF Payments through interposed entities (1) This section applies if: (a) a payment received by a non-resident through one or more interposed companies, partnerships, trusts or other persons is attributable to an amount of dividends, interest or royalties paid by a resident; and (b) one or more of the interposed companies, partnerships, trusts or other persons is exempt from tax. (2) If this section applies, the amount of dividends, interest or royalties paid by a resident is taken, for the purposes of this Division, to have been paid by the resident directly to the non-resident. (3) For the purposes of this section, a person is exempt from tax if, at the time at which the payment was received by the non-resident, all income of the person was exempt from tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 128B Liability to withholding tax (1A) In this section, a reference to a person to whom this section applies is a reference to the Commonwealth, a State, an authority of the Commonwealth or of a State or a person who is, or persons at least 1 of whom is, a resident. (1) Subject to subsections (3), (3A), (3D) and (3E), this section applies to income that: (a) is derived, on or after 1 January 1968, by a non-resident; and (b) consists of a dividend paid by a company that is a resident. Note: An amount declared to be conduit foreign income is an amount to which this section does not apply: see sections 802-15 and 802-17 of the Income Tax Assessment Act 1997. (2) Subject to subsection (3), this section also applies to income that: (a) is derived, on or after 1 January 1968, by a non-resident; and (b) consists of interest that: (i) is paid to the non-resident by a person to whom this section applies and is not an outgoing wholly incurred by that person in carrying on business in a country outside Australia at or through a permanent establishment of that person in that country; or (ii) is paid to the non-resident by a person who, or by persons each of whom, is not a resident and is, or is in part, an outgoing incurred by that person or those persons in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia. Note: An amount of interest paid to a person by a temporary resident is an amount to which this section does not apply: see section 768-980 of the Income Tax Assessment Act 1997. (2A) Subject to subsection (3), where income: (a) is, or has, after 2 July 1973, been, derived, or derived in part, by a person to whom this section applies in carrying on business in a country outside Australia at or through a permanent establishment of the person in that country; and (b) consists of interest that: (i) is or has been paid to the person by another person to whom this section applies and is not an outgoing wholly incurred by that other person in carrying on business in a country outside Australia at or through a permanent establishment of that other person in that country; or (ii) is or has been paid to the first-mentioned person by a person who is, or by persons each of whom is, not a resident and is, or is in part, an outgoing incurred by that last-mentioned person or those last-mentioned persons in carrying on business in Australia at or through a permanent establishment of that last- mentioned person or those last-mentioned persons in Australia; this section also applies to that income or to the part of that income so derived, as the case may be. Note: An amount of interest paid to a person by a temporary resident is an amount to which this section does not apply: see section 768-980 of the Income Tax Assessment Act 1997. (2B) Subject to subsection (3), this section also applies to income that: (a) is derived by a non-resident: (i) during the 1993-94 year of income of the non-resident; or (ii) during a later year of income of the non-resident; and (b) consists of a royalty that: (i) is paid to the non-resident by a person to whom this section applies and is not an outgoing wholly incurred by that person in carrying on business in a foreign country at or through a permanent establishment of that person in that country; or (ii) is paid to the non-resident by a person who, or by persons each of whom, is not a resident and is, or is in part, an outgoing incurred by that person or those persons in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia. (2C) Subject to subsection (3), where income: (a) is derived, or derived in part, by a person (the recipient) to whom this section applies in carrying on business in a country outside Australia at or through a permanent establishment of the person in that country; and (b) consists of a royalty that: (i) is paid to the recipient by another person (the payer) to whom this section applies and is not an outgoing wholly incurred by the payer in carrying on business in a country outside Australia at or through a permanent establishment of the payer in that country; or (ii) is paid to the recipient by one or more persons (the non-resident payers), each of whom is not a resident, and is, or is in part, an outgoing incurred by the non-resident payers in carrying on business in Australia at or through a permanent establishment of the non-resident payers in Australia; this section also applies to that income or to the part of that income mentioned in paragraph (a). (2D) Subsections (2B) and (2C) do not apply to income to the extent to which it is a return on an equity interest in a company. (3) This section does not apply to: (aaa) income that consists of a non-share dividend that is unfrankable under section 215-10 of the Income Tax Assessment Act 1997; or (a) income derived by a non-resident that is: (i) exempt from income tax because of section 50-5 (other than because of item 1.5A, 1.5B or 1.6 in the table in that section) or 50-10, item 6.1 or 6.2 of the table in section 50-30, section 50-40 or item 9.1 or 9.2 of the table in section 50-45 of the Income Tax Assessment Act 1997; and (ii) exempt from income tax in the country in which the non-resident resides; or (aa) income derived by a non-resident that is an overseas charitable institution (within the meaning of section 121C) where the income is exempt under subsection 121ELA(1); or (ba) income that is exempt from income tax because of section 124ZM (which exempts dividends paid by PDFs); or (bb) income that is not included in assessable income because of section 159GZZZZE; or (d) income in respect of which a trustee is liable to be assessed under section 99 or section 99A; or (e) income that is derived by a trustee, being a trustee in relation to a trust created by a person who, at the time the income is derived, is a resident and in respect of which the Commissioner is empowered, under section 102, to assess the trustee to pay income tax; or (ga) income that consists of: (i) the franked part of a dividend; or (ii) in relation to a dividend that is paid by a former exempting entity (within the meaning of the Income Tax Assessment Act 1997) on a share acquired under an employee share scheme (within the meaning of that Act)--the part of the dividend that is franked with an exempting credit; or (iii) in relation to a dividend that is paid by a former exempting entity (within the meaning of the Income Tax Assessment Act 1997) to an eligible continuing substantial member (within the meaning of that Act)--the part of the dividend that is franked with an exempting credit; other than a dividend in respect of which a determination is made under paragraph 204-30(3)(c) of the Income Tax Assessment Act 1997 or a dividend or a part of a dividend in respect of which a determination is made under paragraph 177EA(5)(b) of this Act; or (gb) income that consists of a dividend derived from assets included in the insurance funds of a life assurance company that carries on business in Australia at or through a permanent establishment of the life assurance company in Australia; or (gc) income that consists of interest derived on a nostro account by a non-resident that is a foreign bank; or (h) income that consists of: (ii) interest derived by a non-resident in carrying on business in Australia at or through a permanent establishment of the non-resident in Australia (except interest derived by a limited partner in a VCLP, ESVCLP or AFOF as such a partner); (iv) interest to which section 128F, 128FA or 128GB applies; or (j) income in respect of which a taxpayer is liable to be assessed under Division 9C; or (jb) income that: (i) is derived by a non-resident that is a superannuation fund for foreign residents; and (ii) consists of interest, or consists of dividends or non-share dividends paid by a company that is a resident; and (iii) is exempt from income tax in the country in which the non-resident resides; or (k) income that is not included in assessable income because of subsection 271-105(1); or (l) income derived by a trustee that, because of paragraph 102UK(2)(b) or 102UM(2)(b), is not included in the assessable income of a trustee beneficiary of the trust estate. (3A) Paragraph (3)(ga) does not apply to income consisting of a dividend, or a part of a dividend, that is derived by the trustee of a trust, or a partnership, to the extent (if any) to which any amount paid to, or applied for the benefit of, a taxpayer (being a beneficiary in the trust or a partner in the partnership) that: (a) was attributable to the dividend; and (b) was paid or applied: (i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or (ii) under a financing arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; may reasonably be regarded as equivalent to the payment of interest on a loan. (3B) In subsection (3A): "commencing time" means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997. "financing arrangement" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. (3C) In determining for the purposes of subsection (3A) the extent (if any) to which an amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to: (a) the way in which the amount was calculated; and (b) the conditions applying to the payment or application of the amount; and (c) any other relevant matters. (3D) This section does not apply to a demerger dividend to which section 45B does not apply. (3E) This section does not apply to income that consists of a dividend that: (a) is paid to a person who is a non-resident carrying on business in Australia at or through a permanent establishment of the person in Australia; and (b) is attributable to the permanent establishment; and (c) is not paid to the person in the person's capacity as trustee. Note: This subsection not only ensures that this section does not apply to that income to make withholding tax payable on it, but also (as a result) ensures that none of that income is non-assessable non-exempt income under section 128D. Subsection 44(1) makes that income assessable income. (3F) In subsection (3E): "permanent establishment" of a person: (a) has the same meaning as in a double tax agreement (as defined in Part X) that relates to a foreign country and affects the person; or (b) has the meaning given by subsection 6(1), if there is no such agreement. (4) A person who derives income to which this section applies that consists of a dividend is liable to pay income tax upon that income at the rate declared by the Parliament in respect of income to which this subsection applies. (5) A person who derives income to which this section applies that consists of interest is, subject to subsections (6) and (7), liable to pay income tax upon that income at the rate declared by the Parliament in respect of income to which this subsection applies. (5A) A person who derives income to which this section applies that consists of a royalty is liable to pay income tax upon that income at the rate declared by the Parliament in respect of income to which this subsection applies. (6) Where: (a) income to which this section applies consists of interest and is paid to the person by whom it is derived by a person to whom this section applies; and (b) the interest is, in part only, an outgoing incurred by that person to whom this section applies in carrying on business in a country outside Australia at or through a permanent establishment of that person to whom this section applies in that country; income tax is payable under subsection (5) upon so much only of the income as is attributable to so much of the interest as is not an outgoing so incurred. (7) Where: (a) income to which this section applies consists of interest and is paid to the person by whom it is derived by a person who, or by persons each of whom, is not a resident; and (b) the interest is, in part only, an outgoing incurred by the person or persons by whom it is paid in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia; income tax is payable under subsection (5) upon so much only of the income as is attributable to so much of the interest as is an outgoing so incurred. (8) For the purposes of subparagraphs (2)(b)(i) and (2A)(b)(i) and paragraph (6)(b), where: (a) interest is paid, or has, after 2 July 1973, been paid, to a person by another person, being a person to whom this section applies, carrying on business in a country outside Australia; and (b) the interest or a part of the interest: (i) is interest incurred by the other person in gaining or producing income that is derived by the other person otherwise than in carrying on business in a country outside Australia at or through a permanent establishment of the other person in that country or is interest incurred by the other person for the purpose of gaining or producing income to be so derived; or (ii) is interest incurred by the other person in carrying on business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the other person otherwise than in so carrying on business at or through a permanent establishment of the other person in a country outside Australia; the interest or the part of the interest, as the case may be, is not an outgoing incurred by the other person in carrying on business in a country outside Australia at or through a permanent establishment of the other person in that country. (9) For the purposes of subparagraphs (2)(b)(ii) and (2A)(b)(ii) and paragraph (7)(b), where: (a) interest is paid, or has, after 2 July 1973, been paid, to a person by another person or other persons (in this subsection referred to as the borrower), being: (i) another person who is or was carrying on business in Australia and is not or was not a resident; or (ii) other persons who are or were carrying on business in Australia and each of whom is not or was not a resident; and (b) the interest or a part of the interest: (i) is interest incurred by the borrower in gaining or producing income that is derived by the borrower in carrying on business in Australia at or through a permanent establishment of the borrower in Australia or is interest incurred by the borrower for the purpose of gaining or producing income to be so derived; or (ii) is interest incurred by the borrower in carrying on a business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the borrower in so carrying on business at or through a permanent establishment of the borrower in Australia; the interest or the part of the interest, as the case may be, is an outgoing incurred by the borrower in carrying on business in Australia at or through a permanent establishment of the borrower in Australia. (9A) For the purposes of subparagraphs (2B)(b)(i) and (2C)(b)(i), where: (a) a royalty is paid, to a person by another person, being a person to whom this section applies, carrying on business in a country outside Australia; and (b) the royalty, or a part of the royalty: (i) is a royalty incurred by the other person in gaining or producing income that is derived by the other person otherwise than in carrying on business in a country outside Australia at or through a permanent establishment of the other person in that country or is a royalty incurred by the other person for the purpose of gaining or producing income to be so derived; or (ii) is a royalty incurred by the other person in carrying on business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the other person otherwise than in so carrying on business at or through a permanent establishment of the other person in a country outside Australia; the royalty or the part of the royalty, as the case may be, is not an outgoing incurred by the other person in carrying on business in a country outside Australia at or through a permanent establishment of the other person in that country. (9B) For the purposes of subparagraphs (2B)(b)(ii) and (2C)(b)(ii), where: (a) a royalty is paid to a person by another person or other persons (the licensee), being: (i) another person who is or was carrying on business in Australia and is not or was not a resident; or (ii) other persons who are or were carrying on business in Australia and each of whom is not or was not a resident; and (b) the royalty or a part of the royalty: (i) is a royalty incurred by the licensee in gaining or producing income that is derived by the licensee in carrying on business in Australia at or through a permanent establishment of the licensee in Australia or is a royalty incurred by the licensee for the purpose of gaining or producing income to be so derived; or (ii) is a royalty incurred by the licensee in carrying on a business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the licensee in so carrying on business at or through a permanent establishment of the licensee in Australia; the royalty or the part of the royalty, as the case may be, is an outgoing incurred by the licensee in carrying on business in Australia at or through a permanent establishment of the licensee in Australia. (9C) If: (a) apart from this subsection, tax would be payable under subsection 126(1) on an amount of interest paid to a person; and (b) section 128F would apply to the interest, assuming that paragraph (1)(e) of that section had not been enacted; then: (c) despite anything else in this section, the interest is taken, for the purposes of this Division, to be income derived by the person and to be income to which this section applies; and Note: As a result of this paragraph, the interest will not be subject to tax under subsection 126(1): see paragraph 126(1)(b). (d) in addition to the effect of any credit arising under section 18-30 in Schedule 1 to the Taxation Administration Act 1953 in respect of the interest, the total tax payable by the person, other than under this section, is reduced by the amount of any tax payable under this section on the interest; and (e) tax paid under this section on the interest is not an allowable deduction. (10) Income tax payable by a person in accordance with this section is in addition to any other income tax payable by him or her upon income to which this section does not apply. (11) Income tax payable by a person in accordance with this section upon income to which this section applies by virtue of subsection (2A) or (2C) is in addition to, and shall not be taken into account in arriving at the amount of, any other income tax payable by him or her in respect of that income. INCOME TAX ASSESSMENT ACT 1936 - SECT 128C Payment of withholding tax (1) Withholding tax is due and payable by the person liable to pay the tax at the expiration of 21 days after the end of the month in which the income to which the tax relates was derived by the person. (3) If any of the withholding tax which a person is liable to pay remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that: (a) started at the beginning of the day by which the withholding tax was due to be paid; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the withholding tax; (ii) general interest charge on any of the withholding tax. Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953. (4AA) If: (a) a person is liable to pay the general interest charge on an amount of withholding tax which is payable on an amount that, by virtue of the application of section 128AA, is taken to consist of interest paid in relation to the transfer of a qualifying security; (b) the Commissioner is satisfied that: (i) before the security was transferred, a notice expressed to be issued under subsection 265B(4) identifying the security was given by the person, in connection with the transfer, to the transferee; (ii) one or more of the statements made in the notice is incorrect; and (iii) the person did not know of the circumstance referred to in subparagraph (ii) at the time of transfer of the security; and (c) the proper amount of the withholding tax liability of the person exceeds the amount that would have been the amount of the withholding tax liability if it were determined on the basis that the statements made in the notice were correct; the Commissioner shall remit so much of the amount of the general interest charge as bears to that amount the same proportion as the amount of the excess referred to in paragraph (c) bears to the amount of withholding tax. (6) The ascertainment of the amount of any withholding tax shall not be deemed to be an assessment within the meaning of any of the provisions of this Act. (7) The Commissioner may serve on a person, by post or otherwise, a notice in which is specified: (a) the amount of any withholding tax that the Commissioner has ascertained is payable by that person; and (b) the date on which that tax became due and payable. (8) The production of a notice served under subsection (7), or of a document under the hand of the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of such a notice, is evidence that the amount of withholding tax specified in the notice became due and payable by the person on whom the notice was served on the date so specified. INCOME TAX ASSESSMENT ACT 1936 - SECT 128D Certain income not assessable Income other than income to which section 128B applies by virtue of subsection (2A), (2C) or (9C) of that section upon which withholding tax is payable, or upon which withholding tax would, but for paragraph 128B(3)(ga) or (jb), section 128F, section 128FA or section 128GB, be payable, is not assessable income and is not exempt income of a person. Note: An amount of interest paid to a person by a temporary resident is non-assessable non-exempt income: see section 768-980 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 128F Division does not apply to interest on certain publicly offered company debentures or debt interests Interest to which this section applies (1) This section applies to interest paid by a company in respect of a debenture or debt interest in the company if: (a) the company was a resident of Australia when it issued the debenture or debt interest; and (b) the company is a resident of Australia when the interest is paid; and (c) for a debt interest other than a debenture--the debt interest: (i) is a non-equity share; or (ii) consists of 2 or more related schemes (within the meaning of the Income Tax Assessment Act 1997) where one or more of them is a non-equity share; or (iii) is a syndicated loan; or (iv) is prescribed by the regulations for the purposes of this section; and (d) either: (i) the issue of the debenture or debt interest satisfies the public offer test set out in subsection (3) or (4); or (ii) for a syndicated loan--the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test set out in subsection (3A). (1A) This section also applies to interest paid by a company in respect of a debenture or debt interest in the company if: (a) the company was a non-resident when it issued the debenture or debt interest; and (b) the company is a non-resident when the interest is paid; and (c) the debenture or debt interest was issued, and the interest is paid, by the company in carrying on business at or through a permanent establishment in Australia; and (d) for a debt interest other than a debenture--the debt interest: (i) is a non-equity share; or (ii) consists of 2 or more related schemes (within the meaning of the Income Tax Assessment Act 1997) where one or more of them is a non-equity share; or (iii) is a syndicated loan; or (iv) is prescribed by the regulations for the purposes of this section; and (e) either: (i) the issue of the debenture or debt interest satisfies the public offer test set out in subsection (3) or (4); or (ii) for a syndicated loan--the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test set out in subsection (3A). (1B) If: (a) some or all of the transfer price (within the meaning of section 128AA) of a debenture or debt interest is taken under that section to be income that consists of interest; and (b) for a debt interest other than a debenture--the debt interest: (i) is a non-equity share; or (ii) consists of 2 or more related schemes (within the meaning of the Income Tax Assessment Act 1997) where one or more of them is a non-equity share; or (iii) is a syndicated loan; or (iv) is prescribed by the regulations for the purposes of this section; and (c) either: (i) the issue of the debenture or debt interest satisfies the public offer test set out in subsection (3) or (4); or (ii) for a syndicated loan--the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test set out in subsection (3A); this section applies to the interest. Note: Subsection (6) does not apply to the interest because that subsection deals only with interest paid on a debenture or debt interest by the issuing company. Tax not payable (2) Tax is not payable under this Division in respect of interest to which this section applies. Public offer test (3) The issue of a debenture or debt interest by a company satisfies the public offer test if the issue resulted from the debenture or debt interest being offered for issue: (a) to at least 10 persons each of whom: (i) was carrying on a business of providing finance, or investing or dealing in securities, in the course of operating in financial markets; and (ii) was not known, or suspected, by the company to be an associate (see subsection (9)) of any of the other persons covered by this paragraph; or (b) to at least 100 persons whom it was reasonable for the company to have regarded as either: (i) having acquired debentures or debt interests in the past; or (ii) being likely to be interested in acquiring debentures or debt interests; or (c) as a result of being accepted for listing on a stock exchange, where the company had previously entered into an agreement with a dealer, manager or underwriter, in relation to the placement of debentures or debt interests, requiring the company to seek such listing; or (d) as a result of negotiations being initiated publicly in electronic form, or in another form, that was used by financial markets for dealing in debentures or debt interests; or (e) to a dealer, manager or underwriter, in relation to the placement of debentures or debt interests, who, under an agreement with the company, offered the debenture or debt interest for sale within 30 days in a way covered by any of paragraphs (a) to (d). (3A) An invitation to become a lender under a syndicated loan facility by a company satisfies the public offer test if the invitation was made: (a) to at least 10 persons each of whom: (i) was carrying on a business of providing finance, or investing or dealing in securities, in the course of operating in financial markets; and (ii) was not known, or suspected, by the company to be an associate (see subsection (9)) of any of the other persons covered by this paragraph; or (b) publicly in electronic form, or in another form, that was used by financial markets for dealing in debentures or debt interests; or (c) to a dealer, manager or underwriter, in relation to the placement of debentures or debt interests, who, under an agreement with the company, made the invitation to become a lender under the facility within 30 days in a way covered by paragraph (a) or (b). Global bonds (4) The issue of a debenture or debt interest by a company also satisfies the public offer test if the debenture or debt interest is a global bond (see subsection (10)). Issues and invitations that always fail the public offer test (5) The issue of a debenture or debt interest by a company does not satisfy the public offer test if, at the time of the issue, the company knew, or had reasonable grounds to suspect, that: (a) the debenture, an interest in the debenture or the debt interest was being, or would be, acquired either directly or indirectly by an associate of the company; and (b) either: (i) the associate is a non-resident and the debenture or interest, or the debt interest, was not being, or would not be, acquired by the associate in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or (ii) the associate is a resident of Australia and the debenture or interest, or the debt interest, was being, or would be, acquired by the associate in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country; and (c) the debenture or interest, or the debt interest, was not being, or would not be, acquired by the associate in the capacity of: (i) a dealer, manager or underwriter in relation to the placement of the debenture or debt interest; or (ii) a clearing house, custodian, funds manager or responsible entity of a registered scheme. (5AA) An invitation to become a lender under a syndicated loan facility is taken never to have satisfied the public offer test if, at the time the invitation is made, the company knew, or had reasonable grounds to suspect, that: (a) an associate of the company is or will become a lender under the facility; and (b) either: (i) the associate is a non-resident and the associate is not or would not become a lender under the facility in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or (ii) the associate is a resident of Australia and the associate is or would become a lender under the facility in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country; and (c) the associate is not or would not become a lender under the facility in the capacity of: (i) a dealer, manager or underwriter in relation to the invitation; or (ii) a clearing house, custodian, funds manager or responsible entity of a registered scheme. No exemption for interest paid to certain associates of the issuing company (6) This section does not apply to interest paid by the company to a person in respect of the debenture or debt interest if, at the time of the payment, the company knows, or has reasonable grounds to suspect, that: (a) the person is an associate of the company; and (b) either: (i) the associate is a non-resident and the payment is not received by the associate in respect of a debenture or debt interest that the associate acquired in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or (ii) the associate is a resident of Australia and the payment is received by the associate in respect of a debenture or debt interest that the associate acquired in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country; and (c) the associate does not receive the payment in the capacity of a clearing house, paying agent, custodian, funds manager or responsible entity of a registered scheme. Australian public bodies are treated as Australian resident companies (7) This section applies in relation to a debenture or debt interest issued by: (a) the Commonwealth, a State or a Territory; or (b) an authority of the Commonwealth, of a State or of a Territory; as if the Commonwealth, State, Territory or authority were a company and a resident of Australia. Debentures or debt interests issued through certain non-resident subsidiaries can also get the exemption (8) If: (a) a company (the parent company) beneficially owns all of the issued equity interests in the capital of a company (the subsidiary) that is not a resident of Australia; and (b) the subsidiary's only business is raising finance for the purposes of the parent company; and (c) the subsidiary raises finance in a country specified in the regulations (but not Australia) by issuing a debenture or debt interest in that country; and (d) when the debenture or debt interest is issued, the subsidiary is treated as a resident of that country for the purposes of the tax law (see subsection (9)) of the country; then this section has effect as if the parent company had raised the finance and issued the debenture or debt interest. Definitions (9) In this section: "associate" has the meaning given by section 318, except that paragraphs (1)(b), (2)(a) and (4)(a) of that section must be disregarded. "clearing house" means a person who operates a facility that is used by financial markets for investing in or dealing in securities. "company" includes a company in the capacity of trustee of a resident trust estate if: (a) the trust is not established by a will, or instrument of trust, for public charitable purposes; and (b) the only person who is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust is a company other than a company in the capacity of trustee. "debenture, without affecting its meaning elsewhere in this Act, includes a promissory note or a bill of exchange (in addition to the things mentioned in the definition of debenture" in subsection 6(1)). "global bond" has the meaning given by subsection (10). "registered scheme" has the same meaning as in the Corporations Act 2001. "responsible entity", of a registered scheme, has the same meaning as in the Corporations Act 2001. "syndicated loan" means a loan or other form of financial accommodation that is provided under a syndicated loan facility, being a facility that has 2 or more lenders. "syndicated loan facility" has the meaning given by subsections (11), (12) and (13). "tax law", in relation to a country other than Australia, means: (a) if the country has federal foreign tax--the law of the country that imposes the federal foreign tax; or (b) in any other case--the law of the country that imposes foreign tax. Global bond (10) A debenture or debt interest issued by a company is a global bond if: (a) it describes itself as a global bond or a global note; and (b) it is issued to a clearing house (see subsection (9)) or to a person as trustee or agent for, or otherwise on behalf of, one or more clearing houses; and (c) in connection with the issue, the clearing house or houses: (i) confer rights in relation to the debenture or debt interest on other persons; and (ii) record the existence of the rights; and (d) before the issue: (i) the company; or (ii) a dealer, manager or underwriter, in relation to the placement of debentures or debt interests, on behalf of the company; announces that, as a result of the issue, such rights will be able to be created; and (e) the announcement is made in a way or ways covered by any of paragraphs (3)(a) to (e) (reading a reference in those paragraphs to "debentures or debt interests" as if it were a reference to such a right, and a reference to the "company" as if it included a reference to the dealer, manager or underwriter); and (f) under the terms of the debenture or debt interest, interests in the debenture or debt interest are able to be surrendered, whether or not in particular circumstances, in exchange for other debentures or debt interests issued by the company that are not themselves global bonds. (11) A written agreement is a syndicated loan facility if: (a) the agreement describes itself as a syndicated loan facility or syndicated facility agreement; and (b) the agreement is between one or more borrowers and at least 2 lenders; and (c) under the agreement each lender severally, but not jointly, agrees to lend money to, or otherwise provide financial accommodation to, the borrower or borrowers; and (d) the amount to which the borrower or borrowers will have access at the time the first loan or other form of financial accommodation is to be provided under the agreement is at least $100,000,000 (or a prescribed amount). (12) A written agreement is also a syndicated loan facility if: (a) the agreement describes itself as a syndicated loan facility or syndicated facility agreement; and (b) the agreement is between one or more borrowers and one lender where the agreement provides for the addition of other lenders; and (c) the agreement provides that, when other lenders are added, each lender severally, but not jointly, agrees to lend money to, or otherwise provide financial accommodation to, the borrower or borrowers; and (d) the amount to which the borrower or borrowers will have access at the time the first loan or other form of financial accommodation is to be provided under the agreement is at least $100,000,000 (or a prescribed amount). (13) However, an agreement under which there are 2 or more borrowers is a syndicated loan facility only if all of them are: (a) members of the same wholly-owned group (within the meaning of the Income Tax Assessment Act 1997); or (b) parties to the same joint venture; or (c) associates of each other. (14) For the purposes of this section, a change (including by novation) to the lenders under a syndicated loan facility does not result in a different agreement. (15) For a debt interest that consists of 2 or more related schemes (within the meaning of the Income Tax Assessment Act 1997) where one or more of them is a non-equity share, this section applies only to interest paid in respect of the non-equity share. Note: Subsection 128A(1AB) defines interest for the purposes of this Division. Under that subsection, dividends paid in respect of a non-equity share are treated as being interest. (16) The rule in subsection (15) does not apply to the extent that interest in respect of the other related scheme or schemes would be interest to which this section applies in respect of a debenture or debt interest. INCOME TAX ASSESSMENT ACT 1936 - SECT 128FA Division does not apply to interest on certain publicly offered unit trust debentures or debt interests Interest to which this section applies (1) This section applies to interest paid by the trustee of an eligible unit trust in respect of a debenture or debt interest issued by the trustee if: (a) for a debt interest other than a debenture--the debt interest: (i) is a syndicated loan; or (ii) is prescribed by the regulations for the purposes of this section; and (b) either: (i) the issue of the debenture or debt interest satisfies the public offer test set (see subsection (6)); or (ii) for a syndicated loan--the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test (see subsection (6A)). (2) If: (a) some or all of the transfer price (within the meaning of section 128AA) of a debenture or debt interest issued by the trustee of an eligible unit trust is taken under that section to be income that consists of interest; and (b) for a debt interest other than a debenture--the debt interest: (i) is a syndicated loan; or (ii) is prescribed by the regulations for the purposes of this section; and (c) either: (i) the issue of the debenture or debt interest satisfies the public offer test set (see subsection (6)); or (ii) for a syndicated loan--the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test (see subsection (6A)); this section applies to the interest. Note: Subsection (4) does not apply to the interest because that subsection deals only with interest paid on a debenture or debt interest by the issuing eligible unit trust. Tax not payable (3) Tax is not payable under this Division in respect of interest to which this section applies. No exemption for interest paid to certain associates of the issuing trustee (4) This section does not apply to interest paid by the trustee of an eligible unit trust to a person in respect of the debenture or debt interest if, at the time of the payment, the trustee knows, or has reasonable grounds to suspect, that: (a) the person is an associate of the trustee; and (b) either: (i) the associate is a non-resident and the payment is not received by the associate in respect of a debenture or debt interest that the associate acquired in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or (ii) the associate is a resident of Australia and the payment is received by the associate in respect of a debenture or debt interest that the associate acquired in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country; and (c) the associate does not receive the payment in the capacity of a clearing house, paying agent, custodian, funds manager or responsible entity of a registered scheme. Debentures or debt interests issued through certain non-resident subsidiaries can also get the exemption (5) If: (a) the trustee of an eligible unit trust holds all of the issued equity interests in the capital of a company that is not a resident of Australia; and (b) the company's only business is raising finance for the purposes of the eligible unit trust; and (c) the company raises finance in a country specified in the regulations (but not Australia) by issuing a debenture or debt interest in that country; and (d) when the debenture or debt interest is issued, the company is treated as a resident of that country for the purposes of the tax law (see subsection (8)) of the country; then this section has effect as if the trustee had raised the finance and issued the debenture or debt interest. Public offer test (6) For the purposes of working out under this section whether the issue of a debenture or debt interest by the trustee of an eligible unit trust satisfies the public offer test, subsections 128F(3) to (5) apply to the trustee of the eligible unit trust in a corresponding way to the way in which those subsections apply to a company, subject to subsection (7) of this section. (6A) For the purposes of working out under this section whether an invitation to become a lender under a syndicated loan facility satisfies the public offer test, subsections 128F(3A) and (5AA) apply to the trustee of the eligible unit trust in a corresponding way to the way in which those subsections apply to a company, subject to subsection (7) of this section. (7) For the purposes of applying subsection 128F(3), (3A), (4), (5) or (5AA) as mentioned in subsection (6) or (6A) of this section: (a) a reference in any of those subsections to a company knowing, suspecting or having reasonable grounds to suspect something, or it being reasonable for a company to have regarded something, is taken to be a reference to the trustee of the eligible unit trust knowing, suspecting or having reasonable grounds to suspect that thing, or it being reasonable for the trustee of the eligible unit trust to have regarded that thing; and (b) a reference in any of those subsections to an associate is taken to be a reference to an associate within the meaning of this section; and (c) a reference in any of those subsections to a global bond is taken to be a reference to a global bond within the meaning of subsection 128F(10). (7A) For the purposes of this section, a change (including by novation) to the lenders under a syndicated loan facility does not result in a different agreement. Definitions (8) In this section: "associate" has the meaning given by section 318, except that: (a) paragraphs (1)(b), (2)(a) and (4)(a) of that section must be disregarded; and (b) subsection (5) of that section applies to a unit trust mentioned in paragraph (b) of the definition of eligible unit trust in this subsection in the same way as that subsection applies in relation to a public unit trust. "clearing house" has the same meaning as in section 128F. "company" has the same meaning as in section 128F. "debenture": (a) in relation to the trustee of an eligible unit trust, includes debenture stock, bonds, promissory and other notes, bills of exchange and any other securities issued by the trustee, whether constituting a charge on the assets of the eligible unit trust or not; and (b) in relation to a company, has the same meaning as in section 128F. "eligible unit holder" means: (a) the trustee of a public unit trust; or (b) the trustee (within the meaning of the Income Tax Assessment Act 1997) of a complying superannuation fund that has 50 or more members; or (c) the trustee of a pooled superannuation trust within the meaning of the Income Tax Assessment Act 1997; or (d) the trustee (within the meaning of the Income Tax Assessment Act 1997) of a complying approved deposit fund; or (e) a life insurance company within the meaning of the Income Tax Assessment Act 1997; or (f) a public company within the meaning of section 103A; or (g) the trustee of a unit trust in which all of the issued units are held by 2 or more entities that are eligible unit holders because of: (i) the application of another paragraph of this definition (whether or not the same paragraph); or (ii) a previous application of this paragraph; or (iii) any combination of subparagraphs (i) and (ii). "eligible unit trust" means: (a) a public unit trust; or (b) a unit trust in which all of the issued units are held by 2 or more eligible unit holders. "public unit trust" has the same meaning as in section 102G. "registered scheme" has the same meaning as in section 128F. "responsible entity" has the same meaning as in section 128F. "syndicated loan" has the same meaning as in section 128F. "syndicated loan facility" has the same meaning as in section 128F. "tax law" has the same meaning as in section 128F. (9) For the purposes of this section, a trust or fund of a kind mentioned in any of paragraphs (a) to (d) of the definition of eligible unit holder in subsection (8) in relation to a year of income is taken to be a trust or fund of that kind at all times during the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 128GB Division not to apply to interest payments on offshore borrowings by offshore banking units (1) This section applies to: (a) interest paid by a person in respect of an offshore borrowing of the person; or (b) interest consisting of gold paid by a person in respect of an offshore gold borrowing of the person; if, when the borrowing took place, the person was an offshore banking unit (whether or not the person is still an offshore banking unit when the interest is paid). (2) Tax is not payable in accordance with this Division in respect of interest to which this section applies. INCOME TAX ASSESSMENT ACT 1936 - SECT 128NA Special tax payable in respect of certain securities and agreements (1) Where, but for subsection 128AA(2): (a) the transferor of a qualifying security who is not liable to pay withholding tax in relation to the transfer of the qualifying security would be liable to pay withholding tax in relation to the transfer; or (b) the transferor of a qualifying security who is liable to pay withholding tax in relation to the transfer of the qualifying security would be liable to pay additional withholding tax in relation to the transfer; then, for the purposes of this section, there shall be taken to be an avoided withholding tax amount in relation to the person who is the transferee of the qualifying security of an amount equal to the withholding tax or the additional withholding tax, as the case may be, that the person would be so liable to pay. (2) Where: (a) an attributable agreement payment or attributable agreement payments were made by a person under a relevant agreement before the commencement of section 128AC; and (b) the Commissioner is of the opinion that the payment or payments were made before the commencement of that section, or that the payment or payments were of a greater amount than they would otherwise have been, for the sole or dominant purpose of securing the result that the total amount (in this subsection referred to as the actual withholding tax) of withholding tax payable under that section in relation to all attributable agreement payments made under the relevant agreement after the commencement of that section would be less than the amount (in this subsection referred to as the notional withholding tax) that would otherwise have been payable; then, for the purposes of this section, there shall be taken to be an avoided withholding tax amount in relation to the person of an amount equal to the amount by which the notional withholding tax exceeds the actual withholding tax. (3) For the purposes of subsection (2), expressions used in that subsection that are also used in section 128AC have the same respective meanings in that subsection as in that section. (4) Where there is an avoided withholding tax amount in relation to a person under this section, the person is liable to pay income tax, as imposed by the Income Tax (Securities and Agreements) (Withholding Tax Recoupment) Act 1986, in respect of the avoided withholding tax amount. INCOME TAX ASSESSMENT ACT 1936 - SECT 128NB Special tax payable in respect of certain dealings by current and former offshore banking units (1) Where a person who is or has been an offshore banking unit transfers to another person an amount of tax exempt loan money or tax exempt gold, other than by way of: (a) payment in carrying on an OB activity or what would be an OB activity if the person were an OBU; or (b) repayment of an offshore borrowing or offshore gold borrowing; the person is liable to pay income tax, as imposed by the Income Tax (Offshore Banking Units) (Withholding Tax Recoupment) Act 1988, on the lost withholding tax amount in respect of the transfer. (2) For the purposes of subsection (1), the lost withholding tax amount in respect of the transfer is an amount ascertained in accordance with the formula: where: "IWT rate" is the rate declared by the Parliament in respect of income to which subsection 128B(5) applies. "PB rate" is the prevailing borrowing rate in relation to the person at the time of the transfer. "PB term" is the number of years in the prevailing borrowing term in relation to the person at the time of the transfer; and "TA" is the amount of tax exempt loan money or tax exempt gold transferred. (3) Tax under this section is due and payable by the person liable to pay the tax at the end of: (a) 21 days after the end of the month in which the transfer to which it relates takes place; or (b) such further period as the Commissioner, in special circumstances, allows. Application (3A) The Commissioner must not exercise his or her power under paragraph (3)(b) on or after 1 July 2000. Note: For provisions about collection and recovery of tax on or after 1 July 2000, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953. (4) Section 128C (other than subsections (1) and (4AA)) applies, in addition to its application apart from this subsection, as if references in that section to withholding tax were references to tax payable under this section. (5) The Commissioner may remit the whole or part of an amount of tax payable under this section in relation to the transfer of an amount of tax exempt loan money or tax exempt gold to another person if: (a) the Commissioner is satisfied that: (i) the liability to pay the amount of tax arose because the person mistakenly believed, on reasonable grounds, that the other person was a non-resident or an offshore banking unit, that interest payable to the person in respect of the amount transferred would be an outgoing of a particular kind or that the amount transferred was not tax exempt loan money or tax exempt gold; and (ii) the person had taken reasonable steps to ascertain the matter to which the mistaken belief related; or (b) the Commissioner is satisfied that there are special circumstances justifying the remission of the whole or part of the amount of tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 128NBA Credits in respect of amounts assessed in relation to certain financial arrangements When section applies (1) This section applies if: (a) the amount of any withholding tax that has become payable by a taxpayer on a payment of interest under, or in relation to the transfer of, a qualifying security or a Division 230 financial arrangement has been paid; and (b) there is a net financial arrangement amount (see subsection (5)) in relation to the taxpayer in relation to: (i) if the payment of interest is a payment in relation to the transfer of the qualifying security--the security; or (ii) if the payment of interest is such a payment by virtue of the application of section 128AC in relation to an attributable agreement payment within the meaning of that section--the attributable agreement payment; or (iii) in any other case--the payment of interest; and (c) the amount of the withholding tax payable on the interest exceeds the amount that would have been payable on the interest if the interest were reduced by the net financial arrangement amount. Entitlement to apply for credit (2) The taxpayer may apply to the Commissioner for a credit of an amount equal to the excess. Requirements for application (3) The application must be in the approved form. Entitlement to credit (4) If the Commissioner is satisfied as to the matters mentioned in paragraphs (1)(a), (b) and (c), the applicant is entitled to a credit of an amount equal to the excess. Net financial arrangement amount (5) For the purposes of this section, if: (a) in the case of a qualifying security--the sum of all amounts (if any) included in the assessable income of the taxpayer of any years of income in relation to the qualifying security, attributable agreement payment or payment of interest under section 159GQ; or (b) in the case of a Division 230 financial arrangement--the sum of all amounts (if any) included in the assessable income of the taxpayer of any years of income in relation to the arrangement under Division 230 of the Income Tax Assessment Act 1997; exceeds: (c) in the case of a qualifying security--the sum of all amounts (if any) allowable as deductions from the assessable income of the taxpayer of any years of income in relation to the security or the payment, as the case may be, under that section; or (d) in the case of a Division 230 financial arrangement--the sum of: (i) all amounts (if any) allowable as deductions from the assessable income of the taxpayer of any years of income in relation to the arrangement under Division 230 of the Income Tax Assessment Act 1997; and (ii) all amounts (if any) of interest paid under the arrangement before the interest mentioned in paragraph (1)(a) is paid; there is a net financial arrangement amount equal to the excess. (6) For the purposes of paragraph (5)(b) and subparagraph (5)(d)(i), disregard any year of income in which the taxpayer was not an Australian resident. (7) For the purposes of subsection (6): (a) if section 230-485 of the Income Tax Assessment Act 1997 applies in relation to a year of income: (i) treat the foreign residency period mentioned in that section as a year of income in which the taxpayer was not an Australian resident; and (ii) treat the Australian residency period mentioned in that section as a year of income in which the taxpayer was an Australian resident; and (b) if section 230-490 of that Act applies in relation to a year of income: (i) treat the period during that year in which the taxpayer was not an Australian resident as a year of income in which the taxpayer was not an Australian resident; and (ii) treat the period during that year in which the taxpayer was an Australian resident as a year of income in which the taxpayer was an Australian resident. INCOME TAX ASSESSMENT ACT 1936 - SECT 128P Objections If an applicant for a certificate under this Division is dissatisfied with a decision of the Commissioner: (a) in any case--to refuse to issue the certificate; or (b) in the case of a certificate under section 128AB--to specify a particular amount in the certificate; the applicant may object against the decision in the manner set out in Part IVC of the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 128Q Power of Commissioner to obtain information Section 264 applies, for the purposes of this Division, as if the reference in paragraph (1)(b) of that section to a person's income or assessment were a reference to a matter relevant to the administration or operation of this Division. INCOME TAX ASSESSMENT ACT 1936 - SECT 128R Informal arrangements For the purposes of this Division, the Commissioner may have regard to arrangements, understandings and practices not having legal force in the same manner as if they had legal force. INCOME TAX ASSESSMENT ACT 1936 - SECT 128TG Summary of this Division (1) The following is a summary of this Division. (2) If, in connection with a money-lending business, a taxpayer is issued shares in a small-medium enterprise, any profit or loss the taxpayer makes when it disposes of certain shares that would be dealt with under section 6-5 or 8-1 of the Income Tax Assessment Act 1997 is, to the extent that it relates to the period after the issue, instead dealt with under Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997. (3) For this to apply, the taxpayer must, after the issue, hold shares representing at least 10% of the value of the small-medium enterprise. INCOME TAX ASSESSMENT ACT 1936 - SECT 128TH When Division applies This Division applies if: (a) a taxpayer acquires a threshold interest in an SME (see section 128TJ); and (b) afterwards, the taxpayer disposes of ordinary shares, or an interest in ordinary shares, in the SME that were issued to the taxpayer (whether before, at the time of, or after acquiring the threshold interest); and (ba) the disposal takes place: (i) in any case--in the course of the taxpayer carrying on a business of lending money or otherwise in connection with such a business of the taxpayer; or (ii) if the taxpayer is a company that is a subsidiary of another company--while the one or more members of the direct ownership group of the taxpayer (see subsection 128TL(3)) are each carrying on a business of lending money; and (c) the shares are not trading stock of the taxpayer; and (d) apart from this section: (i) any profit on the disposal would be included in the taxpayer's assessable income of a year of income under section 6-5 of the Income Tax Assessment Act 1997; and (ii) any loss on the disposal would be allowable as a deduction from the taxpayer's assessable income of a year of income under section 8-1 of that Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 128TI Consequences of Division applying If this Division applies: (a) no profit on the disposal is included in the taxpayer's assessable income of any year of income under section 6-5 of the Income Tax Assessment Act 1997; and (b) no loss on the disposal is allowable as a deduction from the taxpayer's assessable income of any year of income under section 8-1 of that Act; and (c) the taxpayer is taken: (i) to have disposed of the shares, at the time of acquiring the threshold interest in the SME, for a consideration equal to their market value at the time; and (ii) to have re-acquired the shares immediately afterwards (for the purposes of this section, as if they had been issued to the taxpayer) for an amount equal to that consideration; and (d) any profit or loss on the disposal that is taken to have happened by subparagraph (c)(i) is included in the taxpayer's assessable income under section 6-5 of that Act, or is an allowable deduction under section 8-1 of that Act, in the year of income in which the shares are actually (disregarding that subparagraph) disposed of, and not in any other year of income. Note: As a result of this section, the tax consequences of the actual disposal will be dealt with under section 6-5 or 8-1 of that Act in respect of any period of holding before the acquisition of the threshold interest and under Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 in respect of any period after the acquisition of that interest. INCOME TAX ASSESSMENT ACT 1936 - SECT 128TJ Acquiring a threshold interest in an SME A taxpayer acquires a threshold interest in an SME if: (a) ordinary shares in an SME (see section 128TK) are issued to the taxpayer; and (b) the shares are issued: (i) in any case--in the course of the taxpayer carrying on a business of lending money or otherwise in connection with such a business of the taxpayer; or (ii) if the taxpayer is a company that is a subsidiary of another company--while the one or more members of the direct ownership group of the taxpayer (see subsection 128TL(3)) are each carrying on a business of lending money; and (c) immediately after the shares, and any other ordinary shares forming part of the same issue, are issued to the taxpayer and any other persons, the percentage of the value of the SME represented by ordinary shares issued to the taxpayer (whether before or as part of the threshold share issue) is at least 10%; and (d) no previous issue of shares to the taxpayer had resulted in the taxpayer acquiring a threshold interest in the SME. INCOME TAX ASSESSMENT ACT 1936 - SECT 128TK SME or small-medium enterprise (1) An SME or small-medium enterprise is a company the total value of whose assets, as determined under this section, is no more than $50 million. (2) The total value of the company's assets is the total value of its assets (both current and non-current) as shown in the last audited accounts prepared in relation to the company for the purposes of Division 4 of Part 3.6 of the Corporations Act 2001 before the investment is made. (3) If: (a) no such audited accounts have been prepared within the 12 months ending when the shares are issued; or (b) the last such audited accounts prepared relate to a period that ended more than 18 months before the shares are issued; then the company is not an SME unless: (c) before the shares are issued, the taxpayer gets an audited statement (see subsection (4)) showing the total value of the company's assets as at a time no more than 12 months before the shares are issued; and (d) that value is no more than $50 million. (4) In subsection (3), an audited statement is a statement audited by a person or firm: (a) who is appointed as the company's auditor in accordance with the Corporations Act 2001; or (b) who is eligible to consent to being so appointed. INCOME TAX ASSESSMENT ACT 1936 - SECT 128TL Subsidiary and direct ownership group (1) A company (the first company) is a subsidiary of another company (the second company) if all the shares in the first company are beneficially owned by: (a) the second company; or (b) a company that is, or 2 or more companies each of which is, a subsidiary of the second company; or (c) the second company and a company that is, or 2 or more companies each of which is, a subsidiary of the second company. (2) For the purposes of subsection (1), if a company is a subsidiary of another company (including a company that is such a subsidiary because of a previous application or applications of this subsection), every company that is a subsidiary of the first-mentioned company is taken to be a subsidiary of that other company. (3) The one or more companies in whichever of paragraph (1)(a), (b) or (c) applies are the direct ownership group of the first company. INCOME TAX ASSESSMENT ACT 1936 - SECT 128U Interpretation (1) In this Division, unless the contrary intention appears: "Aboriginal" means a person who is: (a) a member of the Aboriginal race of Australia; or (b) a member of the race to which Torres Strait Islanders belong. "Aboriginal land" means any estate or interest in land that, under provisions of a law of the Commonwealth or of a State or Territory that relate to Aboriginals, is held for the use or benefit of Aboriginals. "Aboriginals Benefit Account" means the Aboriginals Benefit Account continued in existence by section 62 of the Aboriginal Land Rights (Northern Territory) Act 1976. "distributing body" means: (a) an Aboriginal Land Council established by or under the Aboriginal Land Rights (Northern Territory) Act 1976; (b) a corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006; or (d) any other incorporated body that: (i) is established by or under provisions of a law of the Commonwealth or of a State or Territory that relate to Aboriginals; and (ii) is empowered or required (whether under that law or otherwise) to pay moneys received by the body to Aboriginals or to apply such moneys for the benefit of Aboriginals, either directly or indirectly. "mineral royalties" means royalties payable in respect of the mining of minerals. "minerals" means: (a) gold, silver, copper, tin and other metals; (b) coal, shale, petroleum (within the meaning of the Income Tax Assessment Act 1997) and valuable earths and substances; (c) mineral substances; (d) gems and precious stones; and (e) ores and other substances containing minerals; whether suspended in water or not, and includes water. "miner's right" means a miner's right or other authority issued or granted under a law of the Commonwealth or of a State or Territory relating to mining of minerals, being a right or authority that empowers the holders to take possession of, mine or occupy land or take any other action in relation to land for any purpose in connection with mining. "mining" includes the obtaining of minerals from alluvial or surface deposits. "mining interests", in relation to any land, means any lease or other interest in the land (including a right to prospect or explore for minerals in or on the land) issued or granted under a law of the Commonwealth or of a State or Territory relating to mining of minerals. "mining payment" means a payment made to a distributing body or made to, or applied for the benefit of, an Aboriginal or Aboriginals, being: (a) a payment made on or after 1 July 1979 and before the day that the Financial Management Legislation Amendment Act 1999 commenced, out of the Aboriginals Benefit Reserve to the extent that the payment represents money paid into the Aboriginals Benefit Reserve on or after 1 July 1979 in pursuance of subsection 63(2) or (4) of the Aboriginal Land Rights (Northern Territory) Act 1976; and (aa) a payment made on or after the day that the Financial Management Legislation Amendment Act 1999 commenced by the Commonwealth in respect of a debit from the Aboriginals Benefit Account to the extent that the payment represents an amount credited to the Aboriginals Benefit Account in pursuance of subsection 63(1) or (4) of the Aboriginal Land Rights (Northern Territory) Act 1976; and (b) any payment made on or after 1 July 1979 that is of the kind referred to in subsection 44 (1) or (2) of the Aboriginal Land Rights (Northern Territory) Act 1976; and (c) any other payment made on or after 1 July 1979 under provisions of a law of the Commonwealth or of a State or Territory that relate to Aboriginals or under an agreement made in accordance with such provisions, being a payment made: (i) in consideration of the issuing, granting or renewal of a miner's right or mining interest in respect of Aboriginal land; (ii) in consideration of the granting of permission to a person to enter or remain on Aboriginal land or to do any act on Aboriginal land in relation to prospecting or exploring for, or mining of, minerals; or (iii) by way of payment of mineral royalties payable in respect of the mining of minerals on Aboriginal land or by way of payment of an amount determined by reference to an amount of mineral royalties received by the Commonwealth, a State or the Northern Territory in respect of the mining of minerals on Aboriginal land; but does not include a payment made by a distributing body. (2) In section 260, income tax or tax includes mining withholding tax. (3) For the purposes of this Division, a mining payment is taken to include any amount that has been, or purports to have been, withheld from the mining payment for the purposes of section 12-320 in Schedule 1 to the Taxation Administration Act 1953. (4) For the purposes of the succeeding provisions of this Division, where a mining payment (in this subsection referred to as the relevant mining payment) is made to, or applied for the benefit of, 2 or more persons, there shall be deemed to have been made to, or applied for the benefit of, each of those persons, a mining payment of an amount equal to so much of the relevant mining payment as bears to the relevant mining payment the same proportion as 1 bears to the number of persons to whom the relevant mining payment was made or for whose benefit the relevant mining payment was applied, as the case may be. INCOME TAX ASSESSMENT ACT 1936 - SECT 128V Liability to mining withholding tax (1) Where a mining payment is made to, or applied for the benefit of, a person, that person is liable to pay income tax on the amount of the mining payment at the rate declared by the Parliament for the purposes of this section. (2) Income tax payable by a person in accordance with this section is in addition to other income tax payable by that person upon amounts that are not mining payments. INCOME TAX ASSESSMENT ACT 1936 - SECT 128W Payment of mining withholding tax (1) Mining withholding tax is due and payable by a person liable to pay the tax at the expiration of 21 days after the end of the month in which the payment of the amount to which the tax relates was made, or of such further period as the Commissioner, in special circumstances, allows. Note: For provisions about collection and recovery of mining withholding tax and other amounts, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953. (4) The ascertainment of the amount of any mining withholding tax shall not be deemed to be an assessment within the meaning of any of the provisions of this Act. (5) The Commissioner may serve on a person liable to pay mining withholding tax, by post or otherwise, a notice in which is specified: (a) the amount of any mining withholding tax that the Commissioner has ascertained is payable by that person; and (b) the date on which that tax became due and payable. (6) The production of a notice served under subsection (5), or of a document under the hand of the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of such a notice, is evidence that the amount of mining withholding tax specified in the notice became due and payable by the person on whom the notice was served on the date specified in the notice as the date on which that tax became due and payable. INCOME TAX ASSESSMENT ACT 1936 - SECT 128X Power of Commissioner to obtain information Section 264 applies, for the purposes of this Division, as if the reference in paragraph (1)(b) of that section to a person's income or assessment were a reference to a matter relevant to the administration or operation of this Division. INCOME TAX ASSESSMENT ACT 1936 - SECT 129 Taxable income of ship-owner or charterer Where a ship belonging to or chartered by a person whose principal place of business is out of Australia carries passengers, live-stock, mails or goods shipped in Australia, 5% of the amount paid or payable to him or her in respect of such carriage, whether that amount is payable in or out of Australia, shall be deemed to be taxable income derived by him or her in Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 130 Master or agent to make return The master of the ship, or the agent or other representative in Australia of the owner or charterer, shall, when called upon by the Commissioner by notice in the Gazette or by any other notice to him or her, make a return of the amounts so paid or payable. INCOME TAX ASSESSMENT ACT 1936 - SECT 131 Determination by Commissioner If such return is not made, or if the Commissioner is not satisfied with the return, the Commissioner may determine the amount so paid or payable. INCOME TAX ASSESSMENT ACT 1936 - SECT 132 Assessment of tax The master, agent or representative, as agent for the owner or charterer, may be assessed upon the taxable income and shall be liable to pay the tax assessed. INCOME TAX ASSESSMENT ACT 1936 - SECT 133 Master liable to pay (1) Where the assessment is made on the agent or representative, and the tax is not paid forthwith upon receipt of notice of the assessment, the master shall be liable to pay the tax. (2) This section shall not, so long as any tax for which the master becomes liable under this section remains unpaid, relieve any other person to whom the notice of assessment has been given in respect of that tax, from liability to pay the tax remaining unpaid. INCOME TAX ASSESSMENT ACT 1936 - SECT 134 Notice of assessment Where any person is liable to pay tax under this Division, the Commissioner shall give notice to the person of the assessment, and he or she shall forthwith pay the tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 135 Clearance of ship A collector or officer of customs for any State or Territory shall not grant a clearance to the ship until he or she is satisfied that any tax which has been or may be assessed under this Division has been paid, or that arrangements for its payment have been made to the satisfaction of the Commissioner. INCOME TAX ASSESSMENT ACT 1936 - SECT 135A Freights payable under certain agreements Where goods are shipped in pursuance of an agreement of the kind specified in section 7C of the Australian Industries Preservation Act 1906-1937, the amount paid or payable to the owner or charterer of the ship in respect of the carriage of those goods shall, for the purposes of this Division, be deemed to be the amount remaining after deducting from the amount which would be payable according to the gross rate of freight specified in the agreement the amount of any rebate allowed in pursuance of the agreement or any payment, whenever made, by the owner or charterer, or out of funds provided by the owner or charterer, to any person or persons being the owner or shipper of the goods or the agent of either of them in respect of the shipment. INCOME TAX ASSESSMENT ACT 1936 - SECT 136AA Interpretation (1) In this Division, unless the contrary intention appears: "acquire" includes: (a) acquire by way of purchase, exchange, lease, hire or hire-purchase; and (b) obtain, gain or receive. "agreement" means any agreement, arrangement, transaction, understanding or scheme, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. "area covered by an international tax sharing treaty" has the meaning given by subsection (4). "derive" includes gain or produce. "expenditure" includes loss or outgoing. "income" includes any amount that is, or may be, included in assessable income or taken into account in calculating an amount that is, or may be, included in assessable income. "permanent establishment", in relation to a taxpayer, means: (a) a place that is a permanent establishment of the taxpayer by virtue of the definition of permanent establishment in section 6; or (b) a place at which any property of the taxpayer is manufactured or processed for the taxpayer, whether by the taxpayer or another person. "property" includes: (a) a chose in action; (b) any estate, interest, right or power, whether at law or in equity, in or over property; (c) any right to receive income; and (d) services. "right to receive income" means a right of a person to have income that will or may be derived (whether from property or otherwise) paid to, or applied or accumulated for the benefit of, the person. "services" includes any rights, benefits, privileges or facilities and, without limiting the generality of the foregoing, includes the rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred under: (a) an agreement for or in relation to: (i) the performance of work (including work of a professional nature); (ii) the provision of, or the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction; (iii) the conferring of rights, benefits or privileges for which consideration is payable in the form of a royalty, tribute, levy or similar exaction; or (iv) the carriage, storage or packaging of any property or the doing of any other act in relation to property; (b) an agreement of insurance; (c) an agreement between a banker and a customer of the banker entered into in the course of the carrying on by the banker of the business of banking; or (d) an agreement for or in relation to the lending of moneys. "supply" includes: (a) supply by way of sale, exchange, lease, hire or hire-purchase; and (b) provide, grant or confer. "taxpayer" includes a partnership and a taxpayer in the capacity of a trustee. (2) The definition of taxpayer in subsection (1) shall not be taken to affect in any way the interpretation of that expression where it is used in this Act other than this Division. (3) In this Division, unless the contrary intention appears: (a) a reference to the supply or acquisition of property includes a reference to agreeing to supply or acquire property; (b) a reference to consideration includes a reference to property supplied or acquired as consideration and a reference to the amount of any such consideration is a reference to the value of the property; (c) a reference to the arm's length consideration in respect of the supply of property is a reference to the consideration that might reasonably be expected to have been received or receivable as consideration in respect of the supply if the property had been supplied under an agreement between independent parties dealing at arm's length with each other in relation to the supply; (d) a reference to the arm's length consideration in respect of the acquisition of property is a reference to the consideration that might reasonably be expected to have been given or agreed to be given in respect of the acquisition if the property had been acquired under an agreement between independent parties dealing at arm's length with each other in relation to the acquisition; and (e) a reference to the supply or acquisition of property under an agreement includes a reference to the supply or acquisition of property in connection with an agreement. (4) If, under an international tax sharing treaty, Australia and another country share tax revenues from activities undertaken in an area identified by or under the agreement, that area is referred to in this Division as the area covered by the international tax sharing treaty. INCOME TAX ASSESSMENT ACT 1936 - SECT 136AB Operation of Division (1) Nothing in the provisions of this Act other than this Division shall be taken to limit the operation of this Division. (2) In the application of this Division, the operation of section 70-20 of the Income Tax Assessment Act 1997, and of section 355-400 of that Act, shall be disregarded. INCOME TAX ASSESSMENT ACT 1936 - SECT 136AC International agreements For the purposes of this Division, an agreement is an international agreement if: (a) a non-resident supplied or acquired property under the agreement otherwise than in connection with a business carried on in Australia by the non-resident at or through a permanent establishment of the non-resident in Australia; or (b) a resident carrying on a business outside Australia supplied or acquired property under the agreement, being property supplied or acquired in connection with that business; or (c) a taxpayer: (i) supplied or acquired property under the agreement in connection with a business; and (ii) carries on that business in an area covered by an international tax sharing treaty. INCOME TAX ASSESSMENT ACT 1936 - SECT 136AD Arm's length consideration deemed to be received or given (1) Where: (a) a taxpayer has supplied property under an international agreement; (b) the Commissioner, having regard to any connection between any 2 or more of the parties to the agreement or to any other relevant circumstances, is satisfied that the parties to the agreement, or any 2 or more of those parties, were not dealing at arm's length with each other in relation to the supply; (c) consideration was received or receivable by the taxpayer in respect of the supply but the amount of that consideration was less than the arm's length consideration in respect of the supply; and (d) the Commissioner determines that this subsection should apply in relation to the taxpayer in relation to the supply; then, for all purposes of the application of this Act in relation to the taxpayer, consideration equal to the arm's length consideration in respect of the supply shall be deemed to be the consideration received or receivable by the taxpayer in respect of the supply. (2) Where: (a) a taxpayer has supplied property under an international agreement; (b) the Commissioner, having regard to any connection between any 2 or more of the parties to the agreement or to any other relevant circumstances, is satisfied that the parties to the agreement, or any 2 or more of those parties, were not dealing at arm's length with each other in relation to the supply; (c) no consideration was received or receivable by the taxpayer in respect of the supply; and (d) the Commissioner determines that this subsection should apply in relation to the taxpayer in relation to the supply; then, for all purposes of the application of this Act in relation to the taxpayer, consideration equal to the arm's length consideration in respect of the supply shall be deemed to have been received and receivable by the taxpayer in respect of the supply at the time when the property was supplied or, as the case requires, any of the property was first supplied, or at such later time or times as the Commissioner considers appropriate. (3) Where: (a) a taxpayer has acquired property under an international agreement; (b) the Commissioner, having regard to any connection between any 2 or more of the parties to the agreement or to any other relevant circumstances, is satisfied that the parties to the agreement, or any 2 or more of those parties, were not dealing at arm's length with each other in relation to the acquisition; (c) the taxpayer gave or agreed to give consideration in respect of the acquisition and the amount of that consideration exceeded the arm's length consideration in respect of the acquisition; and (d) the Commissioner determines that this subsection should apply in relation to the taxpayer in relation to the acquisition; then, for all purposes of the application of this Act in relation to the taxpayer, consideration equal to the arm's length consideration in respect of the acquisition shall be deemed to be the consideration given or agreed to be given by the taxpayer in respect of the acquisition. (4) For the purposes of this section, where, for any reason (including an insufficiency of information available to the Commissioner), it is not possible or not practicable for the Commissioner to ascertain the arm's length consideration in respect of the supply or acquisition of property, the arm's length consideration in respect of the supply or acquisition shall be deemed to be such amount as the Commissioner determines. INCOME TAX ASSESSMENT ACT 1936 - SECT 136AE Determination of source of income etc. (1) Where: (a) by the application of section 136AD in relation to a taxpayer other than a partnership or trustee, the arm's length consideration in respect of the supply or acquisition of property by the taxpayer is deemed to have been received or receivable or received and receivable, or to have been given or agreed to be given, as the case may be; and (b) a question arises whether, and if so, as to the extent to which: (i) any income, being that consideration, is derived by the taxpayer from sources in Australia or sources out of Australia; (ii) any income in the calculation of which that consideration is taken into account is derived by the taxpayer from sources in Australia or sources out of Australia; or (iii) that consideration is expenditure incurred by the taxpayer in deriving income from sources in Australia or sources out of Australia; the income or expenditure shall be deemed, for all purposes of this Act, to have been derived or to have been incurred in deriving income, as the case may be, from such source, or from such sources and in such proportions, as the Commissioner determines. (2) Where: (a) by the application of section 136AD in relation to a taxpayer being a partnership, the arm's length consideration in respect of the supply or acquisition of property by the taxpayer is deemed to have been received or receivable or received and receivable, or to have been given or agreed to be given, as the case may be; and (b) in determining the net income, exempt income or partnership loss of the taxpayer or the extent to which the individual interest of a partner in the net income, exempt income or partnership loss of the taxpayer is attributable to sources in Australia, a question arises whether, and if so, as to the extent to which: (i) any income, being that consideration, is derived by the taxpayer from sources in Australia or sources out of Australia; (ii) any income in the calculation of which that consideration is taken into account is derived by the taxpayer from sources in Australia or sources out of Australia; or (iii) that consideration is expenditure incurred by the taxpayer in deriving income from sources in Australia or sources out of Australia; the income or expenditure shall be deemed, for all purposes of this Act, to have been derived or to have been incurred in deriving income, as the case may be, from such source, or from such sources and in such proportions, as the Commissioner determines. (3) Where: (a) by the application of section 136AD in relation to a taxpayer being the trustee of a trust estate, the arm's length consideration in respect of the supply or acquisition of property by the taxpayer is deemed to have been received or receivable or received and receivable, or to have been given or agreed to be given, as the case may be; and (b) in determining the net income or exempt income of the trust estate or the extent to which the share of a beneficiary of the net income or exempt income of the trust estate is attributable to sources in Australia, a question arises whether, and if so, as to the extent to which: (i) any income, being that consideration, is derived by the taxpayer from sources in Australia or sources out of Australia; (ii) any income in the calculation of which that consideration is taken into account is derived by the taxpayer from sources in Australia or sources out of Australia; or (iii) that consideration is expenditure incurred by the taxpayer in deriving income from sources in Australia or sources out of Australia; the income or expenditure shall be deemed, for all purposes of this Act, to have been derived or to have been incurred in deriving income, as the case may be, from such source, or from such sources and in such proportions, as the Commissioner determines. (4) Where: (a) a taxpayer (other than a partnership or trustee): (i) is a resident and carries on a business in a country other than Australia at or through a permanent establishment of the taxpayer in that other country; or (ii) is a resident and carries on a business in an area covered by an international tax sharing treaty; or (iii) is a non-resident and carries on a business in Australia at or through a permanent establishment of the taxpayer in Australia; or (iv) is a non-resident and carries on a business in an area covered by an international tax sharing treaty and also carries on a business somewhere else in Australia at or through a permanent establishment of the taxpayer in Australia; and (b) a question arises whether, and if so, as to the extent to which: (i) any income derived by the taxpayer is derived from sources in Australia or sources out of Australia; or (ii) any expenditure incurred by the taxpayer is incurred in deriving income from sources in Australia or sources out of Australia; (c) none of the preceding provisions of this section applies in relation to the determination of that question; (d) that question, if determined on the basis of the return furnished by the taxpayer, would have a tax result more favourable to the taxpayer than the result that would occur if that question were determined in accordance with this subsection; and (e) in the Commissioner's opinion, the derivation of the income or the incurring of the expenditure is attributable, in whole or in part, to activities carried on by the taxpayer: (i) at or through the permanent establishment that is referred to in subparagraph (a)(i) or (iii); or (ii) in the area covered by the international tax sharing treaty that is referred to in paragraph (a)(ii) or (iv); the income or expenditure shall be deemed, for all purposes of this Act, to have been derived or to have been incurred in deriving income, as the case may be, from such source, or from such sources and in such proportions, as the Commissioner determines. (5) Where: (a) a taxpayer: (i) is a partnership and carries on a business in a country other than Australia at or through a permanent establishment of the taxpayer in that other country; or (ii) is a partnership and carries on a business in an area covered by an international tax sharing treaty; or (iii) carries on a business in Australia at or through a permanent establishment of the taxpayer in Australia and is a partnership in which any of the partners is a non-resident; or (iv) carries on a business in an area covered by an international tax sharing treaty and also carries on a business somewhere else in Australia at or through a permanent establishment of the taxpayer in Australia and is a partnership in which any of the partners is a non-resident; and (b) in determining the net income, exempt income or partnership loss of the taxpayer or the extent to which the individual interest of a partner in the net income, exempt income or partnership loss of the taxpayer is attributable to sources in Australia, a question arises whether, and if so, as to the extent to which: (i) any income derived by the taxpayer is derived from sources in Australia or sources out of Australia; or (ii) any expenditure incurred by the taxpayer is incurred in deriving income from sources in Australia or sources out of Australia; (c) none of the preceding provisions of this section applies in relation to the determination of that question; (d) that question, if determined on the basis of the return furnished by the taxpayer, would have a tax result more favourable to a taxpayer than the result that would occur if that question were determined in accordance with this subsection; and (e) in the Commissioner's opinion, the derivation of the income or the incurring of the expenditure is attributable, in whole or in part, to activities carried on by the taxpayer: (i) at or through the permanent establishment that is referred to in subparagraph (a)(i) or (iii); or (ii) in the area covered by the international tax sharing treaty that is referred to in paragraph (a)(ii) or (iv); the income or expenditure shall be deemed, for all purposes of this Act, to have been derived or to have been incurred in deriving income, as the case may be, from such source, or from such sources and in such proportions, as the Commissioner determines. (6) Where: (a) a taxpayer: (i) is the trustee of a trust estate and carries on a business in a country other than Australia at or through a permanent establishment of the taxpayer in that other country; or (ii) is the trustee of a trust estate and carries on a business in an area covered by an international tax sharing treaty; or (iii) carries on a business in Australia at or through a permanent establishment of the taxpayer in Australia and is the trustee of a trust estate of which any of the beneficiaries is a non-resident; or (iv) carries on a business in an area covered by an international tax sharing treaty and also carries on a business somewhere else in Australia at or through a permanent establishment of the taxpayer in Australia and is the trustee of a trust estate of which any of the beneficiaries is a non-resident; and (b) in determining the net income or exempt income of the trust estate or the extent to which the share of a beneficiary of the net income or exempt income of the trust estate is attributable to sources in Australia, a question arises whether, and if so, as to the extent to which: (i) any income derived by the taxpayer is derived from sources in Australia or sources out of Australia; or (ii) any expenditure incurred by the taxpayer is incurred in deriving income from sources in Australia or sources out of Australia; (c) none of the preceding provisions of this section applies in relation to the determination of that question; (d) that question, if determined on the basis of the return furnished by the taxpayer, would have a tax result more favourable to a taxpayer than the result that would occur if that question were determined in accordance with this subsection; and (e) in the Commissioner's opinion, the derivation of the income or the incurring of the expenditure is attributable, in whole or in part, to activities carried on by the taxpayer: (i) at or through the permanent establishment that is referred to in subparagraph (a)(i) or (iii); or (ii) in the area covered by the international tax sharing treaty that is referred to in paragraph (a)(ii) or (iv); the income or expenditure shall be deemed, for all purposes of this Act, to have been derived or to have been incurred in deriving income, as the case may be, from such source, or such sources and in such proportions, as the Commissioner determines. (7) In the application of the preceding provisions of this section in determining the source or sources of any income derived by a taxpayer or the extent to which expenditure incurred by the taxpayer was incurred in deriving income from a particular source or sources, the Commissioner shall have regard to: (a) the nature and extent of any relevant business carried on by the taxpayer and the place or places at which the business is carried on; (b) if any relevant business carried on by the taxpayer is carried on at or through a permanent establishment--the circumstances that would have, or might reasonably be expected to have, existed if the permanent establishment were a distinct and separate entity dealing at arm's length with the taxpayer and other persons; and (c) such other matters as the Commissioner considers relevant. (8) A reference in this section to expenditure incurred by a taxpayer in deriving income includes a reference to expenditure incurred by the taxpayer in carrying on a business for the purpose of deriving income. (8A) In this section: (a) a reference to income being derived from a source in Australia is to be read as including a separate reference to income being derived from a source in an area in Australia that is covered by an international tax sharing treaty; and (b) a reference to expenditure being incurred in deriving income from a source in Australia is to be read as including a separate reference to expenditure being incurred in deriving income from a source in an area in Australia that is covered by an international tax sharing treaty. Note: This means that the following are the 3 different kinds of sources referred to in this section: (a) a source in Australia (but not in an area covered by an international tax sharing treaty); (b) a source in an area in Australia that is covered by an international tax sharing treaty; (c) a source out of Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 136AF Consequential adjustments to assessable income and allowable deductions (1) Where, by reason of the application of section 136AD in relation to the supply or acquisition of property by a taxpayer, an amount is included in the assessable income of the taxpayer of a year of income or a deduction is not allowable or is not, in part, allowable, to the taxpayer in respect of a year of income, the Commissioner may, in relation to any taxpayer (in this subsection referred to as the relevant taxpayer): (a) if, in the opinion of the Commissioner: (i) there has been included, or would but for this subsection be included, in the assessable income of the relevant taxpayer of a year of income an amount that would not have been included or would not be included, as the case may be, in the assessable income of the relevant taxpayer of that year of income if the property had been supplied or acquired, as the case may be, under an agreement between independent parties dealing at arm's length with each other in relation to the supply or acquisition; and (ii) it is fair and reasonable that that amount or a part of that amount should not be included in the assessable income of the relevant taxpayer of that year of income; determine that that amount or that part of that amount, as the case may be, should not have been included or shall not be included, as the case may be, in the assessable income of the relevant taxpayer of that year of income; and (b) if, in the opinion of the Commissioner: (i) an amount would have been allowed or would be allowable to the relevant taxpayer as a deduction in relation to a year of income if the property had been supplied or acquired, as the case may be, under an agreement between independent parties dealing at arm's length with each other in relation to the supply or acquisition, being an amount that was not allowed or would not, but for this subsection, be allowable, as the case may be, as a deduction to the relevant taxpayer in relation to that year of income; and (ii) it is fair and reasonable that that amount or a part of that amount should be allowable as a deduction to the relevant taxpayer in relation to that year of income; determine that that amount or that part of that amount, as the case may be, should have been allowed or shall be allowable, as the case may be, as a deduction to the relevant taxpayer in relation to that year of income; and the Commissioner shall take such action as the Commissioner considers necessary to give effect to any such determination. (1A) Subsection (1) also has the effect that it would have if the reference in that subsection to the application of section 136AD in relation to a taxpayer included references to: (a) the application of section 136AD in accordance with section 102AAZA for the purpose of calculating the attributable income of a trust estate; and (b) the application of section 136AD in accordance with section 400 for the purpose of calculating the attributable income of a CFC. (2) Where the Commissioner makes a determination under subsection (1) by virtue of which an amount is allowed as a deduction to a taxpayer in relation to a year of income, that amount shall be deemed to be so allowed as a deduction by virtue of such provision of this Act as the Commissioner determines. (3) Where: (a) by reason of the application of section 136AD in relation to the supply or acquisition of property by a taxpayer, an amount is included in the assessable income of the taxpayer of a year of income or a deduction is not allowable or is not, in part, allowable, to the taxpayer in respect of a year of income; (b) in the opinion of the Commissioner, an amount of withholding tax has become payable and has been paid in respect of interest or royalties paid to a taxpayer (in this subsection referred to as the relevant taxpayer), being withholding tax that would not have become payable if the property had been supplied or acquired by the first-mentioned taxpayer under an agreement between independent parties dealing at arm's length with each other in relation to the supply or acquisition; and (c) in the opinion of the Commissioner, it is fair and reasonable that that amount of withholding tax or part of that amount of withholding tax should not have become payable by the relevant taxpayer; the Commissioner may determine that that amount of withholding tax or that part of that amount of withholding tax, as the case may be, should not have become payable by the relevant taxpayer and the Commissioner shall take such action as the Commissioner considers necessary to give effect to any such determination. (4) Where, at any time, a taxpayer considers that the Commissioner ought to make a determination under subsection (1) or (3) in relation to the taxpayer, the taxpayer may post to or lodge with the Commissioner a request in writing for the making by the Commissioner of a determination under the subsection concerned. (5) The Commissioner shall consider the request and serve on the taxpayer, by post or otherwise, a written notice of the Commissioner's decision on the request. (6) If the taxpayer is dissatisfied with the Commissioner's decision on the request, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 141 Interpretation In this Division: "insurance contract" means a contract or guarantee whereby liability is undertaken, contingent upon the happening of any specified event, to pay any money or make good any loss or damage, but does not include a contract of life assurance. "insured event" means an event upon the happening of which the liability under an insurance contract arises. "insured person" means a person with whom any insurance contract is entered into by an insurer. "insured property" means the property the subject of an insurance contract made or given by an insurer. "insurer" means any non-resident who undertakes liability under an insurance contract. INCOME TAX ASSESSMENT ACT 1936 - SECT 142 Income derived by non-resident insurer (1) Where an insured person, whether a resident or non-resident, has entered into an insurance contract with an insurer, and the insured property at the time of the making of the contract is situated in Australia, or the insured event is one which can happen only in Australia, the premium paid or payable under the contract shall be included in the assessable income of the insurer, and shall be deemed to be derived by the insurer from sources in Australia, and, unless the contract was made by a principal office or branch established by the insurer in Australia, this Division shall apply to that premium. (2) Where an insured person who is a resident has entered into an insurance contract with an insurer, and an agent or representative in Australia of the insurer was in any way instrumental in inducing the entry of the insured person into that contract, any premium paid or payable under the contract shall, wherever the insured property is situate, or the insured event may happen, be included in the assessable income of the insurer and shall be deemed to be derived by the insurer from sources in Australia, and, unless the contract was made by a principal office or branch established by the insurer in Australia, this Division shall apply to that premium. INCOME TAX ASSESSMENT ACT 1936 - SECT 143 Taxable income of non-resident insurer The insurer shall be deemed to have derived in any year, in respect of the premiums paid or payable in that year under such contracts, a taxable income equal to 10% of the total amount of such premiums: Provided that, where the actual profit or loss derived or made by the insurer in respect of such premiums is established to the satisfaction of the Commissioner, the taxable income of the insurer in respect thereof, or the amount of the loss so made by the insurer shall, subject to this Act, be calculated by reference to receipts and expenditure taken into account in calculating that profit or loss. INCOME TAX ASSESSMENT ACT 1936 - SECT 144 Liability of agents of insurer The insured person and any person in Australia acting on behalf of the insurer shall be the agents of the insurer, and shall be jointly and severally liable as such for all purposes of this Act. If either of those persons pays or credits to the insurer any amount in respect of the insurance contract before arrangements have been made to the satisfaction of the Commissioner for the payment of any income tax which has been or may be assessed under this Division in respect of that amount, that person shall be personally liable to pay that tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 145 Deduction of premiums Notwithstanding any other provision of this Act, no such premium shall be an allowable deduction to the insured person unless arrangements have been made to the satisfaction of the Commissioner for the payment of any income tax which has been or may be assessed in respect of that premium. INCOME TAX ASSESSMENT ACT 1936 - SECT 146 Exporter to furnish information Every person who exports any goods from Australia shall furnish to the Collector of Customs for transmission to the Commissioner a copy of the customs entry for such goods, and shall show thereon such information as is prescribed regarding the insurance of such goods. INCOME TAX ASSESSMENT ACT 1936 - SECT 147 Rate of tax in special circumstances Where the insurer satisfies the Commissioner that, on account of special circumstances, it is necessary that the rate of tax payable by the insurer under this Division should be ascertained at the time when premiums are paid to the insurer, the Commissioner may direct that the tax so payable in respect of premiums paid during any financial year shall be calculated at the rate which would have been payable if an assessment had been made in respect of those premiums at the date when they were paid. INCOME TAX ASSESSMENT ACT 1936 - SECT 148 Reinsurance with non-residents (1) Notwithstanding anything contained in this Act other than section 177F, but subject to this section, where a person carrying on the business of insurance in Australia reinsures out of Australia the whole or part of any risk with a non-resident: (a) the premiums paid or credited in respect of the reinsurance shall not be: (i) an allowable deduction to the person carrying on the business of insurance in Australia; or (ii) included in the assessable income of the non-resident; and (b) the income of the person carrying on the business of insurance in Australia shall not include sums recovered from that non-resident in respect of a loss on any risk so reinsured. (2) A person carrying on the business of insurance in Australia who reinsures out of Australia the whole or part of any risk with a non-resident may elect, in accordance with this section, that the provisions of subsection (1) shall not be applied in arriving at that person's taxable income, and thereupon: (a) those provisions shall not apply in arriving at that person's taxable income of a year of income to which the election applies; and (b) that person shall be liable to furnish returns, and to pay tax, in accordance with the succeeding provisions of this section, as agent for all non-residents with whom that person so reinsures. (3) Where a person makes an election under subsection (2), he or she shall, subject to subsection (5), be assessed and liable to pay tax as agent, on an amount equal to 10% of the sum of the gross amounts of the premiums paid or credited by him or her in the year of income (being a year of income to which the election applies) to non-residents in respect of all such reinsurances, as if that amount were the taxable income of a non-resident company (not being a private company) not carrying on business in Australia by means either of a principal office or a branch. (4) A person who has made an election under this section shall, as agent, furnish to the Commissioner, within the prescribed time, or within such further time as the Commissioner allows, in respect of every year of income to which the election applies: (a) a return showing the gross amounts of the premiums paid or credited by that person to non-residents in respect of all such reinsurances; or (b) 2 returns, of which: (i) one shall show the gross amounts of such premiums paid or credited by that person to non-residents which are companies; and (ii) the other shall show the gross amounts of such premiums paid or credited by that person to non-residents who are not companies. (5) Where returns are furnished by a person in accordance with paragraph (4)(b), there shall be excluded from the amount on which that person shall be assessed and liable to pay tax as agent in pursuance of subsection (3) an amount equal to 10% of the sum of the gross premiums properly shown in the return specified in subparagraph (4)(b)(ii), and that person shall, in addition to any other tax which that person is liable under this section to pay as agent, be assessed and liable to pay tax as agent on the amount so excluded as if it were the taxable income of a non-resident company (being a private company) not carrying on business in Australia by means either of a principal office or a branch. (6) An election for the purposes of this section shall: (c) be made on or before the last day for the furnishing of the taxpayer's return of income of the year of income in respect of which the election is first to apply, or within such further time as the Commissioner allows; (d) first apply in respect of a year of income which shall be specified in the election; and (e) apply in respect of all subsequent years of income. (7) An assessment for the purposes of subsection (3) or (5) shall be made and notified separately from any other assessment. (8) Where a person is liable, in pursuance of an assessment for the purposes of this section, to pay tax, in respect of any premiums, as agent for more than one non-resident, the amount which that person shall be liable to pay as agent for any one of those non-residents shall be so much of the tax so payable as bears to the whole of that tax the same proportion as the total amount of such of those premiums as were paid to that non-resident bears to the total amount of those premiums. (9) Where a person is or may become liable under this section to pay tax as agent for a non-resident in respect of any premium paid or credited by that person to that non-resident: (a) that person shall, for the purposes of section 254, be deemed to have received the premium in that person's representative capacity immediately before it was so paid or credited; and (b) if that person pays or credits the premium before arrangements have been made to the satisfaction of the Commissioner for the payment of any tax which may be assessed in respect of that premium, that person shall be personally liable to pay that tax. Application to a life assurance company (10) This section applies to a life assurance company in relation to the whole or a part of a risk if, and only if, the risk or that part of the risk: (a) is covered by a disability policy as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997; and (b) relates to a benefit that is payable in an event mentioned in that definition. INCOME TAX ASSESSMENT ACT 1936 - SECT 149 Average income (1) For the purposes of the application of this Division in relation to a taxpayer in relation to a year of income, a reference in this Division to the average income of the taxpayer shall be construed as a reference to the average of the taxable incomes of the taxpayer of the years of income (in this Division referred to as average years) beginning with the first average year and ending with the first-mentioned year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 149A Capital gains, abnormal income and certain death benefits to be disregarded (1) For the purposes of this Division (including the purpose of determining whether this Division applies to the income of a taxpayer): (a) references in this Division to the assessable income of a taxpayer shall be read as references to the amount that would have been the assessable income if the assessable income did not include any net capital gain and did not include any amount under section 82-65, 82-70 or 302-145 of the Income Tax Assessment Act 1997; and (b) references in this Division to the taxable income of a taxpayer shall be read as references to the amount that would have been the taxable income if: (i) the assessable income did not include any net capital gain and did not include any amount under section 82-65, 82-70 or 302-145 of the Income Tax Assessment Act 1997; and (ii) the taxable income were reduced by so much of the taxable income as consists of above-average special professional income within the meaning of the Income Tax Assessment Act 1997. (2) A reference in subsection (1) to the assessable income or taxable income of a taxpayer of a year of income shall, in relation to a taxpayer in the capacity of trustee of a trust estate, be read as a reference to the assesssable income or net income, as the case may be, of the trust estate of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 150 First average year Subject to this Division, the first average year shall be the fourth year before the year of income. A year the income of which was subject to assessment under the previous Act shall be capable of being a first or subsequent average year. INCOME TAX ASSESSMENT ACT 1936 - SECT 151 First application of Division in relation to a taxpayer (1) For the purposes of the first application of this Division in determining the tax payable by a taxpayer, the first average year shall be the first year which is otherwise capable of being an average year, and in which the taxable income is not greater than that of the next succeeding year. No year prior to that first average year shall, for the purposes of any application of this Division in determining the tax payable by a taxpayer, be capable of being an average year. (2) Any year in which the taxpayer was not carrying on business and was not in receipt of a taxable income shall not be counted as a first average year for the purposes of the first application of this Division in determining the tax payable by a taxpayer. (3) This section shall not apply to a taxpayer whose income has been or is liable to be assessed at an average rate of tax determined under the provisions of the previous Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 152 Taxpayer not in receipt of assessable income Any year in which the taxpayer was not carrying on business and was not in receipt of assessable income shall not be counted as an average year, and the provisions of this Division shall apply to the income thereafter derived by the taxpayer as if he or she had never been a taxpayer before that year. INCOME TAX ASSESSMENT ACT 1936 - SECT 153 Taxpayer with no taxable income Any year in which the taxpayer was carrying on business but had no taxable income shall be capable of being an average year. INCOME TAX ASSESSMENT ACT 1936 - SECT 154 Excess of allowable deductions Any excess of allowable deductions over the assessable income of the taxpayer in any average year shall not be taken into account in calculating the average income. INCOME TAX ASSESSMENT ACT 1936 - SECT 155 Permanent reduction of income (1) Where a taxpayer establishes that, owing to his or her retirement from his or her occupation, or from any other cause (but not including a change in the investment of assets from which assessable income was derived into assets from which the taxpayer derives income which is not liable to be assessed under this Act), his or her taxable income has been permanently reduced to an amount which is less than two-thirds of his or her average taxable income, he or she shall be assessed, and the provisions of this Division shall apply to the income thereafter derived by him or her, as if he or she had never been a taxpayer before that year. (2) For the purposes of the application of subsection (1) in relation to a taxpayer in relation to a year of income, a reference in that subsection to the average taxable income of the taxpayer shall be construed as a reference to the amount that would be the average income of the taxpayer in relation to that year of income ascertained in accordance with section 149 if there were excluded from the assessable income of the taxpayer of the average years any income received by him or her from sources from which he or she does not usually receive income. INCOME TAX ASSESSMENT ACT 1936 - SECT 156 Rebate of tax for, or complementary tax payable by, certain primary producers (1) In this section: "actual taxable income from primary production", in relation to a taxpayer in relation to a year of income, means the amount (if any) remaining after deducting from the assessable primary production income of the taxpayer of the year of income so much of the aggregate of the relevant primary production deductions of the taxpayer of the year of income as does not exceed that assessable income. "assessable primary production income", in relation to a taxpayer in relation to a year of income, means so much of the assessable income of the taxpayer of the year of income as was derived from the carrying on of a primary production business by the taxpayer or was included in the assessable income of the taxpayer of the year of income in consequence of the carrying on of a primary production business by the taxpayer. "deemed taxable income from primary production", in relation to a taxpayer in relation to a year of income, means: (a) if the taxpayer did not have a non-primary production profit in relation to the year of income--the taxable income of the taxpayer; and (b) in any other case--the sum of the actual taxable income from primary production of the taxpayer of the year of income and the notional taxable income from primary production of the taxpayer of the year of income. "notional taxable income from primary production", in relation to a taxpayer in relation to a year of income, being a taxpayer who had a non-primary production profit in relation to the year of income, means: (a) where the taxpayer did not incur a primary production loss in relation to the year of income: (i) in a case to which subparagraph (ii) does not apply--the amount ascertained by deducting from the taxable income of the taxpayer of the year of income the actual taxable income from primary production of the taxpayer of the year of income; and (ii) where the taxable income of the taxpayer of the year of income exceeds the actual taxable income from primary production of the taxpayer of the year of income and that excess is greater than $5,000--$5,000 reduced by $1 for each whole dollar by which the amount of that excess exceeds $5,000; and (b) where the taxpayer incurred a primary production loss in relation to the year of income: (i) in a case where the sum of the taxable income of the taxpayer of the year of income and the amount of the primary production loss is less than or equal to $5,000--the taxable income of the taxpayer of the year of income; and (ii) in a case where the sum of the taxable income of the taxpayer of the year of income and the amount of the primary production loss (which sum is in this subparagraph referred to as the non-farm income) exceeds $5,000--an amount ascertained by deducting from $5,000 one dollar for each whole dollar by which so much of the non-farm income as does not exceed $10,000 exceeds $5,000 and deducting from the resultant amount so much (if any) of the amount of the primary production loss as does not exceed that resultant amount. "relevant primary production deductions", in relation to a taxpayer in relation to a year of income, means: (a) any deductions allowed or allowable in the taxpayer's assessment in respect of income of the year of income that relate exclusively to assessable primary production income of the taxpayer of a year of income; (b) so much of any other deductions (other than apportionable deductions) allowed or allowable in the taxpayer's assessment in respect of income of the year of income as, in the opinion of the Commissioner, may appropriately be related to assessable primary production income of the taxpayer of a year of income; and (c) the amount that bears to the apportionable deductions allowed or allowable in the taxpayer's assessment the same proportion as the amount ascertained by deduction from the assessable primary production income of the taxpayer of the year of income any deductions allowable from that assessable income in accordance with paragraphs (a) and (b) bears to the sum of the taxable income of the taxpayer of the year of income and the apportionable deductions. (2) For the purposes of subsection (1), a taxpayer shall be taken to have a non-primary production profit in relation to a year of income if the assessable income of the taxpayer of the year of income other than assessable primary production income exceeds the aggregate of the deductions (other than relevant primary production deductions) allowable to the taxpayer in respect of the year of income. (3) For the purposes of subsection (1), a taxpayer shall be taken to have incurred a primary production loss in relation to a year of income if the aggregate of the relevant primary production deductions in relation to the year of income exceeds the assessable primary production income of the taxpayer of the year of income, and the amount of that loss shall be taken to be the amount of the excess. (5) Where: (a) this Division applies to a share of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of subsection 98(1) or (2) or to the net income or a part of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of section 99 (which share, net income or part, as the case may be, is in this subsection referred to as the eligible net income); and (b) the amount of tax that would, apart from this section, section 94, Division 6AA and Part VIIB and but for any rebate or credit to which the trustee is entitled, be payable by the trustee in respect of the eligible net income exceeds the amount of tax that would, apart from this section, section 94, Division 6AA and Part VIIB and but for any rebate or credit to which the trustee is entitled, be payable by the trustee in respect of the eligible net income if the notional rates declared by the Parliament for the purposes of this section were the rates of tax payable by the trustee in respect of the eligible net income; the trustee is entitled, in his or her assessment in respect of the eligible net income, to a rebate of tax of an amount ascertained in accordance with the formula , where: "A" is the number of whole dollars in the amount of the deemed net income from primary production. "B" is the excess referred to in paragraph (b); and "C" is the number of whole dollars in the eligible net income. (5A) Where: (a) this Division applies to a share of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of subsection 98(1) or (2) or to the net income or a part of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of section 99 (which share, net income or part, as the case may be, is in this subsection referred to as the eligible net income); and (b) the amount of tax that would, apart from this section, section 94, Division 6AA and Part VIIB and but for any rebate or credit to which the trustee is entitled, be payable by the trustee in respect of the eligible net income if the notional rates declared by the Parliament for the purposes of this section were the rates of tax payable by the trustee in respect of the eligible net income exceeds the amount of tax that would, apart from this section, section 94, Division 6AA and Part VIIB and but for any rebate or credit to which the trustee is entitled, be payable by the trustee in respect of the eligible net income; the trustee is liable to pay complementary tax, at the rate declared by the Parliament for the purposes of this subsection, on so much of the net income of the trust estate as is equal to the deemed net income from primary production. (6) For the purposes of the application of this section in relation to a share of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of subsection 98(1) or (2) or in relation to the net income or a part of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of section 99 (which share, net income or part, as the case may be, is in this subsection referred to as the eligible net income): "actual net income from primary production" means so much of the net income from primary production of the trust estate as is included in the eligible net income. "assessable primary production income" means so much of the assessable income of the trust estate of the year of income as was derived from the carrying on of a primary production business by the trustee or was included in the assessable income of the trust estate of the year of income in consequence of the carrying on of a primary production business by the trustee. "deemed net income from primary production" means: (a) if the trust estate did not have a non-primary production profit in relation to the year of income--the eligible net income; and (b) in any other case--the sum of the actual net income from primary production of the trust estate of the year of income and the notional net income from primary production of the trust estate of the year of income. "eligible part of the primary production loss", in relation to a primary production loss incurred by the trust estate in the year of income, means so much of the primary production loss as is equal to the amount by which the eligible net income would have been increased if the aggregate of the relevant primary production deductions allowable in calculating the amount of the net income of the trust estate of the year of income had been equal to the assessable primary production income of the trust estate of the year of income. "net income from primary production" means the amount (if any) remaining after deducting from the assessable primary production income of the trust estate of the year of income so much of the aggregate of the relevant primary production deductions allowable in calculating the net income of the trust estate as does not exceed that assessable primary production income. "notional net income from primary production" means: (a) where the trust estate had a non-primary production profit in relation to the year of income and did not incur a primary production loss in relation to the year of income: (i) in a case to which subparagraph (ii) does not apply--the amount ascertained by deducting from the eligible net income the actual net income from primary production (if any); and (ii) where the eligible net income exceeds the actual net income from primary production in relation to the year of income and that excess is greater than $5,000--$5,000 reduced by $1 for each whole dollar by which the amount of that excess exceeds $5,000; and (b) where the trust estate had a non-primary production profit in relation to the year of income and incurred a primary production loss in relation to the year of income: (i) in a case where the sum of the eligible net income and the eligible part of the primary production loss is less than or equal to $5,000--the eligible net income; and (ii) in a case where the sum of the eligible net income and the eligible part of the primary production loss (which sum is in this subparagraph referred to as the non-farm income) exceeds $5,000--an amount ascertained by deducting from $5,000 one dollar for each whole dollar by which so much of the non-farm income as does not exceed $10,000 exceeds $5,000 and deducting from the resultant amount so much (if any) of the eligible part of the primary production loss as does not exceed that resultant amount. "relevant primary production deductions" means: (a) any deductions allowed or allowable in calculating the amount of the net income of the trust estate of the year of income that relate exclusively to assessable primary production income of a year of income; (b) so much of any other deductions (other than apportionable deductions) allowed or allowable in calculating the amount of that net income as, in the opinion of the Commissioner, may appropriately be related to assessable primary production income of the trust estate of a year of income; and (c) the amount that bears to the apportionable deductions allowed or allowable in calculating the amount of that net income the same proportion as the amount ascertained by deducting from the assessable primary production income of the trust estate of the year of income any deductions allowable from that assessable primary production income in accordance with paragraphs (a) and (b) bears to the sum of the net income of the trust estate and the apportionable deductions. (7) For the purposes of subsection (6), a trust estate shall be taken to have incurred a primary production loss in relation to a year of income if the aggregate of the relevant primary production deductions allowable in calculating the amount of the net income of the trust estate of the year of income exceeds the assessable primary production income of the trust estate of the year of income, and the amount of that loss shall be taken to be the amount of the excess. (8) For the purposes of subsection (6), a trust estate shall be taken to have a non-primary production profit in relation to a year of income if the assessable income of the trust estate of the year of income other than assessable primary production income exceeds the aggregate of the deductions (other than relevant primary production deductions) allowable in calculating the amount of the net income of the trust estate of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 157 Application of Division to primary producers (1) In respect of income derived during the year ending on 30 June 1938 and during any subsequent year or during any accounting period adopted in lieu of any such year, the foregoing provisions of this Division shall not apply except in respect of income derived by a primary producer. (2) For the purposes of this section, primary producer means a person who carries on in Australia a primary production business. (3) Subject to subsection (3A), for the purposes only of determining whether a person is carrying on a primary production business, a beneficiary in a trust estate shall, to the extent to which he or she is presently entitled to the income or part of the income of that estate, be deemed to be carrying on the business carried on by the trustees of the estate which produces that income. (3A) Subsection (3) does not operate to deem a beneficiary in a trust estate who is presently entitled to the income or a part of the income of that estate to be carrying on the business carried on by the trustees of the trust estate in a year of income unless: (a) the share of the income of that trust estate of the year of income to which the beneficiary is presently entitled is not less than $1,040; or (b) the Commissioner is satisfied that the interest of the beneficiary in the trust estate was not acquired by, or granted to, the beneficiary for the purpose, or primarily for the purpose, of enabling the provisions of this Division to apply in respect of income derived by the beneficiary. (4) If in any year in respect of which this Division applies only to taxpayers who are primary producers, a taxpayer was not carrying on business as a primary producer, that year shall not be counted as an average year and the provisions of this Division shall apply to the income thereafter derived by the taxpayer as if he or she had never been a taxpayer before that year. INCOME TAX ASSESSMENT ACT 1936 - SECT 158 Application of Division This Division shall not apply in any case where there are not at least 2 average years or where the taxpayer is assessed in accordance with section 99A in respect of the year of income, and shall not apply to the taxable income of a company except income in respect of which it is assessable as a trustee. INCOME TAX ASSESSMENT ACT 1936 - SECT 158A Election that Division not apply (1) A taxpayer may elect that this Division shall not apply in relation to income of the taxpayer of a year of income specified in the election and of all subsequent years of income. (2) An election in pursuance of subsection (1) shall be made in writing and lodged with the Commissioner on or before the date of lodgment of the return of income of the taxpayer for the year of income specified in the election or within such further time as the Commissioner allows. (3) Where a taxpayer makes an election under subsection (1), this Division shall not apply in relation to income of the taxpayer of the year of income specified in the election or of any subsequent year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GE Interpretation (1) 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. (2) 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. (3) 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). (4) 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. (5) 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. (6) 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. (7) 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. (8) 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. (10) 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. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GEA Division applies to certain State/Territory bodies In addition to any other operation that this Division has, this Division operates as if the references to an exempt public body included a reference to a prescribed excluded STB (within the meaning of Division 1AB). INCOME TAX ASSESSMENT ACT 1936 - SECT 159GF Residual amounts (1) Subject to subsection 159GJ(1), in this Division a reference to the residual amount at a particular time (in this subsection referred to as the relevant time) in relation to the eligible amount by reason of which an item of property is eligible depreciation property at the relevant time is a reference to the eligible amount reduced by: (a) where the item of property was not dealt with by the taxpayer who holds the item in the prescribed manner at any time during the period (in this subsection referred to as the relevant period) before the relevant time when it was held by the taxpayer (within the meaning of Division 40 of the Income Tax Assessment Act 1997)--the total amount of deductions for depreciation or decline in value that would, but for any deduction denying provision, have been allowable to the taxpayer under this Act or the Income Tax Assessment Act 1997 in respect of that item of property for the relevant period if: (i) at all times during the relevant period the taxpayer had wholly and exclusively dealt with the item of property in the prescribed manner; and (ii) those deductions were calculated using the diminishing value method; and (iii) section 57AG, as in force immediately before the commencement of section 1 of the Taxation Laws Amendment Act 1992, did not apply in relation to the item of property; (b) where the item of property was wholly and exclusively dealt with by the taxpayer who held the item in the prescribed manner at all times during the relevant period--the total amount of deductions for depreciation or decline in value that were or, but for any deduction denying provision, would have been, allowed or allowable to the taxpayer in respect of the item of property for that period under this Act or the Income Tax Assessment Act 1997; and (c) in any other case--the total amount of deductions for depreciation or decline in value that, but for any deduction denying provision, would have been allowable to the taxpayer who holds the item of property in respect of the item under this Act or the Income Tax Assessment Act 1997 for the relevant period if: (i) the taxpayer had wholly and exclusively dealt with the item of property in the prescribed manner at all times during the relevant period; and (ii) in respect of any part of the relevant period for which deductions for depreciation or decline in value were or, but for any deduction denying provision, would have been allowed or allowable under this Act or the Income Tax Assessment Act 1997--the deductions were allowable on the same basis and at the same percentage as was or would have been allowed or allowable for that part of the relevant period; and (iii) in respect of any other part (in this subparagraph referred to as the relevant part) of the relevant period--the deductions were allowable: (A) where the relevant part was immediately succeeded by another part of the relevant period in respect of which deductions for depreciation or decline in value were or, but for any deduction denying provision, would have been allowed or allowable under this Act or the Income Tax Assessment Act 1997--on the same basis and at the same percentage as was or would have been allowed or allowable in respect of that other part; and (B) in any other case--on the same basis and at the same percentage as was or, but for any deduction denying provision, would have been allowed or allowable under this Act or the Income Tax Assessment Act 1997 in respect of the part of the relevant period for which deductions for depreciation or decline in value was or would have been allowed or allowable, being the part that immediately preceded the relevant part. (2) For the purposes of subsection (1): (a) an item of eligible depreciation property shall be taken to be dealt with by a taxpayer in the prescribed manner at a particular time if: (i) the item of property is used by the taxpayer at that time for the purpose of producing assessable income; or (ii) the item of property is, at that time, installed ready for use for the purpose of producing assessable income and held in reserve by the taxpayer; and (b) a reference to a deduction denying provision is a reference to a provision of this Act that would have the effect of denying an entitlement in whole or in part to a deduction otherwise wholly allowable under this Act. (3) Subject to subsection 159GJ(2), where any of the following amounts (in this subsection referred to as the attributable amount): (a) an amount of residual previous capital expenditure within the meaning of the former Division 10 or 10AA; (b) an amount of residual capital expenditure within the meaning of the former Division 10, 10AA or 10A; (c) an amount of residual (1 May 1981 to 18 August 1981) capital expenditure within the meaning of the former Division 10 or 10AA; (d) an amount of residual (19 August 1981 to 19 July 1982) capital expenditure within the meaning of the former Division 10 or 10AA; (e) so much as is unrecouped of an amount of allowable (post-19 July 1982) capital expenditure within the meaning of the former Division 10 or 10AA; (f) so much as is unrecouped of an amount of allowable capital expenditure within the meaning of the former Subdivision 330-C of the Income Tax Assessment Act 1997; (fa) so much of an amount of mining capital expenditure or transport capital expenditure (within the meaning of the Income Tax Assessment Act 1997) as has not been deducted under Division 40 of that Act; (g) the difference between capital expenditure and previous deductions as defined in the former subsection 387-470(1) of the Income Tax Assessment Act 1997; (h) the difference between the cost of a forestry road or timber mill building for the purposes of Division 40 of the Income Tax Assessment Act 1997 and its adjustable value for the purposes of that Division; ascertained as at the end of a year of income, is attributable in whole or in part to an amount of expenditure (in this subsection referred to as the relevant expenditure) by reason of which an item of property is Division 10, 10AA or 10A property, in this Division a reference to the residual amount at any time during the year of income in relation to the relevant expenditure is a reference to so much of the attributable amount as is attributable to the relevant expenditure. (4) Subject to subsection 159GJ(3), in this Division a reference to the residual amount at a particular time in relation to an amount of expenditure by reason of which an item of property is Division 10AAA property is a reference to the amount of expenditure reduced by any part of that expenditure that has been allowed or is allowable as a deduction under the former Division 10AAA of this Part or the former Subdivision 330-H of the Income Tax Assessment Act 1997, or under Subdivision 40-I of that Act for transport capital expenditure, from the assessable income of any taxpayer of a year of income preceding the year of income in which the particular time occurs. (5) Subject to subsection 159GJ(4), in this Division a reference to the residual amount at a particular time in relation to an amount of expenditure by reason of which an item of property is Division 10C or 10D property is a reference to the residual capital expenditure within the meaning of the former Division 10C or 10D of this Part, or to the undeducted construction expenditure within the meaning of Division 43 of the Income Tax Assessment Act 1997, as appropriate, at that time in relation to the amount of expenditure. (6) In this Division, a reference to the residual amount at a particular time in relation to an amount of expenditure because of which an item of property is an eligible spectrum licence is a reference to: (a) the amount of unrecouped expenditure (within the meaning of the former section 380-20 of the Income Tax Assessment Act 1997) on that licence at that time; or (b) the adjustable value of that licence (within the meaning of Division 40 of that Act) at that time. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GG Qualifying arrangements (1) For the purposes of this Division, where at any time (in this subsection referred to as the relevant time) any of the following conditions is satisfied in relation to an arrangement relating to the use by a person (in this subsection referred to as the end-user), or to the control by a person (in this subsection also referred to as the end-user) of the use, of property owned by another person who is a party to the arrangement, being property that is or includes an item of eligible property: (a) the arrangement contains provision to the effect that: (i) if: (A) on the termination or expiration of the arrangement, the owner sells or otherwise disposes of the whole of the arrangement property, or part of the arrangement property that is or includes the item of eligible property, to any person; and (B) the owner or an associate receives in respect of the sale or disposal no consideration, or consideration of an amount less than an amount (in this subparagraph referred to as the guaranteed residual value) specified in, or ascertainable under, the provision; the end-user or an associate will pay to the owner or an associate an amount equal to the guaranteed residual value, or to the amount by which the guaranteed residual value exceeds the consideration, as the case may be; (ii) at or after the termination or expiration of the arrangement, the whole of the arrangement property or part of the arrangement property that is or includes the item of eligible property is to be transferred (whether or not for any consideration) to the end-user or an associate; (iii) the end-user or an associate has or will have the right to purchase or to require the transfer of the whole of the arrangement property or part of the arrangement property that is or includes the item of eligible property; or (iv) the arrangement period in relation to the item of eligible property in relation to the arrangement is a period that exceeds 1 year and the end-user or an associate will be liable to carry out, to expend money in respect of or to reimburse the owner or an associate for expenditure in respect of, repairs that may be required to the whole of the arrangement property or to part of the arrangement property that is or includes the item of eligible property; (b) the arrangement period in relation to the item of eligible property in relation to the arrangement is equal to or greater than: (i) where the item is an item of eligible real property--50% of the effective life of that item at the commencement of the arrangement period; or (ii) in any other case--75% of the effective life of that item at the commencement of the arrangement period; (c) the sum of: (i) the payment portions of arrangement payments that were liable to be made at or before the relevant time in relation to the eligible amount, or in relation to all of the eligible amounts (including any eligible amount in respect of expenditure incurred after the commencement of the arrangement period), in relation to the item of eligible property; and (ii) the payment portions of arrangement payments that, having regard to the provisions of the arrangement and any other relevant circumstances, are or were, at the relevant time, likely to become liable to be made after the relevant time in relation to the eligible amount, or in relation to all of the eligible amounts (including any eligible amount in respect of expenditure that, having regard to the provisions of the arrangement and any other relevant circumstances, is or was likely to be incurred during the arrangement period), in relation to the item of eligible property; is equal to or greater than 90% of the sum of: (iii) the residual amount in relation to the eligible amount, or the sum of the residual amounts in relation to the eligible amounts, in respect of which expenditure was incurred before the commencement of the arrangement period in relation to the item of eligible property, as ascertained at the commencement of the arrangement period; and (iv) the amount of any expenditure that was, or is likely to be, incurred during the arrangement period, being expenditure giving rise to an eligible amount in relation to the item of eligible property; the arrangement shall be taken to be, or to have been, a qualifying arrangement in relation to the item of eligible property: (d) at the relevant time; and (e) at all times before the relevant time when the arrangement was in force in relation to the item of eligible property. (2) For the purposes of this Division, where: (a) an item of eligible property is, or is included in, arrangement property in relation to an arrangement relating to the use by a person (in this subsection referred to as the end-user), or to the control by a person (in this subsection also referred to as the end-user) of the use, of property owned by another person who is a party to the arrangement; and (b) the ownership of the item of eligible property is transferred to the end-user or an associate within 1 year after the arrangement ceases to be in force (whether by termination or expiration) in relation to the item of eligible property; the arrangement shall be taken to have been a qualifying arrangement in relation to the item of eligible property at all times during the period during which the arrangement was in force in relation to the item of eligible property. (3) For the purposes of subsections (1) and (2): (a) a lease to a person of property owned by another person shall be taken to be an arrangement relating to the use by the person of property owned by the other person; and (b) any arrangement entered into in relation to the lease referred to in paragraph (a) shall be taken to be part of the arrangement referred to in that paragraph. (4) Where, but for this subsection, an arrangement would be a qualifying arrangement in relation to an item of eligible property at a particular time (in this subsection referred to as the relevant time) and the Commissioner, having regard to: (a) the circumstances by reason of which the arrangement is a qualifying arrangement in relation to that item of eligible property; and (b) any other relevant circumstances; considers it unreasonable that the arrangement should be a qualifying arrangement at the relevant time in relation to the item of eligible property, the arrangement shall be taken not to be a qualifying arrangement at the relevant time in relation to the item of eligible property. (5) Where an arrangement is a qualifying arrangement in relation to an item of eligible property at a particular time (in this subsection referred to as the relevant time) and the arrangement ceases to be a qualifying arrangement in relation to that item of eligible property at a later time, the arrangement shall not be taken not to have been a qualifying arrangement in relation to that item of eligible property at the relevant time by reason of it ceasing to be a qualifying arrangement in relation to that item of eligible property at the later time. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GH Application of Division in relation to property (1A) This Division does not apply in relation to the item of eligible property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997) if the tax preferred use: (a) starts on or after 1 July 2007; and (b) does not occur under a legally enforceable arrangement entered into before 1 July 2007. (1B) This Division does not apply in relation to the item of eligible property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997) if: (a) the tax preferred use starts on or after 1 July 2007; and (b) the tax preferred use occurs under a legally enforceable arrangement that was entered into before 1 July 2007; and (c) an election is made under item 71 of Schedule 1 to the Tax Laws Amendment (2007 Measures No. 5) Act 2007 to have subitem 71(2) of that Schedule apply to the property. (1) Subject to subsections (1A), (1B) and (2), where: (a) at a particular time (in this subsection referred to as the relevant time) an arrangement is a qualifying arrangement under subsection 159GG(1) or (2) in relation to an item of eligible property; and (b) either of the following conditions is satisfied: (i) the qualifying arrangement was entered into after 5 o'clock in the afternoon, by standard time in the Australian Capital Territory, on 15 May 1984 and the end-user referred to in subsection 159GG(1) or (2) is an exempt public body; (ii) the arrangement was entered into after 5 o'clock in the afternoon, by legal time in the Australian Capital Territory, on 16 December 1984 and the use of the property referred to in subsection 159GG(1) or (2) takes place, or will take place, outside Australia and is, or will be, wholly or partly for the purpose of producing exempt income; this Division applies in relation to the item of eligible property at the relevant time. (2) This Division does not apply in relation to an item of eligible property at a particular time if at that time section 51AD applies to the item of eligible property in relation to a taxpayer. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GJ Effect of application of Division on certain deductions etc. (1) Where this Division applies in relation to an item of eligible depreciation property: (b) in relation to any year of income the whole of which is included in or comprises the application period--no depreciation deduction shall be allowable to any taxpayer in relation to the item of property for that year of income; (c) in relation to any other year of income in which the whole or a part of the application period occurs: (i) in relation to any part (in this subsection referred to as the pre-application part) of the year of income that precedes the application period--there shall be allowable to a taxpayer as a depreciation deduction in relation to the item of property: (A) where this Division has not previously applied in relation to the item of property--the same depreciation deduction (if any) as would, apart from this Division, be allowable to the taxpayer; and (B) in any other case--the same depreciation deduction (if any) as would, but for this application of this section, be allowable to the taxpayer; (ii) in relation to the part of the year of income during which this Division applies--no depreciation deduction shall be allowable to any taxpayer in relation to the item of property; and (iii) in relation to any part (in this subsection referred to as the post-application part) of the year of income that occurs after the application period (not being a part that occurs after the commencement of a subsequent application period): (A) the residual amount in relation to the item of eligible depreciation property at any time (in this sub-subparagraph referred to as the relevant time) during the post-application part is an amount ascertained in accordance with the formula: where: A is the amount that, but for this application of this section, would be the residual amount at the relevant time in relation to the eligible amount (in this subparagraph referred to as the relevant eligible amount) by reason of which the item is an item of eligible depreciation property. B is: (a) where paragraph (b) of this component does not apply--the amount that, in determining the residual amount in component A, would be taken into account as depreciation under subsection 159GF(1) in respect of the application period; and (b) where, in determining the residual amount in component A, depreciation deductions taken into account in respect of the post-application part would be calculated under this Act or the Income Tax Assessment Act 1997 using the diminishing value method--the amount that, in determining the residual amount in component A, would be taken into account under subsection 159GF(1) as depreciation deductions in respect of the application period and the part of the post-application part before the relevant time; and C is: (a) where paragraph (a) of component B applies--an amount equal to the total notional principal in relation to the relevant eligible amount in relation to the application period; and (b) where paragraph (b) of component B applies--the sum of: (i) the total notional principal in relation to the relevant eligible amount in relation to the application period; and (ii) the amount that, in determining the residual amount in component A, would be taken into account as depreciation deductions under subsection 159GF(1) in respect of the part of the post-application part before the relevant time if the depreciated value under this Act, the undeducted cost under the former Division 42 of the Income Tax Assessment Act 1997 or the adjustable value under Division 40 of that Act, of the item of eligible depreciation property at the beginning of the year of income in which this Division ceases to apply were equal to the residual amount at the beginning of the application period as reduced by the total notional principal in relation to the relevant eligible amount in relation to the application period; (B) for the purposes of any application of this Act or the Income Tax Assessment Act 1997, in relation to the item of property in relation to the post-application part--the depreciated value, within the meaning of Division 3 of this Part, the undeducted cost under the former Division 42 of the Income Tax Assessment Act 1997 or the adjustable value under Division 40 of that Act, of the item of property at any time during the post-application part shall be taken to be an amount equal to the residual amount in relation to the relevant eligible amount at that time as ascertained in accordance with sub-subparagraph (A); and (C) the depreciation deduction (if any) allowable to a taxpayer in relation to the item of property in relation to the post-application part is the depreciation deduction that would be allowable in respect of that period if this Division did not apply and, in the case of an item of property in relation to which the former paragraph 56(1)(a) of this Act or the diminishing value method under the former Division 42, or Division 40, of the Income Tax Assessment Act 1997 would, apart from this Division, apply, if the depreciated value, within the meaning of the former section 62 of this Act, the undeducted cost, under the former Division 42 of the Income Tax Assessment Act 1997 or the adjustable value under Division 40 of that Act, of the item of property at the beginning of the year of income were equal to the residual amount, as ascertained under sub-subparagraph (A), in relation to the relevant eligible amount at the commencement of the post-application part; (d) the residual amount at any time (in this paragraph referred to as the relevant time) after the year of income in which the application period ends (not being a time after the commencement of a subsequent application period) in relation to the eligible amount (in this paragraph referred to as the relevant eligible amount) by reason of which the item is an item of eligible depreciation property is the amount that would be the residual amount in relation to the relevant eligible amount in relation to the relevant time under sub-subparagraph (1)(c)(iii)(A) if the post-application part referred to in that sub-subparagraph extended to include the relevant time; and (e) for the purpose of the application of this Act and the Income Tax Assessment Act 1997 in relation to the item of property at any time after the year of income in which the application period ends--there shall be taken to have been allowed as a depreciation deduction in relation to the item of property in relation to the application period an amount equal to the total notional principal in relation to the eligible amount by reason of which the item of property is eligible depreciation property in relation to the application period. (2) Where this Division applies in relation to an item of Division 10, 10AA or 10A property: (a) no deduction is allowable to any taxpayer under: (ii) section 40-830 of the Income Tax Assessment Act 1997 for a project amount that is mining capital expenditure within the meaning of that Act; or (iii) Subdivision 40-B of that Act for a depreciating asset that is a forestry road or timber mill building; in relation to any amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10, 10AA or 10A property for any year of income in which the whole or a part of the application period occurs; (b) the residual amount at any time after the application period (not being a time after the commencement of a subsequent application period) in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10, 10AA or 10A property is an amount equal to the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(3) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and (c) for the purposes of the application of: (ii) section 40-830 of the Income Tax Assessment Act 1997 for a project amount that is mining capital expenditure within the meaning of that Act; or (iii) Subdivision 40-B of that Act for a depreciating asset that is a forestry road or timber mill building; in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10, 10AA or 10A property at any time after the application period, there shall be taken to have been allowed in respect of the amount of expenditure a deduction under whichever of those provisions applies in respect of the amount of expenditure of an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period. (3) Where this Division applies in relation to an item of Division 10AAA property: (a) no deduction is allowable to any taxpayer under section 40-830 of the Income Tax Assessment Act 1997 for a project amount that is transport capital expenditure within the meaning of that Act in relation to any amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10AAA property for any year of income in which the whole or a part of the application period occurs; and (b) the residual amount at any time after the application period (not being a time after the commencement of a subsequent application period) in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10AAA property is an amount equal to the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(4) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and (c) for the purposes of the application of section 40-830 of the Income Tax Assessment Act 1997, for a project amount that is transport capital expenditure within the meaning of that Act, in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10AAA property for any year of income after the year of income in which this Division ceases to apply--it is taken to be a requirement of that section that the deduction allowable under that section in respect of the amount of expenditure does not exceed the residual amount in relation to the amount of expenditure as worked out in accordance with paragraph (b). (4) Where this Division applies in relation to an item of Division 10C or 10D property: (a) in relation to any year of income the whole of which is included in or comprises the application period--no deduction shall be allowable to any taxpayer under Division 43 of the Income Tax Assessment Act 1997, in relation to any amount of expenditure by reason of which the item is Division 10C or 10D property for that year of income; (b) in relation to any other year of income in which the whole or a part of the application period occurs: (i) in relation to any part (in this subsection referred to as the pre-application part) of the year of income that precedes the application period--there shall be allowable to the taxpayer as a deduction under Division 43 of the Income Tax Assessment Act 1997 in relation to an amount of expenditure by reason of which the item is Division 10C or 10D property: (A) where this Division has not previously applied in relation to the amount of expenditure--the same deduction (if any) as would, apart from this Division, be allowable under that Division; and (B) in any other case--the same deduction (if any) as would, but for this application of this section, be allowable under that Division; (ii) in relation to the part of the year of income during which this Division applies--no deduction shall be allowable to any taxpayer under Division 43 of the Income Tax Assessment Act 1997 in relation to any amount of expenditure by reason of which the item is Division 10C or 10D property; and (iii) in relation to any part (in this subsection referred to as the post-application part) of the year of income that occurs after the application period (not being a part that occurs after the commencement of a subsequent application period): (A) the residual amount at any time during the post-application part in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property is an amount equal to the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(5) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and (C) the deduction (if any) allowable to a taxpayer in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property under Division 43 of the Income Tax Assessment Act 1997 in relation to the post-application part is the deduction (if any) that would be allowable to the taxpayer under that Division in respect of that period if this Division (other than this sub-subparagraph) did not apply and if it were a requirement of that Division that the deduction did not exceed the residual amount in relation to the amount of expenditure as ascertained in accordance with sub-subparagraph (A); (c) the residual amount at any time after the year of income in which the application period ends (not being a time after the commencement of a subsequent application period) in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property is the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF (5) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and (d) in the application of Division 43 of the Income Tax Assessment Act 1997 in relation to any year of income after the year of income in which this Division ceases to apply, in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property it shall be taken to be a requirement of Division 43 of the Income Tax Assessment Act 1997 that the deduction (if any) allowable to a taxpayer under that Division in respect of the amount of expenditure does not exceed the residual amount in relation to the amount of expenditure as ascertained in accordance with paragraph (c). (5) If this Division applies in relation to an item of property that is an eligible spectrum licence: (a) an amount cannot be deducted under Division 40 of the Income Tax Assessment Act 1997 in relation to any amount of expenditure (other than expenditure incurred after the application period) by reason of which the item is an eligible spectrum licence for any year of income in which any of the application period occurs; and (b) the residual amount at any time after the application period (but before the start of a later application period) in relation to an amount of expenditure (other than expenditure incurred after the application period) because of which the item is an eligible spectrum licence is an amount equal to: • the amount that, if not for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(6); reduced by: • an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and (c) for the purposes of applying Division 40 of the Income Tax Assessment Act 1997 in relation to an amount of expenditure (other than expenditure incurred after the application period) because of which the item is an eligible spectrum licence at any time after the application period, a deduction under that Division is taken to have been allowed, for the amount of expenditure, of an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GK Effect of application of Division on assessability of arrangement payments (1) Where this Division applies in relation to an item of eligible property in relation to which there is an assessable arrangement payment or assessable arrangement payments in relation to a taxpayer in respect of the application period, there shall be included in the assessable income of the taxpayer so much only of any payment portion of each assessable arrangement payment in relation to an eligible amount as does not exceed the interest amount (if any) in relation to the payment portion. (2) For the purposes of subsection (1), a reference to the interest amount in relation to a payment portion of an assessable arrangement payment in relation to an eligible amount is a reference to the amount (if any) ascertained in accordance with the formula A (1 + B)t - A , where: "A" is the eligible principal in relation to the payment portion; "B" is: (a) where the sum of the payment portions of the likely arrangement payments in relation to the eligible amount in respect of the likely application period (including any notional final payment portion of an arrangement payment) exceeds the residual amount, as ascertained at the commencement of the application period, in relation to the eligible amount--the fraction that is the effective annual interest rate, ascertained at the commencement of the application period referred to in subsection (1), at which the sum of the present values of the payment portions equals the residual amount; and (b) in any other case--nil; and "t" is the number of whole days in the arrangement payment period divided by 365. (3) For the purposes of subsection (2): (a) a reference in that subsection to the eligible principal in relation to a payment portion of an arrangement payment in relation to an eligible amount is a reference to: (i) where the arrangement payment is the first arrangement payment in the likely application period referred to in that subsection--the residual amount in relation to the eligible amount, as ascertained at the commencement of the arrangement payment period in relation to the arrangement payment; and (ii) in the case of any other arrangement payment--an amount ascertained in accordance with the formula A - B + C , where: A is the eligible principal in relation to the payment portion of the immediately preceding arrangement payment; B is the amount of the payment portion of the immediately preceding arrangement payment; and C is the interest amount in relation to the payment portion of the immediately preceding arrangement payment; and (b) a reference in that subsection to the arrangement payment period in relation to an arrangement payment is a reference to: (i) where the arrangement payment is the first arrangement payment liable to be made in respect of the application period referred to in that subsection--the period commencing at the beginning of the application period and ending at the time at which the arrangement payment is liable to be made; and (ii) in the case of any other arrangement payment--the period commencing at the time at which the immediately preceding arrangement payment was liable to be made and ending at the time at which the arrangement payment concerned is liable to be made. (4) Where the qualifying arrangement in relation to an item of eligible property in relation to which this Division applies does not provide for the sale or disposal of the item to a person who is a party to the qualifying arrangement or to an associate, for the purposes of this section an arrangement payment (not being an assessable arrangement payment) that includes a payment portion (which portion is in this section referred to as a notional final payment portion) in relation to any eligible amount by reason of which the item is an item of eligible property shall be taken to be liable to be made at the end of the likely application period of an amount equal to: (a) where the qualifying arrangement is a qualifying arrangement by reason of the application of subparagraph 159GG(1)(a)(i)--so much of the guaranteed residual value referred to in that subparagraph as is attributable to the eligible amount; or (b) in any other case--the amount that in the opinion of the Commissioner was, or would have been, at the commencement of the application period, the market value at the end of the application period of so much of the item of eligible property as is attributable to the eligible amount. (5) Where an amount of eligible capital expenditure is incurred in relation to an item of eligible property at any time after this Division commences to apply in relation to the item of eligible property, this section applies in respect of that expenditure as if this Division had commenced to apply in relation to the item of eligible property at the time at which the expenditure was incurred. (6) In this section: (a) likely application period, in relation to an application of this Division, means the period that, having regard to the provisions of the qualifying arrangement referred to in section 159GH and to any other relevant circumstances, was, at the time at which that application of this Division commenced, the likely length of the application period; and (b) likely arrangement payment, in relation to a likely application period, means an arrangement payment that, having regard to the provisions of the qualifying arrangement referred to in section 159GH and to any other relevant circumstances, was, at the time at which the likely application period commenced, likely to become liable to be made during the likely application period. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GL Special provision relating to Division 10C or 10D property (1) If: (a) section 159GH applies in relation to an item of Division 10C or 10D property; and (b) at the time at which that section commenced to apply in relation to the item of property, the sum of the present values of the net Division 16D amounts, for each year of income during which the whole or a part of the likely application period occurs, in relation to an amount of expenditure by reason of which the property is Division 10C or 10D property will be less than the sum of the present values, at that time, of the net Division 10C or 10D amounts for each such year of income in relation to the expenditure; sections 159GJ and 159GK do not apply in relation to the amount of expenditure in relation to the application period. (2) In subsection (1): (a) a reference to the net Division 10C or 10D amounts for a year of income in relation to an amount of expenditure by reason of which an item of property is Division 10C or 10D property is a reference to the sum of the payment portions of any assessable arrangement payments likely to become liable to be made in relation to the amount of expenditure in relation to that year of income reduced by the deduction (if any) that, but for this Division, would be allowable under the former Division 10C or 10D of this Part, or under Division 43 of the Income Tax Assessment Act 1997, for the year of income in respect of the amount of expenditure; (b) a reference to the net Division 16D amounts for a year of income in relation to an amount of expenditure by reason of which an item of property is Division 10C or 10D property is a reference to the sum of so much of the payment portions of any assessable arrangement payments likely to become liable to be made during the year of income in relation to the amount of expenditure as would, but for this section, be included in the assessable income of any taxpayer of the year of income under section 159GK; and (c) likely application period has the same meaning as in section 159GK. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GM Special provision where cost of plant etc. is also eligible capital expenditure Where: (a) at a particular time (in this section referred to as the relevant time) an item of eligible property is both eligible depreciation property and eligible capital expenditure property; and (b) the expenditure by reason of which the item of property is eligible capital expenditure property is the amount that: (i) was the cost of the item of property to the taxpayer who incurred the expenditure for the purpose of the former Subdivision 42-B, or Subdivision 40-C, of the Income Tax Assessment Act 1997; or (ii) would have been the cost to the taxpayer for the purpose of that Subdivision if it applied in relation to the item of property; for the purpose of ascertaining the residual amount at the relevant time in relation to the amount of expenditure: (c) if a capital expenditure deduction would, apart from this Division, be allowable to a taxpayer in respect of the amount of eligible capital expenditure in relation to the year of income in which the relevant time occurs--the item of eligible property shall be taken to be at the relevant time an item of eligible capital expenditure property and not an item of eligible depreciation property; and (d) in any other case--the item of eligible property shall be taken to be at the relevant time an item of eligible depreciation property and not an item of eligible capital expenditure property. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GN Effect of use of property under qualifying arrangement for producing assessable income (1) Where: (a) this Division applies in relation to an item of eligible property by reason of the application of subparagraph 159GH(1)(b)(i) in relation to the use by an exempt public body, or the control by an exempt public body of the use, of the item of eligible property under a qualifying arrangement; (b) the exempt public body jointly uses, or jointly controls the use of, the item of eligible property together with another person, or one or more other persons, who are not exempt public bodies; (c) the item of eligible property is or will be used during the arrangement period in relation to the qualifying arrangement for producing income of an amount that, having regard to the provisions of the qualifying arrangement and any other relevant circumstances, is not likely to be less than the total amount of the arrangement payments under the qualifying arrangement in relation to the item of eligible property; and (d) the income, or a part of the income, referred to in paragraph (c) will be included in the assessable income of one or more persons (which person, or each of which persons, is in this subsection referred to as an assessable person); the following provisions have effect: (e) where all of the income referred to in paragraph (c) will be included in the assessable income of one or more persons--sections 159GJ and 159GK do not apply in relation to the item of eligible property; (f) where paragraph (e) does not apply: (i) there is allowable to a taxpayer so much of any deduction that, but for this section, would not, by reason of the application of section 159GJ, be allowable to the taxpayer in relation to any eligible amount in relation to the item of eligible property in respect of the application period as is ascertained in accordance with the formula AB , where: A is the amount of the deduction that, but for this section would not, by reason of the application of section 159GJ, be allowable to the taxpayer; and B is the assessable person fraction for the purposes of the application of this Division concerned; (ii) for the purposes of section 159GJ, a reference in that section to the total notional principal in relation to an eligible amount in relation to the item of eligible property in respect of the application period shall be taken to be a reference to the amount that, but for this subparagraph, would be the total notional principal, as increased by the amount of any deduction allowable under subparagraph (i) of this paragraph in relation to the eligible amount in respect of the application period; and (iii) for the purposes of the application of section 159GK, any eligible amount in relation to the item of property in respect of the application period shall be ascertained in accordance with the formula AB , where: A is the amount that, but for this section, would be the eligible amount; and B is the non-assessable person fraction in relation to the application of this Division concerned. (2) For the purposes of subsection (1): (a) a reference in that subsection to the assessable person fraction in relation to an application of this Division in relation to an item of eligible property is a reference to the interest of all of the assessable persons in the income referred to in paragraph (1)(c) expressed as a fraction of the interests of all of the persons entitled to that income; and (b) a reference in that subsection to the non-assessable person fraction in relation to an application of this Division in relation to an item of eligible property is a reference to the fraction ascertained by subtracting the assessable person fraction in relation to that application of this Division in relation to the item of eligible property from the number 1. (3) Where: (a) this Division applies in relation to an item of eligible property by reason of the application of subparagraph 159GH(1)(b)(ii) in relation to the use of the item of property outside Australia partly for the purpose of producing exempt income; and (b) that use is also partly for the purpose of producing assessable income; the following provisions have effect: (c) there is allowable to a taxpayer so much of any deduction that, but for this section, would not, by reason of the application of section 159GJ, be allowable to the taxpayer in relation to any eligible amount in relation to the item of eligible property in respect of the application period as is ascertained in accordance with the formula AB , where: A is the amount of the deduction that, but for this section would not, by reason of the application of section 159GJ, be allowable to the taxpayer; and B is the assessable income fraction for the purposes of the application of this Division concerned; (d) for the purposes of section 159GJ, a reference in that section to the total notional principal in relation to an eligible amount in relation to the item of eligible property in respect of the application period shall be taken to be a reference to the amount that, but for this paragraph, would be the total notional principal, as increased by the amount of any deduction allowable under paragraph (c) of this subsection in relation to the eligible amount in respect of the application period; and (e) for the purposes of the application of section 159GK, any eligible amount in relation to the item of property in respect of the application period shall be ascertained in accordance with the formula AB , where: A is the amount that, but for this section, would be the eligible amount; and B is the exempt income fraction in relation to the application of this Division concerned. (4) For the purposes of subsection (3): (a) a reference in that subsection to the assessable income fraction in relation to an application of this Division in relation to an item of eligible property is a reference to the amount of the assessable income referred to in paragraph (3)(b) expressed as a fraction of the sum of that assessable income and the exempt income referred to in paragraph (3)(a); and (b) a reference in that subsection to the exempt income fraction in relation to an application of this Division in relation to an item of eligible property is a reference to the fraction ascertained by subtracting the assessable income fraction in relation to that application of this Division in relation to the item of eligible property from the number 1. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GO Special provisions relating to partnerships (1) Where: (a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income); (b) either a deduction or an arrangement payment, or both, were taken into account in calculating that net income or partnership loss; (c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction), or the arrangement payment or a part of the arrangement payment (which arrangement payment or part of the arrangement payment, as the case may be, is referred to in this subsection as the relevant arrangement payment) would not have been taken into account for the purpose of that calculation if this Division applied in relation to the partnership in relation to particular property that is arrangement property in relation to a qualifying arrangement; (d) this Division does not apply in relation to the partnership in relation to the property by reason only that the qualifying arrangement was entered into before the time (in this subsection referred to as the earliest application time) referred to in whichever subparagraph of paragraph 159GH(1)(b) would be applicable if this Division applied as mentioned in paragraph (c); and (e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer after the earliest application time; the following provisions have effect: (f) there shall be included in the assessable income of the taxpayer of the relevant year of income an amount that bears to the amount of the relevant deduction the same proportion as the individual interest of the taxpayer in that net income bears to that net income or, as the case requires, as the individual interest of the taxpayer in that partnership loss bears to that partnership loss; (g) there shall be allowable as a deduction in the assessment of the taxpayer of the relevant year of income an amount that bears to the amount of the relevant arrangement payment the same proportion as the individual interest of the taxpayer in that net income bears to that net income or, as the case requires, as the individual interest of the taxpayer in that partnership loss bears to that partnership loss. (2) Where: (a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income); (b) either a deduction or an arrangement payment, or both, were taken into account in calculating that net income or partnership loss; (c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction), or the arrangement payment or a part of the arrangement payment (which arrangement payment or part of the arrangement payment, as the case may be, is referred to in this subsection as the relevant arrangement payment), would not have been taken into account for the purpose of that calculation if this Division applied in relation to the partnership in relation to particular property that is arrangement property in relation to a qualifying arrangement; (d) this Division does not apply in relation to the partnership in relation to the property by reason only that the qualifying arrangement was entered into before the time (in this subsection referred to as the earliest application time) referred to in whichever subparagraph of paragraph 159GH(1)(b) would be applicable if this Division applied as mentioned in paragraph (c); (e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer before the earliest application time; (f) after the earliest application time, the taxpayer made or agreed to make a contribution or contributions (which contribution is or contributions are in this subsection referred to as the additional contribution) to the capital of the partnership in addition to any contribution or contributions to the capital of the partnership that, under a contract or contracts entered into at or before that time, the taxpayer had made or agreed to make; and (g) by reason of making or agreeing to make the additional contribution, the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss, is greater than it would otherwise have been; the following provisions have effect: (h) where a deduction was taken into account in calculating that net income or partnership loss--there shall be included in the assessable income of the taxpayer of the relevant year of income an amount ascertained in accordance with the formula A (B - C) ; (j) where an arrangement payment was taken into account in calculating that net income or partnership loss--there shall be allowable as a deduction in the assessment of the taxpayer of the relevant year of income an amount ascertained in accordance with the formula A (B - C) ; where: A is the amount of the relevant deduction or of the relevant arrangement payment, as the case requires; B is the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss; and C is the fraction that would be B if that fraction were ascertained on the basis of the individual interests of the partners immediately before the earliest application time and the net income or partnership loss at that time were equal to the net income or partnership loss of the relevant year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GP Interpretation (1) In this Division, unless the contrary intention appears: "accrual amount" has the meaning given by subsection 159GQB(1). "accrual period" has the meaning given by section 159GQA. "agreement" has the same meaning as in Subdivision D of Division 3. "annuity" has the same meaning as in section 10 of the Superannuation Industry (Supervision) Act 1993. "associate" has the same meaning as in Subdivision D of Division 3. "eligible return" has the meaning given by subsection (3). "fixed return security" means a qualifying security under which the amount or amounts payable are or consist of: (a) a specified amount or specified amounts; (b) an amount or amounts the method of calculation of which does not involve an interest or indexation rate or other factor, being a rate or factor that varies or may vary during the term of the security; or (c) any combination of amounts referred to in paragraph (a) or (b). "holder", in relation to a security at a particular time, means the person who, if the amount or amounts payable under the security were due and payable at that time, would be entitled to receive payment of the amount or amounts. "implicit interest rate" has the meaning given by subsection 159GQB(2). "ineligible annuity" means an annuity issued by a life assurance company to or for the benefit of a natural person other than in the capacity of trustee of a trust estate. "issue", in relation to a security other than a bill of exchange, means the creation of the liability to pay an amount or amounts under the security. "issue price", in relation to a security, means the consideration (if any) for the issue of the security. "issuer", in relation to a security (other than a bill of exchange) at a particular time, means the person who, if the amount or amounts payable under the security were due and payable at that time, would be liable to pay the amount or amounts. "partial redemption", in relation to a security, means the discharging of a part (other than the final part) of a liability to pay an amount or amounts under the security representing a return of the issue price of the security. "partial redemption payment", in relation to a security, means a payment that has the effect of partially redeeming the security. "qualifying security" means any security: (a) that is issued after 16 December 1984; (b) that is not a prescribed security within the meaning of section 26C; (ba) that is not part of an exempt series (see subsection (9A)); (c) the term of which, ascertained as at the time of issue of the security will, or is reasonably likely to, exceed 1 year; (d) that has an eligible return; and (e) where the precise amount of the eligible return is able to be ascertained at the time of issue of the security--in relation to which the amount of the eligible return is greater than 1½ % of the amount ascertained by multiplying the amount of the payment or the sum of the payments (excluding any periodic interest) liable to be made under the security by the number (including any fraction) of years in the term of the security; but does not, except as provided by subsection (10), include an annuity. "redemption", in relation to a security, means the discharging of all liability to pay any amount or amounts under the security representing a return of the issue price of the security. "redemption payment", in relation to a security, means any payment that has the effect of redeeming the security. "security" means: (a) stock, a bond, debenture, certificate of entitlement, bill of exchange, promissory note or other security; (b) a deposit with a bank or other financial institution; (c) a secured or unsecured loan; or (d) any other contract, whether or not in writing, under which a person is liable to pay an amount or amounts, whether or not the liability is secured. "taxpayer's maximum term", in relation to a security held by a taxpayer, means: (a) if the security was issued to the taxpayer--the term of the security; or (b) if the security was transferred to the taxpayer--the part of the term remaining after the transfer. "term", in relation to a security, means the period from the issue of the security until the time at which the liability to make the payment or final payment or payments, as the case requires, under the security arises. "transfer", in relation to a security, means transfer, sell, assign or dispose in any way of the security or of the right to receive payment of the amount or amounts payable under the security, but does not include a redemption or partial redemption of the security. "transfer price", in relation to the transfer of a security, means the consideration (if any) for the transfer of the security. "variable return security" means a qualifying security that is not a fixed return security. (2) Where: (a) the Commissioner, having regard to any connection between the parties to the issue or transfer of a security and to any other relevant circumstances, is satisfied that the parties were not dealing with each other at arm's length in relation to the issue or transfer; and (b) the Commissioner determines that this subsection should apply in relation to the issue or transfer; then, for the purposes of the application of the definition of issue price or transfer price, as the case may be, in subsection (1) in relation to the issue or transfer, the consideration for the issue or transfer shall be taken to be equal to: (c) the consideration that might reasonably be expected for the issue or transfer if the parties to the issue or transfer were independent parties dealing at arm's length with each other in relation to the issue or transfer; or (d) where, for any reason (including an insufficiency of information available to the Commissioner), it is not possible or not practicable for the Commissioner to ascertain the amount referred to in paragraph (c)--such amount as the Commissioner determines. (3) For the purposes of this Division, there shall be taken to be an eligible return in relation to a security if at the time when the security is issued it is reasonably likely, by reason that the security was issued at a discount, bears deferred interest or is capital indexed or for any other reason, having regard to the terms of the security, for the sum of all payments (other than periodic interest payments) under the security to exceed the issue price of the security, and the amount of the eligible return is the amount of the excess. (6) For the purposes of this Division, where an amount of interest is payable under a security, the amount shall be taken to be periodic interest if the period between the commencement of the period in respect of which the interest is expressed to be payable and the time at which the interest is payable is less than or equal to one year. (7) Where: (a) but for this subsection, an amount of interest payable under a security would, by reason of the application of subsection (6), be taken, for the purposes of this Division, to be periodic interest; and (b) the Commissioner, having regard to the amount of the interest, considers that it is properly attributable to a period in excess of one year; then, for purposes of the application of this Division: (c) the amount of interest shall not be taken to be periodic interest; and (d) the amount of interest shall be taken to be attributable to the period to which the Commissioner considers it is properly attributable. (8) Where 2 or more of the amounts payable under a security are payable to different persons and in return for consideration given by different persons, the 2 or more amounts shall, for the purposes of this Division, be taken to be payable under a separate security having such of the terms of the first-mentioned security as are relevant. (9) For the purposes of the application of this Division in relation to the holding of a security acquired by a taxpayer on transfer, any prior holding of the security by the taxpayer, whether on issue or transfer, shall be disregarded. (9A) For the purposes of paragraph (ba) of the definition of qualifying security in subsection (1), if: (a) after 16 December 1984, a person issues a security (the first in the series) that is not a qualifying security; and (b) during the period from the end of 16 December 1984 until the issuing of the first in the series, the person did not issue any qualifying security with exactly the same payment dates, payment amounts and other terms as the first in the series; and (c) after issuing the first in the series, the person issues another security (the later security) with exactly the same payment dates, payment amounts and other terms as the first in the series; the later security is part of an exempt series. (9B) In determining for the purposes of paragraph (9A)(b) or (c) whether a security has exactly the same other terms as another security, the fact that the first-mentioned security has a different issue price than the second-mentioned security is to be disregarded. (10) Where: (a) an annuity is issued on or after 29 October 1987; (b) the requirements of paragraphs (b) to (e) (inclusive) of the definition of qualifying security in subsection (1) are satisfied in relation to the annuity; and (c) the annuity is not an ineligible annuity; the annuity is a qualifying security for the purposes of this Division. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GQ Tax treatment of holder of qualifying security Accrual amounts to be worked out (1) If a taxpayer holds a qualifying security for all or part of a year of income, the effect on the taxpayer's taxable income is determined by working out the accrual amount (see section 159GQB) for each accrual period (see section 159GQA) in the year of income and then summing the accrual amounts. Positive sum assessable (2) If the sum is a positive amount, the amount is included in the assessable income of the taxpayer of the year of income. Negative sum deductible (3) If the sum is a negative amount, a deduction of the amount is allowable in the assessment of the taxpayer of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GQA Accrual period Taxpayer's maximum term to be divided into accrual periods (1) The taxpayer's maximum term for the qualifying security is divided into accrual periods in accordance with this section. Whole year of income (2) If a year of income is wholly taken up by any of the taxpayer's maximum term, the year of income is divided into 2 accrual periods of 6 months. Beginning of taxpayer's maximum term (3) If the taxpayer's maximum term begins after the beginning of the year of income: (a) if it begins less than 6 months after the beginning of the year of income--the period from the beginning of the taxpayer's maximum term until the middle of the year of income is an accrual period and the second 6 months of the year of income is an accrual period; and (b) in any other case--the part of the year of income taken up by the taxpayer's maximum term is an accrual period. End of taxpayer's maximum term (4) If the taxpayer's maximum term ends before the end of a year of income: (a) if it ends no later than 6 months after the beginning of the year of income--the part of the year of income taken up by the taxpayer's maximum term is an accrual period; and (b) in any other case--the first 6 months of the year of income is an accrual period and the period from the middle of the year of income until the end of the taxpayer's maximum term is an accrual period. Example (5) For example, if the taxpayer's year of income is a financial year and a security with a 2 year term is issued to the taxpayer on 1 April, the accrual periods will be as follows: 1st year 2nd year 3rd year of income of income of income 1 Apr. 1 July 1 Jan. 1 July 1 Jan. 1 Apr. 3 month 6 month 6 month 6 month 3 month accrual accrual accrual accrual accrual period period period period period INCOME TAX ASSESSMENT ACT 1936 - SECT 159GQB Accrual amount Formula (1) The accrual amount for an accrual period is worked out using the formula: Implicit interest rate (2) In the formula in subsection (1), Implicit interest rate means the rate of interest worked out under section 159GQC (for a fixed return security) or 159GQD (for a variable return security), properly adjusted to take account of the case where the accrual period is less than 6 months. Opening balance (3) In the formula in subsection (1), Opening balance means the amount worked out using the formula: Issue/transfer price + Previous accruals - Payments where: "Issue/transfer price" means the issue price or transfer price, as the case requires, of the security; and "Previous accruals" means: (a) if paragraph (b) does not apply--the sum, whether positive or negative, of all accrual amounts for previous accrual periods in the taxpayer's maximum term; or (b) if the accrual period is the first in the taxpayer's maximum term--nil; and "Payments" means all payments (other than of periodic interest) made or liable to be made under the security during all previous accrual periods in the taxpayer's maximum term.Periodic interest etc. (4) In the formula in subsection (1), Periodic interest etc. means the sum of: (a) all periodic interest payments made or liable to be made under the security during the accrual period, properly adjusted in the case of any payment made other than at the end of the period; and (b) if any payments (other than of periodic interest) made or liable to be made under the security during the accrual period are made or liable to be made other than at its end--an amount to adjust properly for the making of the payments other than at the end of the period. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GQC Implicit interest rate for fixed return security For the purposes of the formula component Implicit interest rate in subsection 159GQB(1), the rate of interest for a fixed return security in relation to a taxpayer is the rate of compound interest per period of 6 months at which: (a) the sum of the present values of all amounts payable under the security during the taxpayer's maximum term; equals: (b) the issue price or the transfer price, as the case requires, of the security. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GQD Implicit interest rate for variable return security Implicit interest rate to be recalculated each year etc. (1) For the purposes of the formula component Implicit interest rate in subsection 159GQB(1), the rate of interest for a variable return security must be worked out in accordance with subsection (2) separately for each year of income during the taxpayer's maximum term. If there are 2 accrual periods of 6 months in the year of income, the rate is the same for both periods. It is possible for the rate to be negative. Rate (2) The rate applicable in relation to a year of income is the rate of compound interest per period of 6 months in the calculation period (see subsection (3)) at which: (a) the sum of the present values of all amounts payable under the security during the calculation period; equals: (b) the opening balance, mentioned in subsection 159GQB(1), for the accrual period that begins the calculation period. Calculation period (3) The calculation period means the part of the taxpayer's maximum term that occurs after the beginning of the year of income. Where amount payable is not known (4) For the purposes of paragraph (2)(a), if by the end of the year of income it is not possible to determine whether an amount will be payable, or the size of the amount that will be payable, after the end of the year of income, the determination is to be made by applying subsection (5), (7) or (11), or a combination of those subsections. Assumption of constant level (5) Subject to subsection (7), if an amount payable is worked out to any extent by reference to the amount or level, at a particular time, of a rate, price, index or other thing, it is to be assumed that the rate, price, index or thing will be the same at all times after the end of the year of income as it was at the end of the year of income (or, if it was not available at the end of the year of income, at the time when it was last available in the year of income). Examples (6) For the purposes of subsection (5): (a) an example of an amount worked out wholly by reference to the amount of a rate at a particular time is an interest payment under a floating rate note. The amount payable is the product of an interest rate indicator (such as the prevailing bank bill rate) and the face or par value of the note; and (b) an example of an amount worked out wholly by reference to the amount of a price at a particular time is a redemption payment under a commodity linked security where the amount of the payment is the product of the prevailing price of a commodity (such as gold) and the face or par value of the security. Assumption of continuing rate of change (7) If an amount payable is worked out to any extent by reference to the amount of change in an index or other thing that occurs during a period, it is to be assumed that the index or other thing will continue to change at the same rate as it did: (a) if the index or other thing was available at the end of the year of income--during the year of income; or (b) in any other case--during the period of 12 months in respect of which the index or other thing was last available in the year of income. Example (8) An example for the purposes of subsection (7) is a payment whose amount is the product of the face or par value of a security and the percentage increase in the All Groups Consumer Price Index number (the CPI) during the year ending on 30 June 1995. If the year of income for which the implicit interest rate is being worked out is the 1993-94 year of income and the CPI increases by 2% during the year ending on 31 March 1994 (the date of the last available number during the year of income), the CPI is assumed to increase by 2% during the year ending on 30 June 1995. Disguised continuing rate of change case (9) For the purposes of subsection (7), if an amount payable is worked out to any extent by reference to the quotient of: (a) the amount or level of an index or other thing at a particular time; and (b) either: (i) the amount or level of the index or other thing at a different time; or (ii) another amount that, while not expressed to be the amount or level of the index or other thing at a different time, may reasonably be regarded as representing the amount or level of the index or other thing at a different time; the amount payable is taken to be worked out to that extent by reference to the amount of change in the index or other thing that occurs during the period between the 2 times. Example (10) An example for the purposes of subsection (9) is a payment under a security issued in December 1994 that is worked out by multiplying a number of dollars by the quotient of: (a) the All Groups Consumer Price Index number in respect of the quarter ending on 31 December 1997; and (b) the number 114. Assume that the number in paragraph (b) is the same as the All Groups Consumer Price Index number in respect of the quarter ending on 31 December 1994. In this case, it would be reasonable to regard the number as representing the amount of the index at 31 December 1994, and therefore to apply subsection (7). General assumption (11) If it is not possible to make the determination mentioned in subsection (4) in respect of the whole or part of any amount by applying subsection (5) or (7), or both, (for example, because no information about a rate, price or index was available during the year of income), the determination in respect of that whole or part is to be made on the basis of what is most likely in the circumstances. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GR Consequences of actual payments (1) Where a payment (not being a payment that is, or to the extent that it consists of, a periodic interest payment, a redemption payment or a partial redemption payment) is made or liable to be made in a year of income to a taxpayer under a qualifying security: (a) no amount shall be included in the assessable income of the taxpayer of the year of income in respect of the payment otherwise than under section 159GQ; and (b) where the taxpayer acquired the qualifying security on transfer--no amount shall be allowable as a deduction from the assessable income of the taxpayer of the year of income in respect of the payment otherwise than under section 159GQ. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GS Balancing adjustments on transfer of qualifying security (1) Where there is a profit amount in relation to the transfer of a qualifying security by a taxpayer in a year of income: (a) if there is a net assessable amount in relation to the transfer and: (i) the profit amount exceeds the net assessable amount--an amount equal to the excess shall be included in the assessable income of the taxpayer of the year of income; or (ii) the net assessable amount exceeds the profit amount--an amount equal to the excess shall be allowable as a deduction from the assessable income of the taxpayer of the year of income; and (b) if there is a net deductible amount in relation to the transfer--an amount equal to the sum of that amount and the profit amount shall be included in the assessable income of the taxpayer of the year of income. (2) Where there is a loss amount in relation to the transfer of a qualifying security by a taxpayer in a year of income and: (a) there is a net assessable amount in relation to the transfer--an amount equal to the net assessable amount shall be allowable as a deduction from the assessable income of the taxpayer of the year of income; or (b) there is a net deductible amount in relation to the transfer that exceeds the loss amount--an amount equal to the excess shall be included in the assessable income of the taxpayer of the year of income. (3) For the purposes of the application of this section in relation to the transfer (in this subsection referred to as the relevant transfer) of a qualifying security by a taxpayer: (a) where the transfer price, as increased by the amount of any payments (other than periodic interest payments) made to the taxpayer under the security in respect of the period when the security was held by the taxpayer exceeds: (i) the issue price of the security; or (ii) where the security was acquired by the taxpayer on transfer--the transfer price in relation to that transfer; there shall be taken to be a profit amount in relation to the relevant transfer of an amount equal to the excess; (b) where the issue price of the security or, where the security was acquired by the taxpayer on transfer, the transfer price in relation to that transfer exceeds the sum of the transfer price in relation to the relevant transfer and any payments (other than periodic interest payments) made to the taxpayer under the security in respect of the period when the security was held by the taxpayer, there shall be taken to be a loss amount in relation to the relevant transfer of an amount equal to the excess; (c) where the sum of all amounts (if any) included under section 159GQ in the assessable income of the taxpayer in respect of the security in respect of the period when the security was held by the taxpayer exceeds the sum of all amounts (if any) allowable under those sections as deductions from the assessable income of the taxpayer in respect of the security in respect of that period, there shall be taken to be a net assessable amount in relation to the relevant transfer of an amount equal to the excess; and (d) where the sum of all amounts (if any) allowable under section 159GQ as deductions from the assessable income of the taxpayer in respect of the security in respect of the period when the taxpayer held the security exceeds the sum of all amounts (if any) included under those sections in the assessable income of the taxpayer in respect of the security in respect of that period, there shall be taken to be a net deductible amount in relation to the relevant transfer of an amount equal to the excess. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GT Tax treatment of issuer of a qualifying security (1) Subsections (1A) and (1B) apply if a taxpayer is an issuer of a qualifying security to which this section applies during a period (the issuer period) comprising the whole or part of a year of income. (1A) If, on the assumptions in subsection (1C), an amount would be included in the taxpayer's assessable income of the year of income in respect of the issuer period, then, subject to this section, the taxpayer is entitled to a deduction in his or her assessment for the year of income equal to that amount. (1B) If, on the assumptions in subsection (1C), a deduction would be allowable in the taxpayer's assessment for the year of income, then an amount equal to the deduction is included in the taxpayer's assessable income of the year of income. (1C) For the purposes of subsections (1A) and (1B), the assumptions are that: (a) the security was issued to the taxpayer (rather than the taxpayer being the issuer of the security); and (b) the taxpayer held the security during the whole of the issuer period; and (c) the taxpayer did not transfer the security at the end of the issuer period; and (d) sections 159GW, 159GX and 159GY were not enacted. (2) A deduction is not allowable to a taxpayer under subsection (1A) in relation to a qualifying security to which this section applies unless the taxpayer would, but for this Division, be entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 in respect of payments (not being redemption payments, partial redemption payments or periodic interest payments) made or liable to be made under the security in respect of the relevant period referred to in that subsection. (3) Where a payment (not being a payment that is, or to the extent that it consists of, a periodic interest payment, a redemption payment or a partial redemption payment) is made or liable to be made in a year of income by a taxpayer under a qualifying security to which this section applies, no amount shall be allowable as a deduction from the assessable income of the taxpayer of the year of income in respect of the payment otherwise than under this section. (5) Subject to subsection (6), this section applies to: (a) any qualifying security issued on or before 22 May 1986; and (b) any qualifying security issued in Australia after 22 May 1986 other than a negotiable instrument issued payable to bearer. (6) This section does not apply to a qualifying security issued by a taxpayer after 5 o'clock in the evening, by standard time in the Australian Capital Territory, on 23 April 1987: (a) to, on behalf of or otherwise for the benefit of, a non-resident or a prescribed dual resident associate of the taxpayer; or (b) subject to an agreement between the taxpayer and an associate of the taxpayer under which the security is or was to be transferred to a non-resident or a prescribed dual resident associate of the taxpayer. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GU Effect of Division on certain transfer profits and losses (1) Where, apart from this Division, a profit that is made by a resident taxpayer in relation to a transfer of a qualifying security that does not form part of the trading stock of the taxpayer would be included in the assessable income of the taxpayer of a year of income, the profit shall not be so included in the assessable income of the taxpayer. (2) Where, apart from this Division, a loss that is incurred by a resident taxpayer in relation to a transfer of a qualifying security that does not form part of the trading stock of the taxpayer would be allowable as a deduction from the assessable income of the taxpayer of a year of income and there is a net deductible amount, within the meaning of section 159GS, in relation to the transfer, so much only of the amount of the loss as exceeds the net deductible amount shall be so allowable as a deduction. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GV Consequence of variation of terms of security (1) Where, after 22 May 1986, a material variation is made in the terms of a security, for the purposes of the application of this Division in relation to the security in respect of the period after the variation and before any subsequent material variation: (a) the security shall be taken to have been issued on the terms on which it was originally issued as varied by the material variation and any prior variation; (b) where consideration for the variation is paid or payable by the holder of the security--the issue price of the security shall be taken to be an amount equal to the amount that was the issue price of the security immediately before this application of this subsection increased by the amount of that consideration; (c) where consideration for the variation is paid or payable by the issuer of the security--the issue price of the security shall be taken to be an amount equal to the amount that was the issue price of the security immediately before this application of this subsection reduced by the amount of that consideration; and (d) paragraph (a) of the definition of qualifying security in subsection 159GP(1) shall be disregarded. (2) Where: (a) subsection (1) applies in relation to a security held by a taxpayer in relation to a material variation in the terms of the security; and (b) if: (i) that subsection had effect not only in relation to the period after the variation but also in relation to the whole of the term of the security before the variation; and (ii) any previous material variations were taken into account but any subsequent material variations were disregarded; the sum (in this subsection referred to as the total notional taxable income) of the taxable incomes of the taxpayer in respect of the year of income in which the variation is made and all previous years of income would have differed from the sum (in this subsection referred to as the total actual taxable income) of the actual taxable incomes of the taxpayer of those years of income; the following provisions have effect: (c) where the total notional taxable income exceeds the total actual taxable income--an amount equal to the excess shall be included in the assessable income of the taxpayer of the year of income in which the variation is made; (d) where the total actual taxable income exceeds the total notional taxable income--an amount equal to the excess shall be allowable as a deduction from the assessable income of the taxpayer of the year of income in which the variation is made. (3) In this section, a reference to a material variation of the terms of a security is a reference to a variation of the terms of the security: (a) that has the effect that a security that was not a qualifying security before the variation would, if the security had been originally issued with the terms as varied and if paragraph (a) of the definition of qualifying security in subsection 159GP(1) were disregarded, have been a qualifying security when the security was issued; (b) that has the effect that a security that is a qualifying security would, if originally issued with the terms as varied, not have been a qualifying security at the time of issue; or (c) that has the effect that the amount, or time of making, of a payment under the security, or that the holder or issuer of the security, is varied. (4) Where any right or option under a security to extend the term of, or otherwise vary the effect of, the security is exercised, then, for the purposes of this section, the exercise of that right or option shall be taken to be a variation of the terms of the security to provide for the extension or other effect. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GW Effect of Division in relation to non-residents (1) Subject to subsection (2), where during the whole or a part of a year of income (which whole or part is in this subsection referred to as the period of non-residence) a taxpayer is not a resident: (a) no amount shall be included in, or allowable as a deduction from, the assessable income of the taxpayer of the year of income under section 159GQ in relation to the period of non-residence; and (c) no amount shall be included in, or allowable as a deduction from, the assessable income of the taxpayer of the year of income under section 159GS in relation to any transfer of the security that occurred during the period of non-residence. (2) Where: (a) a payment is made or liable to be made under a qualifying security to a resident taxpayer; and (b) the taxpayer was not a resident for the whole or a part (which whole or part is in this subsection referred to as the period of non-residence) of the period during which the taxpayer held the security; the following provisions have effect: (c) there shall be included in the assessable income of the taxpayer of the year of income in which the payment is made or liable to be made an amount equal to the amount that, but for subsection (1), would have been included in the assessable income of the taxpayer of any year or years of income under section 159GQ in respect of the payment in respect of the period of non-residence; (d) there shall be allowable as a deduction from the assessable income of the taxpayer of the year of income in which the payment is made or liable to be made an amount equal to the amount that, but for subsection (1), would have been allowable as a deduction from the assessable income of the taxpayer of any year or years of income under section 159GQ in respect of the payment in respect of the period of non-residence. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GX Effect of Division where certain payments not assessable Where, but for this section, an amount would be included in, or allowable as a deduction from, the assessable income of a taxpayer of a year of income under section 159GQ in respect of the whole or a part of a payment under a qualifying security, no amount shall be so included or allowable unless the payment or a part of the payment, when actually made or liable to be made, would, disregarding section 128D, be included in the assessable income of the taxpayer of a year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GY Effect of Division where qualifying security is trading stock No amount shall be included in, or allowable as a deduction from, the assessable income of a taxpayer: (a) under section 159GQ in relation to a qualifying security in respect of any year or part of a year of income during which the qualifying security forms part of the trading stock of the taxpayer; or (c) under section 159GS in relation to the transfer of a qualifying security by the taxpayer where, immediately before the transfer, the qualifying security was or formed part of the trading stock of the taxpayer. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZ Stripped securities (1) Where: (a) at any time a taxpayer acquires or acquired a security (in this subsection referred to as the underlying security) in relation to which there are or were 2 or more payment rights; and (b) the taxpayer transfers or transferred one or some but not all of those rights to a particular person or particular persons jointly; for the purposes of the application of this Division (including any subsequent application of this subsection) in relation to any period after the transfer of the right or rights: (c) instead of the underlying security, there shall be taken to have been originally issued: (i) a separate security under which the payment right or payment rights transferred to the person or persons referred to in paragraph (b) were created; (ii) where at the time at which that right or those rights were transferred, another payment right or other payment rights in relation to the underlying security was or were transferred to another person or to other persons jointly--a separate security under which that other right or those other rights were created; and (iii) where immediately after the transfer the taxpayer retains or retained any payment right or rights--a separate security under which that right or those rights were created; (d) where the underlying security was issued to the taxpayer--the issue price of each separate security referred to in paragraph (c) shall be taken to be so much of the issue price of the underlying security as bears to that amount the proportion that the market value of the separate security at the time of issue of the underlying security bears to the market value of the underlying security at that time; and (e) where the underlying security was acquired by the taxpayer on transfer--the transfer price, in relation to that transfer, of each separate security referred to in paragraph (c) shall be taken to be so much of the transfer price of the underlying security as bears to that amount the proportion that the market value of the separate security at the time of transfer bears to the market value of the underlying security at that time. (2) Where, by reason of the application of subsection (1) in relation to the transfer after 16 December 1984 of a payment right or payment rights in relation to a security to a particular person or particular persons jointly, the payment right or rights is or are taken to comprise a separate security, then, for the purposes of the application of this Division in relation to the separate security in relation to any period after the transfer, paragraph (a) of the definition of qualifying security in subsection 159GP(1) shall be disregarded. (3) In subsections (1) and (2), payment right, in relation to a security, means a right to receive a particular payment that is liable to be made under the security. (4) Where: (a) at any time a taxpayer acquires or acquired a security (in this subsection referred to as the underlying security) on issue or transfer; (b) after 16 December 1984, the taxpayer issues a qualifying security (in this subsection referred to as the stripped security); and (c) but for this subsection, a deduction of an amount equal to the whole or a part of the issue price or, where the underlying security was acquired on transfer, the transfer price of the underlying security would be allowable from the assessable income of the taxpayer of the year of income in which the taxpayer issues the stripped security in respect of the issue of the stripped security; the amount of the deduction allowable shall be an amount that bears to the issue price or transfer price, as the case may be, of the underlying security the same proportion as the market value of the stripped security at the time of issue or purchase, as the case may be, bears to the market value of the underlying security at that time. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZC Interpretation--general (1) In this Division: "associate" has the same meaning as in section 318. "cancellation" includes redemption. "disposal" includes cancellation. "entity" means a company, a partnership or a trust estate. "pre-cancellation period", in relation to a cancellation of shares to which this Division applies, means the period beginning when the holding company concerned became a holding company of the subsidiary concerned and ending at the time of the cancellation. "security" means stock, a bond or debenture, or any other document evidencing the indebtedness of a person, whether or not the debt is secured. (3) For the purposes of this Division, a company is: (a) a subsidiary of another company; or (b) the holding company of another company; if the first-mentioned company is such for the purposes of the Corporations Act 2001. (4) For the purposes of this Division, a reference to an interest in an entity is a reference to a legal or equitable interest in: (a) if the entity is a company--shares in the company; (b) if the entity is a partnership--capital or profits of the partnership; (c) if the entity is a trust estate--corpus or income of the trust estate; or (d) in any case--securities issued by the entity. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZD Meaning of eligible entity, eligible interest and eligible proportion For the purposes of this Division, where a holding company holds interests in a subsidiary of the holding company either directly or indirectly through interposed entities: (a) a reference to an eligible entity in relation to the holding company and the subsidiary is a reference to the holding company or any of the interposed entities; (b) a reference to an eligible interest of an eligible entity is a reference to any interest held by the eligible entity directly in the subsidiary or directly in any other eligible entity in relation to the holding company and the subsidiary; and (c) a reference to the eligible proportion in relation to an eligible interest of an eligible entity is a reference to the proportion of the total interests held directly in the subsidiary by all persons and entities that is represented by: (i) if the eligible entity holds the eligible interest directly in the subsidiary--the eligible interest; or (ii) if, by virtue of holding the eligible interest, the eligible entity holds an interest in the subsidiary indirectly through another eligible entity or other eligible entities--that interest in the subsidiary. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZE Share cancellations to which this Division applies Where a holding company cancels shares in itself that are held by a subsidiary of that company, this Division applies to the cancellation of the shares. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZF Effect on subsidiary of share cancellations to which this Division applies (1) Where: (a) this Division applies to a cancellation of shares; and (b) apart from this section, either: (i) the subsidiary concerned would not receive or be entitled to receive any capital proceeds in respect of the cancellation; or (ii) the capital proceeds that the subsidiary concerned would receive or be entitled to receive in respect of the cancellation would be less than the adjusted market value of the shares; the following provisions have effect for the purposes of this Act: (c) where subparagraph (b)(i) applies--the subsidiary shall be taken to have received or to be entitled to receive, as capital proceeds in respect of the cancellation, an amount equal to the adjusted market value of the shares; (d) where subparagraph (b)(ii) applies--the amount of the capital proceeds that the subsidiary receives or is entitled to receive in respect of the cancellation shall be taken to be increased by an amount so that it equals the adjusted market value of the shares. (2) For the purposes of subsection (1), the adjusted market value of the shares is the amount that would have been their market value at the time of the cancellation if the cancellation did not occur and was never proposed to occur. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZG Pre-cancellation disposals of eligible interests (1) Where: (a) this Division applies to a cancellation of shares; (b) during the pre-cancellation period, there is a disposal of an eligible interest held by an eligible entity in relation to the holding company and the subsidiary concerned; and (c) apart from this section, either: (i) the eligible entity would not have received or been entitled to receive any capital proceeds in respect of the disposal; or (ii) the capital proceeds that the eligible entity would have received or been entitled to receive in respect of the disposal would have been less than the adjusted market value of the eligible interest; the following provisions have effect for the purposes of this Act: (d) where subparagraph (c)(i) applies--the eligible entity shall be taken to have received or to have been entitled to receive, as capital proceeds in respect of the disposal, an amount equal to the adjusted market value of the eligible interest; (e) where subparagraph (c)(ii) applies--the amount of the capital proceeds that the eligible entity received or was entitled to receive in respect of the disposal shall be taken to be increased by an amount so that it equals the adjusted market value of the eligible interest. (2) For the purposes of subsection (1), the adjusted market value of the eligible interest is the amount that would have been its market value at the time of the disposal if the cancellation of the shares to which this Division applies did not occur and was never proposed to occur. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZH Post-cancellation disposals of eligible interests etc. (1) Where: (a) as a result of the application of section 159GZZZF in relation to a cancellation of shares, the subsidiary concerned is taken to have received or to be entitled to receive an amount of capital proceeds or an increase in an amount of capital proceeds (which amount or increase is in this section called the cancellation adjustment amount) in relation to the cancellation of the shares; and (b) an eligible entity in relation to the holding company and the subsidiary concerned holds an eligible interest at the time of the share cancellation; then this section applies in relation to the eligible interest. (2) For the purposes of this Act (other than Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997): (a) if the eligible interest is not trading stock--in determining: (i) the amount of any deduction allowed or allowable to the eligible entity in respect of the acquisition of the eligible interest; or (ii) the amount of any profit included in, or loss allowable as a deduction from, the assessable income of the eligible entity in respect of the acquisition and any subsequent disposal of the eligible interest; the capital proceeds in respect of the acquisition of the eligible interest shall be taken to have been reduced by the eligible interest's eligible proportion of the cancellation adjustment amount; and (b) if the eligible interest is trading stock--the capital proceeds in respect of any subsequent disposal of the eligible interest shall be taken to be increased by the eligible interest's eligible proportion of the cancellation adjustment amount. (3) For the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997, if a CGT event happens in relation to the eligible interest, the cost base and reduced cost base of the eligible interest is reduced by the eligible interest's eligible proportion of the cancellation adjustment amount. (5) This section applies in relation to the acquisition of the eligible interest held by the eligible entity, and to a CGT event happening in relation to the eligible interest, even if the entity was not an eligible entity, and the interest was not an eligible interest, at the time of the acquisition or CGT event. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZI Additional application of sections 159GZZZG and 159GZZZH to associates (1) Subject to this section, where a natural person is an associate of a holding company (otherwise than solely because of being the trustee of a trust estate), sections 159GZZZG and 159GZZZH apply (in addition to any application apart from this application of this section) as if references in those sections to: (a) an eligible entity in relation to the holding company and the subsidiary concerned; (b) an eligible interest of such an entity; or (c) the eligible proportion in relation to such an interest; were references to what would, if the natural person were a holding company in relation to the subsidiary, be respectively: (d) an eligible entity in relation to the natural person and the subsidiary; (e) an eligible interest of such an entity; or (f) the eligible proportion in relation to such an interest. (2) For the purposes of applying section 159GZZZG or 159GZZZH in accordance with subsection (1): (a) any interest of an entity that is an eligible interest for the purposes of the application of that section apart from subsection (1) shall be taken not to be an eligible interest; and (b) any eligible interest of an eligible entity (including the natural person) held in the actual holding company referred to in subsection (1), or in any eligible entity interposed between the natural person and that holding company, shall be taken not to be an eligible interest. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZIA Application of Division to non-share dividends (1) This Division: (a) applies to a non-share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non-share dividend in the same way as it applies to a dividend. (2) Paragraph (1)(a) does not apply to subsection 159GZZZP(1). INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZJ Interpretation In this Division: "buy-back" has the meaning given by paragraph 159GZZZK(a). "off-market purchase" has the meaning given by paragraph 159GZZZK(d). "on-market purchase" has the meaning given by paragraph 159GZZZK(c). "purchase price" has the meaning given by section 159GZZZM. "seller" has the meaning given by paragraph 159GZZZK(b). INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZK Explanation of terms For the purposes of this Division, where a company buys a share in itself from a shareholder in the company: (a) the purchase is a buy-back; and (b) the shareholder is the seller; and (c) if: (i) the share is listed for quotation in the official list of a stock exchange in Australia or elsewhere; and (ii) the buy-back is made in the ordinary course of trading on that stock exchange; the buy-back is an on-market purchase; and (d) if the buy-back is not covered by paragraph (c)--the buy-back is an off-market purchase. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZL Special buy-backs not made in ordinary course of trading on a stock exchange For the purposes of this Division, a buy-back is not made in the ordinary course of trading on a stock exchange in Australia if, when reported to the stock exchange, the transaction under which the buy-back is made, is, under the stock exchange's rules, described as special. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZM Purchase price in respect of buy-back For the purposes of this Division, the purchase price in respect of a buy-back of a share is: (a) if the seller has received or is entitled to receive an amount or amounts of money as a result of or in respect of the buy-back--that amount or the sum of those amounts; or (b) if the seller has received or is entitled to receive property other than money as a result of or in respect of the buy-back--the market value of that property at the time of the buy-back; or (c) if the seller has received or is entitled to receive both an amount or amounts of money and property other than money as a result of or in respect of the buy-back--the sum of that amount or those amounts and the market value of that property at the time of the buy-back. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZN Buy-back and cancellation disregarded for certain purposes If a company buys-back a share then the buy-back, and any subsequent cancellation of the share, are disregarded for the purposes of: (a) determining for the purposes of this Act: (i) whether an amount is included in the assessable income of the company under a provision of this Act (other than a provision of Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT)); or (ii) whether an amount is allowable as a deduction to the company; or (b) determining whether the company makes a capital gain or capital loss. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZP Part of off-market purchase price is a dividend (1) For the purposes of this Act, but subject to subsection (1A), where a buy-back of a share or non-share equity interest by a company is an off-market purchase, the difference between: (a) the purchase price; and (b) the part (if any) of the purchase price in respect of the buy-back of the share or non-share equity interest which is debited against amounts standing to the credit of: (i) the company's share capital account if it is a share that is bought back; or (ii) the company's share capital account or non-share capital account if it is a non-share equity interest that is bought back; is taken to be a dividend paid by the company: (c) to the seller as a shareholder in the company; and (d) out of profits derived by the company; and (e) on the day the buy-back occurs. (1A) If the dividend is included to any extent in the seller's assessable income of any year of income, it is not taken into account to that extent under section 118-20 of the Income Tax Assessment Act 1997. (2) The remainder of the purchase price is taken not to be a dividend for the purposes of this Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZQ Consideration in respect of off-market purchase (1) Subject to this section, if a buy-back of a share is an off-market purchase, then: (a) in determining, for the purposes of this Act: (i) whether an amount is included in the assessable income of the seller under a provision of this Act other than Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT); or (ii) whether an amount is allowable as a deduction to the seller; or (b) whether the seller makes a capital gain or capital loss; in respect of the buy-back, the seller is taken to have received or to be entitled to receive, as consideration in respect of the sale of the share, an amount equal to the purchase price in respect of the buy-back. Deemed consideration increased to market value (2) If apart from this section: (a) the purchase price in respect of the buy-back; is less than: (b) the amount that would have been the market value of the share at the time of the buy-back if the buy-back did not occur and was never proposed to occur; then, subject to subsection (3), in making the determinations mentioned in paragraphs (1)(a) and (b), the amount of consideration that the seller is taken to have received or to be entitled to receive in respect of the sale of the share is equal to the market value mentioned in paragraph (b) of this subsection. Deemed consideration reduced where dividend assessable etc. (3) Subject to subsection (8), if there is a reduction amount in respect of the buy-back (see subsection (4)), then, in making the determinations mentioned in paragraphs (1)(a) and (b), the amount of consideration that the seller is taken to have received or to be entitled to receive in respect of the sale of the share, after any application of subsection (2), is reduced by the reduction amount. Reduction amount (4) The following steps are to be taken in working out whether there is a reduction amount in respect of the buy-back: (a) first, work out whether the whole or part of the purchase price in respect of the buy-back is taken to be a dividend by section 159GZZZP; (b) second, for any amount satisfying paragraph (a), work out whether the whole or part of it is either: (i) included in the seller's assessable income of any year of income (disregarding section 128D of this Act and section 802-15 of the Income Tax Assessment Act 1997); or (ii) an eligible non-capital amount (see subsection (5)). The amount worked out is the reduction amount in respect of the buy-back. Eligible non-capital amount (5) An amount is an eligible non-capital amount if it is neither: (a) debited against a share capital account or a reserve to the extent that it consists of profits from the revaluation of assets of the company that have not been disposed of by the company; nor (b) attributable, either directly or indirectly, to amounts that were transferred from such an account or reserve of the company. Debit for deemed dividend (7) For the purposes of subsection (5), an amount of the purchase price that is taken to be a dividend by section 159GZZZP is taken to have been debited against the account or reserves against which the purchase price was debited, and to the same extent. Offsetable amount excluded from reduction where loss (8) If: (aa) the seller is a corporate tax entity; and (a) the amount of consideration that the seller is taken by subsection (1) or (2) to have received or to be entitled to receive in respect of the sale of the share is, apart from this subsection, reduced by a reduction amount under subsection (3); and (b) the dividend mentioned in paragraph (4)(a), so far as it does not exceed the reduction amount, consists to any extent of an offsetable amount (see subsection (9)); and (c) disregarding this subsection, as a result of the operation of this section: (i) for the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT), the seller incurs a capital loss or an increased capital loss (which loss or increase is the loss amount) in respect of the buy-back; or (ii) a loss, or an increased loss, (which loss or increase is also the loss amount) in respect of the buy-back is allowable as a deduction to the seller under a provision of a Part of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997; or (iii) the amount of a deduction allowable from the seller's assessable income of any year of income in respect of the issue or acquisition of the share exceeds, or exceeds by a greater amount, (the excess or increased excess is also the loss amount) the amount included in the seller's assessable income of any year of income in respect of the buy-back of the share; then the reduction in the amount of the consideration under subsection (3) is instead a reduction equal to: (d) the reduction amount; less: (e) so much of the offsetable amount as does not exceed the loss amount. Meaning of offsetable amount (9) For the purposes of subsection (8), if the seller is entitled to a tax offset under Division 207 of the Income Tax Assessment Act 1997 in the seller's assessment for a year of income in respect of the dividend, the dividend consists of an offsetable amount worked out using the formula: INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZR No part of on-market purchase price is a dividend For the purposes of this Act, where a buy-back by a company of a share is an on-market purchase, no part of the purchase price in respect of the buy-back of the share is taken to be a dividend. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZS Consideration in respect of on-market purchase Where a buy-back is an on-market purchase, then: (a) in determining, for the purposes of this Act: (i) whether an amount is included in the assessable income of the seller under a provision of this Act other than Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT); or (ii) whether an amount is allowable as a deduction to the seller; or (b) whether the seller makes a capital gain or capital loss; in respect of the buy-back, the seller is taken to have received or to be entitled to receive, as consideration in respect of the sale of the share, the purchase price in respect of the buy-back of the share. Note: The issue of certificates that give rise to the tax concessions in this Division has been terminated for new cases by the Taxation Laws Amendment (Infrastructure Borrowings) Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZZD Interpretation In this Division: "certificate" has the same meaning as in Chapter 3 of the DAA Act. "DAA" means the Development Allowance Authority appointed under Chapter 4 of the DAA Act. "DAA Act" means the Development Allowance Authority Act 1992. "direct infrastructure borrowing" has the same meaning as in Chapter 3 of the DAA Act. "exemption period", in relation to an infrastructure borrowing, means: (a) in the case of a direct infrastructure borrowing or an indirect infrastructure borrowing--the period of 15 years beginning at the time of the borrowing; or (b) in the case of a refinancing infrastructure borrowing--so much of the period that under paragraph (a) is the exemption period in respect of the direct infrastructure borrowing, or the indirect infrastructure borrowing, to which the refinancing infrastructure borrowing relates as remains at the time of the refinancing infrastructure borrowing. "IB amount", in relation to a taxpayer, means: (a) a payment of interest, or in the nature of interest, made or liable to be made to the taxpayer under an infrastructure borrowing; or (b) an amount included in the assessable income of the taxpayer under section 159GQ in relation to an infrastructure borrowing. "indirect infrastructure borrowing" has the same meaning as in Chapter 3 of the DAA Act. "infrastructure borrowing" has the same meaning as in Chapter 3 of the DAA Act. "infrastructure period", in relation to a certificate that is cancelled, means the period from the time of the borrowing to which the certificate applied until the conditions under section 93R of the DAA Act would, if the certificate had not been cancelled, have ceased to apply to the holder. "refinancing infrastructure borrowing" has the same meaning as in Chapter 3 of the DAA Act. "tax benefit amount", in relation to a certificate that is cancelled, in relation to a year of income (being the year of income in which the cancellation occurs or any earlier or later year of income), means: (a) a payment of interest, or in the nature of interest, that, because of paragraph 159GZZZZE(1)(a), is not allowable as a deduction from the assessable income of the year of income of a taxpayer in respect of the borrowing to which the certificate applies; or (b) an amount that, because of paragraph 159GZZZZE(2)(d), is not allowable as a deduction under section 159GT from the assessable income of the year of income of a taxpayer in respect of the borrowing to which the certificate applies. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZZE Infrastructure borrowings to be non-assessable and non-deductible Basic non-assessability/non-deductibility provision (1A) This section applies to an infrastructure borrowing if a certificate is issued in relation to the borrowing, regardless of whether the certificate is later cancelled. (1) Subject to section 159GG, no amount is included in, or allowable as a deduction from, the assessable income of a taxpayer of a year of income in respect of: (a) payments of principal or interest, or in the nature of interest, made or liable to be made by or to the taxpayer under the infrastructure borrowing during the exemption period in relation to the borrowing; or (b) amounts received or receivable, or paid or payable, by the taxpayer by way of consideration for the acquisition or disposal, during the exemption period in relation to the infrastructure borrowing, of: (i) rights or liabilities in respect of the borrowing; or (ii) any bond, debenture, discounted security, or other document evidencing indebtedness, in respect of the borrowing; or (c) any profit or loss of the taxpayer in respect of a disposal mentioned in paragraph (b), or in respect of the repayment of the infrastructure borrowing by or to the taxpayer during the exemption period in relation to the borrowing; or (d) the writing off or extinguishing of the whole or part of any debt that consists of a payment or amount to which this subsection applies that is liable to be made to, or is receivable by, the taxpayer. Special provision relating to Division 16E (2) Subject to section 159GZZZZG, no amount is included in, or allowable as a deduction from, the assessable income of a taxpayer of a year of income: (a) under section 159GQ in relation to the exemption period in respect of the infrastructure borrowing; or (c) under section 159GS in relation to any transfer, during the exemption period in respect of the infrastructure borrowing, of: (i) rights or liabilities in respect of the borrowing; or (ii) any bond, debenture, discounted security, or other document evidencing indebtedness, in respect of the borrowing; or (d) under section 159GT in respect of the exemption period in relation to the infrastructure borrowing. Deemed re-acquisition after exemption period (3) For the purposes of this Act: (a) if a taxpayer holds a bond, debenture, discounted security, or other document evidencing indebtedness, in respect of the infrastructure borrowing--that bond, debenture, discounted security or other document; or (b) in any other case--all rights of a taxpayer under the infrastructure borrowing; is or are taken to have been disposed of by the taxpayer immediately before the end of the exemption period and to have been re-acquired by the taxpayer immediately after the end of the period for their market value at that time. INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZZF Tax exemption to be disregarded for certain purposes The exclusion under section 159GZZZZE of amounts from assessable income is to be disregarded for the purpose of applying any provision of this Act to determine allowable deductions in respect of infrastructure borrowings (other than deductions to which section 159GZZZZE applies). INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZZG Rebate election Basic case (1) If: (a) if subsections 159GZZZZE(1) and (2) did not apply to IB amounts, the assessable income of a year of income of a taxpayer who is: (i) a company or a natural person (other than a company or natural person in the capacity of a trustee); or (ii) a corporate unit trust within the meaning of Division 6B in relation to the year of income; or (iii) a public trading trust within the meaning of Division 6C in relation to the year of income; or (iv) a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the year of income; would include one or more IB amounts; and (b) the taxpayer's return of income of the year of income includes all of the IB amounts; then: (c) all of the IB amounts are included in the taxpayer's assessable income of the year of income; and (d) the taxpayer is entitled to a rebate in the taxpayer's assessment for that year of an amount equal to 30% of the IB amounts. Beneficiary assessment (2) If: (a) apart from this subsection, a share of the net income of a trust estate of a year of income is included in a taxpayer's assessable income under section 97; and (b) if subsections 159GZZZZE(1) and (2) did not apply to IB amounts included in the assessable income of the trust estate, or of any other trust estate or partnership, that share of the net income would be increased by an amount (the IB attributable amount); and (c) the taxpayer's return of income of the year of income is prepared on the basis that all of the IB amounts are included in the assessable income of the trust estate, or of the other trust estate or partnership; then: (d) for the purposes only of working out the share of the net income to be included in the taxpayer's assessable income, the assessable income of the trust estate, or of the other trust estate or partnership, includes all of the IB amounts; and (e) the taxpayer is entitled to a rebate in the taxpayer's assessment for the year of income of an amount equal to 30% of the IB attributable amount. Trustee assessment (3) If: (a) apart from this subsection, the trustee of a trust estate is assessed and liable to pay tax: (i) in respect of a share of the net income of the trust estate of a year of income under section 98; or (ii) in respect of the whole or part of the net income of the trust estate under section 99 or 99A; and (b) if subsections 159GZZZZE(1) and (2) did not apply to IB amounts included in the assessable income of the trust estate, or of any other trust estate or partnership, of the year of income, the amount of the share, or of the whole or the part, of the net income would be increased by an amount (the IB attributable amount); and (c) the trustee's return of income in respect of the share, or the whole or the part of the net income, of the year of income is prepared on the basis that all of the IB amounts are included in the assessable income of the trust estate, or of the other trust estate or partnership; then: (d) for the purposes only of working out the amount of: (i) the share, or of the whole or the part, of the net income; and (ii) the individual interest of a beneficiary in the net income of the trust estate that is to be included in the beneficiary's assessable income under section 100, where the share of the net income to which subparagraph (a)(i) of this subsection applies is that of the beneficiary; the assessable income of the trust estate, or of the other trust estate or partnership, includes all of the IB amounts; and (e) the trustee is entitled to a rebate in the trustee's assessment in respect of the share, or of the whole or the part, of the net income of the year of income to an amount equal to 30% of the IB attributable amount. Partner assessment (4) If: (a) apart from this subsection, a share of the net income of a partnership of a year of income is included in a taxpayer's assessable income under section 92; and (b) if subsections 159GZZZZE(1) and (2) did not apply to IB amounts included in the assessable income of the partnership, or of any other partnership or trust estate, that share of the net income would be increased by an amount (the IB attributable amount); and (c) the taxpayer's return of income of the year of income is prepared on the basis that all of the IB amounts are included in the assessable income of the partnership, or of the other partnership or trust estate; then: (d) for the purposes only of working out the share of the net income included in the taxpayer's assessable income, the assessable income of the partnership, or of the other partnership or trust estate, includes all of the IB amounts; and (e) the taxpayer is entitled to a rebate in the taxpayer's assessment for the year of income of an amount equal to 30% of the IB attributable amount. (5) The inclusion of an IB amount in the assessable income of a person under this section does not affect the denial of allowability of a deduction to another person in respect of the same amount under subsection 159GZZZZE(1) or (2). INCOME TAX ASSESSMENT ACT 1936 - SECT 159GZZZZH Tax payable where infrastructure borrowing certificate cancelled Tax payable (1) If: (a) the DAA cancels a certificate in relation to an infrastructure borrowing; and (b) for any year of income (whether the one in which the cancellation takes place or an earlier or later one), there is a tax benefit amount in relation to the certificate; the holder of the certificate at the time of the cancellation is liable to pay tax on an amount (an infrastructure certificate cancellation amount) worked out using the formula: where "Factor" means: (a) if the year of income to which the tax benefit amount relates is: (i) the year of income in which the act or omission that was the ground, or the first act or omission that was a ground, relied on by the DAA for cancelling the certificate occurred; or (ii) an earlier year of income; the fraction worked out using the formula: ; or (b) in any other case--the number 1. Assessment of amount (2) The Commissioner may make an assessment of the tax payable by a taxpayer under this section. In making or amending the assessment, and in dealing with any objection, appeal or review in relation to the assessment or amended assessment, the Commissioner may rely in whole or in part on advice given by the DAA under section 93ZF of the DAA Act. Incorporation in other notices (3) This Act does not prevent notice of the assessment being incorporated in a notice of any other assessment made in respect of the taxpayer under this Act. References in other provisions (4) Unless the contrary intention appears, in sections 172, 174, 254 and 255 and former sections 204, 215 and 216, but not in any other section of this Act, income tax or tax includes tax payable under this section. (5) Division 5 of the Income Tax Assessment Act 1997 (How to work out when to pay your income tax) applies to tax payable under this section in the same way as that Division applies to income tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 159H Application This Subdivision applies in relation to an assessment in respect of the income of a taxpayer if and only if: (a) the taxpayer is a resident and is not a company, and the assessment is not in respect of income derived by him or her in a representative capacity as an agent or trustee; or (b) both of the following requirements are satisfied: (i) the taxpayer is a trustee who is liable to be assessed under section 98 in respect of a share of the net income of a trust estate in respect of a beneficiary; (ii) the beneficiary is a resident and is not a company. INCOME TAX ASSESSMENT ACT 1936 - SECT 159HA Indexation for the purposes of sections 159J, 159L and 159P (1) Sections 159J, 159L and 159P apply in relation to an indexing year of income as if each indexable amount were replaced by the amount calculated using the formula: Previous indexable amount ï‚´ Indexation factor where: "Previous indexable amount" is the indexable amount concerned for the previous year of income. "Indexation factor" is the indexation factor for the indexing year of income. (2) Where, apart from this subsection, an amount calculated under subsection (1) would be an amount of dollars and cents: (a) if the number of cents is less than 50--the amount shall be rounded down to the nearest whole dollar; and (b) in any other case--the amount shall be rounded up to the nearest whole dollar. (3) The indexation factor for an indexing year of income is the number (calculated to 3 decimal places) ascertained by dividing the sum of the index numbers for the quarters of the 12 month period ending on 31 March immediately before the indexing year of income by the sum of the index numbers for the quarters of the preceding 12 month period ending on 31 March. (4) If the factor ascertained under subsection (3) in relation to an indexing year of income would, if it were calculated to 4 decimal places, end with a number greater than 4, the factor ascertained under that subsection in relation to that indexing year of income shall be taken to be the factor calculated to 3 decimal places and increased by 0.001. (5) Subject to subsection (6), if at any time, whether before or after the commencement of this section, the Australian Statistician has published or publishes an index number in respect of a quarter in substitution for an index number previously published by the Australian Statistician in respect of that quarter, the publication of the later index number shall be disregarded for the purposes of this section. (6) If at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the reference base for the Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to the index numbers published in terms of the new reference base. (6A) If the indexation factor for an indexing year of income is less than 1.000, sections 159J and 159L apply in relation to the indexing year of income as if each indexable amount were the same as the previous indexable amount (as defined in subsection (1)). This subsection has effect despite subsection (1). (7) In this section: "indexable amount" means: (a) an amount specified in subsection 159J(1B) or (2) (other than the amounts specified in column 3 of the table in subsection 159J(2) in respect of a dependant included in class 3 or 4); or (b) the amounts specified in subsection 159L(2); or (c) the amount specified in: (i) paragraph 23AB(7A)(a); or (ii) paragraph (d) of the definition of relevant rebate amount in subsection 79A(4); or (iii) paragraph (d) of the definition of concessional rebate amount in subsection 79B(6); or (d) an amount specified in paragraph 159P(3A)(b); or, if any such amount has been altered under this section in relation to the 2008-09 year of income or a later year of income, the altered amount. "indexation factor" means the indexation factor ascertained under subsection (3). "indexing year of income" means the year of income commencing on 1 July 2008 or a later year of income. "index number", in relation to a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter. INCOME TAX ASSESSMENT ACT 1936 - SECT 159J Rebates for dependants (1) Where, during the year of income, a taxpayer contributes to the maintenance of a person (in this section referred to as a dependant) specified in column 2 of the table set out in subsection (2) and that person is a resident, the taxpayer is entitled, in his or her assessment in respect of income of that year of income, to a rebate of tax ascertained in accordance with this section. (1A) A taxpayer is not entitled in his or her assessment in respect of income of a year of income after the year of income that ends on 30 June 1976 to a rebate under this section in respect of a person by reason that the person is included in class 3 or class 4 in the table set out in subsection (2). (1AB) A taxpayer is not entitled, in his or her assessment in respect of a year of income, to a rebate under this section in respect of a dependant included in class 1, 2, 5 or 6 in the table in subsection (2) if: (a) for a dependant included in class 1--the taxpayer's adjusted taxable income for the year is more than the income limit for family tax benefit (Part B) for the year; or (b) for a dependant included in class 2, 5 or 6--subsection (1AC) applies to the taxpayer for the year. (1AC) This subsection applies to a taxpayer for a year of income if the sum of: (a) the taxpayer's adjusted taxable income for the year; and (b) if the taxpayer has a spouse during the year--the spouse's adjusted taxable income for the year; and (c) if the taxpayer has a spouse during only part of the year--this amount: is more than the income limit for family tax benefit (Part B) for the year. Note: If the taxpayer has a different spouse during different parts of the year, the adjusted taxable income of each spouse will be included under paragraph (c). (1B) Where, but for subsection (1A), a taxpayer would be entitled in his or her assessment in respect of income of a year of income to a rebate under this section in respect of a dependant included in class 3 or 4 in the table in subsection (2), the entitlement of the taxpayer to a rebate under this section in that assessment in respect of any dependant included in class 2 of that table shall be calculated as if the reference in that table to $1,711 were a reference to $2,051. (1C) A taxpayer is not entitled, in his or her assessment in respect of a year of income, to a rebate under this section in respect of a dependant included in class 1 in the table in subsection (2) if the dependant was born on or after 1 July 1971. (1D) A taxpayer is not entitled, in his or her assessment in respect of a year of income, to a rebate under this section in respect of a dependant who is an invalid spouse or a carer spouse for the purpose of class 5 in the table in subsection (2) if the taxpayer is also entitled to a rebate in respect of the dependant being included in class 1 in the table. (1E) If a taxpayer is entitled, in his or her assessment in respect of a year of income, to a rebate under this section in respect of a dependant who is an invalid spouse included in class 5 in the table in subsection (2), the taxpayer is not also entitled to a rebate in respect of that dependant being included as a carer spouse in class 5 in the table. (2) Subject to this section, the amount of the rebate allowable in the assessment of the taxpayer in respect of a dependant under this section is the relevant amount specified in column 3 of the following table: Column 1 Class Column 2 Dependant Column 3 Amounts of Rebate 1 Spouse of the taxpayer $2,100 2 Child-housekeeper $1,711 3 Child less than 21 years of age (not being a student) In respect of 1 such child--$376 In respect of each other such child--$282 4 Student $376 5 Invalid relative, invalid spouse or carer spouse In respect of an invalid relative--$770 In respect of an invalid spouse--$2,100 In respect of a carer spouse--$2,100 6 Parent of the taxpayer or of the taxpayer's spouse $1,540 (3) Where: (a) the taxpayer contributes to the maintenance of a dependant during part only of the year of income; or (aa) a dependant is a resident during part only of the year of income; or (b) during the whole or part of the year of income, 2 or more persons contribute to the maintenance of a person who is a dependant in relation to 1 or more of the persons so contributing; or (c) a dependant, being the spouse of the taxpayer, is the spouse of the taxpayer during part only of the year of income; or (d) a dependant, being a child-housekeeper, is wholly engaged in keeping house for the taxpayer during part only of the year of income; or (e) a dependant, being a child included in class 3 in the table in subsection (2), a student or an invalid relative, is such a dependant during part only of the year of income; or (f) a dependant, being a spouse of the taxpayer, is an invalid spouse or a carer spouse during part only of the income year; the rebate allowable to the taxpayer in respect of that dependant shall be such part of the relevant amount specified in column 3 of that table as, in the opinion of the Commissioner, is reasonable in the circumstances. (3A) In the application of the definition of resident in subsection 6(1) for the purposes of this section, a dependant included in class 1, 2, 3 or 4, and a child, invalid spouse or carer spouse of the taxpayer being a dependant included in class 5, in the table in subsection (2) shall be deemed to have a domicile in Australia at all times when the taxpayer has a domicile in Australia. (4) The amount of the rebate otherwise allowable under this section in respect of a dependant shall be reduced by $1 for every $4 by which the dependant's adjusted taxable income for the year of income exceeds $282. (5) Where, during the whole or a part of the year of income, the taxpayer and a person of a kind specified in column 2 of the table in subsection (2) resided together and that person has an adjusted taxable income for that year, then, for the purposes of this section, the taxpayer shall be regarded, unless the contrary is established to the satisfaction of the Commissioner, as having contributed to the maintenance of that person during the whole or that part of the year of income, as the case may be. (5A) Subject to subsection (5B), where, but for this subsection, a taxpayer would, by reason that he or she contributed to the maintenance of 2 or more dependants included in class 1 in the table in subsection (2) during the whole or a part of the year of income, be entitled in his or her assessment in respect of income of the year of income to more than one rebate under this section, the taxpayer shall be regarded as having contributed to the maintenance of only one of those dependants during the whole or that part of the year of income, as the case may be, being the dependant in respect of whom the lesser, or least, of the rebates would, but for this subsection, be allowable to the taxpayer under this section in respect of those dependants. (5B) Where subsection (5A) applies but the Commissioner is of the opinion that, because of special circumstances, it would be reasonable to regard the taxpayer as having contributed during the whole or a part of the year of income to the maintenance of a dependant included in class 1 in the table in subsection (2), other than the dependant in respect of whom a rebate is allowable under this section by virtue of the operation of subsection (5A), the taxpayer shall be regarded as having contributed to the maintenance of that other dependant only and the rebate allowable to the taxpayer under this section in respect of that other dependant shall be such amount, not exceeding the relevant amount specified in column 3 of the table in subsection (2), as is, in the opinion of the Commissioner, reasonable in the circumstances. (5C) Where: (a) during the whole or a part of the year of income, a taxpayer contributed to the maintenance of 2 or more dependants included in class 1 in the table in subsection (2); and (b) by virtue of the operation of subsection (4), a rebate is not allowable to the taxpayer under this section in respect of one of those dependants; the taxpayer shall be regarded as not having contributed to the maintenance of any of those dependants during the whole or that part of the year of income, unless the Commissioner is of the opinion that, because of special circumstances, it would be unreasonable to do so, in which case the rebate (if any) allowable under this section in the assessment of the taxpayer in respect of income of the year of income in respect of a dependant included in class 1 in that table shall be such amount, not exceeding the relevant amount specified in column 3 of that table, as is, in the opinion of the Commissioner, reasonable in the circumstances. (5CA) For the purposes of subsections (5A), (5B) and (5C), treat a dependant that is an invalid spouse or a carer spouse for the purpose of class 5 in the table in subsection (2) as a dependant included in class 1 in the table. (5D) Where, by reason that, during the whole or a part of the year of income, a taxpayer contributes to the maintenance of a dependant included in class 1 in the table in subsection (2) or a dependant that is an invalid spouse or a carer spouse for the purpose of class 5 in the table in subsection (2), the taxpayer is entitled, or would, but for subsection (1C) or (4), be entitled, in his or her assessment in respect of income of the year of income, to a rebate under this section, a child of the taxpayer shall be deemed not to have been engaged in keeping house for the taxpayer during the whole or that part of the year of income, as the case may be. (6) In this section: "adjusted taxable income" has the same meaning as in the A New Tax System (Family Assistance) Act 1999, except that, for the purposes of this section, clauses 3 and 3A of Schedule 3 to that Act are taken not to have been enacted. "carer spouse" means a person who is a spouse of the taxpayer, being a person: (a) who is wholly engaged in providing care to an invalid relative; or (b) to whom a carer allowance or carer payment is being paid pursuant to the Social Security Act 1991 or to whom a carer service pension is being paid pursuant to the Veterans' Entitlements Act 1986. "child-housekeeper" means the child of a taxpayer who is wholly engaged in keeping house for the taxpayer. "income limit for family tax benefit (Part B)" means the amount specified in subclause 28B(1) of Schedule 1 to the A New Tax System (Family Assistance) Act 1999, as indexed under Part 2 of Schedule 4 to that Act. "invalid relative" means a person who is not less than 16 years of age and is a child, brother or sister of the taxpayer or of the taxpayer's spouse, being a person: (a) to whom a disability support pension or a special needs disability support pension is being paid under the Social Security Act 1991; or (c) in respect of whom the taxpayer obtains a certificate issued by a medical officer of the Health Department, or by a medical practitioner appointed by the Families Secretary for the purpose of examining claimants for disability support pensions under that Act, certifying that the person has a continuing inability to work within the meaning of Part 2.3 of that Act. Note: Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining relationships for the purposes of the definition of invalid relative. "invalid spouse" means a person that is a spouse of the taxpayer, being a person who satisfies the requirements in paragraph (a) or (c) of the definition of invalid relative. "student" means a person who is less than 25 years of age and is receiving full-time education at a school, college or university. INCOME TAX ASSESSMENT ACT 1936 - SECT 159JA Rebates for dependants--reduction because of certain other benefits Families without shared care percentages (1) A taxpayer is not entitled, in his or her assessment in respect of a year of income, to a rebate under section 159J in respect of a dependant for a part of the year, if: (a) the dependant is included in class 1 or 2 in the table in subsection 159J(2) or is an invalid spouse or a carer spouse for the purpose of class 5 in the table in subsection 159J(2); and (b) during that part of the year: (i) the taxpayer is a member of a family tax benefit (Part B) family without shared care; or (ii) parental leave pay is payable under the Paid Parental Leave Act 2010 to the taxpayer, or to the taxpayer's spouse while being the taxpayer's partner (within the meaning of that Act). Note: That part of the year may be the whole year. (2) Subject to subsection (3), the rebate allowable to the taxpayer under section 159J in respect of the dependant for the part (if any) of the year not covered by paragraph (1)(b) of this section is such part of the relevant rebate amount specified in column 3 of the table in subsection 159J(2) as, in the Commissioner's opinion, is reasonable in the circumstances. Families with shared care percentages (3) The rebate allowable to a taxpayer under section 159J in respect of a dependant for a part (the shared care period) of a year of income is to be worked out using the formula in subsection (4) of this section, if: (a) disregarding this subsection, the taxpayer would be entitled, in his or her assessment in respect of the year, to a rebate under section 159J in respect of the dependant; and (b) the dependant is included in class 1 or 2 in the table in subsection 159J(2) or is an invalid spouse or a carer spouse for the purpose of class 5 in the table in subsection 159J(2); and (c) during the shared care period: (i) the taxpayer, or the taxpayer's spouse while being the taxpayer's partner (within the meaning of the A New Tax System (Family Assistance) Act 1999), was eligible for family tax benefit at the Part B rate within the meaning of that Act; and (ii) clause 31 of Schedule 1 to that Act applied in respect of that Part B rate because the taxpayer, or the taxpayer's spouse, had a shared care percentage for an FTB child (within the meaning of that Act). Note: The shared care period may be the whole year. (4) The formula is: where: "applicable rebate amount" is the amount of rebate that would have been allowable under section 159J in respect of the shared care period but for subsection (3) of this section. "non-shared care rate" is the rate that would be the standard rate in respect of the taxpayer or the taxpayer's spouse under clause 30 of Schedule 1 to the A New Tax System (Family Assistance) Act 1999 if: (a) clause 31 of that Schedule did not apply; and (b) the FTB child in respect of whom the standard rate was determined under clause 31 was the only FTB child of the taxpayer or the taxpayer's spouse, as the case requires. "shared care rate" is the standard rate in respect of the taxpayer or the taxpayer's spouse worked out under clause 31 of Schedule 1 to the A New Tax System (Family Assistance) Act 1999. INCOME TAX ASSESSMENT ACT 1936 - SECT 159K Sole parent rebate (1) Where, during the whole of the year of income, a taxpayer has the sole care of a dependant or dependants included in class 3 or class 4 in the table in subsection 159J(2), being a dependant or dependants in respect of whom he would be entitled to a rebate of tax under section 159J in his assessment in respect of income of the year of income but for subsection 159J(1A), he is entitled, subject to subsection (3), to a rebate of tax, in his assessment in respect of income of that year of income, of: (a) if he is not entitled, in respect of the year of income, to a rebate of tax under section 159J in respect of a spouse or child-housekeeper or under section 159L in respect of a housekeeper--an amount of $1,607; and (b) if he is entitled to a rebate of tax under section 159J in respect of a child-housekeeper, or under section 159L in respect of a housekeeper, in respect of a period that is part of the year of income, or the taxpayer contributed during a period that is part of the year of income, to the maintenance of his spouse--an amount of $1,607 less an amount that bears to $1,607 the same proportion as the number of days in that period (or, if there is more than one such period, in those periods) bears to 365. (1A) A taxpayer is not entitled to a rebate under this section in his or her assessment in respect of the 2000-2001 year of income or a later year of income. (2) Where, during part only of the year of income, a taxpayer has the sole care of a dependant or dependants included in class 3 or class 4 in the table in subsection 159J(2), being a dependant or dependants in respect of whom he would be entitled to a rebate of tax under section 159J in his assessment in respect of income of the year of income but for subsection 159J(1A), and the taxpayer would, if he had had the sole care of that dependant or those dependants during the whole of the year of income, have been entitled to a rebate under subsection (1), the taxpayer is entitled, subject to subsection (3), to a rebate of tax, in his assessment in respect of income of the year of income, of an amount not exceeding $1,607 that, in the opinion of the Commissioner, is reasonable in the circumstances. (3) Where the taxpayer is the spouse of another person during the whole or part of the year of income: (a) the taxpayer is not entitled to a rebate under this section in respect of that year of income unless the Commissioner is of the opinion that, because of special circumstances, it is just to allow a rebate; and (b) the rebate (if any) shall be such amount not exceeding $1,607 as, in the opinion of the Commissioner, is reasonable in the circumstances. INCOME TAX ASSESSMENT ACT 1936 - SECT 159L Rebates for housekeepers (1) Where, during the year of income, a person (in this section referred to as a housekeeper) is wholly engaged in keeping house in Australia for a taxpayer and in caring for: (a) a child of the taxpayer less than 21 years of age; or (b) a dependant included in class 3, or a dependant less than 21 years of age included in class 4, in the table in subsection 159J(2) in respect of whom the taxpayer would be entitled to a rebate under section 159J in his or her assessment in respect of income of the year of income but for subsection 159J(1A); or (ba) a dependant who is an invalid relative for the purpose of class 5 in the table in subsection 159J(2) in respect of whom the taxpayer is entitled to a rebate under section 159J in his or her assessment in respect of income of the year of income; or (c) an invalid spouse (within the meaning of subsection 159J(6)); the taxpayer is entitled, in his or her assessment in respect of income of that year of income, to a rebate of tax ascertained in accordance with this section. (2) Subject to this section, the amount of the rebate allowable under this section in the assessment of the taxpayer in respect of income of a year of income shall be: (a) in the case of a taxpayer who would, but for subsection 159J(1A), be entitled to a rebate in that assessment under section 159J in respect of a dependant included in class 3 or class 4 in the table in subsection 159J(2)--$2,051; and (b) in any other case--$1,711. (3) Where, by reason of the fact that, during a part of the year of income, the taxpayer contributes to the maintenance of a dependant included in class 1 or class 2 in the table in subsection 159J(2) or a carer spouse for the purpose of class 5 in the table in subsection 159J(2) not being a dependant specified in paragraph (1)(c) of this section, the taxpayer is entitled to a rebate of tax under section 159J in his or her assessment in respect of income of the year of income, a housekeeper shall be deemed not to have been wholly engaged in keeping house for the taxpayer during that part of the year of income. (3B) A taxpayer is not entitled, in his or her assessment in respect of a year of income, to a rebate under this section if subsection 159J(1AC) applies to the taxpayer for the year. (4) If a taxpayer has an invalid spouse (within the meaning of subsection 159J(6)) and the housekeeper is not, during the year of income, engaged in caring for the invalid spouse of the taxpayer: (a) the taxpayer is not entitled to a rebate under this section in his or her assessment in respect of income of the year of income unless the Commissioner is of the opinion that, because of special circumstances, it is just to allow a rebate; and (b) the rebate (if any) shall be of such amount, not exceeding the amount specified in subsection (2) in relation to the taxpayer as, in the opinion of the Commissioner, is reasonable in the circumstances. (5) Where a housekeeper is wholly engaged in keeping house for the taxpayer and in caring for the child, dependant or spouse during part only of the year of income, the rebate allowable in respect of that housekeeper under this section in the assessment of the taxpayer in respect of income of that year of income shall be such part of the amount specified in subsection (2) in relation to the taxpayer as, in the opinion of the Commissioner, is reasonable in the circumstances. INCOME TAX ASSESSMENT ACT 1936 - SECT 159LA Rebates for housekeepers--reduction because of certain other benefits Families without shared care percentages (1) A taxpayer is not entitled, in his or her assessment in respect of a year of income, to a rebate under section 159L in respect of a person (the housekeeper) for a part of the year, if, during that part of the year: (a) the taxpayer does not contribute to the maintenance of a dependant specified in paragraph 159L(1)(c); and (b) either or both of the following subparagraphs apply: (i) the taxpayer is a member of a family tax benefit (Part B) family without shared care; (ii) parental leave pay is payable under the Paid Parental Leave Act 2010 to the taxpayer, or to the taxpayer's spouse while being the taxpayer's partner (within the meaning of that Act). Note: That part of the year may be the whole year. (2) Subject to subsection (3), the rebate allowable to the taxpayer under section 159L in respect of the housekeeper for the part (if any) of the year not covered by subsection (1) of this section is such part of the rebate specified in subsection 159L(2) in relation to the taxpayer as, in the Commissioner's opinion, is reasonable in the circumstances. Families with shared care percentages (3) The rebate allowable to a taxpayer under section 159L in respect of a person (the housekeeper) for a part (the shared care period) of a year of income is to be worked out using the formula in subsection (4) of this section, if: (a) disregarding this subsection, the taxpayer would be entitled, in his or her assessment in respect of the year, to a rebate under section 159L in respect of the housekeeper; and (b) during the shared care period: (i) the taxpayer, or the taxpayer's spouse while being the taxpayer's partner as defined in the A New Tax System (Family Assistance) Act 1999, was eligible for family tax benefit at the Part B rate within the meaning of that Act; and (ii) clause 31 of Schedule 1 to that Act applied in respect of that Part B rate because the taxpayer, or the taxpayer's spouse, had a shared care percentage for an FTB child (within the meaning of that Act); and (iii) the taxpayer did not contribute to the maintenance of a dependant specified in paragraph 159L(1)(c) of this Act. Note: The shared care period may be the whole year. (4) The formula is: where: "applicable rebate amount" is the amount of rebate that would have been allowable under section 159L in respect of the shared care period but for subsection (3) of this section. "non-shared care rate" is the rate that would be the standard rate in respect of the taxpayer or the taxpayer's spouse under clause 30 of Schedule 1 to the A New Tax System (Family Assistance) Act 1999 if: (a) clause 31 of that Schedule did not apply; and (b) the FTB child in respect of whom the standard rate was determined under clause 31 was the only FTB child of the taxpayer or the taxpayer's spouse, as the case requires. "shared care rate" is the standard rate in respect of the taxpayer or the taxpayer's spouse worked out under clause 31 of Schedule 1 to the A New Tax System (Family Assistance) Act 1999. INCOME TAX ASSESSMENT ACT 1936 - SECT 159M Double concessional rebates Where, but for this section, a taxpayer would be entitled, under the provisions of sections 159J and 159L, to more than one rebate of tax in his or her assessment in respect of income of a year of income in respect of the same person, the rebate or rebates shall be of such amount as is or such amounts as are, in the opinion of the Commissioner, reasonable in the circumstances. INCOME TAX ASSESSMENT ACT 1936 - SECT 159N Rebate for certain low-income taxpayers (1) If a taxpayer's taxable income of a year of income is less than $67,500, the taxpayer is entitled to a rebate of tax in the taxpayer's assessment for the year of income. (2) The amount of the rebate is $1,500, reduced by 4 cents for every $1 of the amount (if any) by which the taxpayer's taxable income of the year of income exceeds $30,000. No rebate in respect of income of certain children (3) Subsections (4) and (5) apply if the taxpayer is a prescribed person in relation to the year of income for the purpose of Division 6AA of Part III. (4) Do not apply the rebate against the part (if any) of the taxpayer's basic income tax liability that is attributable to the taxpayer's eligible taxable income for the year of income. (5) If the taxpayer is entitled to the tax offset mentioned in item 15 of the table in subsection 63-10(1) of the Income Tax Assessment Act 1997 (tax offset in respect of certain pensions) for the year of income, treat that tax offset as being applied, to the extent possible, against the part of the taxpayer's basic income tax liability mentioned in subsection (4) of this section. INCOME TAX ASSESSMENT ACT 1936 - SECT 159P Rebate for medical expenses (1) An amount paid by the taxpayer in the year of income as medical expenses in respect of himself or herself, or in respect of a dependant who is a resident, less any amount paid to the taxpayer or any other person, and any amount which the taxpayer or any other person is entitled to be paid, in respect of those medical expenses by a government or public authority or by a society, association or fund (whether incorporated or not) shall, for the purposes of this section, be treated as a rebatable amount in respect of that year of income. (3) Where an amount is paid in the year of income by the trustee of a trust estate out of income of the trust estate as medical expenses in respect of a beneficiary who is a resident, that amount, less the sum of any amounts that have been paid to the trustee or any other person or that the trustee or any other person is entitled to be paid, in respect of those medical expenses by a government or public authority, or by a society, association or fund (whether incorporated or not) shall, for the purposes of this section, be treated as a rebatable amount: (a) where the trustee is liable to be assessed under section 98 in respect of income of the year of income to which that beneficiary is presently entitled--in the assessment of the trustee in respect of that income; and (b) where that beneficiary is liable to be assessed in respect of any income of the year of income--in the assessment of that beneficiary in respect of that income. (3A) Where: (a) a rebatable amount is, or rebatable amounts are, applicable to a taxpayer in respect of a year of income; and (b) that rebatable amount, or the aggregate of those rebatable amounts, exceeds $2,000; the taxpayer is entitled to a rebate of tax in the taxpayer's assessment in respect of income of that year of income of an amount equal to 20% of the excess. (3B) Where the trustee of the estate of a deceased person pays an amount as medical expenses in respect of a liability incurred by the deceased person in the deceased person's lifetime, being an amount that would have been treated, for the purposes of this section, as a rebatable amount if it had been paid by the deceased person during the deceased person's lifetime, there shall be allowed, in the assessment of the trustee upon the assessable income derived by the deceased person during the year of income in which the deceased person died, a rebate of tax equal to the rebate that would have been allowable to the deceased person under this section in respect of that amount if it had been paid by the deceased person during the year of income in which the deceased person died. (4) In this section: "dependant" means: (a) the spouse of the taxpayer; or (b) a child of the taxpayer less than 21 years of age; or (c) a person in respect of whom the taxpayer is entitled to a rebate under section 159J; or (ca) a person included in class 1, class 2 or class 6 in the table in subsection 159J(2) or a person who is an invalid relative for the purpose of class 5 in the table in subsection (2) in respect of whom the taxpayer would be entitled to a rebate under section 159J but for subsection 159J(1AB); or (d) a person included in class 3 or class 4 in the table in subsection 159J(2) in respect of whom the taxpayer would be entitled to a rebate under section 159J but for subsection 159J(1A). "ineligible medical expenses" means payments: (a) to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of a cosmetic operation that is not a professional service for which a medicare benefit is payable under Part II of the Health Insurance Act 1973; or (b) to a legally qualified dentist for: (i) dental services; or (ii) treatment; that is solely cosmetic. "medical expenses" means payments: (a) to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation; or (b) to a legally qualified dentist for dental services or treatment or the supply, alteration or repair of artificial teeth; or (c) to a person registered under a law of a State or Territory as a dental mechanic in respect of charges lawfully made by that person for the supply, alteration or repair of artificial teeth; or (d) for therapeutic treatment administered by direction of a legally qualified medical practitioner; or (e) in respect of an artificial limb (or part of a limb), artificial eye or hearing aid; or (f) in respect of a medical or surgical appliance (not otherwise specified in this definition) prescribed by a legally qualified medical practitioner; or (g) for: (i) the testing of eyes or the prescribing of spectacles by a person legally qualified to perform those services; or (ii) the supply of spectacles in accordance with any such prescription; or (h) as remuneration of a person for services rendered by him or her as an attendant of a person who is blind or permanently confined to a bed or an invalid chair; or (i) for the maintenance of a dog used for the guidance or assistance of, but not social therapy for, a person with a disability, being a dog that the Commissioner is satisfied is properly trained in the guidance or assistance of persons with disabilities; but does not include ineligible medical expenses. "professional service" has the meaning given by subsection 3(1) of the Health Insurance Act 1973. (5) For the purposes of the definitions of ineligible medical expenses and medical expenses in subsection (4), a payment made to an employer (not being a public or private hospital) of a person (in this subsection referred to as the relevant person) who is a legally qualified medical practitioner, nurse or chemist in respect of the provision of services or treatment, or the supply of goods, by the relevant person shall be taken to be a payment made to the relevant person in respect of the provision of those services or that treatment or in respect of the supply of those goods. (6) For the purposes of the definitions of ineligible medical expenses and medical expenses in subsection (4), a payment made to an employer of a legally qualified dentist in respect of the provision of dental services or treatment, or the supply, alteration or repair of artificial teeth, by the dentist shall be taken to be a payment made to the dentist in respect of the provision of those services or that treatment or in respect of the supply, alteration or repair of those artificial teeth. (7) For the purposes of paragraph (c) of the definition of medical expenses in subsection (4), a payment made to an employer of a person registered under a law of a State or Territory as a dental mechanic in respect of charges lawfully made by the employer in respect of the supply, alteration or repair of artificial teeth by the dental mechanic shall be taken to be a payment made to the dental mechanic in respect of charges lawfully made by the dental mechanic for the supply, alteration or repair of those artificial teeth. (8) A reference in subsection (5), (6) or (7) to an employer of a legally qualified medical practitioner, nurse or chemist, a legally qualified dentist or a person registered under a law of a State or Territory as a dental mechanic shall be read as including a reference to a person with whom the medical practitioner, nurse, chemist, dentist or dental mechanic has entered into a contract for services. INCOME TAX ASSESSMENT ACT 1936 - SECT 159ZR Interpretation (1) In this Subdivision, unless the contrary intention appears: "accrual year", in relation to the total arrears amount, means a year of income in which any part of the total arrears amount accrued. "annual arrears amount", in relation to an accrual year, means so much of the total arrears amount as accrued in that year. "associate" has the same meaning as in section 318. "current year" means the year of income for which the rebate is being calculated. "distant accrual year" means an accrual year that is not a recent accrual year. "eligible income" means: (a) salary or wages to the extent to which they accrued during a period ending more than 12 months before the date on which they are paid; (b) salary or wages paid to a person after re-instatement to duty following a period of suspension of the person from duty, to the extent to which the salary or wages accrued during the period of suspension; (c) a payment covered by section 12-80 or 12-120 in Schedule 1 to the Taxation Administration Act 1953; (d) a Commonwealth education or training payment (see subsection 6(1)); (e) a payment that is covered by Division 52, 53 or 55 of the Income Tax Assessment Act 1997, but that is not exempt from income tax under that Division; (f) a payment under a law of a foreign country that is similar to a payment covered by paragraph (e); but does not include so much of any such amount as was taken into account in calculating the amount of a tax reimbursement payment by the Commonwealth that was authorised under section 33 of the Financial Management and Accountability Act 1997. "eligible lump sum", in relation to a year of income, means a lump sum payment of eligible income received on or after 1 July 1986 that is included in the assessable income of the year of income and accrued, in whole or in part, in an earlier year or years of income. "gross tax" means the tax payable before the allowance of any rebates or credits. "law of a foreign country" includes a law of any part of, or place in, a foreign country. "normal taxable income" is the amount that would be the taxable income if: (a) no amount were included in assessable income under Division 82, section 83-10 or 83-80 or Division 301 or 302 of the Income Tax Assessment Act 1997 or Division 82 of the Income Tax (Transitional Provisions) Act 1997; and (b) the taxable income were reduced by any above-average special professional income included in the taxable income under section 405-15 of the Income Tax Assessment Act 1997; and (c) no amount were included in assessable income under section 102-5 of the Income Tax Assessment Act 1997 (about including net capital gains in assessable income). "notional tax amount" has the meaning given by sections 159ZRC and 159ZRD. "rebated tax" means the tax payable after the allowance of any tax offset under Division 82, 83, 301 or 302 of the Income Tax Assessment Act 1997, subsection 392-35(2) of that Act (which allows some primary producers tax offsets) or Division 82 of the Income Tax (Transitional Provisions) Act 1997, but before the allowance of any other tax offsets or any credits. "rebate year" means a year of income for which the conditions in paragraphs 159ZRA(1)(a) and (b) are satisfied. "recent accrual year", in relation to the total arrears amount, means: (a) if there are 3 or more accrual years for the total arrears amount--the most recent 2 of those years; or (b) in any other case--the accrual year, or each of the accrual years, for the total arrears amount. "salary or wages" means payments covered by sections 12-35, 12-40 (except payments of remuneration to a director of the company who is also an associate of the company), 12-45, 12-80, 12-110, 12-115 and 12-120 in Schedule 1 to the Taxation Administration Act 1953. "total arrears amount", in relation to a year of income, means the aggregate of the eligible lump sums included in the assessable income of the year of income to the extent to which those eligible lump sums accrued in an earlier year or years of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 159ZRA Eligibility for rebate (1) Where: (a) the assessable income of the taxpayer of a year of income (in this Subdivision called the current year) includes one or more eligible lump sums; and (b) the total arrears amount is not less than 10% of the amount (if any) remaining after deducting that total arrears amount from the normal taxable income of the current year; the taxpayer is entitled to a rebate of tax, in the taxpayer's assessment for the current year, of the amount (if any) calculated in accordance with this Subdivision. (2) The rebate is only available to a natural person (otherwise than in the capacity of a trustee). INCOME TAX ASSESSMENT ACT 1936 - SECT 159ZRB Calculation of rebate The rebate is calculated in accordance with the formula: Tax on arrears - Notional tax on arrears where: "Tax on arrears" is the amount by which the rebated tax on the taxable income of the current year exceeds the rebated tax on the taxable income of the current year, being that taxable income reduced by the total arrears amount. "Notional tax on arrears" is the total of the notional tax amounts for the accrual years. INCOME TAX ASSESSMENT ACT 1936 - SECT 159ZRC Notional tax amount for recent accrual years The notional tax amount for a recent accrual year is calculated in accordance with the formula: Tax on increased income - Tax on actual income where: "Tax on increased income" is the rebated tax on the taxable income of the accrual year, being that taxable income adjusted as follows: (a) the annual arrears amount for the accrual year is to be added; (b) if the accrual year is also a rebate year--the total arrears amount for the accrual year is to be deducted; and (c) if, during the accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year--the amount that so accrued during the accrual year is to be added. "Tax on actual income" is the rebated tax on the taxable income of the accrual year, being that taxable income adjusted as follows (if applicable): (d) if the accrual year is also a rebate year--the total arrears amount for the accrual year is to be deducted; and (e) if, during the accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year--the amount that so accrued during the accrual year is to be added. INCOME TAX ASSESSMENT ACT 1936 - SECT 159ZRD Notional tax amount for distant accrual years (1) The notional tax amount for a distant accrual year is calculated in accordance with the formula: Arrears amount x Average tax rate on recent arrears where: "Arrears amount" is the annual arrears amount in relation to the accrual year. "Average tax rate on recent arrears" is the average of the rates calculated in accordance with the following formula in respect of each of the recent accrual years:where: "Increased normal tax" is the gross tax on the normal taxable income of the recent accrual year, being that normal taxable income adjusted as follows: (a) the annual arrears amount for the recent accrual year is to be added; (b) if the recent accrual year is also a rebate year--the total arrears amount for the recent accrual year is to be deducted; and (c) if, during the recent accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year--the amount that so accrued during the recent accrual year is to be added. "Normal tax" is the gross tax on the normal taxable income of the recent accrual year, being that normal taxable income adjusted as follows (if applicable): (d) if the recent accrual year is also a rebate year--the total arrears amount for the recent accrual year is to be deducted; and (e) if, during the recent accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year--the amount that so accrued during the recent accrual year is to be added. "Arrears amount" is the annual arrears amount for the recent accrual year. (2) A rate calculated for the purposes of subsection (1) in respect of a recent accrual year shall be calculated as a decimal fraction to 3 decimal places. (3) If a rate so calculated would end with a number greater than 4 if it were calculated to 4 decimal places, the rate shall be increased by 0.001. INCOME TAX ASSESSMENT ACT 1936 - SECT 160AAAA Tax rebate for low income aged persons (1) A taxpayer who is an individual (other than in the capacity as trustee) is entitled to a rebate of tax in the taxpayer's assessment in respect of income of a year of income of an amount (if any), ascertained in accordance with the regulations, if the taxpayer satisfies the conditions in subsections (2) and (3). (2) The first condition is that, on at least one day during the year of income, either: (a) the taxpayer: (i) is eligible for a pension, allowance or benefit under the Veterans' Entitlements Act 1986 (other than Part VII); and (ii) has reached pension age, within the meaning of that Act; and (iii) is not in gaol; or (b) the taxpayer: (i) is qualified for an age pension under the Social Security Act 1991; and (ii) is not in gaol. (3) The second condition is that the taxpayer's rebate income for the year of income is less than an amount ascertained in accordance with the regulations. (4) If the taxpayer is the spouse of another person, the amount applicable to the taxpayer under subsection (3) is half of the sum of: (a) the taxpayer's rebate income for the year of income; and (b) the taxpayer's spouse's rebate income for the year of income (reduced by any amount included in the spouse's assessable income under section 100); and (c) an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 98 in respect of the taxpayer's spouse. (5) Regulations made for the purposes of this section may be expressed to apply in relation to a year of income any part of which occurred before the notification of the regulations. INCOME TAX ASSESSMENT ACT 1936 - SECT 160AAAB Tax rebate for low income aged persons--trustees assessed under section 98 (1) A taxpayer who is a trustee who is liable to be assessed under section 98 in respect of a beneficiary's share of the net income of the trust estate is entitled to a rebate of tax in the trustee's assessment in respect of income of a year of income of an amount (if any), ascertained in accordance with the regulations, if the conditions in subsections (2) and (3) are satisfied. (2) The first condition is that, on at least one day during the year of income, either: (a) the beneficiary: (i) is eligible for a pension, allowance or benefit under the Veterans' Entitlements Act 1986 (other than Part VII); and (ii) has reached pension age, within the meaning of that Act; and (iii) is not in gaol; or (b) the beneficiary: (i) is qualified for an age pension under the Social Security Act 1991; and (ii) is not in gaol. (3) The second condition is that the beneficiary has an amount applicable under subsection (4) or (5) for the year of income less than an amount ascertained in accordance with the regulations. (4) If the beneficiary is not the spouse of another person, the amount applicable to the beneficiary under subsection (3) is the amount that would be the beneficiary's rebate income for the year of income if the beneficiary's taxable income for that year were the beneficiary's share of the net income of the trust estate. (5) If the beneficiary is the spouse of another person, the amount applicable to the beneficiary under subsection (3) is half the sum of: (a) the amount that would be applicable to the beneficiary under subsection (3) if the beneficiary were not the spouse of another person; and (b) the beneficiary's spouse's rebate income for the year of income (reduced by any amount included in the spouse's assessable income under section 100); and (c) an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 98 in respect of the taxpayer's spouse. (6) Regulations made for the purposes of this section may be expressed to apply in relation to a year of income any part of which occurred before the notification of the regulations. INCOME TAX ASSESSMENT ACT 1936 - SECT 160AAA Rebate in respect of certain pensions, benefits etc. (1) In this section: "rebatable benefit" means an amount: (a) paid by way of a benefit under Part 2.8A, 2.11, 2.11A, 2.12, 2.12B, 2.14, 2.15, 2.15A or 3.15A of the Social Security Act 1991; or (aa) paid by way of parenting payment that is PP (partnered) under the Social Security Act 1991, to the extent that the amount is not exempt under Division 52 of the Income Tax Assessment Act 1997; or (b) consisting of a Commonwealth education or training payment (see subsection 6(1)), except where the recipient, or the individual on whose behalf the recipient receives the payment, is an employee of any person who is entitled to a Commonwealth subsidy in respect of the employment; or (c) paid as a wage to a participant in a project under the Community Development Employment Projects program from the wages component of a grant made under the program; or (d) paid by way of Northern Territory CDEP transition payment under Part 2.27 of the Social Security Act 1991; or (da) paid by way of exceptional circumstances relief payment or farm help income support under the Farm Household Support Act 1992; or (e) paid by way of income support to farmers and small business owners affected by Cyclone Larry or Cyclone Monica; or (f) known as an interim income support payment and paid under section 33 of the Financial Management and Accountability Act 1997; or (g) known as the Equine Workers Hardship Wage Supplement Payment. "rebatable pension" means a pension, allowance or benefit under: (a) the Veterans' Entitlements Act 1986 (other than Part VII); or (b) the Social Security Act 1991 (other than Part 2.8A, 2.10 to the extent it provides for parenting payment that is a PP (partnered), 2.11, 2.11A, 2.12, 2.12B, 2.14, 2.15, 2.15A, 2.18 or 3.15A). (2) Subject to subsections (4) and (4A), where the assessable income of a taxpayer of a year of income includes an amount of rebatable pension, the taxpayer is entitled in the taxpayer's assessment in respect of income of the year of income to a rebate of tax of an amount (if any) ascertained in accordance with the regulations. (3) Subject to subsections (4) and (4A), where the assessable income of a taxpayer of a year of income includes an amount of rebatable benefit, the taxpayer is entitled in the taxpayer's assessment in respect of income of the year of income to a rebate of tax of an amount (if any) ascertained in accordance with the regulations. (4) Where, apart from this subsection, the taxpayer would be entitled in his or her assessment in respect of income of a year of income to a rebate of tax under both subsections (2) and (3): (a) if the amounts of the rebates are the same--the taxpayer is entitled to only one of the rebates; and (b) if the amounts of the rebates are not the same--the taxpayer is not entitled to the lesser of the rebates. (4A) A taxpayer is not entitled to a rebate under this section for a year of income if: (a) the taxpayer is entitled to a rebate of tax for the year of income under section 160AAAA; or (b) the taxpayer is the beneficiary of a trust where the trustee of the trust is entitled to a rebate of tax for the year of income under section 160AAAB in respect of the taxpayer. (5) Regulations made for the purposes of this section may be expressed to apply in relation to a year of income any part of which occurred before the notification of the regulations. INCOME TAX ASSESSMENT ACT 1936 - SECT 160AAB Rebate in respect of amounts assessable under section 26AH (1) In this section: eligible 26AH amount, in relation to a year of income, means an amount included in assessable income under section 26AH in relation to an eligible policy within the meaning of that section issued by: (a) a life assurance company, not being a life assurance company the whole of the income of which of the year of income is exempt from tax; (c) the Government Insurance Office of New South Wales; (d) Suncorp Insurance and Finance, being a body corporate established by a law of Queensland; (e) the State Government Insurance Commission established by a law of South Australia; (f) the State Insurance Office established by a law of Victoria; or (g) the State Government Insurance Corporation established by a law of Western Australia. "statutory percentage" means: (a) if the policy concerned was issued by a friendly society: (i) if the year of income is earlier than the 2002-03 year of income--33%; or (ii) if the year of income is the 2002-03 year of income or a later year of income--30%; or (b) otherwise: (i) if the year of income is earlier than the 2001-02 year of income--39%; or (ii) if the year of income is the 2001-02 year of income--34%; or (iii) if the year of income is the 2002-03 year of income or a later year of income--30%. (2) A taxpayer, not being a taxpayer in the capacity of trustee of a trust estate, is entitled in his or her assessment in respect of income of a year of income to a rebate of tax equal to the statutory percentage of an eligible 26AH amount included in his or her assessable income of the year of income. (3) Where: (a) an amount is included under section 97, 98A or 100 in the assessable income of a year of income of a taxpayer being a beneficiary of a trust estate otherwise than in the capacity of trustee of another trust estate; and (b) the whole or a part of the amount so included (which whole or part is in this subsection referred to as the rebatable amount) is attributable to an eligible 26AH amount included in the assessable income of the year of income of the trust estate or of another trust estate; the taxpayer is entitled in his or her assessment in respect of income of the year of income to a rebate of tax equal to the statutory percentage of the rebatable amount. (4) Where: (a) a taxpayer being the trustee of a trust estate is liable to be assessed and to pay tax in pursuance of section 98 in respect of a share of the net income of the trust estate of a year of income; and (b) the whole or part of that share (which whole or part is in this subsection referred to as the rebatable amount) is attributable to an eligible 26AH amount included in the assessable income of the year of income of the trust estate or of another trust estate; the taxpayer is entitled in that assessment to a rebate of tax equal to the statutory percentage of the rebatable amount. (5) Where: (a) a taxpayer being the trustee of a trust estate is liable to be assessed and to pay tax in pursuance of section 99 or 99A in respect of the whole or a part (which whole or part is in this subsection referred to as the relevant trust income) of the net income of the trust estate of a year of income; and (b) the whole or a part of the relevant trust income (which whole or part is in this subsection referred to as the rebatable amount) is attributable to an eligible 26AH amount included in the assessable income of the year of income of the trust estate or of another trust estate; the taxpayer is entitled in that assessment to a rebate of tax equal to the statutory percentage of the rebatable amount. (5A) A taxpayer being the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust is entitled in the taxpayer's assessment in respect of income of a year of income to a rebate of tax equal to the statutory percentage of any eligible section 26AH amount included in the taxpayer's assessable income of the year of income. (6) Where an eligible 26AH amount is included in the assessable income of a partnership of a year of income in the calculation of the net income or partnership loss of the partnership of the year of income, a partner in the partnership is entitled in his or her assessment in respect of income of the year of income to a rebate of tax equal to the statutory percentage of the amount by which the taxable income of the partner of the year of income exceeds the amount that could reasonably be expected to be that taxable income if the eligible 26AH amount had not been included in the assessable income of the partnership of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 160AD Maximum amount of rebates Notwithstanding anything contained in this or any other Act, the sum of the rebates allowable under this Act shall not exceed the amount of tax which would otherwise be payable by the taxpayer. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ADA Most tax offsets under the 1997 Assessment Act are treated as rebates A tax offset under a provision of the Income Tax Assessment Act 1997 is taken to be a rebate for the purposes of this Act, unless that provision corresponds to a provision of this Act that provides for a credit. Note: If the tax offset provision does correspond to a credit provision, the tax offset is treated as a credit: see section 6D. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZVA Object (1) The object of this Part is: (a) to assist in calculating that part of a foreign bank's taxable income that is referable to certain activities of its Australian branch; and (b) to make it clear that withholding tax will apply to amounts that are taken by this Part to be interest paid by the branch to the bank. Note: This Part also: (a) applies to foreign entities that are financial entities in the same way as it applies to foreign banks; and (b) applies to permanent establishments in Australia of foreign entities that are financial entities in the same way as it applies to Australian branches of foreign banks. See Division 4. (2) For the purpose of achieving the object mentioned in subsection (1), this Part requires, in the circumstances stated in this Part and not otherwise, that the Australian branch is to be treated as if it were a separate legal entity from the bank. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZVB Application (1) It is the intention that, in so far as this Part is to be applied to identify amounts of income and expenditure that are taken into account in calculating that part of a foreign bank's taxable income of a year of income that is referable to certain activities of its Australian branch, the provisions of this Part are to be applied in their entirety. (2) If, as a result of the application of this Part: (a) the taxable income of a year of income of a foreign bank that is attributable to activities carried on by the bank through its Australian branch is greater than the amount that would be that taxable income if this Part did not apply; or (b) a foreign bank would be taken not to incur a loss in a year of income in respect of activities carried on by the bank through its Australian branch that it would be taken to have incurred if this Part did not apply; or (c) the amount of a loss that a foreign bank would be taken to incur in a year of income in respect of activities carried on by the bank through its Australian branch is less than the amount of the loss that it would be taken to have incurred if this Part did not apply; and an agreement within the meaning of the Income Tax (International Agreements) Act 1953 that has the force of law applies in relation to the bank, the bank may elect that this Part is not to apply in the calculation of its taxable income of that year of income. (3) If a foreign bank makes an election as mentioned in subsection (2): (a) this Part does not apply in the calculation of the bank's taxable income of the year of income to which the election relates and the bank may furnish returns, and is liable to pay tax, accordingly; but (b) the election does not affect the operation of this Part in respect of the application of withholding tax to amounts that are taken by this Part to be interest paid by the branch to the bank. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZV Definitions In this Part, unless the contrary intention appears: "accounting records" includes: (a) invoices, receipts, vouchers and other documents of prime entry; and (b) any working papers and other documents that are necessary to explain the methods and calculations by which accounts are made up. "Australian branch", in relation to a foreign bank, means a permanent establishment in Australia through which the bank carries on banking business. "derivative transaction" means a Division 230 financial arrangement (within the meaning of the Income Tax Assessment Act 1997) that is entered into for the purpose of eliminating, reducing or altering the risk of adverse financial consequences that might result from changes in rates of interest or changes in rates of exchange between currencies, or for the purpose of making a profit from such changes, but does not include a transaction entered into for the provision of finance or a foreign exchange transaction. "interest" has the same meaning as in Division 11A of Part III. "foreign bank" means a body corporate that is a foreign ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959. "foreign exchange transaction" means a transaction by which different currencies are exchanged. "offshore banking unit" has the same meaning as in Division 11A of Part III. "time of establishment", in relation to an Australian branch of a foreign bank, means the time when the bank began to carry on business through the permanent establishment in Australia that constitutes the branch. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZW Certain provisions to apply as if Australian branch of foreign bank were a separate legal entity (1) Subsections (2), (3), (4) and (5) apply only: (a) for the purposes of sections 160ZZZ, 160ZZZA, 160ZZZC, 160ZZZE and 160ZZZF as they have effect in the determination under this Act of the liability of a foreign bank to tax (other than withholding tax) in respect of income derived from an Australian branch of the bank; and (b) for the purposes of the provisions of this Act other than this Part as those provisions apply in relation to amounts that are taken by this Part to have been received from a foreign bank by its Australian branch or to have been paid to a foreign bank by its Australian branch; and (c) for the purposes of section 160ZZZJ as it has effect in determining the liability of a foreign bank to withholding tax in respect of amounts paid to the bank by an Australian branch of the bank. (1A) To avoid doubt, subsection (2) applies for the purposes of applying Subdivision 230-A of the Income Tax Assessment Act 1997 to a financial arrangement (within the meaning of that Act). Note: This means that it is possible for financial arrangements to be entered into between the bank and the branch and for the bank or the branch to have a gain or loss from such an arrangement dealt with under Division 230 of the Income Tax Assessment Act 1997. (2) The branch and the bank are taken to be, and to have been since the time of establishment of the branch, separate legal entities. (3) The branch is taken to be, and to have been since the time of its establishment, a company having a share capital all the shares in which are or were beneficially owned by the bank. (4) The branch is taken to be a non-resident and to have been a non-resident since the time of its establishment. (5) For the purposes of Division 13 of Part III, the branch is taken not to be, and not to have been at any time since its establishment, a permanent establishment in Australia of the bank. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZX Income of branch to have Australian source (1) All income derived by a foreign bank through its Australian branch is taken, for the purposes of this Act, to be income derived from a source in Australia. (2) All gains from a Division 230 financial arrangement (within the meaning of the Income Tax Assessment Act 1997) made by a foreign bank through its Australian branch is taken, for the purposes of this Act, to be from an Australian source. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZZ Notional borrowing by branch from bank (1) If an amount has been made available by a foreign bank for use by an Australian branch of the bank and is recorded in the branch's accounting records as having been provided by the bank to the branch, that amount is taken, for the purposes of this Act, to have been borrowed by the branch from the bank when the amount became so available and to have been so borrowed in the currency in which the amount became so available. (2) If an amount has been made available by the branch to the bank in purported repayment of an amount that is taken, under subsection (1), to have been borrowed by the branch from the bank and the amount so made available is recorded in the branch's accounting records as having been repaid by the branch to the bank, the amount that was so taken to have been borrowed is taken, for the purposes of this Act, to have been repaid by the branch to the bank when the amount became so available and to have been so repaid in the currency in which the amount became so available. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZZA Notional payment of interest by branch to bank (1) If, under section 160ZZZ, an amount is taken, for the purposes of this Act, to have been borrowed (the notional borrowing) in a particular currency from a foreign bank by an Australian branch of the bank, the following provisions have effect: (a) at any time (the relevant time) when, in respect of the notional borrowing, an amount (the notional amount of interest) is entered in the branch's accounting records as interest for a period fixed by the bank, interest is taken, for the purposes of this Act, to be incurred by the branch, paid by the branch to the bank, and derived by the bank, in respect of the notional borrowing; (b) subject to the application of paragraph (c), the notional amount of interest is taken, for the purposes of this Act, to be the amount of interest so taken to be paid; (c) if the interest on the notional borrowing at the relevant time was at a rate of interest that exceeded the LIBOR that was applicable at the beginning of the relevant interest calculation period in relation to the notional borrowing, there is taken to have been entered in the branch's accounting records at the relevant time, in lieu of the notional amount of interest, the amount that would have been so entered if interest on the notional borrowing for the relevant interest calculation period had been calculated at the LIBOR that was applicable at the beginning of that period. (2) For the purposes of this section, a reference to the LIBOR that was applicable at the beginning of the relevant interest calculation period in relation to the notional borrowing is a reference to: (a) the LIBOR applicable at the beginning of that period in respect of advances in the currency of that borrowing for a term the number of days in which was equal to the number of days in that period; or (b) if there was no LIBOR applicable at the beginning of that period in respect of advances in the currency of that borrowing for such a term: (i) the LIBOR applicable at the beginning of that period in respect of advances in that currency for a term the number of days in which most nearly approximated the number of days in that period; or (ii) if there were different LIBORs so applicable for different terms the number of days in each of which could be described as having most nearly approximated the number of days in that period--the LIBOR so applicable for the shorter of those terms. (3) For the purposes of this section: (a) a reference to LIBOR, in relation to a particular time, is a reference to the rate of interest applicable at that time in relation to banks in the London inter bank market as determined by reference to the Reuter Monitor Money Rates Service or any other published source; and (b) a reference to the relevant interest calculation period in relation to a notional borrowing from a foreign bank by an Australian branch of the bank is a reference to the period fixed by the bank for the calculation of the notional amount of interest in respect of the notional borrowing. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZZC Offshore banking units If: (a) apart from this section, a foreign bank would be an offshore banking unit under a declaration published under subsection 128AE(2); and (b) the foreign bank has an Australian branch; this Act has effect as if the Australian branch were the offshore banking unit under the declaration. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZZE Notional derivative transactions between branch and bank If the accounting records of an Australian branch of a foreign bank reflect a derivative transaction notionally entered into by the branch with the bank: (a) the notional transaction is taken to be a transaction entered into by the branch with the bank; and (b) any amount entered in the branch's accounting records as a payment or receipt in respect of the notional transaction is taken, for the purposes of this Act, to be an amount paid or received by the branch, as the case may be, in respect of the derivative transaction when the amount was so entered. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZZF Notional foreign exchange transactions between branch and bank If the accounting records of an Australian branch of a foreign bank reflect a foreign exchange transaction notionally entered into by the branch with the bank: (a) the notional transaction is taken to be a transaction entered into by the branch with the bank; and (b) any amount entered in the branch's accounting records as a payment or receipt in respect of the notional transaction is taken, for the purposes of this Act, to be an amount paid or received by the branch, as the case may be, in respect of the foreign exchange transaction when the amount was so entered. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZZG Losses Subdivision 170-A of the Income Tax Assessment Act 1997 has effect as if an Australian branch of a foreign bank were a subsidiary of the bank and a resident of Australia. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZZH Net capital losses Subdivision 170-B of the Income Tax Assessment Act 1997 (about transfer of net capital losses within wholly-owned groups of companies) has effect as if an Australian branch of a foreign bank were a 100% subsidiary (within the meaning of that Act) of the bank and an Australian resident (within the meaning of that Act). INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZZI Certain transactions to be disregarded Any transaction entered into by a foreign bank otherwise than through its Australian branch: (a) under which finance is provided to the bank; or (b) that is a derivative transaction or a foreign exchange transaction; is to be disregarded for the purpose of determining whether a deduction is allowable to the bank under this Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZZJ Withholding tax on interest paid by branch to bank (1) If: (a) an amount of interest is taken under section 160ZZZA to be paid to, and derived by, a foreign bank by an Australian branch of the bank; and (b) apart from this section, section 128B of this Act, and Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953, would apply to an amount (the taxable amount) that comprises the whole or a part of the amount so taken to be paid; the following subsections have effect. (2) Section 128B of this Act, and Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953, apply only to the amount worked out using the formula: (3) An amount to which section 128B applies because of subsection (2) of this section is taken, for the purposes of section 128C, to be income that was derived by the bank when the amount of interest referred to in paragraph (1)(a) is taken to have been paid to the bank. INCOME TAX ASSESSMENT ACT 1936 - SECT 160ZZZK Treatment like Australian branches of foreign banks Objects (1) The main objects of this section are: (a) to treat foreign entities that are financial entities like foreign banks for the purposes of this Part; and (b) to treat Australian permanent establishments of foreign entities that are financial entities like Australian branches of foreign banks for the purposes of this Part. Foreign financial entities treated like foreign banks (2) This Part (except this Division) applies to a foreign entity that is a financial entity in the same way as this Part applies to a foreign bank. Australian permanent establishments treated like Australian branches (3) This Part (except this Division) applies to a permanent establishment in Australia of a foreign entity that is a financial entity in the same way as this Part applies to an Australian branch of a foreign bank. Definitions (4) In this section: "financial entity" has the meaning given by section 995-1 of the Income Tax Assessment Act 1997. "foreign entity" has the meaning given by section 995-1 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 161 Annual returns Requirement to lodge a return (1) Every person must, if required by the Commissioner by notice published in the Gazette, give to the Commissioner a return for a year of income within the period specified in the notice. Note: The Commissioner may defer the time for giving the return: see section 388-55 in Schedule 1 to the Taxation Administration Act 1953. (1A) The Commissioner may, in the notice, exempt from liability to furnish returns such classes of persons not liable to pay income tax as the Commissioner thinks fit, and a person so exempted need not furnish a return unless the person is required by the Commissioner to do so. (2) If the taxpayer is absent from Australia, or is unable from physical or mental infirmity to make such return, the return may be signed and delivered by some person duly authorized. (3) Nothing in this section prevents an approval by the Commissioner of a form of return under section 35D of the Superannuation Industry (Supervision) Act 1993 from requiring or permitting a return under that section to be attached to, or to form part of, a return under this section. Note: However, the rules applicable to a return under section 35D of the Superannuation Industry (Supervision) Act 1993 are those specified in that Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 161A Form and content of returns (1) The return must be in the approved form. Electronic returns (2) An approval given by the Commissioner of a form of return may require or permit the return to be given on a specified kind of data processing device, or by way of electronic transmission, in accordance with specified software requirements. INCOME TAX ASSESSMENT ACT 1936 - SECT 161AA Contents of returns of full self-assessment taxpayers A full self-assessment taxpayer must, in a return for a year of income, specify: (a) its taxable income or its net income for that year of income (or that it has no taxable income or net income for that year); and (b) the amount of the tax payable on that taxable income or net income (or that no tax is payable); and (c) the amount of interest (if any) payable by the taxpayer under section 102AAM for that year of income; and (d) for a company that is an RSA provider, or a trustee of a superannuation fund in relation to the year of income: (i) its no-TFN contributions income as defined by section 295-610 of the Income Tax Assessment Act 1997 (or that it has no no-TFN contributions income); and (ii) the amount of the income tax payable on that income (or that no income tax is payable). INCOME TAX ASSESSMENT ACT 1936 - SECT 161G Tax agent to give taxpayer copy of notice of assessment Where a taxpayer has given the address of a registered tax agent as the taxpayer's address for service, the registered tax agent must give the taxpayer the original of, or a copy of, any notice of assessment in respect of that taxpayer that is delivered to that address. Penalty: 30 penalty units. INCOME TAX ASSESSMENT ACT 1936 - SECT 162 Further returns and information A person must, if required by the Commissioner, whether before or after the end of the year of income, give the Commissioner, within the time required and in the approved form: (a) a return or a further or fuller return for a year of income or a specified period, whether or not the person has given the Commissioner a return for the same period; or (b) any information, statement or document about the person's financial affairs. INCOME TAX ASSESSMENT ACT 1936 - SECT 163 Special returns Every person, whether a taxpayer or not, if required by the Commissioner, shall, in the approved form and within the time required by the Commissioner, furnish any return required by the Commissioner for the purposes of this Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 163A Late lodgement penalty--relevant entities, instalment taxpayers and full self-assessment taxpayers (1) Subject to subsection (2), if: (a) a person who is a relevant entity, an instalment taxpayer or a full self-assessment taxpayer is required to furnish a return under section 161, 162 or 163 in relation to a year of income; and (b) the return is not furnished within: (i) in the case of section 161--the period specified in the notice under that section or any further period allowed by the Commissioner under that section; or (ii) in the case of section 162 or 163--the time required by the Commissioner under that section; the person is liable to pay, by way of penalty, $10 for each week or part of a week that occurs after the end of the period, the further period or the time mentioned in paragraph (b) and before the return is furnished. Note: The penalty is payable even if the return is never furnished. Maximum penalty (2) The maximum penalty payable under subsection (1) in respect of the return is $200. Notification requirements (3) The Commissioner must give the person a notice in writing stating that the person is liable to penalty under this section in relation to the year of income and specifying: (a) the amount of the penalty; and (b) the day on which the penalty is due and payable. The day specified must be at least 30 days after the day on which the notice is given, and the amount is due and payable on the day specified. Note: A person who fails to pay on time some or all of the penalty is liable to pay the general interest charge on the unpaid amount: see section 163AA. Notice in assessment notice (4) The notice may be included in any other notice of assessment in respect of the person. Remission of penalty (5) The Commissioner may, in his or her discretion, remit the whole or any part of the penalty. Notice in writing of decision (6) If the Commissioner makes a decision to remit part only of the penalty, or not to remit any part of the penalty, the Commissioner must: (a) if the decision is made before the Commissioner gives the notice under subsection (3)--advise the person of the decision in the notice under subsection (3); or (b) in any other case--give notice in writing of the decision to the person. Objections (7) If the person is dissatisfied with: (a) the notice given to the person under subsection (3); or (b) a decision of the Commissioner under subsection (5) in relation to the person; the person may object against the notice, or against the decision, as the case requires, in the manner set out in Part IVC of the Taxation Administration Act 1953. Income tax or tax includes penalty (8) Unless the contrary intention appears, in sections 254 and 255 and former sections 215 and 216, but not in any other section of this Act, a reference to income tax or tax includes a reference to the penalty. Definitions (9) In this section: "instalment taxpayer" has the same meaning as in former Division 1C of Part VI. "relevant entity" has the same meaning as in former Division 1B of Part VI. (10) This section does not apply to a return for the 2000-01 year of income or a later year of income. Note: See instead Division 286 in Schedule 1 to the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 163AA General interest charge on unpaid penalty A person who fails to pay some or all of a penalty under section 163A by the time by which the penalty is due to be paid is liable to pay the general interest charge on the unpaid amount for each day in the period that: (a) started at the beginning of the day by which the penalty was due to be paid; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the penalty; (ii) general interest charge on any of the penalty. Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 163B Late lodgment of returns by persons other than relevant entities, instalment taxpayers and full self-assessment taxpayers (1) If: (a) a person (other than a relevant entity, an instalment taxpayer or a full self-assessment taxpayer) is required to furnish a return under section 161, 162 or 163 in relation to a year of income; and (b) the return is not furnished within: (i) in the case of section 161--the period specified in the notice under that section or any further period allowed by the Commissioner under that section; or (ii) in the case of section 162 or 163--the time required by the Commissioner under that section; and (c) an assessment (other than an amended assessment) is made of the income tax payable by the person for the year of income (whether or not on the basis of a return that is later furnished by the person); the person is liable to pay the general interest charge on the amount in subsection (2) and the amount of the charge is taken to be additional tax payable under this section. Note: The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953. (1A) The person is liable to pay the general interest charge for each day in the period that: (a) started at the beginning of the day by which the return was required to be furnished; and (b) finishes at the end of the day before the return is furnished, or the day before the Commissioner made the assessment, whichever is earlier. Amount on which additional tax payable (2) The additional tax is payable on the lesser of: (a) the amount of income tax payable under the assessment (after allowing any rebate or deduction under subsection 100(2) and before any crediting, applying or other payment); and (b) the person's net tax payable (see subsection (3)). Meaning of net tax payable (3) The person's net tax payable is the amount worked out using the formula: where: "Tax liabilities" means the sum of the following amounts (worked out disregarding any payment on account of the amounts): (a) income tax payable under the assessment (after allowing any rebate or deduction under subsection 100(2) and before allowing any crediting, applying or refunding, notified in the notice of assessment, of an income tax crediting amount); (b) additional tax for the year of income payable by the person under Part VII immediately before any such crediting, applying or refunding; (c) interest for the year of income payable by the person under section 102AAM immediately before any such crediting, applying or refunding; (d) an HEC assessment debt or compulsory repayment amount notified in the notice of assessment; (e) an FS assessment debt notified in the notice of assessment. "Crediting amounts and payments on account" means the sum of: (a) any income tax crediting amounts notified in the notice of assessment; and (b) any payments made on account of the amounts in paragraphs (a) to (e) of the definition of Tax liabilities. Collection etc. of additional tax (8) Former sections 204, 205, 206, 215, 216, 258 and 259, and sections 254 and 255, apply to additional tax payable under this section in the same way as they apply to income tax. Minimum amount (9) If less than $20 of additional tax is payable under this section, the additional tax is taken to be $20. Definitions (10) In this section: "compulsory repayment amount" has the same meaning as in the Higher Education Support Act 2003. "FS assessment debt" means an FS assessment debt under: (a) subsection 19AB(2) of the Social Security Act 1991; or (b) the Student Assistance Act 1973 as in force at a time on or after 1 July 1998. "HEC assessment debt" has the same meaning as in Chapter 5A of the Higher Education Funding Act 1988. "income tax crediting amount", in relation to the income tax payable by a person for a year of income, means an amount of a credit applied under Division 3 of Part IIB of the Taxation Administration Act 1953 against the income tax. "instalment taxpayer" has the same meaning as in former Division 1C of Part VI. "relevant entity" has the same meaning as in former Division 1B of Part VI. (11) This section does not apply to a return for the 2000-01 year of income or a later year of income. Note: See instead Division 286 in Schedule 1 to the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 164 Returns deemed to be duly made Every return purporting to be made or signed by or on behalf of any person shall be deemed to have been duly made by the person or with the person's authority until the contrary is proved. INCOME TAX ASSESSMENT ACT 1936 - SECT 166 Assessment From the returns, and from any other information in the Commissioner's possession, or from any one or more of these sources, the Commissioner shall make an assessment of the amount of the taxable income (or that there is no taxable income) of any taxpayer, and of the tax payable thereon (or that no tax is payable). INCOME TAX ASSESSMENT ACT 1936 - SECT 166A Deemed assessment (1) Where a taxpayer that is a relevant entity within the meaning of former Division 1B of Part VI furnishes a return in respect of income of a year of income to which that Division applied: (a) the Commissioner is taken to have made, on the day on which the return is furnished, an assessment of the relevant taxable income or net income, as the case may be, and of the tax payable on that taxable income or net income, being those respective amounts as specified in the return; and (b) on and after the day on which the Commissioner is deemed to have made the assessment, the return is deemed to be a notice of the deemed assessment and to be under the hand of the Commissioner; and (c) the notice referred to in paragraph (b) is deemed to have been served on the entity on the day on which the Commissioner is deemed to have made the assessment. (2) Where: (aa) at a particular time, a taxpayer to which former Division 1C of Part VI applied gives a return in respect of income of a year of income to which that Division applied; and (ab) before that time, no return has been given, and no assessment has been made, in relation to the taxpayer in respect of the income of the year of income: the following provisions apply: (a) the Commissioner is deemed to have made an assessment of the taxable income or net income, and the tax payable on that income, equal to those respective amounts specified in the return; (b) the assessment is deemed to have been made on the day on which the return is lodged; (c) on and after the day on which the Commissioner is deemed to have made the assessment, the return is deemed to be a notice of the deemed assessment: (i) under the hand of the Commissioner; and (ii) served on the taxpayer on the day on which the Commissioner is deemed to have made the assessment. (3) If: (a) at a particular time, a full self-assessment taxpayer gives a return in respect of a year of income for which the taxpayer is a full self-assessment taxpayer; and (b) before that time, no return has been given, and no assessment has been made, in relation to the taxpayer in respect of the income of the year of income; the following provisions apply: (c) the Commissioner is taken to have made an assessment of the taxable income or net income (or an assessment that there is no taxable income or net income), and the tax payable on that income (or that no tax is payable), in accordance with what the taxpayer specified in the return; (d) the assessment is taken to have been made on the day on which the return is lodged; (e) on and after the day on which the Commissioner is taken to have made the assessment, the return is taken to be a notice of the assessment: (i) under the hand of the Commissioner; and (ii) served on the taxpayer on the day on which the Commissioner is taken to have made the assessment. INCOME TAX ASSESSMENT ACT 1936 - SECT 167 Default assessment If: (a) any person makes default in furnishing a return; or (b) the Commissioner is not satisfied with the return furnished by any person; or (c) the Commissioner has reason to believe that any person who has not furnished a return has derived taxable income; the Commissioner may make an assessment of the amount upon which in his or her judgment income tax ought to be levied, and that amount shall be the taxable income of that person for the purpose of section 166. INCOME TAX ASSESSMENT ACT 1936 - SECT 168 Special assessment (1) The Commissioner may at any time during any year, or after its expiration, make an assessment of the taxable income derived (or that there is no taxable income) in that year or any part of it by any taxpayer, and of the tax payable thereon (or that no tax is payable). (2) Where the income, in respect of which such an assessment is made, is derived in a period less than a year, the assessment shall be made as if the beginning and end of that period were the beginning and end respectively of the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 169 Assessments on all persons liable to tax Where under this Act any person is liable to pay tax (including a nil liability), the Commissioner may make an assessment of the amount of such tax (or an assessment that no tax is payable). INCOME TAX ASSESSMENT ACT 1936 - SECT 169AA Consolidated assessments (1) This section applies if 2 or more persons (the recipients) are in receipt of income, or of profits or gains of a capital nature, for or on behalf of: (a) a non-resident; or (b) a person absent from Australia. (2) The Commissioner may, if it appears to him or her to be expedient to do so: (a) consolidate all or any of the assessments of the income, profits or gains; and (b) declare one of the recipients to be the agent of the non-resident or absent person in respect of the consolidated assessment; and (c) require the agent to pay income tax on the amount assessed. (3) If the Commissioner does so, the agent is liable to pay the tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 169A Reliance by Commissioner on returns and statements (1) Where a return of income of a taxpayer of a year of income is furnished to the Commissioner (whether or not by the taxpayer), the Commissioner may, for the purposes of making an assessment in relation to the taxpayer under this Act, accept, either in whole or in part, a statement in the return of the assessable income derived by the taxpayer and of any allowable deductions or rebates to which it is claimed that the taxpayer is entitled and any other statement in the return or otherwise made by or on behalf of the taxpayer. (2) Despite subsection (1), if, in a document given with a return of income of a taxpayer of a year of income and signed by or on behalf of the taxpayer, a question is raised: (a) that is relevant to the liability of the taxpayer in respect of the year of income; and (b) on which the taxpayer is not entitled to apply for a private ruling under Division 359 in Schedule 1 to the Taxation Administration Act 1953; the Commissioner must give attention to that question. (3) In determining whether an assessment is correct, any determination, opinion or judgment of the Commissioner made, held or formed in connection with the consideration of an objection against the assessment shall be deemed to have been made, held or formed when the assessment was made. INCOME TAX ASSESSMENT ACT 1936 - SECT 170 Amendment of assessments (1) The Commissioner may amend an assessment as follows: Amendment of assessments Time of amendment Qualification 1 The Commissioner may amend an assessment of an individual for a year of income within 2 years after the day on which the Commissioner gives notice of the assessment to the individual. This item does not apply: (a) if the individual carries on a business at any time in that year unless the individual is a small business entity for that year; or (b) if the individual is a partner in a partnership that carries on a business at any time in that year unless the partnership is a small business entity for that year; or (c) to an individual in the capacity of a trustee of a trust estate at any time in that year (see item 3 for this case); or (d) if the individual is a beneficiary of a trust estate at any time in that year unless the trust is a small business entity for that year or the trustee of the trust (in that capacity) is a full self-assessment taxpayer for that year; or (e) if it is reasonable to conclude that any person entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the individual obtaining a scheme benefit in relation to income tax from the scheme for that year; or (f) in any other circumstance prescribed by the regulations. This item is subject to items 5 and 6. 2 The Commissioner may amend an assessment of a company that is a small business entity for the year of income to which the assessment relates within 2 years after the day on which the Commissioner gives notice of the assessment to the company. This item does not apply: (a) if the company is a partner in a partnership that carries on a business at any time in that year unless the partnership is a small business entity for that year; or (b) to a company in the capacity of a trustee of a trust estate at any time in that year (see item 3 for this case); or (c) if the company is a beneficiary of a trust estate at any time in that year unless the trust is a small business entity for that year or the trustee of the trust (in that capacity) is a full self-assessment taxpayer for that year; or (d) if it is reasonable to conclude that any person entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the company obtaining a scheme benefit in relation to income tax from the scheme for that year; or (e) in any other circumstance prescribed by the regulations. This item is subject to items 5 and 6. 3 The Commissioner may amend an assessment of a person (in the capacity of a trustee of a trust estate) for a year of income if the trust is a small business entity for that year. The Commissioner may amend the assessment within 2 years after the day on which he or she gives notice of the assessment to the person. This item does not apply: (a) if the person (in that capacity) is a partner in a partnership that carries on a business at any time in that year unless the partnership is a small business entity for that year; or (b) if the person (in that capacity) is a beneficiary of another trust estate at any time in that year unless the other trust is a small business entity for that year or the trustee of the other trust (in that capacity) is a full self-assessment taxpayer for that year; or (c) if it is reasonable to conclude that any person entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the person (in that capacity) obtaining a scheme benefit in relation to income tax from the scheme for that year; or (d) in any other circumstance prescribed by the regulations. This item is subject to items 5 and 6. 4 If item 1, 2 or 3 does not apply, the Commissioner may amend an assessment within 4 years after the day on which he or she gives notice of the assessment to the taxpayer. This item is subject to items 5 and 6. 5 The Commissioner may amend an assessment at any time if he or she is of the opinion there has been fraud or evasion. None. 6 The Commissioner may amend an assessment at any time: (a) to give effect to a decision on a review or appeal; or (b) as a result of an objection made by the taxpayer or pending a review or appeal. None. Note 1: This section applies to assessments where no tax is payable: see the definition of assessment in subsection 6(1). Note 2: This section also applies to amended assessments: see section 173. However, there are limits on how amended assessments can be amended: see subsections (2) and (3) of this section. Note 3: The amendment period mentioned in item 1, 2, 3 or 4 may be extended: see subsections (5) to (7). Limit on amending amended assessments under subsection (1) (2) The Commissioner cannot amend an amended assessment under item 1, 2, 3 or 4 of the table in subsection (1) if the limited amendment period for the original assessment concerned has ended. Note: The Commissioner can amend amended assessments at any time under item 5 or 6 of the table in subsection (1). Refreshed amendment period for amending amended assessments (3) If the Commissioner amends an assessment (the earlier assessment) as set out in column 2 of the following table, he or she may, under this subsection, amend the assessment (the later assessment) that results from that amendment in the way set out in column 3 within: (a) if item 1, 2 or 3 of the table in subsection (1) applies to the original assessment concerned (which may or may not be the earlier assessment)--2 years after the day on which he or she gives notice of the later assessment to the taxpayer; or (b) otherwise--4 years after that day. Amendment of later assessment Column 1 Item Column 2 In this case: Column 3 the position is: 1 The Commissioner amends the earlier assessment about a particular in a way that reduces a taxpayer's liability and the Commissioner accepts a statement made by the taxpayer in making the amendment The Commissioner may amend the later assessment about that particular in a way that increases the taxpayer's liability. 2 The Commissioner amends the earlier assessment about a particular in a way that: (a) increases a taxpayer's liability; or (b) reduces a taxpayer's liability (other than in a case covered by item 1) The Commissioner may amend the later assessment about that particular in a way that reduces the taxpayer's liability. Note 1: The earlier assessment may be the original assessment or an amended assessment. Note 2: The Commissioner can amend the later assessment at any time under item 5 or 6 of the table in subsection (1). Note 3: The amendment period mentioned in paragraph (3)(a) or (b) may be extended: see subsections (5) to (7). (4) The Commissioner cannot amend an assessment under item 2 of the table in subsection (3) about a particular if he or she has previously amended an assessment under item 1 of that table about that particular. Extensions--applications by taxpayer (5) The Commissioner may amend an assessment even though the limited amendment period has ended if, before the end of that period, the taxpayer applies for an amendment in the approved form. The Commissioner may amend the assessment to give effect to the decision on the application. Extensions--giving effect to private rulings (6) The Commissioner may amend an assessment even though the limited amendment period has ended if: (a) the taxpayer applies for a private ruling under Division 359 in Schedule 1 to the Taxation Administration Act 1953 before the end of that period; and (b) the Commissioner makes a private ruling under that Division because of the application. The Commissioner may amend the assessment to give effect to the ruling. Extensions--Federal Court orders or taxpayer consent (7) If: (a) the Commissioner has started to examine the affairs of a taxpayer in relation to an assessment; and (b) the Commissioner has not completed the examination before the end of the limited amendment period or that period as extended; the limited amendment period may be extended as follows: Extensions of limited amendment period In this case: the position is: 1 The Commissioner, before the end of the limited amendment period or that period as extended, applies to the Federal Court of Australia for an order extending the limited amendment period The Court may order an extension of the limited amendment period for a specified period if it is satisfied that it was not reasonably practicable, or it was inappropriate, for the Commissioner to complete the examination within the limited amendment period, or that period as extended, because of: (a) any action taken by the taxpayer; or (b) any failure of the taxpayer to take action that would have been reasonable for the taxpayer to take. 2 The Commissioner, before the end of the limited amendment period or that period as extended, requests the taxpayer to consent to extending the limited amendment period The taxpayer may, by notice in writing, consent to extending the limited amendment period for a specified period. (8) The limited amendment period for an assessment may be extended more than once under subsection (7). Other amendment periods (9) Notwithstanding anything contained in this section, when the assessment of the taxable income of any year includes an estimated amount of income, or of profits or gains of a capital nature, derived by the taxpayer in that year from an operation or series of operations the profit or loss on which was not ascertainable at the end of that year owing to the fact that the operation or series of operations extended over more than one or parts of more than one year, the Commissioner may at any time within 4 years after ascertaining the total profit or loss actually derived or arising from the operation or series of operations, amend the assessment so as to ensure its completeness and accuracy on the basis of the profit or loss so ascertained. (9B) Subject to subsection (9C), nothing in this section prevents the amendment, at any time, of an assessment for the purpose of giving effect to a prescribed provision or a relevant provision. (9C) Subsection (9B) does not authorize the Commissioner, for the purpose of giving effect to a prescribed provision or a relevant provision, to amend an assessment made in relation to a taxpayer in relation to a year of income where: (a) in a case where the purpose of the amendment is to give effect to the prescribed provision in relation to the supply or acquisition of property--the prescribed provision has been previously applied, in relation to that supply or acquisition, in making or amending an assessment in relation to the taxpayer in relation to the year of income; or (b) in any other case--the prescribed provision or the relevant provision, as the case may be, has been previously applied, in relation to the same subject matter, in making or amending an assessment in relation to the taxpayer in relation to the year of income. (9D) This section does not prevent the amendment of an assessment at any time if the amendment is made, in relation to a contract that after the making of the assessment is found to be void ab initio, to ensure that Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT) is taken always to have applied to the contract as if the contract had never been made. (10) Nothing in this section prevents the amendment, at any time, of an assessment for the purpose of giving effect to any of the provisions of this Act set out in this table. Amendment of assessments Item Provision Brief description 1 Section 23AB Income of certain persons serving with an armed force under the control of the United Nations 3 Section 26AG Certain film proceeds included in assessable income 4 Subsection 47(2B) Distributions by liquidator 5 Section 51AD Deductions not allowable in respect of property used under certain leveraged arrangements 6 Section 51AH Deductions not allowable where expenses incurred by employee are reimbursed 10 Section 78A Certain gifts not to be allowable deductions 14 Section 82KL Tax benefit not allowable in respect of certain recouped expenditure 16 Subsection 82SA(2) Interest on certain convertible notes to be an allowable deduction--where loan made on or after 1 January 1976 17 Section 100A Present entitlement arising from reimbursement agreement 18 Subdivision C of Division 6D of Part III Trustee beneficiary non-disclosure tax on share of net income 20 Section 105AB Additional period for distribution by liquidator 21 Section 121AT Other tax consequences of demutualisation 22 Division 9C of Part III Assessable income diverted under certain tax avoidance schemes 23 Former Division 10BA of Part III Australian films 24 Section 136AF Consequential adjustments to assessable income and allowable deductions 25 Division 16D of Part III Certain arrangements relating to the use of property 26 Subsection 159GZZZH(2) Post-cancellation disposals of eligible interests etc. 27 Section 160ABB Rebate in respect of certain payments by the Commonwealth Savings Bank of Australia 28 Section 271-105 in Schedule 2F Amounts subject to family trust distribution tax not assessable (10AA) Nothing in this section prevents the amendment, at any time, of an assessment for the purpose of giving effect to any of the provisions of the Income Tax Assessment Act 1997 set out in this table. Amendment of assessments Item Provision Brief description 1A Subsection 15-65(2) Sugar industry exit grant becomes assessable because of breach of undertaking 5 Subsection 26-25(3) Deduction for interest or royalty if withholding tax paid 22 Section 59-30 Repayment of amounts 23 Subdivision 61-G Private health insurance offset complementary to Part 2-2 of the Private Health Insurance Act 2007 24 Subdivision 61-I Tax offset for first child 26 Section 83A-310 Forfeiture of ESS interests acquired under an employee share scheme 28 Section 83A-340 Rights that become rights to acquire shares 30 Subsection 104-10(3) or (6) Subsection 104-25(2) Subsection 104-45(2) Subsection 104-90(2) Subsection 104-110(2) Subsection 104-205(2) Subsection 104-225(5) Subsection 104-230(5) The time of a CGT event is decided by there being a contract entered into 40 Paragraph 104-15(4)(a) CGT event B1: agreement ends without title passing 50 Subsection 104-40(5) Exception to CGT event D2 where option is exercised 60 Section 108-15 Disposal of collectable that is part of a set 70 Section 108-25 Disposal of personal use asset that is part of a set 80 Section 116-45 Modification to capital proceeds for non-receipt 90 Section 116-50 Modification to capital proceeds for amounts you repay 100 Subsection 122-25(4) Right or option etc. exercised after roll-over to acquire trading stock 110 Subsection 122-135(4) Right or option etc. exercised after roll-over to acquire trading stock 120 Subdivision 124-B Roll-over for assets compulsorily acquired, lost or destroyed 130 Subsection 126-5(3) CGT event B1: agreement ends without title passing 140 Subsection 126-45(3) CGT event B1: agreement ends without title passing 150 Subsection 126-50(3) Right or option etc. exercised after roll-over to acquire trading stock 160 Section 126-70 Capital loss disregarded despite choice for no roll-over 165 Subsection 138-15(5) CGT event B1: agreement ends without title passing 170 Subsection 165-115ZA(2) Reduction in respect of reduced cost base etc. of debt disregarded if commercial debt forgiveness provisions apply 173 Division 250 Asset is put to a tax preferred use by a tax preferred end user 174 Section 295-25 Commissioner makes an assessment as if an entity were a complying superannuation entity or a pooled superannuation trust for the income year and: (a) the entity does not become one; or (b) the Australian Prudential Regulation Authority (APRA) does not receive certain documents about the entity within a specified period 175 Section 295-30 Notice under section 342 of the Superannuation Industry (Supervision) Act 1993 or under regulations made for the purposes of that section is revoked, or the decision to give the notice is set aside 176 Subsection 295-195(3) An amount is excluded from the assessable income of a complying superannuation fund or an RSA provider because of the exercise of an option by the trustee or provider 177 Section 295-270 Commissioner makes an assessment on the basis of an amount of pre-1 July 88 funding credits being anticipated for an income year and: (a) it becomes clear that those credits will not be available; or (b) APRA does not receive certain documents within a specified period 178 295-490(2) Deduction is denied because financial assistance funding levy is remitted or there is a refund of an overpayment of the levy 185 Former Subdivision 375-H Deductions for shares in a film licensed investment company 190 Subdivision 385-E Primary producer elects to spread or defer tax on profit from forced disposal or death of live stock 200 Section 385-160 Disentitling event happens in relation to your primary production business 210 Division 393 Farm management deposits (11) Nothing in this section prevents the amendment, at any time, of an assessment to decrease the liability of a taxpayer for the purpose of giving effect to section 24 of the International Tax Agreements Act 1953. Definitions (14) In this section, unless the contrary intention appears: "double taxation agreement" means an agreement within the meaning of the International Tax Agreements Act 1953. "limited amendment period", for an assessment, means the period within which the Commissioner may amend the assessment: (a) under item 1, 2, 3 or 4 of the table in subsection (1); or (b) under paragraph (3)(a) or (b). "prescribed provision" means section 136AD or 136AE. "relevant provision" means: (a) a provision of a double taxation agreement that attributes to a permanent establishment or to an enterprise the profits it might be expected to derive if it were independent and dealing at arm's length; or (b) paragraph 7, 8 or 9 of Article 5, or Article 7, of the Taxation Code in Annex G to the Timor Sea Treaty or a provision of any other international tax sharing treaty that corresponds with any of those paragraphs or that Article. "scheme" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "scheme benefit" has the meaning given by section 284-150 in Schedule 1 to the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 170C Power of Commissioner to reduce amount of tax payable in certain cases For the purposes of the making of an assessment on or after 1 July 1966, the Commissioner may reduce by One cent the amount of tax that would, but for this section, be payable by a taxpayer being a person other than a company or being a company in the capacity of a trustee, before deducting any rebate or credit to which the taxpayer is entitled. INCOME TAX ASSESSMENT ACT 1936 - SECT 171 Where no notice of assessment served (1) Where a taxpayer has duly furnished to the Commissioner a return of income, or of profits or gains of a capital nature, and no notice of assessment in respect thereof has been served within 12 months thereafter, the taxpayer may in writing by registered post request the Commissioner to make an assessment. (2) If within 3 months after the receipt by the Commissioner of the request a notice of assessment is not served upon the taxpayer, any assessment issued thereafter in respect of that income, or of those profits or gains, shall be deemed to be an amended assessment, and for the purpose of determining whether such amended assessment may be made, the taxpayer shall be deemed to have been served on the last day of the 3 months with a notice of assessment in respect of which income tax was payable on that day. INCOME TAX ASSESSMENT ACT 1936 - SECT 171A Limited period to make assessments for nil liability returns for the 2003-04 year of income or earlier (1) If the circumstances set out in column 2 of the following table apply to a taxpayer in relation to the 2003-04 year of income (a nil year) or an earlier year of income (also a nil year), the Commissioner cannot make an original assessment for that taxpayer for that year in the circumstances set out in column 3: Making assessments Column 1 Item Column 2 In this case: Column 3 the position is: 1 The taxpayer's return of income for a nil year disclosed, or the Commissioner has given the taxpayer a notice for a nil year that stated, either of the following: (a) the taxpayer had an amount of taxable income, and that no tax was payable; (b) the taxpayer had no taxable income because the taxpayer's deductions equalled the taxpayer's assessable income; and the taxpayer did not deduct a tax loss in the nil year The Commissioner cannot make an original assessment for the taxpayer for the nil year after the later of the following: (a) 31 October 2008; (b) the period of 4 years beginning on the day on which the taxpayer lodged the taxpayer's return of income for the nil year. 2 The taxpayer's return of income for a nil year disclosed, or the Commissioner has given the taxpayer a notice for a nil year that stated, either of the following: (a) the taxpayer had an amount of taxable income, and that no tax was payable; (b) the taxpayer had no taxable income because the taxpayer's deductions equalled the taxpayer's assessable income; and the taxpayer did deduct a tax loss in the nil year The Commissioner cannot make an original assessment for the taxpayer for the nil year after the period of 6 years beginning on the later of the following: (a) the day on which the taxpayer lodged the taxpayer's return of income for the 2004-05 year of income or, if the taxpayer is a member of a consolidated group at the end of that year of income, the day on which head company's return of income for that year of income is lodged; (b) the day on which the taxpayer lodged the taxpayer's return of income for the nil year. 3 The taxpayer had a tax loss in a nil year, none of which has been carried forward to the 2004-05 year of income The Commissioner cannot make an original assessment for the taxpayer for the nil year after the period of 6 years beginning on the later of the following: (a) the day on which the taxpayer lodged the taxpayer's return of income for the 2004-05 year of income or, if the taxpayer is a member of a consolidated group at the end of that year of income, the day on which head company's return of income for that year of income is lodged; (b) the day on which the taxpayer lodged the taxpayer's return of income for the nil year. 4 (a) the taxpayer had a tax loss in a nil year, some or all of which has been carried forward to the 2004-05 year of income; and (b) the taxpayer or, if the taxpayer is a member of a consolidated group at the end of the 2004-05 year of income, the head company notifies the Commissioner, in the approved form, that the taxpayer or the head company had a tax loss in the nil year The Commissioner cannot make an original assessment for the taxpayer for the nil year after the period of 6 years beginning on the later of the following: (a) the day on which the Commissioner received the notification; (b) the day on which the taxpayer lodged the taxpayer's return of income for the nil year. (2) Subsection (1) does not apply in relation to a nil year if: (a) the Commissioner is of the opinion there has been fraud or evasion; or (b) had the Commissioner made an assessment, in accordance with the taxpayer's return of income, that the taxpayer had no taxable income or that no tax was payable by the taxpayer (assuming that such an assessment could have been made)--this Act would not have prevented the Commissioner amending the assessment at any time. INCOME TAX ASSESSMENT ACT 1936 - SECT 172 Refunds of amounts overpaid (1) Where, by reason of an amendment of an assessment, a person's liability to tax (the earlier liability) is reduced: (a) the amount by which the tax is so reduced is taken never to have been payable for the purposes of: (i) provisions of this Act that apply the general interest charge; and (ii) Division 280 in Schedule 1 to the Taxation Administration Act 1953 (which applies the shortfall interest charge); and (b) the Commissioner must apply the amount of any tax overpaid in accordance with Divisions 3 and 3A of Part IIB of the Taxation Administration Act 1953. (1A) However, if a later amendment of an assessment is made and all or some of the person's earlier liability in relation to a particular is reinstated, paragraph (1)(a) is taken not to have applied, or not to have applied to the extent that the earlier liability is reinstated. (2) In subsection (1), unless the contrary intention appears, tax includes the general interest charge under a provision of this Act, additional tax under Part VII and shortfall interest charge. Note 1: The general interest charge is worked out under of Part IIA of the Taxation Administration Act 1953. Note 2: Subsection 8AAB(4) of that Act lists the provisions that apply the charge. INCOME TAX ASSESSMENT ACT 1936 - SECT 173 Amended assessment to be an assessment Except as otherwise provided every amended assessment shall be an assessment for all the purposes of this Act. INCOME TAX ASSESSMENT ACT 1936 - SECT 174 Notice of assessment (1) As soon as conveniently may be after any assessment is made, the Commissioner shall serve notice thereof in writing by post or otherwise upon the person liable to pay the tax. (3) In subsection (1), tax includes additional tax under Part VII. INCOME TAX ASSESSMENT ACT 1936 - SECT 175 Validity of assessment The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with. INCOME TAX ASSESSMENT ACT 1936 - SECT 175A Objections against assessments (1) A taxpayer who is dissatisfied with an assessment made in relation to the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. (2) A taxpayer cannot object under subsection (1) against an assessment ascertaining that: (a) the taxpayer has no taxable income; or (b) the taxpayer has an amount of taxable income and no tax is payable; unless the taxpayer is seeking an increase in the taxpayer's liability. INCOME TAX ASSESSMENT ACT 1936 - SECT 176 Judicial notice of signature All courts and all persons having by law or consent of parties authority to hear, receive and examine evidence, shall take judicial notice of the signature of every person who is or has been the Commissioner, a Second Commissioner or a Deputy Commissioner, provided such signature is attached or appended to any official document. INCOME TAX ASSESSMENT ACT 1936 - SECT 177 Evidence (1) The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct. (2) The production of a Gazette containing a notice purporting to be issued by the Commissioner shall be conclusive evidence that the notice was so issued. (3) The production of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a document issued by either the Commissioner, a Second Commissioner, or a Deputy Commissioner, shall be conclusive evidence that the document was so issued. (4) The production of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of or extract from any return or notice of assessment shall be evidence of the matter therein set forth to the same extent as the original would be if it were produced. (5) To avoid doubt, subsection (4) applies to a copy or an extract of a document that was given to the Commissioner on a data processing device or by way of electronic transmission unless the taxpayer can show that the taxpayer did not authorise the document. INCOME TAX ASSESSMENT ACT 1936 - SECT 177A Interpretation (1) In this Part, unless the contrary intention appears: "capital loss" has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. "foreign income tax offset" means a tax offset allowed under Division 770 of the Income Tax Assessment Act 1997. "scheme" means: (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. "taxpayer" includes a taxpayer in the capacity of a trustee. (2) The definition of taxpayer in subsection (1) shall not be taken to affect in any way the interpretation of that expression where it is used in this Act other than this Part. (3) The reference in the definition of scheme in subsection (1) to a scheme, plan, proposal, action, course of action or course of conduct shall be read as including a reference to a unilateral scheme, plan, proposal, action, course of action or course of conduct, as the case may be. (4) A reference in this Part to the carrying out of a scheme by a person shall be read as including a reference to the carrying out of a scheme by a person together with another person or other persons. (5) A reference in this Part to a scheme or a part of a scheme being entered into or carried out by a person for a particular purpose shall be read as including a reference to the scheme or the part of the scheme being entered into or carried out by the person for 2 or more purposes of which that particular purpose is the dominant purpose. INCOME TAX ASSESSMENT ACT 1936 - SECT 177B Operation of Part (1) Nothing in the following limit the operation of this Part: (a) the provisions of this Act (other than this Part); (b) the International Tax Agreements Act 1953; (c) the Petroleum (Timor Sea Treaty) Act 2003. (2) This Part does not affect the operation of Division 393 of the Income Tax Assessment Act 1997 (Farm management deposits). (3) Where a provision of this Act other than this Part is expressed to have effect where a deduction would be allowable to a taxpayer but for or apart from a provision or provisions of this Act, the reference to that provision or to those provisions, as the case may be, shall be read as including a reference to subsection 177F(1). (4) Where a provision of this Act other than this Part is expressed to have effect where a deduction would otherwise be allowable to a taxpayer, that provision shall be deemed to be expressed to have effect where a deduction would, but for subsection 177F(1), be otherwise allowable to the taxpayer. INCOME TAX ASSESSMENT ACT 1936 - SECT 177C Tax benefits (1) Subject to this section, a reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme shall be read as a reference to: (a) an amount not being included in the assessable income of the taxpayer of a year of income where that amount would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer of that year of income if the scheme had not been entered into or carried out; or (b) a deduction being allowable to the taxpayer in relation to a year of income where the whole or a part of that deduction would not have been allowable, or might reasonably be expected not to have been allowable, to the taxpayer in relation to that year of income if the scheme had not been entered into or carried out; or (ba) a capital loss being incurred by the taxpayer during a year of income where the whole or a part of that capital loss would not have been, or might reasonably be expected not to have been, incurred by the taxpayer during the year of income if the scheme had not been entered into or carried out; or (bb) a foreign income tax offset being allowable to the taxpayer where the whole or a part of that foreign income tax offset would not have been allowable, or might reasonably be expected not to have been allowable, to the taxpayer if the scheme had not been entered into or carried out; and, for the purposes of this Part, the amount of the tax benefit shall be taken to be: (c) in a case to which paragraph (a) applies--the amount referred to in that paragraph; and (d) in a case to which paragraph (b) applies--the amount of the whole of the deduction or of the part of the deduction, as the case may be, referred to in that paragraph; and (e) in a case to which paragraph (ba) applies--the amount of the whole of the capital loss or of the part of the capital loss, as the case may be, referred to in that paragraph; and (f) in a case where paragraph (bb) applies--the amount of the whole of the foreign income tax offset or of the part of the foreign income tax offset, as the case may be, referred to in that paragraph. (2) A reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme shall be read as not including a reference to: (a) the assessable income of the taxpayer of a year of income not including an amount that would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer of that year of income if the scheme had not been entered into or carried out where: (i) the non-inclusion of the amount in the assessable income of the taxpayer is attributable to the making of an agreement, choice, declaration, agreement, election, selection or choice, the giving of a notice or the exercise of an option (expressly provided for by this Act or the Income Tax Assessment Act 1997) by any person, except one under Subdivision 126-B, 170-B or 960-D of the Income Tax Assessment Act 1997; and (ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given or exercised, as the case may be; or (b) a deduction being allowable to the taxpayer in relation to a year of income the whole or a part of which would not have been, or might reasonably be expected not to have been, allowable to the taxpayer in relation to that year of income if the scheme had not been entered into or carried out where: (i) the allowance of the deduction to the taxpayer is attributable to the making of a declaration, agreement, election, selection or choice, the giving of a notice or the exercise of an option by any person, being a declaration, agreement, election, selection, choice, notice or option expressly provided for by this Act or the Income Tax Assessment Act 1997, except one under Subdivision 960-D of the Income Tax Assessment Act 1997; and (ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given or exercised, as the case may be; or (c) a capital loss being incurred by the taxpayer during a year of income the whole or part of which would not have been, or might reasonably be expected not to have been, incurred by the taxpayer during the year of income if the scheme had not been entered into or carried out where: (i) the incurring of the capital loss by the taxpayer is attributable to the making of a declaration, agreement, choice, election or selection, the giving of a notice or the exercise of an option (expressly provided for by this Act or the Income Tax Assessment Act 1997) by any person, except one under Subdivision 126-B, 170-B or 960-D of the Income Tax Assessment Act 1997; and (ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, notice or option to be made, given or exercised, as the case may be; or (d) a foreign income tax offset being allowable to the taxpayer the whole or a part of which would not have been, or might reasonably be expected not to have been, allowable to the taxpayer if the scheme had not been entered into or carried out, where: (i) the allowance of the foreign income tax offset to the taxpayer is attributable to the making of a declaration, agreement, election, selection or choice, the giving of a notice or the exercise of an option by any person, being a declaration, agreement, election, selection, choice, notice or option expressly provided for by this Act; and (ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given or exercised, as the case may be. (2A) A reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme is to be read as not including a reference to: (a) the assessable income of the taxpayer of a year of income not including an amount that would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer of that year of income if the scheme had not been entered into or carried out where: (i) the non-inclusion of the amount in the assessable income of the taxpayer is attributable to the making of a choice under Subdivision 126-B of the Income Tax Assessment Act 1997 or an agreement under Subdivision 170-B of that Act; and (ii) the scheme consisted solely of the making of the agreement or election; or (b) a capital loss being incurred by the taxpayer during a year of income the whole or part of which would not have been, or might reasonably be expected not to have been, incurred by the taxpayer during the year of income if the scheme had not been entered into or carried out where: (i) the incurring of the capital loss by the taxpayer is attributable to the making of a choice under Subdivision 126-B of the Income Tax Assessment Act 1997 or an agreement under Subdivision 170-B of that Act; and (ii) the scheme consisted solely of the making of the agreement or election. (3) For the purposes of subparagraph (2)(a)(i), (b)(i), (c)(i) or (d)(i) or (2A)(a)(i) or (b)(i): (a) the non-inclusion of an amount in the assessable income of a taxpayer; or (b) the allowance of a deduction to a taxpayer; or (c) the incurring of a capital loss by a taxpayer; or is taken to be attributable to the making of a declaration, election, agreement or selection, the giving of a notice or the exercise of an option where, if the declaration, election, agreement, selection, notice or option had not been made, given or exercised, as the case may be: (ca) the allowance of a foreign income tax offset to a taxpayer; (d) the amount would have been included in that assessable income; or (e) the deduction would not have been allowable; or (f) the capital loss would not have been incurred; or (g) the foreign income tax offset would not have been allowable. (4) To avoid doubt, paragraph (1)(a) applies to a scheme if: (a) an amount of income is not included in the assessable income of the taxpayer of a year of income; and (b) an amount would have been included, or might reasonably be expected to have been included, in the assessable income if the scheme had not been entered into or carried out; and (c) instead, the taxpayer or any other taxpayer makes a discount capital gain (within the meaning of the Income Tax Assessment Act 1997) for that or any other year of income. (5) Subsection (4) does not limit the generality of any other provision of this Part. INCOME TAX ASSESSMENT ACT 1936 - SECT 177CA Withholding tax avoidance (1) This section applies in relation to a particular amount if a taxpayer is not liable to pay withholding tax on an amount where that taxpayer would have, or could reasonably be expected to have, been liable to pay withholding tax on the amount if a scheme had not been entered into or carried out. (2) For the purposes of this Part, if this section applies in relation to an amount, the taxpayer is taken to have obtained a tax benefit in connection with the scheme of an amount equal to the amount mentioned in subsection (1). INCOME TAX ASSESSMENT ACT 1936 - SECT 177D Schemes to which Part applies This Part applies to any scheme that has been or is entered into after 27 May 1981, and to any scheme that has been or is carried out or commenced to be carried out after that date (other than a scheme that was entered into on or before that date), whether the scheme has been or is entered into or carried out in Australia or outside Australia or partly in Australia and partly outside Australia, where: (a) a taxpayer (in this section referred to as the relevant taxpayer) has obtained, or would but for section 177F obtain, a tax benefit in connection with the scheme; and (b) having regard to: (i) the manner in which the scheme was entered into or carried out; (ii) the form and substance of the scheme; (iii) the time at which the scheme was entered into and the length of the period during which the scheme was carried out; (iv) the result in relation to the operation of this Act that, but for this Part, would be achieved by the scheme; (v) any change in the financial position of the relevant taxpayer that has resulted, will result, or may reasonably be expected to result, from the scheme; (vi) any change in the financial position of any person who has, or has had, any connection (whether of a business, family or other nature) with the relevant taxpayer, being a change that has resulted, will result or may reasonably be expected to result, from the scheme; (vii) any other consequence for the relevant taxpayer, or for any person referred to in subparagraph (vi), of the scheme having been entered into or carried out; and (viii) the nature of any connection (whether of a business, family or other nature) between the relevant taxpayer and any person referred to in subparagraph (vi); it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for the purpose of enabling the relevant taxpayer to obtain a tax benefit in connection with the scheme or of enabling the relevant taxpayer and another taxpayer or other taxpayers each to obtain a tax benefit in connection with the scheme (whether or not that person who entered into or carried out the scheme or any part of the scheme is the relevant taxpayer or is the other taxpayer or one of the other taxpayers). Note: Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of subparagraphs (b)(vi) and (viii). INCOME TAX ASSESSMENT ACT 1936 - SECT 177E Stripping of company profits (1) Where: (a) as a result of a scheme that is, in relation to a company: (i) a scheme by way of or in the nature of dividend stripping; or (ii) a scheme having substantially the effect of a scheme by way of or in the nature of a dividend stripping; any property of the company is disposed of; (b) in the opinion of the Commissioner, the disposal of that property represents, in whole or in part, a distribution (whether to a shareholder or another person) of profits of the company (whether of the accounting period in which the disposal occurred or of any earlier or later accounting period); (c) if, immediately before the scheme was entered into, the company had paid a dividend out of profits of an amount equal to the amount determined by the Commissioner to be the amount of profits the distribution of which is, in his or her opinion, represented by the disposal of the property referred to in paragraph (a), an amount (in this subsection referred to as the notional amount) would have been included, or might reasonably be expected to have been included, by reason of the payment of that dividend, in the assessable income of a taxpayer of a year of income; and (d) the scheme has been or is entered into after 27 May 1981, whether in Australia or outside Australia; the following provisions have effect: (e) the scheme shall be taken to be a scheme to which this Part applies; (f) for the purposes of section 177F, the taxpayer shall be taken to have obtained a tax benefit in connection with the scheme that is referable to the notional amount not being included in the assessable income of the taxpayer of the year of income; and (g) the amount of that tax benefit shall be taken to be the notional amount. (2) Without limiting the generality of subsection (1), a reference in that subsection to the disposal of property of a company shall be read as including a reference to: (a) the payment of a dividend by the company; (b) the making of a loan by the company (whether or not it is intended or likely that the loan will be repaid); (c) a bailment of property by the company; and (d) any transaction having the effect, directly or indirectly, of diminishing the value of any property of the company. (2A) This section: (a) applies to a non-share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non-share dividend in the same way as it applies to a dividend. (3) In this section, property includes a chose in action and also includes any estate, interest, right or power, whether at law or in equity, in or over property. INCOME TAX ASSESSMENT ACT 1936 - SECT 177EA Creation of franking debit or cancellation of franking credits (1) In this section, unless the contrary intention appears: "relevant circumstances" has a meaning affected by subsection (17). "relevant taxpayer" has the meaning given by subsection (3). "scheme for a disposition", in relation to membership interests or an interest in membership interests, has a meaning affected by subsection (14). (2) An expression used in this section that is defined in the Income Tax Assessment Act 1997 has the same meaning as in that Act, except to the extent that its meaning is extended by subsection (16), (18) or (19), or affected by subsection (15). Application of section (3) This section applies if: (a) there is a scheme for a disposition of membership interests, or an interest in membership interests, in a corporate tax entity; and (b) either: (i) a frankable distribution has been paid, or is payable or expected to be payable, to a person in respect of the membership interests; or (ii) a frankable distribution has flowed indirectly, or flows indirectly or is expected to flow indirectly, to a person in respect of the interest in membership interests, as the case may be; and (c) the distribution was, or is expected to be, a franked distribution or a distribution franked with an exempting credit; and (d) except for this section, the person (the relevant taxpayer) would receive, or could reasonably be expected to receive, imputation benefits as a result of the distribution; and (e) having regard to the relevant circumstances of the scheme, it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling the relevant taxpayer to obtain an imputation benefit. Bare acquisition of membership interests or interest in membership interests (4) It is not to be concluded for the purposes of paragraph (3)(e) that a person entered into or carried out a scheme for a purpose mentioned in that paragraph merely because the person acquired membership interests, or an interest in membership interests, in the entity. Commissioner to determine franking debit or deny franking credit (5) The Commissioner may make, in writing, either of the following determinations: (a) if the corporate tax entity is a party to the scheme, a determination that a franking debit or exempting debit of the entity arises in respect of each distribution made to the relevant taxpayer or that flows indirectly to the relevant taxpayer; (b) a determination that no imputation benefit is to arise in respect of a distribution or a specified part of a distribution that is made, or that flows indirectly, to the relevant taxpayer. A determination does not form part of an assessment. Notice of determination (6) If the Commissioner makes a determination under subsection (5), the Commissioner must: (a) in respect of a determination made under paragraph (5)(a)--serve notice in writing of the determination on the corporate tax entity; or (b) in respect of a determination made under paragraph (5)(b)--serve notice in writing of the determination on the relevant taxpayer. The notice may be included in a notice of assessment. Publication in national newspaper of determination in relation to listed public company denying imputation benefit (7) If the Commissioner makes a determination under paragraph (5)(b), in respect of a distribution made by a listed public company, the Commissioner is taken to have served notice in writing of the determination on the relevant taxpayer if the Commissioner causes the notice to be published in a daily newspaper that circulates generally in each State, the Australian Capital Territory and the Northern Territory. The notice is taken to have been served on the day on which the publication takes place. Evidence of determination (8) The production of: (a) a notice of a determination; or (b) a document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of a determination; is conclusive evidence: (c) of the due making of the determination; and (d) except in proceedings under Part IVC of the Taxation Administration Act 1953 on an appeal or review relating to the determination, that the determination is correct. Objections (9) If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. Effect of determination of franking debit or exempting debit (10) If the Commissioner makes a determination under paragraph (5)(a): (a) on the day on which notice in writing of the determination is served on the entity, a franking debit or exempting debit of the corporate tax entity arises in respect of the distribution; and (b) the amount of the franking debit or exempting debit is such amount as is stated in the Commissioner's determination, being an amount that: (i) the Commissioner considers reasonable in the circumstances; and (ii) does not exceed the amount of the franking debit or exempting debit of the entity arising under item 1 of the table in section 205-30 of the Income Tax Assessment 1997 or item 2 of the table in section 208-120 of that Act in respect of the distribution. Effect of determination that no imputation benefit is to arise (11) If the Commissioner makes a determination under paragraph (5)(b), the determination has effect according to its terms. Application of section to non-share dividends (12) This section: (a) applies to a non-share equity interest in the same way as it applies to a membership interest; and (b) applies to an equity holder in the same way as it applies to a member; and (c) applies to a non-share dividend in the same way as it applies to a distribution. Meaning of interest in membership interests (13) A person has an interest in membership interests if: (a) the person has any legal or equitable interest in the membership interests; or (b) the person is a partner in a partnership and: (i) the assets of the partnership include, or will include, the membership interests; or (ii) the partnership derives, or will derive, income indirectly through interposed companies, trusts or partnerships, from distributions made on the membership interests; or (c) the person is a beneficiary of a trust (including a potential beneficiary of a discretionary trust) and: (i) the membership interests form, or will form, part of the trust estate; or (ii) the trust derives, or will derive, income indirectly through interposed companies, trusts or partnerships, from distributions made on the membership interests. Meaning of scheme for a disposition (14) A scheme for a disposition of membership interests or an interest in membership interests includes, but is not limited to, a scheme that involves any of the following: (a) issuing the membership interests or creating the interest in membership interests; (b) entering into any contract, arrangement, transaction or dealing that changes or otherwise affects the legal or equitable ownership of the membership interests or interest in membership interests; (c) creating, varying or revoking a trust in relation to the membership interests or interest in membership interests; (d) creating, altering or extinguishing a right, power or liability attaching to, or otherwise relating to, the membership interests or interest in membership interests; (e) substantially altering any of the risks of loss, or opportunities for profit or gain, involved in holding or owning the membership interests or having the interest in membership interests; (f) the membership interests or interest in membership interests beginning to be included, or ceasing to be included, in any of the insurance funds of a life assurance company. (15) In determining whether a distribution flows indirectly to a person, assume that the following provisions of the Income Tax Assessment Act 1997 had not been enacted: (a) section 295-385 (about income from assets set aside to meet current pension liabilities), section 295-390 (about income from other assets used to meet current pension liabilities) and 295-400 (about income of a PST attributable to current pension liabilities); or (b) paragraph 320-37(1)(a) (about segregated exempt assets) or paragraph 320-37(1)(d) (about income bonds, funeral policies and scholarship plans). When imputation benefit is received (16) A taxpayer to whom a distribution flows indirectly receives an imputation benefit as a result of the distribution if: (a) the taxpayer is entitled to a tax offset under Division 207 of the Income Tax Assessment Act 1997 as a result of the distribution; or (b) where the taxpayer is a corporate tax entity--a franking credit would arise in the franking account of the taxpayer as a result of the distribution. Note: Where the distribution is made directly to the taxpayer, see subsection 204-30(6) of the Income Tax Assessment Act 1997 for a definition of imputation benefit. Meaning of relevant circumstances of scheme (17) The relevant circumstances of a scheme include the following: (a) the extent and duration of the risks of loss, and the opportunities for profit or gain, from holding membership interests, or having interests in membership interests, in the corporate tax entity that are respectively borne by or accrue to the parties to the scheme, and whether there has been any change in those risks and opportunities for the relevant taxpayer or any other party to the scheme (for example, a change resulting from the making of any contract, the granting of any option or the entering into of any arrangement with respect to any membership interests, or interests in membership interests, in the corporate tax entity); (b) whether the relevant taxpayer would, in the year of income in which the distribution is made, or if the distribution flows indirectly to the relevant taxpayer, in the year in which the distribution flows indirectly to the relevant taxpayer, derive a greater benefit from franking credits than other entities who hold membership interests, or have interests in membership interests, in the corporate tax entity; (c) whether, apart from the scheme, the corporate tax entity would have retained the franking credits or exempting credits or would have used the franking credits or exempting credits to pay a franked distribution to another entity referred to in paragraph (b); (d) whether, apart from the scheme, a franked distribution would have flowed indirectly to another entity referred to in paragraph (b); (e) if the scheme involves the issue of a non-share equity interest to which section 215-10 of the Income Tax Assessment Act 1997 applies--whether the corporate tax entity has issued, or is likely to issue, equity interests in the corporate tax entity: (i) that are similar, from a commercial point of view, to the non-share equity interest; and (ii) distributions in respect of which are frankable; (f) whether any consideration paid or given by or on behalf of, or received by or on behalf of, the relevant taxpayer in connection with the scheme (for example, the amount of any interest on a loan) was calculated by reference to the imputation benefits to be received by the relevant taxpayer; (g) whether a deduction is allowable or a capital loss is incurred in connection with a distribution that is made or that flows indirectly under the scheme; (ga) whether a distribution that is made or that flows indirectly under the scheme to the relevant taxpayer is sourced, directly or indirectly, from unrealised or untaxed profits; (h) whether a distribution that is made or that flows indirectly under the scheme to the relevant taxpayer is equivalent to the receipt by the relevant taxpayer of interest or of an amount in the nature of, or similar to, interest; (i) the period for which the relevant taxpayer held membership interests, or had an interest in membership interests, in the corporate tax entity; (j) any of the matters referred to in subparagraphs 177D(b)(i) to (viii). Meaning of greater benefit from franking credits (18) The following subsection lists some of the cases in which a taxpayer to whom a distribution flows indirectly receives a greater benefit from franking credits than an entity referred to in paragraph (17)(b). It is not an exhaustive list. (19) A taxpayer to whom a distribution flows indirectly receives a greater benefit from franking credits than an entity referred to in paragraph (17)(b) if any of the following circumstances exist in relation to that entity in the year of income in which the distribution giving rise to the benefit is made, and not in relation to the taxpayer if: (a) the entity is not an Australian resident; or (b) the entity would not be entitled to any tax offset under Division 207 of the Income Tax Assessment Act 1997 because of the distribution; or (c) the amount of income tax that would be payable by the entity because of the distribution is less than the tax offset to which the entity would be entitled; or (d) the entity is a corporate tax entity at the time the distribution is made, but no franking credit arises for the entity as a result of the distribution; or (e) the entity is a corporate tax entity at the time the distribution is made, but cannot use franking credits received on the distribution to frank distributions to its own members because: (i) it is not a franking entity; or (ii) it is unable to make frankable distributions. Note: Where the distribution is made directly to the taxpayer, see subsections 204-30(7), (8), (9) and (10) of the Income Tax Assessment Act 1997 for a list of circumstances in which the taxpayer will be treated as deriving a greater benefit from franking credits than another entity. INCOME TAX ASSESSMENT ACT 1936 - SECT 177EB Cancellation of franking credits--consolidated groups Expressions to have same meanings as in section 177EA and Income Tax Assessment Act 1997 (1) Unless the contrary intention appears, expressions used in this section: (a) if those expressions are defined in section 177EA--have the same meanings as in that section (subject to subsection (10) of this section); and (b) otherwise--have the same meanings as in the Income Tax Assessment Act 1997. This section and section 177EA do not limit each other (2) This section does not limit the operation of section 177EA, and section 177EA does not limit the operation of this section. Application of section (3) This section applies if: (a) there is a scheme for a disposition of membership interests in an entity (the joining entity); and (b) as a result of the disposition, the joining entity becomes a subsidiary member of a consolidated group; and (c) a credit arises in the franking account of the head company of the group because of the joining entity becoming a subsidiary member of the group; and (d) having regard to the relevant circumstances of the scheme, it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling the credit referred to in paragraph (c) to arise in the head company's franking account. Bare acquisition of membership interests (4) It is not to be concluded for the purposes of paragraph (3)(d) that a person entered into or carried out a scheme for a purpose mentioned in that paragraph merely because the person acquired membership interests in the joining entity. Commissioner to determine no franking credit (5) The Commissioner may make, in writing, a determination that no credit is to arise in the head company's franking account because of the joining entity becoming a subsidiary member of the consolidated group. A determination does not form part of an assessment. Effect of determination (6) A determination under subsection (5) has effect according to its terms. Notice of determination (7) If the Commissioner makes a determination under subsection (5), the Commissioner must serve notice in writing of the determination on the head company. The notice may be included in a notice of assessment. Evidence of determination (8) The production of: (a) a notice of a determination; or (b) a document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of a determination; is conclusive evidence: (c) of the due making of the determination; and (d) except in proceedings under Part IVC of the Taxation Administration Act 1953 on an appeal or review relating to the determination, that the determination is correct. Objections (9) If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. Relevant circumstances (10) The relevant circumstances of a scheme include the following: (a) the extent and duration of the risks of loss, and the opportunities for profit or gain, from holding membership interests in the joining entity that are respectively borne by or accrue to the parties to the scheme, and whether there has been any change in those risks and opportunities for the head company or any other party to the scheme (for example, a change resulting from the making of any contract, the granting of any option or the entering into of any arrangement with respect to any membership interests in the joining entity); (b) whether the head company, or a person holding membership interests in the head company, would, in the year of income in which the joining entity became a subsidiary member of the group or any later year of income, derive a greater benefit from franking credits than other persons who held membership interests in the joining entity immediately before it became a subsidiary member of the group; (c) the extent (if any) to which the joining entity was able to pay a franked dividend or distribution immediately before it became a subsidiary member of the group; (d) whether any consideration paid or given by or on behalf of, or received by or on behalf of, the head company in connection with the scheme (for example, the amount of any interest on a loan) was calculated by reference to the franking credit benefits to be received by the head company; (e) the period for which the head company held membership interests in the joining entity; (f) any of the matters referred to in subparagraphs 177D(b)(i) to (viii). Section to apply to exempting credits (11) This section applies to exempting credits arising in the exempting account of the head company of a consolidated group in the same way that it applies to credits arising in the head company's franking account. INCOME TAX ASSESSMENT ACT 1936 - SECT 177F Cancellation of tax benefits etc. (1) Where a tax benefit has been obtained, or would but for this section be obtained, by a taxpayer in connection with a scheme to which this Part applies, the Commissioner may: (a) in the case of a tax benefit that is referable to an amount not being included in the assessable income of the taxpayer of a year of income--determine that the whole or a part of that amount shall be included in the assessable income of the taxpayer of that year of income; or (b) in the case of a tax benefit that is referable to a deduction or a part of a deduction being allowable to the taxpayer in relation to a year of income--determine that the whole or a part of the deduction or of the part of the deduction, as the case may be, shall not be allowable to the taxpayer in relation to that year of income; or (c) in the case of a tax benefit that is referable to a capital loss or a part of a capital loss being incurred by the taxpayer during a year of income--determine that the whole or a part of the capital loss or of the part of the capital loss, as the case may be, was not incurred by the taxpayer during that year of income; (d) in the case of a tax benefit that is referable to a foreign income tax offset, or a part of a foreign income tax offset, being allowable to the taxpayer--determine that the whole or a part of the foreign income tax offset, or the part of the foreign income tax offset, as the case may be, is not to be allowable to the taxpayer; and, where the Commissioner makes such a determination, he or she shall take such action as he or she considers necessary to give effect to that determination. (2) Where the Commissioner determines under paragraph (1)(a) that an amount is to be included in the assessable income of a taxpayer of a year of income, that amount shall be deemed to be included in that assessable income by virtue of such provision of this Act as the Commissioner determines. (2A) Where a tax benefit that is covered by section 177CA has been obtained, or would but for this section be obtained, by a taxpayer in connection with a scheme to which this Part applies: (a) the Commissioner may determine that the taxpayer is subject to withholding tax under section 128B on the whole or a part of that amount; and (b) if the Commissioner makes such a determination, he or she must take such action as he or she considers necessary to give effect to that determination. (2B) A determination under paragraph (1)(c) or subsection (2A) must be in writing. (2C) Notice of the determination must be given to the taxpayer and, in the case of a determination under subsection (2A), to the person who paid the amount. (2D) More than one determination may be included in the same notice. (2E) A failure to comply with subsection (2C) does not affect the validity of a determination. (2F) If the Commissioner makes a determination under subsection (2A), the amount that the Commissioner determines is taken to be subject to withholding tax is taken to have been subject to withholding tax at all times by virtue of such provision of section 128B as the Commissioner determines. (2G) If the taxpayer is dissatisfied with a determination under paragraph (1)(c) or subsection (2A), the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. (3) Where the Commissioner has made a determination under subsection (1) or (2A) in respect of a taxpayer in relation to a scheme to which this Part applies, the Commissioner may, in relation to any taxpayer (in this subsection referred to as the relevant taxpayer): (a) if, in the opinion of the Commissioner: (i) there has been included, or would but for this subsection be included, in the assessable income of the relevant taxpayer of a year of income an amount that would not have been included or would not be included, as the case may be, in the assessable income of the relevant taxpayer of that year of income if the scheme had not been entered into or carried out; and (ii) it is fair and reasonable that that amount or a part of that amount should not be included in the assessable income of the relevant taxpayer of that year of income; determine that that amount or that part of that amount, as the case may be, should not have been included or shall not be included, as the case may be, in the assessable income of the relevant taxpayer of that year of income; or (b) if, in the opinion of the Commissioner: (i) an amount would have been allowed or would be allowable to the relevant taxpayer as a deduction in relation to a year of income if the scheme had not been entered into or carried out, being an amount that was not allowed or would not, but for this subsection, be allowable, as the case may be, as a deduction to the relevant taxpayer in relation to that year of income; and (ii) it is fair and reasonable that that amount or a part of that amount should be allowable as a deduction to the relevant taxpayer in relation to that year of income; determine that that amount or that part, as the case may be, should have been allowed or shall be allowable, as the case may be, as a deduction to the relevant taxpayer in relation to that year of income; or (c) if, in the opinion of the Commissioner: (i) a capital loss would have been incurred by the relevant taxpayer during a year of income if the scheme had not been entered into or carried out, being a capital loss that was not incurred or would not, but for this subsection, be incurred, as the case may be, by the relevant taxpayer during that year of income; and (ii) it is fair and reasonable that the capital loss or a part of that capital loss should be incurred by the relevant taxpayer during that year of income; determine that the capital loss or the part, as the case may be, should be incurred by the relevant taxpayer during that year of income; or (d) if, in the opinion of the Commissioner: (i) an amount would have been allowed, or would be allowable, to the relevant taxpayer as a foreign income tax offset if the scheme had not been entered into or carried out, being an amount that was not allowed or would not, apart from this subsection, be allowable, as the case may be, as a foreign income tax offset to the relevant taxpayer; and (ii) it is fair and reasonable that the amount, or a part of the amount, should be allowable as a foreign income tax offset to the relevant taxpayer; determine that that amount or that part, as the case may be, should have been allowed or is allowable, as the case may be, as a foreign income tax offset to the relevant taxpayer; and the Commissioner shall take such action as he or she considers necessary to give effect to any such determination. (4) Where the Commissioner makes a determination under subsection (3) by virtue of which an amount is allowed as a deduction to a taxpayer in relation to a year of income, that amount shall be deemed to be so allowed as a deduction by virtue of such provision of this Act as the Commissioner determines. (5) Where, at any time, a taxpayer considers that the Commissioner ought to make a determination under subsection (3) in relation to the taxpayer in relation to a year of income, the taxpayer may post to or lodge with the Commissioner a request in writing for the making by the Commissioner of a determination under that subsection. (6) The Commissioner shall consider the request and serve on the taxpayer, by post or otherwise, a written notice of the Commissioner's decision on the request. (7) If the taxpayer is dissatisfied with the Commissioner's decision on the request, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 177G Amendment of assessments Nothing in section 170 prevents the amendment of an assessment at any time if the amendment is for the purpose of giving effect to subsection 177F(3). INCOME TAX ASSESSMENT ACT 1936 - SECT 202 Objects of this Part The objects of this Part are, by means of the establishment of a system of tax file numbers: (a) to increase the effectiveness and efficiency of the matching of information contained in reports given to the Commissioner under this Act or the regulations with information disclosed in income tax returns by taxpayers; and (b) to prevent evasion of liability to taxation under the laws of the Commonwealth relating to income tax; and (c) to facilitate the administration of any legislation enacted by the Parliament under which benefits are provided by the Commonwealth to students in relation to contributions or charges payable by students in respect of the costs of courses of study provided by institutions of higher education or in respect of the costs of other services and amenities available to students in connection with such institutions; and (d) to facilitate the administration of any legislation enacted by the Parliament to impose charge equal to any shortfall in the amount spent by employers on training employees; and (e) to facilitate the administration of a provision of an Act, being a provision which authorises the collection of a tax file number as a condition to the giving of personal assistance within the meaning of the Data-matching Program (Assistance and Tax) Act 1990; and (f) to facilitate the administration of the Data-matching Program (Assistance and Tax) Act 1990; and (g) to facilitate the administration of any legislation enacted by the Parliament in relation to the imposition of charge on an employer's superannuation guarantee shortfall; and (ga) to facilitate the administration of the Child Support (Assessment) Act 1989 and the Child Support (Registration and Collection) Act 1988; and (h) to facilitate the administration of Division 6 of Part 4A of the Student Assistance Act 1973; and (ha) to facilitate the administration of: (i) Part 2B.3 of the Social Security Act 1991; or (ii) a provision of an instrument under Chapter 2B of the Social Security Act 1991 (as in force before the commencement of Schedule 2 to the Youth Allowance Consolidation Act 2000) establishing a Student Financial Supplement Scheme, being a provision relating to the recovery through the taxation system of a student's outstanding indebtedness in respect of financial supplement paid to the student in accordance with the Scheme; and (hb) to facilitate the administration of Part 3.18 of the Social Security Act 1991; and (hc) to facilitate the administration of Division 11A of Part IIIB of the Veterans' Entitlements Act 1986; and (i) to facilitate: (i) the administration of Part 25A of the Superannuation Industry (Supervision) Act 1993 in relation to individuals; and (ii) the administration of that Act in relation to superannuation entities (within the meaning of that Act) or regulated exempt public sector superannuation schemes (within the meaning of Part 25A of that Act); and (ia) to facilitate the administration of the Superannuation (Unclaimed Money and Lost Members) Act 1999 (including the administration of registers by State or Territory authorities (within the meaning of that Act) in accordance with section 18 of that Act); and (j) to facilitate the administration of the Small Superannuation Accounts Act 1995; and (ka) to facilitate: (i) the administration of Part 11 of the Retirement Savings Accounts Act 1997 in relation to individuals; and (ii) the administration of that Act in relation to RSA providers; and (kb) to facilitate: (i) the administration of Division 2 of Part 5 of the First Home Saver Accounts Act 2008 in relation to individuals; and (ii) the administration of that Act in relation to FHSA providers (within the meaning of that Act); and (l) to facilitate the administration of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 and the Termination Payments Tax (Assessment and Collection) Act 1997; and (la) to facilitate the administration of the Paid Parental Leave Act 2010; and (m) to facilitate the administration of the A New Tax System (Family Assistance) (Administration) Act 1999 and section 5 of the A New Tax System (Family Assistance) (Consequential and Related Measures) Act (No. 1) 1999; and (o) to facilitate the administration of section 204A of the Social Security (Administration) Act 1999; and (p) to facilitate the administration of the fuel tax law (within the meaning of section 110-5 of the Fuel Tax Act 2006); and (q) to facilitate the administration of Division 2AA of Part II of the Banking Act 1959. INCOME TAX ASSESSMENT ACT 1936 - SECT 202A Interpretation In this Part, unless the contrary intention appears: "alienated personal services payment" has the meaning given by section 13-10 in Schedule 1 to the Taxation Administration Act 1953. "applicant," in relation to an application for the issue of a tax file number, means the person specified in the application as the person by whom or on whose behalf the issue of a tax file number is sought. "approved form" has the same meaning as in the Income Tax Assessment Act 1997. "bank means": (a) the Reserve Bank of Australia; (b) a body corporate that is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959; or (c) a person who carries on State banking within the meaning of paragraph 51(xiii) of the Constitution. "child" means a person who is less than 16 years of age. "co-operative housing society" means a society registered or incorporated as a co-operative housing society or similar society under a law of a State or Territory. "data processing device" means any article or material from which information is capable of being reproduced with or without the aid of any other article or device. "eligible PAYG payment" means: (a) a payment from which an amount must be withheld under Subdivision 12-B (other than section 12-55), Subdivision 12-C or Subdivision 12-D in Schedule 1 to the Taxation Administration Act 1953; or (aa) an alienated personal services payment in respect of which Division 13 in Schedule 1 to the Taxation Administration Act 1953 requires an amount to be paid to the Commissioner; or (b) a non-cash benefit in respect of which an amount is payable to the Commissioner under section 14-5 in Schedule 1 to the Taxation Administration Act 1953 because of the application of that section in relation to Subdivision 12-B, 12-C or 12-D of that Schedule; and has a meaning affected by section 202AA. "entity" means a body corporate or unincorporated association, but does not include a natural person or a partnership. "financial institution" means: (a) a bank; or (b) a co-operative housing society. "government body" means the Commonwealth, a State, a Territory or an authority of the Commonwealth or of a State or Territory. "interest-bearing account" means any facility, other than an RSA or FHSA, by which a financial institution: (a) does any one or more of the following: (i) accepts deposits of money to the credit of a person; (ii) allows withdrawals from the money deposited; (iii) pays cheques or payment orders drawn on the institution by, or collects cheques or payment orders on behalf of, the person; and (b) pays or credits interest, or amounts in the nature of interest, on the balance standing to the credit of the person from time to time. "interest-bearing deposit" means a deposit of money, other than into an RSA or FHSA, with a financial institution, in consideration of which the financial institution pays or credits interest, or amounts in the nature of interest, to a person. "investment body" means a person who is an investment body within the meaning of section 202D. "investment to which this Part applies" means an investment of a kind mentioned in section 202D. "investor" means a person who is an investor within the meaning of section 202D. "passport", in relation to a person who does not hold a passport, means another official travel document held by the person. "payer" means: (a) a person who makes an eligible PAYG payment (other than an alienated personal services payment), or is likely to make such a payment; or (b) a person who receives an alienated personal services payment, or is likely to receive such a payment. "person" includes a partnership, a company and a person in the capacity of trustee of a trust estate. "public company" means a public company within the meaning of the Corporations Act 2001. "recipient" means: (a) a person who receives an eligible PAYG payment (other than an alienated personal services payment), or is likely to receive such a payment; or (b) a person in relation to whose personal services income (within the meaning of the Income Tax Assessment Act 1997) a payer receives an alienated personal services payment, or is likely to receive such a payment. "securities dealer" means a person who is a dealer for the purposes of the Securities Industry Act 1980 or for the purposes of a law of a State or Territory that corresponds to that Act. "solicitor" means a solicitor, barrister and solicitor or legal practitioner of the High Court or of the Supreme Court of a State or Territory. "tax file number", in relation to a person, means a number issued to the person by the Commissioner, being a number that is either: (a) a number issued to the person under Division 2; or (aa) a number issued to a person under section 44 or 48 of the Higher Education Funding Act 1988; or (b) a number notified, before the commencement of this section, to the person as the person's income tax file number. "TFN declaration" means a declaration made for the purposes of section 202C. "unit trust" means a trust to which a unit trust scheme relates, and includes: (a) a cash management trust; (b) a property trust; (c) an arrangement declared by the Minister, by notice published in the Gazette, to be a unit trust for the purposes of this definition; but does not include an FHSA trust or any arrangement declared by the Minister, by notice published in the Gazette, not to be a unit trust for the purposes of this definition. "unit trust scheme" means an arrangement made for the purpose, or having the effect, of providing, for a person who has funds available for investment, facilities for participation by the person, as a beneficiary under a trust, in any profit or income arising from the acquisition, holding, management or disposal of property under the trust. INCOME TAX ASSESSMENT ACT 1936 - SECT 202AA Definition of eligible PAYG payment In applying the definition of eligible PAYG payment in section 202A: (a) a requirement to withhold a nil amount is treated as a requirement to withhold an amount; and (b) a requirement to pay a nil amount to the Commissioner is treated as a requirement to pay an amount to the Commissioner; and (c) the following provisions in Schedule 1 to the Taxation Administration Act 1953 are to be disregarded, namely: section 12-1, subsection 12-45(2), subsection 12-110(2) and subsection 12-115(2). INCOME TAX ASSESSMENT ACT 1936 - SECT 202B Application for tax file number (1) A person may apply to the Commissioner for the issue of a tax file number. (2) An application shall be in a form approved by the Commissioner and shall be accompanied by documentary evidence of the applicant's identity. (3) An application may be handed in at, or posted to, the office of a Deputy Commissioner. (4) An application may be handed in at an office or facility designated by the Commissioner as a receiving centre for applications of that kind. INCOME TAX ASSESSMENT ACT 1936 - SECT 202BA Issuing of tax file numbers (1) Subject to subsection (3), if, on an application for a tax file number, the Commissioner is satisfied that the applicant's identity has been established, the Commissioner shall issue a tax file number to the applicant. (2) If, on such an application, the Commissioner is not satisfied as to the applicant's true identity, the Commissioner may refuse the application. (3) If, on such an application, the Commissioner is satisfied that: (a) the applicant already has a tax file number; or (b) a notice under section 202BD in relation to the applicant is in force; the Commissioner shall refuse the application. (4) The Commissioner may, without an application being made, issue a tax file number to a person whenever it is necessary to do so in connection with the performance of a function of the Commissioner under a law of the Commonwealth relating to taxation. (5) The Commissioner shall issue a tax file number to a person by giving the person a written notice of the number. (6) The Commissioner shall refuse an application for a tax file number by giving the applicant a written notice of the refusal and of the reasons for the refusal. INCOME TAX ASSESSMENT ACT 1936 - SECT 202BB Current tax file number On the issue of a tax file number to a person, any tax file number previously issued to the person and not already cancelled or withdrawn ceases to have effect. INCOME TAX ASSESSMENT ACT 1936 - SECT 202BC Deemed refusal by Commissioner (1) If the Commissioner has not decided an application for a tax file number within 28 days after the application is made, the applicant may, at any time, give to the Commissioner written notice that the applicant wishes to treat the application as having been refused. (2) If in the application the applicant has stated the name and address of one or more payers of the applicant, subsection (1) does not apply at a particular time if at that time a notice has been issued to each such payer under section 202BD in relation to the applicant and each such notice is in force. (3) For the purposes of Division 6, where an applicant gives notice under subsection (1), the Commissioner shall be taken to have refused the application for a tax file number on the day on which the notice was given. INCOME TAX ASSESSMENT ACT 1936 - SECT 202BD Interim notices (1) Where an application for a tax file number states the name and address of a payer of the applicant, the Commissioner may give to the payer a notice under this section in relation to the applicant. (2) The notice remains in force for the period of 28 days commencing on the day specified in the notice. (3) The notice shall specify: (a) the applicant's name as shown in the application; and (b) the last day of the period for which the notice remains in force. (4) On giving the notice, the Commissioner shall inform the applicant that the notice has been given. (5) The notice may be given to take effect on the expiration of a notice previously given to the payer under this section in relation to the applicant. (6) Where, while an application for a tax file number is pending, the applicant notifies the Commissioner, in writing, of the name and address of a payer of the applicant (being a payer whose name and address is not stated on the application), the payer's name and address shall, at the end of the period of 7 days after the notification, be taken to have been stated on the application. INCOME TAX ASSESSMENT ACT 1936 - SECT 202BE Cancellation of tax file numbers (1) Where the Commissioner concludes that a tax file number was issued to a person under an identity that is not the person's true identity, the Commissioner may, by written notice given to the person, cancel the tax file number. (2) The Commissioner shall set out in the notice the reasons for the Commissioner's conclusion. INCOME TAX ASSESSMENT ACT 1936 - SECT 202BF Alteration of tax file numbers The Commissioner may, at any time, by written notice given to a person who has a tax file number: (a) withdraw that number; and (b) issue to the person a new tax file number in place of the withdrawn number. INCOME TAX ASSESSMENT ACT 1936 - SECT 202C TFN declarations by recipients of eligible PAYG payments (1) A person who is a recipient of a payer, or expects to become a recipient of a payer, may make a TFN declaration in relation to the payer. (2) To be effective, the declaration must be made in the approved form. INCOME TAX ASSESSMENT ACT 1936 - SECT 202CA Operation of TFN declaration (1) Subject to this Division, a TFN declaration commences to have effect when it is made. Note: Under section 202CB, a TFN declaration is not effective unless the tax file number of the recipient is stated in the declaration. (1A) A TFN declaration ceases to have effect when the recipient makes another TFN declaration in relation to the payer. (1B) A TFN declaration ceases to have effect 12 months after it is made if no eligible PAYG payment is made by the payer to the recipient during that 12 month period. (1C) If: (a) the payer makes an eligible PAYG payment to the recipient after the TFN declaration is made; and (b) a period of 12 months then elapses without any further eligible PAYG payment being made by the payer to the recipient; then the TFN declaration ceases to have effect at the end of that period of 12 months. (2) A TFN declaration to which a determination under subsection (3) applies ceases to have effect at the end of the day fixed by the determination. (3) The Commissioner may determine that: (a) all TFN declarations; or (b) a specified class of TFN declarations; shall cease to have effect at the end of the day specified in the determination. (4) A determination shall be made by notice published in the Gazette. INCOME TAX ASSESSMENT ACT 1936 - SECT 202CB Quotation of tax file number in TFN declaration (1) Subject to subsections (2) and (4) and subsection 202CE(2), a TFN declaration is not effective for the purposes of this Part unless the tax file number of the recipient is stated in the declaration. (2) For the purposes of this Part, a recipient is taken to have stated his or her tax file number in a TFN declaration if the declaration includes a statement: (a) that an application by the recipient for a tax file number is pending; or (b) that the recipient has a tax file number but does not know what it is and has asked the Commissioner to inform him or her of the number. (3) Where: (a) a TFN declaration includes such a statement; and (b) the recipient who made the declaration fails to inform the payer of the recipient's tax file number within 28 days after making the declaration; subsection (2) does not apply to the declaration in respect of any time after the end of the period of 28 days. (4) For the purposes of this Part, a recipient is taken to have stated his or her tax file number in a TFN declaration in relation to a payer while a notice under section 202BD given to the payer in relation to the recipient is in force. (5) If: (a) the tax file number of a recipient is withdrawn under section 202BF; and (b) at the time of the withdrawal, the number is stated in a TFN declaration; the declaration is taken to state the tax file number of the recipient in spite of the withdrawal of the number. (6) Subsections (2) to (4) do not apply to a TFN declaration given to the Education Secretary, to the Employment Secretary or to the Chief Executive Centrelink: (a) by a person who is an applicant for an austudy payment, a CDEP Scheme Participant Supplement, a newstart allowance, a sickness allowance or a youth allowance under the Social Security Act 1991; or (aaa) by a person who is not a member of a couple and is an applicant for a parenting payment under the Social Security Act 1991; or (b) by a person who is a recipient for the purposes of this Part because the person receives, or expects to receive, a payment referred to in paragraph (a). Persons receiving benefits under Veterans' Entitlements Act (7) Subsections (2) to (4) do not apply to a TFN declaration given to the Veterans' Affairs Secretary: (a) by a person who is an applicant for a pension or allowance under the Veterans' Entitlements Act 1986; or (b) by a person who is a recipient for the purposes of this Part because the person receives, or expects to receive, such a pension or allowance. Persons receiving benefits under Military Rehabilitation and Compensation Act (8) Subsections (2) to (4) do not apply to a TFN declaration given to the Military Rehabilitation and Compensation Commission: (a) by a person who is an applicant for compensation or an allowance under the Military Rehabilitation and Compensation Act 2004; or (b) by a person who is a recipient for the purposes of this Part because the person receives, or expects to receive, such compensation or allowance. INCOME TAX ASSESSMENT ACT 1936 - SECT 202CC Making a replacement TFN declaration in place of an ineffective declaration Nothing in this Division prevents a recipient making a new TFN declaration in place of a TFN declaration that is ineffective under subsection 202CB(1). INCOME TAX ASSESSMENT ACT 1936 - SECT 202CD Sending of TFN declaration to Commissioner (1) Where a recipient gives a payer a TFN declaration, the payer shall: (a) countersign the original of the declaration; (b) within 14 days after the declaration is made, send the original to the office of a Deputy Commissioner; and (c) retain the copy of the declaration in accordance with subsection (6). Penalty: 10 penalty units. (4) If: (a) a TFN declaration, when given to a payer, does not quote the recipient's tax file number; and (b) before the payer sends the declaration to the Deputy Commissioner, the recipient informs the payer of the recipient's tax file number; the payer shall write the number on the declaration and on the copy. Penalty: 10 penalty units. (5) Where a tax file number has been written on a declaration under subsection (4), the declaration shall be regarded as stating that number as the tax file number of the recipient who made the declaration. (5A) A payer who fails to comply with subsection (1) or (4) is liable to pay to the Commissioner a penalty of 10 penalty units. Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. Note 2: Division 298 in Schedule 1 to the Taxation Administration Act 1953 contains machinery provisions relating to civil penalties. (6) The payer shall retain the copy of a TFN declaration until the second 1 July after the day on which the declaration ceases to have effect. INCOME TAX ASSESSMENT ACT 1936 - SECT 202CE Effect of incorrect quotation of tax file number (1) If the Commissioner is satisfied: (a) that the tax file number stated in a TFN declaration: (i) has been cancelled or withdrawn since the declaration was given; or (ii) is otherwise wrong; and (b) that the recipient has a tax file number; the Commissioner may give to the payer concerned written notice of the incorrect statement and the recipient's tax file number. (2) If a notice is given under subsection (1), the TFN declaration shall be regarded, for the purposes of this Part, as having always stated the recipient's tax file number. (3) If: (a) the Commissioner is satisfied that the tax file number stated in a TFN declaration: (i) has been cancelled since the declaration was given; or (ii) is for any other reason not the recipient's tax file number; and (b) the Commissioner is not satisfied that the recipient has a tax file number; the Commissioner may, by written notice given to the payer, inform the payer accordingly. (4) A notice under subsection (3) takes effect on the day specified in the notice, being a day not earlier than the day on which a copy of the notice is given to the recipient under subsection (5). (5) The Commissioner shall give a copy of any notice under subsection (3) to the recipient concerned, together with a written statement of the reasons for the decision to give the notice. (6) On and from the day on which a notice under subsection (3) takes effect, the TFN declaration concerned shall be taken not to state the tax file number of the recipient concerned. (7) Subsection (6) does not apply to a TFN declaration given to the Employment Secretary or to the Chief Executive Centrelink: (a) by a person who is an applicant for an austudy payment, a CDEP Scheme Participant Supplement, a newstart allowance, a sickness allowance or a youth allowance under the Social Security Act 1991; or (aaa) by a person who is not a member of a couple and is an applicant for a parenting payment under the Social Security Act 1991; or (b) by a person who is a recipient for the purposes of this Part because the person receives, or expects to receive, a payment referred to in paragraph (a). Persons receiving benefits under Veterans' Entitlements Act (8) Subsection (6) does not apply to a TFN declaration given to the Veterans' Affairs Secretary: (a) by a person who is an applicant for a pension or allowance under the Veterans' Entitlements Act 1986; or (b) by a person who is a recipient for the purposes of this Part because the person receives, or expects to receive, such a pension or allowance. (9) Subsection (6) does not apply to a TFN declaration given to the Military Rehabilitation and Compensation Commission: (a) by a person who is an applicant for compensation or an allowance under the Military Rehabilitation and Compensation Act 2004; or (b) by a person who is a recipient for the purposes of this Part because the person receives, or expects to receive, such compensation or allowance. INCOME TAX ASSESSMENT ACT 1936 - SECT 202CF Payer must notify Commissioner if no TFN declaration by recipient (1) If, after the commencement of this section, a person (the payer) commences a relationship with another person under which, or as a result of which, the payer will make (or will be likely to make) eligible PAYG payments to a person (the recipient), whether or not the recipient is a party to the relationship, the payer must give notice to the Commissioner in the approved form, within 14 days after the commencement of the relationship, unless a TFN declaration made by the recipient to the payer is in effect at the end of that 14 day period. (2) If, at the commencement of this section, a person (the payer) has a relationship with another person under which, or as a result of which, the payer will make (or will be likely to make) eligible PAYG payments to a person (the recipient), whether or not the recipient is a party to the relationship, the payer must give notice to the Commissioner in the approved form, not later than 31 October 2000, unless a TFN declaration made by the recipient to the payer is in effect on 31 October 2000. (3) A payer who fails to comply with subsection (1) or (2) is liable to pay to the Commissioner a penalty of 10 penalty units. Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. Note 2: Division 298 in Schedule 1 to the Taxation Administration Act 1953 contains machinery provisions relating to civil penalties. INCOME TAX ASSESSMENT ACT 1936 - SECT 202D Explanation of terms: investment, investor, investment body (1A) This section: (a) applies to a non-share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder. (1) Investments of the kinds mentioned in column 1 of the following table are investments to which this Part applies, whether or not the investments come into existence before the commencement of this section. Table Item No. Column 1 Investment Column 2 Investor Column 3 Investment body 1 Interest-bearing account with a financial institution The person in whose name the account is held The financial institution 2 Interest-bearing deposit (other than a deposit to the credit of an account) with a financial institution The person in whose name the deposit is made The financial institution 3 Loan of money to a government body or to a body corporate (other than a deposit to the credit of an account referred to in item 1, a deposit to which item 2 applies or a loan made in the ordinary course of the business of providing business or consumer finance by a person who carries on that business) The person in whose name the money is lent The government body or body corporate 4 Deposit of money with a solicitor for the purpose of: The person for whose benefit the money is to be invested or lent The solicitor (a) being invested by the solicitor; or (b) being lent under an agreement to be arranged by or on behalf of the solicitor 5 Units in a unit trust The person in whose name the units are held The manager of the unit trust 6 Shares in a public company The shareholder The company 7 An investment-related betting chance The betting investor The betting investment body (2) In relation to an investment of a kind mentioned in column 1 of an item in the table in subsection (1): (a) the investor is the person specified in column 2 of the item; and (b) the investment body is the person specified in column 3 of the item. (3) Where: (a) by virtue of subsection (2), a body corporate other than an entrepot nominee company is the investor in relation to an investment; and (b) another person is entitled to receive from the body corporate all or part of the income from the investment; the person's right to receive the income or part of the income is an investment to which this Part applies. (3A) In the case of an investment that is a relevant Part VA investment for the purposes of section 221YHZLA, subsection (3) does not apply to a person's right to receive income if: (a) the body corporate concerned has received a payment of the kind referred to in paragraph 221YHZLA(2)(a); and (b) the circumstances referred to in subparagraph 221YHZLA(2)(c)(i) or (ii) in relation to an applicant exist in relation to the body corporate. (4) In relation to an investment referred to in subsection (3): (a) the person entitled to receive income is the investor; and (b) the body corporate is the investment body. (5) Subsection (4) does not affect a person's status or obligations as an investor by virtue of subsection (2). (6) In determining whether a person in the capacity of trustee of a trust estate is an investor in relation to an investment, it is irrelevant that the name of the trust estate, the name of any actual or potential beneficiary or any other indication of trust is shown on any documentation in connection with the investment. (7) Subsection (6) is enacted for the guidance and information of investors and investment bodies and does not, by implication, affect the meaning of other provisions of this Act dealing with trustees and trust estates. (8) If subparagraph 26AJ(1)(a)(ii) and paragraphs 26AJ(1)(b), (c), (d), (e), (f) and (g) apply in relation to the payment or crediting of an amount to a person, being the taxpayer referred to in subsection 26AJ(1), then: (a) for the purposes of this section: (i) the betting chance referred to in paragraph 26AJ(1)(c) is an investment-related betting chance; and (ii) the person is the betting investor in relation to the investment-related betting chance; and (iii) the investment body referred to in paragraph 26AJ(1)(c) is the betting investment body in relation to the investment-related betting chance; and (b) for the purposes of this Part, and for the purposes of Subdivision 12-E in Schedule 1 to the Taxation Administration Act 1953: (i) the betting chance referred to in paragraph 26AJ(1)(c) is taken to be an investment; and (ii) the amount paid or credited is taken to be income in respect of the investment. (9) For the purposes of subsection (3), an entrepot nominee company is a body corporate that is: (a) controlled solely by a securities dealer or by 2 or more persons each of whom is a securities dealer; and (b) operated for the sole purpose of facilitating settlement of security transactions. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DA Phasing-in period for Division The phasing-in period for this Division is the period of 12 months commencing on 1 July 1990. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DB Quotation of tax file numbers in connection with investments (1) A person who, at any time after the beginning of the phasing-in period for this Division, is an investor in relation to an investment to which this Part applies may quote the person's tax file number to the investment body in connection with the investment. (2) Where: (a) a person, at any time after the beginning of the phasing-in period for this Division, holds an investment on behalf of another person; and (b) the first-mentioned person does not have a tax file number in his or her capacity of trustee of a trust estate in relation to the investment; the first-mentioned person may quote his or her tax file number to the investment body in connection with the investment and, for the purposes of this Part, that person is to be taken to have quoted the investor's tax file number in connection with the investment. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DC Method of quoting tax file number (1) A person quotes a tax file number to an investment body by informing the body of the number in a manner approved by the Commissioner. (2) The investment body may be so informed by the person or by another person acting for that person. (3) If, after the beginning of the phasing-in period for this Division, a person becomes an investor as a result of a transaction carried out through a securities dealer, the person shall be taken to have quoted the person's tax file number to the investment body concerned if the dealer is informed of the number. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DD Investor excused from quoting tax file number in certain circumstances Where: (a) at a particular time a person becomes an investor in relation to an investment to which this Part applies by virtue of acquiring shares in a public company; and (b) at that time, the person has quoted, or is taken to have quoted, a tax file number in connection with an existing investment consisting of a shareholding in that company; and (c) the company has not, since the quotation of the number in connection with the existing investment, informed the person that the company has lost the person's tax file number; the person is to be taken to have quoted a tax file number in connection with the first-mentioned investment. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DDB Quotation of tax file number in connection with indirectly held investment (1) If, apart from this section: (a) either of the following subparagraphs applies: (i) both of the following conditions are satisfied: (A) a body corporate (in this section called the interposed entity) is the investor in relation to an investment (in this section called the secondary investment) with an investment body (in this section called the secondary investment body); (B) another person (in this section called the primary investor) is entitled to receive from the interposed entity all or part of the income from the secondary investment (which right to receive the income or part of the income is in this section called primary investment); (ii) both of the following conditions are satisfied: (A) a person (in this section also called the primary investor) is the investor in relation to an investment (in this section also called the primary investment) covered by item 4 in the table in subsection 202D(1), being a deposit of money with a solicitor (in this section also called the interposed entity); (B) as a result of carrying out the purpose for which that investment was made, the interposed entity is the investor in relation to another investment (in this section also called the secondary investment) with an investment body (in this section also called the secondary investment body); and (b) the conditions set out in the regulations are satisfied; the following provisions have effect for the purposes of this Part and Subdivision 12-E in Schedule 1 to the Taxation Administration Act 1953: (c) the primary investor may quote his or her tax file number under section 202DB to the secondary investment body in connection with the secondary investment as if he or she were the investor in relation to the secondary investment; (d) if the primary investor quotes his or her tax file number as mentioned in paragraph (c)--the interposed entity is taken to have quoted his or her tax file number to the secondary investment body in connection with the secondary investment; (e) the interposed entity is not entitled to actually quote his or her tax file number to the secondary investment body in connection with the secondary investment; (f) the interposed entity is taken not to be an investment body in relation to the primary investment. (2) If there are 2 or more primary investors in relation to a primary investment, all the primary investors are taken to have quoted their tax file numbers as mentioned in paragraph (1)(c) if, and only if: (a) all of those primary investors are persons who, for the purposes of this Part, are taken, by section 202EE or 202EF, or both, to have quoted their tax file numbers under this Division in connection with the primary investment; or (b) if: (i) paragraph (a) does not apply; and (ii) all of those primary investors are covered by any or all of the following categories: (A) persons who, for the purpose of this Part, are taken, under section 202EE or 202EF, or both, to have quoted their tax file numbers under this Division in connection with the primary investment; (B) persons to whom section 202EB applies; (C) entities mentioned in paragraph 202EC(1)(a); and (iii) all of the following conditions are satisfied in relation to at least one of those primary investors: (A) the primary investor is covered by sub-subparagraph (ii)(B) or (C); (B) the primary investor gives to the secondary investment body the information mentioned in subsection 202EB(1) or 202EC(1) as if the primary investor were the investor in relation to the secondary investment; (C) as a result of the giving of that information, the primary investor would be taken, under section 202EB or 202EC, to have quoted his or her tax file number under this Division in connection with the secondary investment; or (c) at least one of those primary investors: (i) has a tax file number; and (ii) has quoted that number under section 202DB to the secondary investment body in connection with the secondary investment as if he or she were the investor in relation to the secondary investment. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DE Securities dealer to inform the investment body of tax file number Where: (a) after the beginning of the phasing-in period for this Division, a person becomes an investor as a result of a transaction carried out through a securities dealer; and (b) the person informs the dealer of the person's tax file number; the dealer shall inform the investment body concerned of the person's tax file number. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DF Effect of incorrect quotation of tax file number (1) If the Commissioner is satisfied: (a) that the tax file number quoted to an investment body in relation to an investment: (i) has been cancelled or withdrawn since it was quoted; or (ii) is otherwise wrong; and (b) that the investor has a tax file number; the Commissioner may give to the investment body concerned notice of the incorrect statement and the investor's tax file number. (2) If a notice is given under subsection (1), the investor shall be regarded, for the purposes of this Part, as having always stated the investor's tax file number in connection with the investment. (3) If: (a) the Commissioner is satisfied that the tax file number quoted to an investment body in relation to an investment: (i) has been cancelled since it was quoted; or (ii) is for any other reason not the investor's tax file number; and (b) the Commissioner is not satisfied that the investor has a tax file number; the Commissioner may, by written notice given to the investment body concerned, inform the investment body accordingly. (4) A notice under subsection (3) takes effect on the day specified in the notice, being a day not earlier than the day on which a copy of the notice is given to the investor under subsection (5). (5) The Commissioner shall give a copy of any notice under subsection (3) to the investor concerned, together with a written statement of the reasons for the decision to give the notice. (6) On and from the day on which a notice under subsection (3) takes effect, the investor concerned shall be taken not to have quoted the investor's tax file number in connection with the investment. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DG Investments held jointly (1) Where 2 persons are jointly entitled to the property or rights that constitute an investment to which this Part applies, neither person shall be taken to have quoted the person's tax file number in connection with the investment unless both persons have quoted their tax file numbers under this Division in connection with the investment. (2) Where more than 2 persons are jointly entitled to the property or rights that constitute an investment to which this Part applies, all of the persons are to be taken to have quoted their tax file numbers in connection with the investment if and only if: (a) where one of those persons has a tax file number and is not an exempt person in relation to the investment--that person has quoted that number, and at least one of the other persons is, for the purposes of this Part, to be taken to have quoted his or her tax file number, under this Division in connection with the investment; or (b) where 2 or more of those persons have tax file numbers and are not exempt persons in relation to the investment--at least 2 of those persons have quoted their own tax file numbers under this Division in connection with the investment; or (c) in any other case--at least 2 of those persons are, for the purposes of this Part, to be taken to have quoted their tax file numbers under this Division in connection with the investment. (2A) A reference in subsection (2) to an exempt person in relation to an investment is a reference to a person who, for the purposes of this Part, is to be taken to have quoted his or her tax file number under this Division in connection with the investment although the person has not actually done so. (3) This section does not apply in relation to persons who are jointly entitled to property or rights merely because they are partners in a partnership. (4) This section does not apply in relation to investments covered by section 202DDB. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DH Tax file number quoted for superannuation or surcharge purposes taken to be quoted for purposes of the taxation of eligible termination payments (1) If a person (the first person) who is a beneficiary of an eligible superannuation entity or of a regulated exempt public sector superannuation scheme has quoted his or her tax file number to the trustee of the entity or scheme in connection with the operation or possible future operation of the Superannuation Industry (Supervision) Act 1993, the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Superannuation (Unclaimed Money and Lost Members) Act 1999, the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 or the Termination Payments Tax (Assessment and Collection) Act 1997, the first person is taken, so long as he or she continues to be such a beneficiary, to have made a TFN declaration in relation to the trustee that has effect under Division 3.. (2) In this section and in section 202DHA, eligible superannuation entity and regulated exempt public sector superannuation scheme have the same meanings as in Part 25A of the Superannuation Industry (Supervision) Act 1993. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DHA Tax file number quoted for Division 3 purposes taken to have been quoted for superannuation purposes If: (a) a person has on or after 1 July 2007 made a TFN declaration in relation to a payer; and (b) the person is a beneficiary of an eligible superannuation entity or of a regulated exempt public sector superannuation scheme or is an RSA holder; and (c) the payer makes a contribution to the person's eligible superannuation entity or regulated exempt public sector superannuation scheme or RSA for the benefit of the person; the person is taken to have authorised the payer to inform the trustee of the superannuation entity or scheme or the RSA provider of the person's tax file number. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DI Tax file number quoted for RSA purposes taken to be quoted for purposes of the taxation of superannuation benefits If a person (the first person) who is the holder of an RSA has quoted his or her tax file number to the provider of the RSA in connection with the operation or possible future operation of the Retirement Savings Accounts Act 1997, the first person is taken, so long as he or she continues to be the holder of the RSA, to have made a TFN declaration in relation to the provider of the RSA that has effect under Division 3. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DJ Tax file number quoted for purposes of taxation of superannuation benefits taken to be quoted for surcharge purposes (1) If a person who is: (a) a beneficiary of an eligible superannuation entity or of a regulated exempt public sector superannuation scheme; or (b) a member of a constitutionally protected superannuation fund; or (c) the holder of an RSA; has made a TFN declaration in relation to the trustee of the entity, scheme or fund, or the RSA provider, that states his or her tax file number, and has effect under Division 3 (except a declaration that includes a statement mentioned in subsection 202CB(2)), the person is taken, so long as he or she continues to be such a beneficiary, member or holder, to have quoted that tax file number to the trustee of the entity, scheme or fund or to the RSA provider, as the case may be, in connection with the operation or possible future operation of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 and the Termination Payments Tax (Assessment and Collection) Act 1997. (2) In this section: "constitutionally protected superannuation fund has the same meaning as constitutionally protected fund" has in the Income Tax Assessment Act 1997. "eligible superannuation entity and regulated exempt public sector superannuation scheme" have the same meanings as in Part 25A of the Superannuation Industry (Supervision) Act 1993. "holder, RSA and RSA provider" have the same meanings as in the Retirement Savings Accounts Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DL Quotation of tax file number A depositor of a farm management deposit quotes the owner's tax file number to the FMD provider in connection with the deposit by: (a) stating the number in the form mentioned in subsection 393-20(2) of the Income Tax Assessment Act 1997 in relation to the deposit; or (b) informing the FMD provider of the number in any other manner approved by the Commissioner in connection with the deposit. Note: If a farm management deposit was made by a trustee on behalf of a beneficiary who was under a legal disability when the deposit was made, and the beneficiary is no longer under a legal disability, this Division applies as if the beneficiary had made the deposit: see section 393-28 of the Income Tax Assessment Act 1997. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DM Effect of incorrect quotation of tax file number Commissioner may notify FMD provider of correct tax file number (1) If the Commissioner is satisfied: (a) that the tax file number quoted to an FMD provider in connection with a farm management deposit: (i) has been cancelled or withdrawn since it was quoted; or (ii) is otherwise wrong; and (b) that the owner has a tax file number; the Commissioner may give the FMD provider notice in writing of the owner's correct tax file number. Commissioner may notify FMD provider if owner does not have a tax file number etc. (3) If: (a) the Commissioner is satisfied that the tax file number quoted to an FMD provider in connection with a farm management deposit: (i) has been cancelled since it was quoted; or (ii) is for any other reason not the owner's tax file number; and (b) the Commissioner is not satisfied that the owner has a tax file number; the Commissioner may give the FMD provider notice in writing accordingly. Commissioner to give owner copy of notice (4) If a notice is given under subsection (3), the Commissioner must give the depositor a copy of the notice, together with a written statement of the reasons for the decision to give the notice. Notice takes effect when given to owner (5) The notice takes effect on the day specified in the notice, being a day not earlier than the day on which the copy of the notice is given to the depositor. Tax file number deemed not quoted (6) On and from the day on which the notice takes effect, the depositor is taken not to have quoted the owner's tax file number in connection with the deposit. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DN Application of Division This Division applies to both the trustee of a trust and to a beneficiary of the trust, if: (a) paragraph 12-175(1)(c) in Schedule 1 to the Taxation Administration Act 1953 applies to the trust; and Note: That paragraph applies to certain closely held trusts. (b) paragraph 12-175(1)(d) in that Schedule applies to the beneficiary. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DO Quotation of tax file numbers (1) The beneficiary may quote the beneficiary's tax file number to the trustee. (2) The beneficiary quotes the beneficiary's tax file number to the trustee if the beneficiary, or another person acting for the beneficiary, informs the trustee of the number in a manner approved by the Commissioner. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DP Trustee must report quoted tax file numbers (1) The trustee must report the beneficiary's tax file number to the Commissioner, in the approved form, if: (a) the beneficiary quotes the beneficiary's tax file number to the trustee during a quarter (within the meaning of the Income Tax Assessment Act 1997); and (b) the beneficiary has not quoted the beneficiary's tax file number to the trustee in connection with an investment to which this Part applies; and (c) the trustee has not reported, and is not required to report, the beneficiary's tax file number to the Commissioner under Division 6D of Part III of this Act (about trustee beneficiary non-disclosure tax). (2) The trustee must give the report to the Commissioner within: (a) one month after the end of the quarter to which it relates; or (b) within such further time as the Commissioner allows. (3) The Commissioner may, by notice in writing given to the trustee, inform the trustee that the period specified in the notice (being a period greater than 3 months) is to be the trustee's reporting period for the purposes of this section. If the Commissioner does so, a reference in this section to a quarter is taken to be a reference to the period specified in the notice. (4) For the purposes of this section, disregard subsection 202DR(3). Note: Refusal or failure to report to the Commissioner as required by this section is an offence under section 8C of the Taxation Administration Act 1953. INCOME TAX ASSESSMENT ACT 1936 - SECT 202DR Effect of incorrect quotation of tax file number Commissioner may notify trustee of correct tax file number (1) If the Commissioner is satisfied: (a) that the tax file number quoted to the trustee: (i) has been cancelled or withdrawn since it was quoted; or (ii) is otherwise wrong; and (b) that the beneficiary has a tax file number; the Commissioner may give the trustee notice in writing of the beneficiary's correct tax file number. (2) The notice given under subsection (1) is taken to have taken effect on the day on which the cancelled or withdrawn tax file number was quoted to the trustee as mentioned in paragraph (1)(a). (3) On and from the day on which the notice given under subsection (1) took effect, the beneficiary is taken to have quoted the beneficiary's correct tax file number to the trustee. Commissioner may notify trustee if beneficiary does not have a tax file number etc. (4) If: (a) the Commissioner is satisfied that the tax file number quoted to the trustee: (i) has been cancelled or withdrawn since it was quoted; or (ii) is for any other reason not the beneficiary's tax file number; and (b) the Commissioner is not satisfied that the beneficiary has a tax file number; the Commissioner must give the trustee written notice accordingly. (5) The Commissioner must give the beneficiary a copy of the notice given under subsection (4), together with a written statement of the reasons for the decision to give the notice. (6) The notice given under subsection (4) takes effect on the day specified in the notice, being a day not earlier than the day on which the copy of the notice is given to the beneficiary. (7) On and from the day on which the notice given under subsection (4) takes effect, the beneficiary is taken not to have quoted the beneficiary's tax file number to the trustee. Note: The trustee may be required to withhold an amount from a payment to the beneficiary if the beneficiary has not quoted the beneficiary's tax file number to the trustee at the time the payment is made: see sections 12-175 and 12-180 in Schedule 1 to the Taxation Administration Act 1953. As such, the trustee may be required to withhold if a notice under subsection (4) of this section is in effect on the day on which the payment is made. INCOME TAX ASSESSMENT ACT 1936 - SECT 202EA Persons receiving certain pensions etc.--employment (1) Nothing in this Part shall be taken to provide for a person who is a recipient because the person receives, or expects to receive, a pension or benefit referred to in subsection (5) to make a TFN declaration, or to quote his or her tax file number, in connection with the payment of that pension, benefit or allowance. (2) For the purposes of this Part, a person who is being paid a pension or benefit referred to in subsection (5) shall be taken to have quoted his or her tax file number in a TFN declaration given to a payer of the person if a statement is made in the declaration to the effect that the person is being paid such a pension or benefit. (3) A person who, as a person who is being paid a pension or benefit referred to in subsection (5), is taken, because of this section, to have quoted his or her tax file number in a TFN declaration shall continue to be taken to have, because of this section, quoted the number in the declaration until the Commissioner gives a written notice to the person to the effect that the person is no longer entitled to exemption under this section. (4) The Commissioner may not give a notice under subsection (3) until the person has ceased to be paid any pension or benefit referred to in subsection (5). (5) This section applies in relation to the following: (a) an age pension under Part 2.2 of the Social Security Act 1991; (b) a disability support pension under Part 2.3 of that Act; (c) a wife pension under Part 2.4 of that Act; (d) a carer payment under Part 2.5 of that Act; (f) a widow B pension under Part 2.8 of that Act; (fa) a parenting payment that is a pension PP (single) under Part 2.10 of that Act; (g) a special benefit under Part 2.15 of that Act; (h) a special needs pension under Part 2.16 of that Act; (i) a pension under Part III of the Veterans' Entitlements Act 1986; (ia) income support supplement under Part IIIA of the Veterans' Entitlements Act 1986; (j) Defence Force Income Support Allowance under Part VIIAB of the Veterans' Entitlements Act 1986. INCOME TAX ASSESSMENT ACT 1936 - SECT 202EB Persons receiving certain pensions etc.--investments (1) For the purposes of this Part, a person to whom this section applies shall be taken to have quoted his or her tax file number under Division 4 in connection with the investment if the investment body concerned is given the following information by the person in a manner approved by the Commissioner: (a) the person's full name; (b) the nature of the pension, benefit or allowance by virtue of the payment of which the person is a person to whom this section applies. (3) A person who, as a person to whom this section applies, is taken, because of this section, to have quoted his or her tax file number in connection with an investment shall continue to be taken to have, because of this section, quoted the number in connection with the investment until the Commissioner gives a written notice to the person to the effect that the person is no longer entitled to exemption under this section. (4) The Commissioner may not give a notice under subsection (3) until the person has ceased to be a person to whom this section applies. (5) A person to whom this section applies is a person who is being paid: (a) one of the following: (i) an age pension under Part 2.2 of the Social Security Act 1991; (ii) a disability support pension under Part 2.3 of that Act; (iii) a wife pension under Part 2.4 of that Act; (iv) a carer payment under Part 2.5 of that Act; (vi) a widow B pension under Part 2.8 of that Act; (via) a parenting payment that is a pension PP (single) under Part 2.10 of that Act; (vii) a special benefit under Part 2.15 of that Act; (viii) a special needs pension under Part 2.16 of that Act; or (c) a pension under Part III of the Veterans' Entitlements Act 1986; or (d) income support supplement under Part IIIA of the Veterans' Entitlements Act 1986. INCOME TAX ASSESSMENT ACT 1936 - SECT 202EC Entities not required to lodge income tax returns (1) For the purposes of this Part, where: (a) an entity that is not required to furnish to the Commissioner a return under section 161 in respect of a year of income is, at any time during that year, an investor in relation to an investment to which this Part applies; and (b) the entity does not have a tax file number; the entity shall be taken to have quoted its tax file number in connection with the investment if the investment body concerned is given the following information by the eligible representative in a manner approved by the Commissioner: (c) the name and address of the entity; (d) the reason why the entity is not obliged to furnish to the Commissioner a return under section 161 in respect of the year of income. (3) An entity that, as an entity that is not required to furnish to the Commissioner a return under section 161 in respect of a year of income, is to be taken, because of this section, to have quoted its tax file number in connection with an investment shall continue to be taken to have, because of this section, quoted the number in connection with the investment until 2 months after the end of the first year of income, following the time at which the entity is to be taken to have quoted the number, in respect of which the entity is required so to furnish a return. (4) Where an entity in respect of which information has been given to an investment body under subsection (1) in connection with an investment becomes obliged under section 161 to furnish a return in respect of a year of income, the person who is the public officer of the entity for the purposes of this Act is guilty of an offence if: (a) the entity is, at the end of the year of income, still an investor in relation to the investment; and (b) the investment body is not, within 2 months after the end of the year of income, informed of the entity's tax file number or informed that the entity is obliged to furnish the return. Penalty: $1,000. (5) For the purposes of this section, a person is an eligible representative of an entity if the person is: (a) where the entity is a body corporate--a person who is any one or more of the following: (i) the public officer of the body corporate for the purposes of this Act; (ii) an officer of the body corporate within the meaning of section 8Y of the Taxation Administration Act 1953; (iii) a receiver of property of the body corporate, whether appointed by a court or otherwise and whether or not also a manager; (iv) a liquidator of the body corporate appointed by a court; (v) in the case of a foreign company within the meaning of the Corporations Act 2001--a local agent of the company within the meaning of that Act; (vi) an employee of the body corporate in relation to whom there is in force a written authorisation to act as an eligible representative of the body corporate, being an authorisation by a person who, when the authorisation was given, was an eligible representative of the body corporate by virtue of one or more of the preceding subparagraphs; or (b) where the entity is an unincorporated association--a person who is any one or more of the following: (i) the public officer of the unincorporated association for the purposes of this Act; (ii) a director, secretary, office-holder, liquidator, receiver or trustee of the association; (iii) an employee or member of the unincorporated association in relation to whom there is in force a written authorisation to act as an eligible representative of the unincorporated association, being an authorisation by a person who, when the authorisation was given, was an eligible representative of the unincorporated association by virtue of either or both of the preceding subparagraphs. INCOME TAX ASSESSMENT ACT 1936 - SECT 202EE Non-residents (1) For the purposes of this Part, where: (a) a non-resident is an investor in relation to an investment to which this Part applies; and (b) at a particular time, the investment body pays an amount to the non-resident by way of income derived from the investment; the non-resident is taken to have quoted the non-resident's tax file number in connection with the investment at that time if: (c) the investment body is required to withhold an amount under Subdivision 12-F or 12-H in Schedule 1 to the Taxation Administration Act 1953 from the payment; or (d) the investment body would have been required to withhold such an amount but for the operation of paragraph 128B(3)(a), (ga) or (jb) or subparagraph 128B(3)(h)(iv) of this Act or subsection 802-15(1) of the Income Tax Assessment Act 1997. (2) If: (a) a person who was a non-resident and an investor in relation to an investment to which this Part applies becomes a resident of Australia at a particular time; and (b) the person is, at that time, still an investor in relation to the investment; and (c) the investment body concerned is not, within one month after that time, informed of the person's tax file number or informed that the person has become such a resident; the person is guilty of an offence. Penalty: 10 penalty units. (3) Nothing in this section affects the person's liability to pay withholding tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 202EF Territory residents etc. (1) For the purposes of this Part, a recipient is taken to have quoted the recipient's tax file number in a TFN declaration given to the payer concerned under section 202C if all eligible PAYG payments by the payer to the recipient would be exempt from income tax because of Division 1A of Part III. (2) For the purposes of this Part, an investor in relation to an investment to which this Part applies shall be taken to have quoted the investor's tax file number under Division 4 in connection with the investment if income derived from the investment would be exempt from income tax because of Division 1A of Part III. (3) Subsection (1) or (2) continues to have effect until the end of one month after the payments or income would no longer be exempt from income tax because of Division 1A of Part III. (4) Where: (a) a person has been taken, because of this section, to have quoted the person's tax file number in connection with payments, or with an investment; and (b) the payments, or income derived from the investment, ceases to be exempt from income tax because of Division 1A of Part III; the person is guilty of an offence if, within one month of the income ceasing to be exempt from income tax, the payer concerned, or the investment body concerned, is not informed of the person's tax file number or informed that the income is no longer exempt from income tax. Penalty: 10 penalty units. INCOME TAX ASSESSMENT ACT 1936 - SECT 202EG Manner of completing declarations Where a person is unable to make a declaration under this Division, the declaration may be made by another person on behalf of the first-mentioned person. INCOME TAX ASSESSMENT ACT 1936 - SECT 202EH Declarations under this Division to be retained in certain circumstances (1) The Commissioner may direct an investment body to retain declarations, or declarations of a particular kind, made under this Division for such time as is specified in the direction. (2) A direction mentioned in subsection (1) must be given to the investment body in writing or by notice published in the Gazette. (3) An investment body that is retaining a declaration in accordance with such a direction must, if required to do so by the Commissioner: (a) forward the declaration to the office of a Deputy Commissioner in accordance with the Commissioner's directions; or (b) give to the Commissioner such information contained in the declaration as the Commissioner specifies. INCOME TAX ASSESSMENT ACT 1936 - SECT 202F Review of decisions (1) Applications may be made to the Tribunal for review of the following decisions of the Commissioner: (a) a decision refusing an application for the issue of a tax file number under section 202BA (including a decision that is to be taken to have been made by virtue of section 202BC); (b) a decision to cancel a tax file number under section 202BE; (c) a decision to give a notice under subsection 202CE(3); (d) a decision to give a notice under subsection 202DF(3); (da) a decision to give a notice under subsection 202DM(3); (db) a decision to give a notice under subsection 202DR(4); (e) a decision to give a notice under subsection 202EB(3); (f) a decision under subsection 202G(4) not to exempt a person from compliance with section 202G or to vary or revoke a notice given under that subsection; (fa) a decision to give a notice under subsection 190-15(1) or (1A) of the Higher Education Support Act 2003; (fb) a decision to give a notice under subsection 190-20(1) or (1A) of the Higher Education Support Act 2003; (g) a decision stated by the regulations to be a reviewable decision for the purposes of this section. (2) Where an application has been made to the Tribunal for review of a decision referred to in paragraph (1)(a), the orders that may be made under subsection 41(2) of the Administrative Appeals Tribunal Act 1975 include an order that the Commissioner issue a tax file number to the applicant pending the determination of the application for review. (3) A tax file number issued in accordance with an order referred to in subsection (2) ceases to have effect when the application is finally disposed of. (4) When a tax file number ceases to have effect under subsection (3), this Part (other than this section) applies as if the number had been cancelled. INCOME TAX ASSESSMENT ACT 1936 - SECT 202FA Statements to accompany notification of decisions (1) Where a decision of a kind referred to in section 202F is made and notice in writing of the decision is given to a person whose interests are affected by the decision, that notice shall include a statement to the effect that, if the person is dissatisfied with the decision, application may, subject to the Administrative Appeals Tribunal Act 1975, be made to the Tribunal for review of the decision and, except where subsection 28(4) of that Act applies, also include a statement to the effect that the person may request a statement under section 28 of that Act. (2) A failure to comply with subsection (1) does not affect the validity of the decision. INCOME TAX ASSESSMENT ACT 1936 - SECT 202G Transmission of information in accordance with specifications (1) The Commissioner may, by notice published in the Gazette, set out specifications for transmission to the Commissioner of information to which this section applies. (2) A notice under subsection (1) has effect on and from the day specified in the notice. (3) Where the whole or part of the information to which this section applies that a person is obliged to give to the Commissioner is kept by or on behalf of the person by means of a data processing device, the person shall, when giving any of that information to the Commissioner, give it in a manner and form that is in accordance with the specifications set out in the notice under subsection (1), as amended from time to time. (4) A person is exempt from compliance with subsection (3) if, on an application by the person, the Commissioner has, by written notice to the person, exempted the person from compliance with this section. (5) A notice under subsection (4) has effect for the period specified in the notice. (6) Refusal by the Commissioner of an application under subsection (4) shall be by notice in writing to the applicant. (7) In deciding whether to exempt a person, the Commissioner shall consider: (a) the amount of information concerned; (b) any difficulties in giving the information in the manner required by this section; (c) the purposes of this Part; and (d) any other matters that the Commissioner thinks are relevant. (8) A person is exempt from compliance with subsection (3) if the person is included in a class of persons specified by the Commissioner by notice published in the Gazette. (9) This section applies to information that a person is or will be obliged to give to the Commissioner, whether by means of a report, form, certificate or otherwise: (a) under this Part; (b) under regulations made for the purposes of this Part; or (c) under this Act, being information in respect of which this Act provides for the inclusion of tax file numbers. INCOME TAX ASSESSMENT ACT 1936 - SECT 251R Interpretation (1) In this Part, Medicare levy or levy means Medicare levy imposed as such by any Act as assessed under this Act. (1A) In this Part, unless the contrary intention appears: "surcharge" means Medicare levy surcharge imposed by the A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999. (2) If, during any period, 2 persons (whether of the same sex or different sexes): (a) had a relationship that was registered under a law of a State or Territory prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; or (b) lived together in a relationship as a couple on a genuine domestic basis, although not legally married to each other; this Part and any Act imposing levy has effect in relation to the period as if the persons were married to each other. (2A) If, during the period, either or both of the persons was legally married to another person, or in a relationship mentioned in paragraph (2)(a) with another person, this Part and any Act imposing levy has effect as if the person or persons were not legally married to, or in a relationship mentioned in paragraph (2)(a) with, the other person or persons. (3) Subject to subsections (4), (5), (6), (6B), (6C) and (6D), a person shall be taken to have been a dependant of another person for the purposes of this Part during any part of the year of income in which: (a) the first-mentioned person was a resident of Australia; (b) the first-mentioned person was: (i) the spouse of the other person; (ii) a child of the other person less than 21 years of age; or (iii) a child of the other person not less than 21 years of age but less than 25 years of age and receiving full-time education at a school, college or university; and (c) the other person contributed to the maintenance of the first-mentioned person. (4) A child referred to in subparagraph (3)(b)(iii) shall not be taken to have been a dependant of a person for the purposes of this Part during a period being the whole or a part of a year of income unless the person would be entitled to a rebate in respect of that child under section 159J in the person's assessment in respect of income of that year of income but for subsection 159J(1A). (5) If, in relation to a period, being the whole or a part of a year of income: (a) the parents of a child referred to in paragraph (3)(b) lived separately and apart from each other; and (b) the child would, but for this subsection, be taken, for the purposes of this Part, to be a dependant of each of his or her parents in respect of that period; and (c) both of the parents or their spouses, being partners as defined in the A New Tax System (Family Assistance) Act 1999, are eligible for family tax benefit at the Part A rate under that Act in respect of that child (whether the child is an FTB child or a regular care child within the meaning of that Act) in respect of the period; and (d) the Families Secretary has determined, under Subdivision D of Division 1 of Part 3 of that Act, each parent's or spouse's percentage of care for the child during a care period (within the meaning of that Act); the child is to be taken to be a dependant of each parent for the purposes of Part VIIB of this Act, for so much only of that period as corresponds with that percentage of care. (6) For the purposes of paragraph (3)(c), a person shall be taken to have contributed to the maintenance of another person during any period during which the person and that other person resided together, unless the contrary is established to the satisfaction of the Commissioner. (6A) A reference in subsections (6B), (6C) and (6D) to an eligible prescribed person in relation to a period is a reference to a person who would, apart from subsections 251U(2) and (3), be taken to have been a prescribed person, for the purposes of this Part and of any Act imposing levy, during that period by virtue of paragraph 251U(1)(a), (b), (c), (ca), (caa) or (cb). (6B) For the purposes of this Part, where: (a) a person (in this subsection called the first person) was an eligible prescribed person in relation to a period in a year of income; and (b) apart from this subsection, another person (in this subsection called the leviable person) would be a dependant of the first person during that period; and (c) levy is payable by the leviable person upon the taxable income of the year of income; the leviable person is not to be taken to have been a dependant of the first person during that period. (6C) For the purposes of this Part, where: (a) a person (in this subsection called the first person) was an eligible prescribed person in relation to a period in a year of income; and (b) another person (in this subsection called the spouse) was the spouse of the first person during the whole of that period; and (c) the spouse was not an eligible prescribed person in relation to that period; and (d) levy is payable by the spouse upon the taxable income of the year of income; and (e) apart from this subsection, a child of both the first person and the spouse would be a dependant of both the first person and the spouse during that period; that child is not to be taken to have been a dependant of the first person during that period. (6D) Subject to subsection (6F), for the purposes of this Part, where: (a) a person (in this subsection and subsections (6E) to (6H) (inclusive) called the first person) was an eligible prescribed person in relation to a period in a year of income; and (b) another person (in this subsection called the spouse) was the spouse of the first person during the whole of that period; and (c) the spouse was an eligible prescribed person in relation to that period; and (d) apart from this subsection, levy would be payable by both the first person and the spouse upon their respective taxable incomes of the year of income; and (e) apart from this subsection, a child of both the first person and the spouse would be a dependant of both the first person and the spouse during that period; and (f) the first person and the spouse have entered into an agreement (in subsections (6E) to (6H) (inclusive) called the family agreement) stating that, for levy purposes, that child: (i) is not to be treated as a dependant of the first person during that period; and (ii) is to be treated as a dependant of the spouse during that period; that child is not to be taken to be a dependant of the first person during that period. (6E) The family agreement must be entered into on or before the date of lodgment of the return of income of the first person for the year of income concerned or within such further time as the Commissioner allows. (6F) Subsection (6D) does not apply, and is taken never to have applied, if the first person fails to retain the family agreement until the end of: (a) 5 years beginning on the date of lodgment of the first person's return of income for the year of income concerned; or (b) a shorter period determined by the Commissioner in writing for the first person; or (c) a shorter period determined by the Commissioner by legislative instrument for a class of persons that includes the first person. (6FA) A determination under paragraph (6F)(c) may specify different periods for different classes of taxpayers. (6G) Where the family agreement is lost or destroyed and the Commissioner is satisfied that the first person has a document (in this subsection called the substitute family agreement) that: (a) is a copy of the family agreement; or (b) properly records all the matters set out in the family agreement and was in existence when the family agreement was lost or destroyed; the substitute family agreement is to be taken, for the purposes of this section, to be, and to have been at all times after the family agreement was lost or destroyed, the family agreement. (6H) Where the family agreement is lost or destroyed and the Commissioner is satisfied that: (a) the family agreement was lost or destroyed because of circumstances beyond the control of the first person; and (b) subsection (6G) does not apply; subsection (6F) does not apply and is to be taken never to have applied. (6J) Section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to subsection (6F), (6G) or (6H). (7) In this Act (other than this Part, the definition of year of tax in subsection 6(1) and Division 17 of Part III), unless the contrary intention appears, income tax or tax includes levy payable in accordance with this Part and surcharge. (8) In determining for the purposes of this Part and of any Act imposing levy whether a person was, or but for subsection 251U(2) would have been, or was not, a prescribed person during the whole or a part of the year of income that commenced on 1 July 1983, that year of income shall be deemed to be constituted by the period commencing on 1 February 1984 and ending on 30 June 1984. INCOME TAX ASSESSMENT ACT 1936 - SECT 251S Medicare levy (1) Subject to this Part, a levy by the name of Medicare levy is levied, and shall be paid, at the rate applicable under the relevant Act imposing the levy, for the financial year that commenced on 1 July 1983, and for each succeeding financial year, upon: (a) the taxable income of the year of income of a person, not being a company or a person in the capacity of a trustee, who, at any time during the year of income, was a resident of Australia otherwise than by virtue of subsection 7A(2); (b) if the trustee of a trust estate is required to be assessed in pursuance of section 98 in respect of a share of the net income of the trust estate of the year of income, being a share to which a beneficiary who, at any time during the year of income, was a resident of Australia otherwise than by virtue of subsection 7A(2) is presently entitled--that share of that net income; and (c) if the trustee of a trust estate (other than a trust estate of a deceased person) is required to be assessed, and is liable to pay tax, in pursuance of section 99 or 99A in respect of the whole or a part of the net income of the trust estate of the year of income--that net income or that part of that net income, as the case may be. Note: Subdivision 61-L (tax offset for Medicare levy surcharge (lump sum payments in arrears)) of the Income Tax Assessment Act 1997 might provide a tax offset for a person if Medicare levy surcharge (within the meaning of that Act) is payable by the person. (1A) If the taxpayer is entitled to a tax offset under subsection 301-20(2) of the Income Tax Assessment Act 1997 for a year of income, paragraph (1)(a) of this section applies as if the taxable income of the taxpayer of the year of income were reduced by the amount mentioned in subsection 301-20(3) of that Act for the person for the year. (2) Levy payable by a person in accordance with this Part is payable in addition to any tax payable by the person in accordance with any other provision of this Act. (3) In determining for the purposes of paragraph (1)(a) or (b) whether, in relation to the year of income commencing on 1 July 1985 or any subsequent year of income, a person was a resident of Australia otherwise than by virtue of subsection 7A(2), that subsection shall be applied as if the reference in that subsection to the Territory of Christmas Island were omitted. (4) In determining for the purposes of paragraph (1)(a) or (b) whether, in relation to the 1991-92 year of income or any subsequent year of income, a person was a resident of Australia otherwise than by virtue of subsection 7A(2), that subsection is to be applied as if the reference in that subsection to the Territory of Cocos (Keeling) Islands were omitted. INCOME TAX ASSESSMENT ACT 1936 - SECT 251T Levy (other than certain levy increases) not payable by prescribed persons or by certain trustees Notwithstanding anything contained in section 251S, Medicare levy (other than an increase in the levy payable under section 8B, 8C, 8D, 8E, 8F or 8G of the Medicare Levy Act 1986) is not payable by: (a) a person (not being a person in the capacity of a trustee) who was a prescribed person during the whole of the year of income; (b) a person in the capacity of a trustee of a trust that is a Territory trust for the purposes of Division 1A of Part III in relation to the year of income, in respect of income of the trust of the year of income; or (c) a person in the capacity of a trustee of a trust, in respect of a share of the net income of the trust estate of the year of income (being a share to which a beneficiary who was a prescribed person during the whole of the year of income is presently entitled) in respect of which the trustee is required to be assessed in pursuance of section 98. INCOME TAX ASSESSMENT ACT 1936 - SECT 251U Prescribed persons (1) Subject to this section, a person shall be taken to have been a prescribed person, for the purposes of this Part and of any Act imposing levy, during a particular period if: (a) the person was entitled to free medical treatment during the whole of that period in respect of every incapacity, disease or disabling condition because the person was a member of the Defence Force or was a relative of, or was otherwise associated with, a member of the Defence Force; or (b) the person was entitled under the Veterans' Entitlements Act 1986 or the Military Rehabilitation and Compensation Act 2004 to free medical treatment during the whole of that period in respect of every incapacity, disease or disabling condition; or (c) the person was, during the whole of that period, a recipient of a sickness allowance under Part 2.14 of the Social Security Act 1991; or (ca) the person was, during the whole of that period, a recipient of: (i) an age pension under Part 2.2 of the Social Security Act 1991; or (ii) a disability support pension under Part 2.3 of the Social Security Act 1991; where the rate of the pension was calculated under section 1065 of the Social Security Act 1991; or (caa) the person was, during the whole of that period, a recipient of a disability support pension under Part 2.3 of the Social Security Act 1991 where the rate of the pension was calculated under section 1066B of the Social Security Act 1991; or (cb) the person was, during the whole of that period, a recipient of: (i) an age service pension under Division 3 of Part III of the Veterans' Entitlements Act 1986; or (ii) an invalidity service pension under Division 4 of Part III of the Veterans' Entitlements Act 1986; or (iii) a partner service pension under Division 5 of Part III of the Veterans' Entitlements Act 1986; where the rate of the pension was calculated under Method statement 2 in subpoint SCH6-A1(3), or Method statement 4 in subpoint SCH6-A1(5), in Schedule 6 to the Veterans' Entitlements Act 1986; or (cc) during the whole of that period: (i) the person was receiving income support supplement under Part IIIA of the Veterans' Entitlements Act 1986; and (ii) the rate of the person's income support supplement was worked out under Method statement 6 in subpoint SCH6-A1(7) in Schedule 6 to the Veterans' Entitlements Act 1986; or (d) during the whole of that period the person was a non-resident, or was a resident solely because subsection 7A(2) treats Norfolk Island as part of Australia; or (e) during the whole of that period the person was: (i) the head of a diplomatic mission, or the head of a consular post, established in Australia; or (ii) a member of the staff of a diplomatic mission, or a member of the consular staff of a consular post, established in Australia; or (iii) a member of the family of a person referred to in subparagraph (i) or (ii), being a member who forms part of the household of that person; and was not an Australian citizen and was not ordinarily resident in Australia; or (f) the Health Minister has certified that, had any service, treatment or care to which Medicare benefits under the Health Insurance Act 1973 relate been rendered to the person or to another person during that period, the first-mentioned person would not have been entitled to Medicare benefits in respect of that service, treatment or care. Note: Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of subparagraph (1)(e)(iii). (2) A person shall not be taken to have been a prescribed person, for the purposes of this Part and of any Act imposing levy, during a particular period unless every person who was a dependant of the first-mentioned person during that period is to be taken, or but for this subsection would be taken, to have been a prescribed person, for the purposes of this Part and of any Act imposing levy, during that period. (3) Where: (a) a person would not, but for this subsection, be taken to have been a prescribed person, for the purposes of this Part and of any Act imposing levy, during a particular period; and (b) the person would, but for subsection (2), be taken to have been a prescribed person, for the purposes of this Part and of any Act imposing levy, during that period by virtue of paragraph (1)(a), (b), (c), (ca), (caa) or (cb); the person shall be taken to have been a prescribed person, for the purposes of this Part and of any Act imposing levy, during one-half of that period. (4) In this section: (a) expressions that are defined by the Vienna Convention on Diplomatic Relations referred to in the Diplomatic Privileges and Immunities Act 1967 have the same respective meanings as in that Convention; and (b) expressions that are defined by the Vienna Convention on Consular Relations referred to in the Consular Privileges and Immunities Act 1972 have the same respective meanings as in that Convention. INCOME TAX ASSESSMENT ACT 1936 - SECT 251V Subsections 251R(4), (5), (6B), (6C) and (6D) not to apply to certain medicare levy increases (1) This section applies to a person during a period if, apart from this section, another person would be taken under subsection 251R(4), (5), (6B), (6C) or (6D) not to have been a dependant of the first-mentioned person during the period. (2) For the purposes of working out the amount of the increase in the levy (if any) payable by: (a) the first-mentioned person under section 8B, 8C or 8D of the Medicare Levy Act 1986; or (b) a trustee under section 8E, 8F or 8G of that Act in relation to a share of the net income of the trust estate to which the first-mentioned person is presently entitled; subsection 251R(4), (5), (6B), (6C) or (6D), as the case requires, does not apply to the other person. INCOME TAX ASSESSMENT ACT 1936 - SECT 251VA Subsection 251U(3) not to apply for certain medicare levy increases (1) This section applies to a person, whether or not the person is a person to whom section 251V applies, during a period if, apart from this section, the person would be taken under subsection 251U(3) to be a prescribed person during one-half of the period. (2) For the purposes of working out the amount of the increase in the levy (if any) payable by: (a) the person under section 8B, 8C or 8D of the Medicare Levy Act 1986; or (b) a trustee under section 8E, 8F or 8G of that Act in relation to a share of the net income of the trust estate to which the person is presently entitled; the person is taken not to be a prescribed person during the whole of the period. INCOME TAX ASSESSMENT ACT 1936 - SECT 251W Regulations (1) The regulations may make provision for and in relation to requiring any person to supply to the Commissioner for the purposes of this Part or of any Act imposing levy or surcharge such information as is prescribed, being information that is in the possession of the person or to which the person has access. (2) In subsection (1), person includes any authority or officer of the Commonwealth or of a State. INCOME TAX ASSESSMENT ACT 1936 - SECT 251X Notice of assessment to set out Medicare levy and surcharge The notice of assessment to be served under section 174 on a taxpayer who must pay levy or surcharge for a year of income must specify the total of levy and surcharge (if any) payable by the taxpayer for the year of income. INCOME TAX ASSESSMENT ACT 1936 - SECT 251Z Administration of Medicare levy surcharge Act The Commissioner has the general administration of the A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999. INCOME TAX ASSESSMENT ACT 1936 - SECT 252 Public officer of company (1) Every company carrying on business in Australia, or deriving in Australia income from property, shall at all times, unless exempted by the Commissioner, be represented for the purposes of this Act by a public officer duly appointed by the company or by its duly authorized agent or attorney, and with respect to every such company and public officer the following provisions shall apply: (a) The company, if it has not appointed a public officer before the commencement of this Act, shall appoint a public officer within three months after the commencement of this Act or after the company commences to carry on business or derive income in Australia. (b) The company shall keep the office of the public officer constantly filled. (c) No appointment of a public officer shall be deemed to be duly made until after notice thereof in writing, specifying the name of the officer and an address for service upon the officer has been given to the Commissioner. (d) The company shall duly appoint a public officer when and as often as such an appointment becomes necessary. (e) Service of any document at the address for service, or on the public officer of the company, shall be sufficient service upon the company for all the purposes of this Act or the regulations, and if at any time there is no public officer then service upon any person acting or appearing to act in the business of the company shall be sufficient. (f) The public officer shall be answerable for the doing of all such things as are required to be done by the company under this Act or the regulations, and in case of default shall be liable to the same penalties. (g) Everything done by the public officer which the officer is required to do in the officer's representative capacity shall be deemed to have been done by the company. The absence or non-appointment of a public officer shall not excuse the company from the necessity of complying with any of the provisions of this Act or the regulations, or from any penalty for refusal or failure to comply therewith, but the company shall be liable to the provisions of this Act as if there were no requirement to appoint a public officer. (h) Any notice given to or requisition made upon the public officer shall be deemed to be given to or made upon the company. (i) Any proceedings under this Act taken against the public officer shall be deemed to have been taken against the company, and the company shall be liable jointly with the public officer for any penalty imposed upon the officer. (j) Notwithstanding anything contained in this section, and without in any way limiting, altering or transferring the liability of the public officer of a company, every notice, process or proceeding which under this Act or the regulations thereunder may be given to, served upon or taken against the company or its public officer may, if the Commissioner thinks fit, be given to, served upon or taken against any director, secretary or other officer of the company or any attorney or agent of the company and that director, secretary, officer, attorney or agent shall have the same liability in respect of that notice, process or proceeding as the company or public officer would have had if it had been given to, served upon, or taken against the company or public officer. (2) A person is not capable of being a public officer of a company at a particular time unless the person: (a) is a natural person who has attained the age of 18 years; (b) is ordinarily resident: (i) in the case of a company that: (A) at that time carries on business solely or principally in a prescribed Territory (in this paragraph referred to as the relevant prescribed Territory); or (B) at that time does not carry on business solely or principally in a prescribed Territory, but derived not less than 50% of its income from sources in Australia and the prescribed Territories from sources in a particular prescribed Territory (in this paragraph referred to as the relevant prescribed Territory) during the year immediately preceding that time; in Australia or the relevant prescribed Territory; or (ii) in any other case--in Australia; and (c) is capable of understanding the nature of the person's appointment as the public officer of the company. (3) A company that contravenes paragraph (1)(d) is, in respect of each day on which it contravenes that paragraph (including the day of a conviction of an offence against this subsection or any subsequent day), guilty of an offence punishable on conviction by a fine not exceeding 1 penalty unit. (4) An offence under subsection (3) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (5) A reference in subsection (1) (other than in paragraph (a)) to this Act or the regulations includes a reference to Part III of the Taxation Administration Act 1953 to the extent to which that Part of that Act relates to this Act or the regulations. (6) In subsection (2): "Australia" does not include a prescribed Territory. "prescribed Territory" means an external Territory referred to in subsection 7A (2). INCOME TAX ASSESSMENT ACT 1936 - SECT 252A Public officer of trust estate (1) Where, at any time after the expiration of the period of 90 days after the commencement of this section: (a) any business of a trust estate is carried on in Australia or any income from property (not being solely income in respect of which tax is payable under Division 11A of Part III) is derived by a trust estate from sources in Australia; (b) there is not a trustee of the trust estate who is a resident; (c) there is not in force in relation to the trust estate an exemption granted by the Commissioner under subsection (3); and (d) there is not in force in relation to the trust estate an appointment of a public officer made in accordance with subsection (5); each person who, at that time, is a trustee of the trust estate is, in respect of each day on which the circumstances set out in paragraphs (a), (b), (c) and (d) are in existence (including the day of a conviction of an offence against this subsection or any subsequent day), guilty of an offence punishable on conviction by a fine not exceeding 1 penalty unit. (1A) An offence under subsection (1) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (2) A reference in subsection (1) to the period of 90 days after the commencement of this section shall, in the application of that subsection in relation to a trust estate that, before the commencement of this section, did not carry on any business in Australia or derive income from property (not being solely income in respect of which tax is payable under Division 11A of Part III) from sources in Australia, be read as a reference to the period of 90 days after the date on which any business of the trust estate is commenced to be carried on in Australia, or the date on which the trust estate commences to derive such income from sources in Australia, whichever first occurs. (2A) A person is not capable of being a public officer of a trust estate at a particular time unless the person: (a) is a natural person who has attained the age of 18 years; (b) is ordinarily resident: (i) in the case of a trust estate that: (A) at that time carries on its business solely or principally in a prescribed Territory (in this paragraph referred to as the relevant prescribed Territory); or (B) at that time does not carry on its business solely or principally in a prescribed Territory, but derived not less than 50% of its income from sources in Australia and the prescribed Territories from sources in a particular prescribed Territory (in this paragraph referred to as the relevant prescribed Territory) during the year immediately preceding that time; in Australia or the relevant prescribed Territory; or (ii) in any other case--in Australia; and (c) is capable of understanding the nature of the person's appointment as the public officer of the trust estate. (3) The Commissioner may, by writing signed by him or her, grant to the trustee of a trust estate an exemption from the provisions of subsection (1) in relation to the trust estate. (4) An exemption under subsection (3) may be granted unconditionally or on such conditions as the Commissioner thinks fit and may be granted without limitation as to time or may be granted in respect of a period specified in the exemption. (5) An appointment of a public officer of a trust estate for the purposes of this section shall be made by giving notice in writing to the Commissioner: (a) that is signed by a trustee of the trust estate or by a duly authorized agent or attorney of a trustee of a trust estate; and (b) that specifies the name of the public officer and an address in Australia for service upon the public officer of any documents that are required or permitted by or under this Act or the regulations to be served upon the public officer of the trust estate. (6) The appointment of a public officer of a trust estate ceases to be in force if the public officer dies or lodges with the Commissioner a notice of the officer's resignation as public officer of the trust estate. (7) Where, by or under this Act or the regulations: (a) a document is permitted to be served upon or given to the trustee of a trust estate; or (b) a requisition is permitted or required to be made upon the trustee of a trust estate; that document shall be deemed to have been served upon or given to the trustee if it is served upon the public officer of the trust estate or at the address for service of the public officer of the trust estate, or that requisition shall be deemed to have been made upon the trustee if it is made upon the public officer of the trust estate, as the case may be. (8) A reference in subsection (7) to the service of a document upon the public officer of a trust estate, or the making of a requisition upon the public officer of a trust estate, shall, if there is not in force an appointment under this section of a public officer in relation to the trust estate, be read as a reference to any person acting or appearing to act in the business of the trust estate. (9) The public officer of a trust estate shall be answerable for the doing of all such things as are required to be done by the trustee of the trust estate under this Act or the regulations, and in case of default shall be liable to the same penalties. (10) Where any proceedings for an offence against this Act or the regulations are taken against the public officer, those proceedings shall be deemed to have also been taken against the trustee or trustees of the trust estate and the trustee or trustees shall be liable jointly with the public officer for any penalty in respect of the offence. (11) Notwithstanding the preceding provisions of this section and without affecting any of the obligations or liabilities of the public officer of a trust estate, any notice, process or proceeding that, under this Act or the regulations, may be given to, served upon or taken against the trustee or public officer of the trust estate may, if the Commissioner thinks fit, be given to, served upon or taken against any agent or attorney of the trustee of the trust estate and that agent or attorney shall have the same liability in respect of that notice, process or proceeding as the trustee or public officer would have had if it had been given to, served upon or taken against the trustee or public officer. (12) Everything done by the public officer of a trust estate that the officer is required to do in the officer's capacity of public officer shall be deemed to have been done by the trustee of the trust estate. (13) The absence or non-appointment of a public officer shall not excuse the trustee of a trust estate from the necessity of complying with any of the provisions of this Act or the regulations, or from any penalty for refusal or failure to comply with any of those provisions, but the trustee shall be liable to the provisions of this Act and the regulations as if there were no requirement to appoint a public officer. (14) A reference in this section to this Act or the regulations includes a reference to Part III of the Taxation Administration Act 1953 to the extent to which that Part of that Act relates to this Act or the regulations. (15) In subsection (2A): "Australia" does not include a prescribed Territory. "prescribed Territory" means an external Territory referred to in subsection 7A(2). INCOME TAX ASSESSMENT ACT 1936 - SECT 254 Agents and trustees (1) With respect to every agent and with respect also to every trustee, the following provisions shall apply: (a) He or she shall be answerable as taxpayer for the doing of all such things as are required to be done by virtue of this Act in respect of the income, or any profits or gains of a capital nature, derived by him or her in his or her representative capacity, or derived by the principal by virtue of his or her agency, and for the payment of tax thereon. (b) He or she shall in respect of that income, or those profits or gains, make the returns and be assessed thereon, but in his or her representative capacity only, and each return and assessment shall, except as otherwise provided by this Act, be separate and distinct from any other. (c) If he or she is a trustee of the estate of a deceased person, the returns shall be the same as far as practicable as the deceased person, if living, would have been liable to make. (d) He or she is hereby authorized and required to retain from time to time out of any money which comes to him or her in his or her representative capacity so much as is sufficient to pay tax which is or will become due in respect of the income, profits or gains. (e) He or she is hereby made personally liable for the tax payable in respect of the income, profits or gains to the extent of any amount that he or she has retained, or should have retained, under paragraph (d); but he or she shall not be otherwise personally liable for the tax. (f) He or she is hereby indemnified for all payments which he or she makes in pursuance of this Act or of any requirement of the Commissioner. (g) Where as one of 2 or more joint agents or trustees he or she pays any amount for which they are jointly liable, each other one is liable to pay him or her an equal share of the amount so paid. (h) For the purpose of insuring the payment of tax the Commissioner shall have the same remedies against attachable property of any kind vested in or under the control or management or in the possession of any agent or trustee, as the Commissioner would have against the property of any other taxpayer in respect of tax. (2) Subsection (1) applies to the following in the same way as it applies to tax: (a) the general interest charge under: (i) section 163AA, former section 170AA, former subsection 204(3), former subsection 221AZMAA(1), former subsection 221AZP(1), former subsection 221YD(3) or former section 221YDB of this Act; (ii) section 5-15 of the Income Tax Assessment Act 1997; (b) additional tax under former Part VII of this Act; (c) shortfall interest charge. Note 1: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953 and shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act. Note 2: Subsection 8AAB(4) of that Act lists the provisions that apply the general interest charge. (3) In paragraphs (1)(d) and (e), and in its first occurrence in paragraph (1)(h), tax includes, in addition to the things mentioned in subsection (2): (a) trustee beneficiary non-disclosure tax within the meaning of Division 6D of Part III; and (b) general interest charge payable under section 102UP in respect of such tax. INCOME TAX ASSESSMENT ACT 1936 - SECT 255 Person in receipt or control of money from non-resident (1) With respect to every person having the receipt control or disposal of money belonging to a non-resident, who derives income, or profits or gains of a capital nature, from a source in Australia or who is a shareholder, debenture holder, or depositor in a company deriving income, or profits or gains of a capital nature, from a source in Australia, the following provisions shall, subject to this Act, apply: (a) the person shall when required by the Commissioner pay the tax due and payable by the non-resident; (b) the person is hereby authorized and required to retain from time to time out of any money which comes to the person on behalf of the non-resident so much as is sufficient to pay the tax which is or will become due by the non-resident; (c) the person is hereby made personally liable for the tax payable by the person on behalf of the non-resident to the extent of any amount that the person has retained, or should have retained, under paragraph (b); but the person shall not be otherwise personally liable for the tax; (d) the person is hereby indemnified for all payments which the person makes in pursuance of this Act or of any requirement of the Commissioner. (2) Every person who is liable to pay money to a non-resident shall be deemed to be a person having the control of money belonging to the non-resident, and, subject to subsection (2A), all money due by the person to the non-resident shall be deemed to be money which comes to the person on behalf of the non-resident. (2A) For the purposes of this section, money due by a person to a non-resident from which an amount must be withheld under section 12-325 in Schedule 1 to the Taxation Administration Act 1953 (about natural resource payments) or Subdivision 12-H in that Schedule (about distributions to foreign residents from managed investment trusts) shall be deemed not to be money which comes to the person on behalf of the non-resident. (3) Where the Commonwealth, a State or an authority of the Commonwealth or a State has the receipt, control or disposal of money belonging to a non-resident, this section (other than paragraph (1)(c)) applies to and in relation to the Commonwealth, the State or the authority, as the case may be, in the same manner as it applies to and in relation to any other person. (4) This section applies to the following in the same way as it applies to tax: (a) the general interest charge under: (i) section 163AA, former section 170AA, former subsection 204(3), former subsection 221AZMAA(1), former subsection 221AZP(1), former subsection 221YD(3) or former section 221YDB of this Act; (ii) section 5-15 of the Income Tax Assessment Act 1997; (b) additional tax under former Part VII of this Act; (c) shortfall interest charge. Note 1: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953 and shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act. Note 2: Subsection 8AAB(4) of that Act lists the provisions that apply the general interest charge. (5) This section applies to an equity holder in the same way as it applies to a shareholder. INCOME TAX ASSESSMENT ACT 1936 - SECT 257 Payment of tax by banker Where any income of any person out of Australia is paid, or any proceeds of the disposal of an asset of any person out of Australia are paid, into the account of that person with a banker, the Commissioner may, by notice in writing to the banker, appoint the banker to be the person's agent in respect of the money so paid so long as the banker is indebted in respect thereof, and thereupon the banker shall accordingly be that person's agent. INCOME TAX ASSESSMENT ACT 1936 - SECT 260 Contracts to evade tax void (1) Every contract, agreement, or arrangement made or entered into, orally or in writing, whether before or after the commencement of this Act, shall so far as it has or purports to have the purpose or effect of in any way, directly or indirectly: (a) altering the incidence of any income tax; (b) relieving any person from liability to pay any income tax or make any return; (c) defeating, evading, or avoiding any duty or liability imposed on any person by this Act; or (d) preventing the operation of this Act in any respect; be absolutely void, as against the Commissioner, or in regard to any proceeding under this Act, but without prejudice to such validity as it may have in any other respect or for any other purpose. (2) This section does not apply to any contract, agreement or arrangement made or entered into after 27 May 1981. INCOME TAX ASSESSMENT ACT 1936 - SECT 262 Periodical payments in the nature of income Where under any contract agreement or arrangement made or entered into orally or in writing, either before or after the commencement of this Act, a person assigns, conveys, transfers or disposes of any property on terms and conditions which include the payment for the assignment, conveyance, transfer or disposal of the property by periodical payments which, in the opinion of the Commissioner, are either wholly or in part really in the nature of income of that person such of those payments as are derived in the year of income shall, to the extent to which they are in that opinion in the nature of income, be included in the person's assessable income. INCOME TAX ASSESSMENT ACT 1936 - SECT 262A Keeping of records [see Note 3] (1) Subject to this section, a person carrying on a business must keep records that record and explain all transactions and other acts engaged in by the person that are relevant for any purpose of this Act. Note: There is an administrative penalty if you do not keep or retain records as required by this section: see section 288-25 in Schedule 1 to the Taxation Administration Act 1953. (1A) Without limiting subsection (1), if the person is an OBU (within the meaning of Division 9A of Part III), the person must, subject to this section, maintain the same accounting records in respect of, and separately account for, money used in its OB activities (within the meaning of that Division) as it would if it were a bank conducting banking activities with another person. (1AA) Subsection (1A) does not require an OBU to maintain a separate nostro account or vostro account for its OBU activities. Nostro accounts and vostro accounts are accounts held or maintained by the OBU for the sole purpose of settling international transactions. Note: A defendant bears an evidential burden in relation to the matters in subsection (1AA), see subsection 13.3(3) of the Criminal Code. (1B) Without limiting subsection (1), a foreign bank must maintain accounting records in respect of, and separately account for, money used in the activities of a permanent establishment in Australia through which the bank carries on banking business. (1BA) Without limiting subsection (1), a foreign entity (as defined in the Income Tax Assessment Act 1997) that is a financial entity (as defined in that Act) must maintain accounting records in respect of, and separately account for, money used in the activities of a permanent establishment in Australia of the entity. (1C) Without limiting subsection (1), if a trust is taken to be 2 separate trusts under section 50-80 of the Income Tax Assessment Act 1997, the trustee must maintain accounting records in respect of, and separately account for, those 2 trusts. (1D) A taxpayer who is a full self-assessment taxpayer must: (a) keep a record containing particulars of the basis of the calculation of the amounts that the taxpayer specified under section 161AA in a return for a year of income; and (b) produce to the Commissioner, when and as required by the Commissioner under this Act, a document containing those particulars. (2) The records to be kept under subsection (1) include: (a) any documents that are relevant for the purpose of ascertaining the person's income and expenditure; and (b) documents containing particulars of any election, choice, estimate, determination or calculation made by the person under this Act and, in the case of an estimate, determination or calculation, particulars showing the basis on which and method by which the estimate, determination or calculation was made. (2AAA) Subsection (1) applies to a participant in a forestry managed investment scheme in relation to the scheme even if the participant is not carrying on a business in relation to the scheme. (2AAB) Subsection (2AAC) applies to the forestry manager of a forestry managed investment scheme if: (a) the forestry manager (or an associate of the forestry manager) receives an amount under the scheme; and (b) the amount is included in the forestry manager's (or the associate's) assessable income under section 15-46 of the Income Tax Assessment Act 1997. (2AAC) The records to be kept under subsection (1) by the forestry manager include records about the basis on which the scheme satisfies the requirement in paragraph 394-10(1)(c) of the Income Tax Assessment Act 1997 (the 70% DFE rule). (2AAD) Subsection (1) applies to a person who has a Division 230 financial arrangement even if the person is not carrying on a business in relation to the arrangement. However, that subsection only requires the person to keep records that, for the purposes of this Act, are relevant to the arrangement. (2AAE) To avoid doubt, for the purposes of subsection (4), if the records mentioned in that subsection relate to a Division 230 financial arrangement that a person has, the transactions or acts mentioned in that subsection are taken to be completed at: (a) the end of the year of income in which the person ceases to have the arrangement; or (b) if: (i) the person applies the hedging financial arrangement method in Subdivision 230-E of the Income Tax Assessment Act 1997 to determine the amount of one or more gains or losses the person makes from the arrangement; and (ii) determining the way in which those gains or losses are dealt with in accordance with subsection 230-310(4) of that Act is possible only at a time after the end of the income year mentioned in paragraph (a); the end of the year of income in which that time occurs. (2AA) The records to be kept under subsection (1) include records required to be kept for the purposes of section 820-960, 820-980 or 820-985 of the Income Tax Assessment Act 1997. (2A) If an entity is required to withhold an amount under Division 12 in Schedule 1 to the Taxation Administration Act 1953, or to pay an amount to the Commissioner under Division 13 or 14 of that Schedule, the entity must keep records that record and explain all transactions and other acts engaged in by the entity that are relevant for the purposes of that Schedule. (3) A person who is required by this section to keep records must: (a) keep the records in writing in the English language or so as to enable the records to be readily accessible and convertible into writing in the English language; and (b) keep the records so as to enable the person's liability under this Act to be readily ascertained; and (c) for records required to be kept under section 820-960 of the Income Tax Assessment Act 1997--comply with the applicable provisions of that section; and (ca) for records required to be kept under section 230-355 of the Income Tax Assessment Act 1997--comply with the applicable provisions of that section; and (d) for records required to be kept under section 820-980 of that Act--comply with subsections (2) and (3) of that section; and (e) for records required to be kept under section 820-985 of that Act--comply with subsections (2) and (3) of that section. (4) A person who has possession of any records kept or obtained under or for the purposes of this Act must retain those records until: (a) in a case to which paragraph (b) does not apply--the end of 5 years after those records were prepared or obtained, or the completion of the transactions or acts to which those records relate, whichever is the later; or (b) if the period (in this paragraph called the assessment period) within which the Commissioner may, under section 170, amend an assessment in respect of the person's income of the year of income to which those records relate, or in which a transaction or act to which those records relate was completed, is extended under subsection 170(7): (i) the end of the period of 5 years referred to in paragraph (a); or (ii) the end of the assessment period as so extended; whichever is the later. (4AAA) Subsection (4) does not apply to any record required to be kept by a provision in Schedule 1 to the Taxation Administration Act 1953. Note: A defendant bears an evidential burden in relation to the matters in subsection (4AAA), see subsection 13.3(3) of the Criminal Code. (4A) A person who makes an election under subsection 371(8) must retain the election until the end of 5 years after the election was made. (4AA) A person who is a party to a joint election for roll-over relief made under former section 59AA, 122R, 123F, 124AO or 124W must retain the election, or a copy, until the end of 5 years after the earlier of: (a) the disposal by the person of the property; or (b) the loss or destruction of the property. (4ACA) Subsection (4AC) does not apply in relation to a disposal of property: (a) to which former subsection 58(1), 122JAA(1), 122JG(1), 123BBA(1), 123BF(1), 124AMAA(1), 124GA(1) or 124JD(1) applies; and (b) that occurs in the 1997-98 year of income or a later year of income. Note: A defendant bears an evidential burden in relation to the matters in subsection (4ACA), see subsection 13.3(3) of the Criminal Code. (4AC) If former subsection 58(1), subsection 73AA(1), 73E(1), 73F(1) or 73G(1) or former subsection 122JAA(1), 122JG(1), 123BBA(1), 123BF(1), 124AMAA(1), 124GA(1), 124JD(1) or 124PA(1) applies to the disposal of property by the transferor referred to in that subsection to the transferee referred to in that subsection: (a) the transferor must give to the transferee, within the period specified in subsection (4AD), a notice containing such information about the transferor's holding of the property as will enable the transferee to work out how former section 58, section 73AA, 73E, 73F or 73G or former section 122JAA, 122JG, 123BBA, 123BF, 124AMAA, 124GA, 124JD or 124PA, as the case may be, will apply to the transferee's holding of the property; and (b) the transferee must retain the notice, or a copy, until the end of 5 years after the earlier of: (i) the disposal by the person of the property; or (ii) the loss or destruction of the property. (4AD) The notice referred to in subsection (4AC) must be given within 6 months after the later of the following: (a) the end of the year of income of the transferee in which the disposal occurred; (b) the commencement of subsection (4AC); or within such further period as the Commissioner allows. (4AE) A person who made an election under former paragraph 54A(1)(a) in relation to a unit of property must retain the election, or a copy, until the end of 5 years after the earlier of: (a) the disposal by the person of the property; or (b) the loss or destruction of the property. (4AF) If: (a) a person (the transferor) disposes of, or of a lease of, any part of a building within the meaning of former Division 10C of Part III to another person (the transferee); and (b) either: (i) one or more deductions have been allowed to the transferor under former subsection 124ZC(2A) or (4A) in respect of qualifying hotel expenditure or qualifying apartment expenditure in respect of the building; or (ii) if there have been one or more prior successive owners or lessees of the building--one or more deductions have been allowed to any of the prior successive owners or lessees under former subsection 124ZC(2A) or (4A) in respect of qualifying hotel expenditure or qualifying apartment expenditure in respect of the building; then: (c) the transferor must give to the transferee, within the period specified in subsection (4AG), a notice containing such information about the transferor's holding or lease of the building as will enable the transferee to work out how former Division 10C of Part III applies to the transferee's holding or lease of the building; and (d) the transferee must retain the notice, or a copy, until the end of 5 years after the earlier of: (i) the transferee ceasing to be the owner or lessee of the part of the building; or (ii) the destruction of the building. (4AG) The notice referred to in subsection (4AF) must be given within 6 months after the later of the following: (a) the end of the year of income of the transferee in which the disposal occurred; (b) the commencement of subsection (4AF); or within such further period as the Commissioner allows. (4AH) If: (a) a person (the transferor) disposes of, or of a lease of, any part of a building within the meaning of former Division 10D of Part III to another person (the transferee); and (b) either: (i) one or more deductions have been allowed to the transferor under former subsection 124ZH(2A) in respect of qualifying expenditure in respect of the building; or (ii) if there have been one or more prior successive owners or lessees of the building--one or more deductions have been allowed to any of the prior successive owners or lessees under former subsection 124ZH(2A) in respect of qualifying expenditure in respect of the building; then: (c) the transferor must give to the transferee, within the period specified in subsection (4AJ), a notice containing such information about the transferor's holding or lease of the building as will enable the transferee to work out how former Division 10D of Part III applies to the transferee's holding or lease of the building; and (d) the transferee must retain the notice, or a copy, until the end of 5 years after the earlier of: (i) the transferee ceasing to be the owner or lessee of the part of the building; or (ii) the destruction of the building. (4AJ) The notice referred to in subsection (4AH) must be given within 6 months after the later of the following: (a) the end of the year of income of the transferee in which the disposal occurred; (b) the commencement of subsection (4AH); or within such further period as the Commissioner allows. (4AJA) If: (a) a person (the transferor) disposes of capital works within the meaning of Division 43 of the Income Tax Assessment Act 1997, being capital works begun after 26 February 1992, to another person (the transferee); and (b) a deduction has been allowed under former Division 10C or 10D of Part III of this Act, or under Division 43 of the Income Tax Assessment Act 1997, in respect of those capital works; then: (c) the transferor must give the transferee, within 6 months after the end of the year of income in which the disposal occurred or within a further period allowed by the Commissioner, a notice containing such information as will allow the transferee to work out how Division 43 of the Income Tax Assessment Act 1997 will apply to the transferee in respect of the capital works; and (d) the transferee must retain the notice or a copy of it until the end of 5 years after the transferee disposes of the capital works or the capital works are destroyed, whichever is the earlier. (4AL) A person who makes an election in accordance with subitem 22(3), 22A(3), 23(3) or 23A(2) of the Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998 must retain the election until the end of 5 years after the election was made. (5) Nothing in this section requires a person to retain records or an election where: (a) the Commissioner has notified the person that retention of the records or election is not required; or (b) the person is a company that has gone into liquidation and finally ceased to exist. Note: A defendant bears an evidential burden in relation to the matters in subsection (5), see subsection 13.3(3) of the Criminal Code. (5A) An offence under this section is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (6) In this section: "associate" has the same meaning as in the Income Tax Assessment Act 1997. "foreign bank" means body corporate that is a foreign ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959. "forestry managed investment scheme" has the same meaning as in the Income Tax Assessment Act 1997. "forestry manager" of a forestry managed investment scheme has the same meaning as in the Income Tax Assessment Act 1997. "participant" in a forestry managed investment scheme has the same meaning as in the Income Tax Assessment Act 1997.Penalty: 30 penalty units. Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. INCOME TAX ASSESSMENT ACT 1936 - SECT 263 Access to books etc. (1) The Commissioner, or any officer authorized by the Commissioner in that behalf, shall at all times have full and free access to all buildings, places, books, documents and other papers for any of the purposes of this Act, and for that purpose may make extracts from or copies of any such books, documents or papers. (2) An officer is not entitled to enter or remain on or in any building or place under this section if, on being requested by the occupier of the building or place for proof of authority, the officer does not produce an authority in writing signed by the Commissioner stating that the officer is authorised to exercise powers under this section. (3) The occupier of a building or place entered or proposed to be entered by the Commissioner, or by an officer, under subsection (1) shall provide the Commissioner or the officer with all reasonable facilities and assistance for the effective exercise of powers under this section. Penalty: 30 penalty units. Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. INCOME TAX ASSESSMENT ACT 1936 - SECT 264 Commissioner may require information and evidence (1) The Commissioner may by notice in writing require any person, whether a taxpayer or not, including any officer employed in or in connexion with any department of a Government or by any public authority: (a) to furnish the Commissioner with such information as the Commissioner may require; and (b) to attend and give evidence before the Commissioner or before any officer authorized by the Commissioner in that behalf concerning the person's or any other person's income or assessment, and may require the person to produce all books, documents and other papers whatever in the person's custody or under the person's control relating thereto. (2) The Commissioner may require the information or evidence to be given on oath or affirmation and either verbally or in writing, and for that purpose the Commissioner or the officers so authorized by the Commissioner may administer an oath or affirmation. (3) The regulations may prescribe scales of expenses to be allowed to persons required under this section to attend. INCOME TAX ASSESSMENT ACT 1936 - SECT 264A Offshore information notices (1) Where the Commissioner has reason to believe that: (a) information relevant to the assessment of a taxpayer is: (i) within the knowledge (whether exclusive or otherwise) of a person outside Australia; or (ii) recorded (whether exclusively or otherwise) in a document outside Australia; or (iii) kept (whether exclusively or otherwise) by means of a mechanical, electronic or other device outside Australia; or (b) documents relevant to the assessment of a taxpayer are outside Australia (whether or not copies are in Australia or, if the documents are copies of other documents, whether or not those other documents are in Australia); the Commissioner may, by notice in writing served on the taxpayer (which notice is in this section called the offshore information notice), request the taxpayer: (c) to give to the Commissioner, within the period and in the manner specified in the offshore information notice, any such information; or (d) to produce to the Commissioner, within the period and in the manner specified in the offshore information notice, any such documents; or (e) to make copies of any such documents and to produce to the Commissioner, within the period and in the manner specified in the offshore information notice, those copies. (2) The period specified in the offshore information notice must end 90 days after the date of service of the notice. (3) Upon written application made by the taxpayer within the period specified in the offshore information notice, the Commissioner may, by notice in writing served on the taxpayer, extend the period specified in the offshore information notice. (4) Where: (a) an application under subsection (3) is made before the end of the period specified in the offshore information notice; and (b) at the end of the period, the Commissioner has not notified the taxpayer of the Commissioner's decision on the application; the following provisions have effect: (c) the Commissioner is taken to have extended the period under subsection (3) to the end of the day (in this subsection called the decision day) on which the Commissioner's decision is notified to the taxpayer; (d) if the Commissioner decides to extend the period--the extended period must end after the decision day. (5) A reference in this section (other than subsection (3)) to the period specified in the offshore information notice is a reference to the period as extended under subsection (3). (6) Where: (a) an offshore information notice (in this subsection called the first notice) was served on a taxpayer; and (b) during the period specified in the first notice (including a period specified by virtue of one or more previous applications of this subsection), another offshore information notice (which other notice is in this subsection called the subsequent notice) is served on the taxpayer; and (c) the subsequent notice is expressed to be by way of variation of the first notice; the following provisions have effect: (d) the request, or each of the requests, set out in the subsequent notice is taken, for the purposes of subsections (10), (11) and (14), to have been set out in the first notice; (e) if the period specified in the first notice would, apart from this subsection, end before the end of the period specified in the subsequent notice--the period specified in the first notice is taken to have been extended under subsection (3) to the end of the period specified in the subsequent notice. (7) The Commissioner may, by notice in writing served on the taxpayer, vary the offshore information notice by: (a) reducing its scope; or (b) correcting a clerical error or obvious mistake; and, if the Commissioner does so, a reference in this section to the offshore information notice is to be read as a reference to the notice as so varied. (8) The Commissioner may withdraw an offshore information notice. (9) If the Commissioner withdraws an offshore information notice, nothing in this section prevents the Commissioner giving another offshore information notice in substitution, in whole or in part, for the withdrawn notice. (10) If the taxpayer refuses or fails to comply with the request or requests set out in the offshore information notice, then, except with the consent of the Commissioner: (a) if the information or documents to which the request or requests apply are only relevant to one issue concerning the assessment of the taxpayer: (i) where the request, or any of the requests, apply to information--the information is not admissible in proceedings disputing the taxpayer's assessment; or (ii) where the request, or any of the requests, apply to documents--neither the documents, nor any secondary evidence of the documents, are admissible in proceedings disputing the taxpayer's assessment; or (b) if: (i) the information or documents to which the request or requests apply are relevant to 2 or more issues concerning the assessment of the taxpayer; and (ii) the refusal or failure of the taxpayer relates to information or documents that are relevant to any or all of those issues; the following provisions have effect: (iii) where the request, or any of the requests, apply to information--the information, to the extent to which it is relevant to the issue or issues mentioned in subparagraph (ii), is not admissible in proceedings disputing the taxpayer's assessment; (iv) where the request, or any of the requests, apply to documents--neither: (A) the documents, to the extent to which they are relevant to the issue or issues mentioned in subparagraph (ii); nor (B) secondary evidence of the documents, to the extent to which the secondary evidence is relevant to the issue or issues mentioned in subparagraph (ii); are admissible in proceedings disputing the taxpayer's assessment. (11) Without limiting the power conferred by subsection (10), where: (a) the taxpayer refuses or fails to comply with the request or requests set out in the offshore information notice; and (b) the refusal or failure of the taxpayer relates to some, but not all, of the information or documents to which the request or requests apply and that are relevant to a particular issue concerning the assessment of the taxpayer; the Commissioner, in exercising that power, must have regard to whether there is reason to believe that, because of the absence of that information or those documents, the remaining information or documents that are relevant to that issue are, or are likely to be, misleading. (12) The Commissioner, in exercising the power conferred by subsection (10), must ignore the consequences (whether direct or indirect) of an obligation arising under a law of, or of a part of, a foreign country, in so far as that obligation relates to the secrecy of information or documents. (13) In spite of anything in this section, the Commissioner must give a consent under subsection (10) in any case where a refusal would have the effect, for the purposes of the Constitution, of making any tax or penalty incontestable. (14) Where, before the commencement of the hearing of proceedings disputing the taxpayer's assessment, the Commissioner forms both of the following views: (a) the view that the taxpayer has refused or failed to comply with the request or requests set out in the offshore information notice; (b) the view that the Commissioner is unlikely to give a consent under subsection (10) in relation to that request or those requests and in relation to those proceedings; the Commissioner must serve on the taxpayer a notice in writing setting out those views. (15) A failure to comply with subsection (14) does not affect the validity of a decision under subsection (10). (16) A reference in this section to a refusal or failure of a taxpayer to comply with a request includes a reference to a refusal or failure resulting from the taxpayer being incapable of complying with the request. (17) A reference in this section to proceedings disputing the taxpayer's assessment is a reference to proceedings before a court or the Tribunal arising out of, or relating to, an objection against the assessment. (18) Nothing in this Act precludes an offshore information notice from being set out in the same document as a notice under section 264. (19) An offshore information notice must set out the effect of subsection (10). (20) A failure to comply with subsection (19) does not affect the validity of the offshore information notice. (21) A request under this section is not taken to be a requirement for the purposes of any other provision of this Act or of any provision of the Taxation Administration Act 1953. (22) A refusal or failure to comply with a request set out in an offshore information notice is not an offence. (23) The express references in this section to documents do not imply that references to documents in any other provision of this Act, or in a provision of the Taxation Administration Act 1953, do not have the meaning given by the definition of document in section 2B of the Acts Interpretation Act 1901. (24) Nothing in this section affects the operation of section 264 and nothing in section 264 affects the operation of this section. INCOME TAX ASSESSMENT ACT 1936 - SECT 264BB Commissioner may require private health insurers to provide information (1) The Commissioner may, by notice in writing, require a private health insurer to provide information relevant to the operation of this Act about each person who is covered at any time during a financial year specified in the notice by a complying health insurance policy issued by the insurer or who paid premiums under such a policy. (2) The information that the Commissioner may require the private health insurer to provide includes the following: (a) the name, address and date of birth of each person mentioned in subsection (1); (b) the membership number of the policy; (c) the name, address and date of birth of any spouse of a person covered by the policy (other than a spouse permanently living separately and apart from the person); (d) whether the policy covers hospital treatment, general treatment or both; (e) the date on which the policy was issued; (f) whether the policy has terminated or been suspended, and, if it has, the date on which it terminated or was suspended; (g) the amount of the premium payable under the policy; (h) the period to which the premium relates; (i) any increase or decrease in the premium; (j) whether a payment in respect of a premium that was due within a period specified by the Commissioner was not paid. (3) The information required by a notice under subsection (1) is to be provided: (a) in a form (including an electronic form) approved by the Commissioner; and (b) within the period specified in the notice. (4) In this section, the following terms have the same meanings as in the Private Health Insurance Act 2007: "complying health insurance policy" "general treatment" "hospital treatment" "private health insurer" INCOME TAX ASSESSMENT ACT 1936 - SECT 265A Release of liability of members of the Defence Force on death (1) Subject to subsection (2), where, in respect of the income of any year of income, income tax is payable by the trustee of the estate of a deceased person who has been a member of the Defence Force, the trustee shall, by force of this section, be released from the payment of so much of that tax as remains after deducting any tax deductions unapplied: (a) where the assessable income of the year of income consists solely of pay and allowances earned as a member of the Defence Force--from the amount of income tax so payable by the trustee; or (b) where the assessable income of the year of income includes income other than such pay and allowances: (i) from the amount of income tax so payable by the trustee; or (ii) from the amount by which the income tax payable in respect of the income of the year of income has been increased by the inclusion of such pay and allowances in the assessable income of that year; whichever is the less. (2) Nothing in subsection (1) shall be construed so as to authorize or require the Commissioner to refund any amount paid as or for income tax by or on behalf of the taxpayer or his trustee. (3) The provisions of subsection (1) do not apply in any case where the death of the taxpayer has occurred in circumstances (including the circumstances of his or her service) in which the Commonwealth would not be liable to pay pensions or compensation: (a) under Part II or IV of the Veterans' Entitlements Act 1986 to the dependants of deceased members of the Forces or veterans; or (b) mentioned in paragraph 234(1)(b) of the Military Rehabilitation and Compensation Act 2004 to the wholly dependent partners of deceased members (within the meaning of that Act). (4) Any decision of an authority constituted under the Repatriation Act 1920-1962 on any question affecting the right of any dependants of a deceased member of the Forces to a pension under that Act or under the Repatriation (Far East Strategic Reserve) Act 1956-1962 or the Repatriation (Special Overseas Service) Act 1962, or any decision of an authority constituted under the Veterans' Entitlements Act 1986 on a question affecting the right of a dependant of a deceased veteran to a pension under Part II or IV of that Act, or any decision of the Military Rehabilitation and Compensation Commission established under section 361 of the Military Rehabilitation and Compensation Act 2004 on a question affecting the right of a dependant of a deceased member (within the meaning of that Act) to compensation under Chapter 5 of that Act, in respect of his or her death shall, so long as that decision has not been reversed or overruled, be conclusive evidence of the matters of fact or law so decided for the purposes of the application of subsection (3) in relation to that deceased member of the Forces. (5) In this section: "tax deductions unapplied", in relation to a deceased person, means the total of any amounts withheld under paragraph 12-45(1)(c) in Schedule 1 to the Taxation Administration Act 1953 from amounts earned by the deceased person as a member of the Defence Force where: (a) the amounts have not been credited in payment of income tax; and (b) the Commissioner has not made a payment in respect of them. INCOME TAX ASSESSMENT ACT 1936 - SECT 265B Notices in relation to certain securities (1) Subject to subsection (2), for the purposes of this section: (a) expressions used in this section that are also used in Division 16E of Part III have the same respective meanings as in that Division; and (b) sections 159GV (other than subsection 159GV(2)) and 159GZ apply as if references in those sections to this Division were references to section 265B. (2) Subsection (1) applies as if paragraph (c) of the definition of qualifying security in subsection 159GP(1) were omitted. (3) The holder of a security, not being a prescribed security within the meaning of section 26C, may apply at any time to the issuer for a notice under this section in relation to the security. (4) Where the issuer of a security receives an application under subsection (3) in relation to the security, the issuer shall within 21 days of receipt of the application issue a notice in writing to the applicant, expressed to be issued under this section and identifying the security, that states that the notice was issued at a specified time on a specified date and: (a) where the security is not a qualifying security--that the security is not a qualifying security; or (b) where the security is a qualifying security--that: (i) the security is a qualifying security; (ii) the security was issued for a specified consideration; (iii) where the security was partially redeemed on one or more occasions before the time of issue of the notice--that the security was partially redeemed by a specified amount or amounts on a specified date or dates; and (iv) where the security was varied to become a qualifying security--the security was varied, for a specified consideration, to become a qualifying security. INCOME TAX ASSESSMENT ACT 1936 - SECT 266 Regulations (1) The Governor-General may make regulations, not inconsistent with this Act or the Income Tax Assessment Act 1997, prescribing all matters which by this Act or the Income Tax Assessment Act 1997 are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for giving effect to this Act or the Income Tax Assessment Act 1997, and for prescribing penalties not exceeding a fine of 5 penalty units for offences against the regulations. INCOME TAX ASSESSMENT ACT 1936 - SECT 316 Object of Part (1) The object of this Part is to provide for certain amounts to be included in a taxpayer's assessable income (Division 9) in respect of: (a) the attributable income of a CFC (section 456); and (b) certain changes of residence by a CFC (section 457). (2) To that end (and for other purposes of this Act) this Part contains rules relating to the following: (a) interpretation (Division 1); (b) types of entities (Division 2); (c) control interests, attribution interests, attributable taxpayers and attribution percentages (Division 3); (d) attribution accounts (Division 4); (g) the calculation of attributable income of a CFC (Division 7); (h) the active income test (Division 8); (j) post-attribution asset disposals (Division 10); (k) the keeping of records (Division 11). INCOME TAX ASSESSMENT ACT 1936 - SECT 317 Interpretation (1) In this Part, unless the contrary intention appears: "accounting period", in relation to company, means an accounting period used by the company in the accounts by reference to which it distributes dividends. "accounting records" includes invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes, vouchers and other documents of prime entry and also includes such working papers and other documents as are necessary to explain the methods and calculations by which accounts are made up. "accounts" means ledgers, journals, profit and loss accounts and balance-sheets, and includes statements, reports and notes attached to, or intended to be read with, any of the foregoing. "accruals tax law", in relation to a listed country, means a law of the listed country that is declared by regulations for the purposes of this definition to be an accruals tax law. "active income test" has the meaning given by section 432. "adjusted tainted income" has the meaning given by section 386. "AFI or Australian financial institution" means any of the following Australian entities: (a) a body corporate that is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959; (b) a person who carries on State banking within the meaning of paragraph 51(xiii) of the Constitution; (c) a registered entity under the Financial Sector (Collection of Data) Act 2001; (d) a life assurance company. "AFI subsidiary or Australian financial institution subsidiary" has the meaning given by section 326. "aircraft" means a machine or apparatus that can derive support in the atmosphere from the reactions of the air or from buoyancy, but does not include an air-cushion vehicle. "associate" has the meaning given by section 318. "associate-inclusive control interest" has the meaning given by section 349. "attributable income" has the meaning given by Division 7. "attributable taxpayer", has the meaning given by section 361. "attribution account entity" has the meaning given by section 363. "attribution account payment" has the meaning given by section 365. "attribution credit" has the meaning given by section 371. "attribution debit" has the meaning given by section 372. "attribution percentage" has the meaning given by section 362. "attribution tracing interest": (a) in relation to a CFC--has the meaning given by section 358; and (b) in relation to a CFP--has the meaning given by section 359; and (c) in relation to a CFT--has the meaning given by section 360. Australian 1% entity, in relation to a company or trust, means an Australian entity whose associate-inclusive control interest in the company or trust is at least 1%. "Australian entity" has the meaning given by section 336. "Australian partnership" has the meaning given by section 337. "Australian tax" means income tax or withholding tax. "Australian trust" has the meaning given by section 338. "CFC or controlled foreign company" has the meaning given by section 340. "CFE or controlled foreign entity" has the meaning given by section 339. "CFP or controlled foreign partnership" has the meaning given by section 341. "CFT or controlled foreign trust" has the meaning given by section 342. "CGT roll-over provisions" means former section 160ZZF and Divisions 5A, 5B, 7A and 17 of former Part IIIA of this Act or Divisions 122, 124 and 126, and section 118-350, of the Income Tax Assessment Act 1997. "commodity" means any thing that is capable of delivery under an agreement for its delivery, but does not include an instrument creating or evidencing a chose in action. "commodity investment" means: (a) either of the following contracts: (i) a forward contract in respect of a commodity; (ii) a futures contract in respect of a commodity; or (b) a right or option in respect of such a contract. "company" does not include a company in the capacity of trustee. "company title interest", in relation to land, means a right of occupancy of the land, or of a building or part of a building erected on the land, arising by virtue of the holding of shares, or by virtue of a contract to purchase shares, in a company that owns the land or building. "control tracing interest": (a) in relation to a CFC--has the meaning given by section 353; or (b) in relation to a CFP--has the meaning given by section 354; or (c) in relation to a CFT--has the meaning given by section 355. "currency exchange gain", in relation to a company, in relation to a statutory accounting period, means a currency gain realised by the company in the statutory accounting period, to the extent to which it is attributable to currency exchange rate fluctuations. "currency exchange loss", in relation to a company, in relation to a statutory accounting period, means a currency loss realised by the company in the statutory accounting period, to the extent to which it is attributable to currency exchange rate fluctuations.de facto relationship means: (a) a relationship between 2 persons (whether of the same sex or different sexes) that is registered under a law of a State or Territory prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; or (b) a relationship between 2 persons (whether of the same sex or different sexes) who, although not legally married to each other, live with each other on a genuine domestic basis in a relationship as a couple. "depreciation provision" means: (a) any of former sections 54 to 62 of Division 3 of Part III of this Act, any provision of former Divisions 10, 10AAA, 10AA, 10A, 10C and 10D of that Part; or (b) any provision of Division 40 of the Income Tax Assessment Act 1997 (other than Subdivision 40-E) or of Division 43 of that Act; or (c) any provision of the former Division 42 of that Act (other than Subdivisions 42-L and 42-M), or the former Subdivisions 330-A, 330-C, 330-H and 387-G of that Act. "designated concession income", in relation to a listed country, means: (a) income or profits of a kind specified in the regulations if: (i) foreign tax imposed by a tax law of the country is not payable in respect of the income or profits because of a particular feature; or (ii) foreign tax imposed by a tax law of the country is payable in respect of the income or profits but there is a feature in relation to that tax; and the feature is of a kind specified in the regulations; or (b) capital gains that would be made because of CGT event J1, if the assumptions in paragraphs 383(a) to (c) applied. Note 1: CGT event J1 is about companies ceasing to be related after a roll-over. Note 2: Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened. "direct attribution account interest" has the meaning given by section 366. "direct attribution interest" has the meaning given by section 356. "direct control interest": (a) in relation to a company--has the meaning given by section 350; (b) in relation to a trust--has the meaning given by section 351. "discretionary trust" means a trust where: (a) both of the following conditions are satisfied: (i) a person (who may include the trustee) is empowered (either unconditionally or on the fulfilment of a condition) to exercise any power of appointment or other discretion; (ii) the exercise of the power or discretion, or the failure to exercise the power or discretion, has the effect of determining, to any extent, either or both of the following: (A) the identities of those who may benefit under the trust; (B) how beneficiaries are to benefit, as between themselves, under the trust; or (b) one or more of the beneficiaries under the trust have a contingent or defeasible interest in some or all of the corpus or income of the trust; or (c) the trustee of another trust, being a trust where both of the conditions in paragraph (a) are satisfied, benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the first-mentioned trust. "disposal" of an asset includes: (a) redemption; and (b) CGT event J1 happening in relation to the asset (about companies ceasing to be related after a roll-over) if the assumptions in paragraphs 383(a) to (c) applied. Note: Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened. "distributable profits", in relation to a company, means the amount, whether of an income or capital nature, that, having regard to the accounts of the company and such other matters as may reasonably be regarded as relevant, constitutes profits of the company that would be available for distribution by the company by way of dividends if there were disregarded any requirement of the constituent document, or of any resolution or decision, of the company restricting the availability of the profits for distribution in that way, other than any requirement providing for an eligible provision or reserve. "double tax agreement", in relation to a foreign country, means: (a) if there is only one agreement (within the meaning of the International Tax Agreements Act 1953) in force in respect of the foreign country--that agreement; or (b) if there are 2 or more agreements (within the meaning of that Act) in force in respect of the foreign country--the agreement that is expressed to be: (i) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income; or; or (ia) concerning the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income; or (ii) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital; or (iii) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital; or (iv) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains; or (v) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on