Income Tax Assessment Act 1997

s 13-1 — List of tax offsets

The provisions set out in the list allow you a tax offset. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936. Aboriginal study assistance see social security and other benefit payments annual leave see leave payments annuity see superannuation approved deposit funds (ADFs) see dividends attribution managed investment trusts non ‑ resident beneficiary ................ 276 ‑ 110 averaging see primary production bonuses see life assurance child increased tax payable under Part III Division 6AA, unreasonable 102AH trust income .............................. 100(2) corporate unit trusts see dividends critical minerals .................................... Division 419 Cyclone Larry or Cyclone Monica income support payment see social security and other benefit payments defence force members serving overseas .................... 79B dependants invalid relative, invalid spouse or carer in receipt of carer benefit Subdivision 61 ‑ A dividends general ................................. 207 ‑ 20(2), 207 ‑ 45, 207 ‑ 110(2)(c), 210 ‑ 170(1) early stage venture capital limited partnerships contributions to ESVCLPs......................................... Subdivision 61 ‑ P employment termination employment termination payments ............... 82 ‑ 10 82 ‑ 70 see leave payments , superannuation and sections 82 ‑ 10A and 82 ‑ 10C of the Income Tax (Transitional Provisions) Act 1997 Equine Workers Hardship Wage Supplement Payment see social security and other benefit payments exploration for minerals junior minerals exploration incentive ............. Subdivision 418 ‑ B film .................................... Division 376 foreign income tax foreign income tax paid, tax offset for ............. Division 770 franking deficit tax liabilities to pay ............................ 205 ‑ 70 franked dividends see dividends hardship see child housing National Rental Affordability. .................. Division 380 hydrogen production .................................... Division 421 imputation see dividends and franking deficit tax innovation companies certain shares issued to early stage investors ......... Subdivision 360 ‑ A inter ‑ corporate dividends see dividends interest tax paid on by company ...................... 127 interim income support payment see social security and other benefit payments invalid relative see dependants labour income .................................... Subdivision 61 ‑ E leave payments unused annual leave payment .......... .............. 83 ‑ 15 unused long service leave payment ............... 83 ‑ 85 see employment termination legal disability see trusts life assurance bonus, receipt of ........................... 160AAB life insurance company subsidiary joining consolidated group ............. 713 ‑ 545(5) long service leave see leave payments losses loss carry back ............................ Division 160 low income earner aged or pensioner beneficiary , trustee liable to be assessed for beneficiary’s share of net income of trust estate 160AAAB aged person or pensioner ...................... 160AAAA general ................................. Subdivision 61 ‑ D lump sum income arrears receipt of ................................ 159ZRA, 159ZRB , Subdivision 61 ‑ L non ‑ resident beneficiary see trusts non ‑ resident trust estate see trusts overseas defence force service see defence force partnerships see dividends , housing and small business entities pension see social security and other benefit payments pooled superannuation trusts (PSTs) see dividends primary production averaging of income, trustees .................. 156 averaging of tax liability, individuals ............. 392 ‑ 35(2) farm household allowance see social security and other benefit payments interim income support payments see social security and other benefit payments private health insurance ...................................... Subdivision 61–G public trading trust see dividends public unit trust see dividends R&D Division 355 residents of isolated areas see zone small business small business income ....................... Subdivision 328 ‑ F social security and other benefit payments Aboriginal study assistance scheme .............. 160AAA(3) children, assistance for isolated ................. 160AAA(3) Cyclone Larry or Cyclone Monica income support payment 160AAA(3) Disaster income support allowance for special category visa (subclass 444) holders 160AAA(3) Equine Workers Hardship Wage Supplement Payment .. 160AAA(3) farm household allowance under the Farm Household Support Act 2014 see unemployment and other benefit payments under the Social Security Act 1991 interim income support payment ................. 160AAA(3) pension, social security pension and veteran’s pension .. 160AAAA textile, clothing and footwear allowance ............ 160AAA(3) unemployment and other benefit payments under the Social Security Act 1991 160AAA(3) superannuation generally ................................ Divisions 301 and 302 associated earnings on non ‑ concessional contributions Subdivision 292 ‑ B spouse contributions ........................ Subdivision 290 ‑ D death benefits ............................. 302 ‑ 75 302 ‑ 85 302 ‑ 145 excess concessional contributions ................ 291 ‑ 15(b) first home super saver scheme .................. 313 ‑ 25 member benefits ........................... 301 ‑ 20 301 ‑ 25 301 ‑ 35 301 ‑ 40 301 ‑ 95 301 ‑ 100 301 ‑ 105 301 ‑ 115 TFN quoted to superannuation or RSA provider after no ‑ TFN contributions tax paid 295 ‑ 675 veterans’ invalidity pensions ................... Subdivision 301 ‑ F termination payments see employment termination , leave payments and superannuation trustee see dividends , low income earner and trusts trusts beneficiary in a foreign trust ................... 98B non ‑ resident beneficiary ................ 98A(2)(a) trust income of beneficiary with legal disability ....... 100(2) trust income (modifications for special disability trusts) . 95AB(5) see also dividends , housing and small business entities United Nations forces salary, wages and allowances from service as a member of 23AB(7) unemployment benefits see social security and other benefit payments unit trusts see dividends winding ‑ up of non ‑ resident trust estates see trusts withholding payments made by companies to Australian seafarers .......... Subdivision 61 ‑ N zone residents of isolated areas ..................... 79A

Amendment history: Amended by No 56 of 1997, effective Sch 2 (items 7–10): 1 July 1997 (s 2(4)) | Amended by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 179 of 1997, effective Sch 2 (items 12–26) and Sch 3 (item 4): 25 Nov 1997 (s 2) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 47 of 1998, effective Schedule 1 (items 2, 4): 1 July 1998 Remainder: Royal Assent | Amended by No 91 of 1998, effective Sch 1 (items 1–13, 19): 14 July 1998 (s 2(1)) | Amended by No 102 of 1998, effective 30 July 1998 | Amended by No 128 of 1998, effective 21 Dec 1998 | Amended by No 60 of 1999, effective 9 July 1999 ( see s. 2) | Amended by No 83 of 1999, effective Sch 10 (items 24–54, 68(1), 69): 1 July 2000 (s 2(2)) | Amended by No 144 of 2000, effective Sch 2 (items 7–19) and Sch 3 (items 7(3), 8): 18 Dec 2000 (s 2(2) and gaz 2000, No S634) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 170 of 2001, effective Sch 2 (items 28–44, 51): 12 pm (A.C.T.) 29 Jan 2001 (s 2(2)) Sch 2 (items 69–84, 92): 30 June 2001 (s 2(3)) Sch 3 (items 11–13, 19(1)): 1 Oct 2001 (s 2(1)) | Amended by No 32 of 2002, effective 30 May 2002 | Amended by No 57 of 2002, effective Sch 2: 1 July 2002 (s 2(1) item 3) Sch 4 (items 3, 4): 1 July 2000 (s 2(1) item 5) Sch 4 (items 5–8), Sch 7, Sch 9 (items 9, 11, 12, 15–20, 22–40, 45), Sch 11 (items 2–5), Sch 12 (items 16–18, 20, 25, 26): 3 July 2002 (s 2(1) items 6, 7, 9, 11, 13, 15, 16, 18, 28, 30, 33) Sch 9 (items 10, 13, 14, 21) and Sch 12 (items 23, 24): 1 July 1997 (s 2(1) items 10, 12, 14, 32) Sch 12 (item 19): 30 June 1998 (s 2(1) item 29) Sch 12 (items 21, 22): 22 June 1998 (s 2(1) item 31) Sch 12 (items 27, 28): 16 Apr 1998 (s 2(1) item 34) Sch 12 (item 29): 19 Sept 1997 (s 2(1) item 35) | Amended by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Amended by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 77 of 2005, effective 29 June 2005 | Amended by No 160 of 2005, effective Schedule 1 (items 1–10, 14(1)) and Schedule 2 (items 1–12): Royal Assent | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 80 of 2006, effective Schedule 1 (items 2–4), Schedule 2, Schedule 4 (items 1, 5–9, 14, 20, 23–30), Schedule 5, Schedule 6 (items 3–7) and Schedule 11 (items 1, 2, 4–24): Royal Assent Schedule 3 (items 2–5): 30 June 2006 (s 2(1) item 3) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 32 of 2007, effective Schedule 2 (item 52): 1 Apr 2007 ( see s. 2(1)) Schedule 3 (items 7A, 8, 9, 9A–9C): 1 July 2007 | Amended by No 79 of 2007, effective Schedule 1 (items 28, 29, 39–42, 43(1), (6)), Schedules 3, 4, Schedule 6 (items 3–8), Schedule 9 (items 14–26, 30, 34) and Schedule 10 (items 10–13, 32): Royal Assent Schedule 8 (items 2, 12–25, 26(1)–(3)): 1 July 2007 | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6) | Amended by No 38 of 2008, effective Schedule 1, Schedules 3–6, Schedule 7 (items 1–3, 5), Schedule 8 (items 1–11), Schedule 9 (items 2–4), Schedule 10, Schedule 12 and Schedule 13: 24 June 2008 Schedule 8 (items 12–21): 1 July 2012 | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 130 of 2008, effective 1 July 2008 | Amended by No 141 of 2008, effective Schedule 1 (items 2–5, 10): Royal Assent | Amended by No 42 of 2009, effective Schedule 1 (items 17–26), Schedule 2 (items 2–16, 19–39, 41–48), Schedule 4 (items 2–12), Schedule 5 (items 1–12, 15) and Schedule 8 (items 1, 2, 5): Royal Assent Sch 2 (item 1): 21 June 2007 (s 2(1) item 3) Schedule 3: 1 July 2009 Schedule 8 (items 3, 4): 1 July 2011 | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011 | Amended by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4) | Amended by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent | Amended by No 159 of 2011, effective Schedule 3 (items 17–21, 24): 1 July 2012 | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29) | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 50 of 2012, effective Schedule 3: 27 May 2012 | Amended by No 57 of 2012, effective Schedules 1–3: Royal Assent | Amended by No 75 of 2012, effective Schedule 3 and Schedule 4 (items 1–10, 20): Royal Assent | Amended by No 84 of 2013, effective s 4, Sch 1 (items 2–9, 19–23), Sch 2, Sch 3, Sch 6 and Sch 8 (items 27–32): 28 June 2013 (s 2(1) items 1, 2, 4) | Amended by No 85 of 2013, effective s 4, Sch 1, Sch 2 (items 1–3), Sch 4 (items 1–11) and Sch 7 (items 1, 7–10): 28 June 2013 (s 2(1) items 1–3, 7, 10) Sch 2 (item 6): 1 July 2016 (s 2(1) item 4) Sch 2 (items 7–9): 1 July 2017 (s 2(1) item 5) Sch 4 (items 12, 13): 1 July 2022 (s 2(1) item 8) Sch 4 (items 14, 15): 1 July 2023 (s 2(1) item 9) Sch 8 (items 1–48, 55–64): 26 Mar 2009 (s 2(1) item 11) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 118 of 2013, effective Sch 1 (items 1, 4–11, 16–26, 38–79, 88–96, 110): 29 June 2013 (s 2(1) items 2–5, 11) Sch 1 (item 97): 1 July 2013 (s 2(1) item 6) | Amended by No 11 of 2014, effective Sch 3 (items 7, 8): 1 July 2019 (s 2(1) item 6) Sch 4 (items 1–7): 18 Mar 2014 (s 2(1) item 7) Sch 4 (items 8, 9): 17 Dec 2018 (s 2(1) item 8) | Amended by No 13 of 2014, effective Sch 2 (items 33–56): 1 July 2014 (s 2(1) item 3) Sch 2 (items 143, 144): 26 Feb 2014 (s 2(1) item 8) Sch 2 (items 147–149): 1 Oct 2014 (s 2(1) item 9) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9) | Amended by No 20 of 2015, effective Sch 1 (items 1–3, 6): 20 Mar 2015 (s 2(1) item 2) Sch 4: 19 Mar 2015 (s 2(1) item 3) | Amended by No 21 of 2015, effective s 4 and Sch 6 (items 1, 2, 16–25, 73): 19 Mar 2015 (s 2(1) items 1, 7–11, 13) Sch 1 (items 1–17, 49), Sch 3 and Sch 7 (items 13–21): 20 Mar 2015 (s 2(1) items 2, 4, 15) Sch 4 (items 1–5, 9–17): 1 July 2015 (s 2(1) item 5) Sch 6 (items 51–59, 74–79): never commences (s 2(1) items 12, 14) | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015 | Amended by No 114 of 2015, effective Sch 1 and 2: 26 Aug 2015 (s 2(1) item 1) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4) | Amended by No 54 of 2016, effective Sch 1 (items 1, 12–14, 19) and Sch 2 (items 1–5, 8–14, 20–34, 44–51, 53–56, 63–74, 76): 1 July 2016 (s 2(1) items 2–5, 7) | Amended by No 25 of 2017, effective Sch 3 (items 1–11) and Sch 4 (items 3–5): 5 Apr 2017 (s 2(1) items 4, 6) Sch 3 (items 12–14): 1 Sept 2017 (s 2(1) item 5) | Amended by No 132 of 2017, effective Sch 1 (items 6–12, 21, 27–31): 1 July 2018 (s 2(1) item 2) Sch 2 (items 1–5, 7): 1 Jan 2018 (s 2(1) item 3) | Amended by No 4 of 2018, effective Sch 6 (items 9–20, 27): 21 Feb 2018 (s 2(1) item 1) | Amended by No 15 of 2018, effective Sch 1 (items 1–6A, 11–26, 65–67): 1 Apr 2018 (s 2(1) items 2, 4) Sch 1 (items 42–52, 68–73): repealed before commencing (s 2(1) items 3, 5) | Amended by No 26 of 2018, effective Sch 1 (items 14–23, 342–354), Sch 2 (items 3–6, 82–93), Sch 3 (items 5–8, 98–111) and Sch 4 (items 1–7, 105–110): 20 Mar 2020 (s 2(1) items 2, 4–6) Sch 5 (items 32–39, 139–148): 20 Sept 2020 (s 2(1) item 8) Sch 6 (items 6–8, 63–72) and Sch 7 (items 2–6, 68–77): 1 Jan 2022 (s 2(1) items 10, 11) | Amended by No 47 of 2018, effective Sch 1 (items 1, 6, 7): 1 July 2018 (s 2(1) item 2) Sch 1 (items 11–15, 19, 20): repealed before commencing (s 2(1) item 3) | Amended by No 49 of 2019, effective Sch 3 (item 1) and Sch 4 (items 71–94, 111): 1 July 2019 (s 2(1) items 10, 12) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7) | Amended by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5) | Amended by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5) | Amended by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 15-1 — What this Division is about

This Division sets out some items that are included in your assessable income. Remember that the general rules about assessable income in Division 6 apply to these items. Table of sections Operative provisions 15 ‑ 2 Allowances and other things provided in respect of employment or services 15 ‑ 3 Return to work payments 15 ‑ 5 Accrued leave transfer payments 15 ‑ 10 Bounties and subsidies 15 ‑ 15 Profit ‑ making undertaking or plan 15 ‑ 20 Royalties 15 ‑ 22 Payments made to members of a copyright collecting society 15 ‑ 23 Payments of resale royalties by resale royalty collecting society 15 ‑ 25 Amount received for lease obligation to repair 15 ‑ 30 Insurance or indemnity for loss of assessable income 15 ‑ 35 Interest on overpayments and early payments of tax 15 ‑ 40 Providing mining, quarrying or prospecting information or geothermal exploration information 15 ‑ 45 Amounts paid under forestry agreements 15 ‑ 46 Amounts paid under forestry managed investment schemes 15 ‑ 50 Work in progress amounts 15 ‑ 55 Certain amounts paid under funeral policy 15 ‑ 60 Certain amounts paid under scholarship plan 15 ‑ 70 Reimbursed car expenses 15 ‑ 75 Bonuses 15 ‑ 80 Franked distributions entitled to a foreign income tax deduction—Additional Tier 1 capital exception

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 15-2 — Allowances and other things provided in respect of employment or services

(1) Your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums * provided to you in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by you (including any service as a member of the Defence Force). (2) This is so whether the things were * provided in money or in any other form. (3) However, the value of the following are not included in your assessable income under this section: (a) a * superannuation lump sum or an * employment termination payment; (b) an * unused annual leave payment or an * unused long service leave payment; (c) a * dividend or * non ‑ share dividend; (d) an amount that is assessable as * ordinary income under section 6 ‑ 5; (e) * ESS interests to which Subdivision 83A ‑ B or 83A ‑ C (about employee share schemes) applies. Note: Section 23L of the Income Tax Assessment Act 1936 provides that fringe benefits are non ‑ assessable non ‑ exempt income.

Amendment history: Inserted by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 15-3 — Return to work payments

Your assessable income includes an amount you receive under an * arrangement that an entity enters into for a purpose of inducing you to resume working for, or providing services to, any entity.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 15-5 — Accrued leave transfer payments

Your assessable income includes an * accrued leave transfer payment that you receive. To find out if the payment is deductible to the payer, see section 26 ‑ 10.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 15-10 — Bounties and subsidies

Your assessable income includes a bounty or subsidy that: (a) you receive in relation to carrying on a * business; and (b) is not assessable as * ordinary income under section 6 ‑ 5.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 15-15 — Profit ‑ making undertaking or plan

(1) Your assessable income includes profit arising from the carrying on or carrying out of a profit ‑ making undertaking or plan. (2) This section does not apply to a profit that: (a) is assessable as * ordinary income under section 6 ‑ 5; or (b) arises in respect of the sale of property acquired on or after 20 September 1985. Note: If you sell property you acquired before 20 September 1985 for profit ‑ making by sale, your assessable income includes the profit: see section 25A of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 15-20 — Royalties

(1) Your assessable income includes an amount that you receive as or by way of royalty within the ordinary meaning of “royalty” (disregarding the definition of royalty in subsection 995 ‑ 1(1)) if the amount is not assessable as * ordinary income under section 6 ‑ 5. (2) Subsection (1) does not apply to an amount of a payment to which section 15 ‑ 22 or 15 ‑ 23 applies.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 126 of 2009, effective Schedule 1 (items 1–17, 20): 9 June 2010 ( see s. 2(1))

s 15-22 — Payments made to members of a copyright collecting society

(1) This section, instead of Division 6 of Part III of the Income Tax Assessment Act 1936 , applies to a payment that a * copyright collecting society, to which section 51 ‑ 43 applies, makes to you as a * member of the society. (2) Your assessable income includes the amount of the payment, except to the extent that the payment represents an amount on which the directors of the society are or have been assessed, and are liable to pay * tax, under section 98, 99 or 99A of the Income Tax Assessment Act 1936 . Note: Section 410 ‑ 5 of this Act requires a copyright collecting society to give you a notice at the time of payment.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 126 of 2009, effective Schedule 1 (items 1–17, 20): 9 June 2010 ( see s. 2(1))

s 15-23 — Payments of resale royalties by resale royalty collecting society

(1) This section, instead of Division 6 of Part III of the Income Tax Assessment Act 1936 , applies to a payment that the * resale royalty collecting society makes to you under section 26 of the Resale Royalty Right for Visual Artists Act 2009 . (2) Your assessable income includes the amount of the payment, except to the extent that the payment represents an amount on which the directors of the society are or have been assessed, and are liable to pay * tax, under section 98, 99 or 99A of the Income Tax Assessment Act 1936 . Note: Section 410 ‑ 50 of this Act requires the resale royalty collecting society to give you a notice at the time of payment.

Amendment history: Inserted by No 126 of 2009, effective Schedule 1 (items 1–17, 20): 9 June 2010 ( see s. 2(1))

s 15-25 — Amount received for lease obligation to repair

Your assessable income includes an amount you receive from an entity if: (a) you receive it as a lessor or former lessor of premises; and (b) the entity pays you the amount for failing to comply with a lease obligation to make repairs to the premises; and (c) the entity uses or has used the premises for the * purpose of producing assessable income; and (d) the amount is not assessable as * ordinary income under section 6 ‑ 5. Note: The entity can deduct the amount: see section 25 ‑ 15.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 15-30 — Insurance or indemnity for loss of assessable income

Your assessable income includes an amount you receive by way of insurance or indemnity for the loss of an amount (the lost amount ) if: (a) the lost amount would have been included in your assessable income; and (b) the amount you receive is not assessable as * ordinary income under section 6 ‑ 5.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 15-35 — Interest on overpayments and early payments of tax

Your assessable income includes interest payable to you under the Taxation (Interest on Overpayments and Early Payments) Act 1983 . The interest becomes assessable when it is paid to you or applied to discharge a liability you have to the Commonwealth.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 15-40 — Providing mining, quarrying or prospecting information or geothermal exploration information

(1) Your assessable income includes an amount you receive for providing * mining, quarrying or prospecting information to another entity if: (a) you continue to * hold the information; and (b) the amount you receive is not assessable as * ordinary income under section 6 ‑ 5. (2) Your assessable income includes an amount you receive for providing * geothermal exploration information you have to another entity if: (a) you continue to have the information; and (b) the information is, and continues to be, relevant to: (i) * geothermal energy extraction that you carry on or propose to carry on; or (ii) a * business that you carry on that includes * exploration or prospecting for * geothermal energy resources from which energy can be extracted by geothermal energy extraction; and (c) the amount you receive is not assessable as * ordinary income under section 6 ‑ 5. It does not matter whether the information is generally available or not. (3) Geothermal exploration information is geological, geophysical or technical information that: (a) relates to the presence, absence or extent of * geothermal energy resources in an area; or (b) is likely to help in determining the presence, absence or extent of such resources in an area. (4) Geothermal energy extraction means operations that are for: (a) the extraction of energy from * geothermal energy resources; and (b) the * purpose of producing assessable income.

Amendment history: Inserted by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 84 of 2013, effective s 4, Sch 1 (items 2–9, 19–23), Sch 2, Sch 3, Sch 6 and Sch 8 (items 27–32): 28 June 2013 (s 2(1) items 1, 2, 4) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9)

s 15-45 — Amounts paid under forestry agreements

(1) Your assessable income includes an amount you receive under an agreement for the planting and tending of trees for felling if: (a) you are the manager of the agreement as mentioned in section 82KZMG of the Income Tax Assessment Act 1936 ; and (b) the amount satisfies, for the entity that paid it, the requirements of that section. The amount is included for the income year in which the entity can claim a deduction for the amount. (2) No part of an amount included under subsection (1) is included in your assessable income for a later income year.

Amendment history: Inserted by No 26 of 2002, effective 4 Apr 2002

s 15-46 — Amounts paid under forestry managed investment schemes

(1) Your assessable income includes an amount you receive under a * forestry managed investment scheme if: (a) you are the * forestry manager of the scheme, or an * associate of the forestry manager; and (b) the entity that paid the amount can deduct or has deducted the amount under section 394 ‑ 10 in relation to the scheme (disregarding subsection 394 ‑ 10(5)). The amount is included for the income year for which the entity that paid the amount can or has claimed a deduction for it (disregarding subsection 394 ‑ 10(5)). (2) No part of an amount included under subsection (1) is included in your assessable income for a later income year.

Amendment history: Inserted by No 79 of 2007, effective Schedule 1 (items 28, 29, 39–42, 43(1), (6)), Schedules 3, 4, Schedule 6 (items 3–8), Schedule 9 (items 14–26, 30, 34) and Schedule 10 (items 10–13, 32): Royal Assent Schedule 8 (items 2, 12–25, 26(1)–(3)): 1 July 2007

s 15-50 — Work in progress amounts

Your assessable income includes a * work in progress amount that you receive. Note: To find out whether the amount is deductible to the payer, see section 25 ‑ 95.

Amendment history: Inserted by No 119 of 2002, effective s 4, Sch 1 (items 2–5, 8), Sch 2 and Sch 3 (item 100): 2 Dec 2002 (s 2(1) items 1, 2, 10) Sch 1 (items 6, 7): ( see Sch 10 (item 242) of Act No. 41, 2005) Sch 3 (items 4–78): 30 June 2001 (s 2(1) items 3–8)

s 15-55 — Certain amounts paid under funeral policy

(1) Your assessable income includes the amount of a benefit provided to you by a * life insurance company under a * funeral policy issued after 31 December 2002 to pay for the funeral of the insured person, reduced by: (a) the amount of the premium or premiums of the policy that is reasonably related to the benefit; and (b) the amount of the fees and charges included in the company’s assessable income for any income year under paragraph 320 ‑ 15(1)(k) that is reasonably related to the benefit. (2) This section does not apply if the benefit is included in your assessable income as: (a) * ordinary income under section 6 ‑ 5; or (b) * statutory income under a section of this Act other than this section.

Amendment history: Inserted by No 12 of 2003, effective Schedule 1: 29 Aug 2001 Remainder: Royal Assent | Amended by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 15-60 — Certain amounts paid under scholarship plan

(1) Your assessable income includes the amount of a benefit provided to you, or on your behalf, by a * life insurance company under a * scholarship plan covered by subsection (2) or (3), reduced by the amount worked out under subsection (4), if: (a) the benefit is provided on or after 1 January 2003; and (b) you are nominated in the plan as a beneficiary whose education is to be helped by the benefit. (2) This subsection covers a * scholarship plan issued by the * life insurance company after 31 December 2002. (3) This subsection covers a * scholarship plan if: (a) the plan was issued by the * life insurance company before 1 January 2003; and (b) no amount received by the company on or after 1 January 2003 and attributable to the plan is * non ‑ assessable non ‑ exempt income of the company under paragraph 320 ‑ 37(1)(d). (4) The amount of the reduction is the sum of: (a) the amount of the premium or premiums of the plan that is reasonably related to the benefit; and (b) the amount of the fees and charges included in the company’s assessable income for any income year under paragraph 320 ‑ 15(1)(k) that is reasonably related to the benefit.

Amendment history: Inserted by No 12 of 2003, effective Schedule 1: 29 Aug 2001 Remainder: Royal Assent | Amended by No 66 of 2003, effective s 4, Sch 2 (items 1–5, 17), Sch 3 (items 49–70, 71–128, 129–131, 140, 141), Sch 4, Sch 6 (items 1, 3) and Sch 7 (items 6–9): 30 June 2003 (s 2(1) items 1, 3, 6–8, 8B–12, 12B, 14, 15, 17, 18) Sch 3 (items 70A, 128A): 2 Apr 2003 (s 2(1) items 8A, 12A) | Amended by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 15-70 — Reimbursed car expenses

Your assessable income includes a reimbursement mentioned in section 22 of the Fringe Benefits Tax Assessment Act 1986 (about exempt car expense payment benefits) that, but for that section, would be a * fringe benefit * provided to you.

Amendment history: Inserted by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 15-75 — Bonuses

Your assessable income includes any amount you receive as or by way of bonus on a * life insurance policy, other than a reversionary bonus. Note: Reversionary bonuses are covered by section 6 ‑ 5 of this Act if they are ordinary income and, if not, by section 26AH of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 15-80 — Franked distributions entitled to a foreign income tax deduction—Additional Tier 1 capital exception

(1) If section 207 ‑ 158 would, apart from subsection 207 ‑ 158(2), apply to a * franked distribution, then an amount equal to the * foreign income tax deduction referred to in subsection (1) of that section is included in the assessable income of the entity that made the distribution for the income year mentioned in subsection (2) of this section. (2) The income year is: (a) if the * foreign tax period in which the * foreign income tax deduction arises falls wholly within an income year of the entity—that income year; or (b) if the foreign tax period in which the foreign income tax deduction arises straddles 2 income years of the entity—the later of those income years.

Amendment history: Inserted by No 92 of 2008, effective Schedule 1 (items 10–22, 26): 1 Oct 2008 | Repealed by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015 | Inserted by No 79 of 2020, effective Sch 1, 3 and 5: 1 Oct 2020 (s 2(1) items 2, 4)

s 17-1 — What this Division is about

This Division sets out the effect of the GST in working out assessable income. Generally speaking, GST, input tax credits and adjustments under the GST Act are disregarded. Table of sections 17 ‑ 5 GST and increasing adjustments 17 ‑ 10 Certain decreasing adjustments 17 ‑ 15 Elements in calculation of amounts 17 ‑ 20 GST groups and GST joint ventures 17 ‑ 30 Special credits because of indirect tax transition 17 ‑ 35 Certain sections not to apply to certain assets or expenditure

Amendment history: Inserted by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 17-5 — GST and increasing adjustments

An amount is not assessable income, and is not * exempt income, to the extent that it includes an amount relating to: (a) * GST payable on a * taxable supply; or (b) an * increasing adjustment that relates to a * supply; or (c) an * increasing adjustment that: (i) relates to an * acquisition; and (ii) arises in circumstances that also give rise to a * recoupment that is included in assessable income.

Amendment history: Inserted by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 66 of 2003, effective s 4, Sch 2 (items 1–5, 17), Sch 3 (items 49–70, 71–128, 129–131, 140, 141), Sch 4, Sch 6 (items 1, 3) and Sch 7 (items 6–9): 30 June 2003 (s 2(1) items 1, 3, 6–8, 8B–12, 12B, 14, 15, 17, 18) Sch 3 (items 70A, 128A): 2 Apr 2003 (s 2(1) items 8A, 12A)

s 17-10 — Certain decreasing adjustments

(1) An amount of a * decreasing adjustment that arises under Division 129 or 132 of the * GST Act is assessable income , unless the entity that has the adjustment is an * exempt entity. (2) However, the amount is not assessable income to the extent that, because it becomes a component of a * net input tax credit, a reduction is made under section 103 ‑ 30 (reduction of cost base etc. by net input tax credits).

Amendment history: Inserted by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 95 of 2004, effective s. 4, Schedules 2, 3, 5 and 11: Royal Assent Schedule 7 (items 1–10, 13): 1 July 2004 Schedule 10 (items 28–39, 44, 45): 1 July 2005

s 17-15 — Elements in calculation of amounts

In calculating an amount that may be included in assessable income: (a) an element in the calculation that is an amount received or receivable is treated as not including an amount equal to any * GST payable on a * taxable supply related to the amount received or receivable, or any * increasing adjustment related to that amount; and (b) an element in the calculation that is an amount paid or payable is treated as not including an amount equal to any * input tax credit for an * acquisition related to the amount paid or payable, or any * decreasing adjustment related to that amount.

Amendment history: Inserted by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 17-20 — GST groups and GST joint ventures

(1) A * member of a * GST group is to be treated, for the purposes of this Division, as if Subdivision 48 ‑ B of the * GST Act (other than paragraph 48 ‑ 40(2)(a) and subsection 48 ‑ 40(3)) did not apply to that member. (2) A * participant in a * GST joint venture is to be treated, for the purposes of this Division, as if Subdivision 51 ‑ B of the * GST Act (other than subsections 51 ‑ 30(2) and (3)) did not apply to that participant.

Amendment history: Inserted by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 17-30 — Special credits because of indirect tax transition

A special credit under section 19A of the A New Tax System (Goods and Services Tax Transition) Act 1999 is assessable income at the time it is attributed to a * tax period (for a credit under section 19A).

Amendment history: Inserted by No 177 of 1999, effective Sch 5: 22 Dec 1999 (s 2(1)) Sch 8 (items 1–6): 1 July 2000 (s 2(10)) | Amended by No 156 of 2000, effective Sch 6 (items 47, 48, 49(3)) and Sch 7 (item 15): 21 Dec 2000 (s 2(1)) | Amended by No 97 of 2002, effective s. 4, Schedule 1 (item 8) and Schedule 2 (items 9A, 9B, 10–12): Royal Assent | Repealed and substituted by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 17-35 — Certain sections not to apply to certain assets or expenditure

Sections 17 ‑ 5, 17 ‑ 10 and 17 ‑ 15 do not apply to assets, or to expenditure, for which you can deduct amounts under Division 40 or Division 328. Note: See instead Subdivision 27 ‑ B.

Amendment history: Inserted by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1))

s 20-1 — What this Division is about

This Division includes amounts in your assessable income to reverse the effect of certain kinds of deductions. Table of sections 20 ‑ 5 Other provisions that reverse the effect of deductions

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 20-5 — Other provisions that reverse the effect of deductions

The table lists other provisions that reverse the effect of certain kinds of deductions. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 . Provisions that adjust your tax position in respect of deductions Item In this situation: See: 1 A balancing adjustment for a depreciating asset is included in your assessable income. 40 ‑ 285(1) and 40 ‑ 445(2) 2 An amount you receive by way of insurance or indemnity for a loss of trading stock is included in your assessable income. 70 ‑ 115 2A Limited recourse debt that was used to finance expenditure deductible under a capital allowance (or on property for which you have deducted or can deduct amounts under a capital allowance) terminates: an amount is included in your assessable income 243 ‑ 40 3 Because of: • petroleum resource rent tax; or • an instalment of petroleum resource rent tax; that you have deducted or can deduct, an amount is refunded, credited, paid or applied: the amount is included in your assessable income. 40 ‑ 750(3) 4 You receive a fringe benefit by way of reimbursement or payment of a loss or outgoing you incurred: your deduction for the loss or outgoing is reduced. 51AH 7 You receive an amount as recoupment for your local governing body election expenses: an amount is included in your assessable income. 74A(4) 8 You receive superannuation benefits as a result of someone’s deductible contributions: the benefits are included in your assessable income. 290 ‑ 100 9 An R&D entity receives or becomes entitled to receive an amount: • for, or relating to, the results of R&D activities; or • attributable to it incurring expenditure on R&D activities or to its use of a depreciating asset for the purpose of conducting R&D activities; and the entity is entitled under Division 355 to a tax offset relating to those R&D activities. The amount is included in its assessable income. 355 ‑ 410 10 An R&D entity: • receives, or becomes entitled to receive, a recoupment from government relating to R&D activities; or • can deduct, under Division 355, expenditure on goods, materials or energy used during R&D activities to produce marketable products or products applied to the R&D entity’s own use; and the entity is entitled under Division 355 to a tax offset relating to those R&D activities. An amount is included in its assessable income. Subdivision 355 ‑ G

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 72 of 2001, effective 30 June 2001 | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 170 of 2001, effective Sch 2 (items 28–44, 51): 12 pm (A.C.T.) 29 Jan 2001 (s 2(2)) Sch 2 (items 69–84, 92): 30 June 2001 (s 2(3)) Sch 3 (items 11–13, 19(1)): 1 Oct 2001 (s 2(1)) | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6) | Amended by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 20-10 — What this Subdivision is about

Recoupment of expenses you incurred and can deduct Your assessable income may include an amount that you receive by way of insurance, indemnity or other recoupment if:  it is for a deductible expense; and  it is not otherwise assessable income. Recoupment of expenses you did not incur but can deduct Your assessable income may include an amount that another entity receives by way of insurance, indemnity or other recoupment if:  it is for an expense that you can deduct; and  it is not otherwise your assessable income. Table of sections 20 ‑ 15 How to use this Subdivision What is an assessable recoupment ? 20 ‑ 20 Assessable recoupments 20 ‑ 25 What is recoupment ? 20 ‑ 30 Tables of deductions for which recoupments are assessable How much is included in your assessable income? 20 ‑ 35 If the expense is deductible in a single income year 20 ‑ 40 If the expense is deductible over 2 or more income years 20 ‑ 45 Effect of balancing charge 20 ‑ 50 If the expense is only partially deductible 20 ‑ 55 Meaning of previous recoupment law What if you can deduct a loss or outgoing incurred by another entity? 20 ‑ 60 If you are the only entity that can deduct an amount for the loss or outgoing 20 ‑ 65 If 2 or more entities can deduct amounts for the loss or outgoing

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Repealed and substituted by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1))

s 20-15 — How to use this Subdivision

If you incurred the deductible loss or outgoing (1) First, read sections 20 ‑ 20 to 20 ‑ 30 to work out whether you have received an assessable recoupment. If not, you do not need to read the rest of the Subdivision. (2) If you have received one or more assessable recoupments, sections 20 ‑ 35 to 20 ‑ 55 tell you how much is included in your assessable income for an income year. If another entity incurred a loss or outgoing you can deduct (3) Sections 20 ‑ 60 and 20 ‑ 65 tell you how to apply this Subdivision.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1))

s 20-20 — Assessable recoupments

Exclusion (1) An amount is not an assessable recoupment to the extent that it is * ordinary income, or it is * statutory income because of a provision outside this Subdivision. Insurance or indemnity (2) An amount you have received as * recoupment of a loss or outgoing is an assessable recoupment if: (a) you received the amount by way of insurance or indemnity; and (b) you can deduct an amount for the loss or outgoing for the * current year, or you have deducted or can deduct an amount for it for an earlier income year, under any provision of this Act. Other recoupment (3) An amount you have received as * recoupment of a loss or outgoing ( except by way of insurance or indemnity) is an assessable recoupment if: (a) you can deduct an amount for the loss or outgoing for the * current year; or (b) you have deducted or can deduct an amount for the loss or outgoing for an earlier income year; under a provision listed in section 20 ‑ 30.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 54 of 1999, effective 5 July 1999 (s 2(1), (2))

s 20-25 — What is recoupment ?

General (1) Recoupment of a loss or outgoing includes: (a) any kind of recoupment, reimbursement, refund, insurance, indemnity or recovery, however described; and (b) a grant in respect of the loss or outgoing. Amount paid for you (2) If some other entity pays an amount for you in respect of a loss or outgoing that you incur, you are taken to receive the amount as recoupment of the loss or outgoing. Remission of general interest charge or shortfall interest charge (2A) If: (a) you have incurred expenditure that consists of * general interest charge or * shortfall interest charge; and (b) the Commissioner remits any of that charge; then you are taken to receive the remitted amount as recoupment of that expenditure. Amount for disposing of right to recoupment (3) If you dispose of your right to receive an amount as * recoupment of a loss or outgoing you are taken to receive as recoupment of the loss or outgoing any amount you receive for disposing of that right. (The disposal need not be to another entity.) Amount received that is recoupment to an unspecified extent (4) If you receive an amount that is, to an unspecified extent, * recoupment of a loss or outgoing, the amount is taken to be recoupment of the loss or outgoing to whatever extent is reasonable. Balancing adjustments not covered (5) If a balancing adjustment is required for property on which you incurred a loss or outgoing, no part of the * termination value of the property is an amount you receive as recoupment of the loss or outgoing. Note: The termination value is usually the amount you receive because of disposal, loss or destruction of the property.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 11 of 1999, effective Sch 1 (items 277–280, 404): 1 July 1999 (s 2(3)) | Amended by No 178 of 1999, effective Schedule 1 (items 6, 8, 70–78): 1 July 2000 Remainder: Royal Assent | Amended by No 75 of 2005, effective 29 June 2005

s 20-30 — Tables of deductions for which recoupments are assessable

(1) This table shows the deductions under the Income Tax Assessment Act 1997 for which recoupments are assessable. Note: References are to section numbers except where otherwise indicated. Provisions of the Income Tax Assessment Act 1997 Item Provision Description of expense 1.1 8 ‑ 1 (so far as it allows you to deduct a bad debt, or part of a debt that is bad) bad debts 1.2 8 ‑ 1 (so far as it allows you to deduct rates or taxes) rates or taxes 1.3 25 ‑ 5 tax ‑ related expenses 1.4 25 ‑ 35 bad debts 1.5 25 ‑ 45 embezzlement or larceny by an employee 1.5A 25 ‑ 47 misappropriation by an employee or agent 1.6 25 ‑ 60 election expenses, Commonwealth and State elections 1.6A 25 ‑ 65 election expenses, local governing body 1.7 25 ‑ 75 rates and land taxes on premises used to produce mutual receipts 1.8 The former 25 ‑ 80 upgrading assets to meet GST obligations etc. 1.8A 25 ‑ 95 work in progress amount 1.8B item 7 of the table in section 30 ‑ 15 contributions relating to fund ‑ raising events 1.8C item 8 of the table in section 30 ‑ 15 contributions relating to fund ‑ raising auctions 1.9 Division 40 capital allowances 1.10 The former Division 42 (as it applied to * software because of the former Subdivision 46 ‑ B) expenditure on software 1.11 The former Subdivision 46 ‑ C expenditure on software 1.12 The former Subdivision 46 ‑ D expenditure on software, pooled 1.13 The former Division 42 (as it applied to * IRUs because of Division 44) expenditure on IRUs 1.14 The former 330 ‑ 15 exploration or prospecting expenditure 1.15 The former 330 ‑ 80 allowable capital expenditure relating to mining or quarrying 1.16 The former 330 ‑ 350 petroleum resource rent tax 1.17 The former 330 ‑ 370 transport capital expenditure relating to mining or quarrying 1.18 The former 330 ‑ 435 rehabilitation expenditure relating to mining or quarrying 1.19 The former 330 ‑ 485 balancing adjustment deduction for expenditure relating to mining or quarrying 1.19A Division 355 R&D 1.20 The former Subdivisions 380 ‑ A and 380 ‑ C capital expenditure incurred in obtaining a spectrum licence 1.21 The former Subdivision 387 ‑ A landcare operations expenditure 1.22 The former Subdivision 387 ‑ B expenditure on facilities to conserve or convey water 1.23 The former Subdivision 387 ‑ D grapevine establishment expenditure 1.24 The former Subdivision 387 ‑ C horticultural plant establishment expenditure 1.25 The former Subdivision 387 ‑ E mains electricity connection expenditure 1.26 The former Subdivision 400 ‑ A expenditure on environmental impact assessment 1.27 The former Subdivision 400 ‑ B expenditure on environmental protection activities 1.27A 420 ‑ 15 registered emissions unit 1.28 775 ‑ 30 forex realisation loss (2) This table shows the deductions under the Income Tax Assessment Act 1936 for which recoupments are assessable. Note: References are to section numbers except where otherwise indicated. Provisions of the Income Tax Assessment Act 1936 Item Provision Description of expense 2.1 Former 51(1) (so far as it allowed you to deduct a bad debt, or part of a debt that is bad) bad debts 2.2 Former 51(1) (so far as it allowed you to deduct rates or taxes) rates or taxes 2.3 63 bad debts 2.4 Former 69 tax ‑ related expenses 2.5 Former 70A(3) mains electricity connection expenditure 2.6 Former 71 embezzlement or larceny by an employee 2.7 Former 72 rates and land tax 2.7A Former 72A a payment of petroleum resource rent tax, or an instalment of petroleum resource rent tax, or a credit under paragraph 99(d) of the Petroleum Resource Rent Tax Assessment Act 1987 in respect of a payment of such an instalment 2.8 Former 73B, 73BA or 73BH research and development activity expenditure 2.9 Former 74 election expenses, Commonwealth and State elections 2.9A Former 74A election expenses, local governing body 2.10 Former 75AA(1) or (6) grape vine establishment expenditure 2.11 Former 75B(2) or (3A) water conservation or conveyance expenditure 2.12 Former 75D(2) land degradation prevention expenditure 2.13 Former 82AB development allowance expenditure 2.14 Former 82BB environmental impact study expenditure 2.15 Former 82BK environmental protection expenditure 2.17 Former Division 10 of Part III mining and quarrying expenditure 2.18 Former Division 10AAA of Part III expenditure on transport of minerals and quarry materials 2.19 Former Division 10AA of Part III expenditure on prospecting and mining for petroleum 2.20 Former 124BA expenditure on rehabilitating mining, quarrying and petroleum sites 2.21 Former 124ZZF horticultural plant establishment expenditure (effective life of the plant less than 3 years) 2.22 Former 124ZZG horticultural plant establishment expenditure (effective life of the plant more than 3 years) 2.23 Former 628 drought mitigation property expenditure by a primary producer 2.24 Former 636 drought mitigation property expenditure by a leasing company

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 47 of 1998, effective Schedule 1 (items 2, 4): 1 July 1998 Remainder: Royal Assent | Amended by No 39 of 1999, effective 31 May 1999 | Amended by No 54 of 1999, effective 5 July 1999 (s 2(1), (2)) | Amended by No 164 of 1999, effective Sch 1, Sch 2 (items 1–16, 19–23), Sch 3 (items 1–10, 14) and Sch 4–6: 10 Dec 1999 (s 2(1)) Sch 2 (items 17, 18): never commenced (s 2(2)) | Amended by No 177 of 1999, effective Sch 5: 22 Dec 1999 (s 2(1)) Sch 8 (items 1–6): 1 July 2000 (s 2(10)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 170 of 2001, effective Sch 2 (items 28–44, 51): 12 pm (A.C.T.) 29 Jan 2001 (s 2(2)) Sch 2 (items 69–84, 92): 30 June 2001 (s 2(3)) Sch 3 (items 11–13, 19(1)): 1 Oct 2001 (s 2(1)) | Amended by No 119 of 2002, effective s 4, Sch 1 (items 2–5, 8), Sch 2 and Sch 3 (item 100): 2 Dec 2002 (s 2(1) items 1, 2, 10) Sch 1 (items 6, 7): ( see Sch 10 (item 242) of Act No. 41, 2005) Sch 3 (items 4–78): 30 June 2001 (s 2(1) items 3–8) | Amended by No 133 of 2003, effective 17 Dec 2003 | Amended by No 95 of 2004, effective s. 4, Schedules 2, 3, 5 and 11: Royal Assent Schedule 7 (items 1–10, 13): 1 July 2004 Schedule 10 (items 28–39, 44, 45): 1 July 2005 | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 38 of 2008, effective Schedule 1, Schedules 3–6, Schedule 7 (items 1–3, 5), Schedule 8 (items 1–11), Schedule 9 (items 2–4), Schedule 10, Schedule 12 and Schedule 13: 24 June 2008 Schedule 8 (items 12–21): 1 July 2012 | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1))

s 20-35 — If the expense is deductible in a single income year

(1) Your assessable income includes an * assessable recoupment of a loss or outgoing if: (a) you can deduct the whole of the loss or outgoing for the * current year; or (b) you have deducted or can deduct the whole of the loss or outgoing for an earlier income year. Note 1: The operation of this section may be affected if a balancing charge has been included in your assessable income because of a deduction for the loss or outgoing: see section 20 ‑ 45. Note 2: Recoupment of a loss or outgoing for which you can deduct amounts over more than one income year is covered by section 20 ‑ 40. Note 3: Recoupment of a loss or outgoing that is only partially deductible is covered by section 20 ‑ 50. Total assessed not to exceed the loss or outgoing (2) The total of all amounts that subsection (1) includes in your assessable income for one or more income years in respect of a loss or outgoing cannot exceed the amount of the loss or outgoing. Recoupment received before income year of the deduction (3) If: (a) you can deduct the whole of a loss or outgoing for the * current year; and (b) before the current year you received an * assessable recoupment of the loss or outgoing; your assessable income for the current year includes so much of the recoupment as subsection (1) would have included if you had instead received the recoupment at the start of the current year.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 20-40 — If the expense is deductible over 2 or more income years

(1) This section includes an amount in your assessable income if: (a) you receive in the * current year an * assessable recoupment of a loss or outgoing for which you can deduct amounts over 2 or more income years; or (b) you received in an earlier income year an * assessable recoupment of a loss or outgoing of that kind (unless all of the recoupment has already been included in your assessable income for one or more earlier income years by this section or a * previous recoupment law). (This section applies even if the recoupment was received before the first of those income years.) Note: Recoupment of a loss or outgoing that is only partially deductible is covered by section 20 ‑ 50. (2) Work out as follows how much is included in your assessable income for the * current year because of one or more * assessable recoupments of the loss or outgoing. Note: The method statement ensures that assessable recoupments are included: only so far as they have not already been included for an earlier income year; and only to the extent of your total deductions to date for the loss or outgoing. Method statement Step 1. Add up all the * assessable recoupments of the loss or outgoing that you have received (in the * current year or earlier). The result is the total assessable recoupment . Step 2. Add up the amounts (if any) included in your assessable income for earlier income years, in respect of the loss or outgoing, by this section or a * previous recoupment law. The result is the recoupment already assessed . (If no amount was included, the recoupment already assessed is nil.) Step 3. Subtract the recoupment already assessed from the total assessable recoupment. The result is the unassessed recoupment . Step 4. Add up each amount that you can deduct for the loss or outgoing for the * current year, or you have deducted or can deduct for the loss or outgoing for an earlier income year. The result is the total deductions for the loss or outgoing . Note: The total deductions may be reduced if an amount has been included in your assessable income because of a balancing adjustment: see section 20 ‑ 45. Step 5. Subtract the recoupment already assessed from the total deductions for the loss or outgoing. The result is the outstanding deductions . Step 6. The unassessed recoupment is included in your assessable income, unless it is greater than the outstanding deductions. In that case, the amount of the outstanding deductions is included instead. Example: At the start of the 2002 ‑ 03 income year, a company incurs $100,000 to start to hold a depreciating asset. The company uses the prime cost method, and the effective life is 10 years. $10,000 is deductible for the 2002 ‑ 03 income year and for each of the following 9 income years under section 40 ‑ 25. In the 2002 ‑ 03 income year, the company receives $20,000 as recoupment. How much is assessable for the 2002 ‑ 03 income year? Applying the method statement: After step 1: the total assessable recoupment is $20,000. After step 2: the recoupment already assessed is nil. After step 3: the unassessed recoupment is: total assessable recoupment minus recoupment already assessed, i.e. $20,000 minus 0 = $20,000. After step 4: the total deductions for the loss or outgoing are $10,000. After step 5: the outstanding deductions are: total deductions for the loss or outgoing minus recoupment already assessed, i.e. $10,000 minus 0 = $10,000. After step 6: the unassessed recoupment (step 3) is greater than outstanding deductions (step 5), so the amount of the outstanding deductions is included in assessable income, i.e. $10,000. Applying the method statement to the 2003 ‑ 04 income year: a further $10,000 is included in the company’s assessable income.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1))

s 20-45 — Effect of balancing charge

(1) This section may affect the operation of section 20 ‑ 35 or 20 ‑ 40 (as appropriate) if: (a) a balancing adjustment is required for the * current year (or for an earlier income year) because you have deducted or can deduct an amount for an income year for the loss or outgoing; and (b) an amount (the balancing charge ) is included in your assessable income for the * current year (or for the earlier income year) because of the balancing adjustment. To find out about balancing adjustments, see Subdivision 40 ‑ D. Effect on section 20 ‑ 35 (2) In applying section 20 ‑ 35, treat each of the following as reduced by the balancing charge: (a) the amount of the loss or outgoing; (b) the total of what you can deduct for the loss or outgoing for the * current year, or have deducted or can deduct for an earlier income year. Effect on section 20 ‑ 40 (3) In applying the method statement in subsection 20 ‑ 40(2), reduce the total deductions for the loss or outgoing by the balancing charge. Example: Continuing the example in subsection 20 ‑ 40(2): at the start of the 2005 ‑ 06 income year, the company: receives a further $10,000 as recoupment; and sells the depreciating asset for $75,000. As a result of the sale, a balancing adjustment of $5,000 is included under section 40 ‑ 285 in the company’s assessable income for that income year. How much of the recoupment amount received in the 2005 ‑ 06 income year is assessable for that income year? Applying the method statement in subsection 20 ‑ 40(2): After step 1: the total assessable recoupment is $30,000 (received during 2002 ‑ 03 and 2005 ‑ 06). After step 2: the recoupment already assessed is $20,000 (for 2002 ‑ 03 and 2003 ‑ 04). After step 3: the unassessed recoupment is: total assessable recoupment minus recoupment already assessed, i.e. $30,000 minus $20,000 = $10,000. After step 4: the total deductions for the loss or outgoing are $30,000 ($10,000 for each of 2002 ‑ 03, 2004 ‑ 04 and 2004 ‑ 05), reduced by $5,000 (the amount included in assessable income for the balancing adjustment), i.e. $25,000. After step 5: the outstanding deductions are: total deductions for the loss or outgoing minus recoupment already assessed, i.e. $25,000 minus $20,000 = $5,000. After step 6: the unassessed recoupment (step 3) is greater than outstanding deductions (step 5), so the amount of the outstanding deductions is included in assessable income, i.e. $5,000.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1))

s 20-50 — If the expense is only partially deductible

(1) This section extends the operation of section 20 ‑ 35 or 20 ‑ 40 (as appropriate) to a case where the total of what you can deduct under a provision (the deduction provision ) for a loss or outgoing is limited to a proportion of the loss or outgoing. (2) If you receive an * assessable recoupment of the loss or outgoing, section 20 ‑ 35 or 20 ‑ 40 applies as if: (a) you had incurred only that proportion of the loss or outgoing, but could deduct the whole of that proportion under the deduction provision; and (b) you had received only that proportion of the recoupment. Example: You incur expenditure of $500. A provision listed in section 20 ‑ 30 entitles you to deduct 10% of the expenditure ($50) over 5 years. This means you can deduct $10 in each of the 5 years. You recoup $300 of the expenditure. This section treats you as receiving only 10% of the recoupment. Therefore, $30 is dealt with by section 20 ‑ 40.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 20-55 — Meaning of previous recoupment law

(1) Previous recoupment law means a provision of the Income Tax Assessment Act 1936 listed in this table. Previous recoupment law Item Provision What kind of expense the provision relates to: 1 former 26(j) (so far as it relates to an amount received for or in respect of a loss or outgoing that is a deduction) a loss or outgoing that is a deduction 2 former 26(k) embezzlement or larceny by an employee 3 former 63(3) bad debts 4 former 69(8) tax ‑ related expenses 5 former 70A(5) mains electricity connection expenditure 6 former 72(2) (so far as it relates to a refund of an amount you have deducted or can deduct) rates or taxes 6A former 72A(4)(a) and (aa) petroleum resource rent tax 7 former 74(2) election expenses, Commonwealth and State elections (2) Former section 330 ‑ 350 of this Act is also a previous recoupment law .

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 14 of 2009, effective Schedule 1, Schedule 4 (items 11–34, 52) and Schedule 5 (items 7–13): Royal Assent Schedule 5 (items 2, 3, 14): 29 Jan 2009 Schedule 5 (items 5, 6): 1 July 2011

s 20-60 — If you are the only entity that can deduct an amount for the loss or outgoing

This Subdivision applies in a different way if: (a) an entity (other than you) incurs a loss or outgoing; and (b) you can deduct the whole of the loss or outgoing for an income year, or you can deduct amounts for the loss or outgoing over 2 or more income years; and (c) no other entity can deduct an amount for the loss or outgoing; and (d) the entity that incurred the loss or outgoing receives one or more amounts as * recoupment of the loss or outgoing. This Subdivision (except this section and section 20 ‑ 65) applies as if you had incurred the loss or outgoing and had also received the * recoupment.

Amendment history: Inserted by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1))

s 20-65 — If 2 or more entities can deduct amounts for the loss or outgoing

(1) Special rules apply if: (a) an entity (the first entity ) incurs a loss or outgoing; and (b) 2 or more entities (the deducting entities , which may include the first entity) have deducted or can deduct amounts for the loss or outgoing (whether for the same income year or for different income years); and (c) the first entity receives one or more amounts as * recoupment of the loss or outgoing. (2) This Subdivision (except this section and section 20 ‑ 60) applies as if the first entity and the deducting entities together constituted a single entity (the notional entity ) that had: (a) incurred the loss or outgoing; and (b) received the amount or amounts as * recoupment; and (c) included in its assessable income any amount included in the assessable income of any of the deducting entities under a * previous recoupment law or this Subdivision (except this section). (3) If because of subsection (2) the notional entity’s assessable income for an income year (the assessment year ) would include an amount under this Subdivision (the assessable amount ), the amount reverses in the assessment year the deductions for the loss or outgoing, in accordance with the rules in subsection (5). (4) The assessable income of each deducting entity for the assessment year includes the total amounts (if any) by which that entity’s actual deductions for the loss or outgoing are reversed in that income year. (5) Deductions for the loss or outgoing are reversed in the assessment year as follows: (a) the amounts by which deductions are reversed total the assessable amount (unless all the deductions have been reversed); (b) a deduction for an income year is not reversed until all deductions for earlier income years have been reversed; (c) a deduction is not reversed in the assessment year to the extent that it has already been reversed in an earlier year; (d) if each of 2 or more entities can deduct an amount for the loss or outgoing for the same income year, those deductions are reversed in the assessment year by amounts proportionate to the amounts of the deductions.

Amendment history: Inserted by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1))

s 20-100 — What this Subdivision is about

This Subdivision reverses the effect of deductions for lease payments for a car leased to you (or to your associate), but only if you make a profit by disposing of the car after acquiring it from the lessor. The smallest of these amounts is included in your assessable income:  your profit on the disposal;  the total deductible lease payments for the period of the lease;  the total amounts you could have deducted for the car’s decline in value if, instead of leasing it, you had owned it and used it solely for the purpose of producing assessable income. Table of sections 20 ‑ 105 Map of this Subdivision The usual case 20 ‑ 110 Disposal of a leased car for profit 20 ‑ 115 Working out the profit on the disposal 20 ‑ 120 Meaning of notional depreciation The associate case 20 ‑ 125 Disposal of a leased car for profit Successive leases 20 ‑ 130 Successive leases Previous disposals of the car 20 ‑ 135 No amount included if earlier disposal for market value 20 ‑ 140 Reducing the amount to be included if there has been an earlier disposal Miscellaneous rules 20 ‑ 145 No amount included if you inherited the car 20 ‑ 150 Reducing the amount to be included if another provision requires you to include an amount for the disposal 20 ‑ 155 Exception for particular cars taken on hire 20 ‑ 157 Exception for small business entities Disposals of interests in a car: special rules apply 20 ‑ 160 Disposal of an interest in a car

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1))

s 20-110 — Disposal of a leased car for profit

(1) Your assessable income includes the * profit you make on disposing of a * car if: (a) the car was designed mainly for carrying passengers; and (b) the car was leased to you and has been leased to no ‑ one else; and (c) you or another entity can deduct for the income year any of the lease payments paid or payable by you, or have deducted or can deduct any of them for an earlier income year, under this Act; and (d) you acquired the car from the lessor. Note 1: Even if subsection (1) does not apply, an amount may still be included in your assessable income: under section 20 ‑ 125 (which deals with more complicated cases that may involve your associate); or if you disposed of an interest in a car (rather than the car itself): see section 20 ‑ 160. Note 2: In some cases you do not include an amount in your assessable income: if there has been an earlier disposal of the car for market value: see section 20 ‑ 135; or if you inherited the car: see section 20 ‑ 145; or if the car was let on hire in the circumstances set out in section 20 ‑ 155. (2) However, the amount included cannot exceed the smaller of these limits: (a) the total lease payments for the lease that you or another entity have deducted or can deduct under this Act for an income year; (b) the amount of * notional depreciation for the lease period. Note 1: If, because of more than one lease of the car, there is more than one way to work out the amount to be included, you only include the largest amount: see section 20 ‑ 130. Note 2: In some cases you reduce the amount to be included: if there has been an earlier disposal of the car, or of an interest in it: see section 20 ‑ 140; or if another provision requires you to include an amount because of the disposal: see section 20 ‑ 150. (3) You increase those limits if you have previously leased the * car from the same lessor, or from an * associate of that lessor. You increase the first limit by the total lease payments for each previous lease of that kind that you or another entity have deducted or can deduct under this Act for an income year. You increase the second limit by the amount of * notional depreciation for the period of each previous lease of that kind.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 20-115 — Working out the profit on the disposal

(1) The profit on the disposal is the amount by which the * consideration receivable for the disposal exceeds: the amount it cost you to acquire the * car; plus: any capital expenditure you incurred on the car after acquiring it. (2) The consideration receivable is worked out using this table: Consideration receivable for the disposal of the car Item In this situation: the consideration receivable is: 1 you sell the * car for an amount specific to it the proceeds of the sale, less the expenses of the sale 2 you sell the * car with other property without a specific amount being allocated to it the part of the total proceeds of the sale that is reasonably attributable to the car less the part of the reasonably attributable expenses of the sale 3 you trade the * car in and buy another car the value of the trade ‑ in, plus any other consideration you receive 4 you sell the * car and another entity buys another car the amount by which the cost of the other car is reduced by the sale, plus any other consideration you receive 5 you dispose of the * car to an insurer because it is lost or destroyed the amount or value received or receivable under the insurance policy (3) However, if the disposal of the * car is a * taxable supply, the consideration receivable does not include an amount equal to the * GST payable on the supply.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 20-120 — Meaning of notional depreciation

This is how to work out the notional depreciation for a lease period: Method statement Step 1. Compare: • the * car’s * cost to the lessor for the purposes of Subdivision 40 ‑ C (which is about working out the cost of * depreciating assets); with: • the car’s * termination value for the purposes of section 40 ‑ 300 when the lessor disposed of it. Step 2. If the car’s cost exceeds the car’s termination value, multiply the excess by: • the number of days in the lease period; divided by: • the number of days the lessor owned the car. Step 3. The result is the notional depreciation for the lease period. Step 4. If the car’s cost does not exceed the car’s termination value, the notional depreciation for the lease period is zero. Note 1: The notional depreciation for the lease period represents: the amount you could have deducted for the car’s decline in value if, instead of leasing it, you had owned it and used it solely for the purpose of producing assessable income for that period; adjusted by: the balancing adjustment you would have made if you had disposed of the car at the end of that period. Note 2: The car’s cost to the lessor is worked out differently if the lessor acquired it in the 1996 ‑ 97 income year or an earlier income year: see section 20 ‑ 105 of the Income Tax (Transitional Provisions) Act 1997 . Note 3: The car’s termination value is worked out differently if the lessor disposed of it in the 1996 ‑ 97 income year or an earlier income year: see section 20 ‑ 110 of the Income Tax (Transitional Provisions) Act 1997 .

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1))

s 20-125 — Disposal of a leased car for profit

(1) Your assessable income includes the * profit you make on disposing of a * car if: (a) section 20 ‑ 110 does not include an amount in your assessable income because of the disposal; and (b) the car was designed mainly for carrying passengers; and (c) the car was leased to you or your * associate; and (d) you, your associate or another entity can deduct for the income year any of the lease payments paid or payable by the lessee, or have deducted or can deduct any of them for an earlier income year, under this Act; and (e) either: (i) you, your associate, or entities including you or your associate, acquired the car from the lessor; or (ii) another entity acquired the car from the lessor under an * arrangement that enabled you or your associate to acquire the car. Note 1: Even if subsection (1) does not apply, an amount may be included in your assessable income if you disposed of an interest in a car (rather than the car itself): see section 20 ‑ 160. Note 2: In some cases you do not include an amount in your assessable income: if there has been an earlier disposal of the car for market value: see section 20 ‑ 135; or if you inherited the car: see section 20 ‑ 145; or if the car was let on hire in the circumstances set out in section 20 ‑ 155. (2) However, the amount included cannot exceed the smallest of these limits: (a) the total lease payments for the lease that you, your * associate or another entity have deducted or can deduct under this Act for an income year; (b) the amount of * notional depreciation for the lease period; (c) if an entity other than you, or if entities including you, acquired the * car from the lessor—the amount by which the * consideration receivable for the disposal of the car by you exceeds the total of: (i) the car’s cost to that entity, or those entities; and (ii) any capital expenditure that entity, or any of those entities, incurred on the car after that acquisition and before you acquired it. Note 1: If, because of more than one lease of the car, there is more than one way to work out the amount to be included, you only include the largest amount: see section 20 ‑ 130. Note 2: In some cases you reduce the amount to be included: if there has been an earlier disposal of the car, or of an interest in it: see section 20 ‑ 140; or if another provision requires you to include an amount because of the disposal: see section 20 ‑ 150. Example: Your associate leases a car for 5 years and then acquires it from the lessor for $4,000. Your associate sells it to you for $3,000. You sell it for $10,000. Your profit is $10,000 (the consideration receivable) less $3,000 (the car’s cost to you) = $7,000. The first 2 limits on the amount to be included in your assessable income are $9,000 (total deductible lease payments for the lease) and $8,000 (notional depreciation for the lease period). Since your associate acquired the car from the lessor, the third limit is $10,000 (the consideration receivable by you) less $4,000 (the car’s cost to the associate) = $6,000. The amount you include in your assessable income cannot exceed the smallest of the limits. So, you do not include your profit of $7,000. Instead, you include $6,000 (the smallest of the limits). (3) You increase the first 2 limits if you, or your associate, have previously leased the * car from the same lessor, or from an associate of that lessor. You increase the first limit by the total lease payments for each previous lease of that kind that you, your * associate or another entity have deducted or can deduct under this Act for an income year. You increase the second limit by the amount of * notional depreciation for the period of each previous lease of that kind.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 20-130 — Successive leases

If, because of 2 or more leases of the * car, there are different amounts that could be included in your assessable income because of the disposal, only the largest of those amounts is included.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 20-135 — No amount included if earlier disposal for market value

You do not include an amount in your assessable income because of the disposal if, after the lessor disposed of the * car and before you disposed of it, an entity other than you disposed of the car and: (a) the * consideration receivable for that disposal was at least the * market value of the car at the time of that disposal; or (b) because of that disposal, that market value was included, or an amount worked out using that market value was included, in the entity’s assessable income under this Act.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 20-140 — Reducing the amount to be included if there has been an earlier disposal

Each limit on the amount to be included in your assessable income because of your disposal of the * car is reduced if, after the lease period began and before your disposal, the car, or an interest in it, was disposed of in one of these situations: Reducing each limit on the amount to be included Item In this situation: reduce each limit by: 1 Section 20 ‑ 110 or 20 ‑ 125 included an amount in your assessable income in respect of such an earlier disposal by you that amount 2 Section 20 ‑ 110 or 20 ‑ 125 included an amount in another entity’s assessable income in respect of such an earlier disposal by the other entity that amount 3 Section 20 ‑ 110 or 20 ‑ 125 would have included an amount in your assessable income in respect of such an earlier disposal by you but for the operation of section 20 ‑ 145 that amount 4 Section 20 ‑ 110 or 20 ‑ 125 would have included an amount in another entity’s assessable income in respect of such an earlier disposal by the other entity but for the operation of section 20 ‑ 145 that amount 5 Section 20 ‑ 150 reduced the amount to be included in your assessable income in respect of such an earlier disposal by you the amount of the reduction 6 Section 20 ‑ 150 reduced the amount to be included in another entity’s assessable income in respect of such an earlier disposal by the other entity the amount of the reduction Examples: Your associate leases a car for 5 years and then acquires it. Your associate disposes of it to you and section 20 ‑ 110 includes $500 in your associate’s assessable income. You later dispose of the car. In working out the amount to include in your assessable income for your disposal, you can reduce each limit in subsection 20 ‑ 125(2) by $500 because the disposal by your associate occurred after the lease period began. Contrast this case: You lease a car for 5 years and then acquire it. You dispose of it to another entity and section 20 ‑ 110 includes $1,000 in your assessable income. You lease the car from that entity for 2 years and then acquire it. You later dispose of it. In working out the amount to include in your assessable income in respect of the second lease, you cannot reduce each limit in subsection 20 ‑ 110(2) by $1,000 because the first disposal did not occur after the start of that lease. Note: If the earlier disposal occurred in the 1996 ‑ 97 income year or an earlier income year, each limit may be able to be reduced by a further amount: see section 20 ‑ 115 of the Income Tax (Transitional Provisions) Act 1997 .

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 20-145 — No amount included if you inherited the car

You do not include an amount in your assessable income because of the disposal if you inherited the * car.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 20-150 — Reducing the amount to be included if another provision requires you to include an amount for the disposal

The amount to be included in your assessable income because of the disposal is reduced by any amount that another provision of this Act (except sections 40 ‑ 285 and 40 ‑ 370) requires you to include in your assessable income because of the disposal. Note: sections 40 ‑ 285 and 40 ‑ 370 are about including an amount after making a balancing adjustment on the disposal of a car.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1))

s 20-155 — Exception for particular cars taken on hire

This Subdivision does not apply to these kinds of leases: (a) letting a * car on hire under a * hire purchase agreement; or (b) letting a * car on hire under an agreement of a kind ordinarily entered into by people who take cars on hire intermittently on an hourly, daily, weekly or monthly basis.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 174 of 1997, effective Sch 6 (items 1–16, 23(1)) and Sch 9 (items 1–23, 30(1)): 21 Nov 1997 (s 2(1), (3))

s 20-157 — Exception for small business entities

This Subdivision does not apply to you if, at any time in the income year in which you disposed of the * car, it was allocated to a pool of yours under Division 328.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 80 of 2007, effective 21 June 2007

s 20-160 — Disposal of an interest in a car

(1) This Subdivision applies to the disposal of an interest in a * car in almost the same way as it does to the disposal of the car itself. The differences are set out below. (2) Your assessable income includes so much of your * profit on the disposal as is reasonable. The limits in subsections 20 ‑ 110(2) and 20 ‑ 125(2) do not apply. (3) The cost of the interest to you is taken to be a reasonable amount. (4) Sections 20 ‑ 135 and 20 ‑ 140 do not apply to the disposal. Note 1: Section 20 ‑ 135 says that you do not include an amount if there has been an earlier disposal of the car for market value. Note 2: Section 20 ‑ 140 allows you to reduce the amount to be included if there has been an earlier disposal of the car. (5) Section 20 ‑ 145 applies to the disposal if you inherited either the interest or the * car itself. Note: Section 20 ‑ 145 says that you do not include an amount if you inherited the car.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 25-1 — What this Division is about

This Division sets out some amounts you can deduct. Remember that the general rules about deductions in Division 8 (which is about general deductions) apply to this Division. Table of sections Operative provisions 25 ‑ 5 Tax ‑ related expenses 25 ‑ 10 Repairs 25 ‑ 15 Amount paid for lease obligation to repair 25 ‑ 20 Lease document expenses 25 ‑ 25 Borrowing expenses 25 ‑ 30 Expenses of discharging a mortgage 25 ‑ 35 Bad debts 25 ‑ 40 Loss from profit ‑ making undertaking or plan 25 ‑ 45 Loss by theft etc. 25 ‑ 47 Misappropriation where a balancing adjustment event occurs 25 ‑ 50 Payments of pensions, gratuities or retiring allowances 25 ‑ 55 Payments to associations 25 ‑ 60 Parliament election expenses 25 ‑ 65 Local government election expenses 25 ‑ 70 Deduction for election expenses does not extend to entertainment 25 ‑ 75 Rates and land taxes on premises used to produce mutual receipts 25 ‑ 85 Certain returns in respect of debt interests 25 ‑ 90 Deduction relating to foreign non ‑ assessable non ‑ exempt income 25 ‑ 95 Deduction for work in progress amounts 25 ‑ 100 Travel between workplaces 25 ‑ 110 Capital expenditure to terminate lease etc. 25 ‑ 115 Deduction for payment of rent from land investment by operating entity to asset entity in relation to approved economic infrastructure facility 25 ‑ 120 Transitional—deduction for payment of rent from land investment by operating entity to asset entity 25 ‑ 125 COVID ‑ 19 tests

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 25-130 — Standard deduction for work ‑ related expenses

(1) You can deduct the amount provided by subsection (2) for an income year if: (a) you are an individual; and (b) you are an Australian resident at any time during the income year; and (c) you derive * assessable labour income in the income year. (2) The amount is the lesser of: (a) $1,000; and (b) the total amount of your * assessable labour income for the income year; reduced, but not below zero, by the sum of the following amounts (if any): (c) subject to subsection (3), each of your deductions for the income year under section 8 ‑ 1 (general deductions), to the extent that the loss or outgoing that gives rise to the deduction is incurred in gaining or producing your assessable labour income; (d) each of your deductions for the income year under Division 28 (car expenses), to the extent that the deduction arises in respect of gaining or producing your assessable labour income; (e) each of your deductions for the income year under section 25 ‑ 100 (travel between workplaces), to the extent that either of the following is satisfied in relation to the deduction: (i) while you were at the first place mentioned in paragraph 25 ‑ 100(2)(a), you were engaged in activities to gain or produce your assessable labour income; (ii) while you were at the second place mentioned in paragraph 25 ‑ 100(2)(b), you were engaged in activities to gain or produce your assessable labour income; (f) each of your deductions for the income year under any of the following provisions, to the extent that the deduction arises in respect of a * depreciating asset that is used for the purpose of gaining or producing your assessable labour income: (i) section 25 ‑ 10 (repairs); (ii) Subdivision 40 ‑ B (deducting amounts for depreciating assets); (iii) Subdivision 40 ‑ D (balancing adjustments); (g) each of your deductions under section 25 ‑ 125 (COVID ‑ 19 tests) for the income year. (3) For the purposes of paragraph (2)(c), disregard each of your deductions under section 8 ‑ 1 to the extent that the deduction is in respect of any of the following: (a) an income protection insurance premium; (b) a personal sickness insurance premium; (c) an accident insurance premium; (d) membership of a trade, business or professional association. (4) Your assessable labour income , for an income year, is each amount included in your assessable income for the income year from which an amount must be withheld (even if the amount is not withheld) under any of the following provisions in Schedule 1 to the Taxation Administration Act 1953 : (a) section 12 ‑ 35 (payment to employee); (b) section 12 ‑ 40 (payment to company director); (c) section 12 ‑ 45 (payment to office holder); (d) section 12 ‑ 47 (payment to religious practitioners); (e) section 12 ‑ 50 (return to work payment); (f) Subdivision 12 ‑ C (payments for retirement or because of termination of employment); (g) paragraph 12 ‑ 110(1)(ca) (parental leave pay).

Amendment history: Inserted by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 25-5 — Tax ‑ related expenses

(1) You can deduct expenditure you incur to the extent that it is for: (a) managing your * tax affairs; or (b) complying with an obligation imposed on you by a * Commonwealth law, insofar as that obligation relates to the * tax affairs of an entity; or (ca) a penalty under Subdivision 162 ‑ D of the * GST Act; or (cb) levy under the Major Bank Levy Act 2017 ; or (d) obtaining a valuation in accordance with section 30 ‑ 212 or 31 ‑ 15; or (e) managing your * Australian GloBE tax affairs; or (f) complying with an obligation imposed on you by a * Commonwealth law, insofar as that obligation relates to the Australian GloBE tax affairs of an entity. Note 1: To find out whether a trustee of a deceased estate can deduct expenditure under this section, see subsection 69(7) of the Income Tax Assessment Act 1936 . Note 2: If you receive an amount as recoupment of the expenditure, the amount may be included in your assessable income: see Subdivision 20 ‑ A. No deduction for certain expenditure (2) You cannot deduct under subsection (1): (a) * tax; or (b) an amount withheld or payable under Part 2 ‑ 5 or Part 2 ‑ 10 in Schedule 1 to the Taxation Administration Act 1953 ; or (c) expenditure for * borrowing money (including payments of interest) to pay an amount covered by paragraph (a) or (b); or (d) expenditure for a matter relating to the commission (or possible commission) of an offence against an * Australian law or a * foreign law; or (e) a fee or commission for advice about the operation of a * Commonwealth law relating to taxation, unless that advice is provided by a * recognised tax adviser. No deduction for expenditure excluded from general deductions (3) You cannot deduct expenditure under subsection (1) to the extent that a provision of this Act (except section 8 ‑ 1) expressly prevents or limits your deducting it under section 8 ‑ 1 (about general deductions). It does not matter whether the provision specifically refers to section 8 ‑ 1. No deduction for capital expenditure (4) You cannot deduct capital expenditure under subsection (1). However, for this purpose, expenditure is not capital expenditure merely because the * tax affairs or * Australian GloBE tax affairs concerned relate to matters of a capital nature. Example: Under this section, you can deduct expenditure you incur in applying for a private ruling on whether you can depreciate an item of property. Use of property taken to be for income producing purpose (5) Under some provisions of this Act it is important to decide whether you used property for the * purpose of producing assessable income. For provisions of that kind, your use of property is taken to be for that purpose insofar as you use the property for: (a) managing your * tax affairs; or (b) complying with an obligation imposed on you by a * Commonwealth law, insofar as that obligation relates to the * tax affairs of another entity. Example: You buy a computer to prepare your tax returns. The expenditure you incur in buying the computer is capital expenditure and cannot be deducted under this section. However, to the extent that you use the computer in preparing your income tax return, you will be able to deduct the decline in value of your computer under Division 40. That is because, under this subsection, the computer is property that you are taken to use for the purpose of producing assessable income. (6) If another provision of this Act expressly provides that a particular use of property is not taken to be for the * purpose of producing assessable income, that provision overrides subsection (5). Expenditure by trustee of deceased estate (8) If: (a) after you die, the trustee of your deceased estate incurs expenditure; and (b) had you incurred the expenditure before you died, you could have deducted it under subsection (1); for the purposes of assessing the trustee for the income year in which you died, the expenditure is a deduction under that subsection.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 11 of 1999, effective Sch 1 (items 277–280, 404): 1 July 1999 (s 2(3)) | Amended by No 178 of 1999, effective Schedule 1 (items 6, 8, 70–78): 1 July 2000 Remainder: Royal Assent | Amended by No 179 of 1999, effective Sch 7, Sch 8, Sch 16 (items 18, 19, 37) and Sch 18: 22 Dec 1999 (s 2(1), (7)(d), (e)) Sch 11 (items 80–105) and Sch 18 (items 4, 5, 17, 21, 32): 1 July 2000 (s 2(9)(b), (14)) | Amended by No 58 of 2000, effective s 4, Sch 2 (items 2–4(2)), Sch 5, Sch 6 (items 1–13, 17, 18, 20–32, 34), Sch 9 and Sch 10 (items 12–17(3)–(6), 31–38(3)–(7)): 31 May 2000 (s 2(1)) Sch 4: 17 Dec 1999 (s 2(8)) Sch 6 (items 14–16): never commenced (s 2(10)) Sch 6 (item 19): 16 July 1999 (s 2(11)) Sch 8 (item 19): 1 July 1998 (s 2(13)) | Amended by No 73 of 2001, effective Schedule 1 (items 69–78): 23 May 2001 Schedule 2 (items 48–52): 1 Jan 2001 Schedule 3 (items 34–36): 1 Apr 2001 Remainder: Royal Assent | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 167 of 2001, effective Sch 4 (items 8–10) and Sch 7 and 8: 1 Oct 2001 (s 2(1)) | Amended by No 75 of 2005, effective 29 June 2005 | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 14 of 2009, effective Schedule 1, Schedule 4 (items 11–34, 52) and Schedule 5 (items 7–13): Royal Assent Schedule 5 (items 2, 3, 14): 29 Jan 2009 Schedule 5 (items 5, 6): 1 July 2011 | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011 | Amended by No 64 of 2017, effective Sch 1 (items 4–13, 23): 24 June 2017 (s 2(1) item 2) | Amended by No 134 of 2024, effective sch 1 (items 6 ‑ 29, 66): 11 Dec 2024 (s 2(1) item 1) | Amended by No 29 of 2025, effective sch 2: 1 Apr 2025 (s 2(1) item 2)

s 25-10 — Repairs

(1) You can deduct expenditure you incur for repairs to premises (or part of premises) or a * depreciating asset that you held or used solely for the * purpose of producing assessable income. Property held or used partly for that purpose (2) If you held or used the property only partly for that purpose, you can deduct so much of the expenditure as is reasonable in the circumstances. No deduction for capital expenditure (3) You cannot deduct capital expenditure under this section.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1))

s 25-15 — Amount paid for lease obligation to repair

You can deduct an amount that you pay for failing to comply with a lease obligation to make repairs to premises if you use or have used the premises for the * purpose of producing assessable income. Note: The amount is assessable income of the entity to which you pay it: either as ordinary income under section 6 ‑ 5 or because it is included by section 15 ‑ 25.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 25-20 — Lease document expenses

(1) You can deduct expenditure you incur for preparing, registering or stamping: (a) a lease of property; or (b) an assignment or surrender of a lease of property; if you have used or will use the property solely for the * purpose of producing assessable income. Property used partly for that purpose (2) If you have used, or will use, the leased property only partly for that purpose, you can deduct the expenditure to the extent that you have used, or will use, the leased property for that purpose.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 25-25 — Borrowing expenses

(1) You can deduct expenditure you incur for * borrowing money, to the extent that you use the money for the * purpose of producing assessable income. In most cases the deduction is spread over the * period of the loan. For the cases where the deduction is not spread, see subsection (6). Note: Your deductions under this section may be reduced if any of your commercial debts have been forgiven in the income year: see Subdivision 245 ‑ E. Income year when money used solely for the purpose of producing assessable income (2) You can deduct for an income year the maximum amount worked out under subsection (4) if you use the * borrowed money during that income year solely for the * purpose of producing assessable income. Example: In 1997 ‑ 98 you borrow $100,000 and incur expenditure of $1,500 for the borrowing. You use the money to buy a house. Throughout 1998 ‑ 99 you rent the house to a tenant. You can deduct for the expenditure for 1998 ‑ 99 the maximum amount worked out under subsection (4). Income year when borrowed money used partly for that purpose (3) If you use the money only partly for that purpose during that income year, you can deduct the proportion of that maximum amount that is appropriate having regard to the extent that you used the * borrowed money for that purpose. Note: You cannot deduct anything for that income year if you do not use the money for that purpose at all during that income year. Maximum deduction for an income year (4) You work out as follows the maximum amount that you can deduct for the expenditure for an income year: Method statement Step 1. Work out the remaining expenditure as follows: • For the income year in which the * period of the loan begins, it is the amount of the expenditure. • For a later income year, it is the amount of the expenditure reduced by the maximum amount that you can deduct for the expenditure for each earlier income year. Step 2. Work out the remaining loan period as follows: • For the income year in which the * period of the loan begins, it is the period of the loan (as determined at the end of the income year). • For a later income year, it is the period from the start of the income year until the end of the period of the loan (as determined at the end of the income year). Step 3. Divide the remaining expenditure by the number of days in the remaining loan period. Step 4. Multiply the result from Step 3 by the number of days in the remaining loan period that are in the income year. Example: To continue the example in subsection (2): suppose the original period of the loan is 4 years starting on 1 September 1997. What is the maximum amount you can deduct for the expenditure for 1997 ‑ 98? Applying the method statement: After Step 1: the remaining expenditure is $1,500 (the amount of the expenditure). After Step 2: the remaining loan period is 4 years from 1 September 1997 (1,461 days). After Step 3: the result is $1,500 divided by 1,461 = $1.03. After Step 4: the result is $1.03 multiplied by 302 days = $310.06. Suppose you repay the loan early, on 31 December 1998. What is the maximum amount you can deduct for the expenditure for 1998 ‑ 99? Applying the method statement: After Step 1: the remaining expenditure is $1,500 (the amount of the expenditure) reduced by $310.06 (the maximum amount you can deduct for 1997 ‑ 98) = $1,189.94. After Step 2: the remaining loan period is the period from 1 July 1998 to 31 December 1998 (183 days). After Step 3: the result is $1,189.94 divided by 183 days = $6.50. After Step 4: the result is $6.50 multiplied by 183 days = $1,189.94. Meaning of period of the loan (5) The period of the loan is the shortest of these periods: (a) the period of the loan as specified in the original loan contract; (b) the period starting on the first day on which the money was borrowed and ending on the day the loan is repaid; (c) 5 years starting on the first day on which the money was borrowed. When deduction not spread (6) If the total of the following is $100 or less: (a) each amount of expenditure you incur in an income year for * borrowing money you use during that income year solely for the * purpose of producing assessable income; (b) for each amount of expenditure you incur in that income year for borrowing money you use during that income year only partly for that purpose—the proportion of that amount that is appropriate having regard to the extent that you use the money during that income year for that purpose; you can deduct for the income year: (c) each amount covered by paragraph (a); and (d) each proportion covered by paragraph (b).

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 57 of 2002, effective Sch 2: 1 July 2002 (s 2(1) item 3) Sch 4 (items 3, 4): 1 July 2000 (s 2(1) item 5) Sch 4 (items 5–8), Sch 7, Sch 9 (items 9, 11, 12, 15–20, 22–40, 45), Sch 11 (items 2–5), Sch 12 (items 16–18, 20, 25, 26): 3 July 2002 (s 2(1) items 6, 7, 9, 11, 13, 15, 16, 18, 28, 30, 33) Sch 9 (items 10, 13, 14, 21) and Sch 12 (items 23, 24): 1 July 1997 (s 2(1) items 10, 12, 14, 32) Sch 12 (item 19): 30 June 1998 (s 2(1) item 29) Sch 12 (items 21, 22): 22 June 1998 (s 2(1) item 31) Sch 12 (items 27, 28): 16 Apr 1998 (s 2(1) item 34) Sch 12 (item 29): 19 Sept 1997 (s 2(1) item 35) | Amended by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 15 of 2017, effective Sch 1 (item 1): 1 Mar 2017 (s 2(1) item 2) Sch 2 and Sch 4 (items 26–69, 71–83): 1 Apr 2017 (s 2(1) items 3, 8, 10) Sch 4 (item 70): 19 Mar 2015 (s 2(1) item 9)

s 25-30 — Expenses of discharging a mortgage

Mortgage for borrowed money (1) You can deduct expenditure you incur to discharge a mortgage that you gave as security for the repayment of money that you * borrowed if you used the money solely for the * purpose of producing assessable income. Mortgage for property bought (2) You can deduct expenditure you incur to discharge a mortgage that you gave as security for the payment of the whole or part of the purchase price of property that you bought if you used the property solely for the * purpose of producing assessable income. Money or property used partly for that purpose (3) If you used the money you * borrowed, or the property you bought, only partly for the * purpose of producing assessable income, you can deduct the expenditure to the extent that you used the money or property for that purpose. No deduction for payments of principal or interest (4) You cannot deduct payments of principal or interest under this section.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 57 of 2002, effective Sch 2: 1 July 2002 (s 2(1) item 3) Sch 4 (items 3, 4): 1 July 2000 (s 2(1) item 5) Sch 4 (items 5–8), Sch 7, Sch 9 (items 9, 11, 12, 15–20, 22–40, 45), Sch 11 (items 2–5), Sch 12 (items 16–18, 20, 25, 26): 3 July 2002 (s 2(1) items 6, 7, 9, 11, 13, 15, 16, 18, 28, 30, 33) Sch 9 (items 10, 13, 14, 21) and Sch 12 (items 23, 24): 1 July 1997 (s 2(1) items 10, 12, 14, 32) Sch 12 (item 19): 30 June 1998 (s 2(1) item 29) Sch 12 (items 21, 22): 22 June 1998 (s 2(1) item 31) Sch 12 (items 27, 28): 16 Apr 1998 (s 2(1) item 34) Sch 12 (item 29): 19 Sept 1997 (s 2(1) item 35)

s 25-35 — Bad debts

(1) You can deduct a debt (or part of a debt) that you write off as bad in the income year if: (a) it was included in your assessable income for the income year or for an earlier income year; or (b) it is in respect of money that you lent in the ordinary course of your * business of lending money. Note: If a bad debt is in respect of a payment that is required to be made under a qualifying security (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936 ): see subsection 63(1A) of that Act. Writing off a debt you have bought (2) You can deduct a debt that you write off as bad in the income year if you bought the debt in the ordinary course of your * business of lending money. However, you cannot deduct more than the expenditure you incurred in buying the debt. Writing off part of a debt you have bought (3) You can deduct a part of a debt if: (a) you write off that part as bad in the income year; and (b) you bought the debt in the ordinary course of your * business of lending money. (4) However, the maximum that you can deduct under subsection (3) for one or more income years is the amount (if any) by which: • the expenditure you incurred in buying the debt; exceeds: • so much of the debt as has not yet been written off as bad. Limit on deductions for bad debts under leases of luxury cars (4A) There is a limit to how much you can deduct under this section for debts you write off that relate to * luxury car lease payments that have become or will become liable to be made under a lease of a * car to which Division 242 (about luxury car leases) applies. (4B) The most you can deduct for an income year is: • the interest for the notional loan you are taken to have made to the lessee; reduced by: • each amount that you have deducted, or can deduct, for an earlier income year under this section (or section 63 of the Income Tax Assessment Act 1936 ) for debts relating to * luxury car lease payments that have become or will become liable to be made under the lease. Special rules affecting deductions under this section (5) The rules described in the table may affect your entitlement to deductions under this section, or may result in a deduction being reversed. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 . Rules affecting deductions for bad debts Item For the rules about this situation: See: 1 A company cannot deduct a bad debt if there has been a change in ownership or control of the company and the company has not satisfied the business continuity test. Subdivisions 165 ‑ C and 166 ‑ C 2 A company cannot deduct a bad debt in various other cases that may involve trafficking in bad debts. Subdivision 175 ‑ C and section 63D 3 A deduction under this section is reduced if the debt is forgiven and the debtor and creditor are companies under common ownership and agree for the creditor to forgo the deduction to a specified extent. section 245 ‑ 90 4 If you receive an amount as recoupment of a bad debt that you can deduct under this section, the amount may be included in your assessable income. Subdivision 20 ‑ A 5 Certain trusts cannot deduct a bad debt if there has been a change in ownership or control or an abnormal trading in their units Divisions 266 and 267 in Schedule 2F 6 An entity that used to be a member of a consolidated group or MEC group can deduct a bad debt that used to be owed to a member of the group only if certain conditions are met Subdivisions 709 ‑ D and 719 ‑ I Note: Subsections 230 ‑ 180(3), (5) and (6) and 230 ‑ 195(3), (5) and (6) provide that in certain circumstances a deduction for a loss in relation to a financial arrangement is to be treated, for the purposes of this Act, as a deduction of a bad debt. The rules referred to in this subsection apply to that deduction.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 174 of 1997, effective Sch 6 (items 1–16, 23(1)) and Sch 9 (items 1–23, 30(1)): 21 Nov 1997 (s 2(1), (3)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 17 of 1998, effective 16 Apr 1998 | Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 101 of 2003, effective s. 4, Schedule 1 (items 2–20, 22), Schedule 2 (items 1–12), Schedule 3 (items 2–6) and Schedule 6 (items 16, 22–25, 27, 28, 30): Royal Assent s. 5: 11 Oct 2002 Sch 6 (items 17–19): 1 July 1997 (s 2(1) items 17, 18) Sch 6 (items 20, 21): 21 Dec 2000 (s 2(1) items 19, 20) Sch 6 (item 26): 10 Dec 1999 (s 2(1) item 22) Sch 6 (item 29): 30 June 2000 (s 2(1) item 25) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 162 of 2005, effective Schedule 2 (items 1–13), Schedule 3 (items 1–3, 16–19, 33) and Schedule 6 (items 28–32): Royal Assent Schedule 6 (items 1–5, 7–13): 1 July 2005 Sch 6 (items 6, 16–25): 1 July 2001 (s 2(1) items 4, 6) | Amended by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011 | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 25-40 — Loss from profit ‑ making undertaking or plan

(1) You can deduct a loss arising from the carrying on or carrying out of a profit ‑ making undertaking or plan if any profit from that plan would have been included in your assessable income by section 15 ‑ 15 (which is about profit ‑ making undertakings and plans). When section does not apply (2) You cannot deduct a loss under subsection (1) if the loss arises in respect of the sale of property acquired on or after 20 September 1985. Note: If you sell property you acquired before 20 September 1985 for profit ‑ making by sale, you may be able to deduct a loss on the sale: see section 52 of the Income Tax Assessment Act 1936 . Notice to Commissioner (3) You can deduct a loss under subsection (1), insofar as it arises in respect of property, only if: (a) you notified the Commissioner that you acquired the property for the purpose of profit ‑ making by sale or for the carrying on or carrying out of any profit ‑ making undertaking or plan (however described); or (b) the Commissioner is satisfied that you acquired the property for either of those purposes. When notice must have been given (4) The notice must have been given at or before the time you lodged your * income tax return: (a) for the income year in which you acquired the property; or (b) if you were not required to lodge an income tax return for that income year—for the first income year after that income year for which you were required to lodge one.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 25-45 — Loss by theft etc.

You can deduct a loss in respect of money if: (a) you discover the loss in the income year; and (b) the loss was caused by theft, stealing, embezzlement, larceny, defalcation or misappropriation by your employee or * agent (other than an individual you employ solely for private purposes); and (c) the money was included in your assessable income for the income year, or for an earlier income year. Note: If you receive an amount as recoupment of the loss, the amount may be included in your assessable income: see Subdivision 20 ‑ A.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1))

s 25-47 — Misappropriation where a balancing adjustment event occurs

(1) You can deduct an amount if: (a) a * balancing adjustment event occurs for a * depreciating asset you * held; and (b) your employee or * agent misappropriates (whether by theft, embezzlement, larceny or otherwise) all or part of the amount applicable to you under: (i) item 8 of the table in subsection 40 ‑ 300(2); or (ii) item 1, 3, 4 or 6 of the table in subsection 40 ‑ 305(1); in relation to the balancing adjustment event. Note 1: The amount applicable to you under subsection 40 ‑ 300(2) or 40 ‑ 305(1) may be the market value of an asset or of a non ‑ cash benefit. Note 2: If you receive an amount as recoupment of the amount misappropriated, the amount may be included in your assessable income: see Subdivision 20 ‑ A. (2) The amount you can deduct is so much of the amount misappropriated as represents an amount applicable to you under item 8 of the table in subsection 40 ‑ 300(2) or item 1, 3, 4 or 6 of the table in subsection 40 ‑ 305(1) in relation to the * balancing adjustment event. (3) You can deduct the amount for the income year in which the misappropriation happens. (4) You must reduce the amount you can deduct under this section if your deductions for the asset have been reduced under section 40 ‑ 25 because of use for a purpose other than a * taxable purpose. The reduction is by the same proportion you reduce the balancing adjustment amount for the asset under section 40 ‑ 290. (4A) You must further reduce the amount you can deduct under this section if your deductions for the asset have been reduced under section 40 ‑ 27 (about second ‑ hand assets in residential property). The reduction is by the same proportion you reduce the balancing adjustment amount for the asset under section 40 ‑ 291. (5) Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purposes of giving effect to this section for an income year if: (a) you discover the misappropriation after you lodged your * income tax return for the income year; and (b) the amendment is made at any time during the period of 4 years starting immediately after you discover the misappropriation.

Amendment history: Inserted by No 38 of 2008, effective Schedule 1, Schedules 3–6, Schedule 7 (items 1–3, 5), Schedule 8 (items 1–11), Schedule 9 (items 2–4), Schedule 10, Schedule 12 and Schedule 13: 24 June 2008 Schedule 8 (items 12–21): 1 July 2012 | Amended by No 126 of 2017, effective Sch 1 and 2: 1 Jan 2018 (s 2(1) item 2)

s 25-50 — Payments of pensions, gratuities or retiring allowances

(1) You can deduct a payment of a pension, gratuity or retiring allowance that you make to: (a) an employee; or (b) a former employee; or (c) a dependant of an employee or a former employee. (2) However, you can deduct it only to the extent that it is made in good faith in consideration of the past services of the employee, or former employee, in any * business that you carried on for the purpose of gaining or producing assessable income. (3) You cannot deduct a payment under this section if you can deduct it under any other provision of this Act.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 25-55 — Payments to associations

(1) You can deduct a payment you make for membership of a trade, business or professional association. Note: Alternatively, you can deduct the expense under section 8 ‑ 1 (which is about general deductions) if you satisfy the requirements of that section. Maximum amount—$42 (2) However, $42 is the maximum amount you can deduct under this section for the payments that you make in the income year to any one association. If you deduct under section 8 ‑ 1 (3) If you deduct a payment under section 8 ‑ 1 (which is about general deductions) instead of this section: (a) the payment does not count towards the $42 limit; and (b) the amount that you can deduct for the payment is not limited to $42.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 25-60 — Parliament election expenses

(1) You can deduct expenditure you incur in contesting an election for membership of: (a) the Parliament of the Commonwealth; or (b) the Parliament of a State; or (c) the Legislative Assembly for the Australian Capital Territory; or (d) the Legislative Assembly of the Northern Territory of Australia. Note 1: Entertainment expenses are excluded: see section 25 ‑ 70. Note 2: If you receive an amount as recoupment of the expenditure, the amount may be included in your assessable income: see Subdivision 20 ‑ A.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 47 of 1998, effective Schedule 1 (items 2, 4): 1 July 1998 Remainder: Royal Assent

s 25-65 — Local government election expenses

(1) You can deduct expenditure you incur in contesting an election for membership of a * local governing body, but you cannot deduct more than $1,000 per election. You deduct the expenditure for the income year in which you incur it. (2) However, you can deduct more than the $1,000 limit if: (a) you have received an amount as * recoupment of the expenditure; and (b) some or all of that amount is included in your assessable income for an income year; and (c) the total of your deductions for the election would be less than the $1,000 limit if you disregarded so much (the assessed recoupment ) of the expenditure as equals the amount so included in your assessable income. In that case: (d) the assessed recoupment is disregarded in applying the $1,000 limit; and (e) the further amount that you can deduct because of paragraph (d) is deducted for the income year referred to in paragraph (b). Example: Chris is elected to the Bunyip Shire Council. In the 2007 ‑ 08 income year he incurs expenditure of $1,200 in contesting the election, of which he deducts $1,000 (the limit under subsection (1)). In 2008 ‑ 09, Chris receives $360 as an assessable recoupment of the expenditure. $300 of that is included in his assessable income by section 20 ‑ 35 (as extended by section 20 ‑ 50). Because of the assessable recoupment, $300 of the expenditure is disregarded under paragraph (2)(d) in applying the $1,000 limit. As a result, Chris’s deductions are treated as being only $700, which is less than the limit. This does not affect his original deduction for 2007 ‑ 2008, but it means he can deduct the previously undeducted $200, for 2008 ‑ 09 (see paragraph (2)(e)). This triggers a further application of section 20 ‑ 35 (as extended by section 20 ‑ 50) to include the remaining $60 of the assessable recoupment in Chris’s assessable income for 2008 ‑ 09. His total deductions (net of recoupment included in assessable income) come to $840, which is the same as his original expenditure (net of recoupment). Note: An amount you receive as recoupment of expenditure may be included in your assessable income as an assessable recoupment under Subdivision 20 ‑ A, as ordinary income under section 6 ‑ 5 or as statutory income under some other provision.

Amendment history: Inserted by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 25-70 — Deduction for election expenses does not extend to entertainment

(1) To the extent that you incur expenditure in respect of providing * entertainment, you cannot deduct it under section 25 ‑ 60 or 25 ‑ 65. (2) However, subsection (1) does not stop you deducting expenditure to the extent that you incur it in respect of: (a) providing * entertainment that is available to the public generally; or (b) providing food or drink to yourself, unless it would be concluded that you have a purpose of enabling or facilitating * entertainment to be provided to someone else.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 25-75 — Rates and land taxes on premises used to produce mutual receipts

(1) An entity can deduct these amounts it pays for premises: (a) rates which are annually assessed; (b) land tax imposed under a * State law or * Territory law. But only if it uses the premises: (c) for the purpose of producing mutual receipts; or (d) in carrying on a * business for the purpose of producing mutual receipts; or (e) for the purpose of producing amounts to which section 59 ‑ 35 applies (amounts that would be mutual receipts but for prohibition on distributions to members or issue of MCIs); or (f) in carrying on a * business for the purpose of producing amounts to which section 59 ‑ 35 applies. Note: If the entity receives an amount as recoupment of the rates or land tax, the amount may be included in its assessable income: see Subdivision 20 ‑ A When premises used only for deductible purposes (2) The entity can deduct the whole of the rates or land tax if it uses the premises only in one or more of these ways: (a) for the purpose of producing mutual receipts; (b) in carrying on a * business for the purpose of producing mutual receipts; (c) for the * purpose of producing assessable income. When premises used partly for deductible purposes (3) If the entity uses the premises partly in one or more of the ways referred to in subsection (2) and partly in some other way, it can deduct the rates or land tax to the extent that it uses the premises in one or more of the ways referred to in that subsection. No deduction under section 8 ‑ 1 (4) The entity cannot deduct the rates or land tax under section 8 ‑ 1 (which is about general deductions).

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 13 of 2006, effective 29 Mar 2006 | Amended by No 37 of 2019, effective Sch 2 (items 17–22): 6 Apr 2019 (s 2(1) item 1)

s 25-85 — Certain returns in respect of debt interests

(1) This section deals with a * return that an entity pays or provides on a * debt interest. (2) The * return is not prevented from being a * general deduction for an income year under section 8 ‑ 1 merely because: (a) the return is * contingent on aspects of the economic performance (whether past, current or future) of: (i) the entity or a part of the entity’s activities; or (ii) a * connected entity of the entity or a part of the activities of a connected entity of the entity; or (b) the return secures a permanent or enduring benefit for the entity or a connected entity of the entity. (3) If the * return is a * dividend, the entity can deduct the return to the extent to which it would have been a * general deduction under section 8 ‑ 1 if: (a) the payment of the return were the incurring by the entity of a liability to pay the same amount as interest; and (b) that interest were incurred in respect of the finance raised by the entity and in respect of which the return was paid or provided; and (c) the * debt interest retained its character as a debt interest for the purposes of subsection (2). (4) Subsections (2) and (3) do not apply to a * return to the extent to which it would be a * general deduction under section 8 ‑ 1 apart from this section. (4A) Subsections (2) and (3) do not apply to a * return on a * debt interest that is a * Division 230 financial arrangement. (5) Subject to regulations made for the purposes of subsection (6), subsections (2) and (3) do not apply to the return to the extent to which the annually compounded internal rate of return exceeds the * benchmark rate of return for the interest increased by 150 basis points. (6) The regulations may provide that subsection (5) applies in the circumstances specified in the regulations as if the reference to 150 basis points were a reference to a greater or lesser number of basis points.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 10 of 2016, effective Sch 1 (items 1–32, 38, 39) and Sch 2 (items 3–9, 30): 26 Feb 2016 (s 2(1) items 2, 4)

s 25-90 — Deduction relating to foreign non ‑ assessable non ‑ exempt income

An * Australian entity can deduct an amount of loss or outgoing from its assessable income for an income year if: (a) the amount is incurred by the entity in deriving income from a foreign source; and (b) the income is * non ‑ assessable non ‑ exempt income under section 768 ‑ 5, or section 23AI or 23AK of the Income Tax Assessment Act 1936 ; and (c) the amount is a cost in relation to a * debt interest issued by the entity that is covered by paragraph (1)(a) of the definition of debt deduction . Note: This section does not apply to a Division 230 financial arrangement.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 66 of 2003, effective s 4, Sch 2 (items 1–5, 17), Sch 3 (items 49–70, 71–128, 129–131, 140, 141), Sch 4, Sch 6 (items 1, 3) and Sch 7 (items 6–9): 30 June 2003 (s 2(1) items 1, 3, 6–8, 8B–12, 12B, 14, 15, 17, 18) Sch 3 (items 70A, 128A): 2 Apr 2003 (s 2(1) items 8A, 12A) | Amended by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7)

s 25-95 — Deduction for work in progress amounts

(1) You can deduct a * work in progress amount that you pay for the income year in which you pay it to the extent that, as at the end of that income year: (a) a recoverable debt has arisen in respect of the completion or partial completion of the work to which the amount related; or (b) you reasonably expect a recoverable debt to arise in respect of the completion or partial completion of that work within the period of 12 months after the amount was paid. (2) You can deduct the remainder (if any) of the * work in progress amount for the following income year. (3) An amount is a work in progress amount to the extent that: (a) an entity agrees to pay the amount to another entity (the recipient ); and (b) the amount can be identified as being in respect of work (but not goods) that has been partially performed by the recipient for a third entity but not yet completed to the stage where a recoverable debt has arisen in respect of the completion or partial completion of the work. (4) An amount does not stop being a work in progress amount merely because it is paid after a recoverable debt has arisen in respect of the completion or partial completion of the work to which the amount related.

Amendment history: Inserted by No 119 of 2002, effective s 4, Sch 1 (items 2–5, 8), Sch 2 and Sch 3 (item 100): 2 Dec 2002 (s 2(1) items 1, 2, 10) Sch 1 (items 6, 7): ( see Sch 10 (item 242) of Act No. 41, 2005) Sch 3 (items 4–78): 30 June 2001 (s 2(1) items 3–8)

s 25-100 — Travel between workplaces

When a deduction is allowed (1) If you are an individual, you can deduct a * transport expense to the extent that it is incurred in your * travel between workplaces. Transport expense (1A) A transport expense is a loss or outgoing to do with transport (including the decline in value of a * depreciating asset used in connection with transport) but does not include: (a) a loss or outgoing for accommodation or for food or drink; or (b) expenditure incidental to transport. Travel between workplaces (2) Your travel between workplaces is travel directly between 2 places, to the extent that: (a) while you were at the first place, you were: (i) engaged in activities to gain or produce your assessable income; or (ii) engaged in activities in the course of carrying on a * business for the purpose of gaining or producing your assessable income; and (b) the purpose of your travel to the second place was to: (i) engage in activities to gain or produce your assessable income; or (ii) engage in activities in the course of carrying on a business for the purpose of gaining or producing your assessable income; and you engaged in those activities while you were at the second place. (3) Travel between 2 places is not travel between workplaces if one of the places you are travelling between is a place at which you reside. (4) Travel between 2 places is not travel between workplaces if, at the time of your travel to the second place: (a) the arrangement under which you gained or produced assessable income at the first place has ceased; or (b) the * business in respect of which you engaged in activities at the first place has ceased. No deduction for capital expenditure (5) You cannot deduct expenditure under subsection (1) to the extent that the expenditure is capital, or of a capital nature.

Amendment history: Inserted by No 95 of 2004, effective s. 4, Schedules 2, 3, 5 and 11: Royal Assent Schedule 7 (items 1–10, 13): 1 July 2004 Schedule 10 (items 28–39, 44, 45): 1 July 2005 | Amended by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 25-110 — Capital expenditure to terminate lease etc.

(1) You can deduct an amount for capital expenditure you incur to terminate a lease or licence (including an authority, permit or quota) that results in the termination of the lease or licence if the expenditure is incurred: (a) in the course of carrying on a * business; or (b) in connection with ceasing to carry on a business. (2) The amount you can deduct is 20% of the expenditure: (a) for the income year in which the lease or licence is terminated; and (b) for each of the next 4 income years. Exceptions (3) You cannot deduct any amount for expenditure you incur to terminate a lease that, in accordance with * accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board, is classified as a finance lease. (4) If you incurred the expenditure under an * arrangement and: (a) there is at least one other party to the arrangement with whom you did not deal at * arm’s length; and (b) apart from this subsection, the amount of the expenditure would be more than the * market value of what it was for (assuming the termination did not occur and was never proposed to occur); the amount of expenditure you take into account is that market value. (5) You cannot deduct any amount for expenditure you incur to terminate a lease or licence if: (a) after the termination, you or an * associate of yours enters into another lease or licence with the same party or an associate of that party; and (b) the other lease or licence is of the same kind as the original one. (6) You cannot deduct any amount for expenditure you incur to terminate a lease or licence to the extent that the expenditure is for the granting or receipt of another lease or licence in relation to the asset that was the subject of the original lease or licence.

Amendment history: Inserted by No 32 of 2006, effective 6 Apr 2006 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 25-115 — Deduction for payment of rent from land investment by operating entity to asset entity in relation to approved economic infrastructure facility

(1) An entity that is an * operating entity in relation to a * cross staple arrangement can deduct an amount, for an income year, of * rent from land investment if: (a) another entity derives or receives the amount from the operating entity: (i) in the income year; and (ii) on or after 27 March 2018; and (b) the cross staple arrangement was entered into in relation to: (i) a facility that is covered by section 12 ‑ 439 in Schedule 1 to the Taxation Administration Act 1953 at a time in the income year; or (ii) an improvement to a facility that is covered by that section at a time in the income year; and (c) the other entity is an * asset entity in relation to the cross staple arrangement; and (d) apart from this subsection, the operating entity could otherwise deduct the amount under this Act; and (e) the amount is * excepted MIT CSA income of the asset entity for the income year; and (f) each entity that is a * stapled entity in relation to the cross staple arrangement has made a choice in accordance with subsection (3). (2) If the * asset entity is not a * managed investment trust in relation to the income year, for the purposes of paragraph (1)(e), treat it as a managed investment trust in relation to the income year. (3) An entity makes a choice in accordance with this subsection if: (a) the entity makes the choice in the * approved form; and (b) the entity makes the choice before: (i) the start of the income year in which the asset is first put to use; or (ii) a later time allowed by the Commissioner; and (c) the entity gives the choice to the Commissioner within 60 days after the entity makes the choice. (4) The choice cannot be revoked.

Amendment history: Inserted by No 34 of 2019, effective Sch 1 (items 1–5, 12, 13, 16), Sch 2, Sch 4 (items 3–6, 8, 9) and Sch 5 (items 1, 2, 5): 1 July 2019 (s 2(1) items 2, 3)

s 25-120 — Transitional—deduction for payment of rent from land investment by operating entity to asset entity

(1) This section applies if the requirements in subsection 12 ‑ 440(1) or (2) in Schedule 1 to the Taxation Administration Act 1953 are satisfied in relation to a * cross staple arrangement. (2) An entity that is an * operating entity in relation to the * cross staple arrangement can deduct, for an income year, an amount of * rent from land investment if: (a) another entity derives or receives the amount from the operating entity at a time that: (i) is in the income year; and (ii) is on or after 27 March 2018; and (iii) meets the requirements in subsection 12 ‑ 440(4) of Schedule 1 to the Taxation Administration Act 1953 ; and (b) the other entity is an * asset entity in relation to the cross staple arrangement; and (c) apart from this subsection, the operating entity could otherwise deduct the amount under this Act; and (d) the amount is * excepted MIT CSA income of the asset entity for the income year. (3) If the * asset entity is not a * managed investment trust in relation to the income year, for the purposes of paragraph (2)(d), treat it as a managed investment trust in relation to the income year.

Amendment history: Inserted by No 34 of 2019, effective Sch 1 (items 1–5, 12, 13, 16), Sch 2, Sch 4 (items 3–6, 8, 9) and Sch 5 (items 1, 2, 5): 1 July 2019 (s 2(1) items 2, 3)

s 25-125 — COVID ‑ 19 tests

(1) You can deduct a loss or outgoing to the extent it is incurred in gaining or producing your assessable income if: (a) you are an individual; and (b) the loss or outgoing is incurred in respect of testing you for the novel coronavirus SARS ‑ CoV ‑ 2 that causes COVID ‑ 19 using a test covered by subsection (3); and (c) the purpose of testing you is to determine whether you may attend or remain at a place where you: (i) engage in activities to gain or produce your assessable income; or (ii) engage in activities in the course of carrying on a * business for the purpose of gaining or producing your assessable income. (2) However, you cannot deduct a loss or outgoing under this section to the extent that it is a loss or outgoing of capital, or of a capital nature. (3) This subsection covers a test that: (a) is a polymerase chain reaction test; or (b) is a therapeutic good (within the meaning of the Therapeutic Goods Act 1989 ) that: (i) is included in the Australian Register of Therapeutic Goods maintained under section 9A of that Act; and (ii) has an intended purpose, accepted in relation to that inclusion, that relates to the detection of the novel coronavirus SARS ‑ CoV ‑ 2 that causes COVID ‑ 19.

Amendment history: Inserted by No 14 of 2022, effective sch 2, 3, 6, sch 8 (items 1-9): 1 Apr 2022 (s 2(1) items 3, 7, 9)

s 26-1 — What this Division is about

This Division sets out some amounts that you cannot deduct, or that you cannot deduct in full. Table of sections Operative provisions 26 ‑ 5 Penalties 26 ‑ 10 Leave payments 26 ‑ 15 Franchise fees windfall tax 26 ‑ 17 Commonwealth places windfall tax 26 ‑ 19 Rebatable benefits 26 ‑ 20 Assistance to students 26 ‑ 22 Political contributions and gifts 26 ‑ 25 Interest or royalty 26 ‑ 25A Payments to employees—labour mobility programs 26 ‑ 26 Non ‑ share distribution and dividends 26 ‑ 30 Relative’s travel expenses 26 ‑ 31 Travel related to use of residential premises as residential accommodation 26 ‑ 35 Reducing deductions for amounts paid to related entities 26 ‑ 40 Maintaining your family 26 ‑ 45 Recreational club expenses 26 ‑ 47 Non ‑ business boating activities 26 ‑ 50 Expenses for a leisure facility 26 ‑ 52 Bribes to foreign public officials 26 ‑ 53 Bribes to public officials 26 ‑ 54 Expenditure relating to illegal activities 26 ‑ 55 Limit on deductions 26 ‑ 60 Superannuation contributions surcharge 26 ‑ 68 Loss from disposal of eligible venture capital investments 26 ‑ 70 Loss from disposal of venture capital equity 26 ‑ 75 Excess non ‑ concessional contributions tax cannot be deducted 26 ‑ 80 Financing costs on loans to pay superannuation contribution 26 ‑ 85 Borrowing costs on loans to pay life insurance premiums 26 ‑ 90 Superannuation supervisory levy 26 96 Laminaria and Corallina decommissioning levy cannot be deducted 26 ‑ 97 National Disability Insurance Scheme expenditure 26 ‑ 98 Division 293 tax cannot be deducted 26 ‑ 99 Excess transfer balance tax cannot be deducted

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 26-99A — Division 296 tax cannot be deducted

26 ‑ 99B Build to rent development misuse tax cannot be deducted 26 ‑ 99C Australian IIR/UTPR tax and Australian DMT tax cannot be deducted 26 ‑ 100 Expenditure attributable to water infrastructure improvement payments 26 ‑ 102 Expenses associated with holding vacant land 26 ‑ 105 Non ‑ compliant payments for work and services 26 ‑ 155 Using or holding residential dwellings

Amendment history: Inserted by No 8 of 2026, effective sch 1 (items 12 ‑ 23), sch 2 (items 1 ‑ 10), sch 3 (items 1 ‑ 4): 1 Apr 2026 (s 2(1) items 2, 3)

s 26-160 — Meaning of residential dwelling and new residential dwelling

Meaning of residential dwelling (1) A residential dwelling means a * dwelling other than any of the following: (a) a caravan, mobile tiny home, or other mobile home; (b) a hotel, motel, inn, hostel or boarding house; (c) a dwelling providing accommodation to students in connection with a school or an education institution that is not a school; (d) a boat or other marine vessel. (2) For the purposes of subsection (1), a residential dwelling is taken to include any of the following things to the extent that the thing is available for use by an occupant of the * dwelling: (a) land adjacent to the dwelling; (b) a garage, storeroom or other structure associated with the dwelling. Meaning of new residential dwelling (3) A * residential dwelling is a new residential dwelling in relation to you if the requirements determined under subsection (4) are met in relation to you and the residential dwelling. (4) The Minister must, by legislative instrument, determine requirements for the purposes of subsection (3). Without limiting this subsection, the requirements may include requirements relating to one or more of the following: (a) the kind of * residential dwelling; (b) the kind of interest you hold in the residential dwelling and the circumstances in which you acquired your interest (such as whether you were the builder or a subsequent purchaser of the residential dwelling); (c) circumstances relating to the creation of the residential dwelling (such as whether the residential dwelling was built on vacant land, was created through substantial renovations of an existing building, or was built to replace a demolished residential dwelling); (d) whether the residential dwelling has a separate title, equitable title or similar legal interest that can be acquired by an entity. (4A) Before determining requirements for the purposes of subsection (4), the Minister must be satisfied that determining the requirements will assist in achieving the objective of genuinely adding to the supply of residential dwellings in Australia. (5) To avoid doubt, the Minister may determine requirements under subsection (4) relating to matters or circumstances existing before the commencement of this section.

Amendment history: Inserted by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 26-5 — Penalties

(1) You cannot deduct under this Act: (a) an amount (however described) payable, by way of penalty, under an * Australian law or a * foreign law; or (b) an amount ordered by a court to be paid on the conviction of an entity for an offence against an * Australian law or a * foreign law. (1A) Without limiting paragraph (1)(a), you cannot deduct under this Act the * general interest charge or the * shortfall interest charge. (2) This section does not apply to an amount payable, by way of penalty, under Subdivision 162 ‑ D of the * GST Act. Note: See paragraph 25 ‑ 5(1)(ca) for the deductibility of penalties that arise under Subdivision 162 ‑ D of the GST Act.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 73 of 2001, effective Schedule 1 (items 69–78): 23 May 2001 Schedule 2 (items 48–52): 1 Jan 2001 Schedule 3 (items 34–36): 1 Apr 2001 Remainder: Royal Assent | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 29 of 2025, effective sch 2: 1 Apr 2025 (s 2(1) item 2)

s 26-10 — Leave payments

(1) You cannot deduct under this Act a loss or outgoing for long service leave, annual leave, sick leave or other leave except: (a) an amount paid in the income year to the individual to whom the leave relates (or, if that individual has died, to that individual’s dependant or * legal personal representative); or (b) an * accrued leave transfer payment that is made in the income year. (2) An accrued leave transfer payment is a payment that an entity makes: (a) in respect of an individual’s leave (some or all of which accrued while the entity was required to make payments in respect of the individual’s leave, or leave the individual might take); and (b) when the entity is no longer required (or is about to stop being required) to make payments in respect of such leave; and (c) to another entity when the other entity has begun (or is about to begin) to be required to make payments in respect of such leave; and (d) under (or for the purposes of facilitating the provisions of) an * Australian law, or an award, order, determination or industrial agreement under an * Australian law. It does not matter whether the leave accrues to the individual as an employee or for some other reason. Example: Your employee goes to a new employer. You pay the new employer $2,000 for the employee’s unused long service leave because an industrial agreement requires you to make that payment. Note: An accrued leave transfer payment is included in the assessable income of the entity to which it is made: see section 15 ‑ 5.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 26-15 — Franchise fees windfall tax

You cannot deduct under this Act any tax that is imposed by the Franchise Fees Windfall Tax (Imposition) Act 1997 .

Amendment history: Inserted by No 134 of 1997, effective s 4(2) and Sch 1 (items 3–6): 19 Sept 1997 (s 2)

s 26-17 — Commonwealth places windfall tax

You cannot deduct under this Act any tax that is imposed by the Commonwealth Places Windfall Tax (Imposition) Act 1998 .

Amendment history: Inserted by No 23 of 1998, effective 17 Apr 1998

s 26-19 — Rebatable benefits

(1) You cannot deduct under this Act a loss or outgoing to the extent that the loss or outgoing is incurred in gaining or producing a rebatable benefit (within the meaning of section 160AAA of the Income Tax Assessment Act 1936 ). (2) To the extent that you use property in gaining or producing a rebatable benefit, your use of the property is taken not to be for the * purpose of producing assessable income if subsection (1) would stop you deducting a loss or outgoing if you incurred it in the income year in gaining or producing the rebatable benefit. Note: Under some provisions of this Act, in order to deduct an amount for your property, you must have used the property for the purpose of producing assessable income.

Amendment history: Inserted by No 71 of 2012, effective Sch 1, Sch 2 and Sch 3 (items 1, 2): 27 June 2012 (s 2(1) items 2, 3) Sch 5 (items 1–3): 1 July 2012 (s 2(1) item 6)

s 26-20 — Assistance to students

(1) You cannot deduct under this Act: (ca) a student contribution amount within the meaning of the Higher Education Support Act 2003 paid to a higher education provider (within the meaning of that Act); or (cb) a payment made to reduce a debt to the Commonwealth under Chapter 4 of that Act; or (cba) a payment made to reduce a debt to the Commonwealth under Part 3A of the VET Student Loans Act 2016 ; or (cc) a payment made to reduce a debt to the Commonwealth under Chapter 2AA of the Social Security Act 1991 or Part 2 of the Student Assistance Act 1973 ; or (cd) a payment made to reduce a debt to the Commonwealth under Chapter 3 of the Australian Apprenticeship Support Loans Act 2014 ; or (ce) a payment made to reduce a liability to overseas debtors repayment levy under the Student Loans (Overseas Debtors Repayment Levy) Act 2015 ; or (d) a payment made to reduce a debt to the Commonwealth, or to a participating corporation, under Chapter 2B of the Social Security Act 1991 or Part 4A of the Student Assistance Act 1973 . Exception when you provide a fringe benefit (2) Subsection (1) does not stop you deducting expenditure you incur in * providing a * fringe benefit.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 45 of 1998, effective Sch 12 (items 25–46): 1 July 1998 (s 2(1)) | Amended by No 150 of 2003, effective Sch 2 (items 136–143): 1 Jan 2004 (s 2(1) item 16) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 82 of 2014, effective Sch 1 (items 5–7): 18 July 2014 (s 2(1) item 2) | Amended by No 154 of 2015, effective Sch 5 (items 2–4): 1 Jan 2016 (s 2(1) item 9) | Amended by No 169 of 2015, effective Sch 1 (items 6–10, 111): 1 Jan 2016 (s 2(1) item 2) | Amended by No 116 of 2018, effective Sch 1 (items 27–32): 1 July 2019 (s 2(1) item 2B) | Amended by No 61 of 2023, effective sch 1 (items 132-136, 156-165): 1 Jan 2024 (s 2(1) item 1)

s 26-22 — Political contributions and gifts

You cannot deduct political contributions or gifts (1) You cannot deduct under this Act (other than Subdivision 30 ‑ DA): (a) a contribution (including a membership fee) or gift to a political party that is registered under Part XI of the Commonwealth Electoral Act 1918 or under corresponding State or Territory legislation; or (b) a contribution or gift to an individual when the individual is a candidate in an election for members of: (i) an * Australian legislature; or (ii) a * local governing body; or (c) a contribution or gift to an individual who is a member of: (i) an Australian legislature; or (ii) a local governing body. Exception for employees and office holders (2) However, subsection (1) does not apply to a loss or outgoing incurred in gaining or producing assessable income from which an amount is required to be withheld under section 12 ‑ 35 or 12 ‑ 45 in Schedule 1 to the Taxation Administration Act 1953 . Note: These provisions of the Taxation Administration Act 1953 require amounts to be withheld from income of employees and office holders. Starting and stopping being a candidate (3) For the purposes of this section, an individual: (a) starts being a candidate when the individual’s intention to be or to attempt to be a candidate for the election is publicly available; and (b) stops being a candidate at the earlier of: (i) the time when the result of the election is declared or otherwise publicly announced by an entity (an electoral official ) authorised under the relevant electoral legislation; and (ii) the time (if any) when the individual’s intention to no longer be a candidate for the election is publicly available. Starting being a member (4) An individual who becomes a member as a result of an election (including an election that is later declared void) is taken to start being a member when the individual’s election as a member is declared or otherwise publicly announced by an electoral official.

Amendment history: Inserted by No 16 of 2010, effective 15 Mar 2010

s 26-25 — Interest or royalty

(1) You cannot deduct under this Act interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ) or a * royalty if: (a) Subdivision 12 ‑ F in Schedule 1 to the Taxation Administration Act 1953 requires you to withhold an amount from the interest or royalty; and (b) either: (i) you fail to withhold the amount; or (ii) after withholding the amount, you fail to comply with section 16 ‑ 70 in that Schedule in relation to that amount. (2) You cannot deduct under this Act interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ), or a * royalty, that is in the form of a * non ‑ cash benefit if: (a) section 14 ‑ 5 or 14 ‑ 10 in Schedule 1 to the Taxation Administration Act 1953 requires you to pay an amount to the Commissioner before providing the benefit, because of Subdivision 12 ‑ F in that Schedule; and (b) you fail to pay the amount as required by that section. (3) If: (a) apart from subsection (1) or (2), you can deduct interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ) or a * royalty for an income year; and (b) the * withholding tax payable for the interest or the royalty is paid; you can deduct the interest or royalty for that income year.

Amendment history: Inserted by No 178 of 1999, effective Schedule 1 (items 6, 8, 70–78): 1 July 2000 Remainder: Royal Assent | Amended by No 44 of 2000, effective Sch 3 (item 38), Sch 4 (items 13–16) and Sch 5: 22 Dec 1999 (s 2(1))

s 26-25A — Payments to employees—labour mobility programs

No deduction to extent amount not withheld (1) You cannot deduct under this Act salary, wages, commission, bonuses or allowances from which Subdivision 12 ‑ FC in Schedule 1 to the Taxation Administration Act 1953 (about labour mobility programs) requires you to withhold an amount, to the extent that: (a) you fail to withhold the amount; or (b) after withholding the amount, you fail to comply with section 16 ‑ 70 in that Schedule in relation to that amount. Note: Section 16 ‑ 70 in that Schedule requires you to pay the amount to the Commissioner. Deduction to extent amount not withheld but withholding tax paid (2) You can deduct, for an income year, salary, wages, commission, bonuses or allowances to the extent that: (a) you cannot deduct the salary, wages, commission, bonuses or allowances for that income year only because of subsection (1) of this section; and (b) the * labour mobility program withholding tax payable for the salary, wages, commission, bonuses or allowance is paid.

Amendment history: Inserted by No 58 of 2012, effective Schedule 1 (items 2–6): 21 June 2012 ( see s. 2(1)) Schedule 4: Royal Assent Schedule 5: 1 July 2012 | Amended by No 75 of 2022, effective sch 4 (items 2-21, 38): 1 July 2022 (s 2(1) item 4)

s 26-26 — Non ‑ share distributions and dividends

(1) A company cannot deduct under this Act: (a) a * non ‑ share distribution; or (b) a return that has accrued on a * non ‑ share equity interest. (2) A company cannot deduct a * dividend paid on an * equity interest in the company as a * general deduction under this Act.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001

s 26-30 — Relative’s travel expenses

(1) You cannot deduct under this Act a loss or outgoing you incur, insofar as it is attributable to your * relative’s travel, if: (a) you travelled in the course of performing your duties as an employee, or in the course of carrying on a * business for the purpose of gaining or producing your assessable income; and (b) your relative accompanied you while you travelled. Exception to subsection (1) (2) Subsection (1) does not stop you deducting a loss or outgoing if: (a) your * relative, while accompanying you, performed substantial duties as your employer’s employee, or as your employee; and (b) it is reasonable to conclude that your relative would still have accompanied you even if he or she had not had a personal relationship with you. Exception when you provide a fringe benefit (3) Subsection (1) does not stop you deducting expenditure you incur in * providing a * fringe benefit. This section also applies to individuals who are not employees (4) If an individual is not an employee, but receives, or is entitled to receive, * withholding payments covered by subsection (6), this section applies to the individual as if: (a) he or she were an employee; and (b) the entity, who pays (or is liable to pay) * withholding payments covered by subsection (6) that result in the individual being in receipt of, or entitled to receive, such payments, were the individual’s employer; and (c) any other individual who receives (or is entitled to receive) * withholding payments covered by subsection (6): (i) that result in that other individual being in receipt of, or entitled to receive, such payments; and (ii) that the entity pays (or is liable to pay) to that other individual; were an employee of the entity. This section also applies to entities who are not employers (5) If an entity is not an employer, but pays (or is liable to pay) * withholding payments covered by subsection (6), this section applies to the entity as if: (a) it were an employer; and (b) an individual to whom the entity pays (or is liable to pay) such withholding payments were the entity’s employee. Withholding payments covered (6) This subsection covers: (a) a * withholding payment covered by any of the provisions in Schedule 1 to the Taxation Administration Act 1953 listed in the table; and (b) a withholding payment covered by section 12 ‑ 47 in Schedule 1 to the Taxation Administration Act 1953 where: (i) the payment is made to a religious practitioner by a religious institution; and (ii) the activity, or series of activities, for which the payment is made is done by the religious practitioner as a member of the religious institution. Withholding payments covered Item Provision Subject matter 1 Section 12 ‑ 40 Payment to company director 2 Section 12 ‑ 45 Payment to office holder 3 Section 12 ‑ 50 Return to work payment 4 Subdivision 12 ‑ D Benefit, training and compensation payments

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 179 of 1999, effective Sch 7, Sch 8, Sch 16 (items 18, 19, 37) and Sch 18: 22 Dec 1999 (s 2(1), (7)(d), (e)) Sch 11 (items 80–105) and Sch 18 (items 4, 5, 17, 21, 32): 1 July 2000 (s 2(9)(b), (14)) | Amended by No 168 of 2001, effective Schedule 2: 1 July 2000 Remainder: Royal Assent

s 26-31 — Travel related to use of residential premises as residential accommodation

(1) You cannot deduct under this Act a loss or outgoing you incur, insofar as it is related to travel, if: (a) it is incurred in gaining or producing your assessable income from the use of * residential premises as residential accommodation; and (b) it is not necessarily incurred in carrying on a * business for the purpose of gaining or producing your assessable income. Exception—kind of entity (2) Subsection (1) does not stop you deducting a loss or outgoing if, at any time during the income year in which the loss or outgoing is incurred, you are: (a) a * corporate tax entity; or (b) a * superannuation plan that is not a * self managed superannuation fund; or (c) a * managed investment trust; or (d) a public unit trust (within the meaning of section 102P of the Income Tax Assessment Act 1936 ); or (e) a unit trust or partnership, if each * member of the trust or partnership is covered by a paragraph of this subsection at that time during the income year.

Amendment history: Inserted by No 126 of 2017, effective Sch 1 and 2: 1 Jan 2018 (s 2(1) item 2)

s 26-35 — Reducing deductions for amounts paid to related entities

You can only deduct reasonable amounts paid to related entities (1) If, under another provision of this Act, you can deduct an amount for a payment you make, or for a liability you incur, to a * related entity, then you can only deduct so much of the amount as the Commissioner considers reasonable. Note: This section has a special operation if the payment is made, or the liability is incurred, by a partnership in which a private company is a partner: see section 65 (Payments to associated persons and relatives) of the Income Tax Assessment Act 1936 . Meaning of related entity (2) A related entity is any of the following: (a) your * relative; or (b) a partnership in which your relative is a partner. (3) In the case of a partnership, a related entity is any of the following: (a) a * relative of a partner in the partnership; (b) an individual who is or has been a director of a company that is a partner in the partnership and is a * private company for the income year; (c) an entity that is or has been a shareholder in a company of that kind; (d) a * relative of an individual who is or has been a director or shareholder of a company of that kind; (e) a beneficiary of a trust if the trustee is a partner in the partnership; (f) a * relative of a beneficiary of a trust if the trustee is a partner in the partnership; (g) another partnership, if a partner in the other partnership is a * relative of a partner in the first partnership. However, a partner in a partnership is not a related entity of the partnership. If you can’t deduct, then related entity doesn’t include amount as income (4) To the extent that subsection (1) stops you deducting an amount, the amount is neither assessable income, nor exempt income, of the * related entity.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 75 of 2010, effective Sch 1 (items 34, 35) and Sch 6 (items 7–10): 29 June 2010 (s 2(1) items 2, 9) Sch 2 (item 26): 1 July 2010 (s 2(1) item 4) Sch 2 (item 27): never commenced (s 2(1) item 5) Sch 3, Sch 4 and Sch 5 (items 1, 7–9): 28 June 2010 (s 2(1) items 6, 7) Sch 5 (items 10, 11): 1 Jan 2018 (s 2(1) item 8)

s 26-40 — Maintaining your family

You cannot deduct under this Act expenditure you incur for maintaining: (a) your * spouse (except a spouse permanently living separately and apart from you); or (b) your * child who is under 16 years. Example: A farmer cannot deduct an amount for food or lodgings that the farmer provides to his or her child who is under 16 years for the work the child performs on the farm.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 26-45 — Recreational club expenses

(1) You cannot deduct under this Act a loss or outgoing to the extent you incur it to obtain or maintain: (a) membership of a * recreational club; or (b) rights to enjoy (otherwise than as a * member) facilities provided by a * recreational club for the use or benefit of its * members; whether for yourself or someone else. Meaning of recreational club (2) A recreational club is a company that was established or is carried on mainly to provide facilities, for the use or benefit of its * members, for drinking, dining, * recreation or entertainment. Exception when you provide a fringe benefit (3) Subsection (1) does not stop you deducting expenditure you incur in * providing a * fringe benefit.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 26-47 — Non ‑ business boating activities

Object (1) The object of this section is to improve the integrity of the taxation system by preventing deductions from boating activities that are not carried on as a * business being offset against other assessable income. Rule (2) This Act applies to you as if so much of the amounts relating to using or * holding boats that you could otherwise deduct for an income year as exceeds your assessable income from using or holding boats for that year: (a) were not deductible for that income year; and (b) were an amount (a quarantined amount ) relating to using or holding boats that you can deduct for the next income year. Note: A quarantined amount may be reduced under subsection (5) (for boat capital gains), reduced under subsection (7) (where you deduct part of a quarantined amount under subsection (6) for boat business profits), reduced under subsection (8) (about exempt income) or affected by subsection (10) (about bankruptcy). Example: Ian does not use his boat in a business. In Year 1, Ian would be able to claim $100,000 in deductions for the boat (but for this subsection), including interest, depreciation and running costs. He earns only $40,000 of income from the boat. He can only deduct $40,000. He carries the remaining $60,000 forward to Year 2 (the quarantined amount). In Year 2, Ian has $95,000 of expenses and $30,000 of income for the boat. He can deduct $30,000. The quarantined amount is now $125,000: the quarantined amount from Year 1 plus the excess of expenses over income from Year 2. In Year 3, Ian has $60,000 of expenses and $150,000 of income from the boat. The expenses from Year 3 plus the quarantined amount is $185,000. Therefore, Ian claims a deduction of $150,000 and carries forward $35,000 to Year 4. Exception: business use (3) The rule in subsection (2) does not apply to amounts that are attributable to one or more of the following: (a) * holding a boat as your * trading stock; (b) using a boat (or holding it) mainly for letting it on hire in the ordinary course of a * business that you carry on; (c) using a boat (or holding it) mainly for transporting the public or goods for payment in the ordinary course of a business that you carry on; (d) using a boat for a purpose that is essential to the efficient conduct of a business that you carry on. Note: Even if this exception applies to you, you may still have to quarantine losses under Division 35 (deferral of losses from non ‑ commercial business activities). Exception: fringe benefits (4) The rule in subsection (2) does not apply to so much of an amount you incur in * providing a * fringe benefit. Modification if you have boat capital gains (5) You reduce a quarantined amount you have for an income year by so much of that amount as is applied under section 118 ‑ 80 to reduce a * capital gain you have for the year in relation to a boat. You make this reduction before you deduct an amount under subsection (6). Deduction if you have boat business profits (6) You can deduct all or part of your remaining quarantined amount for an income year if your assessable income for the year from activities of a kind referred to in subsection (3) exceeds your deductions for the year relating to those activities. The amount you can deduct is the lesser of that excess and that remaining quarantined amount. (7) You reduce your quarantined amount for the year by the amount you deduct. You make this reduction before a reduction under subsection (8). Modification if you have exempt income (8) You reduce any remaining quarantined amount you have for an income year by your * net exempt income for that year (after * utilising the net exempt income under section 35 ‑ 15 (about non ‑ commercial business activities) or section 36 ‑ 10 or 36 ‑ 15 (about tax losses)). Modification if you become bankrupt (9) The modification in subsection (10) has effect if: (a) in an income year (the current year ) you become bankrupt or are released from a debt by the operation of an Act relating to bankruptcy; or (b) you became bankrupt before the current year and: (i) the bankruptcy is annulled in the current year under section 74 of the Bankruptcy Act 1966 because your creditors have accepted a proposal for a composition or scheme of arrangement; and (ii) under the composition or scheme of arrangement, you have been, will be or may be released from some or all of the debts from which you would have been released if you had instead been discharged from the bankruptcy. (10) This Act applies to you as if any amount that: (a) is a quarantined amount for you for the current year or was a quarantined amount for you for an earlier year; and (b) has not been applied under section 118 ‑ 80 and that you have not yet deducted; were not an amount relating to using or holding boats that you can deduct for the current year or a later year.

Amendment history: Inserted by No 78 of 2007, effective Schedule 7 (items 2–14): 1 July 2005 Schedule 8 (items 350–353): 19 Dec 2002 (s 2(1) item 7) Remainder: Royal Assent | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 26-50 — Expenses for a leisure facility

(1) You cannot deduct under this Act a loss or outgoing to the extent you incur it: (a) to acquire ownership of a * leisure facility; or (b) to retain ownership of a leisure facility; or (c) to acquire rights to use a leisure facility; or (d) to retain rights to use a leisure facility; or (e) to use, operate, maintain or repair a leisure facility; or (f) in relation to any obligation associated with your ownership of a leisure facility; or (g) in relation to any obligation associated with your rights to use a leisure facility. However, there are exceptions (see subsections (3), (4) and (8)). What is a leisure facility ? (2) A leisure facility is land, a building, or part of a building or other structure, that is used (or held for use) for holidays or * recreation. Exception—leisure facilities (3) Subsection (1) does not stop you deducting a loss or outgoing for a * leisure facility if at all times in the income year: (a) you hold the leisure facility for sale in the ordinary course of your business of selling leisure facilities; or (b) you use the leisure facility (or hold it for use) mainly to provide it: (i) in the ordinary course of your * business of providing leisure facilities for payment; or (ii) to produce your assessable income in the nature of rents, lease premiums, licence fees or similar charges; or (iii) for your employees to use; or (iv) for the care of your employees’ * children. In the case of a company, subparagraphs (b)(iii) and (iv) do not apply to employees who are * members or directors of the company. Exception—part year use of leisure facilities (4) If you use a * leisure facility (or hold it) as described in subsection (3) at all times during part of the income year, then subsection (1) does not stop you deducting so much of the loss or outgoing as is reasonable in the circumstances. Anti ‑ avoidance—when exceptions do not apply (7) A * leisure facility is taken not to be used (or held) as described in subsection (3) if: (a) apart from this subsection, the leisure facility would be used (or held) in that way because of a * scheme; and (b) in the Commissioner’s opinion, the scheme would not have been entered into or carried out if this section had not been enacted. Exception when you provide a fringe benefit (8) Subsection (1) does not stop you deducting expenditure you incur in * providing a * fringe benefit.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 78 of 2007, effective Schedule 7 (items 2–14): 1 July 2005 Schedule 8 (items 350–353): 19 Dec 2002 (s 2(1) item 7) Remainder: Royal Assent | Amended by No 14 of 2009, effective Schedule 1, Schedule 4 (items 11–34, 52) and Schedule 5 (items 7–13): Royal Assent Schedule 5 (items 2, 3, 14): 29 Jan 2009 Schedule 5 (items 5, 6): 1 July 2011

s 26-52 — Bribes to foreign public officials

(1) You cannot deduct under this Act a loss or outgoing you incur that is a * bribe to a foreign public official. (2) An amount is a bribe to a foreign public official to the extent that: (a) you incur the amount in, or in connection with: (i) providing a benefit to another person; or (ii) causing a benefit to be provided to another person; or (iii) offering to provide, or promising to provide, a benefit to another person; or (iv) causing an offer of the provision of a benefit, or a promise of the provision of a benefit, to be made to another person; and (b) you incur the amount with the intention of improperly influencing a * foreign public official (who may be the other person) in order to obtain or retain business or a business or personal advantage (whether or not for yourself). The benefit may be any advantage and is not limited to property. (2A) For the purposes of subsection (2), disregard whether business, or a business or personal advantage, was actually obtained or retained. Payments that written law of foreign public official’s country requires or permits (3) An amount is not a bribe to a foreign public official if, assuming the benefit had been provided, and all related acts had been done, in the * foreign public official’s country, a written law of that country would have required or permitted the provision of the benefit. Facilitation payments (4) An amount is not a bribe to a foreign public official if: (a) the value of the benefit is of a minor nature; and (b) the amount is incurred for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature. (5) For the purposes of this section, a routine government action is an action of a * foreign public official that: (a) is ordinarily and commonly performed by the official; and (b) is covered by any of the following subparagraphs: (i) granting a permit, licence or other official document that qualifies a person to do business in a foreign country or in a part of a foreign country; (ii) processing government papers such as a visa or work permit; (iii) providing police protection or mail collection or delivery; (iv) scheduling inspections associated with contract performance or related to the transit of goods; (v) providing telecommunications services, power or water; (vi) loading and unloading cargo; (vii) protecting perishable products, or commodities, from deterioration; (viii) any other action of a similar nature; and (c) does not involve a decision about: (i) whether to award new business; or (ii) whether to continue existing business with a particular person; or (iii) the terms of new business or existing business; and (d) does not involve encouraging a decision about: (i) whether to award new business; or (ii) whether to continue existing business with a particular person; or (iii) the terms of new business or existing business. Improper influence (6) In determining whether influence is improper, disregard the following: (a) the fact that the benefit, or the offer or promise to provide the benefit, may be, or be perceived to be, customary, necessary or required in the situation; (b) any official tolerance of the benefit; (c) if particular business or a particular business or personal advantage is relevant to determining whether influence is improper—the following: (i) if the value of the business or advantage is insignificant—that fact; (ii) in the case of an advantage—any official tolerance of the advantage; (iii) in the case of an advantage—the fact that the advantage may be customary, or perceived to be customary, in the situation. Duties of foreign public official (8) The duties of a * foreign public official are any authorities, duties, functions or powers that: (a) are conferred on the official; or (b) the official holds himself or herself out as having.

Amendment history: Inserted by No 58 of 2000, effective s 4, Sch 2 (items 2–4(2)), Sch 5, Sch 6 (items 1–13, 17, 18, 20–32, 34), Sch 9 and Sch 10 (items 12–17(3)–(6), 31–38(3)–(7)): 31 May 2000 (s 2(1)) Sch 4: 17 Dec 1999 (s 2(8)) Sch 6 (items 14–16): never commenced (s 2(10)) Sch 6 (item 19): 16 July 1999 (s 2(11)) Sch 8 (item 19): 1 July 1998 (s 2(13)) | Amended by No 147 of 2007, effective Schedule 2 (items 5–9): 25 Sept 2007 | Amended by No 5 of 2024, effective sch 1 (items 11 ‑ 14): 1 Oct 2024 (s 2(1) item 3)