Income Tax Assessment Act 1997

s 247-30 — Exercise or expiry of option

(1) If the * capital protection under a * capital protected borrowing is invoked: (a) the borrower is taken to have exercised the put option; and (b) any interest in a * share, unit in a unit trust or stapled security that is acquired by the lender or another entity under the * arrangement as a result of that capital protection being invoked is taken to have been disposed of by the borrower as a result of the exercise of the option. (2) If the * capital protection under a * capital protected borrowing is not invoked on or before the last occasion on which it could have been, the put option is taken to have expired. Note: If a borrower under a capital protected borrowing holds the protected things on capital account, the exercise or expiry of the put option may give rise to a capital gain or capital loss: see sections 104 ‑ 25 (CGT event C2) and 134 ‑ 1 (exercise of options).

Amendment history: Inserted by No 55 of 2007, effective 12 Apr 2007

s 250-1 — What this Division is about

This Division denies or reduces certain capital allowance deductions that would otherwise be available to you in relation to an asset if the asset is put to a tax preferred use in certain circumstances. If the capital allowance deductions are denied or reduced, certain financial benefits in relation to the tax preferred use of the asset are assessed only to the extent of a notional gain component. This component is worked out on the basis of treating the arrangements under which the asset is put to a tax preferred use, and financial benefits are provided in relation to that tax preferred use, as a loan. Subdivision 250 ‑ E then applies to determine the amounts that are to be assessed.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-5 — Main objects

The main objects of this Division are: (a) to deny or reduce your * capital allowance deductions in respect of an asset if the asset is put to a * tax preferred use and you have insufficient economic interest in the asset; and (b) if your capital allowance deductions are denied or reduced, to treat the * arrangement for the tax preferred use of the asset as a loan that is taxed as a financial arrangement (on a compounding accruals basis).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-10 — When this Division applies to you and an asset

This Division applies to you and an asset at a particular time if: (a) the general test in section 250 ‑ 15 is satisfied in relation to you and the asset; and (b) none of the exclusions in sections 250 ‑ 20, 250 ‑ 25, 250 ‑ 30, 250 ‑ 40 and 250 ‑ 45 apply.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-15 — General test

This Division applies to you and an asset at a particular time if: (a) the asset is being * put to a tax preferred use; and (b) the * arrangement period for the * tax preferred use of the asset is greater than 12 months; and (c) * financial benefits in relation to the tax preferred use of the asset have been, will be or can reasonably be expected to be, * provided to you (or a * connected entity) by: (i) a * tax preferred end user (or a connected entity); or (ii) any * tax preferred entity (or a connected entity); or (iii) any entity that is a foreign resident; and (d) disregarding this Division, you would be entitled to a * capital allowance in relation to: (i) a decline in the value of the asset; or (ii) expenditure in relation to the asset; and (e) you lack a * predominant economic interest in the asset at that time.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 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)

s 250-20 — First exclusion—small business entities

This Division does not apply to you and an asset if: (a) you are a * small business entity for the income year in which the * arrangement period for the * tax preferred use of the asset starts; and (b) you choose to deduct amounts under Subdivision 328 ‑ D for the asset for that income year.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-25 — Second exclusion—financial benefits under minimum value limit

(1) This Division does not apply to you and an asset that is being * put to a tax preferred use under a particular * arrangement if, at the start of the * arrangement period, the total of the nominal values of all the * financial benefits that have been, or will be or can reasonably be expected to be, provided to you (or a * connected entity): (a) by * members of the tax preferred sector; and (b) in relation to the * tax preferred use of the asset or any other asset that is being, or is to be, put to a tax preferred use under the arrangement; does not exceed $5 million. (2) The amount referred to in subsection (1) is indexed annually. Note: Subdivision 960 ‑ M shows you how to index amounts.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-30 — Third exclusion—certain short term or low value arrangements

Certain short term or low value arrangements generally excluded (1) This Division does not apply to you and an asset that is being * put to a tax preferred use under a particular * arrangement if: (a) the * arrangement period for the * tax preferred use of the asset does not exceed: (i) 5 years if the asset is real property and the tax preferred use of the asset is a lease; or (ii) 3 years in any other case; or (b) at the start of the arrangement period, the total of the nominal values of all the * financial benefits that have been, will be or can reasonably be expected to be, provided to you (or a * connected entity): (i) by * members of the tax preferred sector; and (ii) in relation to the tax preferred use of the asset or any other asset that is being, or is to be, put to a tax preferred use under the arrangement; does not exceed: (iii) $50 million if the asset is real property and the tax preferred use of the asset is a lease; or (iv) $30 million in any other case; or (c) at the start of the arrangement period, the total of the values of all the assets that are put to a tax preferred use under the arrangement does not exceed: (i) $40 million if the asset is real property and the tax preferred use of the asset is a lease; or (ii) $20 million in any other case. This subsection has effect subject to section 250 ‑ 35. (2) The amounts referred to in paragraphs (1)(b) and (c) are indexed annually. Note: Subdivision 960 ‑ M shows you how to index amounts.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-35 — Exceptions to section 250 ‑ 30

Debt interests (1) Section 250 ‑ 30 does not apply if the * arrangement (either alone or together with any arrangement in relation to the * tax preferred use of the asset or the provision of * financial benefits in relation to the tax preferred use of the asset) is a * debt interest. (2) In applying subsection (1), disregard subsection 974 ‑ 130(4). Member of tax preferred sector having certain rights in relation to the asset (3) Section 250 ‑ 30 does not apply if: (a) a * member of the tax preferred sector has: (i) a right, obligation or contingent obligation to purchase or acquire the asset or a legal or equitable interest in the asset; or (ii) a right to require the transfer of the asset or a legal or equitable interest in the asset; or (iii) a residual or reversionary interest in the asset that will arise or become exercisable at or after the end of the * arrangement period; and (b) the consideration for the purchase, acquisition or transfer of the right, obligation or interest is not fixed as the * market value of the asset at the time of the purchase, acquisition or transfer. To avoid doubt, this subsection does not apply to the asset merely because your interest in the asset is one that ceases to exist after the passage of a particular period of time. Member of tax preferred sector providing financing (4) Section 250 ‑ 30 does not apply if a * member of the tax preferred sector provides financing, or support for financing, in relation to your interest in the asset (including by way of a loan, a guarantee, an indemnity, a security, hedging or undertaking to provide * financial benefits in the event of the termination of an * arrangement). Finance leases, non ‑ cancellable operating leases, service concessions and similar arrangements (5) Section 250 ‑ 30 does not apply if an * arrangement in relation to the * tax preferred use of the asset, or the provision of * financial benefits in relation to the tax preferred use of the asset, is or involves: (a) a finance lease; or (b) a non ‑ cancellable operating lease; or (c) a service concession or similar arrangement; that generally accepted accounting principles, as in force at the start of the * arrangement period, require to be included as an asset or a liability in your balance sheet. Financial benefits irregular, not based on comparable market ‑ based rates or not reflecting value of tax preferred use of asset (6) Section 250 ‑ 30 does not apply if the * financial benefits that have been, or are to be provided, to you (or a * connected entity) by * members of the tax preferred sector in relation to the * tax preferred use of the asset: (a) are not provided on a regular periodic basis (and at least annually); or (b) are not based on comparable market ‑ based rates; or (c) do not reflect the value of the tax preferred use of the asset. Special rules if tax preferred use is a lease or hire of the asset (7) If the * tax preferred use of the asset is a lease or hire of the asset (or the use of the asset under a lease or hire arrangement), section 250 ‑ 30 does not apply if: (a) the asset is so specialised that the * end user could not carry out one or more of its functions effectively without the asset; and (b) you would be unlikely to be able to re ‑ lease, re ‑ hire or resell the asset to another person who is not a * member of the tax preferred end user group. Note: For particular arrangements that are treated as leases, see section 250 ‑ 80. Special rules if tax preferred use is not a lease or hire of the asset (8) If the * tax preferred use of the asset is not the lease or hire of the asset (or the use of the asset under a lease or hire arrangement), section 250 ‑ 30 does not apply if: (a) a * member of the tax preferred sector has a right, if particular circumstances occur, to manage, or to assume control over, the asset (other than temporarily for the purpose of ensuring public health or safety, protecting the environment or continuing the supply of an essential service); or (b) the asset is so specialised that it is unlikely that it could effectively be put to any use other than the tax preferred use; or (c) neither you (nor a * connected entity) has effective day to day control and physical possession of the asset. Note: For particular arrangements that are treated as leases, see section 250 ‑ 80.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-40 — Fourth exclusion—sum of present values of financial benefits less than amount otherwise assessable

(1) This Division does not apply to you and an asset that is being * put to a tax preferred use under a particular * arrangement if, when that * tax preferred use of the asset starts, the Division 250 assessable amount is less than the alternative assessable amount. (2) For the purposes of subsection (1), the Division 250 assessable amount is the sum of the present values of all the amounts that would be likely to be included in your assessable income under this Division in relation to the * tax preferred use of the asset if this Division applied to you and the asset. (3) This is how to work out the alternative assessable amount for the purposes of subsection (1): Method statement Step 1. Add up the present values of the amounts that would be included in your assessable income in relation to the * financial benefits * provided in relation to the tax preferred use of the asset during the * arrangement period if this Division did not apply to you and the asset. Step 2. Add up the present values of the amounts that you would be able to deduct in relation to the asset, or expenditure in relation to the asset, under Division 40 or Division 43 in relation to the * arrangement period if this Division did not apply to you and the asset. Step 3. Deduct the amount obtained in Step 2 from the amount obtained in Step 1. The result is the alternative assessable amount . (4) To avoid doubt, the amounts referred to in subsections (2) and (3) are all the amounts that would be likely to be included in your assessable income, or deducted, for all the income years during the whole, or a part, of which the asset is * put to the tax preferred use. (5) The point in time to be used in determining, for the purposes of this section: (a) the present value of an amount that is included in your assessable income for an income year; or (b) the present value of an amount that you would be able to deduct for an income year; is the end of the income year.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-45 — Fifth exclusion—Commissioner determination

This Division does not apply to you and an asset at a particular time if: (a) you request the Commissioner to make a determination under this subsection; and (b) the Commissioner determines that it is unreasonable that the Division should apply to you and the asset at that time, having regard to: (i) the circumstances because of which this Division would apply to you and the asset; and (ii) any other relevant circumstances.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-50 — End user of an asset

(1) An entity (other than you) is an end user of an asset if the entity (or a * connected entity): (a) uses, or effectively controls the use of, the asset; or (b) will use, or effectively control the use of, the asset; or (c) is able to use, or effectively control the use of, the asset; or (d) will be able to use, or effectively control the use of, the asset. (2) The control referred to in subsection (1) may be direct or indirect. (3) For the purposes of subsection (1), disregard any temporary control of the asset that is for the purpose of ensuring public health or safety, protecting the environment or continuing the supply of an essential service. (4) To avoid doubt, an entity is taken to be an end user of an asset if the entity (or a * connected entity) holds rights as a lessee under a lease of the asset. Note: For particular arrangements that are treated as leases, see section 250 ‑ 80.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-55 — Tax preferred end user

An * end user of an asset is a tax preferred end user if: (a) the end user (or a * connected entity) is a * tax preferred entity; or (b) the end user is: (i) an entity that is a foreign resident; or (ii) an entity that is an Australian resident, to the extent that the entity carries on * business in a foreign country at or through a * permanent establishment of the entity in that country.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 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 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 250-60 — Tax preferred use of an asset

(1) An asset is put to a tax preferred use at a particular time if: (a) an * end user (or a * connected entity) holds, at that time, rights as lessee under a lease of the asset; and (b) either or both of the following subparagraphs is satisfied at that time: (i) the asset is, or is to be, used by or on behalf of an end user who is a * tax preferred end user because of paragraph 250 ‑ 55(a) (tax preferred entity); (ii) the asset is, or is to be, used wholly or principally outside Australia and an end user of the asset is a tax preferred end user because of paragraph 250 ‑ 55(b) (foreign resident or business). If this subsection applies, the tax preferred use of the asset is the lease referred to in paragraph (a). Note: For particular arrangements that are treated as leases, see section 250 ‑ 80. (2) An asset is also put to a tax preferred use at a particular time if: (a) at that time the asset is, or is to be, used (whether or not by you) wholly or partly in connection with: (i) the production, supply, carriage, transmission or delivery of goods; or (ii) the provision of services or facilities; and (b) either or both of the following subparagraphs is satisfied at that time: (i) some or all of the goods, services or facilities are, or are to be, produced for or supplied, carried, transmitted or delivered to or for an * end user who is a * tax preferred end user because of paragraph 250 ‑ 55(a) (tax preferred entity) but is not an * exempt foreign government agency; (ii) the asset is, or is to be, used wholly or principally outside Australia and an end user of the asset is a tax preferred end user because of paragraph 250 ‑ 55(b) (foreign resident or business). If this subsection applies, the tax preferred use of the asset is the production, supply, carriage, transmission, delivery or provision referred to in paragraph (a). (3) To avoid doubt, the facilities referred to in subsection (2) include: (a) hospital or medical facilities; or (b) prison facilities; or (c) educational facilities; or (e) transport facilities; or (f) the supply of water, gas or electricity; or (g) housing or accommodation; or (h) premises from which to operate a * business or other undertaking. (4) If the asset is being * put to a tax preferred use: (a) the members of the tax preferred end user group are: (i) the * tax preferred end user; and (ii) the * connected entities of the tax preferred end user; and (b) the members of the tax preferred sector are: (i) the tax preferred end user (and connected entities); and (ii) any * tax preferred entity (or a connected entity); and (iii) any entity that is a foreign resident.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 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 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011 | Amended by No 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 250-65 — Arrangement period for tax preferred use

Start of the arrangement period (1) The arrangement period for a particular * tax preferred use of an asset starts when that tax preferred use of the asset starts. End of the arrangement period (2) Subject to subsection (3), the arrangement period for a particular * tax preferred use of an asset is taken to end on the day that is the date on which the tax preferred use of the asset may reasonably be expected, or is likely, to end. (3) The arrangement period for the * tax preferred use of the asset ends when this Division ceases to apply to you and the asset if that happens before the day referred to in subsection (2). (4) In determining when a particular * tax preferred use of an asset is likely to end: (a) regard must be had to: (i) the terms of, and any other circumstances relating to, any * arrangement dealing with that tax preferred use of the asset; and (ii) the terms of, and any other circumstances relating to, any arrangement dealing with the * provision of * financial benefits in relation to that tax preferred use of the asset; and (b) it must be assumed that any right that an entity has to renew or extend such an arrangement will not be exercised (unless it is reasonable to assume that the right will be exercised because of the commercial consequences for the entity (or a * connected entity) of not exercising the right). Tax preferred uses of asset by entity and connected entity (5) For the purposes of this section: (a) the * tax preferred use of an asset by an entity; and (b) the tax preferred use of the asset by a * connected entity of that entity; are taken to constitute a single tax preferred use of the asset.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-70 — New tax preferred use at end of arrangement period if tax preferred use continues

If: (a) this Division applies to you and an asset because the asset is * put to a tax preferred use; and (b) the * arrangement period for the * tax preferred use of the asset ends on a particular date (the termination date ); and (c) the asset continues to be put to the tax preferred use after the termination date; the tax preferred use of the asset after the termination date is taken to be a separate and distinct tax preferred use of the asset from the tax preferred use of the asset before the termination date. Note: This means, among other things, that there is a new arrangement period for the tax preferred use after the termination date and that the arrangement is retested under section 250 ‑ 15 against circumstances as they stand immediately after the termination date.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-75 — What constitutes a separate asset for the purposes of this Division

(1) This Division applies to: (a) an improvement to land; or (b) a fixture on land; whether the improvement or fixture is removable or not, as if it were an asset separate from the land. (2) Whether a particular composite item is itself an asset or whether its components are separate assets is a question of fact and degree which can only be determined in the light of all the circumstances of the particular case. Example 1: A car is made up of many separate components, but usually the car is an asset rather than each component. Example 2: A floating restaurant consists of many separate components (like the ship itself, stoves, fridges, furniture, crockery and cutlery), but usually these components are treated as separate assets. (3) This Division applies to a renewal or extension of an asset that is a right as if the renewal or extension were a continuation of the original right. (4) This Division applies to an asset (the underlying asset ) in which: (a) you have an interest; and (b) one or more other entities also have an interest; as if your interest in the underlying asset were itself the underlying asset.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-80 — Treatment of particular arrangements in the same way as leases

This Division applies to an * arrangement that: (a) in substance or effect, depends on the use of a specific asset that is: (i) real property; or (ii) goods or a personal chattel (other than money or a money equivalent); and (b) gives a right to control the use of the asset (other than temporarily for the purpose of ensuring public health or safety, protecting the environment or continuing the supply of an essential service); and (c) is not a lease; in the same way as it applies to a lease. Note: Even if this section applies to treat an arrangement in relation to an asset as a lease, the requirements in section 250 ‑ 50 still need to be satisfied before an entity can be an end user of the asset.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-85 — Financial benefits in relation to tax preferred use of an asset

(1) For the purposes of this Division, the * financial benefits provided in relation to a tax preferred use of an asset include (but are not limited to): (a) a financial benefit provided in relation to: (i) bringing the asset into a state, condition or location in which it can be * put to the tax preferred use; or (ii) the start of the * tax preferred use of the asset; and (b) a financial benefit provided in relation to the end of the tax preferred use of the asset; and (c) a financial benefit provided in relation to the termination or expiration of an * arrangement that deals with: (i) the tax preferred use of the asset; or (ii) the provision of financial benefits in relation to the tax preferred use of the asset; and (d) a financial benefit provided in relation to the purchase or acquisition of the asset by, or transfer of the asset to, the * tax preferred end user (or a * connected entity). (2) Without limiting paragraph (1)(b), if the asset has a * guaranteed residual value: (a) the amount of the guaranteed residual value is taken to be a * financial benefit provided in relation to the tax preferred use of the asset ; and (b) that financial benefit is taken to be provided when the relevant payment is made in relation to the guaranteed residual value. (3) The asset has a guaranteed residual value if there is an * arrangement that provides to the effect that if: (a) on or after the end of the * arrangement period, you (or a * connected entity) sell or otherwise dispose of the asset to any person; and (b) you (or a connected entity) receives in respect of the sale or disposal: (i) no consideration; or (ii) consideration that is less than an amount (the guaranteed amount ) specified in, or ascertainable under, the provision; a * member of the tax preferred sector will pay to you (or a connected entity), or to someone else for your benefit (or for the benefit of a connected entity), an amount equal to: (c) the guaranteed amount if subparagraph (b)(i) applies; or (d) the amount by which the guaranteed amount exceeds the consideration if subparagraph (b)(ii) applies. The amount of the guaranteed residual value is taken to be the guaranteed amount. (4) If: (a) an asset is * put to a tax preferred use; and (b) an entity is an * end user of the asset because the entity manages the asset or the use to which the asset is put; any * financial benefit that the entity (or a * connected entity) provides that is calculated by reference to the receipts, revenue or income generated by the use of the asset is also taken to be a financial benefit provided in relation to the tax preferred use of the asset . (5) For the purposes of this Division (other than this subsection), a * financial benefit provided by a * member of the tax preferred sector is taken not to be provided in relation to the tax preferred use of an asset to the extent to which the financial benefit merely passes on, or represents: (a) financial benefits provided in relation to the use of the asset; or (b) something derived from the use of the asset; by someone who is not a member of the tax preferred sector. (6) For the purposes of this Division, disregard a * financial benefit * provided in relation to the tax preferred use of the asset to the extent to which it consists solely of routine maintenance of the asset. (7) For the purposes of this Division, if a * financial benefit is provided in relation to the use of a number of assets, a separate financial benefit of an amount or value that is reasonably attributable to each asset is taken to be provided in relation to each asset. (8) To avoid doubt, a * financial benefit may be provided in relation to a tax preferred use of an asset even though it is provided before the * tax preferred use of the asset starts. (9) For the purposes of this Division: (a) a * financial benefit that is not an amount: (i) is taken to become due and payable when the entity providing the financial benefit becomes liable to provide the financial benefit; and (ii) is taken to be paid when it is provided; and (b) a financial benefit that is paid without becoming due and payable is taken to have become due and payable on the day on which it was paid.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-90 — Financial benefit provided directly or indirectly

For the purposes of this Division, a person (the provider ) is taken to provide a * financial benefit to a person (the recipient ) in relation to a * tax preferred use of an asset whether the financial benefit is provided to the recipient: (a) directly; or (b) indirectly (including indirectly through an entity that is not a * connected entity of the recipient and is not a connected entity of the provider).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-95 — Expected financial benefits in relation to an asset put to tax preferred use

For the purposes this Division, the expected financial benefits at a particular time in relation to an asset that is * put to a tax preferred use are the * financial benefits that, at that time: (a) have been; or (b) will, assuming normal operating conditions, be; or (c) can, assuming normal operating conditions, reasonably be expected to be; * provided in relation to the tax preferred use of the asset by a * member of the tax preferred sector to someone who is not a member of the tax preferred sector. Note: Paragraphs 250 ‑ 85(1)(b), (c) and (d) provide for certain benefits provided in relation to the end of the tax preferred use of the asset or in relation to the purchase, disposal or transfer of the asset to be treated as financial benefits provided in relation to the tax preferred use of the asset.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-100 — Present value of financial benefit that has already been provided

For the purposes of this Division, the present value of a * financial benefit at a particular time is the nominal amount or value of the financial benefit if the financial benefit has been provided before that time.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-105 — Discount rate to be used in working out present values

(1) For the purposes of section 250 ‑ 40, the discount rate to be used in working out the present value of a future amount is the * long term bond rate for the * financial year in which the relevant * arrangement period starts. (2) For the purposes of section 250 ‑ 135 and Subdivisions 250 ‑ C and 250 ‑ D, the discount rate to be used in working out the present value of a future amount is a rate that reflects a constant periodic rate of return (worked out on a compounding basis) on the investment in: (a) the asset referred to in subparagraph 250 ‑ 15(d)(i) if that subparagraph applies; or (b) the expenditure referred to in paragraph 250 ‑ 15(d)(ii) if that subparagraph applies; that is implicit in the * arrangements under which the asset is * put to a tax preferred use and * financial benefits are * provided in relation to that tax preferred use.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 14 of 2012, effective Sch 2 (items 11–16): never commenced (s 2(1) item 4) Sch 3 (items 7–85, 91): 1 July 2012 (s 2(1) items 5, 7)

s 250-110 — Predominant economic interest

You lack a predominant economic interest in an asset at a particular time only if one or more of the following sections apply to you and the asset at that time: (a) section 250 ‑ 115 (limited recourse debt test); (b) section 250 ‑ 120 (right to acquire asset test); (c) section 250 ‑ 125 (effectively non ‑ cancellable, long term arrangement test); (d) section 250 ‑ 135 (level of expected financial benefits test).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-115 — Limited recourse debt test

(1) You lack a predominant economic interest in an asset at a particular time if more than the allowable percentage of the cost of your acquiring or constructing the asset is financed (directly or indirectly) by a * limited recourse debt or debts. (2) For the purposes of subsection (1): (a) the amount of a * limited recourse debt is to be reduced by the value of any * debt property (other than the * financed property) that is provided as security for the debt; and (b) if the limited recourse debt finances the acquisition or construction of 2 or more assets, only the amount of the debt that is reasonably attributable to the asset referred to in subsection (1) is to be taken into account. (3) For the purposes of subsection (1), the allowable percentage is: (a) 80% if the asset is taken to be * put to a tax preferred use because of subparagraph 250 ‑ 60(1)(b)(i) or (2)(b)(i) (end use by * tax preferred entities); or (b) 55% if the asset is taken to be put to a tax preferred use because of subparagraph 250 ‑ 60(1)(b)(ii) or (2)(b)(ii) (end use by foreign residents or businesses). (4) This section does not apply to the asset if: (a) you are a * corporate tax entity; and (b) the * tax preferred use of the asset is not the lease or hire of the asset (and is not the use of the asset under a lease or hire arrangement); and (c) the asset is * put to the tax preferred use wholly or principally in Australia; and (d) no * member of the tax preferred sector provides financing, or support for financing, in relation to your interest in the asset (including by way of a loan, a guarantee, an indemnity, a security, hedging or undertaking to provide * financial benefits in the event of the termination of an * arrangement). (5) Paragraph (4)(b) does not apply if: (a) the asset is real property (or an interest in real property); and (b) the * tax preferred use of the asset is a lease; and (c) the space within the property that is occupied by tenants who are * members of the tax preferred sector is less than half of the total space within the property that is either occupied by tenants or available to be occupied by tenants. (6) This section also does not apply to the asset if: (a) you hold the asset as a trustee; and (b) the asset is real property (or an interest in real property); and (c) the * tax preferred use of the asset is a lease; and (d) the space within the property that is occupied by tenants who are * members of the tax preferred sector is less than half of the total space within the property that is either occupied by tenants or available to be occupied by tenants; and (e) the asset is * put to the tax preferred use wholly or principally in Australia; and (f) no member of the tax preferred sector provides financing, or support for financing, in relation to your interest in the asset (including by way of a loan, a guarantee, an indemnity, a security, hedging or undertaking to provide * financial benefits in the event of the termination of an * arrangement).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 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 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 250-120 — Right to acquire asset test

(1) You lack a predominant economic interest in an asset at a particular time if, at that time: (a) the asset is to be transferred to a * member of the tax preferred sector after the end of the * arrangement period; and (b) the consideration for the transfer is not fixed as the * market value of the asset at the time of the transfer. (2) You also lack a predominant economic interest in an asset at a particular time if, at that time: (a) a * member of the tax preferred end user group has, or will have: (i) a right, obligation or contingent obligation to purchase or acquire the asset or a legal or equitable interest in the asset; or (ii) a right to require the transfer of the asset or a legal or equitable interest in the asset; and (b) the consideration for the purchase, acquisition or transfer is not fixed as the * market value of the asset at the time of the purchase, acquisition or transfer. To avoid doubt, this section does not apply to the asset merely because your interest in the asset is one that ceases to exist after the passage of a particular period of time.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-125 — Effectively non ‑ cancellable, long term arrangement test

(1) You lack a predominant economic interest in an asset at a particular time if: (a) any * arrangement that relates to: (i) the * tax preferred use of the asset; or (ii) the * financial benefits to be * provided by the * members of the tax preferred sector in relation to the tax preferred use of the asset; is * effectively non ‑ cancellable (see section 250 ‑ 130); and (b) the * arrangement period for the tax preferred use of the asset is: (i) greater than 30 years; or (ii) if the arrangement period is less than or equal to 30 years—75% or more of that part of the asset’s * effective life that remains when the tax preferred use of the asset starts. (2) Disregard section 40 ‑ 102 in working out the asset’s * effective life for the purposes of subparagraph (1)(b)(ii).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-130 — Meaning of effectively non ‑ cancellable arrangement

(1) An * arrangement that relates to * financial benefits to be * provided by a * member of the tax preferred sector in relation to the tax preferred use of an asset is effectively non ‑ cancellable if: (a) the arrangement can be cancelled only with: (i) your permission; or (ii) the permission of a * connected entity of yours; or (iii) an agent or entity acting on your behalf (or on behalf of a connected entity of yours); or (b) the arrangement can be cancelled without the permission of an entity referred to in paragraph (a) but, if the arrangement were cancelled, the member of the tax preferred sector or another member of the tax preferred sector: (i) would be required to enter into a new arrangement for the * provision of financial benefits in relation to the tax preferred use of the asset; or (ii) would incur a penalty and the magnitude of the penalty would be such as to discourage cancellation. (2) For these purposes, if a * member of the tax preferred sector defaults under an * arrangement and the arrangement is cancelled, the arrangement is to be taken to have been cancelled without the permission of an entity referred to in paragraph (1)(a).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-135 — Level of expected financial benefits test

Effective guarantee or indemnity for value of asset (1) You lack a predominant economic interest in an asset at a particular time if the asset has a * guaranteed residual value at that time. Likely financial benefits exceeding 70% limit (2) You also lack a predominant economic interest in an asset at a particular time if, at that time: (a) the * arrangement under which the asset is * put to the tax preferred use (either alone or together with any other arrangement in relation to the * tax preferred use of the asset or the * provision of * financial benefits in relation to the tax preferred use of the asset) is a * debt interest; or (b) the sum of the present values of the * expected financial benefits that * members of the tax preferred sector have provided, or are or are reasonably likely to provide, to you (or a * connected entity) in relation to the tax preferred use of the asset exceeds 70% of: (i) the * market value of the asset if subparagraph 250 ‑ 15(d)(i) applies; or (ii) so much of the market value of the asset as is attributable to the expenditure referred to subparagraph 250 ‑ 15(d)(ii) if that subparagraph applies.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-140 — When to retest predominant economic interest under section 250 ‑ 135

Purpose for applying section (1) This section applies for the purposes of working out whether this Division applies to you and to an asset that is * put to a tax preferred use. No need to keep retesting if section 250 ‑ 135 does not apply at start of tax preferred use of asset (2) If section 250 ‑ 135 does not apply to you and the asset at the time when the * tax preferred use of the asset starts, that section is taken, subject to subsection (4), to continue not to apply to you and the asset. Note: This subsection means that if section 250 ‑ 135 does not apply to the arrangement when the tax preferred use of the asset starts, the arrangement does not need to be retested against section 250 ‑ 135 until a change of the kind referred to in subsection (4) occurs. No need to keep retesting if section 250 ‑ 135 does not apply when you do something to increase value of expected financial benefits (3) If: (a) you (or a * connected entity), or a * member of the tax preferred sector, do something, or omit to do something, at a particular time that increases the value of the * expected financial benefits in relation to the * tax preferred use of the asset; and (b) section 250 ‑ 135 does not apply to the asset at that time; that section is taken, subject to subsection (4), to continue not to apply to you and the asset. Note: This subsection means that if the arrangement is retested against section 250 ‑ 135 at a particular time and section 250 ‑ 135 does not apply to the arrangement on that retesting, the arrangement does not need to be again retested against section 250 ‑ 135 until a change of the kind referred to in subsection (4) occurs. Retesting when you do something to increase the value of expected financial benefits (4) Subsection (2) or (3) ceases to apply to you and the asset if you (or a * connected entity), or a * member of the tax preferred sector, do something, or omit to do something, that increases the value of the * expected financial benefits in relation to the * tax preferred use of the asset. Certain financial benefits ignored when retesting (5) For the purposes of reapplying section 250 ‑ 135 to the asset, disregard * financial benefits provided before subsection (2) or (3) of this section ceased to apply to the asset. Note: If: (a) subsection (2) or (3) ceases to apply to the asset at a particular time under this subsection; and (b) the asset is retested at that time against section 250 ‑ 135; and (c) on the retesting, that section is found to apply to the asset at that time; subsection (3) will start to apply to the asset again from that time because paragraph (3)(b) will have been satisfied. Clarification that retesting only required if you do something to increase value of expected benefits (6) To avoid doubt, subsection (2) or (3) does not cease to apply merely because the value of the * expected financial benefits in relation to the asset increase because of something other than action taken, or an omission made, by you (or a * connected entity) or a * member of the tax preferred sector. Note: This subsection means that retesting under subsection (4) is not triggered by an increase in the value of expected financial benefits that happens because of external circumstances (circumstances external to activities and omissions of yours, your connected entities and members of the tax preferred sector).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-145 — Denial of capital allowance deductions

(1) If this Division applies to you and an asset at a particular time, any condition that needs to be satisfied for you to be able to deduct an amount under a * capital allowance provision in relation to: (a) a decline in the value of the asset; or (b) expenditure in relation to the asset; is taken not to be satisfied at that time. (2) This section has effect subject to section 250 ‑ 150.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-150 — Apportionment rule

(1) This section applies if: (a) this Division applies to you and an asset that is * put to a tax preferred use; and (b) it is reasonable to expect that, during the * arrangement period for the * tax preferred use of the asset, particular * financial benefits will be provided to you (or a * connected entity); and (c) it is reasonable to expect that those financial benefits: (i) will be provided in relation to a use of the asset that is not that tax preferred use and is not a private use; or (ii) will be * provided in relation to that tax preferred use of the asset but will not be attributable, directly or indirectly, to financial benefits that are provided by * members of the tax preferred sector; and (d) the amount or value of those financial benefits is known or can reasonably be estimated; and (e) you choose to have this section apply to the asset. In applying paragraph (c), disregard financial benefits that are provided under an * arrangement that is a * debt interest. (2) A choice under paragraph (1)(e) in relation to an asset: (a) must be made before the due date for you to lodge your * income tax return for the income year in which the * arrangement period for the * tax preferred use of the asset starts; and (b) must be made for the whole of the arrangement period for the tax preferred use of the asset; and (c) must extend to all assets that are, or are to be, * put to a tax preferred use under the * arrangement under which the asset is put to that use; and (d) is irrevocable. The choice may extend to an asset referred to in paragraph (c) even if it is likely that paragraphs (1)(b) and (c) will not apply to that asset. (3) If this section applies, section 250 ‑ 145 applies to you and the asset only to the extent of the * disallowed capital allowance percentage. (4) Subject to subsection (6), the disallowed capital allowance percentage is the following ratio (expressed as a percentage): (5) The Commissioner may, before the due date for you to lodge your * income tax return for the income year to which the * arrangement period for the * tax preferred use of the asset starts, approve an alternative method for working out the * disallowed capital allowance percentage for you and the asset. (6) If the Commissioner approves an alternative method under subsection (5), the disallowed capital allowance percentage is the percentage worked out in accordance with that alternative method.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-155 — Arrangement treated as loan

Loan with characteristics provided for in this section taken to exist (1) If this Division applies to you and an asset at a particular time in an income year, a * financial arrangement in the form of a loan (with the characteristics provided for in this section) is taken to exist at that time for the purposes of working out your taxable income for that income year. Note: See Subdivision 250 ‑ E for the taxation treatment of the financial arrangement. Lender (2) You are taken to be the lender in relation to the loan. Amount lent and unpaid at the start of the arrangement period (3) The amount worked out under subsection (4) is taken to be the amount that you have lent, and that the borrower has not repaid, at the start of the * arrangement period. (4) The amount is worked out by taking: (a) the amount that, at the start of the * arrangement period, is: (i) the * adjustable value of the asset if subparagraph 250 ‑ 15(d)(i) applies; or (ii) the amount worked out under subsection (5) if subparagraph 250 ‑ 15(d)(ii) applies; or (b) if section 250 ‑ 150 applies—the amount that, at the start of the arrangement period, is the * disallowed capital allowance percentage of: (i) the adjustable value of the asset if subparagraph 250 ‑ 15(d)(i) applies; or (ii) the amount worked out under subsection (5) if subparagraph 250 ‑ 15(d)(ii) applies; and deducting the sum of all * financial benefits that are * subject to deemed loan treatment and that have become due and payable before the start of the arrangement period. (5) If subparagraph 250 ‑ 15(d)(ii) applies, the amount worked out under this subsection for the purposes of subsection (4) is: Item If the expenditure referred to in that subparagraph is ... the amount is ... 1 capital expenditure under Division 40 the amount of the capital expenditure in respect of which a deduction has not been allowed (disregarding this Division) under the relevant Subdivision of Division 40 2 capital expenditure under Division 43 the * undeducted construction expenditure in relation to the capital expenditure Amounts paid to you by borrower under the loan (6) Any * financial benefit that: (a) a person provides; and (b) is * subject to deemed loan treatment; is taken to be an amount that the borrower pays you under the loan. Note 1: Section 250 ‑ 160 tells you which financial benefits are subject to the deemed loan treatment. Note 2: These benefits may be ones that are provided either to you or to a connected entity. Period of the loan (7) The * arrangement period is taken to be the period of the loan. Applying Subdivision 250 ‑ E to the loan (8) For the purposes of applying Subdivision 250 ‑ E to the loan: (a) you are taken to have an overall gain from the loan and that overall gain is taken to be sufficiently certain at the time when you start to have the loan; and (b) the amount of that overall gain is taken to be the sum of the * financial benefits that are * subject to the deemed loan treatment less the amount worked out under subsection (4); and (c) you are taken: (i) to start to have the loan at the start of the * arrangement period; and (ii) to cease to have the loan at the end of the arrangement period; and (d) any right that you (or a connected entity) have to a financial benefit that is subject to deemed loan treatment is taken to be a right that you have under the loan; and (e) if a * connected entity transfers to another person a right to a financial benefit subject to deemed loan treatment: (i) you are taken to transfer the right to that other person; and (ii) any consideration that the connected entity receives in relation to the transfer is taken to be consideration that you receive in relation to the transfer; and (f) if a right that a connected entity has to a financial benefit subject to deemed loan treatment ceases and the connected entity receives consideration in relation to that cessation—you are taken to receive that consideration in relation to the cessation; and (g) you are taken to start to have the loan, or to cease to have the loan, as consideration for something if you start to have the rights to the financial benefits that are subject to deemed loan treatment, or cease to have those rights, as consideration for that thing; and (h) in applying sections 250 ‑ 265 to 250 ‑ 275: (i) the amount that you are taken, under subsections (3), (4) and (5), to have lent are the only financial benefits that you provide under the loan; and (ii) the financial benefits you have received under the loan are taken to include financial benefits that are subject to deemed loan treatment that a person is, at the end of the arrangement period, liable to provide to you. (9) If, under subsection 250 ‑ 160(2), a particular percentage of a reasonable estimate of the * end value of the asset was taken to be a * financial benefit that is * subject to the deemed loan treatment, subsection 250 ‑ 275(1) applies to the loan at the end of the * arrangement period as if you had received under the loan a financial benefit equal to the relevant percentage of the end value of the asset.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-160 — Financial benefits that are subject to deemed loan treatment

General rule (1) Subject to subsections (3) and (4), a * financial benefit is subject to deemed loan treatment if: (a) the financial benefit: (i) has been; or (ii) will, assuming normal operating conditions, be; or (iii) can, assuming normal operating conditions, reasonably be expected to be; provided to you (or a * connected entity); and (b) the financial benefit has been, will be or can reasonably be expected to be * provided directly or indirectly by a * member of the tax preferred sector in relation to the * tax preferred use of the asset; and (c) the right to receive, or the obligation to provide, the financial benefit is * cash settlable; and (d) the financial benefit has not been, will not be or can be expected not to be provided by one of your connected entities. Note: Paragraph (d) stops a financial benefit passing between you and any of your connected entities from being counted twice. End value also taken to be financial benefit subject to deemed loan treatment (2) The relevant percentage of a reasonable estimate of the * end value of the asset is also taken to be a * financial benefit that is subject to deemed loan treatment if: (a) the asset is not to be purchased or acquired by, or transferred to, a * member of the tax preferred sector at the end of the * arrangement period under a legally enforceable * arrangement; or (b) the asset: (i) is, or is to become, a * privatised asset; or (ii) would be, or would become, a privatised asset if it were a * depreciating asset; or (iii) would be a privatised asset if the asset were a depreciating asset and paragraphs 58 ‑ 5(2)(a) and 58 ‑ 5(4)(a) were not limited to acquisitions of depreciating assets that occurred on or after 1 July 2001. The relevant percentage is the * disallowed capital allowance percentage if section 250 ‑ 150 applies. Otherwise it is 100%. Note: See section 250 ‑ 180 for how to work out the end value of the asset. Financial benefits only subject to deemed loan treatment to the extent to which they represent a return on investment (3) The * financial benefit is subject to deemed loan treatment only to the extent to which it reasonably represents a return of, or on, an investment in the asset (as distinct, for example, from representing consideration for the provision of services or the recovery of production costs), having regard to: (a) the * market value of the asset; and (b) the discount rate applicable under subsection 250 ‑ 105(2); and (c) your costs in relation to funding your interest in the asset; and (d) any other relevant matter. The regulations may provide rules to be applied in determining the extent to which a financial benefit reasonably represents a return of or on an investment in the asset. Only financial benefits provided after Division starts applying to you and the asset (4) If the * tax preferred use of the asset starts before this Division starts applying to you and the asset, only * financial benefits provided after this Division starts applying to you and the asset are subject to deemed loan treatment .

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-180 — End value of asset

(1) The end value of an asset is worked out in accordance with this section. (2) If the asset has a * guaranteed residual value, the end value of the asset is: (a) the amount of the guaranteed residual amount if subparagraph 250 ‑ 15(d)(i) applies; or (b) so much of the amount referred to in paragraph (a) as is attributable to the expenditure referred to in subparagraph 250 ‑ 15(d)(ii) if that subparagraph applies. (3) If the asset does not have a * guaranteed residual value and is a * depreciating asset, the end value of the asset is: (a) if subparagraph 250 ‑ 15(d)(i) applies—the amount that would have been the * adjustable value of the asset at the end of the * arrangement period if: (i) this Division had not applied to you and the asset; and (ii) the decline in the asset’s value were worked out on the basis of the asset’s * effective life and using the * prime cost method; or (b) if subparagraph 250 ‑ 15(d)(ii) applies—so much of the amount referred to in paragraph (a) as is attributable to the expenditure referred to in that subparagraph. (4) Disregard section 40 ‑ 102 in working out the asset’s * effective life for the purposes of subparagraph (3)(a)(ii). (5) If neither subsection (2) nor subsection (3) applies and an estimate of the value of the asset is recognised for accounting purposes, the end value of the asset is: (a) the value of the relevant asset at the end of the * arrangement period that would be recognised for accounting purposes if subparagraph 250 ‑ 15(d)(i) applies; or (b) so much of the value of referred to in paragraph (a) as is attributable to the expenditure referred to subparagraph 250 ‑ 15(d)(ii) if that subparagraph applies. The end value must not, however, exceed the amount worked out under subsections 250 ‑ 155(4) and (5) (amount taken to have been lent). (6) If none of subsections (2), (3) and (5) apply to the asset, the end value of the asset is: (a) a reasonable estimate of the * market value of the asset at the end of the * arrangement period if subparagraph 250 ‑ 15(d)(i) applies; or (b) so much of the estimate referred to in paragraph (a) as is attributable to the expenditure referred to in subparagraph 250 ‑ 15(d)(ii) if that subparagraph applies. The end value must not, however, exceed the amount worked out under subsections 250 ‑ 155(4) and (5) (amount taken to have been lent).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-185 — Financial benefits subject to deemed loan treatment not assessed

A * financial benefit is not included in your assessable income if the financial benefit: (a) is * provided to you in relation to the tax preferred use of the asset; and (b) is provided directly or indirectly by a * member of the tax preferred sector; and (c) is * subject to deemed loan treatment. The financial benefit is not assessable income and is not * exempt income.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-190 — What this Subdivision is about

This Subdivision is about the tax treatment of gains and losses from the financial arrangement that you are taken to have under section 250 ‑ 155. You recognise gains and losses from the financial arrangement, as appropriate, over the life of the financial arrangement and ignore distinctions between income and capital. You use a compounding accruals method to recognise the gain or loss. A change in circumstances may cause a re ‑ estimation of gains and losses that the accruals method is being applied to. A balancing adjustment is made if you transfer particular rights or obligations or particular rights or obligations cease.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-195 — Application of Subdivision

This Subdivision applies for the purposes of working out the amount of the gain or loss that is to be included in your assessable income or allowed as a deduction in relation to the * financial arrangement that is taken to exist under section 250 ‑ 155.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-200 — Objects of this Subdivision

The objects of this Subdivision are: (a) to properly recognise gains and losses from the * financial arrangement by allocating them to appropriate periods of time; and (b) to minimise tax deferral.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-205 — Gains are assessable and losses deductible

Gains (1) Your assessable income includes a gain you make from the * financial arrangement. Losses (2) You can deduct a loss you make from the * financial arrangement, but only to the extent that: (a) you make it in gaining or producing your assessable income; or (b) you necessarily make it in carrying on a * business for the purpose of gaining or producing your assessable income.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-210 — Gain or loss to be taken into account only once under this Act

Purpose of this section (1) The purpose of this section is to ensure that your gains that are assessable under this Subdivision, and your losses that are deductible under this Subdivision, are taken into account only once under this Act in working out your taxable income. Gain or loss (2) If a gain or loss is, or is to be, included in your assessable income or allowable as a deduction to you for an income year under this Subdivision, the gain or loss is not to be (to any extent): (a) included in your assessable income; or (b) allowable as a deduction to you; under any other provisions of this Act for the same or any other income year. Associated financial benefits (3) If the amount or value of a * financial benefit is taken into account in working out whether you make, or the amount of, a gain or loss that is, or is to be, included in your assessable income or allowable as a deduction for you for an income year under this Subdivision, the benefit is not to be (to any extent): (a) included in your assessable income; or (b) allowable as a deduction to you; under any other provision of this Act for the same or any other income year.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-215 — Methods for taking gain or loss into account

The methods that can be applied to take account of a gain or loss you make from the * financial arrangement you have are: (a) the accruals method provided for in sections 250 ‑ 235 to 250 ‑ 255; or (b) a balancing adjustment provided for in sections 250 ‑ 265 to 250 ‑ 275. A gain or loss is not taken into account under the method referred to in paragraph (a) to the extent to which the gain or loss is taken into account under sections 250 ‑ 265 to 250 ‑ 275.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-220 — Consistency in working out gains or losses (integrity measure)

Object of section (1) The object of this section is to stop you obtaining an inappropriate tax benefit from not working out your gains and losses in a consistent manner. Consistent treatment for particular financial arrangement (2) If: (a) this Subdivision provides that a particular method applies to gains or losses you make from the * financial arrangement; and (b) that method allows you to choose the particular manner in which you apply that method; you must use that manner consistently for the arrangement for all income years. Consistent treatment for financial arrangements of essentially the same nature (3) If: (a) this Subdivision provides that a particular method applies to gains or losses you make from 2 or more * financial arrangements; and (b) that method allows you to choose the particular manner in which you apply that method; you must use that same manner consistently for all of those financial arrangements that are essentially of the same nature.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-225 — Rights and obligations include contingent rights and obligations

To avoid doubt: (a) a right is treated as a right for the purposes of this Division even it is subject to a contingency; and (b) an obligation is treated as an obligation for the purpose of this Division even if it is subject to a contingency.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-230 — Application of accruals method

The accruals method provided for in sections 250 ‑ 235 to 250 ‑ 255 applies to a gain or loss you make from the * financial arrangement if: (a) the gain or loss is an overall gain or loss from the arrangement; and (b) the gain or loss is sufficiently certain at the time when you start to have the arrangement.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-235 — Overview of the accruals method

If the accruals method applies to a gain or loss you make from the * financial arrangement: (a) you use section 250 ‑ 240 to work out the period over which the gain or loss is to be spread; and (b) you use section 250 ‑ 245 to work out how to allocate the gain or loss to particular intervals within the period over which the gain or loss is to be spread; and (c) if an interval to which part of the gain or loss is allocated straddles 2 income years, you use section 250 ‑ 250 to work out how to allocate that part of the gain or loss allocated between those 2 income years.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-240 — Applying accruals method to work out period over which gain or loss is to be spread

If you have a sufficiently certain overall gain or loss from the * financial arrangement, the period over which the gain or loss is to be spread is the period that: (a) starts when you start to have the arrangement; and (b) ends when you will cease to have the arrangement. In applying paragraph (b), you must assume that you will continue to have the arrangement for the rest of its life.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-245 — How gain or loss is spread

How to spread gain or loss (1) This section tells you how to spread a gain or loss to which the accruals method applies. Compounding accruals or approximation (2) The gain or loss is to be spread using: (a) compounding accruals (with the intervals to which parts of the gain or loss are allocated complying with subsection (3)); or (b) a method whose results approximate those obtained using the method referred to in paragraph (a) (having regard to the length of the period over which the gain or loss is to be spread). Intervals to which parts of gain or loss allocated (3) The intervals to which parts of the gain or loss are allocated must: (a) not exceed 12 months; and (b) all be of the same length. Paragraph (b) does not apply to the first and last intervals. These may be shorter than the other intervals. Assumption of continuing hold arrangement for the rest of its life (4) The gain or loss is to be spread assuming that you will continue to have the * financial arrangement for the rest of its life.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-250 — Allocating gain or loss to income years

(1) You are taken, for the purposes of section 250 ‑ 205, to make, for an income year, a gain or loss equal to a part of a gain or loss if: (a) that part of the gain or loss is allocated to an interval under section 250 ‑ 245; and (b) that interval falls wholly within that income year. (2) If: (a) a part of a gain or loss is allocated to an interval under section 250 ‑ 245; and (b) that interval straddles 2 income years; you are taken, for purposes of section 250 ‑ 205, to make a gain or loss equal to so much of that part of the gain or loss as is allocated between those income years on a reasonable basis. (3) If: (a) a * consolidated group or * MEC group has a * financial arrangement; and (b) a subsidiary member of the group ceases to be a member of the group at a particular time (the exit time ); and (c) immediately after the exit time, the subsidiary member has the financial arrangement; an income year of the group is taken, for the purposes of applying this section to the group and the financial arrangement, to end at the exit time.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-255 — When to re ‑ estimate

When re ‑ estimation necessary (1) You re ‑ estimate a gain or loss from the * financial arrangement under subsection (4) if circumstances arise that materially affect: (a) the amount or value; or (b) the timing; of * financial benefits that were taken into account in working out the amount of the gain or loss. You must re ‑ estimate the gain or loss as soon as reasonably practicable after you become aware of the circumstances referred to in paragraph (b). (2) Without limiting subsection (1), the following are circumstances of the kind referred to in paragraph (1)(b): (a) a material change in market conditions that are relevant to the amount or value of the * financial benefits to be received or provided under the * financial arrangement; (b) cash flows that were previously estimated becoming known and the difference between the cash flows that become known and the cash flows that were previously estimated is not insignificant; (c) a right to, or a part of a right to, a financial benefit under the arrangement is written off as a bad debt. (3) You do not re ‑ estimate a gain or loss from a * financial arrangement under subsection (4) merely because of any one or more of the following: (a) a change in the credit rating, or the creditworthiness, of a party or parties to the financial arrangement; (b) the impairment (within the meaning of the * accounting standards) of the arrangement or a debt that forms part of the arrangement. Nature of re ‑ estimation (4) Making a re ‑ estimation in relation to a gain or loss under this subsection involves: (a) a fresh determination of the amount of the gain or loss; and (b) a reapplication of the accruals method to the redetermined gain or loss to make a fresh allocation of the part of the redetermined gain or loss that has not already been allocated to intervals ending before the re ‑ estimation is made to intervals ending after the re ‑ estimation is made. Basis for re ‑ estimation (5) You may make the fresh allocation of the gain or loss under subsection (4) on either of the following bases: (a) by maintaining the rate of return being used and adjusting the amount to which you apply the rate of return to the present value of the estimated future cash flows discounted at the maintained rate of return; (b) adjusting the rate of return and maintaining the amount to which you apply the rate of return. The object to be achieved by both bases is allow you to bring the remainder of the gain or loss based on the new estimates properly to account over the remainder of the period over which you spread the gain or loss. (6) If you adopt a particular basis under subsection (5) for a gain or loss from the * financial arrangement, you must use the same basis for all the re ‑ estimations you make under this section in relation to your gains and losses from all your financial arrangements. Balancing adjustment if rate of return maintained (7) If you make a fresh allocation of the gain or loss on the basis referred to in paragraph (5)(a), you must make the following balancing adjustment: (a) if you re ‑ estimate a gain and the amount to which you apply the rate of return increases—you make a gain from the * financial arrangement, for the income year in which you make the re ‑ estimation, equal to the amount of the increase; (b) if you re ‑ estimate a gain and the amount to which you apply the rate of return decreases—you make a loss from the arrangement, for the income year in which you make the re ‑ estimation, equal to the amount of the decrease; (c) if you re ‑ estimate a loss and the amount to which you apply the rate of return increases—you make a loss from the arrangement, for the income year in which you make the re ‑ estimation, equal to the amount of the increase; (d) if you re ‑ estimate a loss and the amount to which you apply the rate of return decreases—you make a gain from the arrangement, the income year in which you make the re ‑ estimation, equal to the amount of the decrease.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-260 — Re ‑ estimation if balancing adjustment on partial disposal

Re ‑ estimation if balancing adjustment on partial disposal (1) You also re ‑ estimate a gain or loss from a * financial arrangement under subsection (2) if a balancing adjustment is made in relation to the financial arrangement under sections 250 ‑ 265 to 250 ‑ 275 because you transfer to another person: (a) a proportionate share of all of your rights and/or obligations under a * financial arrangement; or (b) a right or obligation that you have under a financial arrangement to a specifically identified * financial benefit; or (c) a proportionate share of a right or obligation that you have under a financial arrangement to a specifically identified financial benefit. You must re ‑ estimate the gain or loss as soon as reasonably practicable after the transfer occurs. Nature of re ‑ estimation (2) Making a re ‑ estimation in relation to a gain or loss under this subsection involves: (a) a fresh determination of the amount of the gain or loss disregarding: (i) * financial benefits; and (ii) amounts of the gain or loss that have already been allocated to intervals ending before the re ‑ estimation is made; to the extent to which they are reasonably attributable to the proportionate share, or the right or obligation, referred to in paragraph (1)(b); and (b) a reapplication of the accruals method to the redetermined gain or loss to make a fresh allocation of the part of that gain or loss that has not already been allocated to intervals ending before the re ‑ estimation is made to intervals ending after the re ‑ estimation is made. Basis for re ‑ estimation (3) You make the fresh allocation of the gain or loss under subsection (2) by maintaining the rate of return being used and adjusting the amount to which you apply the rate of return to the present value of the estimated future cash flows discounted at the maintained rate of return. The object to be achieved by the fresh allocation is allow you to bring the remainder of the redetermined gain or loss properly to account over the remainder of the period over which you spread the gain or loss.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-265 — When balancing adjustment made

When balancing adjustment made (1) A balancing adjustment is made under section 250 ‑ 275 if: (a) you transfer to another person all of your rights and/or obligations under the * financial arrangement; or (b) all of your rights and/or obligations under the financial arrangement otherwise substantially cease; or (c) you transfer to another person: (i) a proportionate share of all of your rights and/or obligations under the financial arrangement; or (ii) a right or obligation that you have under the financial arrangement to a specifically identified * financial benefit; or (iii) a proportionate share of a right or obligation that you have under the financial arrangement to a specifically identified financial benefit. Modifications for arrangements that are assets (2) The following modifications are made if the * financial arrangement is an asset of yours at the time the event referred to in subsection (1) occurs: (a) paragraphs (1)(a) and (c) do not apply unless the effect of the transfer is to transfer to the other person substantially all the risks and rewards of ownership of the interest transferred; (b) for the purposes of applying section 250 ‑ 275 to the arrangement, you are treated as transferring a right under the arrangement to another person if: (i) you retain the right but assume a new obligation; and (ii) your assumption of the new obligation has the same effect, in substance, as transferring the right to another person; and (iii) the new obligation arises only to the extent to which the right to * financial benefits under the financial arrangement is satisfied; and (iv) you cannot sell or pledge the right (other than as security in relation to the new obligation); and (v) you must, under the new obligation, provide financial benefits you receive in relation to the right to the person to whom you owe the new obligation without delay.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-270 — Exception for subsidiary member leaving consolidated group

A balancing adjustment is not made under section 250 ‑ 275 in relation to a subsidiary member of a * consolidated group or a * MEC group that has the * financial arrangement ceasing to be a member of the group.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-275 — Balancing adjustment

Complete cessation or transfer (1) Use the following method statement to make the balancing adjustment if paragraph 250 ‑ 265(1)(a) or (b) applies: Method statement for balancing adjustment Step 1. Add up the following: (a) the total of all the * financial benefits provided to you under the * financial arrangement; (b) the amount or value of any other consideration you receive in relation to the transfer or cessation referred to in subsection 250 ‑ 265(1); (c) the total of the amounts that have been allowed to you as deductions, because of circumstances that have occurred before the transfer or cessation, for losses from the arrangement; (d) the total of the other amounts that would have been allowed to you as deductions, because of circumstances that have occurred before the transfer or cessation, for losses from the arrangement if all your losses from the arrangement were allowable as deductions. Step 2. Add up the following: (a) the total of all the * financial benefits you have provided under the * financial arrangement; (b) the amount or value of any other consideration you provide in relation to the transfer or cessation referred to in subsection 250 ‑ 265(1); (c) the total of the amounts that have been included in your assessable income, because of circumstances that have occurred before the transfer or cessation, as gains from the arrangement; (d) the total of the other amounts that would have been included in your assessable income, because of circumstances that have occurred before the transfer or cessation, as gains from the arrangement if all your gains from the arrangement were assessable. Step 3. Compare the amount obtained under Step 1 (the Step 1 amount ) with the amount obtained under Step 2 (the Step 2 amount ). If the Step 1 amount exceeds the Step 2 amount, an amount equal to the excess is taken, as a balancing adjustment, to be a gain you make from the * financial arrangement for the purposes of this Subdivision. If the Step 2 amount exceeds the Step 1 amount, an amount equal to the excess is taken, as a balancing adjustment, to be a loss that you make from the arrangement. If the Step 1 amount and the Step 2 amount are equal, no balancing adjustment is made. Proportionate transfer of all rights and/or obligations under financial arrangement (2) If subparagraph 250 ‑ 265(1)(c)(i) applies, you make the balancing adjustment by applying the method statement in subsection (1) but reduce: (a) the amounts referred to in paragraphs (a), (c) and (d) in step 1; and (b) the amounts referred to in paragraphs (a), (c) and (d) in step 2; by applying the proportion referred to in subparagraph 250 ‑ 265(1)(c)(i) to them. Transfer of specifically identified right or obligation under financial arrangement (3) If subparagraph 250 ‑ 265(1)(c)(ii) applies, you make the balancing adjustment by applying the method statement in subsection (1) as if the references to: (a) the amounts referred to in paragraphs (a), (c) and (d) in step 1; and (b) the amounts referred to in paragraphs (a), (c) and (d) in step 2; were references to those amounts to the extent to which they are reasonably attributable to the right or obligation referred to in subparagraph 250 ‑ 265(1)(c)(ii). Proportionate transfer of specifically identified right or obligation under financial arrangement (4) If subparagraph 250 ‑ 265(1)(c)(iii) applies, you make the balancing adjustment by applying the method statement: (a) as if the references to: (i) the amounts referred to in paragraphs (a), (c) and (d) in step 1; and (ii) the amounts referred to in paragraphs (a), (c) and (d) in step 2; were references to those amounts to the extent to which they are reasonably attributable to the right or obligation referred to in subparagraph 250 ‑ 265(1)(c)(iii); and (b) by reducing those amounts by applying the proportion referred to in subparagraph 250 ‑ 265(1)(c)(iii) to them. Attribution must reflect appropriate and commercially accepted valuation principles (5) Any attribution made under subsection (3) or paragraph (4)(a) must reflect appropriate and commercially accepted valuation principles that properly take into account: (a) the nature of the rights and obligations under the * financial arrangement; and (b) the risks associated with each * financial benefit, right and obligation under the arrangement; and (c) the time value of money. Income year for which gain or loss is made (6) The gain or loss you are taken to make under subsection (1), (2), (3) or (4) is a gain or loss for the income year in which the event referred to in subsection 250 ‑ 265(1) occurs.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-280 — Financial arrangement received or provided as consideration

(1) If: (a) this Subdivision applies in relation to your gains and losses from the * financial arrangement; and (b) you start to have the financial arrangement (or a part of the financial arrangement) as consideration (or as part of the consideration) for: (i) something (the thing provided ) that you provided, or are to provide, to someone else; or (ii) something (the thing acquired ) that someone else has provided, or is to provide, to you; and (c) the thing provided or the thing acquired is not money; the amount of the benefit (or that part of the benefit) that you obtained for the thing provided, or gave for the thing acquired, is taken, for the purposes of applying this Act to you, to be the * market value of the financial arrangement (or that part of the financial arrangement) at the time when you start to have the financial arrangement. Note 1: This amount may be relevant, for example, for the purposes of applying the provisions of this Act dealing with capital gains, capital allowances or trading stock to the thing provided or the thing acquired. Note 2: The market value is to be used instead of the nominal value of the financial benefits to be provided under the financial arrangement. (2) If subsection (1) applies, you are taken to have received, or provided, as consideration for starting to have the * financial arrangement (or the part of the financial arrangement), * financial benefits whose value is equal to the market value of the financial arrangement (or that part of the financial arrangement) at the time when you started to have the financial arrangement. (3) If, but for this subsection: (a) subsection (2) would apply to your starting to have a * financial arrangement; and (b) subsection (1) or (4) would also apply to your starting to have the financial arrangement; subsection (2) applies to your starting to have the financial arrangement and subsection (1) or (4) does not. (4) If: (a) this Subdivision applies in relation to your gains and losses from the * financial arrangement; and (b) you cease to have the financial arrangement (or a part of the financial arrangement) as consideration (or as part of the consideration) for: (i) something (the thing acquired ) that someone else provides, or is to provide, to you; or (ii) something (the thing provided ) that you provided, or are to provide, to someone else; and (c) the thing acquired or the thing provided is not money; the amount of the benefit (or that part of the benefit) that you provided for the thing acquired, or obtained for the thing provided, is taken, for the purposes of applying this Act to you, to be the * market value of the financial arrangement (or that part of the financial arrangement) at the time when you cease to have the financial arrangement (or that part of the financial arrangement). Note 1: This amount may be relevant, for example, for the purposes of applying the provisions of this Act dealing with capital gains, capital allowances or trading stock to the thing acquired or the thing provided. Note 2: The market value is to be used instead of the nominal value of the financial benefits to be provided under the financial arrangement. (5) If subsection (4) applies, you are taken to have provided, or received, as consideration for ceasing to have the * financial arrangement (or the part of the financial arrangement), * financial benefits whose value is equal to the market value of the financial arrangement (or that part of the financial arrangement) at the time when you ceased to have the financial arrangement. (6) If, but for this subsection: (a) subsection (5) would apply to your ceasing to have a * financial arrangement; and (b) subsection (1) or (4) would also apply to your ceasing to have the financial arrangement; subsection (5) applies to your ceasing to have the financial arrangement and subsection (1) or (4) does not. (7) Without limiting subsections (1) and (4), the thing provided, or the thing acquired, need not be a tangible thing and may take the form of services, conferring a right, incurring an obligation or extinguishing or varying a right or obligation.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-285 — Treatment of asset after Division ceases to apply to the asset

(1) For the purposes of Division 40, if: (a) this Division applies to you and an asset; and (b) the * arrangement period for the * tax preferred use of the asset ends at a particular time; and (c) the asset would have had an * adjustable value at that time, for the purposes of Division 40, if this Division had never applied to the asset; the adjustable value of the asset, immediately after the end of the arrangement period, is taken to be equal to the amount worked out using the following method statement: Method statement Step 1. Work out whether section 250 ‑ 150 applies. Step 2. If section 250 ‑ 150 does not apply, the amount is the * end value of the asset at the end of the arrangement period. Step 3. If section 250 ‑ 150 does apply, the amount is worked out by: (a) multiplying the * end value of the asset at the end of the * arrangement period by the * disallowed capital percentage; and (b) then multiplying the adjustable value of the asset at the end of the arrangement period (worked out under section 40 ‑ 85) by 100% minus the disallowed capital percentage); and (c) then adding the amount obtained under paragraph (a) and the amount obtained under paragraph (b). (2) If: (a) this Division applies to you and an asset; and (b) the * arrangement period for the * tax preferred use of the asset ends; and (c) a net amount is included in your assessable income in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250 ‑ E in relation to the financial benefits that are subject to the deemed loan treatment); the * cost base, and the * reduced cost base, of the asset are each taken to be reduced at the end of the arrangement period by an amount equal to the difference between: (d) the total amounts or values of the financial benefits that were subject to deemed loan treatment; and (e) the net amount referred to in paragraph (c). Note: See subsection (6) in relation to the application of paragraph (d). (3) If: (a) this Division applies to you and an asset; and (b) the * arrangement period for the * tax preferred use of the asset ends; and (c) a net amount is allowed to you as a deduction in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250 ‑ E in relation to the financial benefits that are subject to the deemed loan treatment); the * cost base, and the * reduced cost base, of the asset are each taken to be reduced at the end of the arrangement period by an amount equal to the sum of: (d) the total amounts or values of the financial benefits that were subject to deemed loan treatment; and (e) the net amount referred to in paragraph (c). Note: See subsection (6) in relation to the application of paragraph (d). (4) If: (a) this Division applies to you and an asset; and (b) the * arrangement period for the * tax preferred use of the asset ends; and (c) a net amount is included in your assessable income in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250 ‑ E in relation to the financial benefits that are subject to the deemed loan treatment); then, in determining the profit or loss on the sale of the asset, a deduction equal to the difference between the following is taken to have been allowed for expenditure by you in connection with the asset: (d) the total amounts or values of the financial benefits that were subject to deemed loan treatment; and (e) the net amount referred to in paragraph (c). Note: See subsection (6) in relation to the application of paragraph (d). (5) If: (a) this Division applies to you and an asset; and (b) the * arrangement period for the * tax preferred use of the asset ends; and (c) a net amount is allowed to you as a deduction in relation to the * financial benefits that are * subject to the deemed loan treatment (taking into account the adjustments under Subdivision 250 ‑ E in relation to the financial benefits that are subject to the deemed loan treatment); then, in determining the profit or loss on the sale of the asset, a deduction equal to the sum of the following is taken to have been allowed for expenditure by you in connection with the asset: (d) the total amounts or values of the financial benefits that were subject to deemed loan treatment; and (e) the net amount referred to in paragraph (c). Note: See subsection (6) in relation to the application of paragraph (d). (6) In applying paragraphs (2)(d), (3)(d), (4)(d) and (5)(d), disregard subsection 250 ‑ 160(2) (reasonable estimate of end value treated as financial benefit subject to deemed loan treatment).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 250-290 — Balancing adjustment under Subdivision 40 ‑ D in some circumstances

(1) This section applies if: (a) this Division applies to you and an asset; and (b) the * arrangement period for the * tax preferred use of the asset ends because a particular event happens; and (c) the event would have been a * balancing adjustment event for the asset for the purposes of Subdivision 40 ‑ D if this Division had not applied to you and the asset when the event happened. (2) A balancing adjustment is made under Subdivision 40 ‑ D as if: (a) the event were a * balancing adjustment event for the asset; and (b) the * adjustable value of the asset, just before the event happened, were the adjustable value worked out under subsection 250 ‑ 285(1); and (c) sections 40 ‑ 290, 40 ‑ 291, 40 ‑ 292 and 40 ‑ 293 did not apply.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent | Amended by No 126 of 2017, effective Sch 1 and 2: 1 Jan 2018 (s 2(1) item 2)

s 250-295 — Objections against determinations and decisions by the Commissioner

(1) This section applies to a determination by the Commissioner under section 250 ‑ 45. (2) This section also applies to a decision by the Commissioner under subsection 250 ‑ 150(5). (3) A person who is dissatisfied with a determination or decision to which this section applies may object against the determination or decision in the manner set out in Part IVC of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 253-1 — What this Subdivision is about

This Act applies to a payment of an entitlement under Division 2AA (Financial claims scheme for account ‑ holders with insolvent ADIs) of Part II of the Banking Act 1959 as if the payment were made by the ADI under the agreement for the account concerned. Special rules prevent the arising and payment of such an entitlement from creating inappropriate capital gains or losses affecting assessable income. Table of sections Operative provisions 253 ‑ 5 Payment of entitlement under financial claims scheme treated as payment from ADI 253 ‑ 10 Disposal of rights against ADI to APRA and meeting of financial claims scheme entitlement have no CGT effects 253 ‑ 15 Cost base of financial claims scheme entitlement and any remaining part of account that gave rise to entitlement

Amendment history: Inserted 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

s 253-5 — Payment of entitlement under financial claims scheme treated as payment from ADI

(1) This Act applies to you as if an amount paid to you, or applied for your benefit, to meet your entitlement under Division 2AA (Financial claims scheme for account ‑ holders with insolvent ADIs) of Part II of the Banking Act 1959 connected with an account with an * ADI had been paid to you by the ADI under the terms and conditions of the agreement for keeping the account. Note: This section has effect subject to more detailed provisions about: (a) entitlements relating to retirement savings accounts (see section 306 ‑ 25); and (b) entitlements relating to farm management deposits (see Subdivision 393 ‑ C). (2) To avoid doubt, subsection (1) does not affect the operation of Part 2 ‑ 5 in Schedule 1 to the Taxation Administration Act 1953 . Note: Division 21 in Schedule 1 to the Taxation Administration Act 1953 contains special provisions about how Part 2 ‑ 5 in that Schedule operates in relation to the meeting of entitlements under Division 2AA of Part II of the Banking Act 1959 .

Amendment history: Inserted 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)

s 253-10 — Disposal of rights against ADI to APRA and meeting of financial claims scheme entitlement have no CGT effects

Disregard a * capital gain or * capital loss you make: (a) because of the operation of section 16AI of the Banking Act 1959 ; or (b) because your entitlement under Subdivision C of Division 2AA of Part II of that Act is met. Note: Section 16AI of the Banking Act 1959 reduces the right of an account ‑ holder who has a protected account with a declared ADI to be paid an amount by the ADI, by the account ‑ holder’s entitlement under Subdivision C of Division 2AA of Part II of that Act to be paid an amount by APRA in connection with the account.

Amendment history: Inserted 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

s 253-15 — Cost base of financial claims scheme entitlement and any remaining part of account that gave rise to entitlement

(1) This section applies if an entitlement arises under Division 2AA (Financial claims scheme for account ‑ holders with insolvent ADIs) of Part II of the Banking Act 1959 in connection with an account ‑ holder’s account with an * ADI. (2) The * cost base and * reduced cost base of the * CGT asset consisting of the entitlement are each the amount of the entitlement. (3) The * cost base of the * CGT asset representing the part (if any) of the account ‑ holder’s right to be paid an amount by the * ADI in connection with the account that remains after the reduction of that right by section 16AI of the Banking Act 1959 (by the amount of the entitlement) is the difference (if any) between: (a) the cost base of the right as it was immediately before the reduction; and (b) the amount of the entitlement. The * reduced cost base is worked out similarly. (4) This section has effect despite: (a) Division 110 (Cost base and reduced cost base); and (b) subsections 112 ‑ 30(2), (3), (4) and (5) (which are about apportioning a * cost base if a * CGT event happens to only part of a * CGT asset). Income Tax Assessment Act 1997 No. 38, 1997 Compilation No. 266 Compilation date: 1 July 2026 Includes amendments: Act No. 17, 2025, Act No. 57, 2025, Act No. 49, 2026 and Act No. 58, 2026 This compilation is in 12 volumes Volume 1: Chapter 1, Part 1 ‑ 1 to Chapter 2, Part 2 ‑ 5 sections 1 ‑ 1 to 36 ‑ 55 Volume 2: Chapter 2, Part 2 ‑ 10 to Chapter 2, Part 2 ‑ 20 sections 40 ‑ 1 to 67 ‑ 30 Volume 3: Chapter 2, Part 2 ‑ 25 to Chapter 3, Part 3 ‑ 1 sections 70 ‑ 1 to 121 ‑ 35 Volume 4: Chapter 3, Part 3 ‑ 3 to Chapter 3, Part 3 ‑ 5 sections 122 ‑ 1 to 197 ‑ 85 Volume 5: Chapter 3, Part 3 ‑ 6 to Chapter 3, Part 3 ‑ 10 sections 200 ‑ 1 to 253 ‑ 15 Volume 6: Chapter 3, Part 3 ‑ 25 to Chapter 3, Part 3 ‑ 30 sections 275 ‑ 1 to 313 ‑ 85 Volume 7: Chapter 3, Part 3 ‑ 32 to Chapter 3, Part 3 ‑ 50 sections 315 ‑ 1 to 421 ‑ 85 Volume 8: Chapter 3, Part 3 ‑ 80 to Chapter 3, Part 3 ‑ 90 sections 615 ‑ 1 to 721 ‑ 40 Volume 9: Chapter 3, Part 3 ‑ 95 to Chapter 4, Part 4 ‑ 5 sections 723 ‑ 1 to 880 ‑ 205 Volume 10: Chapter 5, Part 5 ‑ 30 to Chapter 6, Part 6 ‑ 5 sections 900 ‑ 1 to 995 ‑ 1 Volume 11: Endnotes 1 to 3 Volume 12: Endnote 4 Each volume has its own contents About this compilation This compilation This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 1 July 2026 (the compilation date ). The notes at the end of this compilation (the endnotes ) include information about amending laws and the amendment history of provisions of the compiled law. Uncommenced amendments The effect of uncommenced amendments is not shown in the text of the compiled law. The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). Application, saving and transitional provisions If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes. Editorial changes For more information about any editorial changes made in this compilation, see the endnotes. Presentational changes The Legislation Act 2003 provides for First Parliamentary Counsel to make presentational changes to a compilation. Presentational changes are applied to give a more consistent look and feel to legislation published on the Register, and enable the user to more easily navigate those documents. Modifications If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. Any modifications affecting the law are accessible on the Register. Self ‑ repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes. Contents

Amendment history: Inserted 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

s 275-1 — What this Division is about

The trustee of certain Australian managed investment trusts may make a choice that certain assets of the trust be dealt with under CGT rules. If the trustee does not make such a choice, those assets will be treated as revenue assets (see Subdivision 275 ‑ B). Gains and profits from carried interests held in entities that are or were Australian managed investment trusts (or certain other trusts) are included in the assessable income of the holder of the interests. The holder is entitled to a deduction from losses from such interests (see Subdivision 275 ‑ C).

Amendment history: Inserted 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 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 275-5 — What this Subdivision is about

This Subdivision sets out the requirements for a trust to be a managed investment trust in relation to an income year. Table of sections Operative provisions 275 ‑ 10 Meaning of managed investment trust 275 ‑ 15 Trusts with wholesale membership 275 ‑ 20 Widely ‑ held requirements—ordinary case 275 ‑ 25 Widely ‑ held requirements for registered MIT—special case for entities covered by subsection 275 ‑ 20(4) 275 ‑ 30 Closely ‑ held restrictions 275 ‑ 35 Licensing requirements for unregistered MIS 275 ‑ 40 MIT participation interest 275 ‑ 45 Meaning of managed investment trust —every member of trust is a managed investment trust etc. 275 ‑ 50 Extended definition of managed investment trust —no fund payment made in relation to the income year 275 ‑ 55 Extended definition of managed investment trust —temporary circumstances outside the control of the trustee

Amendment history: Inserted by No 90 of 2010, effective Sch 2, Sch 4 (items 5–8) and Sch 5 (items 1–3, 6–8): 29 June 2010 (s 2(1) item 3) | Repealed and substituted 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 275-10 — Meaning of managed investment trust

(1) A trust is a managed investment trust in relation to an income year if any of the following requirements are met: (a) the trust is covered under subsection (3) of this section in relation to the income year (ordinary case); (b) the trust is covered under section 275 ‑ 45 in relation to the income year (only members of trust are managed investment trusts etc.). (2) A trust is also a managed investment trust in relation to an income year if any of the following requirements are met: (a) the trust is covered under section 275 ‑ 50 in relation to the income year (no fund payment made in relation to the income year); (b) the trust is covered under section 275 ‑ 55 in relation to the income year (temporary circumstances outside the control of the trustee). (3) A trust is covered under this subsection in relation to an income year if: (a) at the time the trustee of the trust makes the first * fund payment in relation to the income year, or at an earlier time in the income year: (i) the trustee of the trust was an Australian resident; or (ii) the central management and control of the trust was in Australia; and (b) the trust is not a trust covered by subsection (4) (trading trust etc.) in relation to the income year; and (c) at the time the payment is made, the trust is a managed investment scheme (within the meaning of section 9 of the Corporations Act 2001 ); and (d) at the time the payment is made: (i) the trust is covered by section 275 ‑ 15 (trusts with wholesale membership); or (ii) if the trust is not covered by section 275 ‑ 15—the trust is registered under section 601EB of the Corporations Act 2001 ; and (e) the trust satisfies, in relation to the income year: (i) if, at the time the payment is made, the trust is registered under section 601EB of the Corporations Act 2001 and is covered by section 275 ‑ 15—either or both of the widely ‑ held requirements in subsections 275 ‑ 20(1) and 275 ‑ 25(1); or (ii) if, at the time the payment is made, the trust is so registered and is not covered by section 275 ‑ 15—either or both of the widely ‑ held requirements in subsections 275 ‑ 20(2) and 275 ‑ 25(1); or (iii) if, at the time the payment is made, the trust is not so registered and is covered by section 275 ‑ 15—the widely ‑ held requirements in subsection 275 ‑ 20(1); and (f) the trust satisfies the closely ‑ held restrictions in subsection 275 ‑ 30(1) in relation to the income year; and (g) if the trust is covered by section 275 ‑ 15 at the time the payment is made—it satisfies the licensing requirements in section 275 ‑ 35 in relation to the income year. Trading unit trust or other trust carrying on trading business etc. cannot be managed investment trust (4) A trust is covered by this subsection in relation to an income year if: (a) in the case of a unit trust—the trust is a trading trust for the purposes of Division 6C of Part III of the Income Tax Assessment Act 1936 in relation to the income year; or (b) in any other case—the trust at any time in the income year: (i) carried on a trading business (within the meaning of that Division); or (ii) controlled, or was able to control, directly or indirectly, the affairs or operations of another person in respect of the carrying on by that other person of a trading business (within the meaning of that Division). (4A) In determining whether a trust is covered by subsection (4), disregard any interest that the trust has in an * AFOF, an * ESVCLP or a * VCLP unless: (a) the trust is a * general partner of the AFOF, ESVCLP or VCLP; or (b) the trust has * committed capital in the partnership that, taken together with the sum of the amounts of committed capital in the partnership of any of that partner’s * associates (other than associates to whom subsection (4B) applies), exceeds 30% of the partnership’s committed capital. (4B) This subsection applies to: (a) an * ADI; or (b) a * life insurance company; or (c) a public authority: (i) that is constituted by a law of a State or internal Territory; and (ii) that carries on life insurance business within the meaning of section 11 of the Life Insurance Act 1995 ; or (d) a widely ‑ held complying superannuation fund within the meaning of section 4A of the Pooled Development Funds Act 1992 ; or (e) a * widely held foreign venture capital fund of funds. Crown entities etc. (5) For the purposes of paragraphs (3)(d) and (e), treat an entity as registered under section 601EB of the Corporations Act 2001 at the time the payment is made if at that time the trust is operated by: (a) an entity that would, but for subsection 5A(4) of that Act (about the Crown not being bound by Chapter 6CA or 7 of that Act), be required under that Act to be a financial services licensee (within the meaning of that Act) whose licence would cover operating such a managed investment scheme; or (b) an entity that: (i) is a * wholly ‑ owned subsidiary of an entity of a kind mentioned in paragraph (a); and (ii) would, but for any instrument issued by ASIC under that Act that has effect in relation to the entity and operation of the scheme mentioned in paragraph (3)(c), be required under that Act to be a financial services licensee (within the meaning of that Act) whose licence would cover operating such a managed investment scheme. Start ‑ up and wind ‑ down phases (6) Treat the requirements in paragraphs (3)(e) and (f) as being satisfied if: (a) the trust is created during the period: (i) starting 12 months before the start of the income year; and (ii) ending at the end of the income year; or (b) the trust ceases to exist during the income year, and was a * managed investment trust (disregarding paragraph (a) of this section) in relation to the previous income year.

Amendment history: Inserted by No 90 of 2010, effective Sch 2, Sch 4 (items 5–8) and Sch 5 (items 1–3, 6–8): 29 June 2010 (s 2(1) item 3) | Repealed and substituted by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4) | Amended by No 54 of 2016, effective Sch 1 (items 1, 12–14, 19) and Sch 2 (items 1–5, 8–14, 20–34, 44–51, 53–56, 63–74, 76): 1 July 2016 (s 2(1) items 2–5, 7) | Amended by No 8 of 2020, effective Sch 2 (items 1–17): 1 Apr 2020 (s 2(1) item 3) | Amended by No 76 of 2023, effective sch 2 (items 649-659), sch 3 (item 41): 20 Oct 2023 (s 2(1) items 2, 14) sch 6 (item 32): 21 Sept 2023 (s 2(1) item 22)

s 275-15 — Trusts with wholesale membership

A trust is covered by this section at a time if, at that time: (a) the trust is not required to be registered in accordance with section 601ED of the Corporations Act 2001 (whether or not it is actually so registered) because of subsection 601ED(2) of that Act (no product disclosure statement required) or because it is operated or managed by an entity covered by subsection 275 ‑ 35(2) (Crown entities); and (b) the total number of entities that had become a * member of the trust because a financial product or a financial service was provided to, or acquired by, the entity as a retail client (within the meaning of the Corporations Act 2001 ) is no more than 20; and (c) the entities mentioned in paragraph (b) have a total * MIT participation interest in the trust of no more than 10%.

Amendment history: Inserted 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 90 of 2010, effective Sch 2, Sch 4 (items 5–8) and Sch 5 (items 1–3, 6–8): 29 June 2010 (s 2(1) item 3) | Repealed and substituted by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4) | Amended by No 76 of 2023, effective sch 2 (items 649-659), sch 3 (item 41): 20 Oct 2023 (s 2(1) items 2, 14) sch 6 (item 32): 21 Sept 2023 (s 2(1) item 22)

s 275-20 — Widely ‑ held requirements—ordinary case

(1) The trust satisfies the requirements in this subsection in relation to the income year if, at the time the payment mentioned in paragraph 275 ‑ 10(3)(a) is made, the trust has at least 25 * members. (2) The trust satisfies the requirements in this subsection in relation to the income year if, at the time the payment mentioned in paragraph 275 ‑ 10(3)(a) is made: (a) units in the trust are listed for quotation in the official list of an * approved stock exchange in Australia; or (b) the trust has at least 50 * members (ignoring objects of a trust). (3) For the purposes of subsection (1) and paragraph (2)(b), determine the number of * members of the trust as follows: (a) first, by applying the rules in subsection (5), identify: (i) the members of the trust that are not entities covered by subsection (4); and (ii) the members of the trust that are entities covered by subsection (4); (b) next, work out the number of members mentioned in subparagraph (a)(i); (c) next: (i) work out the * MIT participation interest in the trust of each entity mentioned in subparagraph (a)(ii); and (ii) for each of those entities, multiply the total of its MIT participation interest in the trust by 50 and round the result upwards to the nearest whole number; and (iii) work out the total of the results of subparagraph (ii) for all of those entities; (d) next, work out the total of the results of paragraphs (b) and (c). (4) This subsection covers the following kinds of entity: (a) a * life insurance company; (b) a * foreign life insurance company that is regulated under a * foreign law; (c) a * complying superannuation fund, a * complying approved deposit fund or a * foreign superannuation fund, being a fund that has at least 50 * members; (d) a * pooled superannuation trust that has at least one member that is a complying superannuation fund that has at least 50 members; (e) a * managed investment trust in relation to the income year; (f) an entity: (i) that is recognised under a foreign law as being used for collective investment by pooling the contributions of its members as consideration to acquire rights to benefits produced by the entity; and (ii) that has at least 50 members; and (iii) the contributing members of which do not have day ‑ to ‑ day control over the entity’s operation; (g) an entity, the principal purpose of which is to fund pensions (including disability and similar benefits) for the citizens or other contributors of a foreign country, if: (i) the entity is a fund established by an * exempt foreign government agency; or (ii) the entity is established under a foreign law for an exempt foreign government agency; or (iii) the entity is a * wholly ‑ owned subsidiary of an entity mentioned in subparagraph (i) or (ii); (h) an investment entity that satisfies all of these requirements: (i) the entity is wholly ‑ owned by one or more * foreign government agencies, or is a wholly ‑ owned subsidiary of one or more foreign government agencies; (ii) the entity is established using only the public money or public property of the foreign government concerned; (iii) all economic benefits obtained by the entity have passed, or are expected to pass, to the foreign government concerned; (i) an entity established and wholly ‑ owned by an * Australian government agency, if the capital of the entity, and returns from the investment of that capital, are used for the primary purpose of meeting statutory government liabilities or obligations (such as superannuation liabilities and liabilities arising from compensation or workcover claims); (ia) the * Future Fund Board; (j) a * limited partnership, if, throughout the income year: (i) at least 95% of the * membership interests in the limited partnership are owned by entities mentioned in the preceding paragraphs of this subsection, or by entities that are wholly ‑ owned by entities so mentioned; and (ii) the remaining membership interests (if any) in the limited partnership are owned by a * general partner of the limited partnership that habitually exercises the management power of the limited partnership; (k) an entity, all the membership interests in which are owned by any of the following: (i) entities mentioned in the preceding paragraphs of this subsection; (ii) entities that are wholly ‑ owned by entities mentioned in the preceding paragraphs of this subsection; (iii) entities that are covered under this subsection because of a previous operation of this paragraph; (l) an entity of a kind similar to an entity mentioned in the preceding paragraphs of this subsection as specified in the regulations. (4A) Any financial assets (within the meaning of the Future Fund Act 2006 ) held by the * Future Fund Board are taken, for the purposes of subparagraph (4)(k)(ii), to be held by the Future Fund Board in its own right. (5) The rules are as follows: (a) if an entity that is not a trust holds interests in the trust indirectly, through a * chain of trusts: (i) treat the entity as a member of the trust; and (ii) do not treat a trust in the chain of trusts as a member of the trust; (b) do not treat an object of the trust as a member of the trust; (c) if the trust is mentioned in subparagraph 275 ‑ 10(3)(d)(i) (trusts with wholesale membership)—do not treat an individual as a member of the trust (other than an individual who became a member of the trust because a financial product or a financial service was provided to, or acquired by, the individual as a wholesale client (within the meaning of the Corporations Act 2001 )); (d) the rules in subsection (7). (6) For the purposes of paragraph (5)(a), treat an entity covered by subsection (4) as an entity that is not a trust. (7) The rules are as follows: (a) treat the following entities as together being one entity: (i) an individual; (ii) each of his or her * relatives; (iii) each entity acting in the capacity of nominee of an individual mentioned in subparagraph (i) or (ii); (b) treat the following entities as together being one entity (the notional entity ): (i) an entity that is not an individual; (ii) each entity acting in the capacity of nominee of the entity mentioned in subparagraph (i). (8) For the purposes of subsection (5), if the entity mentioned in subparagraph (7)(b)(i) is an entity covered by subsection (4), treat the notional entity as an entity covered by subsection (4).

Amendment history: Inserted 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) | Repealed and substituted by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4) | Amended by No 15 of 2019, effective Sch 1 (items 2–17, 46): 1 Apr 2019 (s 2(1) item 2) | Amended by No 76 of 2023, effective sch 2 (items 649-659), sch 3 (item 41): 20 Oct 2023 (s 2(1) items 2, 14) sch 6 (item 32): 21 Sept 2023 (s 2(1) item 22)

s 275-25 — Widely ‑ held requirements for registered MIT—special case for entities covered by subsection 275 ‑ 20(4)

(1) The trust satisfies the requirements in this subsection in relation to the income year if: (a) one or more entities covered by subsection 275 ‑ 20(4) have a total * MIT participation interest in the trust of more than 25% at the time the payment mentioned in paragraph 275 ‑ 10(3)(a) is made; and (b) at no time in the income year does an entity (other than an entity covered by subsection 275 ‑ 20(4)) have a MIT participation interest in the trust of more than 60%. (2) For the purposes of paragraphs (1)(a) and (b): (a) if: (i) an entity covered by subsection 275 ‑ 20(4) has a * MIT participation interest (the first interest ) in the trust; and (ii) another entity covered by subsection 275 ‑ 20(4) also has a MIT participation interest (the second interest ) in the trust; disregard the second interest to the extent that it arises through the existence of the first interest; and (b) if an entity that is not a trust has a MIT participation interest in the trust because it holds interests in the trust indirectly, through a * chain of trusts—do not treat a trust in the chain of trusts as having a MIT participation interest in the trust. (3) For the purposes of paragraph (2)(b), treat an entity covered by subsection 275 ‑ 20(4) as an entity that is not a trust. (4) For the purposes of paragraphs (1)(a) and (b), apply the rules in subsection 275 ‑ 20(7).

Amendment history: Inserted 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 275-30 — Closely ‑ held restrictions

(1) The trust satisfies the requirements in this subsection in relation to the income year unless, at any time in the income year, any of the following situations exist: (a) for a trust mentioned in subparagraph 275 ‑ 10(3)(d)(i) (trusts with wholesale membership)—10 or fewer persons have a total * MIT participation interest in the trust of 75% or more; (b) if paragraph (a) does not apply—20 or fewer persons have a total MIT participation interest in the trust of 75% or more; (c) a foreign resident individual has a MIT participation interest in the trust of 10% or more. (2) For the purposes of paragraphs (1)(a) and (b): (a) if an entity covered by subsection 275 ‑ 20(4) has a * MIT participation interest in the trust—treat that entity as not having a MIT participation interest in the trust; and (b) if an entity that is not a trust has a MIT participation interest in the trust because it holds interests in the trust indirectly, through a * chain of trusts: (i) if the entity is covered by subsection 275 ‑ 20(4)—do not treat it as having a MIT participation interest in the trust; and (ii) do not treat a trust in the chain of trusts as having a MIT participation interest in the trust. (3) For the purposes of paragraph (2)(b), treat an entity covered by subsection 275 ‑ 20(4) as an entity that is not a trust. (4) For the purposes of paragraphs (1)(a) and (b), apply the rules in subsection 275 ‑ 20(7).

Amendment history: Inserted 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) | Repealed and substituted 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 275-35 — Licensing requirements for unregistered MIS

(1) The trust satisfies the requirements in this section in relation to the income year if, at the time the payment mentioned in paragraph 275 ‑ 10(3)(a) is made (the time of the first fund payment for the income year): (a) the trust is operated or managed by: (i) a financial services licensee (within the meaning of the Corporations Act 2001 ) holding an Australian financial services licence whose licence covers it providing financial services (within the meaning of that Act) to wholesale clients (within the meaning of that Act); or (ii) an authorised representative (within the meaning of that Act) of such a financial services licensee; or (b) the trust is operated or managed by an entity covered by subsection (2); or (c) the trust is operated or managed by an entity that: (i) is a * wholly ‑ owned subsidiary of an entity covered by subsection (2); and (ii) is an entity covered by subsection (3). (2) An entity is covered by this subsection if it would, but for subsection 5A(4) of the Corporations Act 2001 (about the Crown not being bound by Chapter 6CA or 7 of that Act), be required under that Act to be a financial services licensee (within the meaning of that Act). (3) An entity is covered by this subsection if it would, but for any instrument issued by ASIC under the Corporations Act 2001 that has effect in relation to the entity and the operation of the scheme mentioned in paragraph 275 ‑ 10(3)(c), be required under that Act to be a financial services licensee (within the meaning of that Act).

Amendment history: Inserted 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) | Repealed and substituted by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4) | Amended by No 76 of 2023, effective sch 2 (items 649-659), sch 3 (item 41): 20 Oct 2023 (s 2(1) items 2, 14) sch 6 (item 32): 21 Sept 2023 (s 2(1) item 22)

s 275-40 — MIT participation interest

(1) An entity has a MIT participation interest in a trust if the entity, directly or indirectly: (a) holds, or has the right to * acquire, interests representing a percentage of the value of the interests in the trust; or (b) has the control of, or the ability to control, a percentage of the rights attaching to * membership interests in the trust; or (c) has the right to receive a percentage of any distribution of income that the trust may make. (2) The MIT participation interest of the entity in the trust is the greatest of the percentages mentioned in paragraphs (1)(a), (b) and (c).

Amendment history: Inserted 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 275-45 — Meaning of managed investment trust —every member of trust is a managed investment trust etc.

(1) A trust is covered under this section in relation to an income year if: (a) the condition in paragraph 275 ‑ 10(3)(a) is satisfied; and (b) the condition in paragraph 275 ‑ 10(3)(b) is satisfied; and (c) either: (i) the only * members of the trust are entities that are covered by subsection 275 ‑ 20(4) (other than entities mentioned in paragraph 275 ‑ 20(4)(f)); or (ii) the only members of the trust are entities that are * managed investment trusts in relation to the income year because of subsection 275 ‑ 10(2); and (d) the trust satisfies the licensing requirements in section 275 ‑ 35 in relation to the income year. (2) A requirement in paragraph (1)(a) is satisfied if, and only if, it is satisfied: (a) at the time the trustee of the trust makes the first * fund payment in relation to the income year; or (b) if the trustee does not make such a payment in relation to the income year—at both the start and the end of the income year.

Amendment history: Inserted 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 275-50 — Extended definition of managed investment trust —no fund payment made in relation to the income year

A trust is covered under this section in relation to an income year if: (a) the trustee of the trust does not make a * fund payment in relation to the income year; and (b) the trust would be a * managed investment trust in relation to the income year if the trustee of the trust had made the first fund payment in relation to the income year on the first day of the income year when it was in existence; and (c) the trust would be a managed investment trust in relation to the income year if the trustee of the trust had made the first fund payment in relation to the income year on the last day of the income year on which it was in existence.

Amendment history: Inserted 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 275-55 — Extended definition of managed investment trust —temporary circumstances outside the control of the trustee

A trust is covered under this section in relation to an income year if: (a) apart from a particular circumstance, the trust would be a * managed investment trust in relation to the income year; and (b) the circumstance is temporary; and (c) the circumstance arose outside the control of the trustee of the trust; and (d) it is fair and reasonable to treat the trust as a managed investment trust in relation to the income year, having regard to the following matters: (i) the matters in paragraphs (a) and (b); (ii) the nature of the circumstance; (iii) the actions (if any) taken by the trustee of the trust to address or remove the circumstance, and the speed with which such actions are taken; (iv) the extent to which treating the trust as a managed investment trust in relation to the income year would increase or reduce the amount of tax otherwise payable by the trustee, the * members of the trust or any other entity; (v) any other relevant matter.

Amendment history: Inserted 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 275-100 — Consequences of making choice—CGT to be primary code for calculating MIT gains or losses

(1) The modifications in subsection (2) apply if: (a) a * CGT event happens at a time involving a * CGT asset; and (b) the CGT asset is owned at that time by an entity that is a * managed investment trust in relation to the income year in which the time occurs; and (c) the CGT event happens because the managed investment trust * disposes of, ceases to own or otherwise realises the asset; and (d) the asset is covered by section 275 ‑ 105; and (e) the entity meets the requirement in section 275 ‑ 110 at the time; and (f) a choice under section 275 ‑ 115 covering the entity is in force for the income year in which the time occurs. (1A) Without limiting paragraph (1)(b), if: (a) a * VCLP or an * ESVCLP owns a * CGT asset at the time referred to in that paragraph; and (b) at that time, the * managed investment trust has an interest in the asset as a * limited partner of the VCLP or ESVCLP; for the purposes of that paragraph, the managed investment trust is taken to own the asset to the extent of that interest. (2) These provisions do not apply to the * CGT event: (a) sections 6 ‑ 5 (about * ordinary income), 8 ‑ 1 (about amounts you can deduct), and 15 ‑ 15 and 25 ‑ 40 (about profit ‑ making undertakings or plans); (b) sections 25A and 52 of the Income Tax Assessment Act 1936 (about profit ‑ making undertakings or schemes); (c) section 118 ‑ 20 (about reducing capital gains if amount otherwise assessable); (d) Division 70 and section 118 ‑ 25 (about trading stock). General exceptions (3) The provisions referred to in subsection (2) can apply to the * CGT event if a * capital gain or * capital loss from the event is disregarded because of one of the provisions in this table: Where gain or loss disregarded because of CGT provision Item Provision Brief description 1 Paragraph 104 ‑ 15(4)(a) Title in a CGT asset does not pass when a hire purchase or similar agreement ends 2 Section 118 ‑ 13 Shares in a PDF 3 Section 118 ‑ 60 Certain gifts Trading stock and profit ‑ making undertakings or plans involving land etc. (4) The provisions referred to in subsection (2) can also apply to the * CGT event if: (a) where the * CGT asset is land (including an interest in land), or a right or option to * acquire or * dispose of land (including an interest in land): (i) the CGT asset is * trading stock; or (ii) the circumstances existing at the time of the event would, disregarding this Subdivision, give rise to an amount being included in the assessable income of the entity under section 15 ‑ 15 or to a deduction for the entity under section 25 ‑ 40 (about profit ‑ making undertakings or plans); or (b) where paragraph (a) does not apply: (i) the * managed investment trust acquired the CGT asset in an income year for which the choice mentioned in paragraph (1)(f) was not in force; and (ii) the CGT asset was treated as trading stock in the managed investment trust’s financial report for the most recent income year ending before the start of the income year in which that choice first came into force; and (iii) the CGT asset was treated as trading stock in the * income tax return for the managed investment trust for the most recent income year ending before the start of the income year in which that choice first came into force; and (iv) the CGT asset was treated as trading stock in the managed investment trust’s financial report for the most recent income year ending before the time of the event; and (v) the CGT asset was treated as trading stock in the income tax return for the managed investment trust for the most recent income year ending before the time of the event. Treatment of outgoings to acquire trading stock (5) The modifications in subsection (6) apply if: (a) an entity that is a * managed investment trust in relation to the income year * acquires a * CGT asset at a time in that income year; and (b) the CGT asset is an item of * trading stock; and (c) the CGT asset is not land (including an interest in land), or a right or option to acquire or * dispose of land (including an interest in land); and (d) the entity incurs an outgoing in connection with acquiring the asset; and (e) the asset is covered by section 275 ‑ 105; and (f) the entity meets the requirement in section 275 ‑ 110 at the time; and (g) a choice under section 275 ‑ 115 covering the entity is in force for the income year in which the time occurs. (6) The modifications are as follows: (a) section 8 ‑ 1 (about amounts you can deduct) does not apply to the * acquisition; (b) Division 70 (about trading stock) does not apply in relation to the asset in respect of: (i) the income year in which the time occurs; and (ii) any later income year in relation to which the entity is a * managed investment trust and throughout which the entity meets the requirement in section 275 ‑ 110.

Amendment history: Inserted 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 54 of 2016, effective Sch 1 (items 1, 12–14, 19) and Sch 2 (items 1–5, 8–14, 20–34, 44–51, 53–56, 63–74, 76): 1 July 2016 (s 2(1) items 2–5, 7)

s 275-105 — Covered assets

(1) An asset is covered by this section if it is any of the following: (a) a * share in a company (including a share in a * foreign hybrid company); (b) a * non ‑ share equity interest in a company; (c) a unit in a unit trust; (d) land (including an interest in land); (e) a right or option to * acquire or * dispose of an asset of a kind mentioned in paragraph (a), (b), (c) or (d). (2) However, the asset is not covered by this section if it is any of the following: (a) a * Division 230 financial arrangement; (b) a * debt interest.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 275-110 — MIT not to be trading trust

(1) An entity that is a trust meets the requirement in this section at a time if the entity is not, at that time, a trading trust for the purposes of Division 6C of Part III of the Income Tax Assessment Act 1936 in relation to that income year. (2) If, apart from a particular circumstance, a trust would meet the requirement in subsection (1) at a time, the trust also meets the requirement in this section at a time if: (a) the circumstance is temporary; and (b) the circumstance arose outside the control of the trustee of the trust; and (c) the trustee of the trust is not liable to pay income tax on the net income of the trust under section 102S of the Income Tax Assessment Act 1936 for the income year in which the time occurs; and (d) it is fair and reasonable to treat the trust as meeting the requirement in this section at that time, having regard to the following matters: (i) the matters in paragraphs (a), (b) and (c); (ii) the nature of the circumstance; (iii) the actions (if any) taken by the trustee of the trust to address or remove the circumstance, and the speed with which such actions are taken; (iv) the extent to which treating the trust as meeting the requirement in this section at that time would increase or reduce the amount of tax otherwise payable by the trustee, the beneficiaries of the trust or any other entity; (v) any other relevant matter.

Amendment history: Inserted 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 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 275-115 — MIT CGT choices

(1) The trustee of an entity that is a * managed investment trust may make a choice under this section that covers the managed investment trust. (2) The choice must be made in the * approved form. (3) The choice can be made only: (a) if the entity became a * managed investment trust in the 2009 ‑ 10 income year or a later income year (whether or not the entity existed before it became a managed investment trust)—on or before the latest of the following days: (i) the day it is required to lodge its * income tax return for the income year in which it became a managed investment trust; (ii) if the Commissioner allows a later day for the managed investment trust—that later day; or (b) otherwise—on or before the latest of the following days: (i) the last day in the 3 month period starting on the day on which this section commences; (ii) the last day of the 2009 ‑ 10 income year; (iii) if the Commissioner allows a later day for the managed investment trust—that later day. (4) The choice, once made, cannot be revoked. (5) The choice is in force: (a) in the circumstances mentioned in paragraph (3)(a)—for the income year in which the entity became a * managed investment trust (whether or not the entity existed before it became a managed investment trust) and later income years; or (b) in the circumstances mentioned in paragraph (3)(b)—for the 2008 ‑ 09 income year and later income years.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 275-120 — Consequences of not making choice—revenue account treatment

(1) This section applies if: (a) the requirements in subsection 275 ‑ 100(1) are met in relation to a * CGT asset held by a * managed investment trust, apart from the requirement in paragraph 275 ‑ 100(1)(f); and (b) the CGT asset is not: (i) land (including an interest in land); or (ii) a right or option to * acquire or * dispose of land (including an interest in land); and (c) the managed investment trust disposes of, ceases to own or otherwise realises the asset; and (d) disregarding this section: (i) the net proceeds (if any) from the disposal, cessation or realisation would not be reflected in an amount being included in the assessable income of the managed investment trust (other than under Part 3 ‑ 1 or 3 ‑ 3); and (ii) the gain or profit (if any) on the disposal, cessation or realisation would not be reflected in an amount being included in the assessable income of the managed investment trust (other than under Part 3 ‑ 1 or 3 ‑ 3); and (iii) the loss (if any) on the disposal, cessation or realisation would not be reflected in an amount being deductible by the managed investment trust. (2) For the purposes of this Act, treat the disposal, cessation of ownership of or realisation of the asset in the same way as the disposal, cessation of ownership of or realisation of a * revenue asset.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 275-200 — Gains and losses etc. from carried interests in managed investment trusts reflected in assessable income or deduction

(1) This section applies if: (a) you hold a * CGT asset in an income year that carries an entitlement to a distribution from an entity; and (b) the entitlement to such a distribution is contingent upon the attainment of profits by the entity; and (c) the entity satisfies any of these requirements: (i) it is a * managed investment trust in relation to the income year; (ii) it was a managed investment trust in relation to a previous income year; and (d) you acquired the asset because of services you or your * associate provided, or will provide, to the entity; and (e) you or your associate provided, or will provide, those services: (i) as a manager of the entity; or (ii) as an associate of a manager of the entity; or (iii) as an employee of a manager of the entity; or (iv) as an associate of an employee of a manager of the entity; and (f) any of the following apply: (i) you become entitled in the income year to such a distribution (regardless of whether the distribution is made immediately, or is to be made in the future); (ii) a * CGT event happens in relation to the asset in the income year. (1A) For the purposes of paragraph (1)(c), in determining whether the entity satisfies any of the requirements mentioned in that paragraph: (a) disregard paragraph 275 ‑ 10(3)(b) (requirement of not being a trading trust etc.); and (b) disregard subsection 102T(16) of the Income Tax Assessment Act 1936 (exclusion of public trading trust etc.). (2) Include in your assessable income for the income year: (a) the amount of the distribution (except to the extent that it represents a return of capital that you or your associate contributed in order for you to * acquire the asset); or (b) the amount of your gain or profit (if any) on the * CGT event. (3) Subsection (2) does not apply to the extent that the amount is included in your assessable income as: (a) * ordinary income under section 6 ‑ 5; or (b) * statutory income under a section of this Act, other than a provision in Part 3 ‑ 1 or 3 ‑ 3. (4) An amount to which subsection (2) applies is taken, for the purposes of the * income tax laws, to have a source in Australia. For the purposes of this subsection, disregard subsection (3). (5) You are entitled to a deduction for the income year for the amount of your loss (if any) on the * CGT event. (6) Subsection (5) does not apply to the extent that you can deduct the amount under another provision of this Act. (7) Subdivision 115 ‑ C does not apply to the amount of a distribution mentioned in subparagraph (1)(f)(i) if: (a) that amount is included in your assessable income under subsection (2); or (b) an amount referable to that amount is included in your assessable income under Division 6 of Part III of the Income Tax Assessment Act 1936 .

Amendment history: Inserted 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 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 275-600 — What this Subdivision is about

The trustee of a managed investment trust in relation to an income year is taxed on amounts related to the managed investment trust’s non ‑ arm’s length income for the income year. Table of sections Operative provisions 275 ‑ 605 Trustee taxed on amount of non ‑ arm’s length income of managed investment trust 275 ‑ 610 Non ‑ arm’s length income 275 ‑ 615 Commissioner’s determination in relation to amount of non ‑ arm’s length income

Amendment history: Inserted 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 275-605 — Trustee taxed on amount of non ‑ arm’s length income of managed investment trust

(1) Subsections (2), (3) and (4) apply if the Commissioner has made a determination under section 275 ‑ 615 that specifies an amount of * non ‑ arm’s length income for a specified * managed investment trust in relation to a specified income year. Excess amount to be taxed (2) The trustee of the * managed investment trust is liable to pay income tax at the rate declared by the Parliament on the amount mentioned in subsection (5). Note: The rate is set out in subsection 12(10) of the Income Tax Rates Act 1986 . Excess amount to be adjusted (3) If the trust is an * AMIT for the income year: (a) if paragraph (b) does not apply—treat the trust as having an * over in the income year in which the determination is made, for the specified income year, of a character relating to * ordinary income, or * statutory income, from an * Australian source, equal to the amount mentioned in subsection (5); or (b) if the trust already has such an over in the income year in which the determination is made, for the specified income year—increase the amount of that over by the amount mentioned in subsection (5). (4) If the trust is not an * AMIT for the income year, reduce the trust’s * net income for the income year in which the determination is made by the amount mentioned in subsection (5), to the extent that the net income is attributable to that amount. Excess amount (5) The amount is the excess mentioned in paragraph 275 ‑ 610(1)(b) in respect of the * non ‑ arm’s length income, reduced by deductions (if any) that: (a) are reflected in: (i) if the trust is an * AMIT for the income year—the amounts of its * trust components for the income year (disregarding subsection (3)); or (ii) otherwise—its * net income for the income year (disregarding subsection (4)); and (b) are attributable only to the amount of non ‑ arm’s length income.

Amendment history: Inserted 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 275-610 — Non ‑ arm’s length income

(1) An amount of * ordinary income or * statutory income is non ‑ arm’s length income of a * managed investment trust if: (a) it is derived from a * scheme the parties to which were not dealing with each other at * arm’s length in relation to the scheme; and (b) that amount exceeds the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm’s length in relation to the scheme; and (c) the amount is none of the following: (i) a distribution from a * corporate tax entity; (ii) a distribution from a trust that is not a party to the scheme mentioned in paragraph (a); (iii) a * return covered by subsection (2). (1A) Disregard subparagraph (1)(c)(ii) if the amount of * ordinary income or * statutory income is * excepted MIT CSA income. (2) This subsection covers a * return that an entity pays or provides on a * debt interest, if the rate (expressed on an annual basis) of the return does not exceed the greater of: (a) the * benchmark rate of return for the interest; and (b) the * base interest rate for the day on which the return is paid or provided, plus 3 percentage points. (3) Subsection (4) applies if: (a) an amount would be * non ‑ arm’s length income of the * managed investment trust (disregarding that subsection); and (b) the amount is a distribution from a trust, or a share of the * net income of a trust, if the trust is a party to the scheme mentioned in paragraph (1)(a). (4) The amount is * non ‑ arm’s length income of the * managed investment trust only to the extent that the distribution or share of * net income is attributable to non ‑ arm’s length income of the trust mentioned in paragraph (3)(b) (on that assumption that the trust were a managed investment trust) because of another operation of this section. (5) Subsection (6) applies if: (a) an amount (the first amount ) of * ordinary income or * statutory income of the * managed investment trust that would be * non ‑ arm’s length income of the managed investment trust (disregarding that subsection) is: (i) a distribution from a trust that is a party to the scheme mentioned in paragraph (1)(a); or (ii) a share of the * net income of a trust that is a party to that scheme; and (b) another amount (the second amount ) of ordinary income or statutory income of the managed investment trust is: (i) a distribution from another trust (whether or not the other trust is a party to that scheme); or (ii) a share of the net income of another trust (whether or not the other trust is a party to that scheme); and (c) it is reasonable to conclude that the second amount would have been higher but for the first amount. (6) The first amount is not * non ‑ arm’s length income of the * managed investment trust to the extent that the second amount would have been higher as mentioned in paragraph (5)(c).

Amendment history: Inserted by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4) | Amended by No 34 of 2019, effective Sch 1 (items 1–5, 12, 13, 16), Sch 2, Sch 4 (items 3–6, 8, 9) and Sch 5 (items 1, 2, 5): 1 July 2019 (s 2(1) items 2, 3)

s 275-615 — Commissioner’s determination in relation to amount of non ‑ arm’s length income

(1) The Commissioner may make a determination in writing that specifies an amount of * non ‑ arm’s length income for a specified * managed investment trust in relation to a specified income year if the Commissioner is satisfied that: (a) the amount of non ‑ arm’s length income for the managed investment trust in relation to the income year is reflected in: (i) if the trust is an * AMIT for the income year—one or more of its * trust components for the income year; or (ii) otherwise—its * net income for the income year; and (b) the managed investment trust is a party to the * scheme mentioned in paragraph 275 ‑ 610(1)(a) at a time in the income year in which the amount is derived; and (c) at least one of the parties to that scheme is not a managed investment trust in relation to the income year. (1A) Disregard paragraphs (1)(b) and (c) if the amount of * non ‑ arm’s length income is * excepted MIT CSA income. Determination does not form part of assessment (2) A determination under subsection (1) does not form part of an assessment. Notice by Commissioner of determination (3) If the Commissioner makes a determination under subsection (1), the Commissioner must give a copy of the determination to the * managed investment trust concerned. Evidence of determination (4) The production of: (a) a notice of a determination; or (b) a document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of a determination; is: (c) conclusive evidence of the due making of the determination; and (d) conclusive evidence that the determination is correct (except in proceedings under Part IVC of the Taxation Administration Act 1953 on an appeal or review relating to the determination). Objections (5) If an entity to whom a determination relates is dissatisfied with the determination, the entity may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4) | Amended by No 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) | Amended by No 34 of 2019, effective Sch 1 (items 1–5, 12, 13, 16), Sch 2, Sch 4 (items 3–6, 8, 9) and Sch 5 (items 1, 2, 5): 1 July 2019 (s 2(1) items 2, 3)

s 276-1 — What this Division is about

A managed investment trust in relation to an income year is an attribution managed investment trust (or AMIT) for the income year if certain criteria are satisfied. In particular, for the trust to be an AMIT, the interests of the members of the trust need to be clearly defined at all times during which the trust is in existence in the income year (see Subdivision 276 ‑ A). An AMIT for an income year is treated as a fixed trust. A member of the AMIT in respect of the income year is treated as having a vested and indefeasible interest in a share of the income and capital of the AMIT throughout the income year (see Subdivision 276 ‑ B). Amounts related to income and tax offsets of an AMIT, determined by the trustee to be of a particular tax character, are attributed to members, generally retaining that tax character (see Subdivision 276 ‑ C). Underestimates and overestimates of amounts at the trust level are carried forward and dealt with in later years. This is done on a character ‑ by ‑ character basis. An underestimate in an income year of a particular character results in an under of that character. An overestimate results in an over of that character. Unders and overs arise, and are dealt with, in the income year in which they are discovered (see Subdivision 276 ‑ F). The trustee of an AMIT is liable to pay income tax on certain amounts reflecting under ‑ attribution of income or over ‑ attribution of tax offsets (see Subdivision 276 ‑ G). Special rules apply to a trust that ceases to be an AMIT (see Subdivision 276 ‑ K).

Amendment history: Inserted 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 276-5 — What this Subdivision is about

A managed investment trust in relation to an income year is an attribution managed investment trust (or AMIT ) for the income year if certain criteria are satisfied. In particular: (a) the interests of the members of the trust need to be clearly defined at all times when the trust is in existence in the income year; and (b) the trustee of the trust needs to have made a choice for the trust to be an AMIT in respect of that income year or an earlier income year. Table of sections Operative provisions 276 ‑ 10 Meaning of attribution managed investment trust (or AMIT ) 276 ‑ 15 Clearly defined interests 276 ‑ 20 Trust with classes of membership interests—each class treated as separate AMIT

Amendment history: Inserted 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 276-10 — Meaning of attribution managed investment trust (or AMIT )

(1) A trust is an attribution managed investment trust (or AMIT ) for an income year if: (a) the trust is a * managed investment trust in relation to the income year; and (b) the rights to income and capital arising from each of the * membership interests in the trust are clearly defined (see section 276 ‑ 15) at all times when the trust is in existence in the income year; and (d) if the regulations specify criteria for the purposes of this paragraph—those criteria are satisfied in relation to the trust; and (e) either: (i) the trustee of the trust has made a choice for the purposes of this subparagraph in respect of that income year; or (ii) the trust was an AMIT for an earlier income year. (2) A choice for the purposes of subparagraph (1)(e)(i) cannot be revoked.

Amendment history: Inserted by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4) | Amended by No 15 of 2019, effective Sch 1 (items 2–17, 46): 1 Apr 2019 (s 2(1) item 2)

s 276-15 — Clearly defined interests

(1) Without limiting the circumstances in which the rights to income and capital arising from the * membership interests in a trust are clearly defined for the purposes of paragraph 276 ‑ 10(1)(b), treat such rights as being clearly defined at a particular time for those purposes if any of the following conditions are satisfied at that time: (a) the trust is registered under section 601EB of the Corporations Act 2001 ; (b) the rights to income and capital arising from each of the membership interests in the trust are the same. (2) For the purposes of working out whether the condition in paragraph (1)(b) is satisfied, disregard the following: (a) fees or charges imposed by the trustee on the * members of the trust; (b) issue and redemption prices of * membership interests in the trust; (c) exposure of the membership interests in the trust to foreign exchange gains and losses.

Amendment history: Inserted 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 276-20 — Trust with classes of membership interests—each class treated as separate AMIT

(1) Subsections (2) and (3) apply if: (a) the * membership interests in an * AMIT for an income year are divided into classes; and (b) the rights arising from each of those membership interests in a particular class are the same as the rights arising from every other of those membership interests in that class; and (c) each of those membership interests in a particular class is distinct from each of those membership interests in another class; and (d) the trustee of the AMIT has made a choice for the purposes of this paragraph that applies to the income year. (2) For the purposes of this Division (other than this Subdivision), treat each class of those * membership interests in the * AMIT as being a separate AMIT for that income year. (3) For the purposes of this Division, allocate assessable income, * exempt income, * non ‑ assessable non ‑ exempt income, * tax losses, * net capital losses and other similar amounts in respect of the * AMIT between each of the separate classes mentioned in subsection (1) on a fair and reasonable basis. Making of choice by trustee (4) A choice for the purposes of paragraph (1)(d) applies to the income year for which it is made and every subsequent income year. (5) A choice for the purposes of paragraph (1)(d) cannot be revoked.

Amendment history: Inserted 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 276-50 — What this Subdivision is about

An AMIT for an income year is treated as a fixed trust. A member of the AMIT in respect of the income year is treated as having a vested and indefeasible interest in a share of the income and capital of the AMIT throughout the income year. Table of sections Operative provisions 276 ‑ 55 AMIT taken to be fixed trust and member taken to have vested and indefeasible interest in income and capital

Amendment history: Inserted 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 276-55 — AMIT taken to be fixed trust and member taken to have vested and indefeasible interest in income and capital

For the purposes of this Act: (a) treat an * AMIT for an income year as a * fixed trust; and (b) treat an entity that is a * member of the AMIT in respect of the income year as having a vested and indefeasible interest in a share of the income and capital of the AMIT throughout the income year.

Amendment history: Inserted 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 276-75 — What this Subdivision is about

Amounts related to income and tax offsets of an AMIT, of a particular tax character, are attributed to members of the AMIT on the basis of their determined member components of that tax character. This attribution does not apply to the extent that amounts have been withheld etc. in relation to those components under Subdivision 12 ‑ F, 12 ‑ H or 12A ‑ C in Schedule 1 to the Taxation Administration Act 1953 . The trustee of an AMIT that is not a withholding MIT may be liable to pay income tax in respect of a determined member component of a foreign resident member (including where that member is acting in the capacity of a trustee). As a result, the member may be entitled to a tax offset. Table of sections Taxation etc. of member on determined member components 276 ‑ 80 Member’s assessable income or tax offsets for determined member components—general rules 276 ‑ 85 Member’s assessable income or tax offsets for determined member components—specific rules 276 ‑ 90 Commissioner’s determination as to status of member as qualified person 276 ‑ 95 Relationship between section 276 ‑ 80 and withholding rules 276 ‑ 100 Relationship between section 276 ‑ 80 and other charging provisions in this Act Foreign resident members—taxation of trustee and corresponding tax offset for members 276 ‑ 105 Trustee taxed on foreign resident’s determined member components 276 ‑ 110 Refundable tax offset for foreign resident member—member that is not a trustee Special rule for interposed custodian 276 ‑ 115 Custodian interposed between AMIT and member

Amendment history: Inserted 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 276-80 — Member’s assessable income or tax offsets for determined member components—general rules

Components of income character (1) Subsection (2) applies if a * member of an * AMIT in respect of an income year has, for the income year, a * determined member component of: (a) a character relating to assessable income; or (b) a character relating to * exempt income; or (c) a character relating to * non ‑ assessable non ‑ exempt income. (2) For the purpose of working out the effects mentioned in subsection (3) for the * member, treat the member as having derived, received or made the amount reflected in the * determined member component: (a) in the member’s own right (rather than as a member of a trust); and (b) in the same circumstances as the * AMIT derived, received or made that amount, to the extent that those circumstances gave rise to the particular character of that component. (3) The effects are as follows: (a) including an amount in the assessable income of the * member; (b) including an amount in the * exempt income of the member; (c) including an amount in the * non ‑ assessable non ‑ exempt income of the member; (d) determining whether the member has made a * capital gain from a * CGT event; (e) determining the extent to which the member’s * net capital loss has been * utilised. Components of tax offset character (4) Subsection (5) applies if a * member of an * AMIT in respect of an income year has, for the income year, a * determined member component of a character relating to a * tax offset. (5) For the purpose of working out the effects mentioned in subsection (6) for the * member, treat the member as having paid or received the amount reflected in the * determined member component: (a) in the member’s own right (rather than as a member of a trust); and (b) in the same circumstances as the * AMIT paid or received that amount. (6) The effects are as follows: (a) entitling the member to a * tax offset; (b) entitling the member to a credit under Division 18 in Schedule 1 to the Taxation Administration Act 1953 .

Amendment history: Inserted 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 276-85 — Member’s assessable income or tax offsets for determined member components—specific rules

(1) This section makes clarifications and modifications of the operation of section 276 ‑ 80 in respect of a * member of an * AMIT in respect of an income year. (2) For the purposes of this Act, if an amount is included in the * member’s assessable income because of the operation of this section, treat that amount as being so included because of the operation of subsection 276 ‑ 80(2). Discount capital gains (3) Subsection (4) applies if the * member has, for the income year, a * determined member component of the character of: (a) a * discount capital gain from a * CGT asset that is * taxable Australian property; or (b) a discount capital gain from a CGT asset that is not taxable Australian property. (4) For the purposes of section 276 ‑ 80 and this section, treat the amount of the component as being double what it would be apart from this subsection. Franking credit gross ‑ up (5) Subsection (6) applies if the * member has, for the income year, a * determined member component (the franking credit gross ‑ up component ) of the character of assessable income under subsection 207 ‑ 20(1) (franking credit gross ‑ up). (6) For the purposes of subsection 207 ‑ 20(1) (franking credit gross ‑ up), treat the reference in that subsection to the amount of the * franking credit on the distribution as instead being a reference to the amount of the franking credit gross ‑ up component. Limitation on circumstances in paragraph 276 ‑ 80(2)(b) (7) The circumstances mentioned in paragraph 276 ‑ 80(2)(b) or (5)(b) do not include the following: (a) the residence of the trustee of the * AMIT; (b) the place of the central management and control of the AMIT.

Amendment history: Inserted 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 276-90 — Commissioner’s determination as to status of member as qualified person

(1) Subsection (2) applies to a * member of an * AMIT in respect of an income year if: (a) the AMIT is specified in a determination under subsection (3); and (b) the income year is specified in the determination; and (c) the member: (i) is specified in the determination; or (ii) is included in a class of members specified in the determination. (2) Treat the * member as not being a qualified person in relation to a distribution in relation to the * AMIT for the income year, for the purposes of Division 1A of former Part IIIAA of the Income Tax Assessment Act 1936 . (3) For the purposes of this section, the Commissioner may make a determination in writing that identifies any of the following: (a) a specified * member of a specified * AMIT; (b) a specified class of members of a specified AMIT. (4) The determination may specify one or more income years. (5) In deciding whether to make a determination under subsection (3), the Commissioner may have regard to any of the following: (a) arrangements (if any) entered into by the * member that directly or indirectly reduce the economic exposure of the member to changes in the value of the * membership interests held by the member in the * AMIT; (b) the lack of such arrangements; (c) the length of time that the member has been a member of the AMIT; (d) any other matter that the Commissioner considers relevant. (6) A determination under subsection (3) is not a legislative instrument. (7) If an entity to whom a determination relates is dissatisfied with the determination, the entity may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .

Amendment history: Inserted 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 276-95 — Relationship between section 276 ‑ 80 and withholding rules

(1) Subsection 276 ‑ 80(2) does not apply to the extent that the * determined member component is reflected in an * AMIT DIR payment or a * fund payment, if an amount in respect of the payment: (a) has been withheld from the payment under Subdivision 12 ‑ F or 12 ‑ H in Schedule 1 to the Taxation Administration Act 1953 ; or (b) would be so withheld apart from an exemption from a requirement to withhold under Subdivision 12 ‑ F in that Schedule; or (c) has been paid under Division 12A in that Schedule; or (d) would be so paid apart from an exemption from a requirement to withhold under Subdivision 12 ‑ F in that Schedule. (2) However, if the * determined member component is reflected in a * fund payment, subsection (1) applies only to the extent to which an amount attributable to the fund payment is treated under section 840 ‑ 815 as not assessable income and not * exempt income. (3) Subsection 276 ‑ 80(2) does not affect the operation of the following: (a) Division 11A of Part III of the Income Tax Assessment Act 1936 ; (b) Subdivision 840 ‑ M of this Act; (c) Division 12 in Schedule 1 to the Taxation Administration Act 1953 . Note: See Division 12A in Schedule 1 to the Taxation Administration Act 1953 for provisions about withholding tax that apply specifically to AMITs.

Amendment history: Inserted 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 276-100 — Relationship between section 276 ‑ 80 and other charging provisions in this Act

(1) This section applies if: (a) an amount is included in the assessable income of a * member of an * AMIT in respect of an income year in respect of the member’s interest in the AMIT; and (b) that amount is so included otherwise than because of the operation of subsection 276 ‑ 80(2). (2) Reduce the amount included in the assessable income of the * member as mentioned in subsection (1) to the extent (if any) that a corresponding amount is included in the assessable income of the member in respect of the member’s interest in the * AMIT because of the operation of subsection 276 ‑ 80(2). (3) To avoid doubt, this section is subject to section 230 ‑ 20 (financial arrangements).

Amendment history: Inserted 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 276-105 — Trustee taxed on foreign resident’s determined member components

(1) This section applies if: (a) a * member of an * AMIT in respect of an income year has, for the income year, a * determined member component of a character relating to assessable income in respect of the AMIT; and (b) either: (i) unless subparagraph (ii) applies—the member is a foreign resident at the end of the income year; or (ii) if the member is, in respect of that determined member component, a beneficiary in the capacity of a trustee of another trust—a trustee of the other trust is a foreign resident at the end of the income year; and (c) the AMIT is not a * withholding MIT. (2) The trustee of the * AMIT is to be assessed and is liable to pay income tax: (a) if subparagraph (1)(b)(i) applies and the * member is not a company—in respect of the amount mentioned in subsection (3) as if it were the income of an individual and were not subject to any deduction; or (b) if subparagraph (1)(b)(i) applies and the member is a company—in respect of the amount mentioned in subsection (3) at the rate declared by the Parliament for the purposes of this paragraph; or (c) if subparagraph (1)(b)(ii) applies—in respect of the amount mentioned in subsection (4) or (5) at the rate declared by the Parliament for the purposes of this paragraph. Note: The rates are set out in the following provisions: (a) for paragraph (a)—subsection 12(6A) of the Income Tax Rates Act 1986 and Schedule 10A to that Act; (b) for paragraph (b)—paragraph 28A(a) of that Act; (c) for paragraph (c)—paragraph 28A(b) of that Act. (3) The amount is the * determined member component, to the extent that the component: (a) is attributable to a period when the * member was an Australian resident; or (b) is attributable to a period when the member was not an Australian resident and is attributable to sources in Australia. (4) The amount is the * determined member component, to the extent that the component is attributable to sources in Australia. (5) For the purposes of subsection (4), treat the entire amount of the * determined member component as not being attributable to sources in Australia if it is of the character of: (a) a * discount capital gain from a * CGT asset that is not * taxable Australian property; or (b) a * capital gain (other than a discount capital gain) from a CGT asset that is not taxable Australian property. Exception for component reflected in AMIT DIR payment or fund payment (6) Subsection (2) does not apply to the extent that the * determined member component is reflected in an * AMIT DIR payment or a * fund payment, if an amount in respect of the payment: (a) has been withheld from the payment under Subdivision 12 ‑ F or 12 ‑ H in Schedule 1 to the Taxation Administration Act 1953 ; or (b) would be so withheld apart from an exemption from a requirement to withhold under Subdivision 12 ‑ F in that Schedule; or (c) has been paid under Division 12A in that Schedule; or (d) would be so paid apart from an exemption from a requirement to withhold under Subdivision 12 ‑ F in that Schedule. Gross ‑ up for discount capital gain (7) Subsection (8) applies if a * determined member component is of the character of: (a) a * discount capital gain from a * CGT asset that is * taxable Australian property; or (b) a discount capital gain from a CGT asset that is not taxable Australian property. (8) For the purposes of this section, treat the amount of the component as being double what it would be apart from this subsection.

Amendment history: Inserted 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 276-110 — Refundable tax offset for foreign resident member—member that is not a trustee

(1) This section applies if a trustee is assessed and liable to pay income tax under section 276 ‑ 105 in respect of a * member because of paragraph 276 ‑ 105(2)(a) or (b). (2) The * member is entitled to a * tax offset for the income year equal to the tax paid by the trustee in accordance with subsection 276 ‑ 105(2). Note: The tax offset is subject to the refundable tax offset rules: see section 67 ‑ 23.

Amendment history: Inserted 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 276-115 — Custodian interposed between AMIT and member

(1) This section applies if: (a) a trust that is a * custodian is a * member of an * AMIT in respect of an income year; and (b) the custodian has, for the income year, a * determined member component of a particular character for the AMIT; and (c) the custodian is interposed between the AMIT and another entity (the subsequent recipient ); and (d) the subsequent recipient: (i) starts to have, at a time in the income year, an entitlement to an amount that is reasonably attributable to all or part of the determined member component; or (ii) would start to have, at a time in the income year, such an entitlement if the determined member component were an actual payment of an amount. (2) For the purposes of this Subdivision, reduce the * custodian’s * determined member component by the amount of the entitlement mentioned in subparagraph (1)(d)(i) or (ii). Note: This subsection may operate to reduce the amount of the determined member component multiple times if there is more than one subsequent recipient in respect of which the requirements in paragraphs (1)(c) and (d) are satisfied. (3) For the purposes of this Subdivision: (a) treat the subsequent recipient as being a * member of the * AMIT in respect of the income year; and (b) treat the subsequent recipient as having, for the income year, a * determined member component for the AMIT that: (i) is of the character mentioned in paragraph (1)(b); and (ii) is equal to the amount of the entitlement mentioned in subparagraph (1)(d)(i) or (ii).

Amendment history: Inserted 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 276-200 — What this Subdivision is about

A member’s member component of a particular character is so much of an AMIT’s determined trust component of that character (see Subdivision 276 ‑ E) as is attributable to membership interests held by the member, worked out in accordance with certain requirements. A member’s determined member component of a particular character is the amount stated to be the member’s member component of that character in an AMMA statement (see Subdivision 276 ‑ H). Table of sections Member ‑ level concepts 276 ‑ 205 Meaning of determined member component 276 ‑ 210 Meaning of member component

Amendment history: Inserted 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 276-205 — Meaning of determined member component

(1) The determined member component of a particular character for an income year of a * member of an * AMIT in respect of the income year is the amount of the member’s * member component of that character as reflected in the AMIT’s latest * AMMA statement for the member for the income year. (2) Subsection (3) applies if: (a) the * member makes a choice for the purposes of this paragraph that complies with subsection (5); and (b) the member gives a copy of the choice to the Commissioner within 4 months after: (i) unless subparagraph (ii) applies—the end of the member’s income year; or (ii) if the * AMIT gives the member a revised * AMMA statement for the income year at a time after the end of that income year—that time; and (c) the member gives a notice of the choice, in accordance with subsection (7), to the trustee of the AMIT within those 4 months. (3) Despite subsection (1), if the * determined member component of that character for the income year (disregarding this subsection) does not accord with subsections 276 ‑ 210(2), (3) and (4), that determined member component is instead the member’s * member component of that character for the income year. (4) For the purposes of subsection (3), in working out the member’s * member component of that character for the income year, if the * trust component of that character differs from the * determined trust component of that character, treat the references in section 276 ‑ 210 to determined trust component as instead being references to trust component. Example: The determined trust component exceeds the trust component because of an unintentional mistake by the trustee of the AMIT. As a result, a member’s corresponding determined member component under subsection (1) exceeds what it would have been if the trustee had not made the mistake. If the member makes a choice under subsection (2), the amount of the determined member component will be determined according to the amount of the trust component. (5) The choice must: (a) be in writing; and (b) state the following matters: (i) the income year to which the choice relates; (ii) what the * member considers to be the member’s * member component of that character for the income year; (iii) the reason why the member considers that the * determined member component of that character for the income year does not accord with subsections 276 ‑ 210(2), (3) and (4). (6) The way the * member’s * income tax return is prepared is sufficient evidence of the making of the choice. (7) The notice must: (a) be in writing; and (b) state the matters mentioned in paragraph (5)(b).

Amendment history: Inserted 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 276-210 — Meaning of member component

(1) This section applies to a * member of an * AMIT in respect of an income year and sets out how to work out the member’s * member components for the year. Meaning of member component (2) The * member’s member component of a character is so much of the * AMIT’s * determined trust component of that character as is attributable to the * membership interests in the AMIT held by the member, worked out in accordance with the requirements in subsections (3) and (4). Attribution must be fair and reasonable and accord with constituent documents (3) The attribution must be worked out on a fair and reasonable basis, in accordance with the constituent documents of the * AMIT. This requirement is subject to the requirement in subsection (4). Attribution must not involve streaming of character amounts (4) The attribution must not attribute any part of a * determined trust component of a particular character to a * member’s * membership interests because of the tax characteristics of the member. Safe harbour rules (5) Without limiting the scope of the requirements in subsection (3) and (4), an amount does not fail to be worked out in accordance with those requirements as mentioned in subsection (2) merely because the amount reflects the fact that: (a) the constituent documents of the * AMIT give the trustee of the AMIT the power to direct an amount arising from the sale of an asset to a particular * member, if: (i) the member redeems one or more * membership interests in the AMIT; and (ii) the direction of the amount is made to fund the redemption; and (b) the trustee exercises that power. (6) Without limiting the scope of the requirements in subsection (3) and (4), an amount does not fail to be worked out in accordance with those requirements as mentioned in subsection (2) merely because the amount reflects the fact that: (a) either: (i) an amount of an * under, relating to a base year (as mentioned in subsection 276 ‑ 345(1)) increases a * trust component of the * AMIT for a later income year under section 276 ‑ 305; or (ii) an amount of an * over, relating to a base year (as mentioned in subsection 276 ‑ 345(1)) decreases a trust component of the AMIT for a later income year under section 276 ‑ 305; and (b) an entity is a * member of the AMIT at a time in the later income year, but was not a member of the AMIT in respect of the base year. (7) Without limiting the scope of the requirements in subsection (3) and (4), an amount does not fail to be worked out in accordance with those requirements as mentioned in subsection (2) merely because the amount reflects the fact that: (a) the trustee made a * capital gain or * capital loss in an income year (for the purposes of working out the amount of a * trust component of the * AMIT for an income year in accordance with the rules in section 276 ‑ 265); and (b) an entity was a * member of the AMIT in respect of the income year, but was not a member of the AMIT at the time the capital gain or capital loss was made.

Amendment history: Inserted 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)