Income Tax Assessment Act 1997

s 393-40 — Repayment of deposit within first 12 months

Partial repayment within first 12 months (1) Any part of a deposit repaid before the last day of the 12 months after the day the deposit is made is not, and is taken never to have been, part of a farm management deposit . Note 1: A repayment covered by subsection (3), (3A) or (5) is disregarded in applying this subsection. The normal rules in sections 393 ‑ 5 (about deductions for making a farm management deposit) and 393 ‑ 10 (about assessability of the repayment of a farm management deposit) apply instead. Note 2: This subsection does not apply if a deposit is reinvested, the term of a deposit is extended, or a deposit is transferred at the depositor’s request: see section 393 ‑ 15. Deposit not to be reduced to less than $1,000 within first 12 months (2) A deposit is not, and is taken never to have been, a farm management deposit if the amount of the deposit is reduced to less than $1,000 because of one or more repayments before the last day of the 12 months after the day the deposit is made. Note 1: A repayment covered by subsection (3), (3A) or (5) is disregarded in applying this subsection. Note 2: This subsection does not apply if a deposit is reinvested, the term of a deposit is extended, or a deposit is transferred at the depositor’s request: see section 393 ‑ 15. Repayment in the event of severe drought (3) Subsections (1) and (2) do not apply to a repayment of the whole or a part of a * farm management deposit if: (a) the * owner of the deposit carries on a * primary production business that satisfies one or more of paragraphs (a), (b), (c) and (f) of the definition of primary production business in subsection 995 ‑ 1(1); and (b) any of the land on which the owner of the deposit carries on any primary production business that satisfies one or more of those paragraphs has, for the period specified in subsection (3AA), had rainfall that: (i) is deficient to an extent prescribed by the regulations; or (ii) if there are no such regulations—is within the lowest 5% of rainfall for that land according to records held by the Commonwealth Bureau of Meteorology; and (c) for the period specified in subsection (3AA): (i) the owner of the deposit has carried on, on that land, a primary production business that satisfies one or more of those paragraphs; and (ii) the amount of the repayment has been held in that farm management deposit. (3AA) For the purposes of paragraphs (3)(b) and (c), the period is: (a) a period prescribed by the regulations; or (b) if there are no such regulations—the most recent period of 6 consecutive months: (i) that precede the repayment; and (ii) for which rainfall records held by the Commonwealth Bureau of Meteorology are publicly available at the time of the repayment. Repayment in the event of an applicable natural disaster (3A) Subsections (1) and (2) do not apply to a repayment of the whole or a part of a * farm management deposit if: (a) natural disaster relief and recovery arrangements made by or on behalf of the Commonwealth apply, in a way specified in regulations made for the purposes of this subsection, to a * primary production business of the * owner of the deposit; and (b) all of the other circumstances specified in those regulations are satisfied. Any later deposit not a farm management deposit (4) If subsection (3) or (3A) applies to an * owner and a repayment, any later deposit that is made by, or on behalf of, the owner in the income year in which the repayment is made is not, and is taken never to have been, a farm management deposit . Repayment in the case of death, bankruptcy or ceasing to carry on a primary production business (5) Subsections (1) and (2) do not apply to a repayment of a * farm management deposit because of the requirement contained in the relevant agreement as set out in item 11 of the table in section 393 ‑ 35 (death, bankruptcy etc.). Certain transactions do not affect the day the deposit was made (6) Subsections (1) to (4) apply as if a * farm management deposit that: (a) is made as a result of a transaction mentioned in subsection 393 ‑ 15(1) (about reinvesting a deposit, extending the term of a deposit and transferring a deposit at the depositor’s request); or (b) is affected by such a transaction; were made on the day on which the original deposit was made. Example: A farm management deposit is made on 1 July 2010 for a term of 6 months, but is extended in December 2010 for another 6 months. For the purposes of subsections (1) to (4), the day the extended deposit was made remains as 1 July 2010. Note: Section 393 ‑ 40 of the Income Tax (Transitional Provisions) Act 1997 provides for a special rule for deposits transferred under the repealed Loan (Income Equalization Deposits) Act 1976 .

Amendment history: Inserted 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 147 of 2011, effective s. 4, Schedule 1, Schedule 5 (items 1–9, 16–20), Schedule 6 (items 1, 6) and Schedule 9: Royal Assent Schedule 8 (items 2–9, 37, 38, 41): 1 Jan 2012 | 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 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 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1)

s 393-45 — Partly repaid farm management deposits

A reference to a farm management deposit is a reference to so much of the deposit as has not been repaid.

Amendment history: Inserted 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)

s 393-50 — What this Subdivision is about

A deposit (the new deposit ) arising from: (a) an entitlement under Division 2AA (Financial claims scheme for account ‑ holders with insolvent ADIs) of Part II of the Banking Act 1959 relating to a farm management deposit (the old deposit ); or (b) a distribution from liquidation of an ADI that is attributable to a farm management deposit (also the old deposit ); is treated as a transfer of the old deposit and does not give rise to new assessable income or deductions. Table of sections Operative provisions 393 ‑ 55 Farm management deposits arising from farm management deposits with ADIs subject to financial claims scheme 393 ‑ 60 Repayment if owner of farm management deposit with insolvent ADI dies, is bankrupt or ceases to be a primary producer

Amendment history: Inserted 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)

s 393-55 — Farm management deposits arising from farm management deposits with ADIs subject to financial claims scheme

Application (1) This section applies if an entitlement arises under Division 2AA (Financial claims scheme for account ‑ holders with insolvent ADIs) of Part II of the Banking Act 1959 in connection with an account containing a * farm management deposit (the old deposit ) with an * ADI (the old ADI ) and either: (a) an amount (the new deposit ) is deposited into either of the following to meet, in whole or part, so much of the entitlement as relates to the old deposit: (i) an existing account for a farm management deposit; (ii) an account established under section 16AH of that Act for the purposes of meeting (in whole or part) the entitlement; or (b) an amount (also the new deposit ) is deposited by a liquidator of the old ADI into either of the following as so much of a distribution from the liquidation of the old ADI as relates to the old deposit: (i) an existing account for a farm management deposit; (ii) an account established under section 16AR of that Act for the payment of the distribution. Note: If an amount is deposited in connection with an account with the old ADI containing 2 or more old deposits, the amount is to be apportioned between each old deposit, so that so much of the amount as is attributable to a particular old deposit is regarded as a distinct new deposit relating to that old deposit. New deposit is a farm management deposit (2) This Division (except this section) applies to the new deposit as if the new deposit were a transfer of the old deposit in accordance with a requirement contained in the relevant agreement for the old deposit as set out in item 13 of the table in section 393 ‑ 35 (which allows for transfers of deposits at the request of the depositor). To avoid doubt, this Division applies in that way as if the amount transferred were the amount of the new deposit, even if that is more or less than the amount of the old deposit. Note 1: The effects of this include the following: (a) section 393 ‑ 5 (about deductions for making a farm management deposit) does not apply in relation to the making of the new deposit (see paragraphs 393 ‑ 15(1)(c) and (2)(a)); (b) subsection 393 ‑ 10(1) (about assessability of the repayment of a farm management deposit) can only apply to the extent of any difference between the amount transferred and the amount of the old deposit (see paragraphs 393 ‑ 15(1)(c) and (2)(b)); (c) subsections 393 ‑ 40(1), (2) and (4) (about repayment of a farm management deposit within the first 12 months) can only apply to the extent of any difference between the amount transferred and the amount of the old deposit (see paragraphs 393 ‑ 15(1)(c) and (2)(c) and (d)); (d) the day the old deposit was made, for the purposes of subsections 393 ‑ 40(1) and (2) (about repayment of a farm management deposit within the first 12 months) and (3A) and (4) (about repayment in the event of an applicable natural disaster), is maintained for the new deposit (see subsection 393 ‑ 40(6)). Note 2: Also, the unrecouped FMD deduction in respect of the new deposit is the same as the unrecouped FMD deduction in respect of the old deposit (see subsection 393 ‑ 15(3)), unless subsection (6) or (7) of this section applies because the new deposit is less than the old deposit. (3) In determining whether either of the following is a * farm management deposit, disregard a requirement contained in an agreement as set out in item 4 of the table in section 393 ‑ 35 (requiring the deposit to be $1,000 or more): (a) the new deposit; (b) a deposit made later directly by the transfer of the new deposit in accordance with a requirement of the relevant agreement for the new deposit as mentioned in item 13 of that table. Unrecouped FMD deduction for new deposit less than old deposit (6) Despite subsection (2) and subsection 393 ‑ 15(3), if the new deposit is less than the old deposit at the time (the declaration time ) the old ADI became a declared ADI under the Banking Act 1959 , the unrecouped FMD deduction in respect of the new deposit is the amount worked out using the following formula: Note: The new deposit could be less than the old deposit if the entitlement is paid in instalments (each of which will be a separate new deposit). (7) However, if the amount worked out under subsection (6) is more than the difference (if any) between: (a) the * unrecouped FMD deduction in respect of the old deposit just before the declaration time; and (b) the total of the amounts worked out under all previous applications of subsection (6) in relation to that old deposit; the unrecouped FMD deduction in respect of the new deposit is equal to the difference (if any). Note: This ensures that when new deposits linked to the old deposit are repaid, the total amount included in assessable income will not exceed the unrecouped FMD deduction in respect of the old deposit. Relationship with other provisions (8) This section has effect despite Division 253 (about tax treatment of entitlements under the financial claims scheme for insolvent ADIs).

Amendment history: Inserted 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 147 of 2011, effective s. 4, Schedule 1, Schedule 5 (items 1–9, 16–20), Schedule 6 (items 1, 6) and Schedule 9: Royal Assent Schedule 8 (items 2–9, 37, 38, 41): 1 Jan 2012 | 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)

s 393-60 — Repayment if owner of farm management deposit with insolvent ADI dies, is bankrupt or ceases to be a primary producer

Subsection 393 ‑ 10(4) does not apply in relation to so much of a * farm management deposit with an * ADI as is equal to the sum of the amounts described in subparagraphs (d)(i) and (ii) of this section if: (a) you are the * owner of the deposit; and (b) the deposit becomes repayable during an income year because of the requirement contained in the relevant agreement as set out in item 11 of the table in section 393 ‑ 35 (death, bankruptcy etc.); and (c) during the income year, the ADI becomes a declared ADI under Division 2AA (Financial claims scheme for account ‑ holders with insolvent ADIs) of Part II of the Banking Act 1959 ; and (d) at the end of the income year, you have either or both of the following: (i) an unmet entitlement under that Division connected with the account for the farm management deposit; (ii) an unmet claim against the ADI, or an unpaid debt owed to you by the ADI, in the winding up of the ADI connected with the account for the deposit. Note: Subsection 393 ‑ 10(4) makes the repayment of a farm management deposit assessable in the income year when the death, bankruptcy etc. occurs, rather than in any later year in which it might be repaid.

Amendment history: Inserted 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)

s 394-1 — What this Division is about

This Division sets out rules about deductions for contributions to forestry managed investment schemes. It also sets out the tax treatment of proceeds from the sale of interests in such schemes, and of proceeds from harvesting trees under such schemes. Table of sections 394 ‑ 5 Object of this Division 394 ‑ 10 Deduction for amounts paid under forestry managed investment schemes 394 ‑ 15 Forestry managed investment schemes and related concepts 394 ‑ 20 Payments on behalf of participant in forestry managed investment scheme 394 ‑ 25 CGT event in relation to forestry interest in forestry managed investment scheme—initial participant 394 ‑ 30 CGT event in relation to forestry interest in forestry managed investment scheme—subsequent participant 394 ‑ 35 70% DFE rule 394 ‑ 40 Payments under forestry managed investment scheme 394 ‑ 45 Direct forestry expenditure

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 394-5 — Object of this Division

The object of this Division is to encourage the expansion of commercial plantation forestry in Australia through the establishment and tending of new plantations for felling. This is achieved by: (a) permitting investors to deduct amounts paid under a forestry scheme in the year of payment, if certain conditions are met (for example, that it is reasonable to expect that the manager of the scheme will spend at least 70% of investors’ contributions, on a market value basis, on activities that establish, tend, fell and harvest trees); and (b) allowing secondary market trading of interests in such schemes, while minimising tax arbitrage and providing tax certainty for investors.

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 394-10 — Deduction for amounts paid under forestry managed investment schemes

(1) You can deduct an amount if: (a) you hold a * forestry interest in a * forestry managed investment scheme; and (b) you pay the amount under the scheme; and (c) the scheme satisfies the * 70% DFE rule (see section 394 ‑ 35) on 30 June in the income year in which a * participant in the scheme first pays an amount under the scheme; and (d) you do not have day to day control over the operation of the scheme (whether or not you have the right to be consulted or give directions); and (e) at least one of these conditions is satisfied: (i) there is more than one participant in the scheme; (ii) the * forestry manager of the scheme, or an * associate of the forestry manager, manages, arranges or promotes similar schemes; and (f) the condition in subsection (4) is satisfied. (2) You deduct the amount for the income year in which you pay it. (3) For the purposes of this Division, do not treat an amount as being paid under a * forestry managed investment scheme if: (a) you pay the amount in connection with a * CGT event in relation to a * forestry interest in the scheme; and (b) as a result of the CGT event: (i) another * participant in the scheme no longer holds the forestry interest; and (ii) you start to hold the forestry interest. (4) For the purposes of paragraph (1)(f), the condition in this subsection is satisfied unless: (a) 18 months have elapsed since the end of the income year in which an amount is first paid under the * forestry managed investment scheme by a * participant in the scheme; and (b) the trees intended to be established in accordance with the scheme have not all been established before the end of those 18 months. (5) You cannot deduct an amount under subsection (1) if: (a) you hold the * forestry interest mentioned in paragraph (1)(a) as an * initial participant; and (b) a * CGT event happens in relation to the forestry interest within 4 years after the end of the income year in which you first pay an amount under the scheme. If you have already deducted it, your assessment may be amended to disallow the deduction. (5A) Paragraph (5)(b) does not apply to a * CGT event if: (a) the CGT event happens because of circumstances outside your control; and Example: The forestry interest is compulsorily acquired. (b) when you acquired the * forestry interest, you could not reasonably have foreseen the CGT event happening. (6) Despite section 170 of the Income Tax Assessment Act 1936 , the Commissioner may amend your assessment at any time within 2 years after the * CGT event, for the purpose of giving effect to subsection (5). (7) Sections 82KZMD and 82KZMF of the Income Tax Assessment Act 1936 do not affect the timing of a deduction under this section.

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 | 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)

s 394-15 — Forestry managed investment schemes and related concepts

(1) A * scheme is a forestry managed investment scheme if the purpose of the scheme is for establishing and tending trees for felling in Australia. (2) The entity that manages, arranges or promotes a * forestry managed investment scheme is the forestry manager of the scheme. (3) A forestry interest in a * forestry managed investment scheme is a right to benefits produced by the scheme (whether the right is actual, prospective or contingent and whether it is enforceable or not). (4) An entity that holds a * forestry interest in a * forestry managed investment scheme (other than the * forestry manager of the scheme) is a participant in the scheme. (5) A * participant in a * forestry managed investment scheme holds a * forestry interest in the scheme as an initial participant if: (a) the participant obtains the forestry interest from the * forestry manager of the scheme; and (b) the payment by the participant to obtain the forestry interest results in the establishment of trees.

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 394-20 — Payments on behalf of participant in forestry managed investment scheme

For the purposes of this Division, treat a payment to the * forestry manager of a * forestry managed investment on behalf of a * participant in the scheme as a payment by the participant to the forestry manager.

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 394-25 — CGT event in relation to forestry interest in forestry managed investment scheme—initial participant

(1) This section applies if: (a) you hold a * forestry interest in a * forestry managed investment scheme as an * initial participant in the scheme; and (b) at least one of these conditions is satisfied: (i) you can deduct or have deducted an amount for an income year under section 394 ‑ 10 in relation to the forestry interest; (ii) the condition in subparagraph (i) would be satisfied if subsection 394 ‑ 10(5) were disregarded; and (c) a * CGT event happens in relation to the forestry interest, other than a CGT event that happens in respect of thinning. (2) Your assessable income for the income year in which the * CGT event happens includes: (a) if, as a result of the CGT event, you no longer hold the * forestry interest—the * market value of the forestry interest (worked out as at the time of the event); or (b) otherwise—the decrease (if any) in the market value of the forestry interest as a result of the CGT event. (3) Any amount that you actually receive because of the * CGT event is not included in your assessable income (nor is it * exempt income).

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 394-30 — CGT event in relation to forestry interest in forestry managed investment scheme—subsequent participant

(1) This section applies if: (a) you hold a * forestry interest in a * forestry managed investment scheme otherwise than as an * initial participant in the scheme; and (b) at least one of these conditions is satisfied: (i) you can deduct or have deducted an amount for an income year under section 394 ‑ 10 in relation to the forestry interest; (ii) you could deduct an amount for an income year under section 394 ‑ 10 if you had paid the amount under the scheme in that year; and (c) a * CGT event happens in relation to the forestry interest, other than a CGT event that happens in respect of thinning. (2) Your assessable income for the income year in which the * CGT event happens includes the lesser of the following: (a) the * market value of the forestry interest (worked out as at the time of the event); (b) the amount (if any) by which the * total forestry scheme deductions in relation to the forestry interest exceeds the * incidental forestry scheme receipts in relation to the forestry interest. (3) The total forestry scheme deductions in relation to the * forestry interest is the total of each amount that you can deduct or have deducted under section 394 ‑ 10 for each income year in relation to the forestry interest. (4) The incidental forestry scheme receipts in relation to the * forestry interest is the total of each amount that you have received under the scheme in each income year in relation to the forestry interest for a reason otherwise than because of the * CGT event. (5) However, if you still hold the forestry interest despite the * CGT event, work out the amount included in your assessable income under subsection (2) using this formula (instead of using the amount worked out under subsection (2)): (6) If this section has operated previously in relation to the * forestry interest, disregard an amount for the purposes of subsections (3) and (4) to the extent that it has already been reflected in your assessable income under that previous operation in relation to the forestry interest. (7) These provisions do not apply to the * CGT event: (a) section 6 ‑ 5 (about * ordinary income); (b) any other provision that includes an amount in assessable income, other than the following: (i) a provision in Part 3 ‑ 1 or 3 ‑ 3; (ii) subsection (2) of this section; (c) section 8 ‑ 1 (about amounts you can deduct); (d) any other provision that allows you to deduct an amount from your assessable income; (e) section 118 ‑ 20. (8) However, the provisions referred to in subsection (7) can apply to the * CGT event if a * capital gain or * capital loss from the event is disregarded because of section 118 ‑ 25. (9) Just before the * CGT event, increase the * cost base and * reduced cost base of the * forestry interest by the amount included in your assessable income under subsection (2).

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 394-35 — 70% DFE rule

(1) A * forestry managed investment scheme satisfies the 70% DFE rule on 30 June in an income year if it is reasonable to expect on that 30 June that the amount of DFE under the scheme (see subsection (2)) is no less than 70% of the amount of the payments under the scheme (see subsection (3)). (2) The amount of DFE under the scheme is the amount of the net present value (on that 30 June) of all * direct forestry expenditure under the scheme that the * forestry manager of the scheme has paid or will pay under the scheme. (3) The amount of payments under the scheme is the amount of the net present value (on that 30 June) of all amounts that all current and future * participants in the scheme have paid or will pay under the scheme. (4) In working out the net present value of an amount paid before that 30 June: (a) unless paragraph (b) applies—treat the amount as having been paid on that 30 June; or (b) if the amount was paid in an income year ending before that 30 June—treat the amount as having been paid on the 30 June in that income year. (5) In working out the net present value of an amount expected to be paid after that 30 June, treat the amount as having been paid on 1 January in the income year in which it is expected to be paid. (6) Reduce an amount worked out under subsection (2) or (3) to the extent (if any) to which that amount can reasonably be expected to be recouped. (7) In working out the net present value of an amount for the purposes of this section, use the yield on Australian Government Treasury Bonds with the maturity closest to 10 years (as published by the Reserve Bank of Australia). (8) For the purposes of subsection (2), if: (a) the * forestry manager of the scheme has paid or will pay an amount under the scheme in a transaction; and (b) the forestry manager and at least one other party to the transaction did not or will not deal at * arm’s length in relation to the transaction; and (c) the amount is or will be more or less than the * market value of what it is for; treat the amount as that market value.

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 394-40 — Payments under forestry managed investment scheme

For the purposes of this Division, do not treat the following payments as payments under a * forestry managed investment scheme by a * participant in the scheme: (a) payments for * borrowing money; (b) payments of interest and payments in the nature of interest; (c) payments of stamp duty; (d) payments of * GST; (e) payments that relate to one or more of the matters mentioned in paragraphs 394 ‑ 45(4)(a), (b) or (c).

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 394-45 — Direct forestry expenditure

(1) Direct forestry expenditure under a * forestry managed investment scheme means: (a) an amount paid under the scheme that is attributable to establishing, tending, felling and harvesting trees; and (b) notional amounts reflecting the * market value of goods, services or the use of land, provided by the * forestry manager of the scheme, for establishing, tending, felling and harvesting trees. Example 1: Notional amounts reflecting the value of the use of land owned by the forestry manager that is provided for establishing, tending, felling and harvesting trees. Example 2: Notional amounts reflecting the value of tree felling services provided by the forestry manager. (2) Treat * direct forestry expenditure covered by paragraph (1)(b) as paid annually for each income year of the * forestry manager of the scheme based on the * market value of the goods, services, or the use of the land. Treat the day on which it is paid as: (a) unless paragraph (b) or (c) applies—1 January in the income year; or (b) if the first time an amount is paid under the scheme is later than the first day of the income year—the last day of the income year; or (c) if the scheme comes to an end on a day before the end of the income year—that day. Exclusions—general (3) However, direct forestry expenditure under the scheme does not include amounts paid under the scheme to the extent that they relate to any of the following: (a) marketing of the scheme; Example: Advertising, sales, sponsorship and entertainment. (b) insurance, contingency funds or provisions (other than provisions for employee entitlements); (c) financing; (d) lobbying; (e) general business overheads (but not overheads directly related to forestry); (f) subscriptions to industry bodies; (g) commissions for financial planners or financial advisers; (h) compliance with requirements related to the structure and operations of the * forestry manager of the scheme; Example: Product design and preparation of product disclosure statements. (i) supervision and auditing of contracts, other than direct supervision of direct forestry activities (such as establishing trees for felling); (j) legal fees relating to any matter mentioned in this subsection. Exclusions—expenditure after harvest etc. (4) Also, direct forestry expenditure under the scheme does not include amounts paid under the scheme to the extent that they relate to any of the following: (a) transportation and handling of felled trees that happens after the earliest of the following: (i) sale of the trees; (ii) arrival of the trees at the mill door; (iii) arrival of the trees at the port; (iv) arrival of the trees at the place of processing (other than where processing happens in ‑ field); (b) processing; (c) stockpiling (other than in ‑ field stockpiling); (d) marketing and sale of forestry produce.

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 405-1 — What this Division is about

Significant fluctuations can occur in the professional incomes of authors, inventors, performing artists, production associates and sportspersons. To lessen the impact of these fluctuations on your marginal tax rates, special tax rates apply if your professional income is above your average. This Division explains how the scheme works and sets out the rules for working out your above ‑ average special professional income. Table of sections 405 ‑ 5 Special rate of income tax on your above ‑ average special professional income 405 ‑ 10 Overview of the Division

Amendment history: Inserted 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))

s 405-5 — Special rate of income tax on your above ‑ average special professional income

(1) If you have above ‑ average special professional income, the Income Tax Rates Act 1986 generally sets a special rate so that the amount of income tax you pay on the top 4 / 5 of your above ‑ average special professional income is effectively 4 times what you would pay on the bottom 1 / 5 of that income at basic rates. Note : Your overall income tax will be less only if 2 marginal rates of income tax would apply to your above ‑ average special professional income if it were treated as the top slice of your taxable income. (2) The following diagram illustrates how the special rate works.

Amendment history: Inserted 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 83 of 1999, effective Sch 10 (items 24–54, 68(1), 69): 1 July 2000 (s 2(2)) | Amended by No 94 of 1999, effective 16 July 1999 (s 2(1)–(3))

s 405-10 — Overview of the Division

For which income years do you have above ‑ average special professional income? (1) The first income year for which you have above ‑ average special professional income is the first income year (professional year 1): (a) for which your taxable professional income is more than $2,500; and (b) during all or part of which you are an Australian resident. (2) After professional year 1, you have above ‑ average special professional income for any income year for all or part of which you are an Australian resident. Note: You need not have been an Australian resident for every income year since professional year 1. What is above ‑ average special professional income? (3) Your above ‑ average special professional income for the current year is the amount (if any) by which your taxable professional income exceeds your average taxable professional income. See Subdivision 405 ‑ A. What is taxable professional income? (4) Your taxable professional income depends on your assessable professional income. See section 405 ‑ 45. (5) Your assessable professional income is assessable income from your work as an author, inventor, performing artist, production associate or sportsperson. See Subdivision 405 ‑ B. How do you work out your average taxable professional income? (6) Generally, your average taxable professional income for the current year is the average of your taxable professional income for the last 4 income years. See section 405 ‑ 50. (7) However, special phasing ‑ in arrangements apply to work out your average taxable professional income for an income year that is less than 4 income years after professional year 1. These arrangements favour people who were Australian residents for at least part of the income year before professional year 1. See section 405 ‑ 50.

Amendment history: Inserted 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 94 of 1999, effective 16 July 1999 (s 2(1)–(3))

s 405-15 — When do you have above ‑ average special professional income?

(1) Your taxable income for the * current year includes above ‑ average special professional income if and only if: (a) you are an individual; and (b) you have been an Australian resident for all or part of the current year; and (c) your * taxable professional income for the current year exceeds your * average taxable professional income for the current year; and (d) either: (i) your * taxable professional income for the current year is more than $2,500; or (ii) your * taxable professional income for an earlier income year was more than $2,500 and you were an Australian resident for all or part of that income year. How much above ‑ average special professional income do you have? (2) The amount of * above ‑ average special professional income in your taxable income for the * current year is the difference between: (a) your * taxable professional income for the current year; and (b) your * average taxable professional income for the current year.

Amendment history: Inserted 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 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 405-20 — What you count as assessable professional income

(1) Work out your assessable professional income for an income year by adding up all your assessable income for the income year that you count under this Subdivision. Note 1: Section 405 ‑ 30 may stop you counting an amount. Note 2: Subsection 405 ‑ 35(1) stops you counting an amount more than once, even if it is described in more than one subsection of this section. Note 3: Subsection 405 ‑ 35(2) may affect the amount you count. Assessable income from professional services (2) You count any assessable income that you * derive as a reward for providing services relating to your activities as a * special professional. Assessable income from prizes (3) You also count any assessable income that you * derive as a prize for your activities as a * special professional. Assessable income from promotions and commentary (4) You also count any assessable income that you * derive, because you are or were a * special professional, for: (a) endorsing or promoting goods or services; or (b) appearing or participating in an advertisement; or (c) appearing or participating in an interview; or (d) providing services as a commentator; or (e) providing similar services. Assessable income from assigning copyright or granting a licence (5) You also count any assessable income that you * derive: (a) as consideration for: (i) assigning all or part of the copyright in a literary, dramatic, musical or artistic work of which you are the author; or (ii) granting an interest in the copyright in such a work by granting a licence; or (b) as an advance on account of royalties relating to such a copyright. Assessable income from assigning or granting patent rights (6) You also count any assessable income that you * derive: (a) as consideration for: (i) assigning all or part of the patent for an invention that you invented; or (ii) granting an interest in the patent for such an invention by granting a licence; or (iii) assigning the right to apply for a patent for such an invention; or (b) as an advance on account of royalties relating to such a patent. Other assessable income from works or inventions (7) You also count any assessable income that you * derive (as * royalties or otherwise): (a) for a literary, dramatic, musical or artistic work of which you are the author; or (b) in relation to copyright in such a work; or (c) for an invention that you invented; or (d) in relation to a patent for such an invention.

Amendment history: Inserted 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))

s 405-25 — Meaning of special professional , performing artist , production associate , sportsperson and sporting competition

Special professional (1) You are a special professional if you are: (a) the author of a literary, dramatic, musical or artistic work; or Note: The expression “author” is a technical term from copyright law. In general, the “author” of a musical work is its composer and the “author” of an artistic work is the artist, sculptor or photographer who created it. (b) the inventor of an invention; or (c) a * performing artist; or (d) a * production associate; or (e) a * sportsperson. Performing artist (2) You are a performing artist if you exercise intellectual, artistic, musical, physical or other personal skills in the presence of an audience by performing or presenting: (a) music; or (b) a play; or (c) dance; or (d) an entertainment; or (e) an address; or (f) a display; or (g) a promotional activity; or (h) an exhibition; or (i) any similar activity. (3) You are also a performing artist if you perform or appear in or on a * film, tape, disc or television or radio broadcast. Production associate (4) You are a production associate if you provide * artistic support for: (a) an activity described in subsection (2); or (b) the activity of making a * film, tape, disc or television or radio broadcast. (5) You provide artistic support for an activity if: (a) you provide services relating to the activity as: (i) an art director; or (ii) a choreographer; or (iii) a costume designer; or (iv) a director; or (v) a director of photography; or (vi) a film editor; or (vii) a lighting designer; or (viii) a musical director; or (ix) a producer; or (x) a production designer; or (xi) a set designer; or (b) you provide similar services relating to the activity. Sportsperson (6) You are a sportsperson if you compete in a * sporting competition. (7) A sporting competition is a sporting activity to the extent that: (a) human beings are the only competitors in it, or it is one in which human beings: (i) compete by riding animals or exercising other skills in relation to animals; or (ii) compete by driving, piloting or crewing * motor vehicles, boats, aircraft or other forms of transport; or (iii) compete with natural obstacles or natural forces, or by overcoming them; and (b) participation in it by human competitors involves primarily their exercising physical prowess, physical strength or physical stamina. (8) However, the participation: (a) of a navigator in the activity of car rallying; or (b) of a coxswain in the activity of rowing; or (c) of a competitor in a similar role in some other activity; need not involve primarily exercising physical prowess, physical strength or physical stamina for the activity to be a sporting competition .

Amendment history: Inserted 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 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)

s 405-30 — What you cannot count as assessable professional income

Assessable income from continuous service as author or inventor (1) You cannot count as * assessable professional income any assessable income you * derive for meeting your obligations under a * scheme to provide services to another person by engaging in activities as the author of a literary, dramatic, musical or artistic work, or as the inventor of an invention, unless: (a) the scheme was entered into solely to require you to provide services by: (i) making one or more specified literary, dramatic, musical or artistic works; or (ii) inventing one or more specified inventions; and (b) you have not been providing services, and may not reasonably be expected to provide services, to that person or his or her * associates under successive * schemes that result in substantial continuity of your providing services. Assessable income from certain activities (2) You cannot count as * assessable professional income any assessable income that you * derive for: (a) coaching or training * sportspersons; or (b) umpiring or refereeing a * sporting competition; or (c) administering a * sporting competition; or (d) being a member of the pit crew in motor sport; or (e) being a theatrical or sports entrepreneur; or (f) owning or training animals. Payments at end of employment, and capital gains (3) You cannot count as * assessable professional income: (a) a * superannuation lump sum or an * employment termination payment; or (b) an * unused annual leave payment or an * unused long service leave payment; or (c) a * net capital gain. This section prevails over section 405 ‑ 20 (4) You cannot count particular assessable income as * assessable professional income if this section says you cannot, even if section 405 ‑ 20 says you count it.

Amendment history: Inserted 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 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)

s 405-35 — Limits on counting amounts as assessable professional income

No double ‑ counting (1) You cannot count the same amount as * assessable professional income more than once, even if it is described in more than one subsection of section 405 ‑ 20. Amounts that are partly assessable professional income (2) If: (a) you * derive assessable income under or as a result of a * scheme; and (b) the assessable income consists of a part that is counted as * assessable professional income and another part that cannot be; and (c) one component is unreasonably large and the other component is unreasonably small, for reasons that are directly or indirectly related to one another; you must work out your * assessable professional income as if the unreasonably large component were reduced by a reasonable amount and the unreasonably small component were increased by the same amount. (3) Subsection (2) affects your * assessable professional income: (a) whether you * derived the assessable income directly or indirectly under or as a result of the * scheme; and (b) whether or not a reason mentioned in paragraph (2)(c) is the only reason why a component is unreasonably large or small.

Amendment history: Inserted 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))

s 405-40 — Joint author or inventor treated as sole author or inventor

(1) If you are a joint author of a literary, dramatic, musical or artistic work, work out your * assessable professional income as if you were the author of that work. Note: This section means that you are treated as a special professional, even if you have never been the sole author of a work. (2) If you are a joint inventor of an invention, work out your * assessable professional income as if you were the inventor of that invention. Note: This section means that you are treated as a special professional, even if you have never been the sole inventor of an invention.

Amendment history: Inserted 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))

s 405-45 — Working out your taxable professional income

Your taxable professional income for an income year is the amount (if any) by which your * assessable professional income for that year exceeds the amount of your deductions for that year worked out as follows: Method statement Step 1. Add up any amounts you can deduct for that year (except * apportionable deductions), so far as they reasonably relate to your * assessable professional income for the year. Step 2. Work out the amount using the formula: Note: The result may be greater than the apportionable deductions. Also, it may be negative. Step 3. Add the sum from Step 1 to the result from Step 2. If the result is more than nil, it is the amount of your deductions to be subtracted from your * assessable professional income.

Amendment history: Inserted 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 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | 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)

s 405-50 — Working out your average taxable professional income

It is generally a 4 ‑ year average (1) Work out your average taxable professional income for the * current year by: (a) adding up your * taxable professional income for each of the last 4 income years before the current year; and (b) dividing the total by 4. Phasing ‑ in arrangements for new professionals (2) However, if the * current year is less than 4 income years after * professional year 1, work out your average taxable professional income using the table in subsection (5). (3) Professional year 1 is the first income year: (a) during which you were an Australian resident (for all or part of the income year); and (b) for which your * taxable professional income was more than $2,500. (4) Professional year 2 , professional year 3 and professional year 4 are respectively the next 3 income years after * professional year 1. (5) The table is as follows: Average taxable professional income during phase ‑ in period Item Current year Average taxable professional income if you were an Australian resident for all or part of the income year immediately before professional year 1 Average taxable professional income if you were a foreign resident for any of the income year immediately before professional year 1 1 Professional year 1 Nil Your * taxable professional income for * professional year 1 2 Professional year 2 1 / 3 of your * taxable professional income for * professional year 1 Your * taxable professional income for * professional year 1 3 Professional year 3 1 / 4 of the sum of your * taxable professional income for each of * professional years 1 and 2 1 / 2 of the sum of your * taxable professional income for each of * professional years 1 and 2 4 Professional year 4 1 / 4 of the sum of your * taxable professional income for each of * professional years 1, 2 and 3 1 / 3 of the sum of your * taxable professional income for each of * professional years 1, 2 and 3 Note: If you were a foreign resident for any part of the income year immediately before professional year 1, the effect of item 1 of the table is that your taxable income for professional year 1 will not include above ‑ average special professional income.

Amendment history: Inserted 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 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 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 410-1 — What this Division is about

This Division sets out rules that apply whenever: (a) a copyright collecting society to which section 51 ‑ 43 applies makes a payment to a member of the society; or (b) the resale royalty collecting society pays a resale royalty.

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 | Repealed and substituted by No 126 of 2009, effective Schedule 1 (items 1–17, 20): 9 June 2010 ( see s. 2(1))

s 410-5 — Copyright collecting society must give notice to member of society

(1) A * copyright collecting society must give a * member of the society notice of any payment it makes to the member, if section 51 ‑ 43 applies to the society. (2) The society must give the notice at the time of the payment. (3) The notice must be in the * approved form. Note: Under section 288 ‑ 75 in Schedule 1 to the Taxation Administration Act 1953 a society is liable to an administrative penalty for failing to give a notice required under this section.

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 | Repealed and substituted by No 126 of 2009, effective Schedule 1 (items 1–17, 20): 9 June 2010 ( see s. 2(1))

s 410-50 — Resale royalty collecting society must give notice to holder of resale royalty right

(1) The * resale royalty collecting society must give an entity notice of any payment it makes to the entity under section 26 of the Resale Royalty Right for Visual Artists Act 2009 , if section 51 ‑ 45 of this Act applies to the society. (2) The society must give the notice at the time of the payment. (3) The notice must be in the * approved form. Note: Under section 288 ‑ 75 in Schedule 1 to the Taxation Administration Act 1953 the society is liable to an administrative penalty for failing to give a notice required under this section.

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

s 415-1 — What this Division is about

This Division provides for special treatment for tax losses and bad debts for certain entities (called “designated infrastructure project entities”) that carry on infrastructure projects that the Infrastructure CEO designates under Subdivision 415 ‑ C.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2)

s 415-5 — Object of this Division

The object of this Division is to reduce the disincentives for private expenditure on nationally significant infrastructure that result from the long lead times between incurring deductions for, and earning assessable income from, such expenditure.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22)

s 415-10 — What this Subdivision is about

The unutilised amounts of a designated infrastructure project entity’s tax losses are increased each year by the long term bond rate. A designated infrastructure project entity is a fixed trust or company that: (a) carries on an infrastructure project designated under Subdivision 415 ‑ C; and (b) only engages, and has only ever engaged, in activities for the purposes of carrying on that designated infrastructure project. The tests that apply in relation to tax losses and bad debts if there is a change of ownership of an entity are modified so that periods during which the entity is a designated infrastructure project entity are not tested. The loss utilisation rules in Subdivision 707 ‑ C do not apply if the head company of a consolidated group is a designated infrastructure project entity after another designated infrastructure project entity joins the group. Note: The transfer rules in subsection 707 ‑ 120(1A) do not apply if a designated infrastructure project entity joins a consolidated group: see subsection 707 ‑ 120(5). Table of sections Uplift of tax losses 415 ‑ 15 Uplift of tax losses of designated infrastructure project entities 415 ‑ 20 Designated infrastructure project entity Change of ownership of trusts and companies 415 ‑ 25 Tax losses of trusts 415 ‑ 30 Bad debts written off etc. by trusts 415 ‑ 35 Tax losses of companies 415 ‑ 40 Bad debts written off by companies Consolidated groups 415 ‑ 45 Losses transferred to head companies of consolidated groups

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22)

s 415-15 — Uplift of tax losses of designated infrastructure project entities

(1) The amount of a * tax loss of a * loss year of an entity is increased, at the end of each later income year (and before any * utilisation of the tax loss by the entity in the later income year), by the amount worked out using the following formula: where: eligible portion of the later income year means the amount worked out using the following formula: (2) This subsection applies to the entity on a day in the later income year if: (a) the entity is a * designated infrastructure project entity on that day; and (b) on the day mentioned in subsection (3), the entity has notified the Commissioner (whether before, during or after the later income year) in the * approved form that the entity was, at any time, a designated infrastructure project entity. (3) For the purposes of paragraph (2)(b), the day is the day after the latest of the following days: (a) the day before which the entity: (i) is required to lodge its * income tax return for the later income year with the Commissioner; or (ii) if the entity is not required to lodge an income tax return for the later income year—would be required to lodge its income tax return for the later income year were the entity required to lodge such a return; (b) the 28th day after the first day the entity carries on the infrastructure project mentioned in paragraph 415 ‑ 20(1)(b); (c) the 28th day after the day the * Infrastructure CEO designates the infrastructure project under section 415 ‑ 70; (d) a later day allowed by the Commissioner. Note: The increase under this section can occur at the end of an income year even if, at the end of the year, the entity does not know the entity is a designated infrastructure project entity (e.g. because the Infrastructure CEO has not yet designated the infrastructure project that the entity carries on, but the Infrastructure CEO does so later). Consolidated groups (4) Disregard paragraph 701 ‑ 30(3)(a) for the purposes of the denominator in the formula in the definition of eligible portion of the later income year in subsection (1) of this section. Note: Paragraph 701 ‑ 30(3)(a) applies if the entity becomes a subsidiary member of a consolidated group during the later income year. (5) For the purposes of applying this section to a * tax loss the * head company of a * consolidated group makes as mentioned in subsection 707 ‑ 140(1): (a) the head company is treated as having made the loss in the income year before the income year in which the transfer mentioned in that subsection occurs; and (b) subsection (2) of this section is treated as not applying to the head company on or before the day the transfer occurs; unless the transferred loss was a non ‑ membership period loss (within the meaning of subsection 701 ‑ 30(3)) in relation to the group. Note: Subsection 707 ‑ 140(1) treats the head company of a consolidated group as having made a loss in an income year in which a loss is transferred to the head company from an entity that joins the group.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2) | 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 415-20 — Designated infrastructure project entity

Designated infrastructure project entity (1) An entity is a designated infrastructure project entity at a time (the relevant time ) if: (a) at the relevant time, the entity is a * fixed trust or a company; and (b) at or after the relevant time, the entity carries on a single * designated infrastructure project; and (c) the entity does not, at or before the relevant time, carry on any other designated infrastructure project; and (d) the only activities in which the entity engages at the relevant time, or engaged before the relevant time, are or were for the purposes of the entity carrying on the single designated infrastructure project. (2) For the purposes of this section: (a) an * enterprise that becomes a * designated infrastructure project at a time is treated as having been a designated infrastructure project at all earlier times; and (b) if the entity carries on (whether or not at the same time) one or more parts, but not the whole, of a single designated infrastructure project—the parts are treated as being a single designated infrastructure project; and (c) in any case—the following are treated as being a single designated infrastructure project: (i) a single designated infrastructure project (the listed infrastructure project ) that is included on an Infrastructure Priority List; (ii) any designated infrastructure projects that the entity carries on (whether or not at the same time) and that are part of the listed infrastructure project; and Note: For Infrastructure Priority Lists, see paragraph 5(b) of the Infrastructure Australia Act 2008 . (d) in any case—any designated infrastructure projects that the entity carries on (whether or not at the same time) and that are part of a single infrastructure project that: (i) is included on an Infrastructure Priority List; and (ii) is not a designated infrastructure project; are treated as being a single designated infrastructure project. Partnerships (3) Subsection (4) applies to an entity if: (a) the entity is a * fixed trust or a company; and (b) the person that is the trustee of the trust, or the person that is the company, is a partner in a partnership. (4) For the purposes of subsections (1) and (2), the entity: (a) is treated as carrying on any * designated infrastructure project carried on by the partnership; and (b) is treated as engaging in any activity engaged in by the partnership; and (c) if the partnership engages in an activity for the purpose of the partnership carrying on a designated infrastructure project—is treated as engaging in that activity for the purpose of the entity carrying on that designated infrastructure project. Consolidated groups (5) For the purposes of working out whether the * head company of a * consolidated group was a * designated infrastructure project entity at a time (whether before or after the group consolidates), section 701 ‑ 5 (Entry history rule) is treated as not applying to the head company in relation to an entity that was not a * member of the consolidated group at that time. (6) For the purposes of working out whether an entity is a * designated infrastructure project entity at a time after the entity ceases to be a * subsidiary member of a * consolidated group, section 701 ‑ 40 (Exit history rule) is treated as not applying to the entity in relation to the group.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2) | 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 415-25 — Tax losses of trusts

Scope (1) This section applies to a * tax loss of a * trust if the trust is a * designated infrastructure project entity at a time (the status time ) in the * loss year. Modifications of Schedule 2F to the Income Tax Assessment Act 1936 (2) Despite paragraph 266 ‑ 25(1)(b), 266 ‑ 30(a), 266 ‑ 75(1)(b) or (2)(b), 266 ‑ 80(1)(a) or (2)(a), 266 ‑ 110(1)(b), 266 ‑ 115(a), 266 ‑ 150(2)(a), 266 ‑ 155(2)(a), 267 ‑ 20(1)(b) or 267 ‑ 60(a) in Schedule 2F to the Income Tax Assessment Act 1936 , for the purposes of sections 266 ‑ 40 and 266 ‑ 45, section 266 ‑ 90, subsections 266 ‑ 125(1) and (2), subsections 266 ‑ 165(1) and (2), sections 267 ‑ 40 and 267 ‑ 45 or sections 267 ‑ 70 and 267 ‑ 75 in that Schedule (whichever are applicable), the test period starts at the first time: (a) that occurs after the status time; and (b) at which the trust is not a * designated infrastructure project entity; if, apart from this subsection, the test period would start earlier. (3) For the purposes of section 267 ‑ 30 in that Schedule, disregard any part of an income year during which the trust is a * designated infrastructure project entity. (4) For the purposes of working out, under subsection 268 ‑ 10(3), 268 ‑ 15(3) or 268 ‑ 20(3) in that Schedule, the end of the first period, disregard any part of the income year mentioned in that subsection during which the trust is a * designated infrastructure project entity. Note: A trust does not calculate its net income and tax loss under Division 268 in that Schedule if the trust was a designated infrastructure project entity during the whole of the income year: see paragraphs 266 ‑ 30(c), 266 ‑ 80(1)(d) and (2)(c), 266 ‑ 115(b), 266 ‑ 155(2)(b), 267 ‑ 60(b) and 272 ‑ 100(f) in that Schedule. (5) For the purposes paragraph 268 ‑ 20(4)(b) in that Schedule, disregard any part of the first of the successive periods during which the trust is a * designated infrastructure project entity.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22)

s 415-30 — Bad debts written off etc. by trusts

Scope (1) This section applies to a debt to which paragraph 266 ‑ 35(1)(a), 266 ‑ 85(1)(a) or (2)(a), 266 ‑ 120(1)(a), 266 ‑ 160(1)(a) or (b), 267 ‑ 25(1)(a) or 267 ‑ 65(1)(a) in Schedule 2F to the Income Tax Assessment Act 1936 applies, if the trust is a * designated infrastructure project entity at a time (the status time ) in the income year in which the debt was incurred. Modifications of Schedule 2F to the Income Tax Assessment Act 1936 (2) Despite paragraph 266 ‑ 35(1)(b), 266 ‑ 85(1)(b) or (2)(b), 266 ‑ 120(1)(b), 266 ‑ 160(2)(a), 267 ‑ 25(1)(b) or 267 ‑ 65(1)(a) in that Schedule, for the purposes of sections 266 ‑ 40 and 266 ‑ 45, section 266 ‑ 90, subsections 266 ‑ 125(1) and (2), subsections 266 ‑ 165(1) and (2), sections 267 ‑ 40 and 267 ‑ 45 or sections 267 ‑ 70 and 267 ‑ 75 in that Schedule (whichever are applicable), the test period starts at the first time: (a) that occurs after the status time; and (b) at which the trust is not a * designated infrastructure project entity. (3) For the purposes of section 267 ‑ 30 in that Schedule, disregard any part of an income year during which the trust is a * designated infrastructure project entity.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22)

s 415-35 — Tax losses of companies

Scope (1) This section applies to a * tax loss of a company if the company is a * designated infrastructure project entity at a time (the status time ) in the * loss year. Modifications of Divisions 165 and 166 (2) Despite subsection 165 ‑ 12(1), 166 ‑ 5(2) or 166 ‑ 20(1), the * ownership test period or * test period under that subsection starts at the earlier of: (a) the first time: (i) that occurs after the status time; and (ii) at which the company is not a * designated infrastructure project entity; and (b) the end of the income year referred to in that subsection as the income year. (3) In a case to which paragraph (2)(b) applies, the company is treated as meeting the conditions in section 165 ‑ 12. (4) Despite subsection 165 ‑ 13(2), 166 ‑ 5(5), 165 ‑ 15(2) or 166 ‑ 20(4), the * business continuity test period under that subsection starts at the start of the * ownership test period or * test period (whichever is applicable) if, apart from this subsection, the business continuity test period would start earlier. (5) Despite subsection 165 ‑ 13(2), 165 ‑ 15(3), 166 ‑ 5(6) or 166 ‑ 20(4), the * test time under that subsection occurs just after the start of the * ownership test period or * test period (whichever is applicable) if, apart from this subsection, the test time would occur earlier. (6) A reference in subsection 165 ‑ 15(1) to the * loss year is treated as being a reference to the period: (a) starting at the start of the * ownership test period; and (b) ending at the end of the income year in which the ownership test period starts. (7) For the purposes of working out, under paragraph 165 ‑ 45(3)(a) or (b) or subsection 165 ‑ 45(4), the end of the first period, disregard any part of the income year mentioned in section 165 ‑ 45 during which the company is a * designated infrastructure project entity. Note: A company does not calculate its taxable income and tax loss under Subdivision 165 ‑ B if the company was a designated infrastructure project entity during the whole of the income year: see paragraph 165 ‑ 35(c). Exceptions (8) Disregard this section for the purposes of Subdivisions 165 ‑ CA and 165 ‑ CB (about net capital losses) and 175 ‑ A and 175 ‑ CA (about tax benefits).

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 415-40 — Bad debts written off by companies

Scope (1) This section applies to a debt that a company writes off as bad, if the company is a * designated infrastructure project entity at a time (the status time ) in the income year in which the debt was incurred. Modifications of Divisions 165 and 166 (2) Despite subsection 165 ‑ 123(1) or 166 ‑ 40(2), the * ownership test period or * test period under that subsection starts at the earlier of: (a) the first time that occurs after the status time and on or after: (i) in the case of subsection 165 ‑ 123(1)—the start of the * first continuity period; or (ii) in the case of subsection 166 ‑ 40(2)—the time the company chooses under that subsection; and at which the company is not a * designated infrastructure project entity; and (b) the end of the * second continuity period. (3) In a case to which paragraph (2)(b) applies, the company is treated as meeting the conditions in section 165 ‑ 123. (4) Despite subsection 165 ‑ 126(2), 165 ‑ 129(2), 165 ‑ 132(1) or 166 ‑ 40(5), the * business continuity test period under that subsection starts at the start of the * ownership test period or * test period (whichever is applicable) if, apart from this subsection, the business continuity test period would start earlier. (5) Despite subsection 165 ‑ 126(2), 165 ‑ 129(3) or 166 ‑ 40(6), the * test time under that subsection occurs just after the start of the * ownership test period or * test period (whichever is applicable) if, apart from this subsection, the test time would occur earlier. (6) A reference in subsection 165 ‑ 129(1) to the * first continuity period is treated as being a reference to the period: (a) starting at the start of the * ownership test period; and (b) ending at the end of the income year in which the ownership test period starts. Exception (7) Disregard this section for the purposes of Subdivision 175 ‑ C (about tax benefits).

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 415-45 — Losses transferred to head companies of consolidated groups

Subdivision 707 ‑ C (Amount of transferred losses that can be utilised) does not apply to a loss transferred under Subdivision 707 ‑ A (Transfer of previously unutilised losses to head company), if: (a) just before the transfer, the transferor of the loss was a * designated infrastructure project entity; and (b) just after the transfer, the transferee of the loss is a designated infrastructure project entity.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22)

s 415-50 — What this Subdivision is about

To receive the special treatment for tax losses and bad debts under Subdivision 415 ‑ B, an entity must only engage in activities for the purposes of carrying on an infrastructure project designated by the Infrastructure CEO under this Subdivision. Designation is dependent on: (a) criteria prescribed by the Minister; and (b) a cap on the total estimated private capital expenditure that would be incurred for all provisionally designated and designated infrastructure projects. Table of sections Designating infrastructure projects 415 ‑ 55 Applications for designation 415 ‑ 60 Dealing with applications 415 ‑ 65 Provisional designation 415 ‑ 70 Designation Infrastructure project capital expenditure cap 415 ‑ 75 Infrastructure project capital expenditure cap 415 ‑ 80 Acceptance of estimates of infrastructure project capital expenditure Miscellaneous 415 ‑ 85 Review of decisions 415 ‑ 90 Information to be made public 415 ‑ 95 Delegation 415 ‑ 100 Infrastructure project designation rules

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2)

s 415-55 — Applications for designation

(1) An entity may apply to the * Infrastructure CEO to have the Infrastructure CEO designate an * enterprise (the infrastructure project ) that is a proposed investment in, or enhancement to, infrastructure as being an infrastructure project in relation to which Subdivision 415 ‑ B applies. Note: The Infrastructure CEO holds office under the Infrastructure Australia Act 2008 . (2) The application must include an estimate of the * infrastructure project capital expenditure that would be incurred for the purpose of the infrastructure project. (3) Subsection (2) does not apply to * infrastructure project capital expenditure to the extent that the infrastructure project capital expenditure would be: (a) incurred by an * Australian government agency; or (b) funded by a grant from an Australian government agency. (4) The application must: (a) be in a form (if any) approved by the * Infrastructure CEO; and (b) be accompanied by the fee (if any) prescribed by the * infrastructure project designation rules. (5) A fee prescribed as mentioned in paragraph (4)(b) is payable to the * Infrastructure CEO, on behalf of the Commonwealth.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2)

s 415-60 — Dealing with applications

Dealing with applications (1) The * Infrastructure CEO must deal with applications made under this Division: (a) in accordance with the requirements prescribed by the * infrastructure project designation rules; or (b) if the infrastructure project designation rules do not prescribe any requirements—in the order in which the applications are made. (2) Without limiting paragraph (1)(a), the requirements the * infrastructure project designation rules may prescribe for the purposes of that paragraph include: (a) requirements relating to the time at which or by which the * Infrastructure CEO must deal with an application; and (b) requirements relating to applications that, in the opinion of the Infrastructure CEO, are incomplete or do not contain sufficient information for the Infrastructure CEO to deal with the applications. (3) For the purposes of subsection (1), the * Infrastructure CEO deals with an application by: (a) designating the infrastructure project provisionally under section 415 ‑ 65, or deciding not to designate the infrastructure project provisionally under that section; or (b) designating the infrastructure project under section 415 ‑ 70 or deciding not to designate the infrastructure project under that section (whether or not the Infrastructure CEO has previously dealt with the application by designating the infrastructure project provisionally under section 415 ‑ 65). (4) Paragraph (1)(b) does not apply to the * Infrastructure CEO deciding whether to designate a * provisionally designated infrastructure project under section 415 ‑ 70. No designation after 30 June 2017 or later prescribed day (5) Despite anything else in this Subdivision, the * Infrastructure CEO must not provisionally designate the infrastructure project under section 415 ‑ 65, or designate the infrastructure project under section 415 ‑ 70, after: (a) 30 June 2017; or (b) a later day (if any) prescribed by the * infrastructure project designation rules.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2)

s 415-65 — Provisional designation

Provisional designation (1) The * Infrastructure CEO must, by instrument in writing, designate the infrastructure project provisionally for the purposes of this Division if: (a) the entity applies to have the Infrastructure CEO designate the infrastructure project in accordance with section 415 ‑ 55; and (b) the Infrastructure CEO accepts the estimate of the * infrastructure project capital expenditure under section 415 ‑ 80; and (c) the provisional designation would not breach the infrastructure project capital expenditure cap under section 415 ‑ 75; and (d) the following conditions are satisfied: (i) the conditions prescribed by the * infrastructure project designation rules; (ii) if the infrastructure project designation rules do not prescribe any conditions—in the opinion of the Infrastructure CEO, the infrastructure is nationally significant infrastructure (within the meaning of the Infrastructure Australia Act 2008 ); and (e) the infrastructure project is not a * designated infrastructure project. (2) The instrument of provisional designation must contain any details prescribed by the * infrastructure project designation rules. Amendment of instruments of provisional designation (3) The * Infrastructure CEO must, by instrument in writing, amend the instrument of provisional designation in accordance with any requirements prescribed by the * infrastructure project designation rules. The Infrastructure CEO must not amend the instrument in any other circumstances. (4) Without limiting subsection (3), the requirements the * infrastructure project designation rules may prescribe for the purposes of that subsection include requirements relating to when an amendment must take effect, which may be a time before the amendment is made. Revocation of instruments of provisional designation (5) The * Infrastructure CEO must, by instrument in writing, revoke the instrument of provisional designation: (a) if the Infrastructure CEO has designated the project under section 415 ‑ 70, or decides not to designate the project; or (b) if the Infrastructure CEO has revoked the instrument of acceptance of the estimate under section 415 ‑ 80; or (c) in the circumstances (if any) prescribed by the * infrastructure project designation rules. The Infrastructure CEO must not revoke the instrument in any other circumstances. (6) Without limiting paragraph (5)(c), the circumstances the * infrastructure project designation rules may prescribe for the purposes of that paragraph include: (a) circumstances involving a failure by a prescribed entity to give prescribed information to the * Infrastructure CEO; and (b) circumstances involving a breach of conditions set by the Infrastructure CEO for the * provisionally designated infrastructure project to remain provisionally designated. (7) The * infrastructure project designation rules must prescribe matters to which the * Infrastructure CEO must have regard in setting conditions for a * provisionally designated infrastructure project to remain provisionally designated, if the infrastructure project designation rules provide for the Infrastructure CEO to set such conditions, as mentioned in paragraph (6)(b).

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2)

s 415-70 — Designation

Designation (1) The * Infrastructure CEO must, by instrument in writing, designate the infrastructure project for the purposes of this Division if: (a) the entity applies to have the Infrastructure CEO designate the infrastructure project in accordance with section 415 ‑ 55; and (b) the Infrastructure CEO accepts the estimate of the * infrastructure project capital expenditure under section 415 ‑ 80; and (c) the designation would not breach the infrastructure project capital expenditure cap under section 415 ‑ 75; and (d) the following conditions are satisfied: (i) the conditions prescribed by the * infrastructure project designation rules; (ii) if the infrastructure project designation rules do not prescribe any conditions—the conditions mentioned in subsection (2); (whether or not the infrastructure project is a * provisionally designated infrastructure project). (2) For the purposes of subparagraph (1)(d)(ii), the following are the conditions: (a) in the opinion of the * Infrastructure CEO, the infrastructure is nationally significant infrastructure (within the meaning of the Infrastructure Australia Act 2008 ); (b) in the opinion of the Infrastructure CEO, financial close on the infrastructure project has occurred or is imminent. (3) The instrument of designation must contain any details prescribed by the * infrastructure project designation rules. Amendment of instruments of designation (4) The * Infrastructure CEO must, by instrument in writing, amend the instrument of designation in accordance with any requirements prescribed by the * infrastructure project designation rules. The Infrastructure CEO must not amend the instrument in any other circumstances. (5) Without limiting subsection (4), the requirements the * infrastructure project designation rules may prescribe for the purposes of that subsection include requirements relating to when an amendment must take effect, which may be a time before the amendment is made. Revocation of instruments of designation (6) The * Infrastructure CEO must, by instrument in writing, revoke the instrument of designation in the circumstances prescribed by the * infrastructure project designation rules. The Infrastructure CEO must not revoke the instrument in any other circumstances. (7) Without limiting subsection (6), the circumstances the * infrastructure project designation rules may prescribe for the purposes of that subsection include: (a) circumstances involving a failure by a prescribed entity to give prescribed information to the * Infrastructure CEO; and (b) circumstances involving a breach of conditions set by the Infrastructure CEO for the * designated infrastructure project to remain designated. (8) The * infrastructure project designation rules must prescribe matters to which the * Infrastructure CEO must have regard in setting conditions for a * designated infrastructure project to remain designated, if the infrastructure project designation rules provide for the Infrastructure CEO to set such conditions, as mentioned in paragraph (7)(b). Infrastructure CEO must notify Commissioner (9) The * Infrastructure CEO must notify the Commissioner of a decision made by the Infrastructure CEO: (a) to designate the infrastructure project; or (b) to amend or to revoke the instrument of designation; within 28 days after making the decision.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2)

s 415-75 — Infrastructure project capital expenditure cap

(1) Provisional designation, or designation, of the infrastructure project would breach the * infrastructure project capital expenditure cap under this section if, were the provisional designation or designation to occur, the total of the estimates accepted under section 415 ‑ 80 for each infrastructure project that, just after the provisional designation or designation, would be: (a) a * provisionally designated infrastructure project; or (b) a * designated infrastructure project; would exceed the amount mentioned in subsection (2). (2) The amount is: (a) $25 billion; or (b) if the * infrastructure project designation rules prescribe a greater amount—that prescribed amount. (3) For the purposes of subsection (1), disregard so much of the amount of an estimate for an infrastructure project (the listed infrastructure project ) as relates to a part of the listed infrastructure project, if: (a) that part of the listed project is (or would be, were the provisional designation or designation mentioned in that subsection to occur): (i) a * provisionally designated infrastructure project; or (ii) a * designated infrastructure project; and (b) the listed infrastructure project is included on an Infrastructure Priority List. Note: For Infrastructure Priority Lists, see paragraph 5(b) of the Infrastructure Australia Act 2008 . (4) In this Act: infrastructure project capital expenditure : (a) has the meaning given by the * infrastructure project designation rules; or (b) if the infrastructure project designation rules do not give infrastructure project capital expenditure a meaning—means capital expenditure.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2)

s 415-80 — Acceptance of estimates of infrastructure project capital expenditure

Acceptance of estimates (1) The * Infrastructure CEO must, by instrument in writing, accept the estimate of * infrastructure project capital expenditure if the following conditions are satisfied: (a) the conditions prescribed by the * infrastructure project designation rules; (b) if the infrastructure project designation rules do not prescribe any conditions—in the opinion of the Infrastructure CEO, the estimate is acceptable. Revocation of instruments of acceptance (2) The * Infrastructure CEO must not revoke the instrument of acceptance if the infrastructure project is a * designated infrastructure project. (3) Subject to subsection (2), the * Infrastructure CEO must, by instrument in writing, revoke the instrument of acceptance in the circumstances prescribed by the * infrastructure project designation rules. The Infrastructure CEO must not revoke the instrument in any other circumstances. (4) Without limiting subsection (3), the circumstances the * infrastructure project designation rules may prescribe for the purposes of that subsection include: (a) circumstances involving a failure by a prescribed entity to give prescribed information to the * Infrastructure CEO; and (b) circumstances involving a failure by the applicant to amend the estimate in accordance with a request made by the Infrastructure CEO. (5) The * infrastructure project designation rules must prescribe matters to which the * Infrastructure CEO must have regard in requesting the applicant to amend the estimate, if the infrastructure project designation rules provide for the Infrastructure CEO to make such requests as mentioned in paragraph (4)(b). (6) If: (a) the * infrastructure project designation rules provide for the * Infrastructure CEO to request the applicant to amend the estimate; and (b) the applicant amends the estimate in accordance with such a request; the acceptance is treated, from the time the amendment is made, as being an acceptance of the amended estimate.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2)

s 415-85 — Review of decisions

Applications may be made to the * ART for review of the following decisions of the * Infrastructure CEO: (a) a decision not to designate the infrastructure project provisionally under section 415 ‑ 65; (b) a decision to amend or revoke the instrument of provisional designation under section 415 ‑ 65; (c) a decision not to designate the infrastructure project under section 415 ‑ 70; (d) a decision to amend or revoke the instrument of designation under section 415 ‑ 70.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2) | Amended by No 38 of 2024, effective sch 1 (items 31 ‑ 37, 64): 14 Oct 2024 (s 2(1) item 2)

s 415-90 — Information to be made public

The * Infrastructure CEO must comply with any requirements prescribed by the * infrastructure project designation rules in relation to the publication of information about: (a) * provisionally designated infrastructure projects and * designated infrastructure projects; and (b) the * infrastructure project capital expenditure cap under section 415 ‑ 75.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2)

s 415-95 — Delegation

The * Infrastructure CEO may, by instrument in writing, delegate any of the Infrastructure CEO’s powers or functions under this Subdivision to an SES employee, or acting SES employee, referred to in paragraph 39(1)(a) or 39A(1)(a) of the Infrastructure Australia Act 2008 .

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 77 of 2014, effective Sch 1 (items 43–99): 1 Sept 2014 (s 2(1) item 2) | 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)

s 415-100 — Infrastructure project designation rules

(1) The Minister may, by legislative instrument, make rules (the infrastructure project designation rules ) prescribing matters: (a) required or permitted by this Subdivision to be prescribed by the rules; or (b) necessary or convenient to be prescribed for carrying out or giving effect to this Subdivision. (2) Despite subsection 14(2) of the Legislation Act 2003 , the * infrastructure project designation rules may make provision in relation to a matter by applying, adopting or incorporating any matter contained in an instrument, or other writing, made by Infrastructure Australia as in force or existing from time to time.

Amendment history: Inserted by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 126 of 2015, effective Sch 1 (items 299–301): 5 Mar 2016 (s 2(1) item 2)

s 417-1 — What this Division is about

This Division alters the operation of this Act on several topics (outlined in the table of Subdivisions above) to address how the Timor Sea Maritime Boundaries Treaty could affect the tax treatment, under Australian income tax law, of entities that undertake petroleum activities in the affected area.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-5 — Object

The object of this Division is to give effect to Australia’s obligations under the * Timor Sea Maritime Boundaries Treaty to provide, in relation to * transitioned petroleum activities, equivalent tax treatment to the tax treatment previously applying in relation to those activities.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-10 — Meaning of transitioned petroleum activities

(1) Transitioned petroleum activities are petroleum activities (within the meaning of the * Timor Sea Maritime Boundaries Treaty) that are undertaken: (a) pursuant to the terms of any of the following * production sharing contracts: (i) Production Sharing Contract JPDA 03 ‑ 12; (ii) Production Sharing Contract JPDA 03 ‑ 13; (iii) Production Sharing Contract JPDA 06 ‑ 105; (iv) Production Sharing Contract JPDA 11 ‑ 106; or (b) pursuant to the terms of a production sharing contract that: (i) comes into force after, or when, that treaty entered into force; and (ii) has the effect of replacing, and relates to the same area as, a production sharing contract mentioned in paragraph (a); or (c) in a part of the * Petroleum Exploration Permit WA ‑ 523 ‑ P permit area that, as a result of that treaty entering into force, ceased to be within the continental shelf of Australia. Note: This part of the Petroleum Exploration Permit WA ‑ 523 ‑ P permit area includes the Buffalo Oil Field. (2) The Petroleum Exploration Permit WA ‑ 523 ‑ P permit area is the area that, just before the * Timor Sea Maritime Boundaries Treaty entered into force, was the subject of Petroleum Exploration Permit WA ‑ 523 ‑ P, granted under Part 2.2 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 on 27 May 2016.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-25 — Deducting amounts for depreciating assets

(1) If: (a) you use a * depreciating asset, or you have it * installed ready for use, for a purpose of undertaking * transitioned petroleum activities; and (b) before the * Timor Sea Maritime Boundaries Treaty entered into force, you or another entity used the asset, or you or another entity had it installed ready for use, for a purpose of undertaking transitioned petroleum activities; to the extent that you use the asset, or you have it installed ready for use, for that purpose, you are taken to use the asset, or to have it installed ready for use, entirely for a * taxable purpose. (2) For the purposes of subsection 40 ‑ 25(2), if: (a) you can deduct an amount for a decline in value of the asset; and (b) apart from subsection (1), you would not be able to deduct an amount, or would only be able to deduct a lesser amount, for that decline in value; and (c) the * transitioned petroleum activities are wholly or partly undertaken, or to be undertaken, in relation to the * JPDA; to the extent that the activities are so undertaken, or so to be undertaken, the part of the asset’s decline in value that is attributable to your use of the asset, or your having it * installed ready for use, for a * taxable purpose is reduced to 10% of what it would be apart from this subsection. (3) For the purposes of Subdivision 40 ‑ C, if: (a) you can deduct an amount for a decline in value of the asset; and (b) apart from subsection (1), you would not be able to deduct an amount, or would only be able to deduct a lesser amount, for that decline in value; in working out the second element of the * cost of the asset, disregard any amount that you pay, and any expenditure that you incur, on or after the day on which the * Timor Sea Maritime Boundaries Treaty entered into force.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-30 — Balancing adjustments

(1) If: (a) before the * Timor Sea Maritime Boundaries Treaty entered into force, you * held a * depreciating asset that you used, or had * installed ready for use, for a purpose of undertaking * transitioned petroleum activities; and (b) you stopped holding the asset when that treaty entered into force, because the asset ceased to exist at that time; and (c) the cessation occurred in connection with the entry into force of that treaty; the cessation is taken, for the purposes of this Act, not to be a * balancing adjustment event. (2) Section 40 ‑ 285 does not apply in relation to a * depreciating asset you * held if: (a) before the * Timor Sea Maritime Boundaries Treaty entered into force, you or another entity used the asset, or you or another entity had it * installed ready for use, for a purpose of undertaking * transitioned petroleum activities; and (b) on or after the day on which that treaty entered into force, a * balancing adjustment event occurs for the asset. Note: The effect of this subsection is to prevent an amount being included in your assessable income, or a deduction arising, because of a balancing adjustment event. The balancing adjustment event still occurs, so the operation of a section such as section 118 ‑ 24 is unaffected. (3) It does not matter, for the purposes of paragraph (2)(a), whether the asset is also used, or * installed ready for use, for a purpose other than the purpose of undertaking * transitioned petroleum activities. (4) If, as a result of the * balancing adjustment event mentioned in paragraph (2)(b), another entity * holds the asset, the * cost of the asset to the other entity is taken to be the asset’s * adjustable value to you just before the balancing adjustment event occurs.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-35 — Allocating assets to a project pool

(1) You may choose to allocate to a project pool all the * depreciating assets (the pooled assets ) that: (a) you * held when the * Timor Sea Maritime Boundaries Treaty entered into force; and (b) before that treaty entered into force, you used, or had * installed ready for use, for a purpose of undertaking * transitioned petroleum activities. (2) You must choose by the day you lodge your * income tax return for the income year (the initial income year ) in which that treaty entered into force. (3) The choice is irrevocable. (4) If you make the choice, for the purposes of Division 40 and section 417 ‑ 30: (a) the pooled assets are taken to be a single * depreciating asset that you * hold; and (b) the single asset is taken to be used, or * installed ready for use, for the same purpose as the purpose for which the pooled assets were used, or installed ready for use, when the * Timor Sea Maritime Boundaries Treaty entered into force; and (c) the * cost of the single asset is taken to be an amount equal to the sum of the * adjustable values of all of the pooled assets when that treaty entered into force; and (d) the decline in value of the single asset is taken to be: (i) for the initial income year—40% of its cost; and (ii) for the next income year—40% of its cost; and (iii) for the income year after that next income year—20% of its cost; and (e) a * balancing adjustment event cannot occur for the single asset; and (f) a * CGT event cannot occur for the single asset; and (g) amounts are not deductible, by you or any other entity, for declines in value of any of the assets allocated to the pool for: (i) the part of the initial income year occurring on or after the entry into force of that treaty; or (ii) any subsequent income year. (5) The transfer of a pooled asset to another entity does not affect the operation of subsection (4) in relation to the single asset.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-40 — Deduction for expenditure on mining site rehabilitation

(1) You can deduct, for an income year, 10% of expenditure on * mining site rehabilitation that you incur in that year if the rehabilitation relates to the undertaking (by you or another entity) of * transitioned petroleum activities in relation to the * JPDA. (2) However, expenditure on these things is not deductible under this section: (a) acquiring land or an interest in land or a right, power or privilege to do with land; (b) a bond or security, however described, for performing * mining site rehabilitation; (c) * housing and welfare.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-45 — Capital expenditure

(1) For the purposes of section 40 ‑ 835, if: (a) a * project amount was allocated to a project pool before the * Timor Sea Maritime Boundaries Treaty entered into force; and (b) the project amount was expenditure for a purpose of undertaking * transitioned petroleum activities in relation to the * JPDA; to the extent that the operation of the project in an income year relates to that expenditure, 10% of the project is taken to operate, in the year, for a * taxable purpose. (2) For the purposes of section 40 ‑ 835, if: (a) a * project amount was allocated to a project pool before the * Timor Sea Maritime Boundaries Treaty entered into force; and (b) the project amount was expenditure for a purpose of undertaking * transitioned petroleum activities otherwise than in relation to the * JPDA; to the extent that the operation of the project in an income year relates to that expenditure, the project is taken to operate, in the year, for a * taxable purpose. (3) If subsection (1) or (2) applies to one or more * project amounts allocated to a project pool, for the income year (the initial income year ) in which the * Timor Sea Maritime Boundaries Treaty entered into force or a later income year, calculate your deduction under section 40 ‑ 830 or 40 ‑ 832 for the project pool as follows: (a) calculate the amount of the deduction as if none of those project amounts had been allocated to the project pool; (b) add to that amount the following: (i) for the initial income year—40% of the sum of those project amounts; (ii) for the next income year—40% of that sum; (iii) for the income year after that next income year—20% of that sum.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-50 — Transferring entitlement to deductions relating to a project pool

(1) You may choose to transfer, to a * corporate tax entity, either or both of the following: (a) all or part of your entitlement to deductions under Division 40 in relation to the declines in value of the single asset mentioned in subsection 417 ‑ 35(4) (including future declines in value but not including declines in value that have already been deducted under that Division); (b) all or part of so much of your entitlement to deductions under section 40 ‑ 830 or 40 ‑ 832 as arises because of the operation of section 417 ‑ 45. (2) The choice: (a) must be in the * approved form; and (b) must be made no later than the day you lodge your * income tax return for the first income year for which all or part of your entitlement is to be transferred. (3) The choice cannot be revoked. (4) Only one choice can be made under this section in relation to the same part of the entitlement. (5) If you choose under this section to transfer to another entity all or part of your entitlement: (a) the other entity can make deductions arising from that entitlement or part; and (b) at the time of the choice, a * franking credit arises in the * franking account of the other entity; and (c) you can no longer make deductions arising from that entitlement or part. (6) The amount of the * franking credit under paragraph (5)(b) is an amount equal to the amount of the deduction transferred multiplied by the standard corporate tax rate (within the meaning of Part IVA of the Income Tax Assessment Act 1936 ).

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-65 — CGT events not created by Timor Sea Maritime Boundaries Treaty entering into force

If: (a) before the * Timor Sea Maritime Boundaries Treaty entered into force, you owned an intangible * CGT asset connected with undertaking * transitioned petroleum activities; and (b) your ownership of the asset ended when that treaty entered into force; and (c) the ending of your ownership occurred in connection with the entry into force of that treaty; the ending of your ownership is not a * CGT event.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-70 — Tax treatment of consideration for transferred entitlement to deductions or tax loss

(1) If: (a) you choose to transfer to another entity: (i) under section 417 ‑ 50, an entitlement to deductions; or (ii) under Subdivision 417 ‑ D, an amount of a * tax loss for an income year; and (b) you receive any consideration from the other entity for the entitlement to deductions or for the amount of the tax loss; then: (c) so much of the consideration as is given for the entitlement to deductions or for the amount of the tax loss is not included in your assessable income or your exempt income; and (d) a * capital gain does not accrue to you because of the receipt of the consideration. (2) If: (a) you choose to transfer to another entity: (i) under section 417 ‑ 50, an entitlement to deductions; or (ii) under Subdivision 417 ‑ D, an amount of a * tax loss for an income year; and (b) the other entity gives you any consideration for the entitlement to deductions or for the amount of the tax loss; then: (c) the other entity cannot deduct the amount or value of the consideration; and (d) the other entity does not incur a * capital loss because of the giving of the consideration.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-75 — Membership interests affected by transfer of entitlement to deductions or tax loss

If: (a) an entity chooses to transfer: (i) under section 417 ‑ 50, an entitlement to deductions; or (ii) under Subdivision 417 ‑ D, an amount of a * tax loss for an income year; and (b) another entity * holds, either directly or indirectly, a * membership interest in that entity; disregard a * capital loss from a * CGT event that arises in relation to the membership interest after the transfer takes effect, except to the extent that the entity can demonstrate that the loss is attributable to a matter other than the transfer.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-90 — Tax losses from transitioned petroleum activities

Transferring tax losses attributable to activities undertaken before the Timor Sea Maritime Boundaries Treaty entered into force (1) If: (a) you have a * tax loss for the income year in which the * Timor Sea Maritime Boundaries Treaty entered into force, or for an earlier income year; and (b) some or all of the tax loss is attributable to you undertaking * transitioned petroleum activities before that treaty entered into force; you may, for that income year or a later income year, choose to transfer all or any part of the amount of the tax loss that is so attributable to a * corporate tax entity (the transferee ) that is your * associate and either is an Australian resident or has a * permanent establishment in Australia. Transferring or applying other tax losses (2) If: (a) you have a * tax loss for an income year (the loss year ); and (b) some or all of the tax loss is attributable to you undertaking * transitioned petroleum activities; and (c) paragraph (1)(b) does not apply to those activities; you may, for that income year or a later income year: (d) choose to transfer all or any part of the amount of the tax loss that is so attributable to a * corporate tax entity (the transferee ) that either is an Australian resident or has a * permanent establishment in Australia; or (e) choose to apply all or any part of the amount of the tax loss that is so attributable as a deduction from your assessable income for any of the 4 income years preceding the income year for which you make the choice. (3) However: (a) the total amount chosen to be transferred or applied under subsection (2) for an income year must not exceed 10% of the total amount: (i) on which your liability for * foreign income tax under the law of Timor ‑ Leste is required to be worked out; and (ii) that relates to undertaking those * transitioned petroleum activities during that year; and (b) you cannot make a choice under paragraph (2)(e) for an income year if you do not have a * franking surplus at the end of that year; and (c) the total amount chosen to be applied under paragraph (2)(e) for an income year must not exceed the sum of: (i) the amount of your franking surplus at the end of that year; and (ii) the product of the amount of that surplus and the * corporate tax gross ‑ up rate. (4) In working out for the purposes of paragraph (3)(a) the total amount chosen to be transferred or applied under subsection (2) for an income year, disregard: (a) any part of the * tax loss attributable to deductions for assets allocated to a project pool under section 417 ‑ 35; and (b) any part of the * tax loss attributable to deductions for assets allocated to a project pool under Subdivision 40 ‑ I, to the extent that the deductions relate to * project amounts to which subsection 417 ‑ 45(1) or (2) applies. (5) In working out for the purposes of paragraph (3)(a) the total amount on which your liability for * foreign income tax under the law of Timor ‑ Leste is required to be worked out, disregard the amounts of any deductions for tax paid under the law of Timor ‑ Leste. (6) Paragraphs (3)(b) and (c) do not apply if you were a foreign resident (other than a * NZ franking company) for more than half of the income year for which the choice was made.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-95 — How choices are made

(1) A choice under section 417 ‑ 90: (a) must be in the * approved form; and (b) must be made no later than: (i) the day you lodge your * income tax return for the income year for which the choice is made; or (ii) a later time allowed by the Commissioner; and (c) must be given to the Commissioner within 30 days after you make the choice. (2) The choice cannot be revoked. (3) Only one choice can be made under this Subdivision in relation to the same part of a * tax loss.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-100 — The effect of choosing to transfer losses

(1) If you choose under this Subdivision to transfer an amount of a * tax loss for an income year (the loss year ): (a) the amount is taken to be a tax loss incurred by the transferee in the loss year; and (b) the transferee can deduct the amount in accordance with section 36 ‑ 17 (which is about how to deduct a tax loss); and (c) at the time of the choice, a * franking credit arises in the * franking account of the transferee; and (d) you can no longer * utilise the amount, and you are taken not to have incurred the tax loss to the extent of the amount. (2) Despite paragraph (1)(a), if the loss year is the same as the income year of the transfer, the transferee is taken to have incurred the * tax loss in the income year before the loss year. Note: This rule is needed because Division 36 allows a tax loss to be deducted only if it was incurred in an earlier income year. (3) The amount of the * franking credit under paragraph (1)(c) is an amount equal to the amount of the * tax loss transferred multiplied by the standard corporate tax rate (within the meaning of Part IVA of the Income Tax Assessment Act 1936 ). (4) Paragraph (1)(c) does not apply if you are not, and have never been, a * corporate tax entity.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-105 — The effect of choosing to apply losses to earlier income years

If you choose under this Subdivision to apply an amount of a * tax loss for an income year as a deduction from your assessable income for an earlier income year: (a) you can deduct the amount from your assessable income for the earlier income year; and (b) you can no longer * utilise the amount, and you are taken not to have incurred the tax loss to the extent of the amount.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-110 — Continuity of ownership and business continuity tests

Section 165 ‑ 10 does not apply to a * tax loss that meets the requirements of: (a) paragraphs 417 ‑ 90(1)(a) and (b); or (b) paragraphs 417 ‑ 90(2)(a) and (b).

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-125 — Foreign income tax offset

(1) If: (a) you are entitled to a * tax offset under Subdivision 770 ‑ A for an income year for * foreign income tax; and (b) the foreign income tax is payable on income you earned as an employee in relation to * transitioned petroleum activities undertaken, or to be undertaken, in relation to the * JPDA; the amount of the offset is to be worked out in accordance with the Taxation Code in Annex G under Article 13(b) of the Treaty (within the meaning of that Act), as if that Taxation Code applied in relation to the income. (2) Subdivision 770 ‑ B does not apply in relation to the amount of the offset.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 417-140 — Transfer pricing benefits relating to transitioned petroleum activities

Acquisitions of Timor Sea petroleum (1) An entity is taken, for the purposes of Division 815, not to get a * transfer pricing benefit from conditions that operate between the entity and another entity in connection with their commercial or financial relations just because the entity acquires petroleum (within the meaning of the * Timor Sea Maritime Boundaries Treaty) from the other entity if: (a) the petroleum was produced by undertaking * transitioned petroleum activities in the Bayu ‑ Undan Gas Field (within the meaning of that treaty); and (b) the price for the acquisition is the price that is used by, or agreed with, a * foreign government agency of Timor ‑ Leste in relation to the acquisition for the purposes of administering the law of Timor ‑ Leste relating to taxation. Supplies of goods and services (2) An entity is taken, for the purposes of Division 815, not to get a * transfer pricing benefit from conditions that operate between the entity and another entity in connection with their commercial or financial relations just because the entity supplies goods or services to the other entity if: (a) the supply occurred pursuant to the terms of an * arrangement, connected with undertaking * transitioned petroleum activities, that: (i) was in force just before the * Timor Sea Maritime Boundaries Treaty was made; or (ii) is substantially similar to an arrangement that was in force just before that time; and (b) the price for the supply is the price that is used by, or agreed with, a * foreign government agency of Timor ‑ Leste in relation to the supply for the purposes of administering the law of Timor ‑ Leste relating to taxation.

Amendment history: Inserted by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 418-1 — What this Division is about

Generally, you are entitled to a tax offset for an income year for exploration credits issued to you for the income year. A greenfields minerals explorer can create exploration credits for an income year. Before creating exploration credits, the explorer must obtain an allocation of exploration credits from the Commissioner for the year. Exploration credits cannot be created for the 2025 ‑ 26 income year or later income years. The exploration credits created for an income year cannot exceed an amount based on the explorer’s greenfields minerals expenditure or tax loss for the year. If the explorer’s exploration credits allocation for the year is smaller than that amount, the amount of exploration credits that the explorer can create will be reduced to sit within the allocation. However, any unused allocation of exploration credits from the preceding year generally would be carried over and so would increase the amount of exploration credits that the explorer can create. An exploration credit created by a greenfields minerals explorer can be issued to you if you have invested in the explorer. While the tax offset you receive for the exploration credit issued to you for an income year will apply to that income year generally, the investment that gives rise to that offset may have been made in that or the preceding income year. There are rules to ensure that exploration credits are not streamed to some investors rather than others. There are also rules to ensure that the total of the exploration credits you receive because of an investment (whether those credits are issued to you for the year in which you invest or the subsequent year) do not exceed the corporate tax that might be paid by the greenfields minerals explorer on that investment. The explorer is liable to pay excess exploration credit tax if the explorer issues exploration credits in breach of these rules. There is a cap on total allocations made by the Commissioner for each income year, but if part of the cap from the preceding year is unallocated it generally will be carried over. Allocations are made in the order in which applications for an allocation are made. If an exploration credit is issued to a corporate tax entity, it will give rise to a franking credit (rather than a tax offset). Note: Excess exploration credit tax is imposed by the Excess Exploration Credit Tax Act 2015 , and the amount of the tax is set out in that Act.

Amendment history: Inserted 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) | Repealed and substituted 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 72 of 2021, effective Sch 2 (items 1–12, 17, 18) and Sch 3 (items 1, 2): 1 July 2021 (s 2(1) items 3, 4)

s 418-5 — Object of this Division

The object of this Division is to encourage investment in minerals exploration in Australia by allowing the benefit of losses from minerals exploration to flow to shareholders who share in the risk of the exploration.

Amendment history: Inserted 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)

s 418-10 — Who is entitled to the tax offset—ordinary case

You are entitled to a * tax offset for an income year if: (a) an * exploration credit is issued to you under Subdivision 418 ‑ E for the income year; and (b) you are not: (i) a * corporate tax entity; or (ii) a trust (other than a trust in relation to which some or all of the liability of the trustee to tax is provided under subsection 98(1) or (2) or 99(2) or (3) of the Income Tax Assessment Act 1936 ); or (iii) a partnership; or (iv) an * exempt entity (other than an * exempt institution that is eligible for a refund); and (c) you are an Australian resident during the whole of that income year.

Amendment history: Inserted 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)

s 418-15 — Who is entitled to the tax offset—life insurance company

(1) An entity is entitled to a * tax offset for an income year if: (a) the entity is a * life insurance company; and (b) an * exploration credit is issued to the entity under Subdivision 418 ‑ E for the income year; and (c) the entity is an Australian resident during the whole of that income year; and (d) were the exploration credit to be a * franked distribution made: (i) by the same entity that issued the credit; and (ii) in the same circumstances in which the credit was issued; the exploration credit would give rise to a * tax offset for the entity that would be subject to the refundable tax offset rules because of paragraph 67 ‑ 25(1C)(b) or (1D)(b). (2) If: (a) an * exploration credit is issued to a * life insurance company; and (b) paragraph (1)(d) applies in relation to only part of the exploration credit; this Division applies as if that part of the exploration credit, and the part of the exploration credit in relation to which that paragraph does not apply, were 2 separate exploration credits issued to the life insurance company.

Amendment history: Inserted 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 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 418-20 — Entitlement of member of a trust or partnership to a share of exploration credits

Members taken to be issued with exploration credits (1) If: (a) you are a * member of a trust or partnership during the income year; and (b) an * exploration credit is issued to the trust or partnership under Subdivision 418 ‑ E for the income year; and (c) the trust or partnership is not a * corporate tax entity; and (d) the trustee of the trust, or the partnership, determines that you are entitled to a share of the exploration credits issued to the trust or partnership for the income year; and (e) the trustee of the trust, or the partnership, gives you a statement, in accordance with subsection (4), informing you of that entitlement; you are taken, for the purposes of this Subdivision, to have been issued with an exploration credit under Subdivision 418 ‑ E, for the income year, of an amount equal to your share of the exploration credits issued to the trust or partnership for the income year. Effect of restrictions on distributions (2) Despite subsection (1), you are not taken, under that subsection, to have been issued with an * exploration credit under Subdivision 418 ‑ E to the extent that, if the exploration credit referred to in paragraph (1)(b) were a * franked distribution of the same amount made: (a) at the time of the determination referred to in paragraph (1)(d); and (b) in relation to the interest, held by the trust or partnership, in relation to which the exploration credit referred to in paragraph (1)(b) is issued to the trust or partnership during the income year; the terms and conditions under which the trust or partnership operates would not permit you to be paid the amount, or the proportion, of the franked distribution that would reflect your entitlement referred to in paragraph (1)(d). Anti ‑ avoidance (3) Despite subsection (1), you are not taken, under that subsection, to have been issued with an * exploration credit under Subdivision 418 ‑ E to the extent that, if the exploration credit were a distribution to you, from the trust or partnership, of a * franked distribution that: (a) was of the same amount as the amount of your share, referred to in paragraph (1)(d), of the exploration credit referred to in paragraph (1)(b); and (b) was made: (i) by the same entity that issued that exploration credit; and (ii) in relation to the same interest in that entity; and (iii) in the same circumstances in which that exploration credit was issued; and (c) * flowed indirectly through one or more trusts or partnerships that were the same as the one or more trusts or partnerships that, apart from subparagraphs 418 ‑ 10(b)(ii) and (iii), would have been entitled to a * tax offset under this Subdivision in relation to: (i) that exploration credit; or (ii) another exploration credit from which that exploration credit is directly or indirectly derived; you would not be entitled to a tax offset under Division 207 in relation to the franked distribution. Statements to members (4) A statement referred to in paragraph (1)(e) must: (a) be in the * approved form; and (b) be given to you on or before the due date: (i) if the trust or partnership is an * investment body for * Part VA investments—for giving to the Commissioner an * annual investment income report in respect of the * financial year corresponding to the income year; or (ii) otherwise—for the trust or partnership to lodge its * income tax return for the income year. Reports to the Commissioner (5) A trust or partnership that has given one or more statements under paragraph (1)(e) relating to * exploration credits for an income year must give to the Commissioner, on or before the due date referred to in paragraph (4)(b) in relation to that income year, a report that: (a) relates to all the statements that the trust or partnership has given under paragraph (1)(e) relating to exploration credits for that income year; and (b) is in the * approved form.

Amendment history: Inserted 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)

s 418-25 — The amount of the tax offset

The amount of your * tax offset under this Subdivision for an income year is the sum of: (a) all the * exploration credits issued to you under Subdivision 418 ‑ E; and (b) all the exploration credits taken under section 418 ‑ 20 to have been issued to you; for the income year.

Amendment history: Inserted 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)

s 418-30 — Reduced amount of the tax offset for certain trusts

(1) If an entity is a trust in relation to which some, but not all, of the liability of the trustee to tax is provided under subsection 98(1) or (2) or 99(2) or (3) of the Income Tax Assessment Act 1936 , the amount of the entity’s * tax offset under this Subdivision for an income year is: where: income taxed under subsection 98(1) or (2) or 99(2) or (3) is the amount of the * net income of the trust, for the income year, in relation to which the trustee is liable to tax under subsection 98(1) or (2) or 99(2) or (3) of the Income Tax Assessment Act 1936 . (2) If: (a) an entity is a trust; and (b) one or more * members of the trust are taken under section 418 ‑ 20 to have been issued with one or more * exploration credits for an income year; the amount of the entity’s * tax offset, under section 418 ‑ 25 or subsection (1) of this section, for the income year is reduced by the sum of amounts of the exploration credits taken to be issued to those members.

Amendment history: Inserted 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)

s 418-50 — Junior minerals exploration incentive franking credit—ordinary case

(1) A * franking credit arises in the * franking account of a * corporate tax entity (other than a * life insurance company) if: (a) an * exploration credit is issued to the entity under Subdivision 418 ‑ E during an income year; and (b) if the entity were not a corporate tax entity, the entity would be entitled to a * tax offset under Subdivision 418 ‑ B in relation to the exploration credit. (2) The amount of the * franking credit is the amount of the * tax offset to which the entity would be entitled under Subdivision 418 ‑ B if: (a) the entity were not a * corporate tax entity; and (b) no other * exploration credits were issued to the entity during the income year. (3) The * franking credit arises at the same time the * exploration credit is issued.

Amendment history: Inserted 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 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)

s 418-55 — Junior minerals exploration incentive franking credit—life insurance company

(1) A * franking credit arises in the * franking account of a * life insurance company if: (a) an * exploration credit is issued to the life insurance company under Subdivision 418 ‑ E during an income year; and (b) paragraph 418 ‑ 15(1)(d) does not apply in relation to the exploration credit; and (c) if that paragraph were to apply in relation to the credit, the life insurance company would be entitled to a * tax offset under Subdivision 418 ‑ B in relation to the exploration credit. (2) The amount of the * franking credit is the amount of the * tax offset to which the * life insurance company would be entitled under Subdivision 418 ‑ B if no other * exploration credits were issued to the life insurance company during the income year. (3) The * franking credit arises at the same time the * exploration credit is issued.

Amendment history: Inserted 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 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)

s 418-70 — Entities that may create exploration credits

(1) An entity may create exploration credits for an income year if: (a) the entity was a * greenfields minerals explorer in the income year; and (b) the entity has an * exploration credits allocation for the income year or an * unused allocation of exploration credits from the immediately preceding income year. Note: The entity cannot have an unused allocation of exploration credits from the 2020 ‑ 21 income year: see subsection 418 ‑ 82(3A). (2) The entity cannot create * exploration credits for an income year before income tax is assessed for the entity for the year. (3) The entity cannot create * exploration credits for the 2025 ‑ 26 income year or a later income year. (4) A failure to comply with subsection (1) or (2) does not invalidate the creation of an * exploration credit. (5) An * exploration credit is to be expressed as an amount. (6) The entity cannot make more than one decision to create * exploration credits for an income year, and the decision is final and irrevocable.

Amendment history: Inserted 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 93 of 2017, effective Sch 2 (items 10–12): 20 Sept 2017 (s 2(1) item 4) | Repealed and substituted 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 72 of 2021, effective Sch 2 (items 1–12, 17, 18) and Sch 3 (items 1, 2): 1 July 2021 (s 2(1) items 3, 4)

s 418-75 — Meaning of greenfields minerals explorer

(1) An entity is a greenfields minerals explorer in an income year if: (a) the entity has * greenfields minerals expenditure for the income year; and (b) during the income year, the entity is a disclosing entity (within the meaning of section 111AC of the Corporations Act 2001 ); and (c) during the income year, the entity is a * constitutional corporation; and (d) during the income year, and during the immediately preceding income year, neither: (i) the entity; nor (ii) any other entity that is * connected with or is an * affiliate of the entity; carried on any mining operations on a mining property for extracting * minerals (except * petroleum) from their natural site, for the * purpose of producing assessable income. (2) However, an entity is not a greenfields minerals explorer in an income year in which either or both of the following happens, or in any subsequent income year: (a) the entity fails to comply with a request of the Commissioner under subsection 418 ‑ 80(5); (b) a determination under section 418 ‑ 185 has effect. Note 1: Under subsection 418 ‑ 80(5), the Commissioner may request a report on an area in relation to which an entity has greenfields minerals expenditure. Note 2: Under section 418 ‑ 185, the Commissioner may determine that an entity that is, or has been, liable to excess exploration credit tax is not to be treated as a greenfields minerals explorer.

Amendment history: Inserted 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) | Repealed and substituted 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)

s 418-80 — Meaning of greenfields minerals expenditure

(1) An entity’s greenfields minerals expenditure for an income year is the sum of: (a) the amounts of any deductions to which the entity is entitled under section 40 ‑ 25 for that income year in relation to declines in value that: (i) are declines in value of * depreciating assets used for * exploration or prospecting for * minerals in an area to which subsection (3) of this section applies; and (ii) are worked out under subsection 40 ‑ 80(1); and (b) the amounts of any deductions for that income year to which the entity is entitled in relation to expenditure: (i) that is of a kind referred to in subsection 40 ‑ 730(1); and (ii) in relation to which the entity satisfies one or more of paragraphs 40 ‑ 730(1)(a) to (c); and (iii) that is expenditure on exploration or prospecting for minerals in an area to which subsection (3) of this section applies. (2) For the purposes of subsection (1), disregard a deduction to the extent that it relates to: (a) matters other than: (i) declines in value of * depreciating assets used for; or (ii) expenditure on; * exploration or prospecting for * minerals in an area to which subsection (3) of this section applies; or (b) exploration or prospecting for * petroleum or oil shale; or (c) activities (such as feasibility studies) undertaken to identify the viability of a mineral resource rather than its existence. (3) This subsection applies to an area: (a) that is in Australia; and (b) in relation to which the entity * holds a * mining, quarrying or prospecting right at the time of incurring the expenditure, or is the transferee under a * farm ‑ in farm ‑ out arrangement; and (c) that has not been identified as containing a mineral resource that is at least inferred in a report prepared in accordance with the requirements of: (i) unless subparagraph (ii) applies—the document that is known as the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves and that took effect on 20 December 2012; or Note: This document is commonly referred to as the JORC Code (2012 Edition). (ii) such other document as the regulations prescribe; and (d) that is not, and is not in, any of the following: (i) the coastal sea of Australia (within the meaning of subsection 15B(4) of the Acts Interpretation Act 1901 ); (ii) an area referred to in subsection 960 ‑ 505(2). (4) For the purposes of paragraph (3)(c), disregard any mineral resource, identified in a report of a kind referred to in that paragraph, that does not include * minerals the * exploration or prospecting for which involved: (a) use of assets referred to in paragraph (1)(a); or (b) expenditure referred to in paragraph (1)(b). (5) The Commissioner may request an entity that is a * greenfields minerals explorer in an income year to prepare, within the period specified in the request, a report that: (a) is of the kind referred to in paragraph (3)(c); and (b) relates to an area in relation to which the entity has * greenfields minerals expenditure for the income year. The request may specify the manner in which, and the form in which, the report is to be prepared.

Amendment history: Inserted 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 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 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) | 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) | Repealed and substituted 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)

s 418-81 — Meaning of exploration credits allocation for an income year

(1) An entity has an exploration credits allocation for an income year if the Commissioner makes a determination under section 418 ‑ 101 allocating the entity * exploration credits for the income year. (2) The amount of the entity’s exploration credits allocation for the income year is the amount of * exploration credits allocated to the entity under the determination. (2A) However, if no * exploration investment is made in the entity in the income year, the amount of the entity’s exploration credits allocation for the income year is nil. Note: The entity must notify the Commissioner if no exploration investment is made in the entity in the income year: see section 418 ‑ 135. (3) If no determination is made allocating * exploration credits to the entity for the income year, the amount of the entity’s exploration credits allocation for the year is nil.

Amendment history: Inserted 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 72 of 2021, effective Sch 2 (items 1–12, 17, 18) and Sch 3 (items 1, 2): 1 July 2021 (s 2(1) items 3, 4)

s 418-82 — When does an entity have an unused allocation of exploration credits from an income year

(1) An entity has an unused allocation of exploration credits from an income year if each of the following: (a) the entity’s * exploration credits allocation for the income year; (b) the total credits issue for investment in the entity for the income year; exceeds the total amount of all * exploration credits created by the entity for the income year. (2) The amount of the unused allocation of exploration credits from the income year is the lesser of: (a) the amount by which the amount mentioned in paragraph (1)(a) exceeds the total amount of all * exploration credits created by the entity for the income year; and (b) the amount by which the amount mentioned in paragraph (1)(b) exceeds the total amount of all * exploration credits created by the entity for the income year. (3) If neither the amount mentioned in paragraph (1)(a) nor (1)(b) exceeds the total amount of all * exploration credits created by the entity for the income year, there is no unused allocation of exploration credits from the income year, and the amount of any unused allocation of exploration credits from the income year is nil. (3A) Despite subsections (1) and (2), the entity cannot have an unused allocation of exploration credits from the 2020 ‑ 21 income year. (4) In this section: total credits issue for investment in the entity (the minerals explorer ) for an income year means the total of all * exploration credits that may be issued by the minerals explorer to all other entities in relation to * exploration investment made by those other entities in the minerals explorer in the income year if section 418 ‑ 120 is complied with.

Amendment history: Inserted 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 72 of 2021, effective Sch 2 (items 1–12, 17, 18) and Sch 3 (items 1, 2): 1 July 2021 (s 2(1) items 3, 4)

s 418-85 — Exploration credits must not exceed maximum exploration credit amount

(1) An entity must not create * exploration credits for an income year of a total amount that exceeds the entity’s * maximum exploration credit amount for the income year. (2) An entity’s maximum exploration credit amount for an income year (the credit year ) is the smallest of the following amounts: (a) the entity’s * greenfields minerals expenditure for the credit year multiplied by the entity’s * corporate tax rate for the credit year; (b) the entity’s * tax loss for the credit year multiplied by the entity’s corporate tax rate for the credit year; (c) the sum of: (i) the entity’s * exploration credits allocation for the credit year; and (ii) the entity’s * unused allocation of exploration credits from the income year immediately preceding the credit year. Note: The entity cannot have an unused allocation of exploration credits from the 2020 ‑ 21 income year: see subsection 418 ‑ 82(3A). (3) In working out the entity’s * greenfields minerals expenditure for the credit year for the purposes of paragraph (2)(a), reduce that greenfields minerals expenditure by the sum of: (a) all * recoupments that the entity receives in relation to the entity’s greenfields minerals expenditure for the credit year; and (b) if: (i) an amount has been included in the entity’s assessable income because a * balancing adjustment event occurs for a * depreciating asset; and (ii) all or part of the amount of the deduction to which the entity is entitled under section 40 ‑ 25 for the credit year in relation to the decline in value of the asset is included in the entity’s greenfields minerals expenditure for that year; so much of the amount of that deduction as was included in that greenfields minerals expenditure. (4) In working out the entity’s * tax loss for the credit year for the purposes of paragraph (2)(b), reduce that tax loss by the sum of: (a) all * recoupments that the entity receives in relation to the entity’s * greenfields minerals expenditure for the credit year; and (b) any part of the entity’s tax loss for the credit year that would not be deductible in the income year immediately following the credit year; and (c) if: (i) an amount has been included in the entity’s assessable income because a * balancing adjustment event occurs for a * depreciating asset; and (ii) all or part of the amount of the deduction to which the entity is entitled under section 40 ‑ 25 for the credit year in relation to the decline in value of the asset is included in the entity’s greenfields minerals expenditure for that year; so much of the amount of that deduction as was included in that greenfields minerals expenditure. (5) For the purposes of paragraph (4)(b), assume that the entity’s assessable income for the income year immediately following the credit year is sufficient to allow the entity to utilise the whole of that * tax loss in relation to the credit year. (6) A failure to comply with this section does not invalidate the creation of an * exploration credit.

Amendment history: Inserted 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) | Repealed and substituted 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 72 of 2021, effective Sch 2 (items 1–12, 17, 18) and Sch 3 (items 1, 2): 1 July 2021 (s 2(1) items 3, 4)

s 418-95 — Effect on tax losses of creating exploration credits

(1) If an entity creates any * exploration credits for a * loss year, the amount of the entity’s * tax loss for the loss year is reduced by the amount worked out as follows: (2) However, if the amount worked out under subsection (1) equals or exceeds what would (apart from this section) be the entity’s * tax loss for the * loss year, that tax loss is taken to be nil.

Amendment history: Inserted 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) | Repealed and substituted 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)

s 418-100 — Applying for an exploration credits allocation

(1) An entity may apply to the Commissioner for a determination under section 418 ‑ 101 allocating * exploration credits to the entity for an income year. (2) The application must be made within 1 month before the start of the * financial year corresponding to the income year for which the allocation is sought. (3) The application must: (a) be * lodged electronically; and (b) be in the * approved form; and (c) include an estimate of: (i) the entity’s * greenfields minerals expenditure for the income year; and (ii) the entity’s * tax loss for the income year; and (iii) the entity’s * corporate tax rate for the income year. (4) The Commissioner must give the entity: (a) if the Commissioner makes a determination under section 418 ‑ 101—a copy of the determination; or (b) if the Commissioner decides to refuse the application—notice of that decision.

Amendment history: Inserted 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)

s 418-101 — Determination by the Commissioner

Determination allocating exploration credits (1) The Commissioner may make a written determination allocating * exploration credits of an amount specified in the determination to an entity for an income year. Circumstances in which the Commissioner must not make a determination (2) The Commissioner must not make a determination allocating * exploration credits to an entity for an income year if the Commissioner is not satisfied that: (a) there is a reasonable possibility that the entity will have: (i) * greenfields minerals expenditure of the amount estimated by the entity in the application, or greater; and (ii) a * tax loss of the amount estimated by the entity in the application, or greater; and (iii) the * corporate tax rate estimated by the entity in the application; and (b) the entity meets any other requirement prescribed under the regulations. Amount of the exploration credits allocated (3) The amount of the * exploration credits specified in the determination must be the smallest of the following amounts: (a) the entity’s estimated * greenfields minerals expenditure for the income year multiplied by the entity’s estimated * corporate tax rate for the income year; (b) the entity’s estimated * tax loss for the income year multiplied by the entity’s estimated corporate tax rate for the income year; (c) either: (i) 5% of an amount equal to the * annual exploration cap for the income year; or (ii) if another amount, or a method for working out another amount, is prescribed—the other amount. Determination not a legislative instrument (4) A determination made under subsection (1) is not a legislative instrument.

Amendment history: Inserted 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)

s 418-102 — General allocation rules

(1) The total amount of * exploration credits allocated to entities for an income year by the Commissioner must not exceed the * annual exploration cap for the year. (2) The Commissioner must consider applications for * exploration credits from entities for an income year in the order in which the Commissioner receives the applications. (3) If the Commissioner receives more than one application at the same time, the Commissioner may decide the order in which the Commissioner considers the applications. (4) If the Commissioner would contravene this section by allocating * exploration credits to an entity for an income year of an amount worked out under subsection 418 ‑ 101(3) then, despite that subsection, the amount of exploration credits allocated to that entity for the income year is to be the difference between the * annual exploration cap for the year and the total amount of exploration credits already allocated to other entities for the year.

Amendment history: Inserted 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)

s 418-103 — Meaning of annual exploration cap

(1) The annual exploration cap for an income year is the following amount: (a) for the 2017 ‑ 18 income year—$15 million; (b) for the 2018 ‑ 19 income year—$25 million, plus the * exploration credits remainder for the immediately preceding income year; (c) for the 2019 ‑ 20 income year—$30 million, plus the exploration credits remainder for the immediately preceding income year and any other amount prescribed for the purposes of this paragraph; (d) for the 2020 ‑ 21 income year—$30 million, plus the exploration credits remainder for the immediately preceding income year and any other amount prescribed for the purposes of this paragraph; (e) for the 2021 ‑ 22 income year—$25 million; (f) for the 2022 ‑ 23 income year—$25 million, plus the exploration credits remainder for the immediately preceding income year; (g) for the 2023 ‑ 24 income year—$25 million, plus the exploration credits remainder for the immediately preceding income year and any other amount prescribed for the purposes of this paragraph; (h) for the 2024 ‑ 25 income year—$25 million, plus the exploration credits remainder for the immediately preceding income year and any other amount prescribed for the purposes of this paragraph. (2) If the total amount of * exploration credits allocated by the Commissioner for an income year is less than the * annual exploration cap for the year, the difference is the exploration credits remainder for the income year.

Amendment history: Inserted 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 72 of 2021, effective Sch 2 (items 1–12, 17, 18) and Sch 3 (items 1, 2): 1 July 2021 (s 2(1) items 3, 4)

s 418-104 — Failure to comply with this Subdivision does not affect allocation

A failure by the Commissioner to comply with this Subdivision does not invalidate a determination allocating * exploration credits to an entity for an income year.

Amendment history: Inserted 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)

s 418-135 — Notifying the Commissioner if no exploration investment in income year for which credits allocated

(1) An entity must notify the Commissioner if: (a) the Commissioner has made a determination under section 418 ‑ 101 allocating the entity * exploration credits for an income year; and (b) no * exploration investment is made in the entity in the income year. (2) The notice must: (a) be in the * approved form; and (b) be given to the Commissioner within 30 days after the end of the income year.

Amendment history: Inserted by No 72 of 2021, effective Sch 2 (items 1–12, 17, 18) and Sch 3 (items 1, 2): 1 July 2021 (s 2(1) items 3, 4)

s 418-110 — Issuing exploration credits

(1) An entity that has created * exploration credits for an income year (the minerals explorer ) may issue an exploration credit for that income year to another entity (the investor ). (2) The * exploration credit issued to the investor for the income year may relate to: (a) * exploration investment made by the investor in the minerals explorer in the income year; or (b) exploration investment made by the investor in the minerals explorer in the immediately preceding income year. However, this rule is subject to the limitations imposed under sections 418 ‑ 115, 418 ‑ 116 and 418 ‑ 120. (3) An * exploration credit is issued to an entity by giving the entity a statement in the * approved form.

Amendment history: Inserted 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) | Repealed and substituted 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)

s 418-111 — Working out whether an exploration investment has been made in an income year

(1) An entity (the investor ) makes an exploration investment in another entity (the minerals explorer ) in an income year if: (a) * shares in the minerals explorer are issued to the investor by the minerals explorer: (i) on or after the day on which the Commissioner makes a determination under section 418 ‑ 101 allocating * exploration credits to the minerals explorer for the income year; and (ii) before the end of the income year; and (b) those shares are * equity interests. (2) The amount of the exploration investment made by the investor in the minerals explorer in the income year is equal to the total amount paid up by the investor on the shares during the period mentioned in paragraph (1)(a).

Amendment history: Inserted 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)

s 418-115 — Who may receive an exploration credit and what is the pool from which the credit may be issued

(1) If * exploration credits are to be issued by an entity (the minerals explorer ) for an income year (the credit year ), work out each of the following by identifying whether scenario 1, 2 or 3 applies, and applying the rules for that scenario: (a) whether the minerals explorer can issue an exploration credit to another entity in relation to * exploration investment made by the other entity in the minerals explorer in the credit year; (b) whether the minerals explorer can issue an exploration credit to another entity in relation to exploration investment made by the other entity in the minerals explorer in the income year immediately preceding the credit year (the preceding year ); (c) the pool of exploration credits from which an exploration credit may be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the credit year (this is called the issue pool for exploration investment made in the minerals explorer in the credit year); (d) the pool of exploration credits from which an exploration credit may be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the preceding year (this is called the issue pool for exploration investment made in the minerals explorer in the preceding year). Scenario 1—no unused allocation of exploration credits from the preceding year (2) If there is no * unused allocation of exploration credits from the preceding year: (a) * exploration credits can be issued to another entity in relation to * exploration investment made by the other entity in the minerals explorer in the credit year; and (b) no exploration credits can be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the preceding year. (3) In this scenario: (a) the issue pool for * exploration investment made in the minerals explorer in the credit year is equal to the total amount of * exploration credits created by the minerals explorer for the credit year; and (b) the issue pool for exploration investment made in the minerals explorer in the preceding year is nil. Scenario 2—exploration credits for the credit year exceed unused allocation of exploration credits from the preceding year (4) If the amount of the * exploration credits created by the minerals explorer for the credit year is more than the * unused allocation of exploration credits from the preceding year: (a) exploration credits can be issued to another entity in relation to * exploration investment made by the other entity in the minerals explorer in the credit year; and (b) exploration credits can be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the preceding year. (5) In this scenario: (a) the issue pool for * exploration investment made in the minerals explorer in the credit year is equal to the difference between the * unused allocation of exploration credits from the preceding year and the total amount of * exploration credits created by the minerals explorer for the credit year; and (b) the issue pool for exploration investment made in the minerals explorer in the preceding year is equal to the unused allocation of exploration credits from the preceding year. (6) However, no * exploration credit can be issued to another entity in relation to * exploration investment made by the entity in the minerals explorer in the credit year unless the * issue pool for exploration investment in the preceding year is exhausted. Scenario 3—exploration credits for the credit year are equal to or less than the unused allocation of exploration credits from the preceding year (7) If the amount of the * exploration credits created by the minerals explorer for the credit year is equal to or less than the * unused allocation of exploration credits from the preceding year: (a) no exploration credits can be issued to another entity in relation to * exploration investment made by the entity in the minerals explorer in the credit year; and (b) exploration credits can be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the preceding year. (8) In this scenario: (a) the issue pool for * exploration investment made in the minerals explorer in the credit year is nil; and (b) the issue pool for exploration investment made in the minerals explorer in the preceding year is equal to the total amount of * exploration credits created by the minerals explorer for the credit year.

Amendment history: Inserted 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) | Repealed and substituted 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)

s 418-116 — Exploration credits issued must be in proportion to exploration investment

If an * exploration credit is issued by an entity (the minerals explorer ) for an income year to another entity (the investor ) in relation to * exploration investment made by the investor in the minerals explorer in an income year (the investment year ): (a) the proportion of the * issue pool for exploration investment made in the minerals explorer in the investment year that is issued to the investor as an exploration credit must be the same as the proportion of the total exploration investment in the minerals explorer in the investment year that is represented by the investor’s exploration investment in the minerals explorer in the investment year; and (b) the minerals explorer must issue an exploration credit to every entity who made an exploration investment in the minerals explorer in the investment year.

Amendment history: Inserted 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)

s 418-120 — The total of all exploration credits issued in relation to exploration investment

The total amount of all * exploration credits issued by an entity (the minerals explorer ) to another entity (the investor ) in relation to * exploration investment made by the investor in the minerals explorer in an income year (the investment year ) must not exceed the amount worked out using the following formula:

Amendment history: Inserted 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) | Repealed and substituted 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)

s 418-125 — Expiry of exploration credits

An * exploration credit created by an entity for an income year (the credit year ) expires if the entity does not issue the credit under this Subdivision on or before 30 June in the financial year that corresponds to the income year that immediately follows the credit year.

Amendment history: Inserted 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) | Repealed and substituted 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)

s 418-130 — Notifying the Commissioner of issuing or expiry of exploration credits

(1) An entity that has created * exploration credits for an income year (the credit year ) must notify the Commissioner of the issuing or expiry of the credits. (2) The notice must: (a) be in the * approved form; and (b) be given to the Commissioner on or before the due date: (i) if the entity is an * investment body for * Part VA investments—for giving to the Commissioner an * annual investment income report in respect of the * financial year corresponding to the year immediately following the credit year; or (ii) otherwise—for the entity to lodge its * income tax return for the income year that immediately follows the credit year.

Amendment history: Inserted 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) | Repealed and substituted 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)

s 418-150 — Excess exploration credit tax

An entity is liable to pay * excess exploration credit tax for an income year if the sum of the * exploration credits it issues for the income year exceeds the amount worked out under section 418 ‑ 151 for the income year (the complying exploration credit amount ). Note: The tax is imposed by the Excess Exploration Credit Tax Act 2014 , and the amount of the tax is set out in that Act.

Amendment history: Inserted 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 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)

s 418-151 — Complying exploration credit amount

(1) The complying exploration credit amount (which may be nil) for an income year is worked out by: (a) starting with the sum of the * exploration credits the entity issues for the income year; and (b) subtracting from the result of paragraph (a) the sum of any of those exploration credits covered by subsection (2); and (c) if the result of paragraph (b) exceeds the entity’s * maximum exploration credit amount for the income year—subtracting from that result the amount of the excess. Note: The complying exploration credit amount is the sum of issued exploration credits that were issued (and created) in compliance with this Division. A liability arises under section 418 ‑ 150 if the sum of all issued exploration credits exceeds this amount. (2) This subsection covers an * exploration credit to the extent to which either or both of the following apply to the credit: (a) the credit was issued in contravention of a requirement in this Division; (b) the credit was created in contravention of a requirement in Subdivision 418 ‑ D (other than section 418 ‑ 85). Note: Because the maximum exploration credit amount from section 418 ‑ 85 is taken into account in paragraph (1)(c) of this section, it is disregarded here.

Amendment history: Inserted 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)

s 418-155 — Due date for payment of excess exploration credit tax

An entity’s * excess exploration credit tax for an income year, as assessed under Schedule 1 to the Taxation Administration Act 1953 , is due and payable at the end of the day by which the entity is required under section 418 ‑ 160 to give the return relating to the income year. Note: For assessments of excess exploration credit tax, see Division 155 in Schedule 1 to the Taxation Administration Act 1953 .

Amendment history: Inserted 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)

s 418-160 — Returns

An entity that is liable to pay * excess exploration credit tax for an income year (the credit year ) must give the Commissioner a return relating to excess exploration credit tax, in the * approved form, within 21 days after the end of the * financial year corresponding to the income year that immediately follows the credit year.

Amendment history: Inserted 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) | Repealed and substituted 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)

s 418-165 — When shortfall interest charge is payable

An amount of * shortfall interest charge that an entity is liable to pay is due and payable 21 days after the day on which the Commissioner gives the entity notice of the charge. Note: Shortfall interest charge is imposed if the Commissioner amends an assessment and the amended assessment results in an increase in some tax payable. For provisions about liability for shortfall interest charge, see Division 280 in Schedule 1 to the Taxation Administration Act 1953 .

Amendment history: Inserted 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)

s 418-170 — General interest charge

If: (a) * excess exploration credit tax or * shortfall interest charge payable by an entity remains unpaid after the time by which it is due and payable; and (b) the Commissioner has not allocated the unpaid amount to an * RBA; the entity is liable to pay the * general interest charge on the unpaid amount for each day in the period that: (c) starts at the beginning of the day on which the excess exploration credit tax or shortfall interest charge was due to be paid; and (d) ends at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the excess exploration credit tax or shortfall interest charge; (ii) general interest charge on any of the excess exploration credit tax or shortfall interest charge. Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953 .

Amendment history: Inserted 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)

s 418-175 — Refunds of amounts overpaid

Section 172 of the Income Tax Assessment Act 1936 applies for the purposes of this Division as if references in that section to tax included references to * excess exploration credit tax.

Amendment history: Inserted 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)

s 418-180 — Record keeping

Section 262A of the Income Tax Assessment Act 1936 applies for the purposes of this Division as if: (a) the reference in that section to a person carrying on a business were a reference to a * corporate tax entity; and (b) the reference in paragraph (2)(a) of that section to the person’s income and expenditure were a reference to the entity’s liability to pay * excess exploration credit tax; and (c) paragraph (5)(a) of that section were omitted.

Amendment history: Inserted 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)

s 418-185 — Determining an entity not to be a greenfields minerals explorer

(1) The Commissioner may determine, by written notice given to an entity that is, or has been, liable to pay * excess exploration credit tax for an income year, that the entity is no longer to be treated as a * greenfields minerals explorer. (2) The determination takes effect from: (a) if, at the time the notice is given, the entity has not issued any * exploration credits for the income year (the credit year ) immediately preceding the income year in which the notice is given—the credit year; or (b) otherwise—the next income year. (3) If the entity or a * member of the entity is dissatisfied with a determination under subsection (1), the entity or member may object to it in the manner set out in Part IVC of the Taxation Administration Act 1953 .

Amendment history: Inserted 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 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)

s 418-190 — Annual impact assessments of this Division

(1) As soon as practicable after the end of each income year referred to in subsection (2), the Minister must cause to be conducted an impact assessment of the operation of this Division during that income year. The objective of the impact assessment should be to measure the additional * exploration or prospecting attributable to the Division. (2) The income years are as follows: (a) the 2017 ‑ 2018 income year; (b) the 2018 ‑ 2019 income year; (c) the 2019 ‑ 2020 income year; (d) the 2020 ‑ 2021 income year. (3) Each impact assessment must make provision for public consultation, including consultation with the industry. (4) The Minister must cause to be prepared a report of each impact assessment. The report must include any information made publicly available by the Commissioner under section 3F of the Taxation Administration Act 1953 in relation to * exploration credits allocated for the income year. (5) The Minister must cause a copy of a report of an impact assessment to be published on the Australian Taxation Office website as soon as practicable after the completion of the preparation of the report.

Amendment history: Inserted 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)

s 419-1 — What this Division is about

Companies may be entitled to a refundable tax offset for expenditure incurred in carrying on processing activities at facilities in Australia that substantially transform feedstock containing critical minerals into purer or more refined forms of the critical minerals that are chemically distinct from the feedstock. This offset is designed to support the growth of these processing activities in Australia. One of the requirements for entitlement to the tax offset is for a company to hold a registration certificate for these processing activities and for the Australian facilities where the activities are to be carried on. The Industry Secretary will decide whether to issue the certificates. A registration can be in force for 10 income years during the period starting on 1 July 2027 and ending on 30 June 2040. The amount of the tax offset is 10% of the company’s expenditure on these processing activities.

Amendment history: Inserted 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)

s 419-5 — Company entitled to refundable tax offset for expenditure incurred in producing critical minerals in Australia

Entitlement to the tax offset (1) A company is entitled to a * tax offset under this section (the CMPTI tax offset ) for an income year if: (a) the company is a * constitutional corporation; and (b) the income year: (i) starts on or after 1 July 2027; and (ii) ends on or before 30 June 2040; and (c) there are one or more * registered CMPTI processing activities for the company and the income year; and (d) the company incurs * CMPTI expenditure for the income year in carrying on any of those activities; and (e) the company is not an * exempt entity; and (f) if * CMPTI community benefit rules under paragraph 419 ‑ 145(1)(a) apply to the company for the income year—the company meets the conditions specified in those rules; and (g) the company satisfies the residency requirements in subsection (2) for the income year. Note: The CMPTI tax offset is a refundable tax offset (see section 67 ‑ 23). Residency requirements (2) The company satisfies the residency requirements in this subsection for the income year if, at all times during the income year in which any of the activities covered by paragraph (1)(c) are carried on: (a) the company: (i) is an Australian resident and has an * ABN; and (ii) is carrying on the activity; or (b) the company: (i) is a foreign resident that has a * permanent establishment in Australia and has an ABN; and (ii) is carrying on the activity through that permanent establishment.

Amendment history: Inserted 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)

s 419-10 — Amount of CMPTI tax offset

(1) The amount of the * CMPTI tax offset for the income year is equal to 10% of the company’s total * CMPTI expenditure referred to in paragraph 419 ‑ 5(1)(d). (2) However, if: (a) * CMPTI community benefit rules under paragraph 419 ‑ 145(1)(b) apply to the company for the income year; and (b) circumstances specified in those rules exist for the company; the amount of the * CMPTI tax offset is reduced by the proportion specified in those rules for those circumstances.

Amendment history: Inserted 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)

s 419-15 — Meaning of critical mineral

(1) Each of the following is a critical mineral : (a) antimony; (b) arsenic; (c) beryllium; (d) bismuth; (e) chromium; (f) cobalt; (g) fluorine; (h) gallium; (i) germanium; (j) graphite; (k) hafnium; (l) high purity alumina; (m) indium; (n) lithium; (o) magnesium; (p) manganese; (q) molybdenum; (r) nickel; (s) niobium; (t) each of the following platinum ‑ group elements: (i) iridium; (ii) osmium; (iii) palladium; (iv) platinum; (v) rhodium; (vi) ruthenium; (u) each of the following rare ‑ earth elements: (i) cerium; (ii) dysprosium; (iii) erbium; (iv) europium; (v) gadolinium; (vi) holmium; (vii) lanthanum; (viii) lutetium; (ix) neodymium; (x) praseodymium; (xi) promethium; (xii) samarium; (xiii) terbium; (xiv) thulium; (xv) ytterbium; (xvi) yttrium; (v) rhenium; (w) scandium; (x) selenium; (y) silicon; (z) tantalum; (za) tellurium; (zb) titanium; (zc) tungsten; (zd) vanadium; (ze) zirconium; (zf) a thing prescribed by the regulations. (2) The regulations must not prescribe uranium for the purposes of paragraph (1)(zf).

Amendment history: Inserted 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)

s 419-20 — Meaning of CMPTI processing activity

(1) A CMPTI processing activity is a processing activity carried on at one or more facilities in Australia that: (a) involves substantially transforming a feedstock containing a * critical mineral through extractive metallurgical processing into a purer or more refined form of the critical mineral that is chemically distinct from the feedstock; or (b) is a processing activity that: (i) relates to one or more critical minerals; and (ii) is of a kind prescribed by the regulations; and (iii) produces an outcome of a kind prescribed by the regulations; if a substantial purpose for carrying on the activity is to achieve the transformation mentioned in paragraph (a) or the outcome mentioned in paragraph (b) (as applicable). Note: To be relevant for the tax offset, the activity will need to be: (a) registered (see paragraph 419 ‑ 5(1)(c)); and (b) carried on at one or more of the facilities specified in the certificate of registration for the activity (see paragraph 419 ‑ 25(1)(a)). (2) However, none of the following activities is a CMPTI processing activity : (a) mining; (b) beneficiation (including the grinding, crushing, floating and other mechanical processing of ores), except to the extent that such an activity is prescribed for the purposes of paragraph (1)(b); (c) manufacturing, except to the extent that such an activity is prescribed for the purposes of paragraph (1)(b); (d) an activity that is contrary to an * Australian law; (e) an activity of a kind prescribed by the regulations. Note: Since subsection (1) is subject to this subsection, an activity that could be covered by both paragraphs (1)(b) and (2)(e) will not be a CMPTI processing activity.

Amendment history: Inserted 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)

s 419-25 — Meaning of CMPTI expenditure

(1) CMPTI expenditure , of a company for an income year, is expenditure the company incurs during the income year to the extent that: (a) the expenditure is incurred in carrying on one or more of the company’s * registered CMPTI processing activities for the income year at facilities specified in the certificates of registration for those activities; and (b) the expenditure is paid during the income year, if at the time the expenditure is incurred: (i) the company, and the entity to which the expenditure is incurred, are not dealing with each other at * arm’s length; or (ii) the entity to which the expenditure is incurred is the company’s * associate. Excluded expenditure (2) Despite subsection (1), CMPTI expenditure does not include any expenditure the company incurs to the extent that the expenditure: (a) is capital, or is of a capital nature; or (b) is taken into account when calculating the decline in value of an asset for the purposes of a * taxation law; or (c) is incurred by way of, or in relation to, the financing of * registered CMPTI processing activities; or (d) is on feedstock, whether raw materials (such as ores or mineral concentrates) or intermediate outputs from a previous processing step; or (e) would result in more than 10% of the company’s CMPTI expenditure for the income year being incurred on or in relation to * intellectual property; or (f) is of a kind prescribed by the regulations. Note: Similarly, subsection (1) means CMPTI expenditure does not include expenditure to the extent that the expenditure is incurred in carrying on: (a) a registered CMPTI processing activity at a facility not specified in the certificate of registration for the activity; or (b) an activity that is not a registered CMPTI processing activity. (3) Despite subsection (1), if carrying on one or more of the company’s * registered CMPTI processing activities results in an output that: (a) would, if the output were the only output of the activities, mean the activities are not * CMPTI processing activities; and (b) is disposed of, or is used to produce another output that is disposed of, in a way that: (i) is for value; or (ii) involves the company and another entity not dealing with each other at * arm’s length; or (iii) is to an * associate of the company; CMPTI expenditure does not include so much of the company’s expenditure incurred in carrying on those activities as is reasonably attributable to the first ‑ mentioned output.

Amendment history: Inserted 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)

s 419-30 — Expenditure to be worked out excluding GST

In determining an amount of expenditure for the purpose of this Division, the expenditure is taken to exclude * GST.

Amendment history: Inserted 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)