Income Tax Assessment Act 1997

s 83A-130 — Takeovers and restructures

Object and scope (1) The object of this section is to allow this Division to continue to apply if: (a) at least one of the following applies: (i) an * arrangement (the takeover ) is entered into that is intended to result in a company (the old company ) becoming a * 100% subsidiary of another company; (ii) * ESS interests in a company (the old company ) acquired under * employee share schemes can reasonably be regarded as having been replaced, wholly or partly, by ESS interests in one or more other companies as a result of a change (the restructure ) in the ownership (including the structure of the ownership) of the old company or a * demerger subsidiary of the old company; and (b) just before the takeover or restructure, you held ESS interests (the old interests ) in the old company that you acquired under an employee share scheme. Treat new interests as continuations of old interests (2) For the purposes of this Division, treat any * ESS interests (the new interests ) in a company (the new company ) that you acquire in connection with the takeover or restructure as a continuation of the old interests, to the extent that: (a) as a result of the arrangement or change, you stop holding the old interests; and (b) the new interests can reasonably be regarded as matching any of the old interests. Note: In determining to what extent something can reasonably be regarded as matching any of the old interests, one of the factors to consider is the respective market values of that thing and of the old interests. (3) Subsection 83A ‑ 45(4) (about the minimum holding period) is taken to apply to the * ESS interests. (4) Subsections (2) and (3) only apply if the new interests relate to ordinary * shares. Old interest not matched by new interests (5) For the purposes of this Division, treat yourself as having disposed of the old interests to the extent that, in connection with the takeover or restructure, you acquire anything that: (a) can reasonably be regarded as matching any of the old interests; but (b) is not treated by subsection (2) as a continuation of those interests. Continuation of your employment (6) For the purposes of this Division, treat your employment by: (a) the new company; or (b) a * subsidiary of the new company; or (c) a holding company (within the meaning of the Corporations Act 2001 ) of the new company; or (d) a subsidiary of a holding company (within the meaning of the Corporations Act 2001 ) of the new company; as a continuation of the employment in respect of which you acquired the old interests. Apportionment of cost base of old interests (7) Treat yourself as having given, as consideration for the assets mentioned in subsection (8), the amount worked out by apportioning among those assets, according to their respective * market values immediately after the takeover or restructure, the total of: (a) the * cost bases of the old interests when you stop holding them; and (b) the cost bases of the assets mentioned in paragraph (8)(b) immediately after the takeover or restructure (ignoring the effect of this subsection). (8) The assets are: (a) the things that: (i) you acquired in connection with the takeover or restructure; and (ii) can reasonably be regarded as matching the old interests; (including all of the new interests); and (b) in a case covered by subparagraph (1)(a)(ii)—any * ESS interests in the old company that: (i) you held just before, and continue to hold just after, the restructure; and (ii) that can reasonably be regarded as matching the old interests. Exceptions (9) This section only applies if: (a) at or about the time you acquire the new interests, you are employed as mentioned in subsection (6); and (b) at the time you acquire the new interests: (i) you do not hold a beneficial interest in more than 10% of the * shares in the new company; and (ii) you are not in a position to cast, or to control the casting of, more than 10% of the maximum number of votes that might be cast at a general meeting of the new company. (10) For the purposes of paragraph (9)(b), you are taken to: (a) hold a beneficial interest in any * shares in the new company that you can acquire under an * ESS interest that is a beneficial interest in a right to acquire a beneficial interest in such shares; and (b) be in a position to cast votes as a result of holding that interest in those shares.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015 | Amended by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2)

s 83A-200 — What this Subdivision is about

You can deduct an amount for shares, rights or stapled securities you provide to your employees under an employee share scheme if they are eligible for a reduction in their assessable income under section 83A ‑ 35. The amount you can deduct is equal to that reduction. You must defer any deduction you are entitled to for amounts you provide to finance your employees acquiring interests in shares, rights or stapled securities under an employee share scheme until the employees have actually acquired those interests. Table of sections Operative provisions 83A ‑ 205 Deduction for employer 83A ‑ 210 Timing of general deductions

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 83A-205 — Deduction for employer

(1) You can deduct an amount for an income year if: (a) during the year you provided one or more * ESS interests to an individual under an * employee share scheme; and (b) you did so as: (i) the employer of the individual; or (ii) a holding company (within the meaning of the Corporations Act 2001 ) of the employer of the individual; and (c) section 83A ‑ 35 applies to reduce the amount included in the individual’s assessable income under subsection 83A ‑ 25(1) in relation to some or all of the interests. (2) Disregard paragraph 83A ‑ 35(2)(b) (income test) for the purposes of paragraph (1)(c) of this section. (3) The amount of the deduction is the amount of the reduction mentioned in paragraph (1)(c). Deduction to be apportioned if interest provided by multiple entities (4) The amount of the deduction worked out under subsection (3) must be apportioned between 2 or more entities on a reasonable basis if the entities jointly provide an * ESS interest for which an amount can be deducted under subsection (1).

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 83A-210 — Timing of general deductions

If: (a) at a particular time, you provide another entity with money or other property: (i) under an * arrangement; and (ii) for the purpose of enabling an individual (the ultimate beneficiary ) to acquire, directly or indirectly, an * ESS interest under an * employee share scheme in relation to the ultimate beneficiary’s employment (including past or prospective employment); and (b) that particular time occurs before the time (the acquisition time ) the ultimate beneficiary acquires the * ESS interest; then, for the purpose of determining the income year (if any) in which you can deduct an amount in respect of the provision of the money or other property, you are taken to have provided the money or other property at the acquisition time.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 83A-305 — Acquisition by associates

(1) If an * associate (other than an * employee share trust) of an individual acquires an * ESS interest in relation to the individual’s employment (including past or prospective employment), then, for the purposes of this Division: (a) treat the interest as having being acquired by the individual (instead of the associate); and (b) treat any circumstance, right or obligation existing or not existing in relation to the interest in relation to the associate as existing or not existing in relation to the individual; and (c) treat anything done or not done by or in relation to the associate in relation to the interest as being done or not done by or in relation to the individual. Example 1: The following are attributed to the employee, rather than to the associate: (a) the associate’s voting rights; (b) the associate’s ability or inability to dispose of the ESS interest; (c) whether there is a real risk that the associate may lose the ESS interest; (d) the associate’s cost base for the ESS interest. Example 2: If the associate disposes of the ESS interest, the employee is taken to have disposed of the ESS interest instead. (2) For the purposes of subsections 83A ‑ 45(6) and (7), subsection (1) of this section also applies if the * associate acquired the * ESS interest otherwise than in relation to the individual’s employment.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2)

s 83A-310 — Forfeiture etc. of ESS interest

(1) This Division (apart from this Subdivision) is taken never to have applied in relation to an * ESS interest acquired by an individual under an * employee share scheme if: (a) disregarding this section, an amount is included in the individual’s assessable income under this Division in relation to the interest; and (b) either: (i) the individual forfeits the interest; or (ii) in the case of an ESS interest that is a beneficial interest in a right—the individual forfeits or loses the interest (without having disposed of the interest or exercised the right); and (c) the forfeiture or loss is not the result of: (i) a choice made by the individual (other than a choice to which subsection (2) applies); or (ii) a condition of the scheme that has the direct effect of protecting (wholly or partly) the individual against a fall in the * market value of the interest. (2) This subsection applies to the following choices by the individual: (a) a choice to cease particular employment; (b) in the case of an * ESS interest that is a beneficial interest in a right: (i) a choice not to exercise the right before it lapsed; or (ii) a choice to allow the right to be cancelled.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2)

s 83A-315 — Market value of ESS interest

(1) Whenever this Division (other than section 83A ‑ 20) uses the * market value of an * ESS interest, instead use the amount specified in the regulations for the purposes of this section in relation to the interest, if the regulations specify such an amount. (2) To avoid doubt, apply the rule in subsection (1) to the * market value component of any calculation for the purposes of this Division that involves market value. Example: If the regulations specify an amount in relation to an ESS interest, use that amount instead of the market value of the interest in working out: (a) whether there is a discount given in relation to interest; and (b) if so—the amount of the discount.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2)

s 83A-320 — Interests in a trust

(1) This section applies if, at a time: (a) you hold an interest in a trust whose assets include * shares; and (b) that interest corresponds to a particular number of the shares (even if the interest does not correspond to particular shares). (2) For the purposes of this Division, treat yourself as holding at that time a beneficial interest in each of a number of the * shares included in the assets of the trust equal to the number mentioned in paragraph (1)(b). (3) If there are 2 or more classes of * shares included in the assets of the trust, this section operates separately in relation to each class as if the shares in that class were all the shares included in the assets of the trust. (4) This section applies to rights to acquire beneficial interests in * shares in the same way it applies to shares. Note: For the CGT treatment of employee share schemes, see Subdivision 130 ‑ D.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 83A-325 — Application of Division to relationships similar to employment

This Division applies to an individual covered by column 1 of an item in the table as if: (a) he or she were employed by the entity referred to in column 2 of that item; and (b) the thing referred to column 3 of that item constituted that employment. Application of Division to relationships similar to employment Item Column 1 This Division applies to an individual who: Column 2 as if he or she were employed by: Column 3 and this constituted that employment: 1 receives, or is entitled to receive, * work and income support withholding payments (otherwise than as an employee) the entity that pays or provides the work and income support withholding payments (or is liable to do so) the relationship because of which the entity pays or provides the work and income support withholding payments to the individual (or is liable to do so). 2 is engaged in service in a foreign country as the holder of an office the entity by whom the individual is so engaged the holding of the office. 3 provides services to an entity (other than services covered by a previous item in this table and services provided as an employee) the entity the * arrangement between the individual and the entity under which those services are provided.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 83A-330 — Application of Division to ceasing employment

For the purposes of this Division, you are treated as ceasing employment when you are no longer employed by any of the following: (a) your employer in that employment; (b) a holding company (within the meaning of the Corporations Act 2001 ) of your employer; (c) a * subsidiary of your employer; (d) a * subsidiary of a holding company (within the meaning of the Corporations Act 2001 ) of your employer.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 83A-335 — Application of Division to stapled securities

(1) This Division applies in relation to a stapled security in the same way as it applies in relation to a * share in a company, if at least one of the * ownership interests that are stapled together to form the stapled security is a share in the company. Note: This means the Division also applies to rights to acquire such a stapled security in the same way it applies to rights to acquire a share. (2) This Division applies in relation to a stapled security in the same way as it applies in relation to an ordinary * share in a company, if at least one of the * ownership interests that are stapled together to form the stapled security is an ordinary share in the company. (3) For the purposes of this Division, in relation to a stapled security or right to acquire a beneficial interest in a stapled security, a company is taken to include (as part of the company) each * stapled entity for the stapled security, if at least one of the * ownership interests that are stapled together to form the stapled security is a * share in the company.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 83A-340 — Application of Division to indeterminate rights

(1) This section applies if: (a) you acquire a beneficial interest in a right; and (b) the right later becomes a right to acquire a beneficial interest in a * share. Example 1: You acquire a right to acquire, at a future time: (a) shares with a specified total value, rather than a specified number of shares; or (b) an indeterminate number of shares. Example 2: You acquire a right under which the provider must provide you with either ESS interests or cash, whichever the provider chooses. (2) This Division applies as if the right had always been a right to acquire the beneficial interest in the * share.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 84-1 — What this Part is about

This Part is about 2 issues relating to personal services income. Division 85 limits the entitlements of individuals to deductions relating to their personal services income. Division 86 sets out the tax consequences of individuals’ personal services income being diverted to other entities (often called alienation of the income). These Divisions do not affect individuals or other entities that conduct personal services businesses. Division 87 defines personal services businesses. Note: This Part may not apply until the 2002 ‑ 03 income year to participants in the prescribed payments system on 13 April 2000: see item 26 of Schedule 1 to the New Business Tax System (Alienation of Personal Services Income) Act 2000 . Table of sections 84 ‑ 5 Meaning of personal services income 84 ‑ 10 This Part does not imply that individuals are employees

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 84-5 — Meaning of personal services income

(1) Your * ordinary income or * statutory income, or the ordinary income or statutory income of any other entity, is your personal services income if the income is mainly a reward for your personal efforts or skills (or would mainly be such a reward if it was your income). Example 1: NewIT Pty. Ltd. provides computer programming services, but Ron does all the work involved in providing those services. Ron uses the clients’ equipment and software to do the work. NewIT’s ordinary income from providing the services is Ron’s personal services income because it is a reward for his personal efforts or skills. Example 2: Trux Pty. Ltd. owns one semi ‑ trailer, and Tom is the only person who drives it. Trux’s ordinary income from transporting goods is not Tom’s personal services income because it is produced mainly by use of the semi ‑ trailer, and not mainly as a reward for Tom’s personal efforts or skills. Example 3: Jim works as an accountant for a large accounting firm that employs many accountants. None of the firm’s ordinary income or statutory income is Jim’s personal services income because it is produced mainly by the firm’s business structure, and not mainly as a reward for Jim’s personal efforts or skills. (2) Only individuals can have personal services income. (3) This section applies whether the income is for doing work or is for producing a result. (4) The fact that the income is payable under a contract does not stop the income being mainly a reward for your personal efforts or skills.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 84-10 — This Part does not imply that individuals are employees

The application of this Part to an individual does not imply, for the purposes of any * Australian law or any instrument made under an Australian law, that the individual is an employee.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 85-1 — What this Division is about

This Division sets out amounts, relating to personal services income, that an individual cannot deduct. In particular, deductions that are unavailable to an employee are similarly unavailable to an individual who has personal services income and who is not an employee. However, this Division does not apply if the individual is conducting a personal services business or receives the income as an employee or office holder. Table of sections 85 ‑ 5 Object of this Division 85 ‑ 10 Deductions for non ‑ employees relating to personal services income 85 ‑ 15 Deductions for rent, mortgage interest, rates and land tax 85 ‑ 20 Deductions for payments to associates etc. 85 ‑ 25 Deductions for superannuation for associates 85 ‑ 30 Exception: personal services businesses 85 ‑ 35 Exception: employees, office holders and religious practitioners 85 ‑ 40 Application of Subdivision 900 ‑ B to individuals who are not employees

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 85-5 — Object of this Division

The object of this Division is to ensure that individuals who are not conducting * personal services businesses cannot deduct certain amounts (such as amounts that employees cannot deduct). Note: This Division also affects the extent to which a personal services entity is entitled to deductions relating to gaining or producing an individual’s personal services income: see section 86 ‑ 60.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 85-10 — Deductions for non ‑ employees relating to personal services income

(1) You cannot deduct under this Act an amount to the extent that it relates to gaining or producing that part of your * ordinary income or * statutory income that is your * personal services income if: (a) the income is not payable to you as an employee; and (b) you would not be able to deduct the amount under this Act if the income were payable to you as an employee. Example: Ruth is an architect who works as an independent contractor for one firm. She is not conducting a personal services business. On most days she travels from her home to the business premises of the firm, where she does her work. She also has a home office, where she does some of her work. This section confirms that Ruth cannot deduct her expenses of travelling between her home and the firm’s premises because she could not deduct them if she were an employee. (2) Subsection (1) does not stop you deducting an amount to the extent that it relates to: (a) gaining work; or Examples: Advertising, tendering and quoting for work. (b) insuring against loss of your income or your income earning capacity; or Examples: Sickness, accident and disability insurance. (c) insuring against liability arising from your acts or omissions in the course of earning income; or Examples: Public liability insurance and professional indemnity insurance. (d) engaging an entity that is not your * associate to perform work; or (e) engaging your * associate to perform work that forms part of the principal work for which you gain or produce your * personal services income; or (f) contributing to a fund in order to obtain * superannuation benefits for yourself or for your * SIS dependants in the event of your death; or Note: For deductions for superannuation contributions: see Subdivision 290 ‑ C. (g) meeting your obligations under a * workers’ compensation law to pay premiums, contributions or similar payments or to make payments to an employee in respect of * compensable work ‑ related trauma; or (h) meeting your obligations, or exercising your rights, under the * GST law.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3)

s 85-15 — Deductions for rent, mortgage interest, rates and land tax

You cannot deduct under this Act an amount of rent, mortgage interest, rates or land tax: (a) for some or all of your residence; or (b) for some or all of your * associate’s residence; to the extent that the amount relates to gaining or producing your * personal services income.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 85-20 — Deductions for payments to associates etc.

(1) You cannot deduct under this Act: (a) any payment you make to your * associate; or (b) any amount you incur arising from an obligation you have to your associate; to the extent that the payment or amount relates to gaining or producing your * personal services income. (2) Subsection (1) does not stop you deducting a payment or amount to the extent that it relates to engaging your * associate to perform work that forms part of the principal work for which you gain or produce your * personal services income. (3) An amount or payment that you cannot deduct because of this section is neither assessable income nor * exempt income of your * associate.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5))

s 85-25 — Deductions for superannuation for associates

(1) You cannot deduct under this Act a contribution you make to a fund or an * RSA to provide for * superannuation benefits payable for your * associate, to the extent that the associate’s work for you relates to gaining or producing your * personal services income. (2) Subsection (1) does not stop you deducting a contribution to the extent that your * associate’s performance of work forms part of the principal work for which you gain or produce your * personal services income. (3) However, if subsection (2) applies, your deduction cannot exceed the amount you would have to contribute, for the benefit of the * associate, to a * complying superannuation fund or an * RSA in order to ensure that you did not have any * individual final superannuation guarantee shortfalls for the associate and any * QE days in the income year. (4) To work out the amount you would have to contribute under subsection (3), assume under the Superannuation Guarantee (Administration) Act 1992 that your payments of qualifying earnings (within the meaning of that Act) to the associate do not include any amounts that section 85 ‑ 10 or 85 ‑ 20 of this Act would prevent you from deducting. Note: See paragraph 85 ‑ 10(2)(e) for deductions relating to employment of associates.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 51 of 2002, effective s. 4, Schedule 1 (item 202(2)) and Schedule 3 (items 3, 4): Royal Assent Schedule 1 (items 185, 186): 1 July 2003 | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 57 of 2025, effective sch 1 (items 79 ‑ 98, 181, 183): 1 July 2026 (s 2(1) item 1)

s 85-30 — Exception: personal services businesses

This Division does not apply to an amount, payment or contribution to the extent that the amount, payment or contribution relates to income from you conducting a * personal services business.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 85-35 — Exception: employees, office holders and religious practitioners

(1) This Division does not apply to an amount, payment or contribution to the extent that the amount, payment or contribution relates to * personal services income that you receive as: (a) an employee; or (b) an individual referred to in paragraph 12 ‑ 45(1)(a), (b), (c), (d) or (e) (about payments to office holders) in Schedule 1 to the Taxation Administration Act 1953 . (2) This Division does not apply to an amount, payment or contribution to the extent that the amount, payment or contribution relates to a payment referred to in section 12 ‑ 47 in Schedule 1 to the Taxation Administration Act 1953 (payments to * religious practitioners).

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 168 of 2001, effective Schedule 2: 1 July 2000 Remainder: Royal Assent

s 85-40 — Application of Subdivision 900 ‑ B to individuals who are not employees

This Division does not have the effect of applying Subdivision 900 ‑ B (about substantiating work expenses) to an individual who is not an employee.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 86-1 — What this Division is about

Income from the rendering of your personal services is treated as your assessable income if it is the income of another entity and is not promptly paid to you as salary. However, this does not apply if the other entity is conducting a personal services business. There are limits to the other entity’s entitlement to deductions to offset against the amount treated as your income.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 86-5 — A simple description of what this Division does

(1) This diagram shows an example of a simple arrangement for the alienation of personal services income. Note 1: Solid lines indicate actual payments between the parties. Dotted lines indicate other interactions between the parties. Note 2: This Division also applies to different and more complex arrangements. (2) This Division has the effect of attributing the personal services entity’s income from the personal services to the individual who performed them (unless the income is promptly paid to the individual as salary). Certain deduction entitlements of the personal services entity can reduce the amount of the attribution.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 86-10 — Object of this Division

The object of this Division is to ensure that individuals cannot reduce or defer their income tax (and other liabilities) by alienating their * personal services income through companies, partnerships or trusts that are not conducting * personal services businesses. Note: The general anti ‑ avoidance provisions of Part IVA of the Income Tax Assessment Act 1936 may still apply to cases of alienation of personal services income that fall outside this Division.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 86-15 — Effect of obtaining personal services income through a personal services entity

Amounts included in your assessable income (1) Your assessable income includes an amount of * ordinary income or * statutory income of a * personal services entity that is your * personal services income. Example: Continuing example 1 in section 84 ‑ 5: Assume that NewIT only provides services to one client. Ron’s assessable income includes ordinary income of NewIT from providing the computer programming services, because the income is Ron’s personal services income. Note: The amount included in your assessable income can be reduced by certain deductions to which the personal services entity is entitled: see section 86 ‑ 20. (2) A personal services entity is a company, partnership or trust whose * ordinary income or * statutory income includes the * personal services income of one or more individuals. Exception: personal services businesses (3) This section does not apply if that amount is income from the * personal services entity conducting a * personal services business. Note: Even if the entity is conducting a personal services business, it is possible that some of its income is not income from conducting that business. Exception: amounts promptly paid to you as salary or wages (4) This section does not apply to the extent that: (a) the * personal services entity pays that amount to you, as an employee, as salary or wages; and (b) the payment is made before the end of the 14th day after the * PAYG payment period during which the amount became * ordinary income or * statutory income of the entity. Note: The entity is obliged to withhold amounts from salary or wages paid before the end of that day: see section 12 ‑ 35 in Schedule 1 to the Taxation Administration Act 1953 . Exception: exempt income etc. (5) This section only applies to the extent that that amount would be assessable income of the personal services entity if this Division did not apply. Example: If the entity’s income includes an amount that is your personal services income for a service on which GST is payable, the amount included in your assessable income will not include the GST, because the GST is neither assessable income nor exempt income of the entity: see section 17 ‑ 5.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 86-20 — Offsetting the personal services entity’s deductions against personal services income

(1) The amount of your * personal services income included in your assessable income under section 86 ‑ 15 may be reduced (but not below nil) by the amount of certain deductions to which the * personal services entity is entitled. Note 1: Subdivision 86 ‑ B limits a personal services entity’s entitlement to deductions. Note 2: If the amount of the deductions exceeds the amount of the personal services income, a deduction for the excess is available to you under section 86 ‑ 27. The personal services entity cannot deduct the amount of the excess: see section 86 ‑ 87. (2) Use this method statement to work out whether, and by how much, the amount is reduced: Method statement Step 1. Work out, for the income year, the amount of any deductions (other than * entity maintenance deductions or deductions for amounts of salary or wages paid to you ) to which the * personal services entity is entitled that are deductions relating to your * personal services income. Step 2. Work out, for the income year, the amount of any * entity maintenance deductions to which the * personal services entity is entitled. Step 3. Work out the * personal services entity’s assessable income for that income year, disregarding any income it receives that is your * personal services income or the personal services income of anyone else. Step 4. Subtract the amount under step 3 from the amount under step 2. Note 1: Step 4 ensures that, before entity maintenance deductions can contribute to the reduction, they are first exhausted against any income of the entity that is not personal services income. Note 2: If the personal services entity receives another individual’s personal services income, see section 86 ‑ 25. Step 5. If the amount under step 4 is greater than zero, the amount of the reduction under subsection (1) is the sum of the amounts under steps 1 and 4. Step 6 . If the amount under step 4 is not greater than zero, the amount of the reduction under subsection (1) is the amount under step 1. Example 1: Continuing example 1 in section 84 ‑ 5: Assume these additional facts: • $120,000 of NewIT’s income is Ron’s personal services income; • NewIT has deductions (including superannuation contributions) of $50,000 relating to Ron’s personal services income (step 1); • NewIT has entity maintenance deductions of $8,000 (step 2); • NewIT has investments that produce income. NewIT’s assessable income, disregarding Ron’s or anyone else’s personal services income, is $20,000 (step 3). Because the step 4 amount is less than zero ( ‑ $12,000), step 5 does not apply and, under step 6, the amount of the reduction is $50,000. Therefore the amount included in Ron’s assessable income is: Example 2: Assume, as an alternative set of facts, that NewIT’s assessable income under step 3 was only $2,000. The step 4 amount would have been $6,000, and, under step 5, the amount of the reduction would have been $56,000 (adding the amounts under steps 1 and 4). The amount included in Ron’s assessable income would then have been: Note: The personal services entity’s deductions that do not relate to your personal services income and that are not entity maintenance deductions cannot reduce the amount included in your assessable income under section 86 ‑ 15.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | Amended by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent

s 86-25 — Apportionment of entity maintenance deductions among several individuals

If, in the income year: (a) the amount worked out under step 4 of the method statement in section 86 ‑ 20 is greater than zero; and Note: This happens if the entity has entity maintenance deductions that form some or all of the reduction under section 86 ‑ 20. (b) the * ordinary income or * statutory income of the * personal services entity includes another individual’s * personal services income (as well as your personal services income); and (c) the other individual’s personal services income is included in the other individual’s assessable income under section 86 ‑ 15; the amount worked out under step 4 is taken to be: where: original step 4 amount is the amount that would be the amount worked out under step 4 if this section did not apply. total personal services income is the sum of all the amounts of personal services income (whether your personal services income or someone else’s) that are included in the personal services entity’s ordinary income or statutory income for the income year. your personal services income is the sum of all the amounts of your personal services income that are included in the personal services entity’s ordinary income or statutory income for the income year. Example: Continuing example 2 in section 86 ‑ 20: Assume that Robyn, another computer consultant, joined NewIT, and NewIT’s ordinary income from providing the services also includes Robyn’s personal services income of $168,000. Because NewIT now receives the personal services income of someone else, Ron’s step 4 amount is reduced as follows: Under step 5 of the method statement in section 86 ‑ 20, the amount of the reduction under that section is therefore $52,500, and the amount included in Ron’s assessable income is $67,500.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 86-27 — Deduction for net personal services income loss

If your personal services deduction amount exceeds your unreduced personal services income, then you can deduct the excess amount. For this purpose: (a) your personal services deduction amount is the amount of deductions relating to your * personal services income worked out under step 1 of the method statement in section 86 ‑ 20, increased by the amount (if greater than zero) worked out under step 4 of the method statement; and (b) your unreduced personal services income is the personal services income that would have been included in your assessable income for the income year if there had not been any reduction under section 86 ‑ 20.

Amendment history: Inserted by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent

s 86-30 — Assessable income etc. of the personal services entity

* Ordinary income or * statutory income of the * personal services entity is neither assessable income nor * exempt income of the entity, to the extent that it is * personal services income included in your assessable income under section 86 ‑ 15. Note: Subsection 118 ‑ 20(4) prevents this income being treated as a capital gain.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 86-35 — Later payments of, or entitlements to, personal services income to be disregarded for income tax purposes

(1) To the extent that a payment by the * personal services entity, or by your * associate, is a payment to you or any of your associates of: (a) * personal services income included in your assessable income under section 86 ‑ 15; or (b) any other amount that is attributable to that income; the payment: (c) is neither assessable income nor * exempt income of the entity receiving it; and Note: Subsection 118 ‑ 20(4) prevents this income being treated as a capital gain. (d) is not an amount that the entity making it can deduct. Note: Section 118 ‑ 65 prevents this amount being treated as a capital loss. Example: Continuing example 2 in section 86 ‑ 20: Assume that NewIT had paid Jill, Ron’s wife, an amount for work that is not the principal work of NewIT. The payment is made from money already included in Ron’s assessable income under section 86 ‑ 15. The amount is neither assessable income nor exempt income of Jill, and NewIT cannot deduct the amount. (2) To the extent that you are entitled, or any of your * associates are entitled, to a share of the net income of the * personal services entity, or of any of your associates, and that income is: (a) * personal services income included in your assessable income under section 86 ‑ 15; or (b) any other amount that is attributable to that income; that share is neither assessable income nor * exempt income of the entity receiving it or entitled to receive it.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5))

s 86-40 — Salary payments shortly after an income year

(1) If: (a) before the end of 14 July in a particular income year, you receive, as salary or wages, * personal services income of yours from the * personal services entity; and (b) failure to make the payment before the end of 14 July would have resulted in an amount of income being included in your assessable income under section 86 ‑ 15 for the preceding income year; you are taken to have received the payment on 30 June of that preceding income year. Example: Continuing example 2 in section 86 ‑ 20: Assume that NewIT is a small withholder for PAYG withholding purposes, and its PAYG payment period covering April 2001 to June 2001 is the quarter ending on 30 June 2001. NewIT’s income for that period (after taking into account any reductions under sections 86 ‑ 20 and 86 ‑ 25) includes $20,000 that is Ron’s personal services income, and NewIT pays this to Ron on 12 July 2001. The $20,000 that Ron receives is assessable income for the income year ended on 30 June 2001. (2) However, this section does not affect the time at which the * personal services entity is treated as having paid the salary or wages. Note 1: Therefore neither the timing of the entity’s deduction for the payment, nor the timing of the obligation to withhold amounts under section 12 ‑ 35 in Schedule 1 to the Taxation Administration Act 1953 , is affected. Note 2: However, these payments are treated as relating to the preceding income year for the purposes of the rules relating to payment summaries, PAYG credits and PAYG withholding non ‑ compliance tax (see Subdivisions 16 ‑ C, 18 ‑ A and 18 ‑ D in Schedule 1 to the Taxation Administration Act 1953 ).

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 99 of 2012, effective s 4 and Sch 3: 29 June 2012 (s 2(1) items 1, 7–10) Sch 1 (items 10, 11, 23): 30 June 2012 (s 2(1) item 3) Sch 2 (items 1–4, 6): 26 Mar 2009 (s 2(1) item 6)

s 86-60 — General rule for deduction entitlements of personal services entities

A * personal services entity cannot deduct under this Act an amount to the extent that it relates to gaining or producing an individual’s * personal services income, unless: (a) the individual could have deducted the amount under this Act if the circumstances giving rise to the entity’s entitlement to deduct the amount had applied instead to the individual; or Note: In particular, Division 85 specifies limits on an individual’s entitlements to deductions relating to the individual’s personal services income. (b) the entity receives the individual’s * personal services income in the course of conducting a * personal services business.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 86-65 — Entity maintenance deductions

(1) Section 86 ‑ 60 does not stop a * personal services entity deducting an amount to the extent that it is an * entity maintenance deduction. Note: See section 86 ‑ 25 for how entity maintenance deductions are offset against a personal services entity’s income. (2) Each of these is an entity maintenance deduction : (a) any fee or charge payable by the entity for opening, operating or closing an account with an * ADI; (b) any deduction under section 25 ‑ 5 (about tax ‑ related expenses); (c) any loss or outgoing incurred in relation to preparation or lodgment of any document the entity is required to lodge under the Corporations Act 2001 ; (d) any fee or charge payable by the entity to an * Australian government agency for any licence, permission, approval, authorisation, registration or certification (however described) that is granted or given under an * Australian law. (3) However, paragraph (2)(c) does not include any payment that the entity makes to an * associate.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 55 of 2001, effective s 4–14 and Sch 3 (items 264–275): 15 July 2001 (s 2(1), (3))

s 86-70 — Car expenses

Cars used solely for business (1) Section 86 ‑ 60 does not stop a * personal services entity deducting a * car expense for a * car of which there is no * private use. Other cars (2) Section 86 ‑ 60 does not stop a * personal services entity deducting: (a) a * car expense; or (b) an amount of tax payable under the Fringe Benefits Tax Assessment Act 1986 for a * car fringe benefit; for a * car of which there is * private use. However, there cannot be, at the same time, more than one car for which such deductions can arise in relation to gaining or producing the same individual’s * personal services income. (3) If there is more than one * car to which subsection (2) could apply at the same time, the entity must choose the car to which subsection (2) applies at that time. The choice remains in effect until the entity ceases to * hold that car. Example: Continuing example 2 in section 86 ‑ 20: Assume that NewIT provides 3 cars to Ron. Car 1 is used solely for business purposes and cars 2 and 3 are used for private purposes. NewIT can deduct all the car expenses it incurs for car 1. It can also deduct all the car expenses it incurs for its choice of either car 2 or car 3, as well as the fringe benefits tax it pays for that car. However, it cannot deduct any car expenses or fringe benefits tax for the car that it does not choose. Note: If car expenses for a car are not deductible because of section 86 ‑ 60, the car benefit being provided is an exempt benefit for the purposes of fringe benefits tax: see subsection 8(4) of the Fringe Benefits Tax Assessment Act 1986 .

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 86-75 — Superannuation

(1) Section 86 ‑ 60 does not stop a * personal services entity deducting a contribution the entity makes to a fund or an * RSA for the purpose of making provision for * superannuation benefits payable for an individual whose * personal services income is included in the entity’s * ordinary income or * statutory income. (2) However, if: (a) the individual performs less than 20% (by * market value) of the entity’s principal work; and (b) the individual is an * associate of another individual whose * personal services income is included in the entity’s * ordinary income or * statutory income; the entity’s deduction cannot exceed the amount it would have to contribute, for the benefit of the individual, to a * complying superannuation fund or an * RSA in order to ensure that it did not have any * individual final superannuation guarantee shortfalls for the individual and any * QE days in the income year. (3) To work out the amount the entity would have to contribute under subsection (2), assume under the Superannuation Guarantee (Administration) Act 1992 that the entity’s payments of qualifying earnings (within the meaning of that Act) to the individual do not include any amounts that section 86 ‑ 60 of this Act would prevent the entity from deducting. Note: Section 86 ‑ 60 will apply the limitations under sections 85 ‑ 10 and 85 ‑ 20 on an individual’s entitlement to deductions (but see paragraph 85 ‑ 10(2)(e) on employment of associates).

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 51 of 2002, effective s. 4, Schedule 1 (item 202(2)) and Schedule 3 (items 3, 4): Royal Assent Schedule 1 (items 185, 186): 1 July 2003 | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 57 of 2025, effective sch 1 (items 79 ‑ 98, 181, 183): 1 July 2026 (s 2(1) item 1)

s 86-80 — Salary or wages promptly paid

Section 86 ‑ 60 does not stop a * personal services entity deducting an amount for salary or wages it pays to the individual referred to in that section before the end of the 14th day after the * PAYG payment period during which the amount became * ordinary income or * statutory income of the entity.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 86-85 — Deduction entitlements of personal services entities for amounts included in an individual’s assessable income

The fact that a * personal services entity: (a) incurs an amount in gaining or producing an individual’s assessable income; or (b) uses a * depreciating asset, or has it installed ready for use, for the * purpose of producing assessable income of an individual; does not stop the entity deducting the loss or outgoing, or deducting an amount for the decline in value of the asset, under this Act if: (c) the entity incurs the amount in gaining or producing, or uses or installs the depreciating asset for the purpose of producing, its * ordinary income or * statutory income; and (d) the income is included in the individual’s assessable income under section 86 ‑ 15.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1))

s 86-87 — Personal services entity cannot deduct net personal services income loss

The total amount of the deductions to which a * personal services entity is entitled for an income year is reduced by the amount of any deduction that an individual, whose * personal services income is ordinary or statutory income of the entity for that income year, is entitled to under section 86 ‑ 27.

Amendment history: Inserted by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent

s 86-90 — Application of Divisions 28 and 900 to personal services entities

This Division does not have the effect of applying Division 28 (about car expenses) or Division 900 (about substantiation rules) to a * personal services entity. Note: Divisions 28 and 900 can still apply to a personal services entity that is a partnership: see subsections 28 ‑ 10(2) and 900 ‑ 5(2).

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 87-1 — What this Division is about

Divisions 85 and 86 do not apply to personal services income that is income from conducting a personal services business. It is not intended that the Divisions apply to independent contractors. A personal services business exists if there is a personal services business determination or if one or more of 4 tests for what is a personal services business are met. Regardless of how much of your personal services income is paid from one source, you can self ‑ assess against the results test to determine whether you are an independent contractor. The results test is based on the traditional tests for determining independent contractors and it is intended that it apply accordingly. However, you cannot “self ‑ assess” whether you meet any of the other 3 tests if 80% or more of your personal services income is from one source. In these cases, you need a personal services business determination in order to be treated as conducting a personal services business.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Repealed and substituted by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5))

s 87-5 — Diagram showing the operation of this Division

This diagram shows how this Division operates to ascertain whether personal services income is income from conducting a personal services business.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Repealed and substituted by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5))

s 87-10 — Object of this Division

The object of this Division is to define * personal services businesses in a way that ensures that it covers genuine businesses but not situations that are merely arrangements for dealing with the * personal services income of individuals.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 87-15 — What is a personal services business?

(1) An individual or * personal services entity conducts a personal services business if: (a) for an individual—a * personal services business determination is in force relating to the individual’s * personal services income; or (b) for a personal services entity—a personal services business determination is in force relating to an individual whose personal services income is included in the entity’s * ordinary income or * statutory income; or (c) in any case—the individual or entity meets at least one of the 4 * personal services business tests in the income year for which the question whether the individual or entity is conducting a personal services business is in issue. Note 1: For personal services business determinations, see Subdivision 87 ‑ B. Note 2: Under subsection (3), the personal services business tests, apart from the results test under section 87 ‑ 18, do not apply if 80% or more of your personal services income is from one source (but they can still be used in deciding whether to make a personal services business determination). (2) The 4 personal services business tests are: (a) the results test under section 87 ‑ 18; and (b) the unrelated clients test under section 87 ‑ 20; and (c) the employment test under section 87 ‑ 25; and (d) the business premises test under section 87 ‑ 30. (3) However, if 80% or more of an individual’s * personal services income (not including income referred to in subsection (4)) during an income year is income from the same entity (or one entity and its * associates), and: (a) the individual’s personal services income is not included in a * personal services entity’s * ordinary income or * statutory income during an income year, and the individual does not meet the results test under section 87 ‑ 18 in that income year; or (b) the individual’s personal services income is included in a personal services entity’s ordinary income or statutory income during an income year, and the entity does not, in relation to the individual, meet the results test under section 87 ‑ 18 in that income year; the individual’s personal services income is not taken to be from conducting a * personal services business unless: (c) when the personal services income is gained or produced, a * personal services business determination is in force relating to the individual’s personal services income; and (d) if the determination was made on the application of a personal services entity—the individual’s personal services income is income from the entity conducting the personal services business. Note: Sections 87 ‑ 35 and 87 ‑ 40 affect the operation of subsection (3) in relation to Australian government agencies and certain agents. (4) Subsection (3) does not apply to income: (a) that the individual receives as an employee; or (b) that the individual receives as an individual referred to in paragraph 12 ‑ 45(1)(a), (b), (c), (d) or (e) (payments to office holders) in Schedule 1 to the Taxation Administration Act 1953 ; or (c) to the extent that it is a payment referred to in section 12 ‑ 47 (payments to * religious practitioners) in that Schedule.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Repealed and substituted by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5))

s 87-18 — The results test for a personal services business

(1) An individual meets the results test in an income year if, in relation to at least 75% of the individual’s * personal services income (not including income referred to in subsection (2)) during the income year: (a) the income is for producing a result; and (b) the individual is required to supply the * plant and equipment, or tools of trade, needed to perform the work from which the individual produces the result; and (c) the individual is, or would be, liable for the cost of rectifying any defect in the work performed. (2) Paragraph (1)(a) does not apply to income: (a) that the individual receives as an employee; or (b) that the individual receives as an individual referred to in paragraph 12 ‑ 45(1)(a), (b), (c), (d) or (e) (payments to office holders) in Schedule 1 to the Taxation Administration Act 1953 ; or (c) to the extent that it is a payment referred to in section 12 ‑ 47 (payments to * religious practitioners) in that Schedule. (3) A * personal services entity meets the results test in an income year if, in relation to at least 75% of the * personal services income of one or more individuals that is included in the personal services entity’s * ordinary income or * statutory income during the income year: (a) the income is for producing a result; and (b) the personal services entity is required to supply the * plant and equipment, or tools of trade, needed to perform the work from which the personal services entity produces the result; and (c) the personal services entity is, or would be, liable for the cost of rectifying any defect in the work performed. (4) For the purposes of paragraph (1)(a), (b) or (c) or (3)(a), (b) or (c), regard is to be had to whether it is the custom or practice, when work of the kind in question is performed by an entity other than an employee: (a) for the * personal services income from the work to be for producing a result; and (b) for the entity to be required to supply the * plant and equipment, or tools of trade, needed to perform the work; and (c) for the entity to be liable for the cost of rectifying any defect in the work performed; as the case requires.

Amendment history: Inserted by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5))

s 87-20 — The unrelated clients test for a personal services business

(1) An individual or a * personal services entity meets the unrelated clients test in an income year if: (a) during the year, the individual or personal services entity gains or produces income from providing services to 2 or more entities that are not * associates of each other, and are not associates of the individual or of the personal services entity; and (b) the services are provided as a direct result of the individual or personal services entity making offers or invitations (for example, by advertising), to the public at large or to a section of the public, to provide the services. Note: Sections 87 ‑ 35 and 87 ‑ 40 affect the operation of paragraph (1)(a) in relation to Australian government agencies and certain agents. (2) The individual or * personal services entity is not treated, for the purposes of paragraph (1)(b), as having made offers or invitations to provide services merely by being available to provide the services through an entity that conducts a * business of arranging for persons to provide services directly for clients of the entity.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5))

s 87-25 — The employment test for a personal services business

(1) An individual meets the employment test in an income year if: (a) the individual engages one or more entities (other than * associates of the individual that are not individuals) to perform work; and (b) that entity performs, or those entities together perform, at least 20% (by * market value) of the individual’s principal work for that year. (2) A * personal services entity meets the employment test in an income year if: (a) the entity engages one or more other entities to perform work, other than: (i) individuals whose * personal services income is included in the entity’s * ordinary income or * statutory income; or (ii) * associates of the entity that are not individuals; and (b) that other entity performs, or those other entities together perform, at least 20% (by * market value) of the entity’s principal work for that year. (2A) If the * personal services entity is a partnership, work that a partner performs is taken, for the purposes of subsection (2), to be work that the personal services entity engages another entity to perform. (3) An individual or a * personal services entity also meets the employment test in an income year if, for at least half the income year, the individual or entity has one or more apprentices.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | 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 87-30 — The business premises test for a personal services business

(1) An individual or a * personal services entity meets the business premises test in an income year if, at all times during the income year, the individual or entity maintains and uses business premises: (a) at which the individual or entity mainly conducts activities from which * personal services income is gained or produced; and (b) of which the individual or entity has exclusive use; and (c) that are physically separate from any premises that the individual or entity, or any * associate of the individual or entity, uses for private purposes; and (d) that are physically separate from the premises of the entity to which the individual or entity provides services and from the premises of any associate of the entity to which the individual or entity provides services. (2) The individual or entity need not maintain and use the same business premises throughout the income year.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 87-35 — Personal services income from Australian government agencies

(1) * Australian government agencies are not treated as * associates of each other for the purposes of subsection 87 ‑ 15(3) and paragraph 87 ‑ 20(1)(a). Example: You receive 60% of your personal services income from a Department of a State government and 40% of your personal services income from a corporation in which that State has a majority shareholding. You are not treated as if 80% or more of your personal services income is income from the same entity and that entity’s associates, and therefore you will not need a personal services business determination to satisfy subsection 87 ‑ 15(3). In addition, you satisfy the first limb (but not necessarily the second limb) of the unrelated clients test in subsection 87 ‑ 20(1), because you receive your personal services income from 2 entities that are not treated as associates of each other. (2) Each Agency within the meaning of the Public Service Act 1999 : (a) is treated as a separate entity; and (b) is not treated as an * associate of any other such Agency, or of any * Australian government agency; for the purposes of subsection 87 ‑ 15(3) and paragraph 87 ‑ 20(1)(a). Example: You receive 70% of your personal services income from the Commonwealth Department of Treasury and 30% of your personal services income from the Australian Taxation Office (neither body has a legal identity separate from the Commonwealth Government). You are not treated as if 80% or more of your personal services income is income from the same entity, or from the same entity and that entity’s associates, and therefore you will not need a personal services business determination to satisfy subsection 87 ‑ 15(3). In addition, you satisfy the first limb (but not necessarily the second limb) of the unrelated clients test in subsection 87 ‑ 20(1), because you receive your personal services income from 2 bodies that are treated as separate entities and that are not treated as associates of each other. (3) Each part of the government of a State or Territory, and each part of an authority of the State or Territory, that has, under a law of the State or Territory, a status corresponding to an Agency within the meaning of the Public Service Act 1999 : (a) is treated as a separate entity; and (b) is not treated as an * associate of any other part of such a government or authority, or of any * Australian government agency; for the purposes of subsection 87 ‑ 15(3) and paragraph 87 ‑ 20(1)(a).

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 87-40 — Application of this Division to certain agents

Object of this section (1) The object of this section is to modify the operation of this Division for * agents who bear entrepreneurial risk in the way they provide services. Agent rules do not apply (1A) The rules in section 960 ‑ 105 (Certain entities treated as agents) do not apply to this section. Agents covered by this section (2) Subsection 87 ‑ 15(3) and section 87 ‑ 20 apply, in the manner specified in this section, to an individual or * personal services entity if: (a) the individual or personal services entity is an * agent of another entity (the principal ) but not the principal’s employee; and (b) the agent receives income from the principal that is for services that the agent provides to other entities ( customers ) on the principal’s behalf; and (c) at least 75% of that income is commissions, or fees, based on the agent’s performance in providing services to the customers on the principal’s behalf; and (d) the agent actively seeks other entities to whom the agent could provide services on the principal’s behalf; and (e) the agent does not provide any services to the customers, on the principal’s behalf, using premises: (i) that the principal or an * associate of the principal owns; or (ii) in which the principal or an associate of the principal has a leasehold interest; unless the agent uses the premises under an arrangement entered into at * arm’s length. Whether personal services income is from one source (3) If the * agent is an individual, in applying subsection 87 ‑ 15(3) to the * personal services income of the agent during an income year, any part of the agent’s personal services income from the principal that: (a) the agent gains or produces during the income year; and (b) is for services that the agent provided to a customer on the principal’s behalf in the income year or an earlier income year; is treated as if it were personal services income from the customer, and not personal services income from the principal. (4) If the * agent is a * personal services entity, in applying subsection 87 ‑ 15(3) to an individual’s * personal services income that is included in the entity’s * ordinary income or * statutory income during an income year, any part of the individual’s personal services income from the principal that: (a) the agent gains or produces during the income year; and (b) is for services that the individual or the agent provided to a customer on the principal’s behalf in the income year or an earlier income year; is treated as if it were personal services income from the customer, and not personal services income from the principal. The unrelated clients test for a personal services business (5) In determining whether, during an income year, the * agent meets the unrelated clients test under section 87 ‑ 20, any services the agent provided in the income year or an earlier income year: (a) for which the agent gains or produces, during the income year, personal services income from the principal; and (b) that were provided to a customer on the principal’s behalf; are treated for the purposes of paragraph 87 ‑ 20(1)(a) as if the agent, and not the principal, provided them to the customer.

Amendment history: Inserted by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 4 of 2007, effective Schedule 1 and Schedule 2 (items 11–16, 26): Royal Assent | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15)

s 87-60 — Personal services business determinations for individuals

Making etc. personal services business determinations (1) The Commissioner may, by giving written notice to an individual: (a) make a personal services business determination relating to the individual; or (b) vary such a determination. (2) The Commissioner may, in the notice, specify: (a) the day on which the determination or variation takes effect, or took effect; (b) the period for which the determination has effect; (c) conditions to which the determination is subject. Matters about which the Commissioner must be satisfied (3) The Commissioner must not make the determination unless satisfied that, in the income year during which the determination first has effect, or is taken to have first had effect, the conditions in one or more of subsections (3A), (3B), (5) and (6) are met. First alternative—results, employment or business premises test met or reasonably expected to be met (3A) The conditions in this subsection are that: (a) the individual could reasonably be expected to meet, or met, the results test under section 87 ‑ 18, the employment test under section 87 ‑ 25, the business premises test under section 87 ‑ 30 or more than one of those tests; and (b) the individual’s * personal services income could reasonably be expected to be, or was, from the individual conducting activities that met one or more of those tests. Second alternative—unusual circumstances prevented the results, employment or business premises test from being met (3B) The conditions in this subsection are that: (a) but for unusual circumstances applying to the individual in that year, the individual could reasonably have been expected to meet, or would have met, the results test under section 87 ‑ 18, the employment test under section 87 ‑ 25, the business premises test under section 87 ‑ 30 or more than one of those tests; and (b) the individual’s * personal services income could reasonably be expected to be, or was, from the individual conducting activities that met one or more of those tests. (4) For the purposes of paragraph (3B)(a) but without limiting the scope of that paragraph, unusual circumstances include providing services to an insufficient number of entities to meet the unrelated clients test under section 87 ‑ 20 if: (a) the individual starts a * business during the income year, and can reasonably be expected to meet the test in subsequent income years; or (b) the individual provides services to only one entity during the income year, but met the test in one or more preceding income years and can reasonably be expected to meet the test in subsequent income years. Third alternative—unrelated clients test was met but 80% or more of income from same source because of unusual circumstances (5) The conditions in this subsection are that: (a) the individual could reasonably be expected to meet, or met, the unrelated clients test under section 87 ‑ 20; and (b) because of unusual circumstances applying to the individual in the income year, 80% or more of the individual’s * personal services income (not including income mentioned in subsection 87 ‑ 15(4)) could reasonably have been expected to be, or would have been, income from the same entity (or one entity and its * associates); and (c) the individual’s personal services income could reasonably be expected to be, or was, from the individual conducting activities that met the unrelated clients test under section 87 ‑ 20. Fourth alternative—unrelated clients test not met because of unusual circumstances (6) The conditions in this subsection are that: (a) but for unusual circumstances applying to the individual in that year, the individual could reasonably have been expected to meet, or would have met, the unrelated clients test under section 87 ‑ 20; and (b) if 80% or more of the individual’s * personal services income (not including income mentioned in subsection 87 ‑ 15(4)) could reasonably have been expected to be, or would have been, income from the same entity (or one entity and its * associates)—that is the case only because of unusual circumstances applying to the individual in the income year; and (c) the individual’s personal services income could reasonably be expected to be, or was, from the individual conducting activities that met the unrelated clients test under section 87 ‑ 20.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 87-65 — Personal services business determinations for personal services entities

Making etc. personal services business determinations (1) The Commissioner may, by giving written notice to a * personal services entity whose * ordinary income or * statutory income includes some or all of an individual’s * personal services income: (a) make a personal services business determination relating to the individual’s personal services income included in the entity’s ordinary income or statutory income; or (b) vary such a determination. (2) The Commissioner may, in the notice, specify: (a) the day on which the determination or variation takes effect, or took effect; (b) the period for which the determination has effect; (c) conditions to which the determination is subject. Matters about which the Commissioner must be satisfied (3) The Commissioner must not make the determination unless satisfied that, in the income year during which the determination first has effect, or is taken to have first had effect, the conditions in one or more of subsections (3A), (3B), (5) and (6) are met. First alternative——results, employment or business premises test met or reasonably expected to be met (3A) The conditions in this subsection are that: (a) the entity could reasonably be expected to meet, or met, the results test under section 87 ‑ 18, the employment test under section 87 ‑ 25, the business premises test under section 87 ‑ 30 or more than one of those tests; and (b) the individual’s * personal services income included in the entity’s * ordinary income or * statutory income could reasonably be expected to be, or was, from the entity conducting activities that met one or more of those tests. Second alternative—unusual circumstances prevented the results, employment or business premises test from being met (3B) The conditions in this subsection are that: (a) but for unusual circumstances applying to the entity in that year, the entity could reasonably have been expected to meet, or would have met, the results test under section 87 ‑ 18, the employment test under section 87 ‑ 25, the business premises test under section 87 ‑ 30 or more than one of those tests; and (b) the individual’s * personal services income included in the entity’s * ordinary income or * statutory income could reasonably be expected to be, or was, from the entity conducting activities that met one or more of those tests. (4) For the purposes of paragraph (3B)(a) but without limiting the scope of that paragraph, unusual circumstances include providing services to an insufficient number of entities to meet the unrelated clients test under section 87 ‑ 20 if: (a) the * personal services entity starts a * business during the income year, and can reasonably be expected to meet that test in subsequent income years; or (b) the personal services entity provides services to only one entity during the income year, but met the test in one or more preceding income years and can reasonably be expected to meet the test in subsequent income years. Third alternative—unrelated clients test was met but 80% or more of income from same source because of unusual circumstances (5) The conditions in this subsection are that: (a) the entity could reasonably be expected to meet, or met, the unrelated clients test under section 87 ‑ 20; and (b) because of unusual circumstances applying to the entity in the income year, 80% or more of the individual’s * personal services income (not including income mentioned in subsection 87 ‑ 15(4)) included in the entity’s * ordinary income or * statutory income could reasonably have been expected to be, or would have been, income from the same entity (or one entity and its * associates); and (c) the individual’s personal services income included in the entity’s ordinary income or statutory income could reasonably be expected to be, or was, from the entity conducting activities that met the unrelated clients test under section 87 ‑ 20. Fourth alternative—unrelated clients test not met because of unusual circumstances (6) The conditions in this subsection are that: (a) but for unusual circumstances applying to the entity in that year, the entity could reasonably have been expected to meet, or would have met, the unrelated clients test under section 87 ‑ 20; and (b) if 80% or more of the individual’s * personal services income (not including income mentioned in subsection 87 ‑ 15(4)) included in the entity’s * ordinary income or * statutory income could reasonably have been expected to be, or would have been, income from the same entity (or one entity and its * associates)—that is the case only because of unusual circumstances applying to the entity in the income year; and (c) the individual’s personal services income included in the entity’s ordinary income or statutory income could reasonably be expected to be, or was, from the entity conducting activities that met the unrelated clients test under section 87 ‑ 20.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 87-70 — Applying etc. for personal services business determinations

(1) An individual or a * personal services entity may apply to the Commissioner, in the * approved form: (a) for a * personal services business determination; or (b) for a variation of a personal services business determination. (2) The Commissioner may request the applicant to give the Commissioner specified information, or a specified document, that the Commissioner needs to decide the application. (3) If the Commissioner has not decided the application within 60 days after it is made, the applicant may, at any time, give the Commissioner written notice that the applicant wishes to treat the application as having been refused. (4) If the applicant gives notice under subsection (3), the Commissioner is taken, for the purposes of section 87 ‑ 85, to have refused the application on the day on which the notice is given. (5) For the purposes of measuring the 60 days mentioned in subsection (3), disregard each period (if any): (a) starting on the day when the Commissioner requests the applicant under subsection (2) to give the Commissioner specified information or a specified document; and (b) ending at the end of the day the applicant gives the Commissioner the specified information or document.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 87-75 — When personal services business determinations have effect

(1) The determination, or a variation of the determination, has effect, or is taken to have had effect, on and from: (a) the day specified in the notice as the day on which the determination or variation takes effect, or took effect; or (b) if a day is not specified—the day on which the notice is given. (2) The determination ceases to have effect at the end of the earliest day on which one or more of these occurs: (a) one or more conditions to which the determination is subject are not met; (b) the Commissioner revokes the determination; (c) the period for which the determination has effect comes to an end.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 87-80 — Revoking personal services business determinations

The Commissioner must, by giving written notice to the individual or * personal services entity on whose application a * personal services business determination was made, revoke the determination if the Commissioner is no longer satisfied that there are grounds on which the determination could be made.

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 87-85 — Review of decisions

A person who is dissatisfied with; (a) a decision of the Commissioner to make, vary or revoke a * personal services business determination; or (b) the Commissioner’s refusal of an application for a personal services business determination or for a variation of a personal services business determination; may object against the decision in the manner set out in Part IVC of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1))

s 100-1 — What this Division is about

This Division is a simplified outline of the capital gains and capital losses provisions, commonly referred to as capital gains tax ( CGT ). It will help you to understand your current liabilities, and to factor CGT into your on ‑ going financial affairs. Table of sections 100 ‑ 5 Effect of this Division 100 ‑ 10 Fundamentals of CGT 100 ‑ 15 Overview of Steps 1 and 2 Step 1—Have you made a capital gain or a capital loss? 100 ‑ 20 What events attract CGT? 100 ‑ 25 What are CGT assets? 100 ‑ 30 Does an exception or exemption apply? 100 ‑ 33 Can there be a roll ‑ over? Step 2—Work out the amount of the capital gain or loss 100 ‑ 35 What is a capital gain or loss? 100 ‑ 40 What factors come into calculating a capital gain or loss? 100 ‑ 45 How to calculate the capital gain or loss for most CGT events Step 3—Work out your net capital gain or loss for the income year 100 ‑ 50 How to work out your net capital gain or loss 100 ‑ 55 How do you comply with CGT? Keeping records for CGT purposes 100 ‑ 60 Why keep records? 100 ‑ 65 What records? 100 ‑ 70 How long you need to keep records

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 100-5 — Effect of this Division

This Division is a * Guide. Note: In interpreting an operative provision, a Guide may be considered only for limited purposes: see section 950 ‑ 150.

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 100-10 — Fundamentals of CGT

(1) CGT affects your income tax liability because your assessable income includes your net capital gain for the income year. Your net capital gain is the total of your capital gains for the income year, reduced by certain capital losses you have made. See later in this Guide (section 100 ‑ 50) for more detail. (2) When you prepare your income tax return, you need to check whether you have made any capital gains for the income year. You also need to check whether you have made any capital losses. You cannot deduct a capital loss from your assessable income, but it will reduce your capital gain in the current income year or later income years. (3) You will also need to consider the impact of CGT when doing your financial planning. In particular, you will need adequate record ‑ keeping to deal most effectively with any immediate or future CGT liability. To give you a sense of the range of things affected by CGT, if you are involved with any of the following, you may have a CGT liability now or at some time in the future: • leases • marriage or relationship breakdown • inheritance • working from home • subdividing land • shares • goodwill • a civil court case • contracts • trusts • options • bankruptcy • a company liquidation • incorporating a company • leaving Australia

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 144 of 2008, effective Schedule 14 (items 59–96): 10 Dec 2008

s 100-15 — Overview of Steps 1 and 2

Note: Capital proceeds and cost base are not relevant for some CGT events, for example CGT event K7 or any of the CGT events created by Subdivision 104 ‑ L.

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 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 100-20 — What events attract CGT?

(1) You can make a capital gain or loss only if a CGT event happens. (2) There are a wide range of CGT events. Some happen often and affect many different taxpayers. Others are rare and affect only a few. Some examples of CGT events Situation Event Which CGT event? You own shares you acquired on or after 20 September 1985 You sell them CGT event A1 You sell a business You agree with the purchaser not to operate a similar business in the same area CGT event D1 You are a lessor You receive a payment for changing the lease CGT event F5 You own shares in a company The company makes a payment (not a dividend) to you as a shareholder CGT event G1 A summary of all the CGT events is in section 104 ‑ 5. Identifying the time of a CGT event (3) The specific time when a CGT event happens is important for various reasons: in particular, for working out whether a capital gain or loss from the event affects your income tax for the current or another income year. If a CGT event involves a contract, the time of the event will often be when the contract is made , not when it is completed. The time of each CGT event is explained early in the relevant section in Division 104.

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 100-25 — What are CGT assets?

(1) Most CGT events involve a CGT asset. (For many, there is an exception if the CGT event happens before 1 July 2027 and the CGT asset was acquired before 20 September 1985.) However, many CGT events are concerned directly with capital receipts and do not involve a CGT asset. See the summary of the CGT events in section 104 ‑ 5. (2) Some CGT assets are reasonably well ‑ known: • land and buildings, for example, a weekender; • shares; • units in a unit trust; • collectables which cost over $500, for example, jewellery or an artwork; • personal use assets which cost over $10,000, for example, a boat. (3) Other CGT assets are not so well ‑ known. For example: • your home; • contractual rights; • goodwill; • foreign currency. For a full explanation of what things are CGT assets: see Division 108.

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 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 100-30 — Does an exception or exemption apply?

(1) Once you identify a CGT event which applies to you, you need to know if there is an exception or exemption that would reduce the capital gain or loss or allow you to disregard it. (2) There are 4 categories of exemptions: 1. exempt assets: for example, cars; 2. exempt or loss ‑ denying transactions: for example, compensation for personal injury or your tenancy comes to an end; 3. anti ‑ overlap provisions (that reduce your capital gain by the amount that is otherwise assessable); 4. small business relief. Note: Most of the exceptions are in Division 104. You will find most of the possible exemptions in Division 118. The small business relief provisions are in Division 152. Some exemptions are limited (3) Take the family home for example. Generally, you are exempt from CGT when you make a capital gain on disposing of your main residence. But this can change depending on how you came to own the house and what you have done with it. For example, if you rent it out, you may be liable to CGT when you sell it. For the limits on the general exemption of your main residence: see Subdivision 118 ‑ B.

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 165 of 1999, effective s 4, Sch 1 (items 1–53, 61, 62), Sch 2, Sch 3 (items 1–4, 18) and Sch 4: 10 Dec 1999 (s 2(1), (2)) | Amended by No 173 of 2000, effective s 4, Sch 1, Sch 3 (items 1–15, 17), Sch 4 (items 6–45, 47–49, 51–59, 65(1), (3)) and Sch 6: 21 Dec 2000 (s 2(1)) Sch 4 (items 46, 50): 1 July 1998 (s 2(3)) Sch 5: 31 May 2000 (s 2(4))

s 100-33 — Can there be a roll ‑ over?

(1) Roll ‑ overs allow you to defer or disregard a capital gain or loss from a CGT event. They apply in specific situations. Some require a choice (for example, where an asset is compulsorily acquired: see Subdivision 124 ‑ B) and some are automatic (for example, where an asset is transferred because of marriage or relationship breakdown: see Subdivision 126 ‑ A). (2) There are 2 types of roll ‑ over: 1. a replacement ‑ asset roll ‑ over allows you to defer a capital gain or loss from one CGT event until a later CGT event happens where a CGT asset is replaced with another one; 2. a same ‑ asset roll ‑ over allows you to disregard a capital gain or loss from a CGT event where the same CGT asset is involved. Note: The replacement ‑ asset roll ‑ overs are listed in section 112 ‑ 115, and the same ‑ asset roll ‑ overs are listed in section 112 ‑ 150.

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 144 of 2008, effective Schedule 14 (items 59–96): 10 Dec 2008

s 100-35 — What is a capital gain or loss?

For most CGT events: • You make a capital gain if you receive (or are entitled to receive) capital amounts from the CGT event which exceed your total costs associated with that event. • You make a capital loss if your total costs associated with the CGT event exceed the capital amounts you receive (or are entitled to receive) from the event.

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 100-40 — What factors come into calculating a capital gain or loss?

Capital proceeds (1) For most CGT events, the capital amounts you receive (or are entitled to receive) from the event are called the capital proceeds . To work out the capital proceeds: see Division 116. Cost base and reduced cost base (2) For most CGT events, your total costs associated with the event are worked out in 2 different ways: • For the purpose of working out a capital gain , those costs are called the cost base of the CGT asset. • For the purpose of working out a capital loss , those costs are called the reduced cost base of the asset. One of the main differences is that the costs may be indexed for inflation in working out a capital gain for a CGT asset (which reduces the size of the gain), but not in working out a capital loss. Indexation is only available for certain entities and may not be available for the entire period the CGT asset is held. To work out the cost base and reduced cost base: see Division 110.

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 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Amended by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 100-45 — How to calculate the capital gain or loss for most CGT events

1. Work out your capital proceeds from the CGT event. 2. Work out the cost base for the CGT asset. 3. Subtract the cost base from the capital proceeds. 4. If the proceeds exceed the cost base, the difference is your capital gain . 5. If not, work out the reduced cost base for the asset. 6. If the reduced cost base exceeds the capital proceeds, the difference is your capital loss . 7. If the capital proceeds are less than the cost base but more than the reduced cost base, you have neither a capital gain nor a capital loss .

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 100-50 — How to work out your net capital gain or loss

1. Reduce your capital gains for the income year by your capital losses for the income year. You need to reduce certain kinds of capital gains before you can reduce other kinds of capital gains. (If the capital losses for the income year exceed the capital gains, the difference is your net capital loss. You cannot deduct a net capital loss from your assessable income.) 2. Reduce any remaining capital gains by any unapplied net capital losses for previous income years. You need to reduce certain kinds of remaining capital gains before you can reduce other kinds of remaining capital gains. 3. Apply any quarantined amount relating to using or holding residential dwellings as residential accommodation to reduce certain kinds of remaining capital gains. 4. Reduce any remaining capital gains that are discount capital gains by the discount percentage. Note: To find out what is a discount capital gain and the discount percentage, see Division 115. 5. If you carry on a small business, apply the small business concessions in further reduction of your capital gains (whether or not the gains are discount capital gains). Note: For the small business concessions, see Division 152. 6. Add up any remaining capital gains. The total is your net capital gain. Note: For the rules on working out your net capital gain or loss, see Division 102.

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 165 of 1999, effective s 4, Sch 1 (items 1–53, 61, 62), Sch 2, Sch 3 (items 1–4, 18) and Sch 4: 10 Dec 1999 (s 2(1), (2)) | Repealed and substituted by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Repealed and substituted by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 100-55 — How do you comply with CGT?

Declare any net capital gain as assessable income in your income tax return. Defer any net capital loss to the next income year for which you have capital gains that exceed the capital losses for that income 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))

s 100-60 — Why keep records?

1. To ensure you do not disadvantage yourself. 2. To comply as easily as possible. 3. To plan for your CGT position in future income years. 4. The law requires you to: see Division 121.

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 100-65 — What records?

Keeping full records will make it easier for you to comply. For example, keep records of: • receipts of purchase or transfer; • interest on money you borrowed; • costs of agents, accountants, legal, advertising etc.; • insurance costs and land rates or taxes; • any market valuations; • costs of maintenance, repairs or modifications; • brokerage on shares; • legal costs.

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 100-70 — How long you need to keep records

The law requires you to keep records for 5 years after a CGT event has happened.

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 102-1 — What this Division is about

This Division tells you how to work out if you have made a net capital gain or a net capital loss for the income year. A net capital gain is included in your assessable income. However, you cannot deduct a net capital loss. (Amounts otherwise included in your assessable income do not form part of a net capital gain.) Some or all of your net capital gain may be subject to a 30% minimum tax (see Division 119).

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 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 102-3 — Concessions in working out your net capital gain

(1) Concessional rules apply to working out the net capital gain of some entities (see subsection (2)) if: (a) they have a capital gain (a discount capital gain ) from a CGT asset acquired at least 12 months before the CGT event that caused the capital gain; and (b) they have not chosen to include indexation in the cost base of the asset for working out the capital gain (if relevant). Note 1: Division 115 explains what is a discount capital gain. Note 2: Under Division 110, the entity can choose to include indexation in the cost base of a CGT asset acquired at or before 11.45 am on 21 September 1999. (2) Only these entities get the concession: (b) complying superannuation entities; (d) life insurance companies, in relation to discount capital gains for CGT events in respect of CGT assets that are complying superannuation assets. Note: Shareholders in a listed investment company can also receive a concession equivalent to a discount capital gain: see Subdivision 115 ‑ D. (3) The concession is that the net capital gain includes only part of the amount of the discount capital gain left after applying capital losses and net capital losses from earlier income years. See subsection 102 ‑ 5(1). Table of sections Operative provisions 102 ‑ 5 Assessable income includes net capital gain 102 ‑ 6 Meanings of the different categories of capital gains 102 ‑ 10 How to work out your net capital loss 102 ‑ 15 How to apply net capital losses 102 ‑ 20 Ways you can make a capital gain or a capital loss 102 ‑ 22 Amounts of capital gains and losses 102 ‑ 23 CGT event still happens even if gain or loss disregarded 102 ‑ 25 Order of application of CGT events 102 ‑ 30 Exceptions and modifications

Amendment history: Inserted by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Amended by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015 | Amended by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 102-5 — Assessable income includes net capital gain

(1) Your assessable income includes your net capital gain (if any) for the income year. You work out your net capital gain in this way: Working out your net capital gain Step 1. Reduce the * capital gains you made during the income year by the * capital losses (if any) you made during the income year as follows: (a) first, reduce any * deferred non‑residential capital gains; (b) then, reduce any * deferred residential capital gains; (c) then, reduce any * non‑residential capital gains; (d) then, reduce any * residential capital gains. Note 1: Indexation may apply in relation to working out your capital gains: see Divisions 110 and 114. Note 2: Some provisions of this Act (such as Divisions 104 and 118) permit or require you to disregard certain capital gains or losses when working out your net capital gain. Subdivision 152 ‑ B permits you, in some circumstances, to disregard a capital gain made from a CGT event happening to a CGT asset you held for at least 15 years. Note 3: If you have more than one capital gain within a category mentioned in paragraph (a), (b), (c) or (d), you can choose the order in which you reduce them. Step 2. Apply any previously unapplied * net capital losses from earlier income years to further reduce the amounts (if any) remaining after the reduction of * capital gains under step 1. Make the further reductions in the same order as mentioned in step 1. Note: Section 102 ‑ 15 explains how to apply net capital losses. Step 3. Apply any quarantined amount referred to in paragraph 26 ‑ 155(1)(b) you have for the income year to reduce the amounts (if any) of any * deferred residential capital gains remaining after the reduction of * capital gains under step 2. Note: Subsection 26 ‑ 155(1) deals with amounts relating to using or holding residential dwellings as residential accommodation. Step 4. Apply any quarantined amount referred to in paragraph 26 ‑ 155(1)(b) you have for the income year remaining after step 3 to reduce the amounts (if any) of any * residential capital gains remaining after the reduction of * capital gains under step 2. Step 5. Reduce by the * discount percentage each amount of any * discount capital gain remaining after the application of steps 1 to 4. Note: Only some entities can have discount capital gains, and only if they have capital gains from certain CGT assets acquired at least a year before making the gains: see Division 115. Step 6. If any of your * capital gains (whether or not they are * discount capital gains) remaining after step 5 qualify for any of the small business concessions in Subdivisions 152 ‑ C, 152 ‑ D and 152 ‑ E, apply those concessions to each of those capital gains as provided for in those Subdivisions. Note 1: The basic conditions for getting these concessions are in Subdivision 152 ‑ A. Note 2: Subdivision 152 ‑ C does not apply to CGT events J2, J5 and J6. In addition, Subdivision 152 ‑ E does not apply to CGT events J5 and J6. Step 7. Add up the amounts of any * capital gains remaining after step 6. The sum is your net capital gain for the income year. Note: For exceptions and modifications to these rules: see section 102 ‑ 30.

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 165 of 1999, effective s 4, Sch 1 (items 1–53, 61, 62), Sch 2, Sch 3 (items 1–4, 18) and Sch 4: 10 Dec 1999 (s 2(1), (2)) | Amended by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | 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 55 of 2007, effective 12 Apr 2007 | Amended by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 102-6 — Meanings of the different categories of capital gains

Non ‑ residential capital gains (1) If a * capital gain you make during an income year is not one to which subsection (5) applies, then so much of the capital gain as is not a * residential capital gain is a non ‑ residential capital gain . Residential capital gains (2) If a * capital gain you make during an income year: (a) is not one to which subsection (5) applies; and (b) arises from a * CGT event happening in relation to a * CGT asset that is or was a * residential dwelling; then so much of the capital gain as is worked out as follows is a residential capital gain : where: post ‑ July 2027 ownership period means the number of days in so much of the following period: (a) unless paragraph (b) applies—your * ownership period of the * CGT asset; (b) if because of section 115 ‑ 215 you are taken to have made the * capital gain as a beneficiary of a trust—the trustee’s ownership period of the CGT asset; as: (c) is on or after 1 July 2027, and as ends on the day the * CGT event happens; and (d) does not include a day or part of a day for which you can reasonably expect to disregard the capital gain because of Subdivision 118 ‑ B (about the main residence exemption). Note 1: If the CGT event is a realisation event mentioned in paragraph 112 ‑ 155(1)(c) or 112 ‑ 165(1)(c), subsection (4) of this section applies to your capital gain for the portion of your ownership period that is before 1 July 2027. Note 2: If the CGT event happens (on or after 1 July 2027) in relation to a CGT asset that was a pre ‑ CGT asset just before 1 July 2027, your capital gain for the portion of your ownership period that is before 1 July 2027 is disregarded (see subsection 112 ‑ 175(2)). residential accommodation days means the sum of: (a) the number of days in the post ‑ July 2027 ownership period in which the * CGT asset is used, or held, solely for the provision of residential accommodation; and (b) for each other day in the post ‑ July 2027 ownership period—the fraction of that day that represents the extent to which, on that day, the CGT asset is used, or held, for the provision of residential accommodation. Deferred non ‑ residential capital gains (3) If a * capital gain you make during an income year is one to which subsection (5) applies, then so much of the capital gain as is not a * deferred residential capital gain is a deferred non ‑ residential capital gain . Deferred residential capital gains (4) If a * capital gain you make during an income year: (a) is one to which subsection (5) applies; and (b) arises from a * CGT event happening in relation to a * CGT asset that is or was a * residential dwelling; then so much of the capital gain as is worked out as follows is a deferred residential capital gain : where: pre ‑ July 2027 ownership period means the number of days in so much of the following period: (a) unless paragraph (b) applies—your * ownership period of the * CGT asset; (b) if because of section 115 ‑ 215 you are taken to have made the * capital gain as a beneficiary of a trust—the trustee’s ownership period of the CGT asset; as: (c) ends on 30 June 2027; and (d) does not include a day or part of a day for which you can reasonably expect to disregard the capital gain because of Subdivision 118 ‑ B (about the main residence exemption). residential accommodation days means the sum of: (a) the number of days in the pre ‑ July 2027 ownership period in which the * CGT asset is used, or held, solely for the provision of residential accommodation; and (b) for each other day in the pre ‑ July 2027 ownership period—the fraction of that day that represents the extent to which, on that day, the CGT asset is used, or held, for the provision of residential accommodation. Does the capital gain arise from a deemed sale on 30 June 2027? (5) This subsection applies to a * capital gain you have made if: (a) paragraph 112 ‑ 160(3)(a) or 112 ‑ 170(3)(a) treats you as having made the capital gain; or (b) because of section 115 ‑ 215, you are taken to have made the capital gain as a beneficiary of a trust in relation to the trust’s deferred gain (within the meaning of paragraph 112 ‑ 170(3)(a)). Note 1: Subsection 112 ‑ 160(3) covers individuals who are Australian residents. Subsection 112 ‑ 170(3) covers trusts. Note 2: Paragraph (b) can cover a capital gain taken to have been made by any of the trust’s beneficiaries, not just beneficiaries who are individuals and Australian residents. Note 3: Section 112 ‑ 175 applies to assets that were pre ‑ CGT assets on 30 June 2027. Section 112 ‑ 175 has the effect that a capital gain from a CGT event happening on or after 1 July 2027 in relation to such an asset will be either a residential capital gain or a non ‑ residential capital gain. (2) However, if during the income year: (a) you became bankrupt; or (b) you were released from debts under a law relating to bankruptcy; any * net capital loss you made for an earlier income year must be disregarded in working out whether you made a * net capital gain for the income year or a later one. (3) Subsection (2) applies even though your bankruptcy is annulled if: (a) the annulment happens under section 74 of the Bankruptcy Act 1966 ; and (b) under the composition or scheme of arrangement concerned, you were, will be or may be released from debts from which you would have been released if instead you had been discharged from the bankruptcy.

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

s 102-10 — How to work out your net capital loss

(1) You work out if you have a net capital loss for the income year in this way: Working out your net capital loss Step 1. Add up the * capital losses you made during the income year. Also add up the * capital gains you made. Step 2. Subtract your * capital gains from your * capital losses. Step 3. If the Step 2 amount is more than zero, it is your net capital loss for the income year. Note: For exceptions and modifications to these rules: see section 102 ‑ 30. (2) You cannot deduct from your assessable income a * net capital loss for any income 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 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15)

s 102-15 — How to apply net capital losses

In working out if you have a * net capital gain, your * net capital losses are applied in the order in which you made them. Note 1: A net capital loss can be applied only to the extent that it has not already been utilised: see subsection 960 ‑ 20(1). Note 2: For applying a net capital loss for the 1997 ‑ 98 income year or an earlier income year, see section 102 ‑ 15 of the Income Tax (Transitional Provisions) Act 1997 .

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)) | Repealed and substituted by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15)

s 102-20 — Ways you can make a capital gain or a capital loss

You can make a * capital gain or * capital loss if and only if a * CGT event happens. The gain or loss is made at the time of the event. Note 1: The full list of CGT events is in section 104 ‑ 5. Note 2: The gain or loss may be affected by an exemption, or may be able to be rolled ‑ over. For exemptions generally, see Division 118. For roll ‑ overs, see Divisions 122, 123, 124 and 126. Note 3: You may make a capital gain or capital loss as a result of a CGT event happening to another entity: see subsections 115 ‑ 215(3), 170 ‑ 275(1) and 170 ‑ 280(3). Note 4: You cannot make a capital loss from a CGT event that happens to your original interests during a trust restructuring period if you choose a roll ‑ over under Subdivision 124 ‑ N. Note 5: The capital loss may be affected if the CGT asset was owned by a member of a demerger group just before a demerger: see section 125 ‑ 170. Note 6: Under subsection 230 ‑ 310(4) gains and losses are taken to arise from a CGT event in particular circumstances. Note 7: This section does not apply in relation to the capital gain mentioned in paragraph 294 ‑ 120(5)(b) of the Income Tax (Transitional Provisions) Act 1997 .

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)) | Amended by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent | Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 81 of 2016, effective Sch 1 (items 2–6, 26–32, 36), Sch 2 (items 1–8, 13–18, 20), Sch 3 (items 1–5, 9), Sch 5–8, Sch 9 (items 1–3, 5), Sch 10 (items 72–80, 93) and Sch 11: 1 Jan 2017 (s 2(1) items 2, 4, 6, 9) Sch 10 (items 2–27, 49–54): 1 July 2018 (s 2(1) item 5)

s 102-22 — Amounts of capital gains and losses

Most * CGT events provide for calculating a * capital gain or * capital loss by comparing 2 different amounts. The amount of the gain or loss is the difference between those amounts.

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 102-23 — CGT event still happens even if gain or loss disregarded

A * CGT event still happens even if: (a) it does not result in a * capital gain or * capital loss; or (b) a capital gain or capital loss from the event is disregarded. Example: Lindy sells a car. Section 118 ‑ 5 says that any capital gain or loss from a CGT event happening to a car is disregarded. However, the sale is still an example of CGT event A1.

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 102-25 — Order of application of CGT events

(1) Work out if a * CGT event (except * CGT events D1 and H2) happens to your situation. If more than one event can happen, the one you use is the one that is the most specific to your situation. (2) However, there are 3 exceptions: one for * CGT event J2, one for CGT event K5 and one for CGT event K12. (2A) If the circumstances that gave rise to * CGT event J2 constitute another CGT event, CGT event J2 applies in addition to the other event. Example: CGT event J2 happens because a replacement asset for a small business roll ‑ over under Subdivision 152 ‑ E becomes your trading stock (in circumstances where CGT event K4 happens). Both CGT events apply. (2B) * CGT event K5 happens if CGT event A1, C2 or E8 happens. CGT event K5 applies in addition to the other event. (2C) If: (a) * CGT events happen for which you make * capital gains or * capital losses; and (b) the capital gains or losses are taken into account in working out a * foreign hybrid net capital loss amount; and (c) the foreign hybrid net capital loss amount is itself taken into account in determining that * CGT event K12 happens; CGT event K12 applies in addition to the other CGT events. (3) If no * CGT event (except * CGT events D1 and H2) happens: (a) work out if CGT event D1 happens and use that event if it does; and (b) if it does not, work out if CGT event H2 happens and use that event if it does. Note: The full list of CGT events is in section 104 ‑ 5.

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)) | Amended by No 165 of 1999, effective s 4, Sch 1 (items 1–53, 61, 62), Sch 2, Sch 3 (items 1–4, 18) and Sch 4: 10 Dec 1999 (s 2(1), (2)) | Amended by No 101 of 2004, effective s. 4, Schedule 1 (items 2–4), Schedule 9, Schedule 10 (items 7–37) and Schedule 11 (items 144–146): Royal Assent Sch 2 and Sch 7 (items 1–8): 30 June 2003 (s 2(1) items 3, 8) Sch 3: 1 July 2003 (s 2(1) item 4) Sch 11 (item 35): 30 June 2000 (s 2(1) item 13) Sch 11 (items 52–59, 88, 89): 1 July 2000 (s 2(1) item 14) Sch 11 (items 141–143): 1 July 2001 (s 2(1) item 16) | Amended by No 55 of 2007, effective 12 Apr 2007

s 102-30 — Exceptions and modifications

Provisions of this Act are in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 . Special rules affecting capital gains and capital losses Item For this kind of entity: There are these special rules: See: 1 All entities You can subtract capital losses from collectables only from your capital gains from collectables. section 108 ‑ 10 2 All entities Disregard capital losses you make from personal use assets. section 108 ‑ 20 2AA Beneficiary of trust that makes a capital gain taken into account in working out the net income of the trust The beneficiary is treated as having an extra capital gain corresponding to the beneficiary’s share of the capital gain (taking into account adjustments in respect of the CGT discount small business concessions and indexation. Subdivision 115 ‑ C 3 All entities If any of your commercial debts have been forgiven in the income year, your net capital losses (including net capital losses from collectables) may be reduced. sections 245 ‑ 130 and 245 ‑ 135 4 A company If it has a change of ownership or control during the income year, and has not satisfied the business continuity test, it works out its net capital gain and net capital loss in a special way. Subdivision 165 ‑ CB 5 A company It cannot apply a net capital loss unless: • the same people owned the company during the loss year, the income year and any intervening year; and • no person controlled the company’s voting power at any time during the income year who did not also control it during the whole of the loss year and any intervening year; or the company has satisfied the business continuity test. Subdivision 165 ‑ CA 6 A company If one or more of these things happen: • a capital gain or loss is injected into it; • a tax benefit is obtained from its available net capital losses or current year capital losses; • a tax benefit is obtained because of its available capital gains; the Commissioner can disallow its net capital losses or current year capital losses, and it may have to work out its net capital loss in a special way. Division 175 7 A company A company can transfer a surplus amount of its net capital loss to another company so that the other company can apply the amount in the income year of the transfer. (Both companies must be members of the same wholly ‑ owned group.) Subdivision 170 ‑ B 7A The head company of a consolidated group or a MEC group The head company of a consolidated group or a MEC group must apply the capital loss from CGT event L1 over at least 5 income years section 104 ‑ 500 8 A PDF If it is a PDF at the end of an income year for which it has a net capital loss, it can apply the loss in a later income year only if it is a PDF throughout the last day of the later income year. section 195 ‑ 25 9 A PDF If it becomes a PDF during an income year, it works out its net capital gain and net capital loss for the income year in a special way. section 195 ‑ 35 10 Body that has ceased to be an STB Net capital losses made before cessation disregarded. Special rules apply in cessation year where net capital gain before cessation and net capital loss after cessation. section 24AX 10A All entities Division 316 contains special rules affecting capital gains and capital losses connected with demutualisation of friendly society health or life insurers. Division 316 11 A life insurance company Division 320 contains special rules that apply to capital gains and capital losses Division 320 12 A company The capital gain or capital loss a company makes from a CGT event that happened to a share in a company that is a foreign resident may be reduced. Subdivision 768 ‑ G 13 A PDF Sections 102 ‑ 5 and 102 ‑ 10 do not apply to the calculation of net capital gains and losses. Capital gains and losses are instead allocated to separate classes of income. Subdivision C of Division 10E of Part III 14 A CFC In calculating the CFC’s attributable income, pre ‑ 1 July 1990 capital losses are disregarded. section 409

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)) | Amended by No 165 of 1999, effective s 4, Sch 1 (items 1–53, 61, 62), Sch 2, Sch 3 (items 1–4, 18) and Sch 4: 10 Dec 1999 (s 2(1), (2)) | Amended by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Amended by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Amended by No 96 of 2004, effective 29 June 2004 | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 88 of 2009, effective s. 4, Schedule 3 (items 1, 5–23), Schedule 4 (items 2–5) and Schedule 5 (items 113–204, 237, 238, 258, 282, 319–341, 344): 18 Sept 2009 Schedule 2 (items 4–15, 25–27, 30, 31): 1 Oct 2009 Schedule 2 (item 23): 1 Jan 2010 | Amended by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1) | Amended by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 103-1 — What this Division is about

This Division sets out some general rules that apply to the provisions dealing with capital gains and capital losses. Table of sections Operative provisions 103 ‑ 5 Giving property as part of a transaction 103 ‑ 10 Entitlement to receive money or property 103 ‑ 15 Requirement to pay money or give property 103 ‑ 25 Choices 103 ‑ 30 Reduction of cost base etc. by net input tax credits

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 103-5 — Giving property as part of a transaction

There are a number of provisions in this Part and Part 3 ‑ 3 that say that a payment, cost or expenditure can include giving property. To the extent that such a provision does say that a payment, cost or expenditure can include giving property, use the * market value of the property in working out the amount of the payment, cost or expenditure.

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 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 173 of 2000, effective s 4, Sch 1, Sch 3 (items 1–15, 17), Sch 4 (items 6–45, 47–49, 51–59, 65(1), (3)) and Sch 6: 21 Dec 2000 (s 2(1)) Sch 4 (items 46, 50): 1 July 1998 (s 2(3)) Sch 5: 31 May 2000 (s 2(4))

s 103-10 — Entitlement to receive money or property

(1) This Part and Part 3 ‑ 3 apply to you as if you had received money or other property if it has been applied for your benefit (including by discharging all or part of a debt you owe) or as you direct. (2) Those Parts apply to you as if you are entitled to receive money or other property: (a) if you are entitled to have it so applied; or (b) if: (i) you will not receive it until a later time; or (ii) the money is payable by instalments.

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 103-15 — Requirement to pay money or give property

This Part and Part 3 ‑ 3 apply to you as if you are required to pay money or give other property even if: (a) you do not have to pay or give it until a later time; or (b) the money is payable by instalments.

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 103-25 — Choices

(1) A choice you can make under this Part or Part 3 ‑ 3 must be made: (a) by the day you lodge your * income tax return for the income year in which the relevant * CGT event happened; or (b) within a further time allowed by the Commissioner. (2) The way you (and any other entity making the choice) prepare your * income tax returns is sufficient evidence of the making of the choice. (3) However, there are some exceptions: (aa) subsection 115 ‑ 230(3) (relating to assessment of * capital gains of resident testamentary trusts) requires a trustee to make a choice by the time specified in subsection 115 ‑ 230(5); and (b) subsections 152 ‑ 315(4) and (5) (relating to the small business retirement exemption) require a choice to be made in writing. Note: This section is modified in calculating the attributable income of a CFC: see section 421 of the Income Tax Assessment Act 1936 .

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)) | Amended by No 165 of 1999, effective s 4, Sch 1 (items 1–53, 61, 62), Sch 2, Sch 3 (items 1–4, 18) and Sch 4: 10 Dec 1999 (s 2(1), (2)) | Amended by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 55 of 2007, effective 12 Apr 2007 | Amended by No 79 of 2007, effective Schedule 1 (items 28, 29, 39–42, 43(1), (6)), Schedules 3, 4, Schedule 6 (items 3–8), Schedule 9 (items 14–26, 30, 34) and Schedule 10 (items 10–13, 32): Royal Assent Schedule 8 (items 2, 12–25, 26(1)–(3)): 1 July 2007 | Amended by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 103-30 — Reduction of cost base etc. by net input tax credits

Reduce the * cost base and * reduced cost base of a * CGT asset, and any other amount that could be involved in the calculation of an entity’s * capital gain or * capital loss, by the amount of any * net input tax credit of the entity in relation to that amount. Example: The other amount could be expenditure in the case of some CGT events (see, for example, CGT event D1). Note: Subsection 116 ‑ 20(5) deals with the effect of net GST on supplies for the purposes of capital proceeds.

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

s 104-1 — What this Division is about

This Division sets out all the CGT events for which you can make a capital gain or loss. It tells you how to work out if you have made a gain or loss from each event and the time of each event. It also contains exceptions for gains and losses for many events (such as the exception for CGT assets acquired before 20 September 1985) and some cost base adjustment rules.

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 104-5 — Summary of the CGT events

CGT events Event number and description Time of event is: Capital gain is: Capital loss is: A1 Disposal of a CGT asset [See section 104 ‑ 10] when disposal contract is entered into or, if none, when entity stops being asset’s owner capital proceeds from disposal less asset’s cost base asset’s reduced cost base less capital proceeds B1 Use and enjoyment before title passes [See section 104 ‑ 15] when use of CGT asset passes capital proceeds less asset’s cost base asset’s reduced cost base less capital proceeds C1 Loss or destruction of a CGT asset [See section 104 ‑ 20] when compensation is first received or, if none, when loss discovered or destruction occurred capital proceeds less asset’s cost base asset’s reduced cost base less capital proceeds C2 Cancellation, surrender and similar endings [See section 104 ‑ 25] when contract ending asset is entered into or, if none, when asset ends capital proceeds from ending less asset’s cost base asset’s reduced cost base less capital proceeds C3 End of option to acquire shares etc. [See section 104 ‑ 30] when option ends capital proceeds from granting option less expenditure in granting it expenditure in granting option less capital proceeds D1 Creating contractual or other rights [See section 104 ‑ 35] when contract is entered into or right is created capital proceeds from creating right less incidental costs of creating it incidental costs of creating right less capital proceeds D2 Granting an option [See section 104 ‑ 40] when option is granted capital proceeds from grant less expenditure to grant it expenditure to grant option less capital proceeds D3 Granting a right to income from mining [See section 104 ‑ 45] when contract is entered into or, if none, when right is granted capital proceeds from grant of right less expenditure to grant it expenditure to grant right less capital proceeds D4 Entering into a conservation covenant [See section 104 ‑ 47] when covenant is entered into capital proceeds from covenant less cost base apportioned to the covenant reduced cost base apportioned to the covenant less capital proceeds from covenant E1 Creating a trust over a CGT asset [See section 104 ‑ 55] when trust is created capital proceeds from creating trust less asset’s cost base asset’s reduced cost base less capital proceeds E2 Transferring a CGT asset to a trust [See section 104 ‑ 60] when asset transferred capital proceeds from transfer less asset’s cost base asset’s reduced cost base less capital proceeds E3 Converting a trust to a unit trust [See section 104 ‑ 65] when trust is converted market value of asset at that time less its cost base asset’s reduced cost base less that market value E4 Capital payment for trust interest [See section 104 ‑ 70] when trustee makes payment non ‑ assessable part of the payment less cost base of the trust interest no capital loss E5 Beneficiary becoming entitled to a trust asset [See section 104 ‑ 75] when beneficiary becomes absolutely entitled for trustee—market value of CGT asset at that time less its cost base; for beneficiary—that market value less cost base of beneficiary’s capital interest for trustee—reduced cost base of CGT asset at that time less that market value; for beneficiary—reduced cost base of beneficiary’s capital interest less that market value E6 Disposal to beneficiary to end income right [See section 104 ‑ 80] the time of the disposal for trustee—market value of CGT asset at that time less its cost base; for beneficiary—that market value less cost base of beneficiary’s right to income for trustee—reduced cost base of CGT asset at that time less that market value; for beneficiary—reduced cost base of beneficiary’s right to income less that market value E7 Disposal to beneficiary to end capital interest [See section 104 ‑ 85] the time of the disposal for trustee—market value of CGT asset at that time less its cost base; for beneficiary—that market value less cost base of beneficiary’s capital interest for trustee—reduced cost base of CGT asset at that time less that market value; for beneficiary—reduced cost base of beneficiary’s capital interest less that market value E8 Disposal by beneficiary of capital interest [See section 104 ‑ 90] when disposal contract entered into or, if none, when beneficiary ceases to own CGT asset capital proceeds less appropriate proportion of the trust’s net assets appropriate proportion of the trust’s net assets less capital proceeds E9 Creating a trust over future property [See section 104 ‑ 105] when entity makes agreement market value of the property (as if it existed when agreement made) less incidental costs in making agreement incidental costs in making agreement less market value of the property (as if it existed when agreement made) E10 Annual cost base reduction exceeds cost base of interest in AMIT [See section 104 ‑ 107A] when reduction happens excess of cost base reduction over cost base no capital loss F1 Granting a lease [See section 104 ‑ 110] for grant of lease—when entity enters into lease contract or, if none, at start of lease; for lease renewal or extension—at start of renewal or extension capital proceeds less expenditure on grant, renewal or extension expenditure on grant, renewal or extension less capital proceeds F2 Granting a long term lease [See section 104 ‑ 115] for grant of lease—when lessor grants lease; for lease renewal or extension—at start of renewal or extension capital proceeds from grant, renewal or extension less cost base of leased property reduced cost base of leased property less capital proceeds from grant, renewal or extension F3 Lessor pays lessee to get lease changed [See section 104 ‑ 120] when lease term is varied or waived no capital gain amount of expenditure to get lessee’s agreement F4 Lessee receives payment for changing lease [See section 104 ‑ 125] when lease term is varied or waived capital proceeds less cost base of lease no capital loss F5 Lessor receives payment for changing lease [See section 104 ‑ 130] when lease term is varied or waived capital proceeds less expenditure in relation to variation or waiver expenditure in relation to variation or waiver less capital proceeds G1 Capital payment for shares [See section 104 ‑ 135] when company pays non ‑ assessable amount payment less cost base of shares no capital loss G3 Liquidator or administrator declares shares or financial instruments worthless [See section 104 ‑ 145] when declaration was made no capital gain shares’ or financial instruments’ reduced cost base H1 Forfeiture of a deposit [See section 104 ‑ 150] when deposit is forfeited deposit less expenditure in connection with prospective sale expenditure in connection with prospective sale less deposit H2 Receipt for event relating to a CGT asset [See section 104 ‑ 155] when act, transaction or event occurred capital proceeds less incidental costs incidental costs less capital proceeds I1 Individual or company stops being an Australian resident [See section 104 ‑ 160] when individual or company stops being Australian resident for each CGT asset the person owns, its market value less its cost base for each CGT asset the person owns, its reduced cost base less its market value I2 Trust stops being a resident trust [See section 104 ‑ 170] when trust ceases to be resident trust for CGT purposes for each CGT asset the trustee owns, its market value of asset less its cost base for each CGT asset the trustee owns, its reduced cost base less its market value J1 Company stops being member of wholly ‑ owned group after roll ‑ over [See section 104 ‑ 175] when the company stops market value of asset at time of event less its cost base reduced cost base of asset less that market value J2 Change in relation to replacement asset or improved asset after a roll ‑ over under Subdivision 152 ‑ E [See section 104 ‑ 185] when the change happens the amount mentioned in subsection 104 ‑ 185(5) no capital loss J4 Trust fails to cease to exist after a roll ‑ over under Subdivision 124 ‑ N [See section 104 ‑ 195] when the failure happens market value of asset less asset’s cost base reduced cost base of asset less asset’s market value J5 Failure to acquire replacement asset and to incur fourth element expenditure after a roll ‑ over under Subdivision 152 ‑ E [See section 104 ‑ 197] at the end of the replacement asset period the amount of the capital gain that you disregarded under Subdivision 152 ‑ E no capital loss J6 Cost of acquisition of replacement asset or amount of fourth element expenditure, or both, not sufficient to cover disregarded capital gain [See section 104 ‑ 198] at the end of the replacement asset period the amount mentioned in subsection 104 ‑ 198(3) no capital loss K1 As the result of an incoming international transfer of a Kyoto unit or an Australian carbon credit unit from your foreign account or your nominee’s foreign account, you start to hold the unit as a registered emissions unit [See section 104 ‑ 205] when you start to hold the unit as a registered emissions unit market value of unit less its cost base reduced cost base of unit less its market value K2 Bankrupt pays amount in relation to debt [See section 104 ‑ 210] when payment is made no capital gain so much of payment as relates to denied part of a net capital loss K3 Asset passing to tax ‑ advantaged entity [See section 104 ‑ 215] when individual dies market value of asset at death less its cost base reduced cost base of asset less that market value K4 CGT asset starts being trading stock [See section 104 ‑ 220] when asset starts being trading stock market value of asset less its cost base reduced cost base of asset less its market value K5 Special capital loss from collectable that has fallen in market value [See section 104 ‑ 225] when CGT event A1, C2 or E8 happens to shares in the company, or an interest in the trust, that owns the collectable no capital gain market value of the shares or interest (as if the collectable had not fallen in market value) less the capital proceeds from CGT event A1, C2 or E8 K6 Pre ‑ CGT shares or trust interest [See section 104 ‑ 230] when another CGT event involving the shares or interest happens capital proceeds from the shares or trust interest (so far as attributable to post ‑ CGT assets owned by the company or trust) less the assets’ cost bases no capital loss K7 Balancing adjustment occurs for a depreciating asset that you used for purposes other than taxable purposes [See section 104 ‑ 235] When balancing adjustment event occurs Termination value less cost times fraction Cost less termination value times fraction K8 Direct value shifts affecting your equity or loan interests in a company or trust [See section 104 ‑ 250 and Division 725] the decrease time for the interests the gain worked out under section 725 ‑ 365 no capital loss K9 Entitlement to receive payment of a carried interest [See section 104 ‑ 255] when you become entitled to receive payment capital proceeds from entitlement no capital loss K10 You make a forex realisation gain covered by item 1 of the table in subsection 775 ‑ 70(1) [See section 104 ‑ 260] when the forex realisation event happens the forex realisation gain no capital loss K11 You make a forex realisation loss covered by item 1 of the table in subsection 775 ‑ 75(1) [See section 104 ‑ 265] when the forex realisation event happens no capital gain the forex realisation loss K12 Foreign hybrid loss exposure adjustment [See section 104 ‑ 270] just before the end of the income year no capital gain the amount stated in subsection 104 ‑ 270(3) L1 Reduction under section 705 ‑ 57 in tax cost setting amount of assets of entity becoming subsidiary member of consolidated group or MEC group [See section 104 ‑ 500] Just after entity becomes subsidiary member no capital gain amount of reduction L2 Amount remaining after step 3A etc. of joining allocable cost amount is negative [See section 104 ‑ 505] Just after entity becomes subsidiary member amount remaining no capital loss L3 Tax cost setting amounts for retained cost base assets exceed joining allocable cost amount [See section 104 ‑ 510] Just after entity becomes subsidiary member amount of excess no capital loss L4 No reset cost base assets against which to apply excess of net allocable cost amount on joining [See section 104 ‑ 515] Just after entity becomes subsidiary member no capital gain amount of excess L5 Amount remaining after step 4 of leaving allocable cost amount is negative [See section 104 ‑ 520] When entity ceases to be subsidiary member amount remaining no capital loss L6 Error in calculation of tax cost setting amount for joining entity’s assets: CGT event L6 [See section 104 ‑ 525] start of the income year when the Commissioner becomes aware of the errors the net overstated amount resulting from the errors, or a portion of that amount the net understated amount resulting from the errors, or a portion of that amount L8 Reduction in tax cost setting amount for reset cost base assets on joining cannot be allocated [See section 104 ‑ 535] Just after entity becomes subsidiary member no capital gain amount of reduction that cannot be allocated Note: Subsection 230 ‑ 310(4) (which deals with hedging financial arrangements) provides that in certain circumstances a CGT event is taken to have occurred in relation to a hedging financial arrangement at the same time as a CGT event actually occurs in relation to a hedged item covered by the arrangement.

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)) | Amended by No 165 of 1999, effective s 4, Sch 1 (items 1–53, 61, 62), Sch 2, Sch 3 (items 1–4, 18) and Sch 4: 10 Dec 1999 (s 2(1), (2)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 167 of 2001, effective Sch 4 (items 8–10) and Sch 7 and 8: 1 Oct 2001 (s 2(1)) | Amended by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent | Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 136 of 2002, effective Sch 1 (items 1, 5): 31 May 2000 (s 2(1) items 2, 4) Sch 1 (items 2–4, 6–27), Sch 2 (items 18–28), Sch 3 (items 2–18) and Sch 4 (items 1, 2): 19 Dec 2002 (s 2(1) items 3, 5, 6) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Amended by No 133 of 2003, effective 17 Dec 2003 | Amended by No 101 of 2004, effective s. 4, Schedule 1 (items 2–4), Schedule 9, Schedule 10 (items 7–37) and Schedule 11 (items 144–146): Royal Assent Sch 2 and Sch 7 (items 1–8): 30 June 2003 (s 2(1) items 3, 8) Sch 3: 1 July 2003 (s 2(1) item 4) Sch 11 (item 35): 30 June 2000 (s 2(1) item 13) Sch 11 (items 52–59, 88, 89): 1 July 2000 (s 2(1) item 14) Sch 11 (items 141–143): 1 July 2001 (s 2(1) item 16) | Amended by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 55 of 2007, effective 12 Apr 2007 | Amended by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7) | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015 | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)

s 104-10 — Disposal of a CGT asset: CGT event A1

(1) CGT event A1 happens if you * dispose of a * CGT asset. (2) You dispose of a * CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner. Note: A change in the trustee of a trust does not constitute a change in the entity that is the trustee of the trust (see subsection 960 ‑ 100(2)). This means that CGT event A1 will not happen merely because of a change in the trustee. (3) The time of the event is: (a) when you enter into the contract for the * disposal; or (b) if there is no contract—when the change of ownership occurs. Example: In June 1999 you enter into a contract to sell land. The contract is settled in October 1999. You make a capital gain of $50,000. The gain is made in the 1998 ‑ 99 income year (the year you entered into the contract) and not the 1999 ‑ 2000 income year (the year that settlement takes place). Note 1: If the contract falls through before completion, this event does not happen because no change in ownership occurs. Note 2: If the asset was compulsorily acquired from you: see subsection (6). (4) You make a capital gain if the * capital proceeds from the disposal are more than the asset’s * cost base. You make a capital loss if those capital proceeds are less than the asset’s * reduced cost base. Exceptions (5) A * capital gain or * capital loss you make is disregarded if: (a) you * acquired the asset before 20 September 1985; or (b) for a lease that you granted: (i) it was granted before that day; or (ii) if it has been renewed or extended—the start of the last renewal or extension occurred before that day. Note 1: You can make a gain if you dispose of shares in a company, or an interest in a trust, that you acquired before that day: see CGT event K6. Note 2: A capital gain or loss you make because you assign a right under or in relation to a general insurance policy you held with an HIH company to the Commonwealth, the trustee of the HIH Trust or a prescribed entity is also disregarded: see section 322 ‑ 15. Note 3: A capital gain or loss made by a demerging entity from CGT event A1 happening as a result of a demerger is also disregarded: see section 125 ‑ 155. Note 4: A capital gain or loss you make because of section 16AI of the Banking Act 1959 is disregarded: see section 253 ‑ 10 of this Act. Section 16AI of the Banking Act 1959 : (a) reduces your right to be paid an amount by an ADI in connection with an account to the extent of your entitlement under Division 2AA of Part II of that Act to be paid an amount by APRA; and (b) provides that, to the extent of the reduction, the right becomes a right of APRA. Note 5: A capital gain or loss you make because, under section 62ZZL of the Insurance Act 1973 , you dispose of a CGT asset consisting of your rights against a general insurance company to APRA is disregarded: see section 322 ‑ 30 of this Act. Compulsory acquisition (6) If the asset was * acquired from you by an entity under a power of compulsory acquisition conferred by an * Australian law or a * foreign law, the time of the event is the earliest of: (a) when you received compensation from the entity; or (b) when the entity became the asset’s owner; or (c) when the entity entered it under that power; or (d) when the entity took possession under that power. Note: You may be able to choose a roll ‑ over if an asset is compulsorily acquired: see Subdivision 124 ‑ B.

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)) | Amended by No 173 of 2000, effective s 4, Sch 1, Sch 3 (items 1–15, 17), Sch 4 (items 6–45, 47–49, 51–59, 65(1), (3)) and Sch 6: 21 Dec 2000 (s 2(1)) Sch 4 (items 46, 50): 1 July 1998 (s 2(3)) Sch 5: 31 May 2000 (s 2(4)) | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 42 of 2009, effective Schedule 1 (items 17–26), Schedule 2 (items 2–16, 19–39, 41–48), Schedule 4 (items 2–12), Schedule 5 (items 1–12, 15) and Schedule 8 (items 1, 2, 5): Royal Assent Sch 2 (item 1): 21 June 2007 (s 2(1) item 3) Schedule 3: 1 July 2009 Schedule 8 (items 3, 4): 1 July 2011 | Amended by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13) | Amended by No 119 of 2013, effective Sch 1: 30 June 2013 (s 2(1) item 2) Remainder: 29 June 2013(s 2(1) items 1, 3, 4)

s 104-15 — Use and enjoyment before title passes: CGT event B1

(1) CGT event B1 happens if you enter into an agreement with another entity under which: (a) the right to the use and enjoyment of a * CGT asset you own passes to the other entity; and (b) title in the asset will or may pass to the other entity at or before the end of the agreement. Note: Division 240 provides for the inclusion of amounts under hire purchase agreements in assessable income. (2) The time of the event is when the other entity first obtains the use and enjoyment of the asset. (3) You make a capital gain if the * capital proceeds from the agreement are more than the asset’s * cost base. You make a capital loss if those capital proceeds are less than the asset’s * reduced cost base. Exceptions (4) A * capital gain or * capital loss you make is disregarded if: (a) title in the asset does not pass to the other entity at or before the end of the agreement; or (b) you * acquired the asset before 20 September 1985.

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)) | Amended by No 114 of 2000, effective Schedule 4 (items 43, 44): 1 July 1998 Remainder: Royal Assent | Amended by No 72 of 2001, effective 30 June 2001 | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 104-20 — Loss or destruction of a CGT asset: CGT event C1

(1) CGT event C1 happens if a * CGT asset you own is lost or destroyed. Note: This event can apply to part of a CGT asset: see section 108 ‑ 5 (definition of CGT asset ). (2) The time of the event is: (a) when you first receive compensation for the loss or destruction; or (b) if you receive no compensation—when the loss is discovered or the destruction occurred. (3) You make a capital gain if the * capital proceeds from the loss or destruction are more than the asset’s * cost base. You make a capital loss if those capital proceeds are less than the asset’s * reduced cost base. Exception (4) A * capital gain or * capital loss you make is disregarded if you * acquired the asset before 20 September 1985.

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 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 104-25 — Cancellation, surrender and similar endings: CGT event C2

(1) CGT event C2 happens if your ownership of an intangible * CGT asset ends by the asset: (a) being redeemed or cancelled; or (b) being released, discharged or satisfied; or (c) expiring; or (d) being abandoned, surrendered or forfeited; or (e) if the asset is an option—being exercised; or (f) if the asset is a * convertible interest—being converted. (2) The time of the event is: (a) when you enter into the contract that results in the asset ending; or (b) if there is no contract—when the asset ends. (3) You make a capital gain if the * capital proceeds from the ending are more than the asset’s * cost base. You make a capital loss if those capital proceeds are less than the asset’s * reduced cost base. Note: The capital proceeds referred to in this subsection are reduced if the gain or loss was for shares and an amount was taken into account as a capital gain for the shares under former section 160ZL of the Income Tax Assessment Act 1936 for the 1997 ‑ 98 income year or an earlier income year: see section 104 ‑ 25 of the Income Tax (Transitional Provisions) Act 1997 . (4) A lease is taken to have expired even if it is extended or renewed. Exceptions (5) A * capital gain or * capital loss you make is disregarded if: (a) you * acquired the asset before 20 September 1985; or (b) for a lease that you granted: (i) it was granted before that day; or (ii) if it has been renewed or extended—the start of the last renewal or extension occurred before that day. Note 1: There are other exceptions if: • your lease expires and you did not use it mainly to produce assessable income: see section 118 ‑ 40; or • you exercise rights to acquire shares or units: see section 130 ‑ 40; or • you acquire shares or units by converting a convertible interest: see section 130 ‑ 60; or • you exercise an option: see section 134 ‑ 1. Note 2: A company can agree to forgo any capital loss it makes as a result of forgiving a commercial debt owed to it by another company where the companies are under common ownership: see section 245 ‑ 90. Note 3: A capital gain or loss a company makes because shares in its 100% subsidiary are cancelled (an example of CGT event C2) on the liquidation of the subsidiary may be reduced if there was a roll ‑ over for a CGT asset under Subdivision 126 ‑ B: see section 126 ‑ 85. Note 5: Cost base adjustments are made only under Subdivision 125 ‑ B if there is a roll ‑ over under that Subdivision for CGT event C2 happening as a result of a demerger. Note 6: A capital gain or loss made by a demerging entity from CGT event C2 happening as a result of a demerger is also disregarded: see section 125 ‑ 155. Note 7: A capital gain or loss you make from the meeting of your entitlement under Division 2AA (Financial claims scheme for account ‑ holders with insolvent ADIs) of Part II of the Banking Act 1959 or Part VC (Financial claims scheme for account ‑ holders with insolvent general insurers) of the Insurance Act 1973 is disregarded: see sections 253 ‑ 10 and 322 ‑ 30 of this Act.

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)) | Amended by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 114 of 2000, effective Schedule 4 (items 43, 44): 1 July 1998 Remainder: Royal Assent | Amended by No 173 of 2000, effective s 4, Sch 1, Sch 3 (items 1–15, 17), Sch 4 (items 6–45, 47–49, 51–59, 65(1), (3)) and Sch 6: 21 Dec 2000 (s 2(1)) Sch 4 (items 46, 50): 1 July 1998 (s 2(3)) Sch 5: 31 May 2000 (s 2(4)) | Amended by No 163 of 2001, effective 1 July 2001 | Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 42 of 2009, effective Schedule 1 (items 17–26), Schedule 2 (items 2–16, 19–39, 41–48), Schedule 4 (items 2–12), Schedule 5 (items 1–12, 15) and Schedule 8 (items 1, 2, 5): Royal Assent Sch 2 (item 1): 21 June 2007 (s 2(1) item 3) Schedule 3: 1 July 2009 Schedule 8 (items 3, 4): 1 July 2011 | Amended by No 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 135 of 2015, effective Sch 1: 13 Oct 2015 (s 2(1) item 2)

s 104-30 — End of option to acquire shares etc.: CGT event C3

(1) CGT event C3 happens if an option a company or a trustee of a unit trust granted to an entity to * acquire a * CGT asset that is: (a) * shares in the company or units in the unit trust; or (b) * debentures of the company or unit trust; ends in one of these ways: (c) it is not exercised by the latest time for its exercise; (d) it is cancelled; (e) it is released or abandoned. (2) The time of the event is when the option ends. (3) The company or trustee makes a capital gain if the * capital proceeds from the grant of the option are more than the expenditure incurred in granting it. It makes a capital loss if those capital proceeds are less . (4) The expenditure can include giving property: see section 103 ‑ 5. However, it does not include an amount you have received as * recoupment of it and that is not included in your assessable income. Exception (5) A * capital gain or * capital loss the company or trustee makes is disregarded if it granted the option before 20 September 1985. Note: This subsection is modified for the purpose of calculating the attributable income of a CFC: see section 418 of the Income Tax Assessment Act 1936 .

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)) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 104-35 — Creating contractual or other rights: CGT event D1

(1) CGT event D1 happens if you create a contractual right or other legal or equitable right in another entity. Example: You enter into a contract with the purchaser of your business not to operate a similar business in the same town. The contract states that $20,000 was paid for this. You have created a contractual right in favour of the purchaser. If you breach the contract, the purchaser can enforce that right. (2) The time of the event is when you enter into the contract or create the other right. (3) You make a capital gain if the * capital proceeds from creating the right are more than the * incidental costs you incurred that relate to the event. You make a capital loss if those capital proceeds are less . Example: To continue the example: If you paid your lawyer $1,500 to draw up the contract, you make a capital gain of: (4) The costs can include giving property: see section 103 ‑ 5. However, they do not include an amount you have received as * recoupment of them and that is not included in your assessable income, or an amount to the extent that you have deducted or can deduct it. Exceptions (5) CGT event D1 does not happen if: (a) you created the right by borrowing money or obtaining credit from another entity; or (b) the right requires you to do something that is another * CGT event that happens to you; or (c) a company issues or allots * equity interests or * non ‑ equity shares in the company; or (d) the trustee of a unit trust issues units in the trust; or (e) a company grants an option to acquire equity interests, non ‑ equity shares or * debentures in the company; or (f) the trustee of a unit trust grants an option to acquire units or debentures in the trust; or (g) you created the right by creating in another entity a right to receive an * exploration benefit under a * farm ‑ in farm ‑ out arrangement. Example: You agree to sell land. You have created a contractual right in the buyer to enforce completion of the transaction. The sale results in you disposing of the land, an example of CGT event A1. This means that CGT event D1 does not happen.

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)) | Amended by No 114 of 2000, effective Schedule 4 (items 43, 44): 1 July 1998 Remainder: Royal Assent | Amended by No 163 of 2001, effective 1 July 2001 | Amended by No 162 of 2005, effective Schedule 2 (items 1–13), Schedule 3 (items 1–3, 16–19, 33) and Schedule 6 (items 28–32): Royal Assent Schedule 6 (items 1–5, 7–13): 1 July 2005 Sch 6 (items 6, 16–25): 1 July 2001 (s 2(1) items 4, 6) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 130 of 2015, effective s 4, Sch 1 (items 1–3, 5–21) and Sch 3 (items 1–5): 16 Sept 2015 (s 2(1) items 1, 2, 4) Sch 2: 1 July 2015 (s 2(1) item 3) Sch 4 (items 1–52, 54–58): 17 Sept 2015 (s 2(1) item 5)

s 104-40 — Granting an option: CGT event D2

(1) CGT event D2 happens if you grant an option to an entity, or renew or extend an option you had granted. Note: Some options are not covered: see subsections (6) and (7). (2) The time of the event is when you grant, renew or extend the option. (3) You make a capital gain if the * capital proceeds from the grant, renewal or extension of the option are more than the expenditure you incurred to grant, renew or extend it. You make a capital loss if those capital proceeds are less . (4) The expenditure can include giving property: see section 103 ‑ 5. However, it does not include an amount you have received as * recoupment of it and that is not included in your assessable income, or an amount to the extent that you have deducted or can deduct it. Exceptions (5) A * capital gain or * capital loss you make from the grant, renewal or extension of the option is disregarded if the option is exercised. Note 1: Section 134 ‑ 1 sets out the consequences of an option being exercised. Note 2: A capital gain or capital loss you made for the 1997 ‑ 98 income year or an earlier income year under former Part IIIA of the Income Tax Assessment Act 1936 is also disregarded where the option is exercised in the 1998 ‑ 99 income year or a later one: see section 104 ‑ 40 of the Income Tax (Transitional Provisions) Act 1997 . (6) This section does not apply to an option granted, renewed or extended by a company or the trustee of a unit trust to * acquire a * CGT asset that is: (a) * shares in the company or units in the unit trust; or (b) debentures of the company or unit trust. Note: Section 104 ‑ 30 deals with this situation. (7) Nor does it apply to an option relating to a * personal use asset or a * collectable.

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)) | Amended by No 114 of 2000, effective Schedule 4 (items 43, 44): 1 July 1998 Remainder: Royal Assent | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 104-45 — Granting a right to income from mining: CGT event D3

(1) CGT event D3 happens if you own a * prospecting entitlement or * mining entitlement, or an interest in one, and you grant another entity a right to receive * ordinary income or * statutory income from operations permitted to be carried on by the entitlement. Note: If this event applies, there is no disposal of the entitlement. (2) The time of the event is: (a) when you enter into the contract with the other entity; or (b) if there is no contract—when you grant the right to receive * ordinary income or * statutory income. (3) You make a capital gain if the * capital proceeds from the grant of the right are more than the expenditure you incurred in granting it. You make a capital loss if those capital proceeds are less . (4) The expenditure can include giving property: see section 103 ‑ 5. However, it does not include an amount you have received as * recoupment of it and that is not included in your assessable income, or an amount to the extent that you have deducted or can deduct 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 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 104-47 — Conservation covenants: CGT event D4

(1) CGT event D4 happens if you enter into a * conservation covenant over land you own. (2) The time of the event is when you enter into the covenant. (3) You make a * capital gain if the * capital proceeds from entering into the covenant are more than that part of the * cost base of the land that is apportioned to the covenant. You make a * capital loss if those capital proceeds are less than the part of the * reduced cost base of the land that is apportioned to the covenant. Note: The capital proceeds from entering into the covenant are modified if you do not receive anything for entering into the covenant: see section 116 ‑ 105. (4) The part of the * cost base of the land that is apportioned to the covenant is worked out in this way: The part of the * reduced cost base of the land that is apportioned to the covenant is worked out similarly. (5) The * cost base and * reduced cost base of the land are reduced by the part of the cost base or reduced cost base of the land that is apportioned to the covenant. Example: Lisa receives $10,000 for entering into a conservation covenant that covers 15% of the land she owns. Lisa uses the following figures in calculating the cost base of the land that is apportioned to the covenant: The cost base of the entire land is $200,000. The market value of the entire land before entering into the covenant is $300,000, and its market value after entering into the covenant is $285,000. Lisa calculates the cost base of the land that is apportioned to the covenant to be: She reduces the cost base of the land by the part that is apportioned to the covenant: Exceptions (6) * CGT event D4 does not happen if: (a) you did not receive any * capital proceeds for entering into the covenant; and (b) you cannot deduct an amount under Division 31 for entering into the covenant. Note: In this case, CGT event D1 will apply. (7) A * capital gain or * capital loss you make is disregarded if you * acquired the land before 20 September 1985.

Amendment history: Inserted by No 167 of 2001, effective Sch 4 (items 8–10) and Sch 7 and 8: 1 Oct 2001 (s 2(1)) | Amended by No 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)

s 104-55 — Creating a trust over a CGT asset: CGT event E1

(1) CGT event E1 happens if you create a trust over a * CGT asset by declaration or settlement. Note: A change in the trustee of a trust does not constitute a change in the entity that is the trustee of the trust (see subsection 960 ‑ 100(2)). This means that CGT event E1 will not happen merely because of a change in the trustee. (2) The time of the event is when the trust over the asset is created. (3) You make a capital gain if the * capital proceeds from the creation are more than the asset’s * cost base. You make a capital loss if those capital proceeds are less than the asset’s * reduced cost base. Cost base rule (4) If you are the trustee of the trust and no beneficiary is absolutely entitled to the asset as against you (disregarding any legal disability), the first element of the asset’s * cost base and * reduced cost base in your hands is its * market value when the trust is created. Exceptions (5) CGT event E1 does not happen if you are the sole beneficiary of the trust and: (a) you are absolutely entitled to the asset as against the trustee (disregarding any legal disability); and (b) the trust is not a unit trust. (6) A * capital gain or * capital loss you make is disregarded if you * acquired the asset before 20 September 1985.

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 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 104-60 — Transferring a CGT asset to a trust: CGT event E2

(1) CGT event E2 happens if you transfer a * CGT asset to an existing trust. Note: A change in the trustee of a trust does not constitute a change in the entity that is the trustee of the trust (see subsection 960 ‑ 100(2)). This means that CGT event E2 will not happen merely because of a change in the trustee. (2) The time of the event is when the asset is transferred. (3) You make a capital gain if the * capital proceeds from the transfer are more than the asset’s * cost base. You make a capital loss if those capital proceeds are less than the asset’s * reduced cost base. (4) If you are the trustee of the trust and no beneficiary is absolutely entitled to the asset as against you (disregarding any legal disability), the first element of the asset’s * cost base and * reduced cost base in your hands is its * market value when the asset is transferred. Exceptions (5) CGT event E2 does not happen if you are the sole beneficiary of the trust and: (a) you are absolutely entitled to the asset as against the trustee (disregarding any legal disability); and (b) the trust is not a unit trust. (6) A * capital gain or * capital loss you make is disregarded if you * acquired the asset before 20 September 1985.

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 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 173 of 2000, effective s 4, Sch 1, Sch 3 (items 1–15, 17), Sch 4 (items 6–45, 47–49, 51–59, 65(1), (3)) and Sch 6: 21 Dec 2000 (s 2(1)) Sch 4 (items 46, 50): 1 July 1998 (s 2(3)) Sch 5: 31 May 2000 (s 2(4)) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 104-65 — Converting a trust to a unit trust: CGT event E3

(1) CGT event E3 happens if: (a) a trust (that is not a unit trust) over a * CGT asset is converted to a unit trust; and (b) just before the conversion, a beneficiary under the trust was absolutely entitled to the asset as against the trustee (disregarding any legal disability the beneficiary is under). (2) The time of the event is when the trust is converted. (3) The beneficiary makes a capital gain if the * market value of the asset (when the trust is converted) is more than the asset’s * cost base. The beneficiary makes a capital loss if that market value is less than the asset’s * reduced cost base. Exception (4) A * capital gain or * capital loss the beneficiary makes is disregarded if it * acquired the asset before 20 September 1985.

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)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 104-70 — Capital payment for trust interest: CGT event E4

(1) CGT event E4 happens if: (a) the trustee of a trust makes a payment to you in respect of your unit or your interest in the trust (except for * CGT event A1, C2, E1, E2, E6 or E7 happening in relation to it); and (b) some or all of the payment (the non ‑ assessable part ) is not included in your assessable income. To avoid doubt, in applying paragraph (b) to work out what part of the payment is included in your assessable income, disregard your share of the trust’s net income that is subject to the rules in subsection 115 ‑ 215(3). Note 1: Subsections 104 ‑ 71(1) (tax ‑ exempted amounts), 104 ‑ 71(3) (tax ‑ free amounts) and 104 ‑ 71(4) (CGT concession amounts) can affect the calculation of the non ‑ assessable part. Note 2: The non ‑ assessable part includes amounts (tax ‑ deferred amounts) associated with the small business 50% reduction, frozen indexation, building allowance and accounting differences in income. Note 3: A payment made to you after you stop owning the unit or interest in the trust forms part of the capital proceeds for the CGT event that happened when you stopped owning it. (1A) However, CGT event E4 does not happen if the unit or interest mentioned in subsection (1) is a unit or interest in an * AMIT. (2) The payment can include giving property (see section 103 ‑ 5). (3) The time of the event is: (a) just before the end of the income year in which the trustee makes the payment; or (b) if another * CGT event (except CGT event E4) happens in relation to the unit or interest or part of it after the trustee makes the payment but before the end of that income year—just before the time of that other CGT event. (4) You make a capital gain if the sum of the amounts of the non ‑ assessable parts of the payments made in the income year made by the trustee in respect of the unit or interest is more than its * cost base. Note: You cannot make a capital loss. (5) If you make a * capital gain, the * cost base and * reduced cost base of the unit or interest are reduced to nil. Note: A capital gain under former section 160ZM of the Income Tax Assessment Act 1936 is also taken into account for the purposes of this subsection: see subsection 104 ‑ 70(3) of the Income Tax (Transitional Provisions) Act 1997 . (6) However, if that sum is not more than the * cost base: (a) the cost base is reduced by that sum; and (b) the * reduced cost base is reduced by that sum (without the adjustment in subsection 104 ‑ 71(3)). Example: Mandy owns units in a unit trust that she bought on 1 July 1998 for $10 each. During the 1999 ‑ 2000 income year the trustee makes 4 non ‑ assessable payments of $0.50 per unit. If at the end of the income year Mandy’s cost base for each unit (including indexation) would otherwise be $10.10, the payments require that it be reduced by $2, giving a new cost base of $8.10. If Mandy sells the units (CGT event A1) in the 2000 ‑ 01 year for more than their cost base at that time, she will make a capital gain equal to the difference. Note: Cost base adjustments are made only under Subdivision 125 ‑ B if there is a roll ‑ over under that Subdivision for CGT event E4 happening as a result of a demerger. Exceptions (7) A * capital gain you make from * CGT event E4 is disregarded if you * acquired the * CGT asset that is the unit or interest before 20 September 1985. (8) CGT event E4 does not happen to the extent that the payment is reasonably attributable to a * LIC capital gain. (9) CGT event E4 does not happen for a payment made to a foreign resident to the extent that the payment is reasonably attributable to * ordinary income or * statutory income from sources other than an * Australian source. However, this exception does not apply if the trust is a * public trading trust.

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)) | Amended by No 165 of 1999, effective s 4, Sch 1 (items 1–53, 61, 62), Sch 2, Sch 3 (items 1–4, 18) and Sch 4: 10 Dec 1999 (s 2(1), (2)) | Amended by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Amended by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 173 of 2000, effective s 4, Sch 1, Sch 3 (items 1–15, 17), Sch 4 (items 6–45, 47–49, 51–59, 65(1), (3)) and Sch 6: 21 Dec 2000 (s 2(1)) Sch 4 (items 46, 50): 1 July 1998 (s 2(3)) Sch 5: 31 May 2000 (s 2(4)) | Repealed and substituted by No 168 of 2001, effective Schedule 2: 1 July 2000 Remainder: Royal Assent | Amended by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 21 of 2005, effective 21 Mar 2005 | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)