Source: https://www.legislation.gov.au/Details/C2012C00272/Html/Volume_6
Timestamp: 2020-04-08 21:37:14
Document Index: 384285461

Matched Legal Cases: ['art 3', 'art 3', 'art 3', 'art 3', 'art 3', 'art 3']

Part 3‑10—Financial transactions 1
Division 230—Taxation of financial arrangements 1
Guide to Division 230 1
230‑1..... What this Division is about................................................................. 1
230‑5..... Scope of this Division......................................................................... 2
Subdivision 230‑A—Core rules 3
230‑10... Objects of this Division...................................................................... 4
Tax treatment of gains and losses from financial arrangements 4
230‑15... Gains are assessable and losses deductible......................................... 4
230‑20... Gain or loss to be taken into account only once under this Act........... 6
230‑25... Associated financial benefits to be taken into account only once under this Act 8
230‑30... Treatment of gains and losses related to exempt income and non‑assessable non‑exempt income 9
230‑35... Treatment of gains and losses of private or domestic nature............... 9
Method to be applied to take account of gain or loss 10
230‑40... Methods for taking gain or loss into account.................................... 10
Financial arrangement concept 12
230‑45... Financial arrangement....................................................................... 12
230‑50... Financial arrangement (equity interest or right or obligation in relation to equity interest) 15
230‑55... Rights, obligations and arrangements (grouping and disaggregation rules) 16
General rules 17
230‑60... When financial benefit provided or received under financial arrangement 17
230‑65... Amount of financial benefit relating to more than one financial arrangement etc. 18
230‑70... Apportionment when financial benefit received or right ceases......... 19
230‑75... Apportionment when financial benefit provided or obligation ceases 20
230‑80... Consistency in working out gains or losses (integrity measure)....... 22
230‑85... Rights and obligations include contingent rights and obligations...... 22
Subdivision 230‑B—The accruals/realisation methods 23
Guide to Subdivision 230‑B 24
230‑90... What this Subdivision is about.......................................................... 24
Objects of Subdivision 24
230‑95... Objects of this Subdivision............................................................... 24
When accruals method or realisation method applies 25
230‑100. When accruals method or realisation method applies........................ 25
230‑105. Sufficiently certain overall gain or loss............................................. 26
230‑110. Sufficiently certain gain or loss from particular event....................... 27
230‑115. Sufficiently certain financial benefits................................................. 28
230‑120. Financial arrangements with notional principal................................. 30
The accruals method 32
230‑125. Overview of the accruals method...................................................... 32
230‑130. Applying accruals method to work out period over which gain or loss is to be spread 32
230‑135. How gain or loss is spread................................................................ 33
230‑140. Method of spreading gain or loss—effective interest method........... 35
230‑145. Application of effective interest method where differing income and accounting years 36
230‑150. Election for portfolio treatment of fees.............................................. 37
230‑155. Election for portfolio treatment of fees where differing income and accounting years 38
230‑160. Portfolio treatment of fees................................................................. 39
230‑165. Portfolio treatment of premiums and discounts for acquiring portfolio 41
230‑170. Allocating gain or loss to income years............................................. 42
230‑175. Running balancing adjustments......................................................... 43
Realisation method 45
230‑180. Realisation method............................................................................ 45
Reassessment and re‑estimation 46
230‑185. Reassessment.................................................................................... 46
230‑190. Re‑estimation.................................................................................... 48
230‑195. Balancing adjustment if rate of return maintained on re‑estimation... 51
230‑200. Re‑estimation if balancing adjustment on partial disposal................. 52
Subdivision 230‑C—Fair value method 54
230‑205. Objects of this Subdivision............................................................... 54
230‑210. Fair value election............................................................................. 54
230‑215. Fair value election where differing income and accounting years...... 55
230‑220. Financial arrangements to which fair value election applies.............. 57
230‑225. Financial arrangements to which election does not apply.................. 58
230‑230. Applying fair value method to gains and losses................................ 59
230‑235. Splitting financial arrangements into 2 financial arrangements.......... 60
230‑240. When election ceases to apply........................................................... 61
230‑245. Balancing adjustment if election ceases to apply............................... 61
Subdivision 230‑D—Foreign exchange retranslation method 62
230‑250. Objects of this Subdivision............................................................... 62
230‑255. Foreign exchange retranslation election............................................. 63
230‑260. Foreign exchange retranslation election where differing income and accounting years 64
230‑265. Financial arrangements to which general election applies.................. 66
230‑270. Financial arrangements to which general election does not apply...... 67
230‑275. Balancing adjustment for election in relation to qualifying forex accounts 68
230‑280. Applying foreign exchange retranslation method to gains and losses 69
230‑285. When election ceases to apply........................................................... 71
230‑290. Balancing adjustment if election ceases to apply............................... 72
Subdivision 230‑E—Hedging financial arrangements method 73
230‑295. Objects of this Subdivision............................................................... 73
230‑300. Applying hedging financial arrangement method to gains and losses 74
230‑305. Table of events and allocation rules................................................... 76
230‑310. Aligning tax classification of gain or loss from hedging financial arrangement with tax classification of hedged item.......................................................................................................... 77
230‑315. Hedging financial arrangement election............................................. 81
230‑320. Hedging financial arrangement election where differing income and accounting years 82
230‑325. Hedging financial arrangements to which election applies................ 82
230‑330. Hedging financial arrangements to which election does not apply.... 83
230‑335. Hedging financial arrangement and hedged item............................. 84
230‑340. Generally whole arrangement must be hedging financial arrangement 87
230‑345. Requirements not satisfied because of honest mistake or inadvertence 89
230‑350. Derivative financial arrangement and foreign currency hedge......... 89
230‑355. Recording requirements.................................................................... 90
230‑360. Determining basis for allocating gain or loss.................................... 92
230‑365. Effectiveness of the hedge................................................................. 93
230‑370. When election ceases to apply........................................................... 93
230‑375. Balancing adjustment if election ceases to apply............................... 94
230‑380. Where requirements not met.............................................................. 94
230‑385. You may be excluded from this Subdivision for deliberate failures to comply with requirements 96
Subdivision 230‑F—Reliance on financial reports 97
230‑390. Objects of this Subdivision............................................................... 97
230‑395. Election to rely on financial reports................................................... 98
230‑400. Financial reports election where differing income and accounting years 99
230‑405. Commissioner discretion to waive requirements in paragraphs 230‑395(2)(c) and (e) 101
230‑410. Financial arrangements to which the election applies...................... 101
230‑415. Financial arrangements not covered by election.............................. 104
230‑420. Effect of election to rely on financial reports................................... 105
230‑425. When election ceases to apply......................................................... 106
230‑430. Balancing adjustment if election ceases to apply............................. 107
Subdivision 230‑G—Balancing adjustment on ceasing to have a financial arrangement 108
230‑435. When balancing adjustment made................................................... 108
230‑440. Exceptions....................................................................................... 110
230‑445. Balancing adjustment...................................................................... 111
Subdivision 230‑H—Exceptions 115
230‑450. Short‑term arrangements where non‑money amount involved........ 116
230‑455. Certain taxpayers where no significant deferral............................... 116
230‑460. Various rights and/or obligations.................................................... 120
230‑465. Ceasing to have a financial arrangement in certain circumstances... 125
230‑470. Forgiveness of commercial debts.................................................... 126
230‑475. Clarifying exceptions...................................................................... 126
230‑480. Treatment of gains in form of franked distribution etc.................... 127
Subdivision 230‑I—Other provisions 127
230‑485. Effect of change of residence—rules for particular methods........... 128
230‑490. Effect of change of residence—disposal and reacquisition etc. after ceasing to be Australian resident where no further recognised gains or losses from arrangement.................................. 130
230‑495. Effect of change of accounting principles or standards................... 130
230‑500. Comparable foreign accounting and auditing standards.................. 131
230‑505. Financial arrangement as consideration for provision or acquisition of a thing 131
230‑510. Non‑arm’s length dealings in relation to financial arrangement....... 133
230‑515. Arm’s length dealings in relation to financial arrangement—adjustment to gain or loss in certain situations 135
230‑520. Disregard gains or losses covered by value shifting regime............ 136
230‑525. Consolidated financial reports......................................................... 136
Subdivision 230‑J—Additional operation of Division 137
230‑530. Additional operation of Division..................................................... 137
Division 240—Arrangements treated as a sale and loan 139
Guide to Division 240 139
240‑1..... What this Division is about............................................................. 139
240‑3..... How the recharacterisation affects the notional seller...................... 139
240‑7..... How the recharacterisation affects the notional buyer..................... 140
Subdivision 240‑A—Application and scope of Division 141
240‑10... Application of this Division............................................................ 141
240‑15... Scope of Division........................................................................... 141
Subdivision 240‑B—The notional sale and notional loan 142
240‑17... Who is the notional seller and the notional buyer?.......................... 142
240‑20... Notional sale of property by notional seller and notional acquisition of property by notional buyer 142
240‑25... Notional loan by notional seller to notional buyer........................... 143
Subdivision 240‑C—Amounts to be included in notional seller’s assessable income 144
Guide to Subdivision 240‑C 144
240‑30... What this Subdivision is about........................................................ 144
240‑35... Amounts to be included in notional seller’s assessable income....... 145
240‑40... Arrangement payments not to be included in notional seller’s assessable income 145
Subdivision 240‑D—Deductions allowable to notional buyer 146
Guide to Subdivision 240‑D 146
240‑45... What this Subdivision is about........................................................ 146
240‑50... Extent to which deductions are allowable to notional buyer............ 146
240‑55... Arrangement payments not to be deductions................................... 147
Subdivision 240‑E—Notional interest and arrangement payments 147
240‑60... Notional interest.............................................................................. 147
240‑65... Arrangement payments................................................................... 148
240‑70... Arrangement payment periods........................................................ 148
Subdivision 240‑F—The end of the arrangement 149
240‑75... When is the end of the arrangement?............................................... 149
240‑80... What happens if the arrangement is extended or renewed............... 150
240‑85... What happens if an amount is paid by or on behalf of the notional buyer to acquire the property 151
240‑90... What happens if the notional buyer ceases to have the right to use the property 151
Subdivision 240‑G—Adjustments if total amount assessed to notional seller differs from amount of interest 153
Guide to Subdivision 240‑G 153
240‑100. What this Subdivision is about........................................................ 153
240‑105. Adjustments for notional seller....................................................... 153
240‑110. Adjustments for notional buyer....................................................... 154
Subdivision 240‑H—Application of Division 16E to certain arrangements 155
240‑112. Division 16E applies to certain arrangements.................................. 155
Subdivision 240‑I—Provisions applying to hire purchase agreements 156
240‑115. Another person, or no person taken to own property in certain cases 156
Division 242—Leases of luxury cars 158
Guide to Division 242 158
242‑1..... What this Division is about............................................................. 158
Subdivision 242‑A—Notional sale and loan 159
Guide to Subdivision 242‑A 159
242‑5..... What this Subdivision is about........................................................ 159
242‑10... Application...................................................................................... 159
242‑15... Notional sale and acquisition........................................................... 160
242‑20... Consideration for notional sale, and cost, of car.............................. 160
242‑25... Notional loan by lessor to lessee..................................................... 161
Subdivision 242‑B—Amount to be included in lessor’s assessable income 162
Guide to Subdivision 242‑B 162
242‑30... What this Subdivision is about........................................................ 162
242‑35... Amount to be included in lessor’s assessable income..................... 162
242‑40... Treatment of lease payments........................................................... 164
Subdivision 242‑C—Deductions allowable to lessee 164
Guide to Subdivision 242‑C 164
242‑45... What this Subdivision is about........................................................ 164
242‑50... Extent to which deductions are allowable to lessee......................... 165
242‑55... Lease payments not deductible........................................................ 165
Subdivision 242‑D—Adjustments if total amount assessed to lessor differs from amount of interest 166
Guide to Subdivision 242‑D 166
242‑60... What this Subdivision is about........................................................ 166
242‑65... Adjustments for lessor.................................................................... 166
242‑70... Adjustments for lessee.................................................................... 167
Subdivision 242‑E—Extension, renewal and final ending of the lease 168
Guide to Subdivision 242‑E 168
242‑75... What this Subdivision is about........................................................ 168
242‑80... What happens if the term of the lease is extended or the lease is renewed 169
242‑85... What happens if an amount is paid by the lessee to acquire the car. 170
242‑90... What happens if the lessee stops having the right to use the car...... 171
Division 243—Limited recourse debt 173
Guide to Division 243 173
243‑10... What this Division is about............................................................. 173
Subdivision 243‑A—Circumstances in which Division operates 173
243‑15... When does this Division apply?...................................................... 174
243‑20... What is limited recourse debt?......................................................... 175
243‑25... When is a debt arrangement terminated?......................................... 177
243‑30... What is the financed property and the debt property?...................... 178
Subdivision 243‑B—Working out the excessive deductions 178
243‑35... Working out the excessive deductions............................................ 178
Subdivision 243‑C—Amounts included in assessable income and deductions 181
243‑40... Amount included in debtor’s assessable income............................. 181
243‑45... Deduction for later payments in respect of debt.............................. 181
243‑50... Deduction for payments for replacement debt................................. 182
243‑55... Effect of Division on later capital allowance deductions................. 184
243‑57... Effect of Division on later capital allowance balancing adjustments 184
243‑58... Adjustment where debt only partially used for expenditure............ 185
Subdivision 243‑D—Special provisions 186
Operative provisions 186
243‑60... Application of Division to partnerships.......................................... 186
243‑65... Application where partner reduces liability..................................... 186
243‑70... Application of Division to companies ceasing to be 100% subsidiary 188
243‑75... Application of Division where debt forgiveness rules also apply... 188
Division 245—Forgiveness of commercial debts 189
Guide to Division 245 189
245‑1..... What this Division is about............................................................. 189
245‑2..... Simplified outline of this Division.................................................. 189
Subdivision 245‑A—Debts to which operative rules apply 190
Guide to Subdivision 245‑A 190
245‑5..... What this Subdivision is about........................................................ 190
Application of Division 191
245‑10... Commercial debts............................................................................ 191
245‑15... Non‑equity shares........................................................................... 191
245‑20... Parts of debts.................................................................................. 191
Subdivision 245‑B—What constitutes forgiveness of a debt 192
Guide to Subdivision 245‑B 192
245‑30... What this Subdivision is about........................................................ 192
Operative provisions 192
245‑35... What constitutes forgiveness of a debt............................................ 192
245‑36... What constitutes forgiveness of a debt if the debt is assigned......... 193
245‑37... What constitutes forgiveness of a debt if a subscription for shares enables payment of the debt 193
245‑40... Forgivenesses to which operative rules do not apply...................... 193
245‑45... Application of operative rules if forgiveness involves an arrangement 194
Subdivision 245‑C—Calculation of gross forgiven amount of a debt 195
Guide to Subdivision 245‑C 195
245‑48... What this Subdivision is about........................................................ 195
Working out the value of a debt 196
245‑50... Extent of forgiveness if consideration is given................................ 196
245‑55... General rule for working out the value of a debt............................. 196
245‑60... Special rule for working out the value of a non‑recourse debt........ 197
245‑61... Special rule for working out the value of a previously assigned debt 198
Working out if an amount is offset against the value of the debt 199
245‑65... Amount offset against amount of debt............................................ 199
Working out the gross forgiven amount 201
245‑75... Gross forgiven amount of a debt.................................................... 201
245‑77... Gross forgiven amount shared between debtors............................. 202
Subdivision 245‑D—Calculation of net forgiven amount of a debt 202
Guide to Subdivision 245‑D 202
245‑80... What this Subdivision is about........................................................ 202
245‑85... Reduction of gross forgiven amount............................................... 203
245‑90... Agreement between companies under common ownership for creditor to forgo capital loss or deduction 204
Subdivision 245‑E—Application of net forgiven amounts 205
Guide to Subdivision 245‑E 205
245‑95... What this Subdivision is about........................................................ 205
General operative provisions 207
245‑100. Subdivision not to apply to calculation of attributable income......... 207
245‑105. How total net forgiven amount is applied....................................... 207
Reduction of tax losses 208
245‑115. Total net forgiven amount is applied in reduction of tax losses....... 208
245‑120. Allocation of total net forgiven amount in respect of tax losses...... 208
Reduction of net capital losses 208
245‑130. Remaining total net forgiven amount is applied in reduction of net capital losses 208
245‑135. Allocation of remaining total net forgiven amount in respect of net capital losses 209
Reduction of expenditure 209
245‑145. Remaining total net forgiven amount is applied in reduction of expenditure 209
245‑150. Allocation of remaining total net forgiven amount in respect of expenditures 211
245‑155. How expenditure is reduced—straight line deductions................... 211
245‑157. How expenditure is reduced—diminishing balance deductions...... 212
245‑160. Amount applied in reduction of expenditure included in assessable income in certain circumstances 212
Reduction of cost bases of assets 213
245‑175. Remaining total net forgiven amount is applied in reduction of cost bases of CGT assets 213
245‑180. Allocation of remaining total net forgiven amount among relevant cost bases of CGT assets 214
245‑185. Relevant cost bases of investments in associated entities are reduced last 214
245‑190. Reduction of the relevant cost bases of a CGT asset....................... 214
Unapplied total net forgiven amount 215
245‑195. No further consequences if there is any remaining unapplied total net forgiven amount 215
Subdivision 245‑F—Special rules relating to partnerships 216
Guide to Subdivision 245‑F 216
245‑200. What this Subdivision is about........................................................ 216
Operative provisions 216
245‑215. Unapplied total net forgiven amount of a partnership is transferred to partners 216
Subdivision 245‑G—Record keeping 217
245‑265. Keeping and retaining records......................................................... 217
Division 247—Capital protected borrowings 220
Guide to Division 247 220
247‑1..... What this Division is about............................................................. 220
247‑5..... Object of Division........................................................................... 220
247‑10... What capital protected borrowing and capital protection are......... 221
247‑15... Application of this Division............................................................ 221
247‑20... Treating capital protection as a put option....................................... 222
247‑25... Number of put options.................................................................... 224
247‑30... Exercise or expiry of option............................................................ 225
Division 250—Assets put to tax preferred use 226
Guide to Division 250 226
250‑1..... What this Division is about............................................................. 226
Subdivision 250‑A—Objects 227
250‑5..... Main objects.................................................................................... 227
Subdivision 250‑B—When this Division applies to you and an asset 227
Overall test 228
250‑10... When this Division applies to you and an asset.............................. 228
250‑15... General test..................................................................................... 228
250‑20... First exclusion—small business entities.......................................... 229
250‑25... Second exclusion—financial benefits under minimum value limit.. 229
250‑30... Third exclusion—certain short term or low value arrangements..... 230
250‑35... Exceptions to section 250‑30.......................................................... 231
250‑40... Fourth exclusion—sum of present values of financial benefits less than amount otherwise assessable 233
250‑45... Fifth exclusion—Commissioner determination............................... 234
Tax preferred use of asset 235
250‑50... End user of an asset........................................................................ 235
250‑55... Tax preferred end user................................................................... 235
250‑60... Tax preferred use of an asset.......................................................... 236
250‑65... Arrangement period for tax preferred use....................................... 237
250‑70... New tax preferred use at end of arrangement period if tax preferred use continues 238
250‑75... What constitutes a separate asset for the purposes of this Division. 239
250‑80... Treatment of particular arrangements in the same way as leases..... 240
Financial benefits in relation to tax preferred use 240
250‑85... Financial benefits in relation to tax preferred use of an asset........... 240
250‑90... Financial benefit provided directly or indirectly.............................. 243
250‑95... Expected financial benefits in relation to an asset put to tax preferred use 243
250‑100. Present value of financial benefit that has already been provided.... 243
Discount rate to be used in working out present values 244
250‑105. Discount rate to be used in working out present values.................. 244
Predominant economic interest 244
250‑110. Predominant economic interest........................................................ 244
250‑115. Limited recourse debt test................................................................ 245
250‑120. Right to acquire asset test................................................................ 246
250‑125. Effectively non‑cancellable, long term arrangement test.................. 247
250‑130. Meaning of effectively non‑cancellable arrangement....................... 248
250‑135. Level of expected financial benefits test.......................................... 248
250‑140. When to retest predominant economic interest under section 250‑135 249
Subdivision 250‑C—Denial of, or reduction in, capital allowance deductions 251
250‑145. Denial of capital allowance deductions............................................ 251
250‑150. Apportionment rule......................................................................... 251
Subdivision 250‑D—Deemed loan treatment of financial benefits provided for tax preferred use 253
250‑155. Arrangement treated as loan............................................................ 253
250‑160. Financial benefits that are subject to deemed loan treatment........... 256
250‑180. End value of asset........................................................................... 258
250‑185. Financial benefits subject to deemed loan treatment not assessed.... 259
Subdivision 250‑E—Taxation of deemed loan 260
Guide to Subdivision 250‑E 261
250‑190. What this Subdivision is about........................................................ 261
Application and objects of Subdivision 261
250‑195. Application of Subdivision............................................................. 261
250‑200. Objects of this Subdivision............................................................. 262
Tax treatment of gains and losses from financial arrangements 262
250‑205. Gains are assessable and losses deductible..................................... 262
250‑210. Gain or loss to be taken into account only once under this Act....... 262
Method to be applied to take account of gain or loss 263
250‑215. Methods for taking gain or loss into account.................................. 263
General rules 264
250‑220. Consistency in working out gains or losses (integrity measure)..... 264
250‑225. Rights and obligations include contingent rights and obligations.... 264
The accruals method 265
250‑230. Application of accruals method....................................................... 265
250‑235. Overview of the accruals method.................................................... 265
250‑240. Applying accruals method to work out period over which gain or loss is to be spread 265
250‑245. How gain or loss is spread.............................................................. 266
250‑250. Allocating gain or loss to income years........................................... 266
250‑255. When to re‑estimate......................................................................... 267
250‑260. Re‑estimation if balancing adjustment on partial disposal............... 269
Balancing adjustment 271
250‑265. When balancing adjustment made................................................... 271
250‑270. Exception for subsidiary member leaving consolidated group........ 272
250‑275. Balancing adjustment...................................................................... 272
Other provisions 275
250‑280. Financial arrangement received or provided as consideration.......... 275
Subdivision 250‑F—Treatment of asset when Division ceases to apply to the asset 277
250‑285. Treatment of asset after Division ceases to apply to the asset.......... 278
250‑290. Balancing adjustment under Subdivision 40‑D in some circumstances 280
Subdivision 250‑G—Objections against determinations and decisions by the Commissioner 281
250‑295. Objections against determinations and decisions by the Commissioner 281
Division 253—Financial claims scheme for account‑holders with insolvent ADIs 282
Subdivision 253‑A—Tax treatment of entitlements under financial claims scheme 282
Guide to Subdivision 253‑A 282
253‑1..... What this Subdivision is about........................................................ 282
253‑5..... Payment of entitlement under financial claims scheme treated as payment from ADI 283
253‑10... Disposal of rights against ADI to APRA and meeting of financial claims scheme entitlement have no CGT effects........................................................................................................ 283
253‑15... Cost base of financial claims scheme entitlement and any remaining part of account that gave rise to entitlement 284
Part 3‑25—Particular kinds of trusts 285
Division 275—Australian managed investment trusts 285
Guide to Division 275 285
275‑1..... What this Division is about............................................................. 285
Subdivision 275‑A—Extended concept of managed investment trust for the purposes of this Division 285
275‑5..... Treatment of trading trusts etc......................................................... 286
275‑10... Trust with investment management activities outside Australia....... 286
275‑15... Every member of trust is a managed investment trust..................... 286
275‑20... No fund payment made in relation to the income year..................... 287
275‑30... Temporary circumstances outside the control of the trustee............ 287
275‑35... Application of subsections 102L(15) and 102T(16)....................... 288
Subdivision 275‑B—Choice for capital treatment of managed investment trust gains and losses 288
275‑100. Consequences of making choice—CGT to be primary code for calculating MIT gains or losses 288
275‑105. Covered assets................................................................................ 291
275‑110. MIT not to be corporate unit trust or trading trust........................... 292
275‑115. MIT CGT choices........................................................................... 293
275‑120. Consequences of not making choice—revenue account treatment... 294
Subdivision 275‑C—Carried interests in managed investment trusts 294
275‑200. Gains and losses etc. from carried interests in managed investment trusts reflected in assessable income or deduction........................................................................................................ 295
Part 3‑30—Superannuation 297
Division 280—Guide to the superannuation provisions 297
280‑1..... Effect of this Division..................................................................... 297
280‑5..... Overview........................................................................................ 298
Contributions phase 298
280‑10... Contributions phase—deductibility................................................. 298
280‑15... Contributions phase—limits on superannuation tax concessions.... 299
Investment phase 299
280‑20... Investment phase............................................................................. 299
Benefits phase 300
280‑25... Benefits phase—different types of superannuation benefit............. 300
280‑30... Benefits phase—taxation varies with age of recipient and type of benefit 300
280‑35... Benefits phase—roll‑overs.............................................................. 301
The regulatory scheme outside this Act 301
280‑40.. Other relevant legislative schemes................................................... 301
Division 285—General concepts relating to superannuation 302
285‑5..... Transfers of property...................................................................... 302
Division 290—Contributions to superannuation funds 303
Guide to Division 290 303
290‑1..... What this Division is about............................................................. 303
Subdivision 290‑A—General rules 303
290‑5..... Non‑application to roll‑over superannuation benefits etc................ 303
290‑10... No deductions other than under this Division................................. 304
Subdivision 290‑B—Deduction of employer contributions and other employment‑connected contributions 304
Deducting employer contributions 305
290‑60... Employer contributions deductible.................................................. 305
290‑65... Application to employees etc........................................................... 305
Conditions for deducting an employer contribution 306
290‑70... Employment activity conditions...................................................... 306
290‑75... Complying fund conditions............................................................. 306
290‑80... Age related conditions..................................................................... 307
Other employment‑connected deductions 308
290‑85... Contributions for former employees etc.......................................... 308
290‑90... Controlling interest deductions........................................................ 311
290‑95... Amounts offset against superannuation guarantee charge............... 312
Returned contributions 312
290‑100. Returned contributions assessable................................................... 312
Subdivision 290‑C—Deducting personal contributions 313
290‑150. Personal contributions deductible.................................................... 313
Conditions for deducting a personal contribution 314
290‑155. Complying superannuation fund condition..................................... 314
290‑160. Maximum earnings as employee condition..................................... 314
290‑165. Age‑related conditions.................................................................... 315
290‑170. Notice of intent to deduct conditions............................................... 315
290‑175. Deduction limited by amount specified in notice............................. 317
290‑180. Notice may be varied but not revoked or withdrawn....................... 317
Subdivision 290‑D—Tax offsets for spouse contributions 318
290‑230. Offset for spouse contribution........................................................ 318
290‑235. Limit on amount of tax offsets........................................................ 319
290‑240. Tax file number............................................................................... 320
Division 292—Excess contributions tax 321
Guide to Division 292 321
292‑1..... What this Division is about............................................................. 321
Subdivision 292‑A—Object of this Division 321
292‑5..... Object of this Division.................................................................... 321
Subdivision 292‑B—Excess concessional contributions tax 322
292‑10... What this Subdivision is about........................................................ 322
292‑15... Liability for excess concessional contributions tax.......................... 322
292‑20... Your excess concessional contributions for a financial year........... 322
292‑25... Your concessional contributions for a financial year...................... 323
Subdivision 292‑C—Excess non‑concessional contributions tax 324
292‑75... What this Subdivision is about........................................................ 324
Operative provisions 324
292‑80... Liability for excess non‑concessional contributions tax.................. 324
292‑85... Your excess non‑concessional contributions for a financial year.... 324
292‑90... Your non‑concessional contributions for a financial year............... 326
292‑95... Contributions arising from structured settlements or orders for personal injuries 327
292‑100. Contribution relating to some CGT small business concessions..... 329
292‑105. CGT cap amount............................................................................. 331
Subdivision 292‑D—Modifications for defined benefit interests 332
292‑155. What this Subdivision is about........................................................ 332
292‑160. Application...................................................................................... 332
292‑165. Concessional contributions—special rules for defined benefit interests 333
292‑170. Notional taxed contributions........................................................... 333
292‑175. Defined benefit interest.................................................................... 336
Subdivision 292‑E—Excess contributions tax assessments 337
Guide to Subdivision 292‑E 337
292‑225. What this Subdivision is about........................................................ 337
292‑230. Commissioner must make an excess contributions tax assessment. 337
292‑235. Part‑year assessment....................................................................... 338
292‑240. Validity of assessment.................................................................... 338
292‑245. Objections....................................................................................... 339
292‑250. Evidence.......................................................................................... 339
Subdivision 292‑F—Amending excess contributions tax assessments 339
Guide to Subdivision 292‑F 339
292‑300. What this Subdivision is about........................................................ 339
292‑305. Amendments within 4 years of the original assessment.................. 340
292‑310. Amended assessments are treated as excess contributions tax assessments 340
292‑315. Later amendments—on request....................................................... 340
292‑320. Later amendments—fraud or evasion.............................................. 341
292‑325. Further amendment of an amended particular.................................. 341
292‑330. Amendment on review etc............................................................... 342
Subdivision 292‑G—Collection and recovery 342
Guide to Subdivision 292‑G 342
292‑380. What this Subdivision is about........................................................ 342
292‑385. Due date for payment of excess contributions tax........................... 343
292‑390. General interest charge.................................................................... 343
292‑395. Refunds of amounts overpaid......................................................... 343
292‑405. Release authority............................................................................. 343
292‑410. Giving a release authority to a superannuation provider.................. 344
292‑415. Superannuation provider given release authority must pay amount. 345
Subdivision 292‑H—Other provisions 347
292‑465. Commissioner’s discretion to disregard contributions etc. in relation to a financial year 347
292‑470. Power of Commissioner to obtain information............................... 349
Division 295—Taxation of superannuation entities 350
Guide to Division 295 350
295‑1..... What this Division is about............................................................. 350
Subdivision 295‑A—Provisions of general operation 351
295‑5..... Entities to which Division applies................................................... 351
295‑10... How to work out the tax payable by superannuation entities.......... 352
295‑15... Division does not impose a tax on property of a State.................... 353
295‑20... Exempting laws ineffective............................................................. 353
295‑25... Assessments on basis of anticipated SIS Act notice....................... 354
295‑30... Effect of revocation etc. of SIS Act notices..................................... 354
295‑35... Acronyms used in tables................................................................. 354
Subdivision 295‑B—Modifications of provisions of this Act 355
295‑85... CGT to be primary code for calculating gains or losses.................. 355
295‑90... CGT rules for pre‑30 June 1988 assets........................................... 356
295‑95... Deductions related to contributions................................................. 357
295‑100. Deductions for investing in PSTs and life policies.......................... 358
295‑105. Distributions to PST unitholders..................................................... 359
Subdivision 295‑C—Contributions included 359
Guide to Subdivision 295‑C 359
295‑155. What this Subdivision is about........................................................ 359
Contributions and payments 361
295‑160. Contributions and payments............................................................ 361
295‑165. Exception—spouse contributions.................................................... 362
295‑170. Exception—Government co‑contributions and contributions for a child 362
295‑171. Exception—payments from FHSAs and Government FHSA contributions 362
295‑173. Exception—trustee contributions.................................................... 363
295‑175. Exception—payments by a member spouse.................................... 363
295‑180. Exception—choice to exclude certain contributions........................ 363
295‑185. Exception—temporary residents..................................................... 364
Personal contributions and roll‑over amounts 364
295‑190. Personal contributions and roll‑over amounts................................. 364
295‑195. Exclusion of personal contributions—contributions....................... 366
295‑197. Exclusion of personal contributions—successor funds................... 367
Transfers from foreign funds 368
295‑200. Transfers from foreign superannuation funds................................. 368
Application of tables to RSA providers 368
295‑205. Application of tables to RSA providers.......................................... 368
Former constitutionally protected funds 369
295‑210. Former constitutionally protected funds.......................................... 369
Subdivision 295‑D—Contributions excluded 369
295‑260. Transfer of liability to investment vehicle........................................ 369
295‑265. Application of pre‑1 July 88 funding credits................................... 371
295‑270. Anticipated funding credits............................................................. 373
Subdivision 295‑E—Other income amounts 374
Amounts included 374
295‑320. Other amounts included in assessable income................................. 374
295‑325. Previously complying funds........................................................... 376
295‑330. Previously foreign funds................................................................. 376
Amounts excluded 376
295‑335. Amounts excluded from assessable income.................................... 376
Subdivision 295‑F—Exempt income 377
295‑385. Income from assets set aside to meet current pension liabilities...... 377
295‑390. Income from other assets used to meet current pension liabilities... 378
295‑395. Meaning of segregated non‑current assets..................................... 381
295‑400. Income of a PST attributable to current pension liabilities............... 381
295‑405. Other exempt income...................................................................... 382
295‑410. Amount credited to RSA................................................................. 383
Subdivision 295‑G—Deductions 383
Death or disability benefits 383
295‑460. Benefits for which deductions are available.................................... 383
295‑465. Complying funds—deductions for insurance premiums................. 384
295‑470. Complying funds—deductions for future liability to pay benefits... 387
295‑475. RSA providers—deductions for insurance premiums..................... 388
295‑480. Meaning of whole of life policy and endowment policy................... 389
Increased amount of superannuation lump sum death benefits 389
295‑485. Deductions for increased amount of superannuation lump sum death benefit 389
Other deductions 390
295‑490. Other deductions............................................................................. 390
Certain amounts cannot be deducted 394
295‑495. Amounts that cannot be deducted.................................................... 394
Subdivision 295‑H—Components of taxable income 394
295‑545. Components of taxable income—complying superannuation funds, complying ADFs and PSTs 395
295‑550. Meaning of non‑arm’s length income............................................. 395
295‑555. Components of taxable income—RSA providers........................... 397
Subdivision 295‑I—No‑TFN contributions 398
295‑605. Liability for tax on no‑TFN contributions income........................... 398
295‑610. No‑TFN contributions income........................................................ 398
295‑615. Meaning of quoted (for superannuation purposes)........................ 399
295‑620. No reduction under Subdivision 295‑D.......................................... 400
295‑625. Assessments................................................................................... 400
Subdivision 295‑J—Tax offset for no‑TFN contributions income (TFN quoted within 4 years) 401
295‑675. Entitlement to a tax offset................................................................ 401
295‑680. Amount of the tax offset................................................................. 402
Division 301—Superannuation member benefits paid from complying plans etc. 403
Guide to Division 301 403
301‑1..... What this Division is about............................................................. 403
Subdivision 301‑A—Application 403
301‑5..... Division applies to superannuation member benefits paid from complying plans etc. 403
Subdivision 301‑B—Member benefits: general rules 404
Member benefits—recipient aged 60 or above 404
301‑10... All superannuation benefits are tax free.......................................... 404
Member benefits—recipient aged over preservation age and under 60 405
301‑15... Tax free status of tax free component.............................................. 405
301‑20... Superannuation lump sum—taxable component taxed at 0% up to low rate cap amount, 15% on remainder 405
301‑25... Superannuation income stream—taxable component attracts 15% offset 406
Member benefits—recipient aged under preservation age 406
301‑30... Tax free status of tax free component.............................................. 406
301‑35... Superannuation lump sum—taxable component taxed at 20%........ 406
301‑40... Superannuation income stream—taxable component is assessable income, 15% offset for disability benefit 407
Subdivision 301‑C—Member benefits: elements untaxed in fund 407
301‑90... Tax free component and element taxed in fund dealt with under Subdivision 301‑B, but element untaxed in the fund dealt with under this Subdivision............................................................ 408
Member benefits (element untaxed in fund)—recipient aged 60 or above 408
301‑95... Superannuation lump sum—element untaxed in fund taxed at 15% up to untaxed plan cap amount, top rate on remainder........................................................................................................ 408
301‑100. Superannuation income stream—element untaxed in fund attracts 10% offset 409
Member benefits (element untaxed in fund)—recipient aged over preservation age and under 60 409
301‑105. Superannuation lump sum—element untaxed in fund taxed at 15% up to low rate cap amount, 30% up to untaxed plan cap amount, top rate on remainder................................................... 409
301‑110. Superannuation income stream—element untaxed in fund is assessable income 410
Member benefits (element untaxed in fund)—recipient aged under preservation age 410
301‑115. Superannuation lump sum—element untaxed in fund taxed at 30% up to untaxed plan cap amount, top rate on remainder........................................................................................................ 410
301‑120. Superannuation income stream—element untaxed in fund is assessable income 411
301‑125. Unclaimed money payments by the Commissioner......................... 411
Subdivision 301‑D—Departing Australia superannuation payments 411
301‑170. Departing Australia superannuation payments.............................. 411
301‑175. Treatment of departing Australia superannuation benefits............... 413
Subdivision 301‑E—Superannuation lump sum member benefits less than $200 413
301‑225. Superannuation lump sum member benefits less than $200 are tax free 413
Division 302—Superannuation death benefits paid from complying plans etc. 415
Guide to Division 302 415
302‑1..... What this Division is about............................................................. 415
Subdivision 302‑A—Application 415
302‑5..... Division applies to superannuation death benefits paid from complying plans etc. 415
302‑10... Superannuation death benefits paid to trustee of deceased estate..... 416
Subdivision 302‑B—Death benefits to dependant 416
Lump sum death benefits to dependants are tax free 417
302‑60... All of superannuation lump sum is tax free..................................... 417
Superannuation income stream—either deceased died aged 60 or above or dependant aged 60 or above 417
302‑65... Superannuation income stream benefits are tax free........................ 417
Superannuation income stream—deceased died aged under 60 and dependant aged under 60 418
302‑70... Superannuation income stream—tax free status of tax free component 418
302‑75... Superannuation income stream—taxable component attracts 15% offset 418
Death benefits to dependant—elements untaxed in fund 418
302‑80... Treatment of element untaxed in the fund of superannuation income stream death benefit to dependant 418
302‑85... Deceased died aged 60 or above or dependant aged 60 years or above—superannuation income stream: element untaxed in fund attracts 10% offset.............................................................. 419
302‑90... Deceased died aged under 60 and dependant aged under 60—superannuation income stream: element untaxed in fund is assessable income........................................................................... 419
Subdivision 302‑C—Death benefits to non‑dependant 419
Superannuation lump sum 420
302‑140. Superannuation lump sum—tax free status of tax free component.. 420
302‑145. Superannuation lump sum—element taxed in the fund taxed at 15%, element untaxed in the fund taxed at 30% 420
Subdivision 302‑D—Definitions relating to dependants 420
302‑195. Meaning of death benefits dependant.............................................. 421
302‑200. What is an interdependency relationship?....................................... 421
Division 303—Superannuation benefits paid in special circumstances 423
303‑5..... Commutation of income stream if you are under 25 etc.................. 423
303‑10... Superannuation lump sum member benefit paid to member having a terminal medical condition 423
Division 304—Superannuation benefits in breach of legislative requirements etc. 425
Guide to Division 304 425
304‑1..... What this Division is about............................................................. 425
304‑5..... Application...................................................................................... 425
304‑10... Superannuation benefits in breach of legislative requirements etc... 425
304‑15... Excess payments from release authorities....................................... 427
Division 305—Superannuation benefits paid from non‑complying superannuation plans 428
Guide to Division 305 428
305‑1..... What this Division is about............................................................. 428
Subdivision 305‑A—Superannuation benefits from Australian non‑complying superannuation funds 428
305‑5..... Tax treatment of superannuation benefits from certain Australian non‑complying superannuation funds 428
Subdivision 305‑B—Superannuation benefits from foreign superannuation funds 429
Application of Subdivision 429
305‑55... Restriction to lump sums received from certain foreign superannuation funds 429
Lump sums received within 6 months after Australian residency or termination of foreign employment etc. 430
305‑60... Lump sums tax free—foreign resident period................................. 430
305‑65... Lump sums tax free—Australian resident period............................ 431
Lump sums to which sections 305‑60 and 305‑65 do not apply 432
305‑70... Lump sums received more than 6 months after Australian residency or termination of foreign employment etc. 432
305‑75... Lump sums—applicable fund earnings.......................................... 433
305‑80... Lump sums paid into complying superannuation plans—choice..... 435
Division 306—Roll‑overs etc. 436
Guide to Division 306 436
306‑1..... What this Division is about............................................................. 436
Operative provisions 436
306‑5..... Effect of a roll‑over superannuation benefit.................................... 436
306‑10... Roll‑over superannuation benefit.................................................... 436
306‑15... Tax on excess untaxed roll‑over amounts....................................... 437
306‑20... Effect of payment to government of unclaimed superannuation money 438
306‑25... Payments connected with financial claims scheme to RSAs........... 438
Division 307—Key concepts relating to superannuation benefits 441
Guide to Division 307 441
307‑1..... What this Division is about............................................................. 441
Subdivision 307‑A—Superannuation benefits generally 442
307‑5..... What is a superannuation benefit?.................................................. 442
307‑10... Payments that are not superannuation benefits............................... 447
307‑15... Payments for your benefit or at your direction or request............... 448
Subdivision 307‑B—Superannuation lump sums and superannuation income stream benefits 448
307‑65... Meaning of superannuation lump sum........................................... 448
307‑70... Meaning of superannuation income stream and superannuation income stream benefit 448
Subdivision 307‑C—Components of a superannuation benefit 449
307‑120. Components of superannuation benefit........................................... 449
307‑125. Proportioning rule........................................................................... 450
307‑130. Superannuation guarantee payment consists entirely of taxable component 451
307‑135. Superannuation co‑contribution benefit payment consists entirely of tax free component 451
307‑140. Contributions‑splitting superannuation benefit consists entirely of taxable component 452
307‑142. Components of certain unclaimed money payments........................ 452
307‑145. Modification for disability benefits................................................. 455
307‑150. Modification in respect of superannuation lump sum with element untaxed in fund 456
Subdivision 307‑D—Superannuation interests 457
307‑200. Regulations relating to meaning of superannuation interests........... 457
307‑205. Value of superannuation interest..................................................... 458
307‑210. Tax free component of superannuation interest............................... 458
307‑215. Taxable component of superannuation interest............................... 458
307‑220. What is the contributions segment?................................................. 459
307‑225. What is the crystallised segment?.................................................... 460
Subdivision 307‑E—Elements taxed and untaxed in the fund of the taxable component of superannuation benefit 461
307‑275. Element taxed in the fund and element untaxed in the fund of superannuation benefits 461
307‑280. Superannuation benefits from constitutionally protected funds etc.. 461
307‑285. Trustee can choose to convert element taxed in the fund to element untaxed in the fund 462
307‑290. Taxed and untaxed elements of death benefit superannuation lump sums 462
307‑295. Superannuation benefits from public sector superannuation schemes may include untaxed element 463
307‑297. Public sector superannuation schemes—elements set by regulations 464
307‑300. Certain unclaimed money payments................................................ 465
Subdivision 307‑F—Low rate cap and untaxed plan cap amounts 468
307‑345. Low rate cap amount...................................................................... 468
307‑350. Untaxed plan cap amount............................................................... 469
Subdivision 307‑G—Other concepts 470
307‑400. Meaning of service period for a superannuation lump sum............ 470
Division 310—Loss relief for merging superannuation funds 472
Guide to Division 310 472
310‑1..... What this Division is about............................................................. 472
Subdivision 310‑A—Object of this Division 473
310‑5..... Object.............................................................................................. 473
Subdivision 310‑B—Choice to transfer losses 473
310‑10... Original fund’s assets extend beyond life insurance policies and units in pooled superannuation trusts 473
310‑15... Original fund’s assets include a complying superannuation/FHSA life insurance policy 475
310‑20... Original fund’s assets include units in a pooled superannuation trust 477
Subdivision 310‑C—Consequences of choosing to transfer losses 478
310‑25... Who losses can be transferred to..................................................... 478
310‑30... Losses that can be transferred......................................................... 479
310‑35... Effect of transferring a net capital loss............................................ 480
310‑40... Effect of transferring a tax loss....................................................... 481
Subdivision 310‑D—Choice for assets roll‑over 482
310‑45... Choosing the assets roll‑over.......................................................... 482
310‑50... Choosing the form of the assets roll‑over....................................... 483
Subdivision 310‑E—Consequences of choosing assets roll‑over 484
310‑55... CGT assets—if global asset approach chosen................................. 485
310‑60... CGT assets—individual asset approach.......................................... 485
310‑65... Revenue assets—if global asset approach chosen........................... 486
310‑70... Revenue assets—individual asset approach.................................... 487
310‑75... Further consequences for roll‑overs involving life insurance companies 487
Subdivision 310‑F—Choices 487
310‑85... Choices........................................................................................... 488
Part 3‑32—Co‑operatives and mutual entities 489
Division 315—Demutualisation of private health insurers 489
Guide to Division 315 489
315‑1..... What this Division is about............................................................. 489
Subdivision 315‑A—Capital gains and losses connected with a demutualisation of a private health insurer to be disregarded 490
Rules for policy holders 491
315‑5..... Policy holders to disregard capital gains and losses related to demutualisation of private health insurer 491
315‑10... Effect on the legal personal representative or beneficiary................ 491
315‑15... Demutualisations to which this Division applies............................. 491
315‑20... What assets are covered.................................................................. 492
Rules for demutualising health insurer 492
315‑25... Demutualising health insurers to disregard capital gains and losses related to demutualisation 492
Rules for other entities 493
315‑30... Other entities to disregard capital gains and losses related to demutualisation 493
Subdivision 315‑B—Cost base of certain shares and rights in private health insurers 493
315‑80... Cost base and acquisition time of demutualisation assets................ 493
315‑85... Demutualisation asset...................................................................... 494
315‑90... Participating policy holders............................................................. 495
Subdivision 315‑C—Lost policy holders trust 495
315‑140. Lost policy holders trust.................................................................. 495
315‑145. CGT treatment of demutualisation assets in lost policy holders trust 496
315‑150. Roll‑over where assets transferred to lost policy holder.................. 497
315‑155. Trustee assessed if assets dealt with not for benefit of lost policy holder 497
315‑160. Subdivision 126‑E does not apply to lost policy holders trust........ 498
Subdivision 315‑D—Special cost base rules for certain shares and rights in holding companies 498
315‑210. Cost base for shares and rights in certain holding companies......... 498
Subdivision 315‑E—Special CGT rule for legal personal representatives and beneficiaries 500
315‑260. Special CGT rule for legal personal representatives and beneficiaries 500
Subdivision 315‑F—Non‑CGT consequences of demutualisation 501
315‑310. General taxation consequences of issue of demutualisation assets etc. 501
Division 316—Demutualisation of friendly society health or life insurers 502
Guide to Division 316 502
316‑1..... What this Division is about............................................................. 502
Subdivision 316‑A—Application 502
316‑5..... Application of this Division............................................................ 502
Subdivision 316‑B—Capital gains and losses connected with the demutualisation 503
Guide to Subdivision 316‑B 503
316‑50... What this Subdivision is about........................................................ 503
Gains and losses of members, insured entities and successors 504
316‑55... Disregarding capital gains and losses, except some involving receipt of money 504
316‑60... Taking account of some capital gains and losses involving receipt of money 505
316‑65... Valuation factor for sections 316‑60, 316‑105 and 316‑165........... 506
316‑70... Value of the friendly society........................................................... 507
Friendly society’s gains and losses 509
316‑75... Disregarding friendly society’s capital gains and losses................. 509
Other entities’ gains and losses 509
316‑80... Disregarding other entities’ capital gains and losses....................... 509
Subdivision 316‑C—Cost base of shares and rights issued under the demutualisation 509
Guide to Subdivision 316‑C 509
316‑100. What this Subdivision is about........................................................ 509
316‑105. Cost base and time of acquisition of shares and certain rights issued under demutualisation 510
316‑110. Demutualisation assets.................................................................... 511
316‑115. Entities to which section 316‑105 applies....................................... 511
Subdivision 316‑D—Lost policy holders trust 512
Guide to Subdivision 316‑D 512
316‑150. What this Subdivision is about........................................................ 512
Application 513
316‑155. Lost policy holders trust.................................................................. 513
Effects of CGT events happening to interests and assets in trust 514
316‑160. Disregarding beneficiaries’ capital gains and losses, except some involving receipt of money 514
316‑165. Taking account of some capital gains and losses involving receipt of money by beneficiaries 514
316‑170. Roll‑over where shares or rights to acquire shares transferred to beneficiary of lost policy holders trust 515
316‑175. Trustee assessed if shares or rights dealt with not for benefit of beneficiary of lost policy holders trust 516
316‑180. Subdivision 126‑E does not apply.................................................. 516
Subdivision 316‑E—Special CGT rules for legal personal representatives and beneficiaries 517
316‑200. Demutualisation assets not owned by deceased but passing to beneficiary in deceased estate 517
316‑205. Interest in lost policy holders trust not owned by deceased but passing to beneficiary in deceased estate 518
Subdivision 316‑F—Non‑CGT consequences of the demutualisation 518
Guide to Subdivision 316‑F 518
316‑250. What this Subdivision is about........................................................ 518
316‑255. General taxation consequences of issue of demutualisation assets etc. 519
316‑260. Franking debits to stop the friendly society and its subsidiaries having franking surpluses 520
316‑265. Franking debits to negate franking credits from some distributions to friendly society and subsidiaries 520
316‑270. Franking debits to negate franking credits from post‑demutualisation payments of pre‑demutualisation tax 521
316‑275. Franking credits to negate franking debits from refunds of tax paid before demutualisation 521
Part 3‑35—Insurance business 522
Division 320—Life insurance companies 522
Guide to Division 320 522
320‑1..... What this Division is about............................................................. 522
Operative provisions 524
Subdivision 320‑A—Preliminary 524
320‑5..... Object of Division........................................................................... 524
Subdivision 320‑B—What is included in a life insurance company’s assessable income 525
Guide to Subdivision 320‑B 525
320‑10... What this Subdivision is about........................................................ 525
320‑15... Assessable income—various amounts............................................ 525
320‑30... Assessable income—special provision for certain income years..... 527
320‑35... Exempt income................................................................................ 528
320‑37... Non‑assessable non‑exempt income............................................... 528
320‑45... Tax treatment of gains or losses from CGT events in relation to complying superannuation/FHSA assets 531
Subdivision 320‑C—Deductions and capital losses 531
Guide to Subdivision 320‑C 531
320‑50... What this Subdivision is about........................................................ 531
Operative provisions 532
320‑55... Deduction for life insurance premiums where liabilities under life insurance policies are to be discharged from complying superannuation/FHSA assets.......................................................... 532
320‑60... Deduction for life insurance premiums where liabilities under life insurance policies are to be discharged from segregated exempt assets.................................................................................. 533
320‑65... Deduction for life insurance premiums in respect of life insurance policies that provide for participating or discretionary benefits............................................................................................ 533
320‑70... No deduction for life insurance premiums in respect of certain life insurance policies payable only on death or disability........................................................................................................ 533
320‑75... Deduction for ordinary investment policies..................................... 534
320‑80... Deduction for certain claims paid under life insurance policies....... 534
320‑85... Deduction for increase in value of liabilities under net risk components of life insurance policies 535
320‑87... Deduction for assets transferred from or to complying superannuation/FHSA asset pool 536
320‑100. Deduction for life insurance premiums paid under certain contracts of reinsurance 537
320‑105. Deduction for assets transferred to segregated exempt assets......... 537
320‑107. Deductions for increased amount of lump sum death benefit.......... 537
320‑110. Deduction for interest credited to income bonds............................. 538
320‑111. Deduction for funeral policy payout................................................ 539
320‑112. Deduction for scholarship plan payout............................................ 539
320‑115. No deduction for amounts credited to RSAs................................... 540
320‑120. Capital losses from assets other than complying superannuation/FHSA assets or segregated exempt assets 540
320‑125. Capital losses from complying superannuation/FHSA assets......... 540
Subdivision 320‑D—Income tax, taxable income and tax loss of life insurance companies 541
Guide to Subdivision 320‑D 541
320‑130. What this Subdivision is about........................................................ 541
320‑131. Overview of Subdivision................................................................ 541
General rules 543
320‑133. Object of Subdivision..................................................................... 543
320‑134. Income tax of a life insurance company.......................................... 543
320‑135. Taxable income and tax loss of each of the 2 classes...................... 544
Taxable income and tax loss of life insurance companies 545
320‑137. Taxable income—complying superannuation/FHSA class............. 545
320‑139. Taxable income—ordinary class..................................................... 547
320‑141. Tax loss—complying superannuation/FHSA class......................... 548
320‑143. Tax loss—ordinary class................................................................. 549
320‑149. Provisions that apply only in relation to the ordinary class............. 550
Subdivision 320‑E—No‑TFN contributions of life insurance companies that are RSA providers 550
Guide to Subdivision 320‑E 550
320‑150. What this Subdivision is about........................................................ 550
Operative provisions 551
320‑155. Subdivisions 295‑I and 295‑J apply to companies that are RSA providers 551
Subdivision 320‑F—Complying superannuation/FHSA asset pool 551
Guide to Subdivision 320‑F 551
320‑165. What this Subdivision is about........................................................ 551
320‑170. Establishment of complying superannuation/FHSA asset pool....... 552
320‑175. Valuations of complying superannuation/FHSA assets and complying superannuation/FHSA liabilities for each valuation time.................................................................................. 553
320‑180. Consequences of a valuation under section 320‑175....................... 554
320‑185. Transfer of assets to complying superannuation/FHSA asset pool otherwise than as a result of a valuation under section 320‑175............................................................................... 555
320‑190. Complying superannuation/FHSA liabilities................................... 556
320‑195. Transfer of assets and payment of amounts from a complying superannuation/FHSA asset pool otherwise than as a result of a valuation under section 320‑175..................................... 557
320‑200. Consequences of transfer of assets to or from complying superannuation/FHSA asset pool 558
Subdivision 320‑H—Segregation of assets to discharge exempt life insurance policy liabilities 560
Guide to Subdivision 320‑H 560
320‑220. What this Subdivision is about........................................................ 560
Operative provisions 561
320‑225. Segregation of assets for purpose of discharging exempt life insurance policy liabilities 561
320‑230. Valuations of segregated exempt assets and exempt life insurance policy liabilities for each valuation time 562
320‑235. Consequences of a valuation under section 320‑230....................... 563
320‑240. Transfer of assets to segregated exempt assets otherwise than as a result of a valuation under section 320‑230 564
320‑245. Exempt life insurance policy liabilities............................................ 565
320‑246. Exempt life insurance policy........................................................... 566
320‑247. Policy split into an exempt life insurance policy and another life insurance policy 568
320‑250. Transfer of assets and payment of amounts from segregated exempt assets otherwise than as a result of a valuation under section 320‑230............................................................................... 569
320‑255. Consequences of transfer of assets to or from segregated exempt assets 570
Subdivision 320‑I—Transfers of business 573
Guide to Subdivision 320‑I 573
320‑300. What this Subdivision is about........................................................ 573
Operative provisions 574
320‑305. When this Subdivision applies........................................................ 574
320‑310. Special deductions and amounts of assessable income.................... 574
320‑315. Complying superannuation/FHSA asset pool and segregated exempt assets 575
320‑320. Certain amounts treated as life insurance premiums........................ 575
320‑325. Friendly societies............................................................................ 576
320‑330. Immediate annuities......................................................................... 576
320‑335. Parts of assets treated as separate assets.......................................... 576
320‑340. Continuous disability policies......................................................... 577
320‑345. Exemption of management fees....................................................... 578
Division 321—General insurance companies and companies that self‑insure in respect of workers’ compensation liabilities 579
Subdivision 321‑A—Provision for, and payment of, claims by general insurance companies 579
321‑10... Assessable income to include amount for reduction in outstanding claims liability 579
321‑15... Deduction for increase in outstanding claims liability..................... 580
321‑20... How value of outstanding claims liability is worked out................. 580
321‑25... Deduction for claims paid during current year................................ 581
Subdivision 321‑B—Premium income of general insurance companies 581
321‑45... Assessable income to include gross premiums............................... 581
321‑50... Assessable income to include amount for reduction in value of unearned premium reserve 581
321‑55... Deduction for increase in value of unearned premium reserve........ 582
321‑60... How value of unearned premium reserve is worked out................. 582
Subdivision 321‑C—Companies that self‑insure in respect of workers’ compensation liabilities 584
321‑80... Assessable income to include amount for reduction in outstanding claims liability 584
321‑85... Deduction for outstanding claims liability....................................... 584
321‑90... How value of outstanding claims liability is worked out................. 585
321‑95... Deductions for claims paid during current year............................... 585
Division 322—Assistance for policyholders with insolvent general insurers 586
Guide to Division 322 586
322‑1..... What this Division is about............................................................. 586
Subdivision 322‑A—HIH rescue package 586
322‑5..... Rescue payments treated as insurance payments by HIH................ 586
322‑10... HIH Trust exempt from tax............................................................. 587
322‑15... Certain capital gains and capital losses disregarded......................... 587
Subdivision 322‑B—Tax treatment of entitlements under financial claims scheme 587
Guide to Subdivision 322‑B 587
322‑20... What this Subdivision is about........................................................ 587
Operative provisions 588
322‑25... Payment of entitlement under financial claims scheme treated as payment from insurer 588
322‑30... Disposal of rights against insurer to APRA and meeting of financial claims scheme entitlement have no CGT effects........................................................................................................ 589
Part 3‑45—Rules for particular industries and occupations 590
Division 328—Small business entities 590
Guide to Division 328 590
328‑5..... What this Division is about............................................................. 590
328‑10... Concessions available to small business entities............................. 591
Subdivision 328‑B—Objects of this Division 592
328‑50... Objects of this Division.................................................................. 592
Subdivision 328‑C—What is a small business entity 593
Guide to Subdivision 328‑C 593
328‑105. What this Subdivision is about........................................................ 593
Operative provisions 593
328‑110. Meaning of small business entity.................................................... 593
328‑115. Meaning of aggregated turnover.................................................... 595
328‑120. Meaning of annual turnover........................................................... 596
328‑125. Meaning of connected with an entity............................................... 597
328‑130. Meaning of affiliate......................................................................... 600
Subdivision 328‑D—Capital allowances for small business entities 600
Guide to Subdivision 328‑D 600
328‑170. What this Subdivision is about........................................................ 600
Operative provisions 602
328‑175. Calculations for depreciating assets................................................. 602
328‑180. Low cost assets............................................................................... 604
328‑185. Pooling............................................................................................ 605
328‑190. Calculation...................................................................................... 607
328‑195. Opening pool balance...................................................................... 608
328‑200. Closing pool balance....................................................................... 609
328‑205. Estimate of taxable use.................................................................... 610
328‑210. Low pool value............................................................................... 612
328‑215. Disposal etc. of depreciating assets................................................. 613
328‑220. What happens if you are not a small business entity or do not choose to use this Subdivision for an income year 614
328‑225. Change in business use................................................................... 614
328‑230. Estimate where deduction denied.................................................... 617
328‑235. Interaction with Divisions 85 and 86.............................................. 618
328‑243. Roll‑over relief................................................................................ 618
328‑245. Consequences of roll‑over.............................................................. 619
328‑247. Pool deductions............................................................................... 619
328‑250. Deductions for assets first used in BAE year.................................. 620
328‑253. Deductions for cost addition amounts............................................. 621
328‑255. Closing pool balance etc. below zero.............................................. 622
328‑257. Taxable use..................................................................................... 623
Subdivision 328‑E—Trading stock for small business entities 624
Guide to Subdivision 328‑E 624
328‑280. What this Subdivision is about........................................................ 624
Operative provisions 624
328‑285. Trading stock for small business entities......................................... 624
328‑295. Value of trading stock on hand....................................................... 625
Division 345—FHSAs 626
Guide to Division 345 626
345‑1..... What this Division is about............................................................. 626
Subdivision 345‑A—Treatment of FHSA providers 626
345‑5..... FHSA provider that is trustee of FHSA trust—tax payable............ 627
345‑10... FHSA provider that is trustee of FHSA trust—CGT to be primary code for calculating gains or losses 627
345‑15... FHSA provider that is an ADI (other than RSA provider)—taxable income and standard component of taxable income........................................................................................................ 628
345‑20... FHSA provider that is an ADI—FHSA component of taxable income 629
345‑25... FHSA provider that is an ADI (other than an RSA provider)—amounts that cannot be deducted 629
345‑30... Amounts of tax paid by FHSA providers that are ADIs................. 629
Subdivision 345‑B—Treatment of FHSA holders 630
345‑50... Credits to and payments from FHSAs etc....................................... 630
Subdivision 345‑C—FHSA misuse tax 630
345‑100. Liability for FHSA misuse tax........................................................ 630
345‑110. Due date for payment of FHSA misuse tax.................................... 631
345‑115. General interest charge.................................................................... 631
Division 355—Research and Development 632
Guide to Division 355 632
355‑1..... What this Division is about............................................................. 632
Subdivision 355‑A—Object 633
355‑5..... Object.............................................................................................. 633
Subdivision 355‑B—Meaning of R&D activities and other terms 633
355‑20... R&D activities................................................................................. 633
355‑25... Core R&D activities........................................................................ 634
355‑30... Supporting R&D activities.............................................................. 635
355‑35... R&D entities.................................................................................... 635
Subdivision 355‑C—Entitlement to tax offset 636
355‑100. Entitlement to tax offset................................................................... 636
355‑105. Deductions under this Division are notional only........................... 638
355‑110. Notional deductions include prepaid expenditure............................ 639
Subdivision 355‑D—Notional deductions for R&D expenditure 639
355‑200. What this Subdivision is about........................................................ 639
355‑205. When notional deductions for R&D expenditure arise.................... 640
355‑210. Conditions for R&D activities......................................................... 640
355‑215. R&D activities conducted by a permanent establishment for other parts of the body corporate 642
355‑220. R&D activities conducted for a foreign entity................................. 642
355‑225. Expenditure that cannot be notionally deducted............................... 644
Subdivision 355‑E—Notional deductions for decline in value of depreciating assets used for R&D activities 645
355‑300. What this Subdivision is about........................................................ 645
355‑305. When notional deductions for decline in value arise........................ 645
355‑310. Notional application of Division 40................................................ 646
355‑315. Balancing adjustments—assets only used for R&D activities......... 647
Subdivision 355‑F—Integrity Rules 649
355‑400. Expenditure incurred while not at arm’s length............................... 649
355‑405. Expenditure not at risk.................................................................... 650
355‑410. Disposal of R&D results................................................................. 651
355‑415. Reducing deductions to reflect mark‑ups within groups................. 652
Subdivision 355‑G—Clawback of R&D recoupments 654
355‑430. What this Subdivision is about........................................................ 654
355‑435. When extra income tax is payable................................................... 654
355‑440. Entity receives government recoupment.......................................... 654
355‑445. Recoupment could relate to R&D activities..................................... 655
355‑450. Amount on which extra income tax is payable................................ 655
Subdivision 355‑H—Feedstock adjustments 656
355‑460. What this Subdivision is about........................................................ 657
355‑465. Feedstock adjustment to assessable income.................................... 657
355‑470. Feedstock revenue........................................................................... 658
355‑475. Application to connected entities and affiliates................................ 658
Subdivision 355‑I—Application to earlier income year R&D expenditure incurred to associates 659
355‑480. Notional deductions for expenditure incurred to associate in earlier income years 659
Subdivision 355‑J—Application to R&D partnerships 660
355‑500. What this Subdivision is about........................................................ 661
355‑505. Meaning of R&D partnership and partner’s proportion................ 661
355‑510. R&D partnership expenditure on R&D activities............................ 661
355‑515. R&D activities conducted by or for an R&D partnership................ 662
355‑520. When notional deductions arise for decline in value of depreciating assets of R&D partnerships 663
355‑525. Balancing adjustments for R&D partnership assets only used for R&D activities 664
355‑530. Implications for partner’s aggregated turnover................................ 666
355‑535. Disposal of R&D results for R&D partnerships............................. 666
355‑540. Application of recoupment rules..................................................... 667
355‑545. Relevance for net income, and losses, of the R&D partnership....... 668
Subdivision 355‑K—Application to Cooperative Research Centres 668
355‑580. When notional deductions for CRC contributions arise.................. 668
Subdivision 355‑W—Other matters 669
355‑700. Objecting to assessment of refundable tax offset............................ 670
355‑705. Effect of findings by Innovation Australia...................................... 670
355‑710. Amendment of assessments............................................................ 671
355‑715. Implications for other deductions and tax offsets............................ 673
Division 376—Films generally (tax offsets for Australian production expenditure) 675
Subdivision 376‑A—Guide to Division 376 675
376‑1..... What this Division is about............................................................. 675
376‑2..... Key features of the tax offsets for Australian production expenditure on films 675
376‑5..... Structure of this Division................................................................ 676
Subdivision 376‑B—Tax offsets for Australian expenditure in making a film 677
Refundable tax offset for Australian expenditure in making a film (location offset) 678
376‑10... Film production company entitled to refundable tax offset for Australian expenditure in making a film (location offset)........................................................................................................ 678
376‑15... Amount of the location offset.......................................................... 679
376‑20... Minister must issue certificate for a film for the location offset....... 679
376‑30... Minister to determine a company’s qualifying Australian production expenditure for the location offset 682
Refundable tax offset for post, digital and visual effects production for a film (PDV offset) 682
376‑35... Film production company entitled to refundable tax offset for post, digital and visual effects production for a film (PDV offset).............................................................................................. 682
376‑40... Amount of the PDV offset.............................................................. 684
376‑45... Minister must issue certificate for a film for the PDV offset........... 684
376‑50... Minister to determine a company’s qualifying Australian production expenditure for the PDV offset 686
Refundable tax offset for Australian expenditure in making an Australian film (producer offset) 686
376‑55... Film production company entitled to refundable tax offset for Australian expenditure in making an Australian film (producer offset)............................................................................. 686
376‑60... Amount of the producer offset........................................................ 689
376‑65... Film authority must issue certificate for an Australian film for the producer offset 689
376‑70... Determination of content of film..................................................... 694
376‑75... Film authority to determine a company’s qualifying Australian production expenditure for the producer offset 694
Subdivision 376‑C—Production expenditure and qualifying Australian production expenditure 696
Production expenditure—common rules 697
376‑125. Production expenditure—general test.............................................. 697
376‑130. Production expenditure—special qualifying Australian production expenditure 698
376‑135. Production expenditure—specific exclusions.................................. 699
Production expenditure—special rules for the location offset 701
376‑140. Production expenditure—special rules for the location offset......... 701
Qualifying Australian production expenditure—common rules 702
376‑145. Qualifying Australian production expenditure—general test........... 702
376‑150. Qualifying Australian production expenditure—specific inclusions 702
376‑155. Qualifying Australian production expenditure—specific exclusions 704
376‑160. Qualifying Australian production expenditure—treatment of services embodied in goods 704
Qualifying Australian production expenditure—special rules for the location offset and the PDV offset 705
376‑165. Qualifying Australian production expenditure—special rules for the location offset and the PDV offset 705
Qualifying Australian production expenditure—special rules for the producer offset 706
376‑170. Qualifying Australian production expenditure—special rules for the producer offset 706
Expenditure generally—common rules 710
376‑175. Expenditure to be worked out on an arm’s length basis.................. 710
376‑180. Expenditure incurred by prior production companies...................... 710
376‑185. Expenditure to be worked out excluding GST................................ 712
Subdivision 376‑D—Certificates for films and other matters 712
376‑230. Production company may apply for certificate................................ 712
376‑235. Notice of refusal to issue certificate................................................. 713
376‑240. Issue of certificate........................................................................... 713
376‑245. Revocation of certificate.................................................................. 715
376‑250. Notice of decision or determination................................................. 716
376‑255. Review of decisions by the Administrative Appeals Tribunal......... 717
376‑260. Minister may make rules about the location offset and the PDV offset 717
376‑265. Film authority may make rules about the producer offset................ 718
376‑270. Amendment of assessments............................................................ 719
376‑275. Review in relation to certain production levels................................ 719
Division 380—National Rental Affordability Scheme 720
Guide to Division 380 720
380‑1..... What this Division is about............................................................. 720
Subdivision 380‑A—National Rental Affordability Scheme Tax Offset 720
NRAS certificates issued to individuals, corporate tax entities and superannuation funds 721
380‑5..... Claims by individuals, corporate tax entities and superannuation funds 721
NRAS certificates issued to NRAS approved participants 722
380‑10... Members of NRAS consortiums—individuals, corporate tax entities and superannuation funds 722
380‑11... Elections by NRAS approved participants...................................... 723
380‑12... Elections by NRAS approved participants—tax offsets.................. 724
380‑13... Elections by NRAS approved participants—special rule for partnerships and trustees 725
380‑14... Members of NRAS consortiums—partnerships and trustees......... 726
NRAS certificates issued to partnerships and trustees 727
380‑15... Entities to whom NRAS rent flows indirectly................................. 727
380‑16... Elections by NRAS approved participants that are partnerships or trustees 728
380‑17... Elections by NRAS approved participants that are partnerships or trustees—tax offsets 729
380‑18... Elections by NRAS approved participants that are partnerships or trustees—special rule for partnerships and trustees........................................................................................................ 731
380‑20... Trustee of a trust that does not have net income for an income year 732
380‑25... When NRAS rent flows indirectly to or through an entity.............. 733
380‑30... Share of NRAS rent........................................................................ 735
380‑32... Amended certificates....................................................................... 738
Subdivision 380‑B—Payments made in relation to the National Rental Affordability Scheme etc. 739
380‑35... Payments made and non‑cash benefits provided in relation to the National Rental Affordability Scheme 739
Division 385—Primary production 740
Guide to Division 385 740
385‑1..... What this Division is about............................................................. 740
385‑5..... Where to find some other rules relevant to primary producers........ 740
Subdivision 385‑E—Primary producer can elect to spread or defer tax on profit from forced disposal or death of live stock 741
Guide to Subdivision 385‑E 741
385‑90... What this Subdivision is about........................................................ 741
385‑95... Basic principles for elections under this Subdivision...................... 742
Operative provisions 742
385‑100. Cases where you can make an election............................................ 742
385‑105. Election to spread tax profit over 5 years........................................ 744
385‑110. Alternative election to defer tax profit and reduce cost of replacement live stock 744
385‑115. Your assessable income includes an amount for replacement live stock you breed 745
385‑120. Purchase price of replacement live stock is reduced........................ 745
385‑125. Alternative election because of bovine tuberculosis has effect over 10 years not 5 746
Subdivision 385‑F—Insurance for loss of live stock or trees 746
385‑130. Insurance for loss of live stock or trees........................................... 746
Subdivision 385‑G—Double wool clips 747
385‑135. Election to defer including profit on second wool clip.................... 747
Subdivision 385‑H—Rules that apply to all elections made under Subdivisions 385‑E, 385‑F and 385‑G 748
385‑145. Partnerships and trusts.................................................................... 748
385‑150. Time for making election................................................................. 748
385‑155. Amounts are assessable income from carrying on the primary production business 749
385‑160. Effect of certain events on election.................................................. 749
385‑163. Disentitling events........................................................................... 750
385‑165. New partnership can elect to be treated as same entity as old partnership 751
385‑170. New partnership can elect to take advantage of election made by former owner of the business 752
Division 392—Long‑term averaging of primary producers’ tax liability 753
Guide to Division 392 753
392‑1..... What this Division is about............................................................. 753
392‑5..... Overview of averaging process....................................................... 753
Subdivision 392‑A—Is your income tax affected by averaging? 756
392‑10... Individuals who carry on a primary production business................ 756
392‑15... Meaning of basic taxable income.................................................... 757
392‑20... Trust beneficiaries taken to be carrying on primary production business 758
392‑22... Trustee may choose that a beneficiary is a chosen beneficiary of the trust 759
392‑25... Choosing not to have your income tax averaged............................. 760
Subdivision 392‑B—What kind of averaging adjustment must you make? 760
Guide to Subdivision 392‑B 760
392‑30... What this Subdivision is about........................................................ 760
Tax offset or extra income tax 761
392‑35... Will you get a tax offset or have to pay extra income tax?............... 761
How to work out the comparison rate 763
392‑40... Identify income years for averaging your basic taxable income...... 763
392‑45... Work out your average income for those years............................... 763
392‑50... Work out the income tax on your average income at basic rates...... 764
392‑55... Work out the comparison rate......................................................... 764
Subdivision 392‑C—How big is your averaging adjustment? 764
Guide to Subdivision 392‑C 764
392‑60... What this Subdivision is about........................................................ 764
392‑65... What your averaging adjustment reflects......................................... 765
Your gross averaging amount 766
392‑70... Working out your gross averaging amount..................................... 766
Your averaging adjustment 767
392‑75... Working out your averaging adjustment......................................... 767
How to work out your averaging component 767
392‑80... Work out your taxable primary production income......................... 767
392‑85... Work out your taxable non‑primary production income.................. 768
392‑90... Work out your averaging component.............................................. 769
Subdivision 392‑D—Effect of permanent reduction of your basic taxable income 770
392‑95... You are treated as if you had not carried on business before.......... 771
Division 393—Farm management deposits 772
Guide to Division 393 772
393‑1..... What this Division is about............................................................. 772
Subdivision 393‑A—Tax consequences of farm management deposits 773
393‑5..... Deduction for making farm management deposit............................ 773
393‑10... Assessability on repayment of deposit............................................ 774
393‑15... Transactions to which the deduction, assessment and 12 month rules have modified application 777
Subdivision 393‑B—Meaning of farm management deposit and owner 778
393‑20... Farm management deposits............................................................. 778
393‑25... Owners of farm management deposits............................................ 779
393‑27... Trustee may choose that a beneficiary is a chosen beneficiary of the trust 781
393‑28... Application of Division to beneficiary no longer under legal disability 782
393‑30... Effect of contravening requirements................................................ 782
393‑35... Requirements of agreement for a farm management deposit........... 782
393‑40... Repayment of deposit within first 12 months.................................. 784
393‑45... Partly repaid farm management deposits......................................... 786
Subdivision 393‑C—Special rules relating to financial claims scheme for account‑holders with insolvent ADIs 787
Guide to Subdivision 393‑C 787
393‑50... What this Subdivision is about........................................................ 787
Operative provisions 787
393‑55... Farm management deposits arising from farm management deposits with ADIs subject to financial claims scheme........................................................................................................ 787
393‑60... Repayment if owner of farm management deposit with insolvent ADI dies, is bankrupt or ceases to be a primary producer.......................................................................................... 790
Division 394—Forestry managed investment schemes 792
Guide to Division 394 792
394‑1..... What this Division is about............................................................. 792
394‑5..... Object of this Division.................................................................... 792
394‑10... Deduction for amounts paid under forestry managed investment schemes 793
394‑15... Forestry managed investment schemes and related concepts........... 794
394‑20... Payments on behalf of participant in forestry managed investment scheme 795
394‑25... CGT event in relation to forestry interest in forestry managed investment scheme—initial participant 795
394‑30... CGT event in relation to forestry interest in forestry managed investment scheme—subsequent participant 796
394‑35... 70% DFE rule................................................................................. 798
394‑40... Payments under forestry managed investment scheme.................... 799
394‑45... Direct forestry expenditure.............................................................. 799
Division 402—Environment protection expenditure 802
Guide to Division 402 802
402‑1..... What this Division is about............................................................. 802
Subdivision 402‑W—Urban water tax offset 802
Guide to Subdivision 402‑W 802
402‑750. What this Subdivision is about........................................................ 802
402‑755. Entitlement to urban water tax offset............................................... 803
402‑760. Certificates...................................................................................... 803
402‑765. Amount of urban water tax offset................................................... 804
402‑770. Revoking certificates....................................................................... 805
402‑775. AAT review.................................................................................... 806
402‑780. Guidelines....................................................................................... 806
Division 405—Above‑average special professional income of authors, inventors, performing artists, production associates and sportspersons 807
Guide to Division 405 807
405‑1..... What this Division is about............................................................. 807
405‑5..... Special rate of income tax on your above‑average special professional income 808
405‑10... Overview of the Division................................................................ 809
Subdivision 405‑A—Above‑average special professional income 810
405‑15... When do you have above‑average special professional income?..... 810
Subdivision 405‑B—Assessable professional income 811
405‑20... What you count as assessable professional income........................ 811
405‑25... Meaning of special professional, performing artist, production associate, sportsperson and sporting competition........................................................................................................ 813
405‑30... What you cannot count as assessable professional income............. 815
405‑35... Limits on counting amounts as assessable professional income...... 816
405‑40... Joint author or inventor treated as sole author or inventor............... 817
Subdivision 405‑C—Taxable professional income and average taxable professional income 817
405‑45... Working out your taxable professional income............................... 817
405‑50... Working out your average taxable professional income.................. 818
Division 410—Copyright and resale royalty collecting societies 820
Guide to Division 410 820
410‑1..... What this Division is about............................................................. 820
Subdivision 410‑A—Notice of payments 820
410‑5..... Copyright collecting society must give notice to member of society 820
410‑50... Resale royalty collecting society must give notice to holder of resale royalty right 821
Division 230—Taxation of financial arrangements
230‑A Core rules
230‑B The accruals/realisation methods
230‑C Fair value method
230‑D Foreign exchange retranslation method
230‑E Hedging financial arrangements method
230‑F Reliance on financial reports
230‑G Balancing adjustment on ceasing to have a financial arrangement
230‑H Exceptions
230‑I Other provisions
230‑J Additional operation of Division
230‑1 What this Division is about
230‑5 Scope of this Division
(1) You have a financial arrangement if you have one or more cash settlable legal or equitable rights and/or obligations to receive or provide a financial benefit.
(2) This Division does not apply to all financial arrangements. The main exceptions are if:
(iv) the arrangement is to end not more than 12 months after you start to have it; or
(b) the arrangement is a financial arrangement under section 230‑50 (equity interests etc.) and neither a fair value election, a hedging financial arrangement election nor an election to rely on financial reports applies to the arrangement.
Note: Section 230‑455 provides for the exceptions referred to in paragraph (a).
Subdivision 230‑A—Core rules
230‑10 Objects of this Division
230‑15 Gains are assessable and losses deductible
230‑20 Gain or loss to be taken into account only once under this Act
230‑25 Associated financial benefits to be taken into account only once under this Act
230‑30 Treatment of gains and losses related to exempt income and non‑assessable non‑exempt income
230‑35 Treatment of gains and losses of private or domestic nature
230‑40 Methods for taking gain or loss into account
230‑45 Financial arrangement
230‑50 Financial arrangement (equity interest or right or obligation in relation to equity interest)
230‑55 Rights, obligations and arrangements (grouping and disaggregation rules)
230‑60 When financial benefit provided or received under financial arrangement
230‑65 Amount of financial benefit relating to more than one financial arrangement etc.
230‑70 Apportionment when financial benefit received or right ceases
230‑75 Apportionment when financial benefit provided or obligation ceases
230‑80 Consistency in working out gains or losses (integrity measure)
230‑85 Rights and obligations include contingent rights and obligations
(1) Your assessable income includes a gain you make from a *financial arrangement.
Note: This Division does not apply to gains that are subject to exceptions under Subdivision 230‑H.
(2) You can deduct a loss you make from a *financial arrangement, but only to the extent that:
Note: This Division does not apply to losses that are subject to exceptions under Subdivision 230‑H.
(3) You can also deduct a loss you make from a *financial arrangement if:
(c) the income is *non‑assessable non‑exempt income under section 23AI, 23AJ or 23AK of the Income Tax Assessment Act 1936; and
(d) the loss is, in whole or in part, a cost in relation to a *debt interest you issue that is covered by paragraph 820‑40(1)(a).
You can deduct the loss only to the extent to which it is a cost in relation to a *debt interest you issue that is covered by paragraph 820‑40(1)(a).
(4) If the *financial arrangement is a *debt interest, the loss is not prevented from being deductible for an income year under subsection (2) merely because of either or both of the following:
(a) one or more of the *financial benefits that are taken into account in working out the amount of the loss are *contingent on the economic performance (whether past, current or future) of:
(5) Subject to subsection (6), subsection (4) does not apply to the loss to the extent to which the annually compounded internal rate of return on the *debt interest exceeds the *benchmark rate of return for the debt interest increased by 150 basis points.
(a) regulations made for the purposes of subsection 25‑85(6) provide that a specified number of basis points is to apply for the purposes of applying subsection 25‑85(5) in particular circumstances; and
(7) Nothing in this Division affects the operation of the provisions of Division 6 that provide for the significance of foreign residence for the assessability of ordinary and statutory income.
Note 1: Gains that you make under this Division may be ordinary or statutory income for the purposes of Division 6.
Note 2: For the effect of a change of residence during an income year, see sections 230‑485 and 230‑490.
(c) a gain or a loss that is dealt with in accordance with subsection 230‑310(4) in relation to an income year.
(2) The purpose of this section is to ensure that your gains and losses, and *financial benefits, to which this section applies are taken into account only once under this Act in working out your taxable income.
Gain or loss to be taken into account only once
(3) A gain or loss to which this section applies is not to be (to any extent):
(c) dealt with in accordance with subsection 230‑310(4);
(4) A gain or loss to which this section applies is not to be (to any extent):
(5) A gain is not to be treated as *exempt income merely because it is not included in your assessable income under this section.
(1) This section applies to a *financial benefit whose amount or value is taken into account in working out whether you make, or the amount of, a gain or loss to which paragraph 230‑20(1)(a), (b) or (c) applies.
Associated financial benefit to be taken into account only once
(2) A *financial benefit to which this section applies is not to be (to any extent):
(b) a bad debt deduction would have been allowed under section 25‑35 in relation to the financial benefit;
subsection (2) does not prevent that bad debt deduction from being allowed under section 25‑35 in relation to the financial benefit as if the debt were still outstanding.
(4) A *financial benefit is not to be treated as *exempt income merely because it is not included in your assessable income under this section.
(1) Despite section 230‑15, a gain that you make from a *financial arrangement:
(a) to the extent that it reflects an amount that would be treated, or would reasonably expected to be treated, as *exempt income under a provision of this Act if this Division were disregarded—is exempt income; and
(b) to the extent that it reflects an amount that would be treated or would reasonably expected to be treated, as *non‑assessable non‑exempt income under a provision of this Act if this Division were disregarded—is not assessable income and is not exempt income.
(2) Despite section 230‑15, a gain that you make from a *financial arrangement:
(a) to the extent that, if it had been a loss, you would have made it in gaining or producing *exempt income—is exempt income; and
(b) to the extent to which, if it had been a loss, you would have made it in gaining or producing *non‑assessable non‑exempt income—is not assessable income and is not exempt income.
(3) A loss you make from a *financial arrangement is not allowable as a deduction to you under any provision of this Act (other than subsection 230‑15(3)) to the extent that you make it in gaining or producing your:
(b) *non‑assessable non‑exempt income.
(2) This Division does not apply to a gain you make from the arrangement to the extent that you use the funds raised or the credit provided for a private or domestic purpose.
(3) A loss you make from the arrangement is not allowable as a deduction to you under any provision of this Act to the extent that you use the funds raised or the credit provided for a private or domestic purpose.
Derivative financial arrangement held for private or domestic purpose
(5) This Division does not apply to a gain you make from the arrangement to the extent that the arrangement is held or used for a private or domestic purpose.
(6) A loss you make from the arrangement is not allowable as a deduction to you under any provision of this Act to the extent that the arrangement is held or used for a private or domestic purpose.
(1) The methods that can be applied to take account of a gain or loss you make from a *financial arrangement are:
(a) the accruals and realisation methods provided for in Subdivision 230‑B; or
(b) the fair value method provided for in Subdivision 230‑C; or
(c) the foreign exchange retranslation method provided for in Subdivision 230‑D; or
(d) the hedging financial arrangement method provided for in Subdivision 230‑E; or
(e) the method of relying on your financial reports provided for in Subdivision 230‑F; or
(f) a balancing adjustment provided for in Subdivision 230‑G.
Note: The methods referred to in paragraphs (b) to (e) only apply if you make an election under the relevant Subdivision and you must meet certain requirements before you can make such an election.
(2) A gain or loss is not taken into account under any of the methods referred to in paragraphs (1)(a), (b), (c) and (e) to the extent to which it is taken into account under the method referred to in paragraph (1)(f) (balancing adjustment).
(3) A gain or loss is not taken into account under the method referred to in paragraph (1)(f) (balancing adjustment) to the extent to which it is taken into account under the method referred to in paragraph (1)(d) (hedging financial arrangement method).
Note: The hedging financial arrangement method may take some account of the gain or loss by reference to the balancing adjustment method (see subsection 230‑300(5)).
(4) Subdivision 230‑B (accruals and realisation method) does not apply to a gain or loss you make from a *financial arrangement:
(a) if Subdivision 230‑C (fair value method) applies to the arrangement; or
(b) to the extent that Subdivision 230‑D (foreign exchange retranslation method) applies to the gain or loss; or
(c) to the extent that Subdivision 230‑E (hedging financial arrangements method) applies to the arrangement; or
(d) if Subdivision 230‑F (method of relying on financial reports) applies to the arrangement; or
(e) if the arrangement is a financial arrangement under section 230‑50 (equity interests etc.).
(5) Subdivision 230‑C (fair value method) does not apply to a gain or loss you make from a *financial arrangement:
(a) to the extent that Subdivision 230‑E (hedging financial arrangements method) applies to the arrangement; or
(b) if Subdivision 230‑F (method of relying on financial reports) applies to the arrangement.
(6) Subdivision 230‑D (foreign exchange retranslation method) does not apply to a gain or loss you make from a *financial arrangement:
(b) to the extent that Subdivision 230‑E (hedging financial arrangements method) applies to the arrangement; or
(c) if Subdivision 230‑F (method of relying on financial reports) applies to the arrangement.
(7) Subdivision 230‑F (method of relying on financial reports) does not apply to a gain or loss you make from a *financial arrangement to the extent that Subdivision 230‑E (hedging financial arrangements method) applies to the arrangement.
(1) You have a financial arrangement if you have, under an *arrangement:
Note 1: Whether your rights and/or obligations under an arrangement constitute a financial arrangement can change over time depending on changes either to the terms of the arrangement or external circumstances (such as particular rights or obligations under the arrangement being satisfied by the parties). For example, a contract may provide for the transfer of a boat in 6 months time and payment of the contract price at the end of 2 years. Until the boat is delivered, there is no financial arrangement because of the operation of paragraphs (d), (e) and (f) above. Once the boat is delivered, there is a financial arrangement because those paragraphs are no longer applicable.
Note 2: The operative provisions of this Division do not apply to all financial arrangements, and only apply partially to some: see the exceptions in Subdivision 230‑H.
Note 3: There are some rules in this Division that tell you what happens if an arrangement ceases to be a financial arrangement (see Subdivision 230‑G and section 230‑505).
(2) A right you have to receive, or an obligation you have to provide, a *financial benefit is cash settlable if, and only if:
(b) in the case of a right—you intend to satisfy or settle it by receiving money or a money equivalent or by starting to have, or ceasing to have, another *financial arrangement; or
(c) in the case of an obligation—you intend to satisfy or settle it by providing money or a money equivalent or by starting to have, or ceasing to have, another financial arrangement; or
(e) you deal with the right or obligation, or with similar rights or obligations, in order to generate a profit from short‑term fluctuations in price, from a dealer’s margin, or from both; or
A reference in paragraph (b) or (c) to a financial arrangement does not include a reference to something that is a financial arrangement under section 230‑50.
Note: Examples of dealing of the kind covered by paragraph (e) are:
(a) dealing with the right or obligation, or similar rights or obligations, on a frequent basis, a short‑term basis or on a frequent and short‑term basis; and
(3) You satisfy this subsection if:
(1) You also have a financial arrangement if you have an *equity interest. The equity interest constitutes the financial arrangement.
(2) You also have a financial arrangement if:
(a) you have, under an *arrangement:
(i) a legal or equitable right to receive something that is a financial arrangement under this section; or
(ii) a legal or equitable obligation to provide something that is a financial arrangement under this section; or
(iii) a combination of one or more such rights and/or obligations; and
(b) the right, obligation or combination does not constitute, or form part of, a financial arrangement under subsection 230‑45(1).
Note 1: Paragraph 230‑40(4)(e) prevents the accruals method or the realisation method being applied to something that is a financial arrangement under this section.
Note 2: Subsection 230‑270(1) prevents the retranslation method being applied to something that is a financial arrangement under this section.
Note 3: Subsection 230‑330(1) prevents the hedging method being applied to something that is a financial arrangement under this section.
(1) If you have a right to receive 2 or more *financial benefits, you are taken, for the purposes of this Division, to have a separate right to receive each of those financial benefits.
(2) If you have an obligation to provide 2 or more *financial benefits, you are taken, for the purposes of this Division, to have a separate obligation to provide each of those financial benefits.
(3) Subsections (1) and (2) apply for the avoidance of doubt.
Matters relevant to determining what rights and/or obligations constitute particular arrangements
(4) For the purposes of this Division, whether a number of rights and/or obligations are themselves an *arrangement or are 2 or more separate arrangements is a question of fact and degree that you determine having regard to the following:
Example 1: Your rights and obligations under a typical convertible note, including the right to convert the note into a share or shares, would constitute one arrangement.
Example 2: Your rights and obligations under a typical price‑linked or index‑linked bond would constitute one arrangement.
Note 1: If you raised funds by means of a contract that you would not have entered into without entering into another contract, and neither contract could be assigned to a third party without the other also being assigned, this would tend to indicate that your rights and obligations under the 2 contracts together constitute one arrangement.
Note 2: If the commercial effect of your individual rights and/or obligations in a group or series cannot be understood without reference to the group or series as a whole, this would tend to indicate that all of your rights and/or obligations in the group or series together constitute one arrangement.
(1) You are taken, for the purposes of this Division, to have (or to have had) an obligation to provide a *financial benefit under a *financial arrangement if:
Note: This means that the financial benefits you provide to acquire the financial arrangement (whether to the issuer, a previous holder or a third party) are taken to be financial benefits you provide under the arrangement. The financial benefits you provide may include, for example, fees paid or the forgoing of rights to receive a financial benefit.
(2) You are taken, for the purposes of this Division, to have (or to have had) a right to receive a *financial benefit under a *financial arrangement if:
Note: The financial benefits you receive may include, for example, the waiving of an obligation you have to provide a financial benefit.
(a) a *financial benefit plays the integral role mentioned in paragraph 230‑60(1)(c) or (2)(c) in relation to a *financial arrangement; and
(2) For the purposes of this Division, determine the amount of the *financial benefit that plays that role in relation to a particular *financial arrangement by apportioning the actual amount of the financial benefit, on a reasonable basis, between:
(1) Apply subsection (2) in working out whether you make, or will make, a gain or loss (and the amount of the gain or loss) at a time when:
(2) You must have regard to the extent to which the *financial benefits that you have provided, or are to provide, under the *financial arrangement are reasonably attributable, at the time mentioned in subsection (1), to the benefit or right referred to in paragraph (1)(a) or (b).
(3) Any attribution made under subsection (2) must reflect appropriate and commercially accepted valuation principles that properly take into account:
(4) Despite subsection (2), no *financial benefit that you have provided, or are to provide, under the *financial arrangement is to be attributed to the benefit or right referred to in paragraph (1)(a) or (b) if:
(a) you are working out the amount of a gain or loss for the purposes of Subdivision 230‑B; and
Note 1: An example of something in the nature of interest is a discount on a security.
Note 2: An example of something that could reasonably be regarded as being a substitute for interest is a lump sum payment received instead of payments of interest.
(2) You must have regard to the extent to which the *financial benefits that you have received, or are to receive, under the *financial arrangement are reasonably attributable, at the time mentioned in subsection (1), to the benefit or obligation referred to in paragraph (1)(a) or (b).
(4) Despite subsection (2), no *financial benefit that you have received, or are to receive, under the *financial arrangement is to be attributed to the benefit or obligation referred to in paragraph (1)(a) or (b) if:
Note 2: An example of something that could reasonably be regarded as being a substitute for interest is a lump sum payment made instead of payments of interest.
(1) The object of this section is to stop you obtaining an inappropriate tax benefit from not working out your gains and losses in a consistent manner.
(a) this Division provides that a particular method applies to gains or losses you make from a *financial arrangement; and
(a) this Division provides that a particular method applies to gains or losses you make from 2 or more *financial arrangements; and
Subdivision 230‑B—The accruals/realisation methods
Guide to Subdivision 230‑B
230‑90 What this Subdivision is about
230‑95 Objects of this Subdivision
230‑100 When accruals method or realisation method applies
230‑105 Sufficiently certain overall gain or loss
230‑110 Sufficiently certain gain or loss from particular event
230‑115 Sufficiently certain financial benefits
230‑120 Financial arrangements with notional principal
230‑125 Overview of the accruals method
230‑130 Applying accruals method to work out period over which gain or loss is to be spread
230‑135 How gain or loss is spread
230‑140 Method of spreading gain or loss—effective interest method
230‑145 Application of effective interest method where differing income and accounting years
230‑150 Election for portfolio treatment of fees
230‑155 Election for portfolio treatment of fees where differing income and accounting years
230‑160 Portfolio treatment of fees
230‑165 Portfolio treatment of premiums and discounts for acquiring portfolio
230‑170 Allocating gain or loss to income years
230‑175 Running balancing adjustments
230‑180 Realisation method
Reassessment and re‑estimation
230‑185 Reassessment
230‑190 Re‑estimation
230‑195 Balancing adjustment if rate of return maintained on re‑estimation
230‑200 Re‑estimation if balancing adjustment on partial disposal
A change in circumstances may also cause a re‑estimation of gains and losses that the accruals method is being applied to.
(1) This section tells you when to apply the accruals method and when to apply the realisation method if this Subdivision applies to gains and losses from a *financial arrangement.
Accruals method—sufficiently certain overall gain or loss at start time
(2) The accruals method provided for in this Subdivision applies to a gain or loss you make from a *financial arrangement if:
Note: Subsection 230‑105(1) tells you when you have a sufficiently certain overall gain or loss.
Accruals method—sufficiently certain particular gain or loss
(3) The accruals method provided for in this Subdivision also applies to a gain or loss you make from a *financial arrangement if:
(i) is sufficiently certain at the time when you start to have the arrangement and before you are to receive or provide the benefit; or
Note: Subsection 230‑110(1) tells you when you have a sufficiently certain gain or loss at a particular time.
(4) Subsection (3) does not apply to a gain or loss that you make from a *financial arrangement if:
(ii) an entity (other than an individual) that satisfies subsection 230‑455(2), (3) or (4) for the income year in which you start to have the arrangement; and
(c) you have not made an election under subsection 230‑455(7).
Realisation method—gain or loss not sufficiently certain
(5) The realisation method provided for in this Subdivision applies to a gain or loss that you make from a *financial arrangement if the accruals method provided for in this Subdivision does not apply to that gain or loss.
Note: Section 230‑180 tells you how to apply the realisation method to the gain or loss.
(1) You have a sufficiently certain overall gain or loss from a *financial arrangement at the time when you start to have the arrangement only if it is sufficiently certain at that time that you will make an overall gain or loss from the arrangement of:
Note: Sections 230‑70 and 230‑75 (about apportionment of financial benefits) only apply in working out whether you make, or will make, a gain or loss (and the amount of the gain or loss) when particular events happen. They do not apply in working out, at the time when you start to have a financial arrangement, whether it is sufficiently certain that you will make an overall gain or loss from the arrangement.
(2) In applying subsection (1), you must:
(1) You have a sufficiently certain gain or loss from a *financial arrangement at a particular time if it is sufficiently certain at that time that you will make a gain or loss from the arrangement of:
(2) In applying subsection (1) to work out whether you have a sufficiently certain gain or loss at a particular time:
(a) have regard to the extent of the risk that a *financial benefit that you are not sufficiently certain to provide or receive under the arrangement may reduce the amount of the gain or loss; and
(b) disregard any financial benefit that has already been taken into account in working out the amount of a sufficiently certain overall gain or loss from the *financial arrangement under subsection 230‑105(1) at the time when you started to have the arrangement; and
Note: Sections 230‑70 and 230‑75 allow you to apportion financial benefits provided and financial benefits received in working out the amount of a gain or loss.
(2) A *financial benefit that you are to receive or provide is to be treated as one that you are sufficiently certain to receive or to provide only if:
(3) In applying subsection (2) to the *financial benefit:
(4) In applying paragraph (2)(b) at a particular time (the reference time) to a *financial benefit that depends on a variable that is based on:
(5) Despite subsection (4), in applying paragraph (2)(b) at a particular time to a *financial benefit that depends on a rate of change to a variable that is based on:
(6) If subsection (4) or (5) applies to a gain or loss and you are determining the amount of the gain or loss at a particular time, you must also assume that that variable will continue to have the value that it has at that time.
(7) Subsections (4) and (5) do not limit paragraph (2)(b).
(1) This section applies to a *financial arrangement that you have if, in substance or effect, and having regard to the pricing, terms and conditions of the arrangement:
(iii) if the arrangement includes one or more other things—those things; and
Example: A swap contract.
(2) To avoid doubt, the *financial benefits mentioned in subparagraphs (1)(a)(i) and (ii), and the notional principal in relation to each leg, need not actually be provided or received.
(3) In applying this Subdivision to the *financial arrangement:
(i) if the thing is a leg—take into account the amount of the notional principal at a time and in a manner that properly reflects the way in which the financial benefits in respect of that leg are calculated; and
(ii) if the thing is not a leg—take into account an amount relevant to the thing at a time and in a manner that properly reflects the way in which the financial benefits in respect of that thing are calculated.
If the accruals method applies to a gain or loss you make from a *financial arrangement:
(a) you use section 230‑130 to work out the period over which the gain or loss is to be spread; and
(b) you use section 230‑135 to work out how to allocate the gain or loss to particular intervals within the period over which the gain or loss is to be spread; and
(c) if an interval to which part of the gain or loss is allocated straddles 2 income years, you use section 230‑170 to work out how to allocate that part of the gain or loss allocated between those 2 income years.
(1) If you have a sufficiently certain overall gain or loss from a *financial arrangement under subsection 230‑105(1), the period over which the gain or loss is to be spread is the period that:
(2) However, if you have sufficiently certain gains or losses from the arrangement that:
(3) If you have a sufficiently certain gain or loss from a *financial arrangement under subsection 230‑110(1), the period over which the gain or loss is to be spread is the period to which the gain or loss relates. Have regard to the pricing, terms and conditions of the arrangement in working out the period to which the gain or loss relates. This subsection has effect subject to subsections (4) and (5).
(4) The start of the period over which a gain or loss to which subsection (3) applies is to be spread must:
(b) not start earlier than the start of the income year during which it becomes sufficiently certain that you will make the gain or loss.
(5) The end of the period over which a gain or loss to which subsection (3) applies is to be spread must: