Income Tax Assessment Act 1997

s 960-85 — Special rule about translation—events that happened before the current choice took effect

Australian resident required to prepare financial reports under section 292 of the Corporations Act 2001 (1) If: (a) as the result of a choice (the current choice ) made by you under item 1 of the table in subsection 960 ‑ 60(1), subsection 960 ‑ 80(1) requires that an amount be translated to the * applicable functional currency; and (b) the amount is attributable to an event that happened, or a state of affairs that came into existence, at a time (the event time ) before the current choice took effect; the table has effect: Special rule about translation Item In this case... this is the result... 1 at the event time, no previous choice made by you under item 1 of the table in subsection 960 ‑ 60(1) was in effect the amount is to be translated first to Australian currency at the exchange rate applicable at the event time, and then to the * applicable functional currency at the exchange rate applicable when the current choice took effect. 2 at the event time, a previous choice made by you under item 1 of the table in subsection 960 ‑ 60(1) was in effect the amount is to be translated first to the previous * applicable functional currency at the exchange rate applicable at the event time, and then to the current applicable functional currency at the exchange rate applicable when the current choice took effect. Permanent establishment, offshore banking unit, CFC or transferor trust (2) If: (a) as the result of a choice (the current choice ) made by you under item 2, 3, 4 or 5 of the table in subsection 960 ‑ 60(1), subsection 960 ‑ 80(1) requires that an amount be translated to the * applicable functional currency; and (b) the amount is attributable to an event that happened, or a state of affairs that came into existence, at a time (the event time ) before the current choice took effect; the table has effect: Special rule about translation Item In this case... this is the result... 1 at the event time, no previous choice made by you under section 960 ‑ 60 in relation to the establishment, unit, CFC or trust was in effect the amount is to be translated first to Australian currency at the exchange rate applicable at the event time, and then to the * applicable functional currency at the exchange rate applicable when the current choice took effect. 2 at the event time, a previous choice made by you under section 960 ‑ 60 in relation to the establishment, unit, CFC or trust was in effect the amount is to be translated first to the previous * applicable functional currency at the exchange rate applicable at the event time, and then to the current applicable functional currency at the exchange rate applicable when the current choice took effect.

Amendment history: Inserted by No 133 of 2003, effective 17 Dec 2003

s 960-90 — Withdrawal of choice

(1) The table has effect if you have made a choice under section 960 ‑ 60: Withdrawal Item In this case: you may withdraw your choice with effect from immediately after the end of... 1 (a) you are an Australian resident who is required to prepare financial reports under section 292 of the Corporations Act 2001 ; and (b) your * applicable functional currency has ceased to be the sole or predominant currency in which you keep your accounts (within the meaning of section 960 ‑ 70) the income year in which you withdraw your choice. 2 (a) you are an Australian resident carrying on an activity or business at or through an * overseas permanent establishment or a foreign resident carrying on an activity or business at or through an * Australian permanent establishment; and (b) the * applicable functional currency of the permanent establishment has ceased to be the sole or predominant currency in which the establishment keeps its accounts (within the meaning of section 960 ‑ 70) the income year in which you withdraw your choice. 3 (a) you are an * offshore banking unit (OBU); and (b) the * applicable functional currency of the OBU has ceased to be the sole or predominant currency in which the OBU keeps its accounts (within the meaning of section 960 ‑ 70) the income year in which you withdraw your choice. 4 (a) you are an attributable taxpayer (within the meaning of Part X of the Income Tax Assessment Act 1936 ) of a * controlled foreign company (CFC); and (b) you have made a choice under item 4 of the table in subsection 960 ‑ 60(1) in relation to the CFC; and (c) the * applicable functional currency of the CFC has ceased to be the sole or predominant currency in which the CFC keeps its accounts (within the meaning of section 960 ‑ 70) the CFC’s * statutory accounting period in which you withdraw your choice. 5 (a) you are a * transferor trust; and (b) the * applicable functional currency of the trust has ceased to be the sole or predominant currency in which the trust keeps its accounts (within the meaning of section 960 ‑ 70) the income year in which you withdraw your choice. (2) A withdrawal must be in writing. (3) Withdrawing a choice does not prevent you from making a fresh choice under section 960 ‑ 60.

Amendment history: Inserted by No 133 of 2003, effective 17 Dec 2003 | Amended by No 96 of 2004, effective 29 June 2004 | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 960-100 — Entities

(1) Entity means any of the following: (a) an individual; (b) a body corporate; (c) a body politic; (d) a partnership; (e) any other unincorporated association or body of persons; (f) a trust; (g) a * superannuation fund; (h) an * approved deposit fund. Note: The term entity is used in a number of different but related senses. It covers all kinds of legal person. It also covers groups of legal persons, and other things, that in practice are treated as having a separate identity in the same way as a legal person does. (1A) Paragraph (1)(e) does not include a * non ‑ entity joint venture. (2) The trustee of a trust, of a * superannuation fund or of an * approved deposit fund is taken to be an entity consisting of the person who is the trustee, or the persons who are the trustees, at any given time. Note 1: This is because a right or obligation cannot be conferred or imposed on an entity that is not a legal person. Note 2: The entity that is the trustee of a trust or fund does not change merely because of a change in the person who is the trustee of the trust or fund, or persons who are the trustees of the trust or fund. (3) A legal person can have a number of different capacities in which the person does things. In each of those capacities, the person is taken to be a different entity . Example: In addition to his or her personal capacity, an individual may be: • sole trustee of one or more trusts; and • one of a number of trustees of a further trust. In his or her personal capacity, he or she is one entity. As trustee of each trust, he or she is a different entity. The trustees of the further trust are a different entity again, of which the individual is a member. (4) If a provision refers to an entity of a particular kind, it refers to the entity in its capacity as that kind of entity, not to that entity in any other capacity. Example: A provision that refers to a company does not cover a company in a capacity as trustee, unless it also refers to a trustee. Note: Under section 87 ‑ 35, certain parts of Australian governments and authorities are treated as separate entities for the purposes of ascertaining whether another entity is conducting a personal services business.

Amendment history: Amended by No 86 of 2000, effective Sch 1 (items 1–26): 30 June 2000 (s 2(1)) | Amended by No 92 of 2000, effective Sch 7 (items 28–30): 1 July 2000 (s 2(1)) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 960-105 — Certain entities treated as agents

(1) This Act applies to an entity as if the entity were an agent of another entity (the principal ) if: (a) the principal is outside Australia; and (b) the entity is in Australia and, on behalf of the principal, holds money of the principal or has control, receipt or disposal of money of the principal. (2) This Act, or a provision of this Act, applies to an entity as if the entity were an agent of another entity if the Commissioner determines in writing that the entity is the agent or sole agent of the other entity for the purposes of this Act or of that provision. (3) A determination under subsection (2) is not a legislative instrument.

Amendment history: Inserted by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 960-115 — Meaning of corporate tax entity

An entity is a corporate tax entity at a particular time if: (a) the entity is a company at that time; or (b) the entity is a * corporate limited partnership in relation to the income year in which that time occurs; or (d) the entity is a * public trading trust in relation to the income year in which that time occurs.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 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 960-120 — Meaning of distribution

(1) What constitutes a distribution by various * corporate tax entities is set out in the following table: Distribution Item Corporate tax entity Distribution 1 company a dividend, or something that is taken to be a dividend, under this Act 2 * corporate limited partnership (a) a distribution made by the partnership, whether in money or in other property, to a partner in the partnership, other than a distribution, or so much of a distribution, as is attributable to profits or gains arising during an income year in relation to which the partnership was not a corporate limited partnership (b) something that is taken to be a dividend by the partnership under this Act 4 * public trading trust a unit trust dividend, as defined in section 102M of the Income Tax Assessment Act 1936 (2) A * corporate tax entity makes a distribution in the form of a dividend on the day on which the dividend is paid, or taken to have been paid.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 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 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 960-130 — Members of entities

(1) The following table sets out who is a member of various entities. Members Item Entity Member 1 company a member of the company or a stockholder in the company 2 partnership a partner in the partnership 3 trust (except a * public trading trust) a beneficiary, unitholder or object of the trust 5 * public trading trust a unitholder of the trust (2) If 2 or more entities jointly hold interests or rights that give rise to membership of another entity, each of them is a member of the other entity. (3) An entity is not a member of another entity just because the entity holds one or more interests or rights relating to the other entity that are * debt interests. This subsection has effect despite subsections (1) and (2) of this section. Example: An entity is not a member of a company as defined in this section merely because it is a member of the company in the ordinary sense of the term because it holds a finance share in the company, if the finance share is a debt interest. However, if the entity holds other shares in the company that are not debt interests, it will be a member because of those other shares.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | 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 960-135 — Membership interest in an entity

If you are a * member of an entity: (a) each interest, or set of interests, in the entity; or (b) each right, or set of rights, in relation to the entity; by virtue of which you are a member of the entity is a membership interest of yours in the entity. Note: In conjunction with subsection 960 ‑ 130(3), this means that a debt interest is not a membership interest. Example: A member of a company holds a finance share in a company that is a debt interest and some other shares in the company that are not debt interests. Only the other shares are membership interests in the company. The finance share is not, because the member is not a member of the company because of that share (see subsection 960 ‑ 130(3)).

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2)

s 960-140 — Ordinary membership interest

A * membership interest in a * corporate tax entity is an ordinary membership interest if: (a) in the case of a membership interest in a company—it is an ordinary share; and (b) in the case of a membership interest in a * corporate limited partnership—it is an interest in the income of the partnership; and (c) in the case of a membership interest in a * public trading trust—it is a unit in the trust.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 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 960-180 — Total participation interest

An entity’s total participation interest at a particular time in another entity is the sum of: (a) the entity’s * direct participation interest in the other entity at that time; and (b) the entity’s * indirect participation interest in the other entity at that time.

Amendment history: Inserted by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent

s 960-185 — Indirect participation interest

(1) Work out the indirect participation interest that an entity (the holding entity ) holds at a particular time in another entity (the test entity ) by multiplying: (a) the holding entity’s * direct participation interest (if any) in another entity (the intermediate entity ) at that time; by: (b) the sum of: (i) the intermediate entity’s direct participation interest (if any) in the test entity at that time; and (ii) the intermediate entity’s indirect participation interest (if any) in the test entity at that time (as worked out under one or more other applications of this section). (2) If there is more than one intermediate entity to which paragraph (1)(a) applies at that time, the holding entity’s indirect participation interest is the sum of the percentages worked out under subsection (1) in relation to each of those intermediate entities.

Amendment history: Inserted by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent

s 960-190 — Direct participation interest

(1) Use the following table to work out the direct participation interest that one entity holds in another entity. Direct participation interest If the other entity is this kind of entity: the direct participation interest that the first entity holds in the other entity is: 1 A company (within the meaning of Part X of the Income Tax Assessment Act 1936 ) the direct control interest (within the meaning of section 350 of the Income Tax Assessment Act 1936 ) that the first entity holds in the other entity 2 A trust (within the meaning of Part X of the Income Tax Assessment Act 1936 ) the direct control interest (within the meaning of section 351 of the Income Tax Assessment Act 1936 ) that the first entity holds in the other entity 3 A partnership the direct control interest (within the meaning of section 350 of the Income Tax Assessment Act 1936 ) that the first entity would hold in the other entity, if the assumptions in subsection (3) of this section were made (2) For the purposes of subsection (1): (a) apply sections 350 and 351 of the Income Tax Assessment Act 1936 as if those sections apply for the purposes of this Division rather than only for the purposes of Part X of that Act; and (b) do not apply subsections 350(6) and (7) and 351(3) and (4) of that Act. (3) For the purposes of item 3 of the table in subsection (1), assume that: (a) the * partnership is a company; and (b) the partners in the partnership are shareholders in the company; and (c) the total amount of assets or capital contributed to the partnership is the total paid ‑ up share capital of the company; and (d) a partner’s right of distribution of capital, assets or profits on the dissolution of the partnership is a shareholder’s right to distribution of capital or profits of the company on winding ‑ up; and (e) a partner’s right of distribution of capital, assets or profits otherwise than on the dissolution of the partnership is a shareholder’s right to distribution of capital or profits of the company otherwise than on winding ‑ up.

Amendment history: Inserted by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent | Amended by No 88 of 2009, effective s. 4, Schedule 3 (items 1, 5–23), Schedule 4 (items 2–5) and Schedule 5 (items 113–204, 237, 238, 258, 282, 319–341, 344): 18 Sept 2009 Schedule 2 (items 4–15, 25–27, 30, 31): 1 Oct 2009 Schedule 2 (item 23): 1 Jan 2010

s 960-195 — Non ‑ portfolio interest test

An interest held by an entity (the holding entity ) in another entity (the test entity ) passes the non ‑ portfolio interest test at a time if the sum of the * direct participation interests held by the holding entity and its * associates in the test entity at that time is 10% or more.

Amendment history: Inserted by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent

s 960-220 — Meaning of trading

Shares in a listed public company (1) There is a trading in * shares in a company if there is an issue, redemption or transfer of those shares, or any other dealing in those shares, but only if it changes the respective proportions in which all the registered holders of shares in the company: (a) can exercise the voting power in the company; or (b) have the right to receive, as registered holders (whether or not for their own benefit) any dividends that the company may pay; or (c) have the right to receive, as registered holders (whether or not for their own benefit) any distribution of capital of the company. Note: A special rule applies in working out whether an asset has stopped being a pre ‑ CGT asset: see section 149 ‑ 10. Units in a unit trust (2) There is a trading in units in a unit trust if there is an issue, redemption or transfer of those units, or any other dealing in those units, but only if it changes the respective proportions in which all the registered holders of units in the trust hold (whether beneficially or not) interests in the trust income or trust capital. Note: A special rule applies in working out whether an asset has stopped being a pre ‑ CGT asset: see section 149 ‑ 10.

Amendment history: Repealed and substituted by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 960-225 — Abnormal trading

(1) There is an abnormal trading in * shares in a company, or in units in a unit trust, if a * trading in the shares or units is abnormal having regard to all relevant factors, including these: (a) the timing of the trading, when compared with the normal timing for trading in the company’s shares or in the trust’s units; (b) the number of shares or units traded, when compared with the normal number of the company’s shares, or the trust’s units, traded; (c) any connection between the trading and any other trading in the company’s shares or in the trust’s units; (d) any connection between the trading and a * tax loss or other deduction of the company or trust. (2) There may also be an abnormal trading under any of the following provisions.

Amendment history: Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 960-230 — Abnormal trading—5% of shares or units in one transaction

There is an abnormal trading in * shares in a company, or in units in a unit trust, if 5% or more of the shares or units are * traded in one transaction.

Amendment history: Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 960-235 — Abnormal trading—suspected 5% of shares or units in a series of transactions

(1) There is an abnormal trading in * shares in a company, or in units in a unit trust, if the company or trustee knows or reasonably suspects that an entity (or an entity and one or more of the entity’s * associates) has acquired (or redeemed) 5% or more of the shares or units in 2 or more transactions and would not have done so if the company or trust did not have a * tax loss or other deduction. Time when abnormal trading happens (2) The * abnormal trading happens at the time of the particular transaction that causes the 5% figure to be exceeded.

Amendment history: Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 960-240 — Abnormal trading—suspected acquisition or merger

There is an abnormal trading in * shares in a company, or in units in a unit trust, if a * trading in those shares or units happens which the company or trustee knows or reasonably suspects is part of an acquisition or merger of the company with another company, or of the trust with another trust.

Amendment history: Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 960-245 — Abnormal trading—20% of shares or units traded over 60 day period

(1) There is an abnormal trading in * shares in a company or units in a unit trust if more than 20% of the shares or units are * traded during a 60 day period. Time when abnormal trading happens (2) The * abnormal trading happens at the end of the 60 day period concerned.

Amendment history: Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 960-250 — What this Subdivision is about

This Subdivision has 2 principles for defining family relationships. The first principle is to treat an unmarried couple (whether of the same sex or different sexes) in the same way as a married couple if: (a) their relationship is registered under particular State or Territory laws; or (b) they live together on a genuine domestic basis. The second principle is to treat anyone who is defined to be an individual’s child in the same way as the individual’s natural child would be treated. Both principles extend to tracing other family relationships, including beyond couples and children and their parents. Table of sections Operative provisions 960 ‑ 252 Object of this Subdivision 960 ‑ 255 Family relationships

Amendment history: Inserted by No 144 of 2008, effective Schedule 14 (items 59–96): 10 Dec 2008

s 960-252 — Object of this Subdivision

(1) The first object of this Subdivision is to ensure that the same consequences flow under this Act and the other Acts to which this Subdivision applies from the relationship between 2 people who are an unmarried couple (whether of the same sex or different sexes) as from a marriage, if: (a) the relationship is registered under a * State law or * Territory law (as mentioned in paragraph (a) of the definition of spouse in subsection 995 ‑ 1(1)); or (b) they live together on a genuine domestic basis. (2) The second object of this Subdivision is to ensure that under this Act and the other Acts to which this Subdivision applies, anyone who is defined to be an individual’s * child is treated in the same way as if he or she were the individual’s natural child.

Amendment history: Inserted by No 144 of 2008, effective Schedule 14 (items 59–96): 10 Dec 2008

s 960-255 — Family relationships

Relationships between couples (1) If one individual is the * spouse of another individual because of the definition of spouse in subsection 995 ‑ 1(1), relationships traced to, from or through the individual, and family groups of which either individual is a member, are to be determined in the same way as if the individual were legally married to the other individual. Example: George and Angelika are not legally married but live together on a genuine domestic basis in a relationship as a couple. This Act treats them as part of each other’s family. Relationships involving children (2) If one individual is the * child of another individual because of the definition of child in subsection 995 ‑ 1(1), relationships traced to, from or through the individual, and family groups of which either individual is a member, are to be determined in the same way as if the individual were the natural child of the other individual. Example: Clare’s stepfather Frank has a sister Angela. This Act applies as if Angela were Clare’s aunt because Clare is defined to be Frank’s child. That is, Clare’s relationship to Angela is determined on the basis that Clare is Frank’s natural child. Application (3) Subsections (1) and (2) apply for the purposes of this Act. They also apply for the purposes of a provision of another Act if one or more of the following applies for the purposes of that provision (or would apply if it were used in the provision): (a) the definition of child in subsection 995 ‑ 1(1); (b) the definition of parent in subsection 995 ‑ 1(1); (c) the definition of relative in subsection 995 ‑ 1(1); (d) the definition of spouse in subsection 995 ‑ 1(1).

Amendment history: Inserted by No 144 of 2008, effective Schedule 14 (items 59–96): 10 Dec 2008

s 960-260 — What this Subdivision is about

There are a number of provisions that require amounts to be indexed. This Subdivision shows you: • how to index those amounts; and • how to calculate the indexation factor. Table of sections 960 ‑ 265 The provisions for which indexation is relevant Operative provisions 960 ‑ 270 Indexing amounts 960 ‑ 275 Indexation factor 960 ‑ 280 Index number 960 ‑ 285 Indexation—superannuation and employment termination 960 ‑ 290 Indexation—levy threshold for the major bank levy

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 71 of 2012, effective Sch 1, Sch 2 and Sch 3 (items 1, 2): 27 June 2012 (s 2(1) items 2, 3) Sch 5 (items 1–3): 1 July 2012 (s 2(1) item 6)

s 960-265 — The provisions for which indexation is relevant

This table sets out the provisions for which indexation is relevant. Provisions for which indexation is relevant Item Topic of provision: See: 1 Car limit section 40 ‑ 230 2 Capital gains—cost base Parts 3 ‑ 1 and 3 ‑ 3 3 Capital gains—Improvements as separate assets Subdivision 108 ‑ D 3A Dependant (invalid and carer) tax offset section 61 ‑ 30 5 * Genuine redundancy payments and * early retirement scheme payments—base amount subsection 83 ‑ 170(3) 6 * Genuine redundancy payments and * early retirement scheme payments—service amount subsection 83 ‑ 170(3) 7 Reduction of superannuation contributions—pre ‑ 1 July 88 funding credits (unused amount at end of previous income year) subsection 295 ‑ 265(2) 8 * Employment termination payments— * ETP cap amount section 82 ‑ 160 9 * Excess concessional contributions— * concessional contributions cap subsection 291 ‑ 20(2) 10 * Excess non ‑ concessional contributions tax on superannuation contributions—index amount ( * CGT cap amount) subsection 292 ‑ 105(4) 10A * General transfer balance cap section 294 ‑ 35 10B * Large superannuation balance threshold section 296 ‑ 30 10C * Very large superannuation balance threshold section 296 ‑ 35 11 * Superannuation benefits—index amount ( * low rate cap amount) subsection 307 ‑ 345(4) 12 * Superannuation benefits—index amount ( * untaxed plan cap amount) subsection 307 ‑ 350(4) 13 Thresholds for application of Division 250 sections 250 ‑ 25 and 250 ‑ 30 13A Concessional cross staple rent cap—existing lease with specified rent section 12 ‑ 443 in Schedule 1 to the Taxation Administration Act 1953 14 Levy threshold for the major bank levy subsection 4(3) of the Major Bank Levy Act 2017 Note: There are provisions of the Income Tax Assessment Act 1936 dealing with indexation that have not yet been rewritten.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 165 of 1999, effective s 4, Sch 1 (items 1–53, 61, 62), Sch 2, Sch 3 (items 1–4, 18) and Sch 4: 10 Dec 1999 (s 2(1), (2)) | Amended by No 114 of 2000, effective Schedule 4 (items 43, 44): 1 July 1998 Remainder: Royal Assent | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 160 of 2005, effective Schedule 1 (items 1–10, 14(1)) and Schedule 2 (items 1–12): Royal Assent | Amended by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended 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 141 of 2008, effective Schedule 1 (items 2–5, 10): Royal Assent | Amended by No 71 of 2012, effective Sch 1, Sch 2 and Sch 3 (items 1, 2): 27 June 2012 (s 2(1) items 2, 3) Sch 5 (items 1–3): 1 July 2012 (s 2(1) item 6) | Amended by No 85 of 2013, effective s 4, Sch 1, Sch 2 (items 1–3), Sch 4 (items 1–11) and Sch 7 (items 1, 7–10): 28 June 2013 (s 2(1) items 1–3, 7, 10) Sch 2 (item 6): 1 July 2016 (s 2(1) item 4) Sch 2 (items 7–9): 1 July 2017 (s 2(1) item 5) Sch 4 (items 12, 13): 1 July 2022 (s 2(1) item 8) Sch 4 (items 14, 15): 1 July 2023 (s 2(1) item 9) Sch 8 (items 1–48, 55–64): 26 Mar 2009 (s 2(1) item 11) | Amended by No 118 of 2013, effective Sch 1 (items 1, 4–11, 16–26, 38–79, 88–96, 110): 29 June 2013 (s 2(1) items 2–5, 11) Sch 1 (item 97): 1 July 2013 (s 2(1) item 6) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9) | Amended by No 109 of 2014, effective Sch 10 (items 13–15, 21–48): 17 Oct 2014 (s 2(1) item 8) | 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 64 of 2017, effective Sch 1 (items 4–13, 23): 24 June 2017 (s 2(1) item 2) | 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) | Amended by No 49 of 2019, effective Sch 3 (item 1) and Sch 4 (items 71–94, 111): 1 July 2019 (s 2(1) items 10, 12) | Amended by No 8 of 2026, effective sch 1 (items 12 ‑ 23), sch 2 (items 1 ‑ 10), sch 3 (items 1 ‑ 4): 1 Apr 2026 (s 2(1) items 2, 3)

s 960-270 — Indexing amounts

(1) Some provisions of this Act require amounts to be indexed. You index an amount by multiplying it by its * indexation factor. (2) You do not index the amount if its * indexation factor is 1 or less. (3) This section does not apply in relation to amounts mentioned in the provisions listed at items 8 to 12, or at item 14, in section 960 ‑ 265. Note: For the indexation of those amounts, see sections 960 ‑ 285 and 960 ‑ 290.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 64 of 2017, effective Sch 1 (items 4–13, 23): 24 June 2017 (s 2(1) item 2)

s 960-275 — Indexation factor

(1) For indexation of amounts on an annual basis, the indexation factor is: (1A) However, for indexation of the amounts mentioned in the provisions listed at items 5, 6 and 7 in section 960 ‑ 265, the indexation factor is: (1B) For indexation under subsection 110 ‑ 36(1A) of the * cost base of a * CGT asset (except the first element of the cost base of an asset covered by subsection (3)), the indexation factor for expenditure: (a) in an element of the cost base; and (b) incurred on or after 1 July 2027; is: The expenditure can include giving property: see section 103 ‑ 5. Note 1: This includes expenditure taken to have been incurred on 1 July 2027 as mentioned in paragraph 112 ‑ 155(2)(b), 112 ‑ 165(2)(b) or 112 ‑ 175(2)(b). Note 2: There are rules affecting when the expenditure was incurred: see Division 114. (1C) For indexation under subsection 110 ‑ 36(1A) of the first element of the * cost base of a * CGT asset that is a * share in a company, or unit in a unit trust, the indexation factor for an amount in that first element that was paid to the company or trust at a time: (a) after the asset was * acquired; and (b) on or after 1 July 2027; is: The payment can include giving property: see section 103 ‑ 5. Example: Peter acquires shares in a company. The shares are partly ‑ paid, and the company makes a call on the shares. Peter sells the shares to Narina before Peter is liable to pay the call. The amount Narina paid to Peter for the shares is indexed under subsection 960 ‑ 275(1B) from the quarter in which she incurred the expenditure to acquire the shares. The amount Narina later pays for the call on the shares is indexed in accordance with this subsection from the quarter in which she made that later payment. (2) For indexation under subsection 110 ‑ 36(1) of the * cost base of a * CGT asset (except the first element of the cost base of an asset covered by subsection (3)), the indexation factor for expenditure in an element of the cost base is: The expenditure can include giving property: see section 103 ‑ 5. Note 1: This rule does not apply to expenditure incurred after 11.45 am on 21 September 1999 or any expenditure relating to a CGT asset acquired after that time: see section 114 ‑ 1. Note 2: This rule applies even if you do not actually pay some of the expenditure until a later time (for example, under a contract to purchase an asset by instalments). Note 3: There are rules affecting when the expenditure was incurred: see sections 114 ‑ 15 and 114 ‑ 20. (3) For indexation under subsection 110 ‑ 36(1) of the first element of the * cost base of a * CGT asset that is: (a) a * share in a company; or (b) a unit in a unit trust; the indexation factor for an amount in the first element of the * cost base of the asset that was paid to the company or trust at a time after it was * acquired is: The payment can include giving property: see section 103 ‑ 5. Example: Peter acquires shares in a company. The shares are partly ‑ paid, and the company makes a call on the shares. Peter sells the shares to Narina before he is liable to pay the call. The amount Narina paid to Peter for the shares is indexed under subsection 960 ‑ 275(2) from the quarter in which she incurred the expenditure to acquire the shares. The amount Narina later pays for the call on the shares is indexed in accordance with subsection 960 ‑ 275(3) from the quarter in which she made that later payment. Note 1: This subsection does not apply to shares or units you acquired before 16 August 1989: see section 960 ‑ 275 of the Income Tax (Transitional Provisions) Act 1997 . Note 2: This subsection does not apply to an amount paid after 11.45 am on 21 September 1999 or an amount paid in relation to a CGT asset acquired after that time: see section 114 ‑ 1. (4) However, you cannot index expenditure in the third element of the * cost base of a CGT asset (costs of ownership). (5) You work out the * indexation factor to 3 decimal places (rounding up if the fourth decimal place is 5 or more). Example: If the factor is 1.102795, it would be rounded up to 1.103. (6) This section does not apply in relation to amounts mentioned in the provisions listed at items 8 to 12, or at item 14, in section 960 ‑ 265. Note: For the indexation of those amounts, see sections 960 ‑ 285 and 960 ‑ 290.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 94 of 1999, effective 16 July 1999 (s 2(1)–(3)) | Amended by No 165 of 1999, effective s 4, Sch 1 (items 1–53, 61, 62), Sch 2, Sch 3 (items 1–4, 18) and Sch 4: 10 Dec 1999 (s 2(1), (2)) | Amended by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Amended by No 114 of 2000, effective Schedule 4 (items 43, 44): 1 July 1998 Remainder: Royal Assent | Amended by No 32 of 2006, effective 6 Apr 2006 | Amended by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 64 of 2017, effective Sch 1 (items 4–13, 23): 24 June 2017 (s 2(1) item 2) | Amended by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 960-280 — Index number

(1) In most cases, the index number for a * quarter is the All Groups Consumer Price Index number (being the weighted average of the 8 capital cities) first published by the Australian Statistician for the quarter. Car limit (2) For calculating the * car limit, the index number for a * quarter is the index number for the motor vehicle purchase sub ‑ group of the Consumer Price Index, being the weighted average of the 8 capital cities, first published by the Australian Statistician for the quarter. (3) If the Australian Statistician changes the index reference period for an * index number, only index numbers published in terms of the new index reference period are to be used after the change. Genuine redundancy, early retirement schemes, pre ‑ 1 July 88 funding credits (4) For calculating the amounts mentioned in the provisions listed at items 5, 6 and 7 in section 960 ‑ 265, the index number for a * quarter is the estimate of full ‑ time adult average weekly ordinary time earnings for the middle month of the quarter first published by the Australian Statistician in respect of that month. (5) Subsection (3) does not apply to the index numbers mentioned in subsection (4). Exceptions (6) This section does not apply in relation to amounts mentioned in the provisions listed at items 8 to 12, or at item 14, in section 960 ‑ 265. Note: For the indexation of those amounts, see sections 960 ‑ 285 and 960 ‑ 290.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 145 of 2015, effective Sch 4 (items 21, 22): 10 Dec 2015 (s 2(1) item 7) | Amended by No 64 of 2017, effective Sch 1 (items 4–13, 23): 24 June 2017 (s 2(1) item 2)

s 960-285 — Indexation—superannuation and employment termination

(1) This section applies in relation to the amounts listed at items 8 to 12 in section 960 ‑ 265. Indexing amounts (2) You index the amount by: (a) first, multiplying its base amount mentioned in subsection (3) by its * indexation factor mentioned in subsection (5); and (b) next, rounding the result in paragraph (a) down to the nearest multiple of its * rounding amount. Example 1: An amount of $140,000 is to be indexed, with a rounding amount of $5,000. If the indexation factor increases this to an indexed amount of $143,000, the indexed amount is rounded back down to $140,000. Example 2: An amount of $140,000 is to be indexed, with a rounding amount of $5,000. If the indexation factor increases this to an indexed amount of $146,000, the indexed amount is rounded down to $145,000. (3) The amount (the base amount ) for an amount to which this section applies is: (a) unless paragraph (b) or (c) applies—the amount for the 2007 ‑ 2008 income year or * financial year; or (b) if the amount is mentioned in item 9 or 10A in section 960 ‑ 265—the amount for the 2017 ‑ 2018 financial year; or (c) if the amount is mentioned in item 10B or 10C in section 960 ‑ 265—the amount for the 2026 ‑ 27 income year. (4) You do not index the amount if the * indexation factor is 1 or less. Indexation factor (5) For indexing an amount, its indexation factor is: where: base quarter means: (a) unless paragraph (b) or (c) applies—the quarter ending on 31 December 2006; or (b) if the amount is mentioned in item 9 or 10A in section 960 ‑ 265—the quarter ending on 31 December 2016; or (c) if the amount is mentioned in item 10B or 10C in section 960 ‑ 265—the quarter ending on 31 December 2025. (6) You work out the * indexation factor mentioned in subsection (5) to 3 decimal places (rounding up if the fourth decimal place is 5 or more). Index number and rounding amount (7) For indexing an amount to which this section applies: (a) the index number for a * quarter is set out in column 2 of the relevant item in the following table; and (b) the rounding amount is set out in column 3 of that item. Concepts for indexing rounded caps Item Column 1 Item in section 960 ‑ 265 Column 2 Index number Column 3 Rounding amount 1 Items 8, 10, 11 and 12 the * index number mentioned in subsection 960 ‑ 280(4) (which is about average weekly ordinary time earnings) $5,000 2 Item 9 (concessional contributions cap) the * index number mentioned in subsection 960 ‑ 280(4) (which is about average weekly ordinary time earnings) $2,500 3 Item 10A (general transfer balance cap) the * index number mentioned in subsection 960 ‑ 280(1) (which is about the CPI) $100,000 4 Item 10B (large superannuation balance threshold) the * index number mentioned in subsection 960 ‑ 280(1) (which is about the CPI) $150,000 5 Item 10C (very large superannuation balance threshold) the * index number mentioned in subsection 960 ‑ 280(1) (which is about the CPI) $500,000

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 62 of 2009, effective Schedule 3 (items 1–10): Royal Assent | Amended by No 75 of 2012, effective Schedule 3 and Schedule 4 (items 1–10, 20): Royal Assent | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Repealed and substituted 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 8 of 2026, effective sch 1 (items 12 ‑ 23), sch 2 (items 1 ‑ 10), sch 3 (items 1 ‑ 4): 1 Apr 2026 (s 2(1) items 2, 3)

s 960-290 — Indexation—levy threshold for the major bank levy

(1) You index, on a * quarterly basis, the amount mentioned in the provision listed at item 14 in section 960 ‑ 265 by: (a) first, multiplying the amount by its * indexation factor mentioned in subsection (3); and (b) next, rounding the result in paragraph (a) down to the nearest multiple of $1,000,000. (2) You do not index the amount if the * indexation factor is 1 or less. (3) For indexation of the amount, the indexation factor is: where: GDP number for the base quarter is the estimate that is, at the end of the * quarter to which the indexation is to be applied, the estimate of the Gross Domestic Product: Current Prices ‑ Seasonally Adjusted most recently published by the Australian Statistician for the * quarter ending on 30 June 2017. GDP number for the preceding quarter is the estimate of the Gross Domestic Product: Current Prices ‑ Seasonally Adjusted first published by the Australian Statistician for the * quarter preceding the quarter to which the indexation is to be applied. (4) You work out the * indexation factor mentioned in subsection (3) to 3 decimal places (rounding up if the fourth decimal place is 5 or more).

Amendment history: Inserted by No 64 of 2017, effective Sch 1 (items 4–13, 23): 24 June 2017 (s 2(1) item 2)

s 960-400 — What this Subdivision is about

The expression “market value” is often used in this Act with its ordinary meaning. However, in some cases that expression has a meaning affected by this Subdivision. The Commissioner may approve methods to use for working out the market value of assets or non ‑ cash benefits. Table of sections Operative provisions 960 ‑ 405 Effect of GST on market value of an asset 960 ‑ 410 Market value of non ‑ cash benefits 960 ‑ 412 Working out market value using an approved method 960 ‑ 415 Amounts that depend on market value

Amendment history: Inserted by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2)

s 960-405 — Effect of GST on market value of an asset

(1) The market value of an asset at a particular time is reduced by the amount of the * input tax credit (if any) to which you would be entitled assuming that: (a) you had * acquired the asset at that time; and (b) the acquisition had been solely for a * creditable purpose. (2) Subsection (1) does not apply: (a) to an asset the * supply of which cannot be a * taxable supply; or (b) in working out the * market value of economic benefits, or of * equity or loan interests, for the purposes of Part 3 ‑ 95 (about value shifting). Note: Some assets, such as shares, cannot be the subject of a taxable supply.

Amendment history: Inserted by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 960-410 — Market value of non ‑ cash benefits

In working out the market value of a * non ‑ cash benefit, disregard anything that would prevent or restrict conversion of the benefit to money.

Amendment history: Inserted by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 960-412 — Working out market value using an approved method

(1) The * market value of an asset or * non ‑ cash benefit that you work out using a method approved under subsection (2) for that kind of asset or benefit binds the Commissioner in relation to you. Note: You do not have to use the method. (2) The Commissioner may, by legislative instrument, approve methods for working out the * market value of assets or * non ‑ cash benefits. A method may include conditions. Note 1: Different methods may be approved for different kinds of assets or non ‑ cash benefits (see subsection 13(3) of the Legislation Act 2003 ). Note 2: Any approved method would need to be consistent with the other rules about market value in this Subdivision.

Amendment history: Inserted by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2) | Amended by No 93 of 2017, effective Sch 2 (items 10–12): 20 Sept 2017 (s 2(1) item 4)

s 960-415 — Amounts that depend on market value

To avoid doubt, apply the rules in this Subdivision to the * market value component of any calculation that involves market value.

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

s 960-500 — What this Subdivision is about

This Subdivision includes rules about the meaning of Australia when used in a geographical sense. The ordinary meaning of Australia includes each State and internal Territory of Australia and their internal waters and any islands that are part of those State and Territories. This Subdivision extends the ordinary meaning of Australia to include each external Territory of Australia (other than the Australian Antarctic Territory) and certain offshore areas and certain offshore installations. Table of sections Operative provisions 960 ‑ 505 Meaning of Australia

Amendment history: Inserted by No 2 of 2015, effective Sch 2 (items 1, 73, 111) and Sch 4 (items 1–8, 79): 25 Feb 2015 (s 2(1) items 3, 5, 6) Sch 2 (items 29–33): 1 July 2015 (s 2(1) item 4)

s 960-505 — Meaning of Australia

Territories (1) Australia , when used in a geographical sense, includes each of the following: (a) Norfolk Island; (b) the Coral Sea Islands Territory; (c) the Territory of Ashmore and Cartier Islands; (d) the Territory of Christmas Island; (e) the Territory of Cocos (Keeling) Islands; (f) the Territory of Heard Island and the McDonald Islands. Note: Section 15B of the Acts Interpretation Act 1901 provides that an Act is taken to have effect in the coastal sea of Australia as if the coastal sea were part of Australia. Offshore areas (2) Australia , when used in a geographical sense, includes an offshore area for the purposes of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 . Note 1: The offshore area includes all things located in that area, including all installations and structures such as oil and gas rigs. The area also extends to the airspace over, and the sea ‑ bed and subsoil beneath, that area. Note 2: The offshore area includes the exclusive economic zone and the continental shelf of Australia.

Amendment history: Inserted by No 2 of 2015, effective Sch 2 (items 1, 73, 111) and Sch 4 (items 1–8, 79): 25 Feb 2015 (s 2(1) items 3, 5, 6) Sch 2 (items 29–33): 1 July 2015 (s 2(1) item 4) | Amended by No 53 of 2015, effective Sch 1 (items 9–17, 19): 1 July 2016 (s 2) | Amended by No 59 of 2019, effective Sch 1 and Sch 2 (items 9–20): 30 Aug 2019 (s 2(1) item 2)

s 960-550 — What this Subdivision is about

Generally speaking, a significant global entity is: (a) a global parent entity with an annual global income of $1 billion or more; or (b) any member of such a global parent entity’s group. Table of sections Operative provisions 960 ‑ 555 Meaning of significant global entity 960 ‑ 560 Meaning of global parent entity 960 ‑ 565 Meaning of annual global income 960 ‑ 570 Meaning of global financial statements 960 ‑ 575 Meaning of notional listed company group

Amendment history: Inserted by No 170 of 2015, effective Sch 1 (items 1–4) and Sch 4: 11 Dec 2015 (s 2(1) item 1)

s 960-555 — Meaning of significant global entity

(1) An entity is a significant global entity for a period if the entity is a * global parent entity: (a) whose * annual global income for the period is $1 billion or more; or (b) in relation to whom the Commissioner makes a determination under subsection (3) for the period. (2) An entity is also a significant global entity for a period if: (a) the entity is a member of a group of entities that are consolidated for accounting purposes as a single group; and (b) one of the other members of the group is a * global parent entity: (i) whose * annual global income for the period is $1 billion or more; or (ii) in relation to whom the Commissioner makes a determination under subsection (3) for the period. (2A) An entity is also a significant global entity for a period if: (a) the entity is a * member of a * notional listed company group; and (b) one of the other members of the group is a * global parent entity: (i) whose * annual global income for the period is $1 billion or more; or (ii) in relation to whom the Commissioner makes a determination under subsection (3) for the period. (3) The Commissioner may make a determination under this subsection in relation to a * global parent entity for a period if: (a) * global financial statements have not been prepared for the entity for the period; and (b) on the basis of the information available to the Commissioner, the Commissioner reasonably believes that, if such statements had been prepared for the period, the entity’s * annual global income for the period would have been $1 billion or more. The Commissioner must give a notice of the determination to the global parent entity, or to another entity that becomes a * significant global entity as a result of the determination. (4) An entity who is dissatisfied with a determination made in relation to the entity may object against the determination in the manner set out in Part IVC of the Taxation Administration Act 1953 . (5) However, if: (a) there has been a taxation objection (within the meaning of section 14ZL of the Taxation Administration Act 1953 ) against an * assessment relating to the entity; and (b) the assessment involved the application of section 177DA of the Income Tax Assessment Act 1936 (schemes that limit a taxable presence in Australia) in relation to the entity; the right of objection under subsection (4) of this section is unaffected, but the outcome of that objection has no effect on the assessment or on the outcome of the taxation objection. Note: Section 14ZVA of the Taxation Administration Act 1953 excludes from a taxation objection to an assessment any grounds (or potential grounds) for an objection to a determination under subsection (3) of this section. (6) A determination under subsection (3) is not a legislative instrument. (7) Section 175 of the Income Tax Assessment Act 1936 (validity) applies to a determination under subsection (3) of this section in the same way as it applies to an * assessment.

Amendment history: Inserted by No 170 of 2015, effective Sch 1 (items 1–4) and Sch 4: 11 Dec 2015 (s 2(1) item 1) | Amended by No 49 of 2020, effective Sch 1 (items 1–17, 21) and Sch 2 (items 1, 7): 1 July 2020 (s 2(1) item 1)

s 960-560 — Meaning of global parent entity

A global parent entity is an entity that, according to: (a) * accounting principles; or (b) if accounting principles do not apply in relation to the entity—commercially accepted principles relating to accounting; is not controlled by another entity. Note: A global parent entity may be a single entity that is not a member of a group of entities.

Amendment history: Inserted by No 170 of 2015, effective Sch 1 (items 1–4) and Sch 4: 11 Dec 2015 (s 2(1) item 1)

s 960-565 — Meaning of annual global income

(1) The annual global income of an entity for a period is: (aa) if the entity is a * member of a * notional listed company group—the total annual income of all the members of the group (worked out on the assumption that all members of the group were consolidated for accounting purposes as a single group); or (a) if paragraph (aa) does not apply and the entity is a member of a group of entities that are consolidated for accounting purposes as a single group—the total annual income of all the members of the group; or (b) otherwise—the total annual income of the entity; as shown in the latest * global financial statements for the entity for the period. (2) Subsection (3) applies if: (a) * global financial statements have not been prepared for the entity for the period; or (b) global financial statements have not been prepared for the entity for the period that show the total annual income mentioned in subsection (1). (3) Despite subsection (1), the annual global income of the * entity for the period is the amount that would be, on the assumption that such statements had been prepared, the total annual income mentioned in subsection (1) shown in those statements.

Amendment history: Inserted by No 170 of 2015, effective Sch 1 (items 1–4) and Sch 4: 11 Dec 2015 (s 2(1) item 1) | Amended by No 49 of 2020, effective Sch 1 (items 1–17, 21) and Sch 2 (items 1, 7): 1 July 2020 (s 2(1) item 1)

s 960-570 — Meaning of global financial statements

Global financial statements for an entity for a period (the relevant period ) are the financial statements that: (a) have been prepared and audited in relation to that entity, or that entity and other entities, in accordance with: (i) * accounting principles and * auditing principles; or (ii) if such principles do not apply—commercially accepted principles, relating to accounting and auditing, that ensure the statements give a true and fair view of the financial position and performance of that entity (or that entity and the other entities on a consolidated basis); and (b) are for the most recent period ending: (i) no later than the end of the relevant period; and (ii) no earlier than 12 months before the start of the relevant period.

Amendment history: Inserted by No 170 of 2015, effective Sch 1 (items 1–4) and Sch 4: 11 Dec 2015 (s 2(1) item 1) | Amended by No 49 of 2020, effective Sch 1 (items 1–17, 21) and Sch 2 (items 1, 7): 1 July 2020 (s 2(1) item 1)

s 960-575 — Meaning of notional listed company group

(1) A notional listed company group is a group of entities that would be required to be consolidated for accounting purposes as a single group, on the assumption that an entity (the test entity ) were a listed company (within the meaning of section 26BC of the Income Tax Assessment Act 1936 ). (2) Each entity in that group is a member of the * notional listed company group. (3) For the purposes of subsection (1), determine whether a group of entities would be required to be consolidated for accounting purposes as a single group according to: (a) * accounting principles; or (b) if accounting principles do not apply in relation to the test entity—commercially accepted principles related to accounting. (4) In applying the * accounting principles or commercially accepted principles referred to in subsection (3): (a) disregard any exceptions in those principles to requirements in those principles for entities to be consolidated as a single group; and (b) without limiting paragraph (a), disregard any rule in those principles providing that one or more entities (the excepted entities ) are not required to be consolidated as a single group with one or more other entities because the effect of such consolidation would be immaterial as a result of: (i) the size of the excepted entities; or (ii) any other matter.

Amendment history: Inserted by No 49 of 2020, effective Sch 1 (items 1–17, 21) and Sch 2 (items 1, 7): 1 July 2020 (s 2(1) item 1)

s 961-1 — What this Subdivision is about

This Subdivision provides for a notional tax offset for an income year if you contribute to the maintenance of a non ‑ student child or a student dependant. The notional tax offset can only be taken into account in working out certain tax offsets under the Income Tax Assessment Act 1936 . Table of sections Entitlement to the notional tax offset 961 ‑ 5 Who is entitled to the notional tax offset Amount of the notional tax offset 961 ‑ 10 Amount of the dependant (non ‑ student child under 21 or student) notional tax offset 961 ‑ 15 Reduced amounts of the dependant (non ‑ student child under 21 or student) notional tax offset 961 ‑ 20 Reductions to take account of the dependant’s income

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

s 961-5 — Who is entitled to the notional tax offset

(1) You are entitled to a notional tax offset for an income year if: (a) you are an individual; and (b) you are an Australian resident; and (c) during the year you contribute to the maintenance of another individual (the dependant ) who: (i) is less than 25 years of age, and is a full ‑ time student at a school, college or university; or (ii) if subparagraph (i) does not apply—is less than 21 years of age; and (d) during the year: (i) the dependant is an Australian resident; or (ii) you had a domicile in Australia. (2) You may be entitled to more than one notional tax offset for the year under subsection (1) if you contributed to the maintenance of more than one dependant during the year. Note: The amount of the notional tax offset in relation to each subsequent dependant may only be part of the full amount: see subsection 961 ‑ 15(1). (3) The notional tax offset only affects your * income tax liability as provided for by sections 23AB, 79A and 79B of the Income Tax Assessment Act 1936 . Note: Section 23AB of that Act provides a tax offset for service with an armed force under the control of the United Nations; section 79A provides a tax offset for residents of isolated areas; section 79B provides a tax offset for members of the Defence Force who are serving overseas.

Amendment history: Inserted by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015 | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 961-10 — Amount of the dependant (non ‑ student child under 21 or student) notional tax offset

(1) The amount of the notional tax offset to which you are entitled in relation to a dependant under section 961 ‑ 5 for an income year is $376. (2) However, if you are entitled to 2 or more such notional tax offsets for the income year in relation to individuals covered by subparagraph 961 ‑ 5(1)(c)(ii), the amount of the notional tax offset under section 961 ‑ 5 is: (a) in relation to the oldest of those individuals—$376; and (b) in relation to each of the others—$282.

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

s 961-15 — Reduced amounts of the dependant (non ‑ student child under 21 or student) notional tax offset

(1) The amount of the notional tax offset under section 961 ‑ 10 is reduced by the amount in accordance with subsection (2) of this section if one or more of the following applies: (a) paragraph 961 ‑ 5(1)(c) applies during part only of the year; (b) paragraph 961 ‑ 5(1)(d) applies during part only of the year; (c) during the whole or part of the year, 2 or more individuals contribute to the maintenance of the dependant; (d) the dependant only meets the description of the individual covered by subparagraph 961 ‑ 5(1)(c)(i) or (ii) for part of the year. (2) The amount of a notional tax offset is reduced to an amount that, in the Commissioner’s opinion, is a reasonable apportionment in the circumstances, having regard to the applicable matters referred to in paragraphs (1)(a) to (d).

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

s 961-20 — Reductions to take account of the dependant’s income

The amount of the notional tax offset under sections 961 ‑ 10 and 961 ‑ 15 in relation to the dependant for the year is reduced by $1 for every $4 by which the following exceeds $282: (a) if you contribute to the maintenance of the dependant for the whole of the year—the dependant’s * adjusted taxable income for offsets for the year; (b) if paragraph (a) does not apply—the dependant’s adjusted taxable income for offsets for that part of the year during which you contribute to the dependant’s maintenance.

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

s 961-50 — What this Subdivision is about

This Subdivision provides for a notional tax offset for an income year if you are the sole contributor to the maintenance of a non ‑ student child or a student dependant. The notional tax offset can only be taken into account in working out certain tax offsets under the Income Tax Assessment Act 1936 . Table of sections Operative provisions 961 ‑ 55 Who is entitled to the notional tax offset 961 ‑ 60 Amount of the dependant (sole parent of a non ‑ student child under 21 or student) notional tax offset 961 ‑ 65 Reductions to take account of change in circumstances

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

s 961-55 — Who is entitled to the notional tax offset

(1) You are entitled to a notional tax offset for an income year if: (a) during the year you have the sole care of another individual (the dependant ) who: (i) is less than 25 years of age, and is a full ‑ time student at a school, college or university; or (ii) if subparagraph (i) does not apply—is less than 21 years of age; and (b) you are entitled to a notional tax offset under Subdivision 961 ‑ A for the dependant; and (c) during the year you did not have a * spouse. (2) Paragraph (1)(c) does not apply if, in the opinion of the Commissioner, because of special circumstances, the paragraph should not apply. (3) The notional tax offset only affects your * income tax liability as provided for by sections 79A and 79B of the Income Tax Assessment Act 1936 . Note: Section 79A of that Act provides a tax offset for residents of isolated areas; section 79B provides a tax offset for members of the Defence Force who are serving overseas.

Amendment history: Inserted by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015 | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 961-60 — Amount of the dependant (sole parent of a non ‑ student child under 21 or student) notional tax offset

The amount of the notional tax offset to which you are entitled under section 961 ‑ 55 for an income year is $1,607. Note: The amount of the offset under this section applies regardless of whether you have one or more dependants that satisfy section 961 ‑ 55.

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

s 961-65 — Reductions to take account of change in circumstances

(1) The amount of the notional tax offset under section 961 ‑ 60 is reduced in accordance with subsection (2) if: (a) paragraph 961 ‑ 55(1)(a) applies during only part of the year; or (b) paragraph 961 ‑ 55(1)(c) does not apply because of subsection 961 ‑ 55(2). (2) The amount of the notional tax offset is reduced to an amount that, in the Commissioner’s opinion, is a reasonable apportionment in the circumstances, having regard to the matters referred to in paragraphs (1)(a) and (b).

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

s 974-1 — What this Division is about

This Division tells you whether an interest is a debt interest, or an equity interest, for tax purposes. An interest that could be characterised as both a debt interest and an equity interest will be treated as a debt interest for tax purposes (except for certain interests that fund returns on equity interests). Whether an interest is a debt interest or an equity interest matters because returns on debt interests are not frankable but may be deductible while returns on equity interests are not deductible but may be frankable. This Division extends beyond shares the range of interests that are recognised as equity in a company. An interest that is an equity interest in a company but is not a share will be treated in the same way as a share for some tax purposes (particularly in relation to the determination of the tax treatment of returns on the interest). This Division also tells you how to work out which distributions made in respect of a non ‑ share equity interest in a company will be non ‑ share dividends and which will be non ‑ share capital returns. Those that are non ‑ share dividends will be treated, for most tax purposes, in the same way as dividends. Table of sections 974 ‑ 5 Overview of Division Operative provisions 974 ‑ 10 Object

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

s 974-5 — Overview of Division

Test for distinguishing debt and equity interests (1) The test for distinguishing between debt interests and equity interests focuses on economic substance rather than mere legal form (see subsection 974 ‑ 10(2)). The test is designed to assess the economic substance of an interest in terms of its impact on the issuer’s position. Debt interests (2) Subdivision 974 ‑ B tells you when an interest is a debt interest in an entity. The basic test is in section 974 ‑ 20. Equity interests (3) Subdivision 974 ‑ C tells you when an interest is an equity interest in a company. The basic test is in section 974 ‑ 75. Tie breaker between debt and equity (4) If an interest satisfies both the debt test and the equity test, it is treated as a debt interest and not an equity interest. Distributions in relation to equity interests that are not shares (5) If you have an equity interest in a company that is not a share, Subdivision 974 ‑ E tells you what will count as a non ‑ share distribution, a non ‑ share dividend and a non ‑ share capital return in relation to the interest. Concepts used in the debt and equity tests (6) Subdivision 974 ‑ F defines a number of concepts that are used in the debt and equity tests (financing arrangement, effectively non ‑ contingent obligation, benchmark rate of return and converting interest).

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

s 974-10 — Object

(1) An object of this Division is to establish a test for determining for particular tax purposes whether a * scheme, or the combined operation of a number of schemes: (a) gives rise to a * debt interest; or (b) gives rise to an * equity interest. Note 1: The test is used, for example, for: (a) identifying distributions that may be frankable and which may be subject to dividend withholding tax; and (b) identifying returns that may be deductible to the company making the return; and (c) resolving uncertainty as to the proper tax treatment for debt/equity hybrid interests (interests that have some debt qualities and some equity qualities); and (d) identifying debt capital for the purposes of Division 820 (thin capitalisation rules). Note 2: Subdivision 167 ‑ A has special rules for working out rights to dividends and capital distributions in a company whose shares do not all carry the same rights to those matters. Those rules include disregarding debt interests. (2) Another object of this Division is that the test referred to in subsection (1) is to operate on the basis of the economic substance of the rights and obligations arising under the * scheme or schemes rather than merely on the basis of the legal form of the scheme or schemes. Note 1: The basic indicator of the economic character of a debt interest is the non ‑ contingent nature of the returns. The basic indicator of the economic character of an equity interest, on the other hand, is the contingent nature of the returns (or convertibility into an interest of that nature). Note 2: The test is intended to operate, for example, to: (a) deny deductibility (but allow franking) for “interest” in relation to a scheme that has the legal form of a loan if the economic substance of the rights and obligations arising under the relevant scheme gives the interest characteristics that are the same as or similar to those of a dividend on an ordinary share (and thereby prevent deductible returns on equity); and (b) allow a deduction (but not franking) for a “dividend” in relation to a scheme that has the legal form of an ordinary share if the economic substance of the rights and obligations arising under the relevant scheme gives the dividend characteristics that are the same as or similar to those of deductible interest on an ordinary loan (and thereby prevent frankable returns on debt). This will not happen if a provision in this Act specifically provides for a different treatment for the interest or dividend. (3) Another object of this Division is that the combined effect of * related schemes be taken into account in appropriate cases: (a) to ensure that the test operates effectively on the basis of the economic substance of the rights and obligations arising under the schemes rather than merely on the basis of the legal form of the schemes; and (b) to prevent the test being circumvented by entities merely entering into a number of separate schemes instead of a single scheme. (4) Another object of this Division is to identify the distributions and credits made in respect of * non ‑ share equity interests in a company that are to be treated as * dividends ( non ‑ share dividends ) and those that are to be treated as returns of capital ( non ‑ share capital returns ). Note: Non ‑ share dividends will generally be included in the recipient’s assessable income and may be frankable. (5) The Commissioner must have regard to the objects stated in subsections (1) to (3) in exercising the power to make a determination under any of the following provisions: (a) subsection 974 ‑ 15(4); (b) subsection 974 ‑ 60(3), (4) or (5); (c) section 974 ‑ 65; (d) subsection 974 ‑ 70(4); (e) subsection 974 ‑ 150(1). Note: An entity can apply to the Commissioner to have a determination made and can object under Part IVC of the Taxation Administration Act 1953 if it is dissatisfied with a determination (see section 974 ‑ 112). (6) Regulations may also be made under the provisions of this Division: (a) to clarify the meaning of certain words and phrases in the light of emerging commercial practices, conditions and products; and (b) to give guidance on the detailed operation of particular provisions. The regulations must be consistent with the objects stated in subsections (1) to (3). (7) Without limiting subsection 13(3) of the Legislation Act 2003 , the regulations made for the purposes of this Division may specify different rules for different classes of circumstances.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 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 126 of 2015, effective Sch 1 (items 299–301): 5 Mar 2016 (s 2(1) item 2) | Amended by No 130 of 2015, effective s 4, Sch 1 (items 1–3, 5–21) and Sch 3 (items 1–5): 16 Sept 2015 (s 2(1) items 1, 2, 4) Sch 2: 1 July 2015 (s 2(1) item 3) Sch 4 (items 1–52, 54–58): 17 Sept 2015 (s 2(1) item 5)

s 974-15 — Meaning of debt interest

Single scheme giving rise to debt interest (1) A * scheme gives rise to a debt interest in an entity if the scheme, when it comes into existence, satisfies the debt test in subsection 974 ‑ 20(1) in relation to the entity. Note 1: A debt interest can also arise under subsection (2) (related schemes) or section 974 ‑ 65 (Commissioner’s discretion). Note 2: Section 974 ‑ 55 defines various aspects of the debt interest that arises. Related schemes giving rise to debt interest (2) Two or more * related schemes (the constituent schemes ) together give rise to a debt interest in an entity if: (a) the entity enters into, participates in or causes another entity to enter into or participate in the constituent schemes; and (b) a scheme with the combined effect or operation of the constituent schemes (the notional scheme ) would satisfy the debt test in subsection 974 ‑ 20(1) in relation to the entity if the notional scheme came into existence when the last of the constituent schemes came into existence; and (c) it is reasonable to conclude that the entity intended, or knew that a party to the scheme or one of the schemes intended, the combined economic effects of the constituent schemes to be the same as, or similar to, the economic effects of a debt interest. This is so whether or not the constituent schemes come into existence at the same time and even if none of the constituent schemes would individually give rise to that or any other * debt interest. Note: Section 974 ‑ 105 explains the effect, for tax purposes, of actions taken under the schemes. (3) Subsection (2) does not apply if each of the * schemes individually gives rise to a * debt interest in the entity. (4) Two or more * related schemes do not give rise to a debt interest in an entity under subsection (2) if the Commissioner determines that it would be unreasonable to apply that subsection to those schemes. (5) Without limiting subsection 974 ‑ 10(5), the Commissioner must, in exercising the power to make a determination under subsection (4), have regard to the following: (a) the purpose of the * schemes (considered both individually and in combination); (b) the effects of the schemes (considered both individually and in combination); (c) the rights and obligations of the parties to the schemes (considered both individually and in combination); (d) whether the schemes (when considered either individually or in combination) provide the basis for, or underpin, an interest issued to investors with the expectation that the interest can be assigned to other investors; (e) whether the schemes (when considered either individually or in combination) comprise a set of rights and obligations issued to investors with the expectation that it can be assigned to other investors; (f) any other relevant circumstances. (6) If: (a) 2 or more * related schemes give rise to a * debt interest in an entity; and (b) one or more of those schemes (the hedging scheme or schemes ) are schemes for hedging or managing financial risk; and (c) the other scheme or schemes give rise to a debt interest in the entity even if the hedging scheme or schemes are disregarded; the debt interest that arises from the schemes is taken, for the purposes of Division 820 (the thin capitalisation rules), not to include the hedging scheme or schemes. Note: This means that in these circumstances the losses associated with the hedging scheme or schemes are not debt deductions under section 820 ‑ 40.

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

s 974-20 — The test for a debt interest

Satisfying the debt test (1) A * scheme satisfies the debt test in this subsection in relation to an entity if: (a) the scheme is a * financing arrangement for the entity; and (b) the entity, or a * connected entity of the entity, receives, or will receive, a * financial benefit or benefits under the scheme; and (c) the entity has, or the entity and a connected entity of the entity each has, an * effectively non ‑ contingent obligation under the scheme to provide a financial benefit or benefits to one or more entities after the time when: (i) the financial benefit referred to in paragraph (b) is received if there is only one; or (ii) the first of the financial benefits referred to in paragraph (b) is received if there are more than one; and (d) it is substantially more likely than not that the value provided (worked out under subsection (2)) will be at least equal to the value received (worked out under subsection (3)); and (e) the value provided (worked out under subsection (2)) and the value received (worked out under subsection (3)) are not both nil. The scheme does not need to satisfy paragraph (a) if the entity is a company and the interest arising from the scheme is an interest covered by item 1 of the table in subsection 974 ‑ 75(1) (interest as a member or stockholder of the company). Note: Section 974 ‑ 30 tells you when a financial benefit is taken to be provided to an entity. (2) The value provided is: (a) the value of the * financial benefit to be provided under the * scheme by the entity or a * connected entity if there is only one; or (b) the sum of the values of all the financial benefits provided or to be provided under the scheme by the entity or a connected entity of the entity if there are 2 or more. Note: Section 974 ‑ 35 tells you how to value financial benefits. (3) The value received is: (a) the value of the * financial benefit received, or to be received, under the * scheme by the entity or a * connected entity of the entity if there is only one; or (b) the sum of the values of all the financial benefits received, or to be received, under the scheme by the entity or a connected entity if there are 2 or more. (4) For the purposes of paragraph (1)(b) and subsections (2) and (3): (a) a * financial benefit to be provided under the * scheme by the entity or a * connected entity is taken into account only if it is one that the entity or connected entity has an * effectively non ‑ contingent obligation to provide; and (b) a financial benefit to be received under the scheme by the entity or a connected entity is taken into account only if it is one that another entity has an effectively non ‑ contingent obligation to provide. Multiple financial benefits (5) Paragraphs (1)(b) and (c) apply to 2 or more * financial benefits whether they are provided at the same time or over a period of time. Regulations (6) The regulations: (a) may specify circumstances in which paragraph (1)(d) is satisfied or not satisfied; and (b) may otherwise specify rules to be applied in determining whether or not paragraph (1)(d) is satisfied.

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

s 974-25 — Exceptions to the debt test

Short term schemes (1) A * scheme does not satisfy the debt test in subsection 974 ‑ 20(1) in relation to an entity if: (a) at least a substantial part of a * financial benefit mentioned in that subsection does not consist of either of the following or a combination of either of the following: (i) a liquid or monetary asset; (ii) an amount of money; and (b) the scheme requires the financial benefit mentioned in paragraph 974 ‑ 20(1)(c) to be provided within a period of no more than 100 days of the receipt of the first financial benefit mentioned in paragraph 974 ‑ 20(1)(b); and (c) the financial benefit mentioned in paragraph 974 ‑ 20(1)(c): (i) is in fact provided within that period; or (ii) is not provided within that period because the entity required to provide the benefit neglects to provide the benefit within that period (although willing to do so); or (iii) is not provided within that period because the entity required to provide the benefit is unable to provide the benefit within that period (although willing to do so); and (d) the scheme is not one of a number of * related schemes that together are taken to give rise to a * debt interest under subsection 974 ‑ 15(2). Regulations (2) The regulations may make provision in relation to the application or operation of subsection (1). Without limiting this, the regulations may: (a) specify what constitutes a substantial part of a * financial benefit for the purposes of paragraph (1)(a); or (b) specify a period to be substituted for the period referred to in paragraph (1)(b).

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

s 974-30 — Providing a financial benefit

Issue of equity interest (1) The following do not constitute the provision of a * financial benefit by an entity or a * connected entity of the entity: (a) the issue of an * equity interest in the entity or a connected entity of the entity; or (b) an amount that is to be applied in respect of the issue of an equity interest in the entity or a connected entity of the entity. Providing a financial benefit to an entity (2) A * financial benefit is taken to be provided to an entity if it is provided: (a) to the entity; or (b) on the entity’s behalf; or (c) for the entity’s benefit. Obligation to provide future financial benefit (3) For the avoidance of doubt, if you have a present obligation to provide a * financial benefit to an entity at some time in the future: (a) the financial benefit is taken to be a financial benefit to be provided in the future; and (b) the obligation to provide the financial benefit is taken not to be a financial benefit being provided at the present.

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

s 974-35 — Valuation of financial benefits—general rules

Value in nominal terms or present value terms (1) For the purposes of this Subdivision: (a) the value of a * financial benefit received or provided under a * scheme is its value calculated: (i) in nominal terms if the performance period (see subsection (3)) must end no later than 10 years after the interest arising from the scheme is issued; or (ii) in present value terms (see section 974 ‑ 50) if the performance period must or may end more than 10 years after the interest arising from the scheme is issued; and (b) the regulations may make provisions relating to the valuation of a financial benefit. Assume scheme runs its full term (2) The value of a * financial benefit received or provided under a * scheme is calculated assuming that the interest arising from the scheme will continue to be held for the rest of its life. Note 1: Section 974 ‑ 40 makes specific provision for cases in which there is a right or option to terminate the interest early. Note 2: Section 974 ‑ 45 makes specific provision for cases involving convertible interests. Performance period (3) The performance period is the period within which, under the terms on which the interest is issued, the * effectively non ‑ contingent obligations of the issuer, and any * connected entity of the issuer, to provide a * financial benefit in relation to the interest have to be met. (4) An obligation is treated as having to be met within 10 years after the interest is issued if: (a) the issuer; or (b) the * connected entity of the issuer; has an * effectively non ‑ contingent obligation to terminate the interest within that 10 year period even if the terms on which the interest is issued formally allow the obligation to continue after the end of that 10 year period. Benefit dependent on variable factor (5) If: (a) a * financial benefit received or provided in respect of an interest depends on a factor that may vary over time (such as a variable interest rate); and (b) that factor is one commonly used in commercial arrangements; and (c) it would be unreasonable to expect any of the parties to the * scheme to know, or to anticipate accurately, the future value of that factor; and (d) that factor has a particular value (the starting value ) when the scheme is entered into; the value of the financial benefit is calculated assuming that the factor’s value will retain the starting value for the whole of the life of the scheme. Note: For example, the value of a return based on a floating interest rate is calculated on the basis that the interest rate remains the interest rate that is applicable when the scheme is entered into. Scheme wholly in foreign currency etc. (6) If all the * financial benefits provided and received under a * scheme are denominated in a particular foreign currency or in terms of quantities of a particular commodity or other unit of account, they are not to be converted into Australian currency for the purpose of comparing their relative values for the purposes of this Subdivision.

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

s 974-40 — Valuation of financial benefits—rights and options to terminate early

(1) This section deals with the situation in which a party to a * scheme has a right or option to terminate the scheme early (whether by discharging an obligation early, converting the interest arising from the scheme into another interest or otherwise). Note 1: An example of terminating a scheme early by discharging an obligation early is terminating a loan by discharging the obligation to repay the principal (and any outstanding interest) early. Note 2: In certain circumstances, conversion of an interest into another interest can terminate its life (see section 974 ‑ 45). (2) The existence of the right or option is to be disregarded in working out the length of the life of the interest arising from the * scheme for the purposes of this Subdivision if the party does not have an * effectively non ‑ contingent obligation to exercise the right or option. (3) If the party does have an * effectively non ‑ contingent obligation to exercise the right or option, the life of the interest ends at the earliest time at which the party will have to exercise the right or option. (4) This section does not limit subsection 974 ‑ 35(2).

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

s 974-45 — Valuation of financial benefits—convertible interests

(1) This section deals with the situation in which a * scheme gives rise to an * interest that will or may convert into an * equity interest in a company. (2) The life of the interest ends no later than the time when it converts into that * equity interest. (3) The possibility of the conversion is to be disregarded in working out the length of the life of the interest arising from the * scheme for the purposes of section 974 ‑ 35 if it is uncertain: (a) whether the interest will ever convert; or (b) when the interest will convert. Note: Section 974 ‑ 40 deals with the situation in which a party to the scheme may exercise a right or option to convert the interest. (4) This section does not limit subsection 974 ‑ 35(2).

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

s 974-50 — Valuation of financial benefits—value in present value terms

(1) Subject to the regulations made for the purposes of subsection (5), the value in present value terms of a * financial benefit to be provided or received in respect of an interest (the test interest ) is calculated under subsection (4). (2) If you need to calculate the values in present value terms of a number of * financial benefits, the value of each financial benefit is to be calculated separately. (3) The value of a * financial benefit is to be calculated assuming that all amounts to be paid by an entity in respect of the test interest are paid at the earliest time when the entity becomes liable to pay them. (4) The value of a * financial benefit in present value terms is: where: adjusted benchmark rate of return is 75% of the * benchmark rate of return on the test interest. n is the number of years in the period starting on the day on which the test interest is issued and ending on the day on which the * financial benefit is to be provided. If the period includes a part of a year, that part is to be expressed as the fraction: year means a period of 12 months. (5) The regulations may provide for the method of calculating the value in present value terms of a * financial benefit. (6) Without limiting subsection (5), the regulations may: (a) provide for an entirely different method of calculating the present value of the * financial benefit; or (b) specify the adjusted * benchmark rate of return; or (c) provide for a different method of determining the adjusted benchmark rate of return; or (d) specify rules for determining whether a * debt interest is an * ordinary debt interest.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended by No 46 of 2011, effective Schedule 2 (items 693–697) and Schedule 3 (items 10, 11): 27 Dec 2011

s 974-55 — The debt interest and its issue

(1) If a * scheme, or 2 or more * related schemes, give rise to a * debt interest in an entity, the debt interest: (a) consists of the interest that carries the right to receive a * financial benefit that the entity or a * connected entity has an * effectively non ‑ contingent obligation to provide under the scheme or any of the schemes; and (b) is taken, subject to section 974 ‑ 60, to be a debt interest in the entity; and (c) is taken to be issued by the entity; and (d) is issued when the entity (or a connected entity of the entity) first receives a * financial benefit under the scheme or any of the schemes; and (e) is on issue while an effectively non ‑ contingent obligation of the entity (or a connected entity of the entity) to provide a financial benefit under the scheme or any of the schemes remains unfulfilled. (2) The interest referred to in paragraph (1)(a) may take the form of a proprietary right, a chose in action or any other form.

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

s 974-60 — Debt interest arising out of obligations owed by a number of entities

(1) This section deals with the situation in which a * scheme, or a number of * related schemes together, would, apart from this section, give rise to the same * debt interest in 2 or more entities. Note: A scheme may give rise to the same debt interest in 2 or more entities if each of those entities has non ‑ contingent obligations to provide financial benefits under the scheme. (2) The * debt interest: (a) is a debt interest in the entity identified under subsection (3) or (4); and (b) is not a debt interest in the other entity or entities. (3) The * debt interest is a debt interest in the entity identified using the following method statement: Method statement Step 1. Work out, for each of the entities, the total value of the * financial benefits that the entity is under an * effectively non ‑ contingent obligation to provide under the * scheme or schemes: this is the entity’s obligation value . Step 2. The * debt interest is taken to be a debt interest in the entity with the greatest obligation value. Step 3. If it is not possible to determine which entity has the greatest obligation value (whether because of an equality of, or uncertainty as to, obligation values or otherwise), the * debt interest is taken to be a debt interest in the entity agreed on by all the entities. Step 4. If the entities do not agree, the interest is taken to be a * debt interest in the entity determined by the Commissioner. (4) Despite subsection (3), the Commissioner may determine that the * debt interest is a debt interest in the entity specified in the determination. (5) The Commissioner may make the determination only if satisfied, having regard to the economic substance of the relevant transactions, that the * debt interest is properly considered from a commercial point of view to be an interest in the entity specified in the determination.

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

s 974-65 — Commissioner’s power

(1) Despite subsection 974 ‑ 20(1) (the debt test), the Commissioner may determine that a * scheme gives rise to a debt interest in an entity if the Commissioner considers that: (a) the scheme would satisfy paragraphs 974 ‑ 20(1)(a), (b), (c) and (e); but (b) instead of satisfying paragraph 974 ‑ 20(1)(d), the scheme would satisfy all the following subparagraphs: (i) it is substantially more likely than not that the value of the * financial benefit to be provided by the entity (or a * connected entity of the entity) under the * effectively non ‑ contingent obligation will be at least equal to the substantial part of the value of the financial benefit received or to be received by the entity (or its connected entity) under the scheme; (ii) it is substantially more likely than not that other financial benefits will be provided by the entity (or its connected entity) to one or more entities under the scheme; (iii) it is substantially more likely than not that the sum of the values of the financial benefits mentioned in subparagraphs (i) and (ii) will be at least equal to the value of the financial benefit received by the entity (or its connected entity) under the scheme. (2) In making the determination, the Commissioner must have regard to the following: (a) the difference between the value of the * financial benefit received and the value of the financial benefit to be provided under the * effectively non ‑ contingent obligation; (b) the degree of likelihood of other financial benefits being provided under the * scheme; (c) the degree of likelihood of the sum of the value of the financial benefits mentioned in subparagraphs (1)(b)(i) and (ii) being equal to or greater than the value of the financial benefit received under the scheme; (d) the particular circumstances surrounding the scheme (including circumstances of the parties to the scheme and their purposes for entering into the scheme). (3) If the Commissioner determines under this section that a * scheme gives rise to a * debt interest, the scheme has that effect for all purposes of this Division.

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

s 974-70 — Meaning of equity interest in a company

Scheme giving rise to equity interest (1) A * scheme gives rise to an equity interest in a company if, when the scheme comes into existence: (a) the scheme satisfies the equity test in subsection 974 ‑ 75(1) in relation to the company because of the existence of an interest; and (b) the interest is not characterised as, and does not form part of a larger interest that is characterised as, a * debt interest in the company, or a * connected entity of the company, under Subdivision 974 ‑ B. Note 1: An equity interest can also arise under subsection (2) if a notional scheme with the combined effect of a number of related schemes would give rise to an equity interest under this subsection. To do this, the notional scheme would need to satisfy paragraph (b). This means that the related schemes will not give rise to an equity interest if the notional scheme would be characterised as (or form part of a larger interest that would be characterised as) a debt interest in the company or a connected entity. Note 2: An equity interest can also arise under section 974 ‑ 80 (arrangements for funding return through connected entities). Note 3: Section 974 ‑ 95 defines various aspects of the equity interest that arises. Related schemes giving rise to equity interest (2) Two or more * related schemes (the constituent schemes ) are taken together to give rise to an equity interest in a company if: (a) the company enters into, participates in or causes another entity to enter into or participate in the constituent schemes; and (b) a scheme with the combined effect or operation of the constituent schemes (the notional scheme ) would give rise to an * equity interest in the company under subsection (1) if the notional scheme came into existence when the last of the constituent schemes came into existence; and (c) it is reasonable to conclude that the company intended, or knew that a party to the scheme or one of the schemes intended, the combined economic effects of the constituent schemes to be the same as, or similar to, the economic effects of an equity interest. This is so whether or not the constituent schemes come into existence at the same time and even if none of the constituent schemes would individually give rise to that or any other equity interest. Note: Section 974 ‑ 105 explains the effect, for tax purposes, of actions taken under the schemes. (3) Subsection (2) does not apply if each of the constituent * schemes individually gives rise to an * equity interest in the company. (4) Two or more related * schemes do not give rise to an * equity interest in a company under subsection (2) if the Commissioner determines that it would be unreasonable to apply that subsection to those schemes. (5) Without limiting subsection 974 ‑ 10(5), the Commissioner must, in exercising the power to make a determination under subsection (4), have regard to the following: (a) the purpose of the * schemes (considered both individually and in combination); (b) the effects of the schemes (considered both individually and in combination); (c) the rights and obligations of the parties to the schemes (considered both individually and in combination); (d) whether the schemes (when considered either individually or in combination) provide the basis for, or underpin, an interest issued to investors with the expectation that the interest can be assigned to other investors; (e) whether the schemes (when considered either individually or in combination) comprise a set of rights and obligations issued to investors with the expectation that it can be assigned to other investors; (f) any other relevant circumstances.

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

s 974-75 — The test for an equity interest

Basic test for equity interest (1) A * scheme satisfies the equity test in this subsection in relation to a company if it gives rise to an interest set out in the following table: Equity interests Item Interest 1 An interest in the company as a member or stockholder of the company. 2 An interest that carries a right to a variable or fixed return from the company if either the right itself, or the amount of the return, is in substance or effect * contingent on aspects of the economic performance (whether past, current or future) of: (a) the company; or (b) a part of the company’s activities; or (c) a * connected entity of the company or a part of the activities of a connected entity of the company. The return may be a return of an amount invested in the interest. 3 An interest that carries a right to a variable or fixed return from the company if either the right itself, or the amount of the return, is at the discretion of: (a) the company; or (b) a * connected entity of the company. The return may be a return of an amount invested in the interest. 4 An interest issued by the company that: (a) gives its holder (or a * connected entity of the holder) a right to be issued with an * equity interest in the company or a * connected entity of the company; or (b) is an * interest that will, or may, convert into an equity interest in the company or a connected entity of the company. This subsection has effect subject to subsection (2) (requirement for financing arrangement). Note: Section 974 ‑ 90 allows regulations to be made clarifying when a right or return is taken to be at discretion of a company or connected entity. Financing arrangement (2) A * scheme that would otherwise give rise to an * equity interest in a company because of an item in the table in subsection (1) (other than item 1) does not give rise to an equity interest in the company unless the scheme is a * financing arrangement for the company. Form interest may take (3) The interest referred to in item 2, 3 or 4 in the table in subsection (1) may take the form of a proprietary right, a chose in action or any other form. Exception for certain at call loans—until 30 June 2005 (4) If: (a) a * financing arrangement takes the form of a loan to a company by a * connected entity; and (b) the loan does not have a fixed term; and (c) either: (i) the loan is repayable on demand made by the connected entity, and repayment is required immediately on the making of the demand, or is required at the end of a particular period after the demand is made (being a period that is not longer than is reasonably necessary to arrange repayment); or (ii) the loan is repayable on the death of the connected entity (if the connected entity is an individual); and (d) the arrangement was entered into on or before 30 June 2005; the arrangement does not give rise to an equity interest in the company. Instead, the arrangement is taken, despite anything in Subdivision 974 ‑ B, to give rise to a debt interest in the company. This subsection ceases to have effect on 1 July 2005. Note: If this subsection ceases to have effect in relation to an interest that is, according to the other provisions of this Division, an equity interest immediately after the cessation, an adjustment to the company’s non ‑ share capital account will occur at that time (see subsection 164 ‑ 15(2)). (5) If, while subsection (4) applies to a * financing arrangement, a circumstance occurs that would otherwise have attracted the operation of subsection 974 ‑ 110(1) or (2) in relation to the arrangement: (a) that subsection of section 974 ‑ 110 does not apply to change the result that subsection (4) of this section produces in relation to the arrangement; but (b) for the purpose of applying this Division in relation to the arrangement after subsection (4) of this section has ceased to have effect, that subsection of section 974 ‑ 110 is taken to have produced the result that it would have produced if subsection (4) of this section had not applied to the arrangement. Further exception for certain related party at call loans (6) In applying this Division in relation to a particular * scheme and a particular income year (which may be the income year in which the scheme is entered into or a later income year), the scheme is taken not to give rise to an equity interest in a company, and instead to give rise to a debt interest in the company, if: (a) the scheme takes the form of a loan to the company that satisfies paragraphs (4)(a), (b) and (c); and (b) the company’s * GST turnover (worked out at the end of the income year) is less than $20,000,000. Note: If this subsection does not apply in relation to the previous income year or the next income year, and the scheme gives rise to an equity interest according to the other provisions of this Division, an adjustment to the company’s non ‑ share capital account will occur at the end of the previous income year or the start of the next income year (see subsections 164 ‑ 15(2) and 164 ‑ 20(3)). (7) For the purpose of paragraph (6)(b), the question whether a company’s * GST turnover (worked out at the end of an income year) is less than $20,000,000 is to be determined in accordance with subsection 188 ‑ 10(2) of the * GST Act, as if that amount of $20,000,000 were a turnover threshold for the purposes of that subsection of the GST Act.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 162 of 2005, effective Schedule 2 (items 1–13), Schedule 3 (items 1–3, 16–19, 33) and Schedule 6 (items 28–32): Royal Assent Schedule 6 (items 1–5, 7–13): 1 July 2005 Sch 6 (items 6, 16–25): 1 July 2001 (s 2(1) items 4, 6) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 10 of 2016, effective Sch 1 (items 1–32, 38, 39) and Sch 2 (items 3–9, 30): 26 Feb 2016 (s 2(1) items 2, 4)

s 974-80 — Equity interest arising from arrangement funding return through connected entities

(1) This section deals with the situation in which: (a) an interest carries a right to a variable or fixed return from a company; and (b) the interest is held by a * connected entity of the company; and (c) apart from this section, the interest would not be an * equity interest in the company; and (ca) the * scheme that gives rise to the interest is a * financing arrangement for the company; and (d) there is a scheme, or a series of schemes, designed to operate so that the return to the connected entity is to be used to fund (directly or indirectly) a return to another person (the ultimate recipient ). (2) The interest is an equity interest in the company if: (a) the amount of the return to the ultimate recipient is in substance or effect * contingent on aspects of the economic performance (whether past, current or future) of: (i) the company; or (ii) a part of the company’s activities; or (iii) a * connected entity of the company or a part of the activities of a connected entity of the company; or (b) either the right itself, or the amount of the return to the ultimate recipient, is at the discretion of: (i) the company; or (ii) a connected entity of the company; or (c) the interest in respect of which the return to the ultimate recipient is made or another interest that arises from the scheme, or any of the schemes, referred to in paragraph (1)(d): (i) gives the ultimate recipient (or a connected entity of the ultimate recipient) a right to be issued with an * equity interest in the company or a connected entity of the company; or (ii) is an * interest that will, or may, convert into an equity interest in the company or a connected entity of the company; and if the interest does not form part of a larger interest that is characterised as a * debt interest in the entity in which it is held, or a * connected entity, under Subdivision 974 ‑ B. The return may be a return of an amount invested in the interest. Note 1: Section 974 ‑ 90 allows regulations to be made clarifying when a right or return is taken to be at the discretion of a company or connected entity. Note 2: Paragraphs (a), (b) and (c) parallel items 2, 3 and 4 of the table in subsection 974 ‑ 75(1). Example: Company A, Company B1, Company B2 and Company B3 are connected entities. Company B1 operates Trust Fund C. An interest in Trust Fund C is issued to person H and the return on that interest is contingent on aspects of the economic performance of Company A. Trust Fund C lends the money paid by H for the purchase of the interest to Company B1 which lends the money to Company B2 which lends the money to Company B3 which lends the money to Company A. Under the arrangements under which the interest is issued and the loans made, payments of interest by Company A on the loan that Company B3 makes to Company A are intended to pass back through Company B2 and Company B1 to fund the return on H’s interest in Trust Fund C. Under subsection (2), Company B3 will have an equity interest in Company A. If the return to Company B3 were itself contingent on Company A’s performance, Company B3’s interest would be an equity interest in Company A under item 2 of the table in subsection 974 ‑ 75(1) (and not under subsection (2) of this section). Company B2 has an equity interest in Company B3 and Company B1 has an equity interest in Company B2. This is because the returns they get are intended to fund the return on H’s interest in Trust Fund C and that return is contingent on aspects of the economic performance of Company A (which is related to both Company B3 and Company B2). (3) The interest referred to in paragraph (1)(a) or (2)(c) may take the form of a proprietary right, a chose in action or any other form.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended by No 10 of 2016, effective Sch 1 (items 1–32, 38, 39) and Sch 2 (items 3–9, 30): 26 Feb 2016 (s 2(1) items 2, 4)

s 974-85 — Right or return contingent on aspects of economic performance

(1) A right, or the amount of a return, is contingent on aspects of the economic performance of an entity, or a part of the entity’s activities, if the right or return is contingent on the economic performance of that entity, or that part of those activities, but not solely because of one of the following: (a) the ability or willingness of an entity to meet the obligation to satisfy the right to the return; (b) the receipts or turnover of the entity or the turnover generated by those activities. (2) The regulations may specify circumstances in which a right or return is to be taken to be contingent, or not contingent, on aspects of the economic performance of an entity or a part of an entity’s activities. (3) The regulations may provide that paragraph (1)(b) does not apply in the circumstances specified in the regulations. (4) The regulations may provide that an interest that: (a) is covered by item 2 in the table in subsection 974 ‑ 75(1) or paragraph 974 ‑ 80(2)(a); and (b) arises in the circumstances specified in the regulations; is not an equity interest because of: (c) the limited extent to which the right or return that the interest carries is * contingent on aspects of the economic performance of an entity or a part of the entity’s activities; or (d) the practical insignificance of the right or return that the interest carries being contingent on that performance.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended by No 10 of 2016, effective Sch 1 (items 1–32, 38, 39) and Sch 2 (items 3–9, 30): 26 Feb 2016 (s 2(1) items 2, 4)

s 974-90 — Right or return at discretion of company or connected entity

The regulations may specify circumstances in which a right, or the amount of a return, is to be taken to be at the discretion of a company or a * connected entity of the company.

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

s 974-95 — The equity interest

(1) If a * scheme gives rise to an * equity interest in a company because of an item of the table in subsection 974 ‑ 75(1), the equity interest consists of the interest referred to in that item. (2) If 2 or more * related schemes give rise to an * equity interest in a company because of an item of the table in subsection 974 ‑ 75(1), the equity interest consists of the combination of interests under the schemes that satisfy the requirements of that item. (3) Subsection 974 ‑ 80(2) also provides that certain interests are * equity interests in a company. (4) If the returns on a * non ‑ share equity interest in a company are payable to 2 or more entities: (a) each entity is taken to be the holder of a non ‑ share equity interest in the company; and (b) each entity’s non ‑ share equity interest consists of the interests that: (i) constitute the non ‑ share equity interest; and (ii) are held by that entity. (5) The company in which an * equity interest exists is taken to be the issuer of the interest.

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

s 974-100 — Treatment of convertible and converting interests

(1) If a * debt interest is an * interest that will or may convert into an * equity interest, the conversion is taken, for the purposes of this Division to give rise to a new interest (and is not treated merely as a continuation of the debt interest). (2) If an * equity interest is an * interest that will or may convert into a * debt interest, the conversion is taken, for the purposes of this Division to give rise to a new interest (and is not treated merely as a continuation of the equity interest).

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

s 974-105 — Effect of action taken in relation to interest arising from related schemes

(1) If: (a) a * scheme, or schemes, give rise to a * debt interest in an entity or an * equity interest in a company; and (b) the entity or company pays a return, or undertakes any other transaction, in respect of any of the following (the component element ): (i) the scheme; or (ii) a part of the scheme; or (iii) one of those schemes; or (iv) a part of one of those schemes; then, for the purposes of the provisions that subsection (2) covers, the return is taken to be paid, or the transaction to have been undertaken, in respect of the debt interest or equity interest and not in respect of the component element. Example: Company A issues a convertible note to Company B. Company C, a connected entity of Company B, provides a binding collateral undertaking to Company A that Company B will exercise the option to convert the note into shares in Company A. The convertible note and the undertaking are related schemes that may give rise to an equity interest in Company A if their combined effect satisfies section 974 ‑ 70. If so, the returns on the note are taken to be returns in respect of the equity interest. (2) This subsection covers: (a) the provisions of this Division (other than this section); and (b) any other provision of this Act whose operation depends on an expression whose meaning is given by this Division.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended by No 162 of 2005, effective Schedule 2 (items 1–13), Schedule 3 (items 1–3, 16–19, 33) and Schedule 6 (items 28–32): Royal Assent Schedule 6 (items 1–5, 7–13): 1 July 2005 Sch 6 (items 6, 16–25): 1 July 2001 (s 2(1) items 4, 6)

s 974-110 — Effect of material change

Change to existing scheme—general rule (1) If: (a) a * scheme or schemes give rise to a * debt interest (or an * equity interest) in a company; and (b) the scheme, or one or more of the schemes, are subsequently changed, including where one or more (but not all) of the schemes cease to exist; and (c) the scheme or schemes as they exist immediately after the change would give rise to an equity interest (or a debt interest) in the company if they came into existence when the change occurred; and (d) subsection (1A) does not apply to the change; this Division applies after the change as if the scheme or schemes as they exist immediately after the change came into existence when the change occurred. Note 1: This will mean that the characterisation of the interest will change at that time. Note 2: This section can apply to an interest a number of times so that, for example, an interest that is equity when issued may change to debt because of one subsequent change and then back to equity because of a later change. Note 3: There will be an adjustment to the company’s non ‑ share capital account when the change occurs (see subsections 164 ‑ 15(2) and 164 ‑ 20(3)). Change to existing scheme—special rule for changing a related party at call etc. loan to a private company from equity to debt (1A) If: (a) a * scheme takes the form of a loan that satisfies paragraphs 974 ‑ 75(4)(a), (b) and (c); and (b) the scheme gives rise to an * equity interest (disregarding the effect this subsection has on the characterisation of the interest because of the change referred to in paragraph (c) of this subsection); and (c) the scheme is subsequently changed; and (d) the change occurs in the period starting immediately after the end of a particular income year (the year of effect ) and ending at the end of the earlier of the following days: (i) the due date for lodgment of the company’s * income tax return for the year of effect; (ii) the date of lodgment of the company’s income tax return for the year of effect; and (e) the scheme, as it exists immediately after the change, would give rise to a * debt interest in the company if the interest came into existence when the change occurred; and (f) the company is a * private company in relation to the year of effect; and (g) subsection 974 ‑ 75(6) does not apply in relation to the loan and the year of effect; and (h) the company elects that this subsection is to apply to the change; this Division applies as if the scheme, as it exists immediately after the change, had come into existence at the start of the year of effect, and as if no other change of a kind referred to in subsection (1) had occurred in relation to the interest in the period commencing at the start of the year of effect and ending when the first ‑ mentioned change was made. Note 1: This will mean that: (a) the characterisation of the interest will change, with effect back to the start of the year of effect; and (b) that characterisation will not be affected by other changes that occurred after the start of the year of effect and before the change to which this subsection applies. Note 2: This section can apply to an interest a number of times so that, for example, an interest that is an equity interest when issued may change to debt because of one subsequent change and then back to equity because of a later change. Note 3: An adjustment to the company’s non ‑ share capital account will be taken to have occurred at the start of the year of effect (see subsection 164 ‑ 20(3)). (1B) An election for the purposes of paragraph (1A)(h): (a) must be in writing; and (b) can only be made in the period referred to in paragraph (1A)(d); and (c) cannot be revoked. Entering into a new related scheme (2) If: (a) a * scheme or schemes give rise to a * debt interest (or an * equity interest) in a company; and (b) the company subsequently enters into, participates in or causes another entity to enter into or participate in a new * related scheme; and (c) the scheme or schemes, together with: (i) the new related scheme; and (ii) any other related scheme that the entity (or company) enters into, participates in or causes another entity to enter into or participate in before the new related scheme is entered into; would give rise to an equity interest (or a debt interest) in the company if they all came into existence when the new related scheme is entered into; this Division applies after the new related scheme is entered into as if all the schemes referred to in paragraph (c) had come into existence when the new related scheme is entered into. Note 1: This will mean that the characterisation of the interest will change at that time. Note 2: This section can apply to an interest a number of times so that, for example, an interest that is equity when issued may change to debt because of one subsequent change and then back to equity because of a later change. Note 3: There will be an adjustment to the company’s non ‑ share capital account when the change occurs (see subsections 164 ‑ 15(2) and 164 ‑ 20(3)). All prior changes to be taken into account (3) In applying paragraphs (1)(c), (1A)(e) and (2)(c) to the * scheme or schemes, take into account: (a) all changes to the scheme or schemes that occur before the change or before the new related scheme is entered into; and (b) all * related schemes entered into before the change or before the new related scheme is entered into; and (c) all changes to related schemes referred to in paragraph (b) that occur before the change or before the new related scheme is entered into.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended by No 162 of 2005, effective Schedule 2 (items 1–13), Schedule 3 (items 1–3, 16–19, 33) and Schedule 6 (items 28–32): Royal Assent Schedule 6 (items 1–5, 7–13): 1 July 2005 Sch 6 (items 6, 16–25): 1 July 2001 (s 2(1) items 4, 6) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 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 974-112 — Determinations by Commissioner

Determinations covered by this section (1) This section covers a determination by the Commissioner under any of the following provisions: (a) subsection 974 ‑ 15(4); (b) subsection 974 ‑ 60(3), (4) or (5); (c) section 974 ‑ 65; (d) subsection 974 ‑ 70(4); (e) subsection 974 ‑ 150(1). Determination on own initiative or on application (2) The Commissioner may make a determination covered by this section: (a) on his or her own initiative; or (b) on an application made under subsection (3). Application for determination (3) An entity may apply to the Commissioner for a determination covered by this section in relation to: (a) an interest of which the entity is the issuer; or (b) an interest of which the entity would be the issuer: (i) if the determination were made; or (ii) if the determination were not made. Note: Paragraph (b) may apply, for example, if the effect of the determination applied for would be to allow, or to prevent, a number of related schemes giving rise to a debt interest or an equity interest. (4) The application: (a) must be in writing; and (b) must set out the grounds on which the applicant thinks the determination should be made; and (c) must set out any information relevant to deciding whether to make the determination. Review of determinations (5) A taxpayer who is dissatisfied with a determination covered by this section may object against the determination in the manner set out in Part IVC of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | 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 974-115 — Meaning of non ‑ share distribution

A company makes a non ‑ share distribution to you if: (a) you hold a * non ‑ share equity interest in the company; and (b) the company: (i) distributes money to you; or (ii) distributes other property to you; or (iii) credits an amount to you; as the holder of that interest.

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

s 974-120 — Meaning of non ‑ share dividend

(1) Subject to subsection (2), all * non ‑ share distributions are non ‑ share dividends . (2) A * non ‑ share distribution is not a non ‑ share dividend to the extent to which the company debits the distribution against: (a) the company’s * non ‑ share capital account; or (b) the company’s * share capital account.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended by No 80 of 2006, effective Schedule 1 (items 2–4), Schedule 2, Schedule 4 (items 1, 5–9, 14, 20, 23–30), Schedule 5, Schedule 6 (items 3–7) and Schedule 11 (items 1, 2, 4–24): Royal Assent Schedule 3 (items 2–5): 30 June 2006 (s 2(1) item 3)

s 974-125 — Meaning of non ‑ share capital return

A non ‑ share capital return is a * non ‑ share distribution to the extent to which it is not a * non ‑ share dividend.

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

s 974-130 — Financing arrangement

(1) A * scheme is a financing arrangement for an entity if it is entered into or undertaken: (a) to raise finance for the entity (or a * connected entity of the entity); or (b) to fund another scheme, or a part of another scheme, that is a * financing arrangement under paragraph (a); or (c) to fund a return, or a part of a return, payable under or provided by or under another scheme, or a part of another scheme, that is a financing arrangement under paragraph (a). (2) The following are examples of * schemes that are generally entered into or undertaken to raise finance: (a) a bill of exchange; (b) income securities; (c) a * convertible interest that will convert into an * equity interest. Note: Paragraph (a) is likely to be relevant for debt interests, paragraph (b) for equity interests and paragraph (c) for both. (3) The following are examples of * schemes that are generally not entered into or undertaken to raise finance: (a) a derivative that is used solely for managing financial risk; (b) a contract for personal services entered into in the ordinary course of a business. Note: These may be relevant for both debt interests and equity interests. (4) For the purposes of subsection (1), the following * schemes are taken not to be entered into or undertaken to raise finance: (a) a lease or bailment that satisfies all of the following: (i) the property leased or bailed is not property to which Division 16D of Part III of the Income Tax Assessment Act 1936 (arrangements relating to the use of property) applies; (ii) the lease or bailment is not a relevant agreement for the purposes of section 128AC of that Act (deemed interest in respect of hire ‑ purchase and certain other arrangements); (iii) the lease or bailment is not an * arrangement to which Division 240 of this Act (about arrangements treated as a sale and loan), or Division 242 of this Act (about luxury car leases), applies; (v) the lessee or bailee, or a * connected entity of the lessee or bailee, is not to, and does not have an obligation (whether contingent or not) or a right to, acquire the leased or bailed property; (vi) Division 250 of this Act does not apply to a person and the property leased or bailed; (b) a securities lending arrangement under section 26BC of the Income Tax Assessment Act 1936 ; (c) a life insurance or general insurance contract undertaken as part of the issuer’s ordinary course of business; (d) a scheme for the payment of royalties (within the meaning of the Income Tax Assessment Act 1936 ) other than: (i) a qualifying arrangement for the purposes of Division 16D of Part III of the Income Tax Assessment Act 1936 ; or (ii) a relevant agreement for the purposes of section 128AC of that Act; or (iii) a scheme or arrangement for the payment of royalties in relation to an asset if Division 250 of this Act applies to a person and the asset. (5) The regulations may: (a) specify that particular * schemes are not financing arrangements ; and (b) specify circumstances in which a scheme will not be a financing arrangement .

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended 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 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 974-135 — Effectively non ‑ contingent obligation

(1) There is an effectively non ‑ contingent obligation to take an action under a * scheme if, having regard to the pricing, terms and conditions of the scheme, there is in substance or effect a non ‑ contingent obligation (see subsections (3), (4) and (6)) to take that action. (2) Without limiting subsection (1), that subsection applies to: (a) providing a * financial benefit under the * scheme; or (b) terminating the scheme. (3) An obligation is non ‑ contingent if it is not contingent on any event, condition or situation (including the economic performance of the entity having the obligation or a * connected entity of that entity), other than the ability or willingness of that entity or connected entity to meet the obligation. (4) The existence of the right of the holder of an * interest that will or may convert into an * equity interest in a company to convert the interest does not of itself make the issuer’s obligation to repay the investment not non ‑ contingent. (5) An obligation to redeem a preference share is not contingent merely because there is a legislative requirement for the redemption amount to be met out of profits or a fresh issue of * equity interests. (6) In determining whether there is in substance or effect a non ‑ contingent obligation to take the action, have regard to the artificiality, or the contrived nature, of any contingency on which the obligation to take the action depends. Note: The artificiality, or the contrived nature, of a contingency would tend to indicate that there is, in substance or effect, a non ‑ contingent obligation to take that action. (7) An obligation of yours is not effectively non ‑ contingent merely because you will suffer some detrimental practical or commercial consequences if you do not fulfil the obligation. Note: For example, a contingent obligation to make payments in respect of an income security issued by an approved deposit ‑ taking institution (ADI) is not effectively non ‑ contingent merely because of the detrimental effect non ‑ payment would have on the ADI’s business. (8) The regulations may make further provisions relating to the following: (a) what constitutes a non ‑ contingent obligation; (b) what does not constitute a non ‑ contingent obligation; (c) what constitutes an * effectively non ‑ contingent obligation; (d) what does not constitute an effectively non ‑ contingent obligation.

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

s 974-140 — Ordinary debt interest

(1) A * debt interest arising from a scheme is an ordinary debt interest if none of the obligations under the scheme is in substance or effect * contingent on aspects of the economic performance of: (a) the issuer of the interest; or (b) a * connected entity; or (c) a part of the operations of the issuer or a connected entity. (2) The regulations may specify rules for determining whether a * debt interest is an * ordinary debt interest.

Amendment history: Inserted by No 163 of 2001, effective 1 July 2001 | Amended by No 10 of 2016, effective Sch 1 (items 1–32, 38, 39) and Sch 2 (items 3–9, 30): 26 Feb 2016 (s 2(1) items 2, 4)

s 974-145 — Benchmark rate of return

(1) The benchmark rate of return for an interest (the test interest) in an entity is the annually compounded internal rate of return on an * ordinary debt interest that: (a) is issued, immediately before the test interest is issued, by the entity, or an equivalent entity, to an entity that is not a * connected entity; and (b) has a comparable maturity date; and (c) is in the same currency; and (d) is issued in the same market; and (e) has the same credit status; and (f) has the same degree of subordination to debts owed to the ordinary creditors of the issuer. (2) If there is no interest that satisfies subsection (1), the benchmark rate of return for the test interest is the annually compounded internal rate of return on an interest that is closest to the test interest in the respects referred to in that subsection (adjusted appropriately to take account of the differences between that interest and the test interest). (3) The regulations may: (a) specify the meaning to be given to an expression used in this section; or (b) provide for a different method of determining the * benchmark rate of return.

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

s 974-150 — Schemes

(1) The Commissioner: (a) may determine that what would otherwise be a single * scheme is to be treated for the purposes of this Division as 2 or more separate schemes; and (b) may determine that the schemes are to be taken for the purposes of this Division to not be * related schemes. (2) Without limiting subsection 974 ‑ 10(5), the Commissioner must, in exercising the power to make a determination under subsection (1), have regard to the following: (a) the purpose of the * scheme (considered both as a whole and in terms of its individual components); (b) the effects of the scheme and each of its components (considered both as a whole and in terms of its individual components); (c) the rights and obligations of the parties to the scheme (considered both as a whole and in relation to its individual components); (d) whether the scheme (when considered as a whole or in terms of its individual components) provides the basis for, or underpins, an interest issued to investors with the expectation that the interest can be assigned to other investors; (e) whether the scheme (when considered as a whole or in terms of its individual components) comprises a set of rights and obligations issued to investors with the expectation that it can be assigned to other investors; (f) any other relevant circumstances. (3) The regulations: (a) may provide that, in the circumstances specified in the regulations, what would otherwise be a single * scheme is to be treated for the purposes of this Division as 2 or more separate schemes; and (b) may provide that the schemes are to be taken for the purposes of this Division to not be * related schemes.

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

s 974-155 — Related schemes

(1) Subject to subsection (3), 2 * schemes are related to one another if they are related to one another in any way. (2) Without limiting subsection (1), 2 * schemes are related to each other if: (a) the schemes are based on stapled instruments; or (b) one of the schemes would, from a commercial point of view, be unlikely to be entered into unless the other scheme was entered into; or (c) one of the schemes depends for its effect on the operation of the other scheme; or (d) one scheme complements or supplements the other; or (e) there is another scheme to which both the schemes are related because of a previous application or applications of this subsection. (3) Two * schemes are not related to one another merely because: (a) one refers to the other; or (b) they have a common party. (4) The regulations may specify circumstances in which 2 * schemes: (a) are taken to be related to one another; or (b) are taken not to be related to one another.

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

s 974-160 — Financial benefit

(1) In this Act: financial benefit : (a) means anything of economic value; and (b) includes property and services; and (c) includes anything that regulations made for the purposes of subsection (3) provide is a financial benefit; even if the transaction that confers the benefit on an entity also imposes an obligation on the entity. (2) In applying subsection (1), benefits and obligations are to be looked at separately and not set off against each other. (3) The regulations may provide that a thing specified in the regulations is a financial benefit for the purposes of this Act.

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

s 974-165 — Convertible and converting interests

An interest (the first interest ) is an interest that will or may convert into another interest (the second interest ) if: (a) the first interest, or a part of the first interest, must be or may be converted into the second interest; or (b) the first interest, or a part of the first interest, must be or may be redeemed, repaid or satisfied by: (i) the issue or transfer of the second interest (whether to the holder of the first interest or to some other person); or (ii) the acquisition of the second interest (whether by the holder of the first interest or by some other person); or (iii) the application in or towards paying ‑ up (in whole or in part) the balance unpaid on the second interest (whether the second interest is to be issued to the holder of the first interest or to some other person); or (c) the holder of the first interest has, or is to have, a right or option to have allotted or transferred to the holder or to some other person, or for the holder or some other person otherwise to acquire: (i) the second interest; or (ii) a right or option to acquire the second interest.

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

s 975-150 — Position to affect rights in relation to a company

(1) A person is in a position to affect rights of a company in relation to another company if the person has a right, power or option: (a) to acquire those rights from one or other of those companies; or (b) to do something that would prevent one or other of those companies from exercising its rights for its own benefit, or from receiving any benefit arising from having those rights. (2) It does not matter whether the person has the right, power or option because of the * constitution of one or other of those companies, any agreement or otherwise. (3) However, the right, power or option of an owner of * ownership interests in the * head entity of a * demerger group to * acquire, under a * demerger, ownership interests in the * demerged entity is not a right, power or option covered by subsection (1).

Amendment history: Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 975-155 — When is an entity a controller (for CGT purposes) of a company?

An entity (the first entity ) is a controller (for CGT purposes ) of a company if: (a) the first entity has an * associate ‑ inclusive control interest in the company of at least 50%; or (b) the first entity has an associate ‑ inclusive control interest in the company of at least 40% and entities other than the first entity or associates of the first entity do not control the company; or (c) the first entity controls the company (alone or with an * associate).

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

s 975-160 — When an entity has an associate ‑ inclusive control interest

(1) An entity has an associate ‑ inclusive control interest in a company in the circumstances set out in Subdivision A of Division 3 of Part X of the Income Tax Assessment Act 1936 . (2) However, in working out whether an entity has an associate ‑ inclusive control interest of a particular percentage for the purposes of section 975 ‑ 155, there are these modifications to the way Part X of that Act operates: (a) that Part is applied to any company, including one acting as a trustee; and (b) subsection 349(4) applies in all cases in working out which entity holds a direct control interest or a control tracing interest equal to 100%; and (c) subsections 350(6) and (7) and 355(1) are ignored; and (d) despite subsection 352(2), an interposed entity may be taken into account in calculating an indirect control interest if the interposed entity is: (i) a company of which the first entity or an * associate is a controller; or (ii) a partnership or a trust; and (e) section 354 applies as if it referred to partnerships rather than CFP’s; and (f) section 355 applies as if it referred to trusts rather than CFT’s. Note 1: Part X of the Income Tax Assessment Act 1936 defines company to exclude a company in the capacity of a trustee. Note 2: The terms direct control interest and control tracing interest are relevant to working out associate ‑ inclusive control interests in a company: see sections 350, 351, 353, 354 and 355 of that Act. Note 3: Under subsection 349(4) of that Act, if 2 or more entities would have a direct control interest or a control tracing interest in a company or trust equal to 100%, only one of them holds the interest. Note 4: Subsections 350(6) and (7) of that Act deal with direct control interests in a company. They deal with interests held by Australian entities. Under subsection 355(1), certain entities are taken to hold a control tracing interest in a trust equal to 100%. Note 5: Paragraphs (2)(d), (e) and (f) of this section are necessary because Part X of the Income Tax Assessment Act 1936 applies only to CFE’s (which comprise CFC’s, CFP’s and CFT’s).

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

s 975-300 — Meaning of share capital account

(1) A company’s share capital account is: (a) an account that the company keeps of its share capital; or (b) any other account (whether or not called a share capital account) that satisfies the following conditions: (i) the account was created on or after 1 July 1998; (ii) the first amount credited to the account was an amount of share capital. (2) If a company has more than one account covered by subsection (1), the accounts are taken, for the purposes of this Act, to be a single account. Note: Because the accounts are taken to be a single account (the combined share capital account ), tainting of any of the accounts has the effect of tainting the combined share capital account. (3) However, if a company’s * share capital account is * tainted, that account is taken not to be a share capital account for the purposes this Act, other than: (a) subsection 118 ‑ 20(6); and (b) Division 197; and (ba) paragraph 202 ‑ 45(e); and (c) the definition of paid ‑ up share capital in subsection 6(1) of the Income Tax Assessment Act 1936 ; and (d) subsection 44(1B) of the Income Tax Assessment Act 1936 ; and (f) subsection 159GZZZQ(5) of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 80 of 2006, effective Schedule 1 (items 2–4), Schedule 2, Schedule 4 (items 1, 5–9, 14, 20, 23–30), Schedule 5, Schedule 6 (items 3–7) and Schedule 11 (items 1, 2, 4–24): Royal Assent Schedule 3 (items 2–5): 30 June 2006 (s 2(1) item 3) | Amended by No 79 of 2007, effective Schedule 1 (items 28, 29, 39–42, 43(1), (6)), Schedules 3, 4, Schedule 6 (items 3–8), Schedule 9 (items 14–26, 30, 34) and Schedule 10 (items 10–13, 32): Royal Assent Schedule 8 (items 2, 12–25, 26(1)–(3)): 1 July 2007

s 975-500 — Wholly ‑ owned groups

Two companies are members of the same wholly ‑ owned group if: (a) one of the companies is a * 100% subsidiary of the other company; or (b) each of the companies is a * 100% subsidiary of the same third company.

s 975-505 — What is a 100% subsidiary?

(1) A company (the subsidiary company ) is a 100% subsidiary of another company (the holding company ) if all the * shares in the subsidiary company are beneficially owned by: (a) the holding company; or (b) one or more 100% subsidiaries of the holding company; or (c) the holding company and one or more 100% subsidiaries of the holding company. (2) However, the subsidiary company is not a 100% subsidiary of the holding company if a person is * in a position to affect rights, in relation to the subsidiary company, of: (a) the holding company; or (b) a 100% subsidiary of the holding company. (3) The subsidiary company is also not a 100% subsidiary of the holding company if at some future time a person will be * in a position to affect rights as described in subsection (2). (4) A company (other than the subsidiary company) is a 100% subsidiary of the holding company if, and only if: (a) it is a 100% subsidiary of the holding company; or (b) it is a 100% subsidiary of a 100% subsidiary of the holding company; because of any other application or applications of this section.

s 976-1 — Franked part of a distribution

The franked part of a * distribution is an amount worked out using the formula: where: applicable gross ‑ up rate means the * corporate tax gross ‑ up rate of the entity making the distribution for the income year in which the distribution is made.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 66 of 2015, effective Sch 1 (items 6–29, 32): 22 June 2015 (s 2(1) items 3, 5) | Amended by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19) | 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 976-5 — Unfranked part of a distribution

The unfranked part of a * distribution is the amount that is left after deducting the * franked part of the distribution from the total distribution.

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

s 976-10 — The part of a distribution that is franked with an exempting credit

The part of a distribution that is franked with an exempting credit is worked out using the formula: where: applicable gross ‑ up rate means the * corporate tax gross ‑ up rate of the entity making the distribution for the income year in which the distribution is made.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 66 of 2015, effective Sch 1 (items 6–29, 32): 22 June 2015 (s 2(1) items 3, 5) | Amended by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19)

s 976-15 — The part of a distribution that is franked with a venture capital credit

The part of a distribution that is franked with a venture capital credit is worked out using the formula: where: applicable gross ‑ up rate means the * corporate tax gross ‑ up rate of the entity making the distribution for the income year in which the distribution is made.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 66 of 2015, effective Sch 1 (items 6–29, 32): 22 June 2015 (s 2(1) items 3, 5) | Amended by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19)

s 977-5 — Realisation event

For a * CGT asset, a realisation event is a * CGT event (except CGT event E4, CGT event E10 and CGT event G1).

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 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 977-10 — Loss realised for income tax purposes

(1) A loss is realised for income tax purposes by a * realisation event that happens to a * CGT asset if, and only if, an entity makes a * capital loss from the event. That capital loss is the loss realised by the event. (2) If a provision of this Act reduces the loss that would, apart from that provision, be * realised for income tax purposes by the event, the * capital loss is reduced by the same amount.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 977-15 — Gain realised for income tax purposes

(1) A gain is realised for income tax purposes by a * realisation event that happens to a * CGT asset if, and only if, an entity makes a * capital gain from the event. That capital gain is the gain that is realised by the event. (2) If a provision of this Act reduces the gain that would, apart from that provision, be * realised for income tax purposes by the event, the * capital gain is reduced by the same amount.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 977-20 — Realisation event

For an item of * trading stock, a realisation event is a disposal of the item or the ending of an income year.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 977-25 — Disposal of trading stock: loss realised for income tax purposes

(1) A loss is realised for income tax purposes by a * realisation event consisting of disposal of an item of * trading stock if, and only if: (a) the item is disposed of, for less than its * cost, in the same income year in which it became part of the trading stock on hand of the entity disposing of it; or (b) the item is disposed of in a later income year for less than its * value as trading stock of the entity on hand at the start of the later income year. (2) The loss that is realised for income tax purposes by the event is the difference between the amount included in the entity’s assessable income because of the disposal and: (a) the amount that the entity can deduct for the item’s * cost; or (b) the item’s * value as * trading stock on hand at the start of the later income year; as appropriate. (3) If a provision of this Act reduces the loss that would, apart from that provision, be * realised for income tax purposes by the event: (a) the amount that the entity can deduct for the item’s * cost; or (b) the item’s * value as * trading stock on hand at the start of the later income year; as appropriate, is reduced by the same amount.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 977-30 — Ending of an income year: loss realised for income tax purposes

(1) A loss is realised for income tax purposes by a * realisation event that happens to an item of * trading stock and consists of the ending of an income year if, and only if, the * value of the item, as trading stock of an entity on hand at the end of that income year, is less than: (a) its * cost, if it became part of the trading stock on hand of the entity during that income year; or (b) otherwise, its value as trading stock of the entity on hand at the start of that income year. (2) The loss that is realised for income tax purposes by the event is the difference between the * value of the item, as * trading stock of the entity on hand at the end of that income year and: (a) the amount that the entity can deduct for the item’s * cost; or (b) the item’s * value as trading stock on hand at the start of the income year; as appropriate. (3) If a provision of this Act reduces the loss that would, apart from that provision, be * realised for income tax purposes by the event: (a) the amount that the entity can deduct for the item’s * cost; or (b) the item’s * value as * trading stock on hand at the start of the income year; as appropriate, is reduced by the same amount.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 977-35 — Disposal of trading stock: gain realised for income tax purposes

(1) A gain is realised for income tax purposes by a * realisation event consisting of disposal of an item of * trading stock if, and only if: (a) the item is disposed of, for more than its * cost, in the same income year in which it became part of the trading stock on hand of the entity disposing of it; or (b) the item is disposed of in a later income year for more than its * value as trading stock of the entity on hand at the start of the later income year. (2) The gain that is realised for income tax purposes by the event is the difference between the amount included in the entity’s assessable income because of the disposal and: (a) the amount that the entity can deduct for the item’s * cost; or (b) the item’s * value as * trading stock on hand at the start of the later income year; as appropriate. (3) If a provision of this Act reduces the gain that would, apart from that provision, be * realised for income tax purposes by the event, the amount that is included in the assessable income of the entity because of the disposal is reduced by the same amount.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 977-40 — Ending of an income year: gain realised for income tax purposes

(1) A gain is realised for income tax purposes by a * realisation event that happens to an item of * trading stock and consists of the ending of an income year if, and only if, the * value of the item, as trading stock of an entity on hand at the end of that income year, is greater than: (a) its * cost, if it became part of the trading stock on hand of the entity during that income year; or (b) otherwise, its value as trading stock of the entity on hand at the start of that income year. (2) The gain that is realised for income tax purposes by the event is the difference between the * value of the item, as * trading stock of the entity on hand at the end of that income year and: (a) the amount that the entity can deduct for the item’s * cost; or (b) the item’s * value as trading stock on hand at the start of the income year; as appropriate. (3) If a provision of this Act reduces the gain that would, apart from that provision, be * realised for income tax purposes by the event: (a) the amount that the entity can deduct for the item’s * cost; or (b) the item’s * value as * trading stock on hand at the start of the income year; as appropriate, is increased by the same amount.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 977-50 — Meaning of revenue asset

A * CGT asset is a revenue asset if, and only if: (a) the profit or loss on your disposing of the asset, ceasing to own it, or otherwise realising it, would be taken into account, in calculating your assessable income or * tax loss, otherwise than as a * capital gain or * capital loss; and (b) the asset is neither * trading stock nor a * depreciating asset.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 977-55 — Loss or gain realised for income tax purposes

For a * revenue asset: (a) disposing of, ceasing to own, or otherwise realising, the asset is a realisation event ; and (b) a loss is realised for income tax purposes by the * realisation event if, and only if, there is a loss on the event; and (c) a gain is realised for income tax purposes by the realisation event if, and only if, there is a profit on the event; and (d) the loss or profit on the event is the loss or gain realised for income tax purposes; and (e) if a provision of this Act reduces the loss or gain that would, apart from that provision, be realised for income tax purposes by the event, the loss or profit to be taken into account in calculating your assessable income or * tax loss is reduced by the same amount.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 980-1 — What this Division is about

A dwelling is used to provide affordable housing if certain conditions are met, including that the dwelling is tenanted or available to be tenanted, and that tenancies of the dwelling are exclusively managed by a community housing provider.

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

s 980-5 — Providing affordable housing

A * dwelling is used to provide affordable housing on a particular day (the test day ) if: (a) on the test day, the dwelling is * taxable Australian real property and is * residential premises that: (i) are tenanted or available to be tenanted; and (ii) are not * commercial residential premises; and (b) on the test day, the tenancy or prospective tenancy of the dwelling is exclusively managed by an * eligible community housing provider; and (c) the eligible community housing provider has given each entity that holds an * ownership interest in the dwelling a certificate under section 980 ‑ 15 that covers the dwelling for the test day; and (d) no entity is entitled to receive an incentive, under the Scheme prescribed for the purposes of Part 2 of the National Rental Affordability Scheme Act 2008 , for the dwelling for the NRAS year (within the meaning of that Scheme) that includes the test day; and (e) in the case of a * managed investment trust holding an * ownership interest in the dwelling on the test day—none of the tenants or occupants of the dwelling on that day holds an interest in the trust that passes the * non ‑ portfolio interest test at any time during that day.

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

s 980-10 — Eligible community housing providers

(1) An eligible community housing provider is: (a) an entity registered (however described) under an * Australian law as a provider of community housing services; or (b) an entity registered (however described) by an * Australian government agency as a provider of community housing services. (2) However, an entity that ceases to be covered by subsection (1) continues to be an eligible community housing provider for the 90 ‑ day period starting on the day of the cessation.

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

s 980-15 — Affordable housing certificates

For the purposes of paragraph 980 ‑ 5(c), a certificate must: (a) include a declaration that the * eligible community housing provider reasonably believes paragraphs 980 ‑ 5(a) and (b) to be satisfied for the * dwelling for the test day; and (b) be given in the * approved form on or before the 31st day after the end of the income year that contains the test day.

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