Income Tax Assessment Act 1936

s 47A — Distribution benefits—CFCs

(1) Subject to subsection (2), if: (a) a company (in this section called the first company ) has profits immediately before a distribution time for a distribution benefit in relation to the first company; and (b) the distribution time occurred after 3 June 1990; and (c) the first company is a CFC at the distribution time; and (d) the first company is a resident of an unlisted country at the distribution time; so much of the distribution payment in relation to the distribution time as would not otherwise be a dividend and does not exceed the amount of those profits is taken, for the purposes of this Act, to be a dividend paid by the first company: (e) to the recipient of the benefit as a shareholder in the first company; and (f) out of profits derived by the first company; and (g) at the distribution time. (2) If: (a) any of the following subparagraphs applies: (i) by virtue of subsection (1), the whole or a part of the distribution payment is included in the assessable income of a taxpayer of the year of income in which the distribution time occurred under section 44; (ii) by virtue of subsection (1), the whole or a part of the distribution payment would, apart from section 23AI or section 768 ‑ 5 of the Income Tax Assessment Act 1997 , be included in the assessable income of a taxpayer of the year of income in which the distribution time occurred under section 44; and (b) both of the following subparagraphs apply: (i) the taxpayer’s return of income for the year of income was not prepared on the basis that the distribution payment had the consequence specified in subsection (1); (ii) the taxpayer has not notified the Commissioner, in writing, within 12 months after the end of the year of income, that the distribution payment had the consequence specified in subsection (1); that subsection has effect in relation to the taxpayer and in relation to that distribution payment as if the reference in that subsection to the purposes of this Act were a reference to the purposes of this Act (other than section 365 of this Act and Division 770 of the Income Tax Assessment Act 1997 ). (3) Subject to subsections (9) and (12), a reference in this section to a distribution benefit in relation to the first company is a reference to an eligible benefit where the following conditions are satisfied: (a) the eligible benefit was provided to: (i) an associated entity in relation to the first company; or (ii) another entity that, immediately after the time of the provision of the eligible benefit, was an associated entity in relation to the first company; (b) the eligible benefit was provided by: (i) the first company; or (ii) an entity (in this subsection called the arranger ) other than the first company under an arrangement between: (A) the first company; and (B) the arranger or another entity; (c) if subparagraph (b)(ii) applies—the first company made, or entered into an undertaking to make, one or more transfers of property or services to the arranger or to another entity (which transfers are in this section called the arrangement transfers ) that are attributable, in whole or in part, to the provision of the eligible benefit. (4) Where the first company entered into an undertaking to make one or more arrangement transfers, the time of the arrangement transfers is the time the undertaking was entered into. (5) Where, at a particular time, an entity (in this subsection called the provider ) waives or releases the obligation of another entity (in this subsection called the recipient ) to pay or repay to the provider an amount: (a) the waiver or release is taken to constitute an eligible benefit provided at that time by the provider to the recipient; and (b) if the eligible benefit is a distribution benefit in relation to the first company—each of the following times is a distribution time for the eligible benefit: (i) if the eligible benefit was provided by the first company—the time of the provision of the eligible benefit; or (ii) in any other case—the time, or each of the times, of the arrangement transfers concerned; (c) if the eligible benefit is a distribution benefit in relation to the first company—the distribution payment in relation to the distribution time is: (i) if the benefit was provided by the first company—the amount the payment or repayment of which is waived or released; or (ii) in any other case—so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit. (6) For the purposes of subsection (5), an entity is taken to be under an obligation to pay or repay an amount even if the amount is not due for payment or repayment. (7) Where, at a particular time, an entity (in this subsection called the provider ) makes a loan to another entity (in this subsection called the recipient ), where: (a) the parties to the loan are not at arm’s length with each other in relation to the loan; or (b) the purpose, or one of the purposes, of the making of the loan was to facilitate, directly or indirectly (through one or more interposed companies, partnerships or trusts), the payment of a dividend that is, or would be, non ‑ assessable non ‑ exempt income under section 768 ‑ 5 of the Income Tax Assessment Act 1997 (in whole or in part); or (c) the purpose, or one of the purposes, of the making of the loan was to facilitate, directly or indirectly, the provision of an eligible benefit by the recipient, being an eligible benefit that is a distribution benefit in relation to any company; the following provisions have effect: (d) the making of the loan is taken to constitute an eligible benefit provided by the provider to the recipient at that time; (e) if the eligible benefit is a distribution benefit in relation to the first company—each of the following times is a distribution time for the eligible benefit: (i) if the benefit was provided by the first company—the time of the provision of the benefit; or (ii) in any other case—the time, or each of the times, of the arrangement transfers concerned; (f) if the eligible benefit is a distribution benefit in relation to the first company—the distribution payment in relation to the distribution time is: (i) if the benefit was provided by the first company—the amount of the loan; or (ii) in any other case—so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit. (8) Where, at a particular time: (a) an entity (in this subsection called the provider ) acquires from a company (in this subsection called the recipient ): (i) a share in the recipient; (ii) a right to acquire a share in the recipient; (iii) an option to acquire a share in the recipient; or (b) an entity (in this subsection also called the provider ) acquires from the trustee of a unit trust (in this subsection also called the recipient ): (i) a unit in the recipient; (ii) a right to acquire a unit in the recipient; (iii) an option to acquire a unit in the recipient; the following provisions have effect: (c) the acquisition is taken to constitute an eligible benefit provided by the provider to the recipient at that time; (d) if the eligible benefit is a distribution benefit in relation to the first company—each of the following is a distribution time for the eligible benefit: (i) if the benefit was provided by the first company—the time of the provision of the benefit; or (ii) in any other case—the time, or each of the times, of the arrangement transfers concerned; (e) if the eligible benefit is a distribution benefit in relation to the first company—the distribution payment in relation to the distribution time is: (i) if the benefit was provided by the first company—the amount or market value of the consideration paid or given by the first company in respect of the acquisition; or (ii) in any other case—so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit; (f) if: (i) the eligible benefit is a distribution benefit in relation to the first company; and (ii) the provider transferred property or services to the recipient in respect of the acquisition; in determining the profits of the company immediately before the distribution time, or the first distribution time, as the case requires, for the distribution benefit, the following assumptions are to be made: (iii) if the benefit was provided by the first company—the assumption that, immediately before the distribution time, the company had: (A) disposed of the property or services to an entity other than the recipient; and (B) received, in respect of that disposal, consideration equal to the market value of the property or services; (iv) if subparagraph (iii) does not apply—the assumption that, immediately before the distribution time, the company had: (A) disposed of equivalent property or services to an entity other than the recipient or the entity who provided the eligible benefit; and (B) received, in respect of that disposal, consideration equal to the market value of the property or services. (9) An eligible benefit that is covered by subsection (8) and provided at a particular time is not a distribution benefit in relation to the first company if, at that time, there is no entity (other than the provider referred to in that subsection) who is: (a) either: (i) the holder of an eligible equity interest in the first company; or (ii) an associate of an entity who is the holder of an eligible equity interest in the first company; and (b) the holder of an eligible equity interest in the recipient referred to in that subsection. (10) Where: (a) an entity (in this subsection called the provider ) transfers property or services to another entity (in this subsection called the recipient ); and (b) the property or services are transferred: (i) for no consideration; or (ii) for a consideration less than the market value of the property or services; and (c) in the case of a transfer of services—the services do not consist of the making of a loan; and (d) in any case—the property or services are not transferred by way of consideration for the acquisition from a company of: (i) a share in the company; or (ii) a right to acquire a share in the company; or (iii) an option to acquire a share in the company; and (e) in any case—the property or services are not transferred in respect of the acquisition from the trustee of a unit trust of: (i) a unit in the unit trust; or (ii) a right to acquire a unit in the unit trust; or (iii) an option to acquire a unit in the unit trust; and (f) in the case of a transfer of property—the property does not consist of a payment in respect of a call on a share in a company; the following provisions have effect: (g) the transfer is taken to constitute an eligible benefit provided by the provider to the recipient at that time; (h) if the eligible benefit is a distribution benefit in relation to the first company—each of the following is a distribution time for the eligible benefit: (i) if the benefit was provided by the first company—the time of the provision of the benefit; or (ii) in any other case—the time, or each of the times, of the arrangement transfers concerned; (j) if the eligible benefit is a distribution benefit in relation to the first company—the distribution payment in relation to the distribution time is: (i) if the benefit was provided by the first company—the amount by which the amount or market value of the property or services exceeds the consideration (including nil consideration) mentioned in paragraph (b); or (ii) if subparagraph (i) does not apply and there is only one arrangement transfer—so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit; or (iii) if subparagraph (i) does not apply and there are 2 or more arrangement transfers—the amount worked out in relation to the arrangement transfer using the following formula: where: Total Excess means so much of the total amount or market value of all the arrangement transfers as is attributable to the provision of the eligible benefit. Arrangement transfer means the amount or market value of the arrangement transfer concerned. Total arrangement transfers means the total amount or market value of all of the arrangement transfers. (k) if the eligible benefit is a distribution benefit in relation to the first company—in determining the profits of the company immediately before a distribution time for the distribution benefit, the following assumptions are to be made: (i) if the benefit was provided by the first company—the assumption that, immediately before the distribution time, the company had: (A) disposed of the property or services to an entity other than the recipient; and (B) received, in respect of that disposal, consideration equal to the market value of the property or services; (ii) if subparagraph (i) does not apply and there is only one arrangement transfer—the assumption that, immediately before the distribution time, the company had: (A) disposed of the property or services covered by the arrangement transfer to an entity other than the entity who provided the eligible benefit; and (B) received, in respect of that disposal, consideration equal to the market value of the property or services; (iii) if subparagraph (i) does not apply and there are 2 or more arrangement transfers—the assumption that, immediately before each distribution time, the company had: (A) disposed of the property or services covered by the arrangement transfer concerned to an entity other than the entity who provided the eligible benefit; and (B) received, in respect of that disposal, consideration equal to the market value of the property or services. (10A) Subsection (10) does not apply to a transfer that is taken by section 70 ‑ 30 or 70 ‑ 110 of the Income Tax Assessment Act 1997 to have occurred. (11) Where, at a particular time, an entity (in this subsection called the provider ) makes a payment to another entity, being a company (in this subsection called the recipient ), in respect of a call on a share in the recipient: (a) the making of the payment is taken to constitute an eligible benefit provided by the provider to the recipient at that time; and (b) if the eligible benefit is a distribution benefit in relation to the first company—each of the following is a distribution time for the eligible benefit: (i) if the benefit was provided by the first company—the time of the provision of the benefit; or (ii) in any other case—the time, or each of the times, of the arrangement transfers concerned; (c) if the eligible benefit is a distribution benefit in relation to the first company—the distribution payment in relation to the distribution time is: (i) if the benefit was provided by the first company—the amount of the payment; or (ii) in any other case—so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit. (12) An eligible benefit that is covered by subsection (11) and provided at a particular time is not a distribution benefit in relation to the first company if, at that time, there is no entity (other than the provider referred to in that subsection) who is: (a) either: (i) the holder of an eligible equity interest in the first company; or (ii) an associate of an entity who is the holder of an eligible equity interest in the first company; and (b) the holder of an eligible equity interest in the recipient referred to in that subsection. (13) If: (a) apart from this subsection, a particular eligible benefit that is covered by subsection (8) or (11) and provided at a particular time is not a distribution benefit in relation to the first company only because of subsection (9) or (12); and (b) at a later time, there is an entity (other than the provider referred to in subsection (8) or (11), as the case may be) who is: (i) either: (A) the holder of an eligible equity interest in the first company; or (B) an associate of an entity who is the holder of an eligible equity interest in the first company; and (ii) the holder of an eligible equity interest in the recipient referred to in whichever of subsections (8) and (11) is applicable; and (ba) if the eligible benefit consists of the acquisition of a share or unit—at that later time, the share or unit has not been redeemed or bought back by the recipient mentioned in subsection (8) for a consideration equal to or greater than the arm’s length value of the share or unit; the following provisions have effect: (c) this section has effect as if subsection (9) or (12), as the case requires, had never applied in relation to that eligible benefit; (d) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection. (14) If: (a) apart from this subsection, a particular eligible benefit (in this subsection called the first eligible benefit ) that is covered by subsection (8) or (11) and provided at a particular time is not a distribution benefit in relation to the first company only because of subsection (9) or (12); and (b) the recipient referred to in whichever of subsections (8) and (11) is applicable provides an eligible benefit (in this subsection called the second eligible benefit ) to: (i) the first company; or (ii) the provider referred to in whichever of those subsections is applicable; or (iii) an associated entity in relation to: (A) the first company; or (B) that provider; and (c) the provision of the first eligible benefit facilitated, directly or indirectly, the provision of the second eligible benefit; and (ca) if the second eligible benefit is covered by subsection (8) or (11): (i) the second eligible benefit is provided on or after 13 September 1990; or (ii) both: (A) the second eligible benefit was provided before 13 September 1990; and (B) the Commissioner is of the opinion that the provision of the second eligible benefit had, or would be likely to have, the effect of enabling any taxpayer to avoid tax; the following provisions have effect: (d) this section has effect as if subsection (9) or (12), as the case requires, had never applied in relation to the first eligible benefit; (e) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection. (15) In determining whether a company has profits at a particular time, it is to be assumed that the accounts of the company had been drawn up immediately before that time. (16) For the purposes of this section, where: (a) the first company has profits (in this subsection called the original profits ) immediately before a distribution time for a distribution benefit in relation to the first company; and (b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount ) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer ) of a year of income (in this subsection called the original year of income ) under section 44 in respect of the distribution payment in relation to the distribution time; and (c) any of the following subparagraphs applies: (i) the original taxpayer is: (A) a resident at any time during the original year of income; and (B) a company or a natural person (other than a company or a natural person in the capacity of a trustee); (iii) the original taxpayer is the trustee of a public trading trust in relation to the original year of income; (iv) the original taxpayer is the trustee of a complying superannuation fund, a non ‑ complying superannuation fund, a complying approved deposit fund, a non ‑ complying approved deposit fund or a pooled superannuation trust in relation to the original year of income; (v) the original taxpayer is the trustee of a resident trust estate (within the meaning of Division 6) in relation to the year of income who is liable to be assessed and pay tax under section 99 or 99A in respect of a part of the net income of the trust estate; then, in determining the profits that the first company has at a later time, no account is to be taken of so much of the original profits as is equal to the original assessable amount. (17) For the purposes of this section, where: (a) the first company has profits (in this subsection called the original profits ) immediately before a distribution time for a distribution benefit in relation to the first company; and (b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount ) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer ) of a year of income (in this subsection called the original year of income ) under section 44 in respect of the distribution payment in relation to the distribution time; and (c) all of the following conditions are satisfied: (i) the original taxpayer is the trustee of a trust estate who is liable to be assessed and pay tax under section 98 in respect of a share in the net income of the trust estate of the original year of income; (ii) the beneficiary who was entitled to that share was a resident at any time during the original year of income; (iii) the whole or a part (which whole or part is in this subsection called the beneficiary’s portion of the original assessable amount ) of the share of the net income is attributable to the original assessable amount; then, in determining the profits that the first company has at a later time, no account is to be taken of so much of the original profits as is equal to the beneficiary’s portion of the original assessable amount. (18) For the purposes of this section, where: (a) the first company has profits (in this subsection called the original profits ) immediately before a distribution time for a distribution benefit in relation to the first company; and (b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount ) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer ) of a year of income (in this subsection called the original year of income ) under section 44 in respect of the distribution payment in relation to the distribution time; and (c) the original taxpayer is the trustee of a trust estate or a partnership; and (d) the following conditions are satisfied in relation to another taxpayer (in this subsection called the actual taxpayer ): (i) an amount is included in the assessable income of the actual taxpayer of a year of income (in this subsection called the assessment year of income ) under subsection 92(1) or section 97 or 100; (ii) the actual taxpayer is: (A) a resident at any time during the assessment year of income, being a company or a natural person (other than a company or a natural person in the capacity of a trustee); or (C) the trustee of a public trading trust in relation to the assessment year of income; or (D) the trustee of a complying superannuation fund, a non ‑ complying superannuation fund, a complying approved deposit fund, a non ‑ complying approved deposit fund or a pooled superannuation trust in relation to the assessment year of income; or (E) the trustee of a trust estate who is liable to be assessed and pay tax under section 98 in respect of a share in the net income of a trust estate; or (F) the trustee of a trust estate who is liable to be assessed and pay tax under section 99 or 99A in respect of a part of the net income of a trust estate; or (G) the trustee of a trust estate where trustee beneficiary non ‑ disclosure tax is payable under Division 6D on the whole or part of the net income of the trust estate; (iii) if sub ‑ subparagraph (ii)(A), (B), (C) or (D) applies—the whole or a part of the amount so included in the actual taxpayer’s assessable income (which whole or part is in this subsection called the actual taxpayer’s portion of the original assessable amount ) is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount; (iv) if sub ‑ subparagraph (ii)(E) applies: (A) the beneficiary who was entitled to the share concerned was a resident at any time during the assessment year of income; and (B) the whole or a part (which whole or part is in this subsection also called the actual taxpayer’s portion of the original assessable amount ) of the share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount; (v) if sub ‑ subparagraph (ii)(F) applies: (A) the trust estate was a resident trust estate (within the meaning of Division 6) in relation to the assessment year of income; and (B) the whole or a part (which whole or part is in this subsection also called the actual taxpayer’s portion of the original assessable amount ) of the part of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount; (vi) if sub ‑ subparagraph (ii)(G) applies: (A) the trust estate was a resident trust estate (within the meaning of Division 6) in relation to the assessment year of income; and (B) the whole or a part (which whole or part is in this subsection also called the actual taxpayer’s portion of the original assessable amount ) of the whole or the part of the share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount; then, in determining the profits that the first company has at a later time, no account is to be taken of so much of the original profits as is equal to the actual taxpayer’s portion of the original assessable amount. (18A) An assessment may be made of a taxpayer on the assumption that subsection (2) will not be applicable in relation to a particular distribution payment made during a year of income of the taxpayer. (18B) Where: (a) the assessment mentioned in subsection (18A) is made; and (b) after the making of the assessment, the Commissioner becomes aware that subsection (2) was applicable in relation to the distribution payment concerned; then, in spite of anything in section 170, the Commissioner may amend the assessment at any time for the purposes of ensuring that the assessment is made as if subsection (18A) of this section were disregarded. (19) The provisions of section 102AAJ apply for the purposes of this section in like manner as they apply for the purposes of Division 6AAA. (20) For the purposes of this section, the question whether a company is a resident of an unlisted country is to be determined in the same manner in which that question is determined for the purposes of Part X. (21) In this section: arm’s length value , in relation to the redemption or buy ‑ back of a share in a company or a unit in a unit trust, means the amount that the company or trustee could reasonably be expected to have been required to pay to obtain the redemption or buy ‑ back of the share or unit under a transaction where the parties to the transaction are dealing with each other at arm’s length in relation to the transaction. arrangement means: (a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and (b) any scheme, plan, proposal, action, course of action or course of conduct, whether there are 2 or more parties or only one party involved. associate has the same meaning as in Part X. associated entity , in relation to a company, means either of the following entities: (a) a shareholder in the company; (b) an entity who is an associate of a shareholder in the company. CFC has the same meaning as in Part X. distribution benefit has the meaning given by subsection (3) of this section. eligible equity interest : (a) in relation to a company, means any of the following: (i) a share, or an interest in a share, in the company; (ii) a right to acquire a share, or an interest in a share, in the company; (iii) an option to acquire a share, or an interest in a share, in the company; or (b) in relation to a unit trust, means any of the following: (i) a unit, or an interest in a unit, in the unit trust; (ii) a right to acquire a unit, or an interest in a unit, in the unit trust; (iii) an option to acquire a unit, or an interest in a unit, in the unit trust; or entity has the same meaning as in Part X. loan includes: (a) an advance of money; and (b) the provision of credit or any other form of financial accommodation; and (c) the payment of an amount for, on account of, on behalf or at the request of an entity where there is an obligation (whether expressed or implied) to repay the amount; and (d) a transaction (whatever its terms or form) which in substance effects a loan of money. property has the same meaning as in Division 6AAA. services has the same meaning as in Division 6AAA. statutory accounting period has the same meaning as in Part X. transfer has the same meaning as in Division 6AAA.

Amendment history: Inserted by No 5 of 1991, item 39 | item 423 | item 459 | item 29 | item 7 | item 1990 | item 434, effective s 4–61: 8 Jan 1991 (s 2) | Amended by No 48 of 1991, item 12, effective s 9, 15, 33, 70 and 81–83: 8 Jan 1991 (s 2(2)) s 10–14, 16–31, 34(a), 35, 37–39, 41–51(1), 52–59(1), 60, 61,67, 68(1), 69, 71–80, 84(1)–(8), (10), (11), (13)–(17), 85, 86 and 88–90: 24 Apr 1991 (s 2(1)) s 32 and 84(9): 1 July 1991 (s 2(4)) s 34(b), 36, 40 and 87: 21 Aug 1990 (s 2(3)) s 51(2), 59(2), 62–66, 68(2) and 84(12): 25 Apr 1991 (s 2(5)) | Amended by No 100 of 1991, Sch 2 item 28, effective s 15–28, 30–32, 33(b), (e), (f), 34–76 and 79–84): 27 June 1991 (s 2(1)) s 29 and 77: 24 Apr 1991 (s 2(3), (6)) s 33(a): 16 June 1990 (s 2(4)) s 33(c) and (d): 30 June 1989 (s 2(5)) s 78: 8 Jan 1991 (s 2(7)) | Amended by No 224 of 1992, item 83 | item 85 | item 86, effective s 4–13, 14(1), 15(1), 16(1), 17(1) and 18–87: 24 Dec 1992 (s 2(1)) s 14(2), 15(2), 16(2) and 17(2): 1 July 1993 (s 2(1)) | Amended by No 121 of 1997, Sch 1 item 70 | Sch 5 item 64, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 122 of 1997, Sch 1 item 17 | Sch 1 item 18 | Sch 1 item 19, effective s 4, Sch 1 (items 1–15, 20), Sch 3 (items 1, 2, 6–21) and Sch 5: 8 July 1997 (s 2(1)) Sch 1 (items 17–19): 3 June 1990 (s 2(2)) Sch 1 (items 22, 23): 1 Sept 1994 (s 2(4)) Sch 1 (item 24): 1 Jan 1993 (s 2(3)) Sch 3 (items 3, 4): 24 June 1986 (s 2(6)) Sch 3 (item 5): 30 June 1992 (s 2(7)) Sch 4: 20 Jan 1997 (s 2(8)) Sch 6: 27 June 1996 (s 2(9)) Sch 8: 19 Dec 1996 (s 2(11)) | Amended by No 70 of 1999, Sch 2 item 4, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 66 of 2003, effective s 4, Sch 1 and Sch 3 (items 1–46, 47, 48, 140(1), (5), (7)): 30 June 2003 (s 2(1) items 1, 2, 4–6, 14) Sch 3 (item 46A): 29 June 2002 (s 2(1) item 5A) | Amended by No 96 of 2004, effective Sch 2 (items 1–80, 85–138, 140, 141) and Sch 3: 29 June 2004 (s 2(1) items 3, 5, 6) | Amended by No 15 of 2007, effective Sch 1 (items 1–8, 22–149, 406(1)–(3)) and Sch 3 (items 6, 7): 15 Mar 2007 (s 2(1) items 2, 6) | Amended by No 143 of 2007, Sch 1 item 20 | Sch 1 item 35, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12) | Amended by No 97 of 2008, effective Sch 1 (items 1, 2, 12) and Sch 3 (items 5–43): 3 Oct 2008 (s 2(1) items 2, 3) | Amended by No 110 of 2014, Sch 2 item 9, effective Sch 2 (items 1, 6–12, 23): 17 Oct 2014 (s 2(1) item 2) Sch 5 (items 7–15, 95–97): 16 Oct 2014 (s 2(1) items 4, 7) | Amended by No 53 of 2016, effective Sch 3 (item 1), Sch 5 (items 1, 3, 6–28, 75), Sch 6 (items 1–20) and Sch 8 (item 1): 5 May 2016 (s 2(1) items 2, 4)

s 51AAA — Deductions not allowable in certain circumstances

(1) Where: (a) an amount is included in the assessable income of a taxpayer of a year of income by section 102 ‑ 5 of the Income Tax Assessment Act 1997 (about net capital gains) or subsection 124ZZB(1) of this Act (about notional capital gains of PDFs); (b) a deduction would, but for this section, be allowable under a provision listed in the table in subsection (2) to the taxpayer; and (c) if the amount had not been included in the assessable income the deduction would not be allowable; the deduction is not allowable. (2) The table lists provisions allowing deductions that are affected by subsection (1). Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 . Deduction provisions affected by net capital gains limit Item Provision Description 1 Subdivision A of Division 3 of Part III General 2 section 8 ‑ 1 General deductions 3 Division 25 Some expenses you can deduct 4 Division 30 Gifts or contributions 5 Division 34 Non ‑ compulsory uniforms 6 Division 36 Tax losses of earlier income years 7 Subdivision 40 ‑ F Facilities to conserve or convey water 8 Subdivision 40 ‑ F Establishing grapevines 9 Subdivision 40 ‑ G Landcare operations 10 Subdivision 40 ‑ G Mains electricity supply 11 Subdivision 40 ‑ G Telephone lines 12 Division 165 Income tax consequences of changing ownership or control of a company 13 Subdivision 170 ‑ A Transfer of tax losses within wholly ‑ owned groups of companies 14 Division 230 Financial arrangements

Amendment history: Inserted by No 52 of 1986, effective 24 June 1986 (s 2) | Amended by No 121 of 1997, Sch 4 item 63 | Sch 4 item 64 | Sch 11 item 37, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 46 of 1998, Sch 10 item 135, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4)) | Amended by No 77 of 2001, Sch 2 item 25, effective Sch 2 (items 20–148, 488(1)): 30 June 2001 (s 2(1)) | Amended by No 101 of 2004, effective s 4, Sch 1 (items 1, 4), Sch 8, Sch 10 (items 1–6) and Sch 11 (items 161, 162): 30 June 2004 (s 2(1) items 1, 2, 9, 10, 18) Sch 11 (items 1, 2): 16 July 1999 (s 2(1) item 11) Sch 11 (items 17–34, 38–43): 30 June 2000 (s 2(1) item 13) Sch 11 (items 44–46, 49–51, 60–87, 101–127): 1 July 2000 (s 2(1) item 14) Sch 11 (items 131–140): 1 July 2001 (s 2(1) item 16) | Amended by No 15 of 2009, Sch 1 item 230 | Sch 1 item 32, effective Sch 1 (items 31–51, 102–105): 26 Mar 2009 (s 2(1) item 2)

s 51AD — Deductions not allowable in respect of property used under certain leveraged arrangements

(1) In this section: arrangement includes: (a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and (b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise. associate has the same meaning in relation to a person as that expression has in relation to a person in section 318. construction includes manufacture. control means effectively control. goods includes whatever is capable of being owned or used. hire ‑ purchase agreement means a hire purchase agreement to which Division 240 of the Income Tax Assessment Act 1997 applies. lease , in relation to property, includes: (a) any arrangement under which a right to use the property is granted by the owner to another person; and (b) any arrangement under which a right to use the property, being a right derived directly or indirectly from a right referred to in paragraph (a), is granted by a person to another person; but does not include a hire ‑ purchase agreement. owner , in relation to property, includes a person who has taken, and holds, the property on hire under a hire ‑ purchase agreement. person includes a person in the capacity of a trustee. prescribed time means one o’clock in the afternoon, by standard time in the Australian Capital Territory, on 24 June 1982. Note: This section applies to deductions under Division 40 (Capital allowances) and Division 43 (Capital works) of the Income Tax Assessment Act 1997 as if you were the owner of an asset you hold (under that Division) instead of any other person: see section 40 ‑ 135 of that Act. (1A) This section does not apply to property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997 ) if the tax preferred use: (a) starts on or after 1 July 2007; and (b) does not occur under a legally enforceable arrangement entered into before 1 July 2007. (1B) This section does not apply to property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997 ) if: (a) the tax preferred use starts on or after 1 July 2007; and (b) the tax preferred use occurs under a legally enforceable arrangement that was entered into before 1 July 2007; and (c) an election is made under item 71 of Schedule 1 to the Tax Laws Amendment (2007 Measures No. 5) Act 2007 to have subitem 71(2) of that Schedule apply to the property. (1C) This section does not apply to property on or after 1 July 2007 if: (a) Division 16D applied to the property immediately before 1 July 2007; or (b) this section did not apply to the property immediately before 1 July 2007 and Division 16D would apply to the property on or after 1 July 2007 but for subsection 159GH(2). For the purposes of applying paragraph (b), disregard the operation of section 159GL. (1D) Subparagraph (4)(a)(iii) and sub ‑ subparagraph (4)(b)(ii)(D) do not apply to property acquired by a taxpayer if: (a) the property is acquired by the taxpayer on or after 1 July 2007; and (b) the property is not acquired under a legally enforceable arrangement entered into before 1 July 2007. (2) In this section, a reference to the acquisition of property by a person is a reference to: (a) the person becoming the owner of the property; or (b) the construction of the property for the person by another person or other persons on premises of the first ‑ mentioned person. (3) In this section, a reference to property being held for use includes a reference to property that is installed ready for use and held in reserve. (3B) For the purpose of this section, disregard an acquisition or disposal of property by way of the transfer of the property for the provision or redemption of a security. Consequently this section applies as if the person who was the owner of the property before the transfer continues to be the owner after the transfer. (4) Subject to subsections (1A), (1B), (1C), (1D) and (8), this section applies, in relation to a taxpayer, to property acquired or constructed by the taxpayer, being property acquired by the taxpayer under a contract entered into after the prescribed time or property constructed by the taxpayer, construction having commenced after that time, if: (a) at a time when the property is owned by the taxpayer, a person (which person is in this section referred to as the end ‑ user ) holds rights as lessee under a lease of the property, and: (i) in a case where the end ‑ user is not a resident of Australia—while the lease is in force, the property is, or is to be, used by a person other than the taxpayer wholly or principally outside Australia; (ii) while the lease is in force, the property is, or is to be, used by a person other than the taxpayer otherwise than wholly and exclusively for the purpose of producing assessable income; or (iii) in a case where the property was acquired by the taxpayer—the property was, prior to its acquisition by the taxpayer, owned, and used or held for use, by the end ‑ user; or (b) in a case to which paragraph (a) does not apply: (i) at a time when the property is owned by the taxpayer, the property is, or is to be, used (whether or not by the taxpayer) wholly or partly in or in connection with the production, supply, carriage, transmission or delivery of goods or the provision of services; and (ii) a person other than the taxpayer (which person is in this section also referred to as the end ‑ user ) controls, will control, or is or will be able to control, directly or indirectly, that use of the property, and: (A) in a case where the end ‑ user is not a resident of Australia—that use of the property takes place, or is to take place, wholly or principally outside Australia; (B) in a case where some or all of the goods are, or are to be, produced for the end ‑ user or supplied, carried, transmitted or delivered to or for the end ‑ user, or some or all of the services are, or are to be, provided to or for the end ‑ user—any of those goods or services are, or are to be, used by the end ‑ user otherwise than wholly and exclusively for the purpose of producing assessable income; (C) in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (i), the end ‑ user derives, or is to derive, no income or income that is wholly or partly exempt from income tax; or (D) in a case where the property was acquired by the taxpayer—the property was, prior to its acquisition by the taxpayer, owned, and used or held for use, by the end ‑ user. (5) In subparagraph (4)(a)(iii) and sub ‑ subparagraph (4)(b)(ii)(D), a reference to the end ‑ user is a reference to the end ‑ user, any of the end ‑ users (where there are 2 or more end ‑ users), any associate of the end ‑ user or of any of those end ‑ users, or any 2 or more such persons. (6) For the purposes of subsection (4), property shall be taken not to have been, prior to its acquisition by the taxpayer, owned, and used or held for use, by a person if: (a) the property was first used or held for use by the person at a time within 6 months before the acquisition of the property by the taxpayer; and (b) at that time there was in existence an arrangement that the property would be sold to another person and leased by that person to the first ‑ mentioned person. (7) Where: (a) the end ‑ user consists of all or any of the partners in a partnership; and (b) a condition of paragraph (4)(a) or (b), as the case may be, is satisfied in relation to any of the partners in the partnership; that condition shall be taken to be satisfied in relation to all the partners in the partnership. (8) This section does not apply to property, in relation to a taxpayer, unless the whole or a predominant part of the cost of the acquisition or construction, as the case may be, of the property by the taxpayer is financed directly or indirectly by a debt or debts (which debt is, or debts are, referred to in this subsection as the non ‑ recourse debt ) and the rights of the creditor or creditors as against the taxpayer in the event of default in the repayment of principal or payment of interest: (a) are limited wholly or predominantly to any or all of the following: (i) rights (including the right to moneys payable) in relation to any or all of the following: (A) the property or the use of the property; (B) goods produced, supplied, carried, transmitted or delivered, or services provided, by means of the property; (C) the loss or disposal of the whole or a part of the property or of the taxpayer’s interest in the property; (ii) rights in respect of a mortgage or other security over the property; (iii) rights arising out of any arrangement relating to the financial obligations of the end ‑ user of the property towards the taxpayer, being financial obligations in relation to the property; (b) are in the opinion of the Commissioner capable of being so limited, having regard to either or both of the following: (i) the assets of the taxpayer; (ii) any arrangement to which the taxpayer is a party; or (c) where paragraphs (a) and (b) do not apply—are limited by reason that not all of the assets of the taxpayer (not being assets that are security for debts of the taxpayer other than the non ‑ recourse debt) would be available for the purpose of the discharge of the whole of the non ‑ recourse debt (including the payment of interest) in the event of any action or actions by the creditor or creditors against the taxpayer arising out of that debt. (9) Where: (a) property has been financed by a debt or debts as mentioned in subsection (8); and (b) the rights of the creditor or creditors as against the taxpayer are, or are capable of being, limited as mentioned in that subsection; the Commissioner may treat those rights as not being, or capable of being, so limited if the Commissioner is of the opinion, having regard to the circumstances in which the debt was, or debts were, incurred and any other matters that the Commissioner thinks relevant, that it would be reasonable to do so. (10) Subject to subsections (11), (12), (13) and (15), where this section has applied to property, in relation to a taxpayer, at any time, the taxpayer shall be deemed not to have occupied or used the property, or held the property for use, at that time, for the purpose of producing assessable income or in carrying on a business for that purpose. (11) Where this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of subparagraph (4)(a)(ii) or sub ‑ subparagraph (4)(b)(ii)(B), and for any part of that time the end ‑ user held, occupied or used the property referred to in that subparagraph, or held it for use, or used any goods or services referred to in that sub ‑ subparagraph, as the case may be, partly for the purpose of producing assessable income, the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent that the Commissioner considers appropriate. (12) Where this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of sub ‑ subparagraph (4)(b)(ii)(C), and for any part of that time the end ‑ user derived assessable income in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (4)(b)(i), the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent that the Commissioner considers appropriate. (13) Where: (a) this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of subparagraph (4)(a)(ii) or sub ‑ subparagraph (4)(b)(ii)(B) or (C); (b) the end ‑ user referred to in that subparagraph or sub ‑ subparagraph, as the case may be, consisted of all or any of the partners in a partnership; and (c) for any part of that time one or more of the partners in the partnership was a person in respect of whom, but for the operation of subsection (7), that subparagraph or sub ‑ subparagraph, as the case may be, would not have applied; the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent that the Commissioner considers appropriate. (14) In considering, for the purposes of subsection (13), the extent to which the taxpayer shall be deemed to have held, occupied or used property, or held if for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, the Commissioner shall have regard: (a) to the interest or interests of the partner or partners referred to in paragraph (13)(c) in the net income, or the partnership loss, of the partnership of the year of income corresponding to the year of income referred to in paragraph (13)(a); (b) the extent to which, for any part of the time referred to in paragraph (13)(a), a partner or partners other than the partner or partners referred to in paragraph (13)(c) held, occupied or used the property, or held it for use, or used the goods or services referred to in sub ‑ subparagraph (4)(b)(ii)(B), as the case may be, for the purpose of producing assessable income; and (c) the extent to which, for any part of the time referred to in paragraph (13)(a), a partner or partners other than the partner or partners referred to in paragraph (13)(c) derived assessable income in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (4)(b)(i). (15) Notwithstanding anything contained in subsections (10), (11) and (13), at any time when this section applies to property by reason of subparagraph (4)(a)(ii), the property shall be deemed not to be held, occupied or used, or held for use, by the taxpayer for the purpose of producing assessable income, or in carrying on a business for that purpose, if, at that time: (a) 2 or more end ‑ users hold rights as lessees under the lease of the property; (b) one or more of the end ‑ users (which end ‑ user is, or end ‑ users are, referred to in this subsection as the exempt end ‑ user ) is a company, or are companies, the income of which is ordinarily exempt from income tax; (c) the property is, or is to be, used wholly or principally in or in connection with the conduct of operations or transactions of a kind that the exempt end ‑ user ordinarily engages in; (d) the exempt end ‑ user controls, will control, or is or will be able to control, directly or indirectly, that use of the property; and (e) in relation to those operations or transactions, the exempt end ‑ user derives, or is to derive, no income or income that is exempt from income tax. (16) Where a taxpayer has incurred expenditure for repairs to property to which this section applies or has applied in relation to the taxpayer and, but for this section, a deduction would be allowable under section 25 ‑ 10 (Repairs) of the Income Tax Assessment Act 1997 in respect of that expenditure, so much of the expenditure as the Commissioner considers appropriate shall be deemed not to be allowable, having regard to: (a) the period for which the taxpayer owned the property before the repairs were commenced and any part of that period during which this section applies or applied to the property in relation to the taxpayer; and (b) in a case to which subsection (11), (12) or (13) of this section applies or applied—the extent to which, for the time during the part of the period referred to in paragraph (a), the taxpayer was deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose. (17) Where a taxpayer has incurred expenditure in borrowing money to finance the acquisition or construction of property to which this section applies or has applied in relation to the taxpayer and a deduction has been allowed, or would but for this section be allowable, under section 25 ‑ 25 (Borrowing expenses) of the Income Tax Assessment Act 1997 in relation to that expenditure, so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be, having regard to: (a) the period for which the money was borrowed or, by the operation of subsection 25 ‑ 25(6) of that Act, is deemed to have been borrowed and any part of that period during which this section applies, applied or, in the opinion of the Commissioner, will apply to the property; and (b) in a case to which subsection (11), (12), or (13) of this section applies or applied—the extent to which, for the time during the part of the period referred to in paragraph (a), the taxpayer is, or in the opinion of the Commissioner will be, deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose. (18) Where a taxpayer has incurred expenditure for the preparation, registration and stamping of a lease, or of an assignment or surrender of a lease, of property to which this section applies or has applied in relation to the taxpayer and a deduction has been allowed, or would but for this section be allowable, under section 25 ‑ 20 (Lease document expenses) of the Income Tax Assessment Act 1997 in respect of that expenditure, so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be, having regard to: (a) the period of the lease and any part of that period during which this section applies, applied or, in the opinion of the Commissioner, will apply to the property; and (b) in a case to which subsection (11), (12) or (13) of this section applies or applied—the extent to which, for the time during the part of the period mentioned in paragraph (a), the taxpayer is, or in the opinion of the Commissioner will be, deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose. (19) Where: (a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income ); (b) a deduction was taken into account in calculating that net income or partnership loss; (c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction ) would not have been taken into account for the purpose of that calculation if this section applied in relation to particular property acquired or constructed by the partnership; (d) this section does not apply in relation to the property by reason only that the property was acquired by the partnership under a contract entered into at or before the prescribed time or was constructed by the partnership, construction having commenced at or before that time; and (e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer after the prescribed time; there shall be included in the assessable income of the taxpayer of the relevant year of income an amount that bears to the amount of the relevant deduction the same proportion as the individual interest of the taxpayer in that net income bears to that net income or, as the case requires, as the individual interest of the taxpayer in that partnership loss bears to that partnership loss. (20) Where: (a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income ); (b) a deduction was taken into account in calculating that net income or partnership loss; (c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction ) would not have been taken into account for the purpose of that calculation if this section applied in relation to particular property acquired or constructed by the partnership; (d) this section does not apply in relation to the property by reason only that the property was acquired by the partnership under a contract entered into at or before the prescribed time or was constructed by the partnership, construction having commenced at or before that time; (e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer before the prescribed time; and (f) after the prescribed time, the taxpayer made or agreed to make a contribution or contributions (which contribution is or contributions are in this subsection referred to as the additional contribution ) to the capital of the partnership in addition to any contribution or contributions to the capital of the partnership that, under a contract or contracts entered into at or before that time, the taxpayer had made or agreed to make; and (g) by reason of making or agreeing to make the additional contribution, the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss, is greater than it would otherwise have been; there shall be included in the assessable income of the taxpayer of the relevant year of income an amount ascertained in accordance with the formula A (B – C) , where: A is the amount of the relevant deduction. B is the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss; and C is the fraction that would be B if another partner, and not the taxpayer, had made or agreed to make the additional contribution. (21) For the purposes of determining if this section applies to property, the income of a prescribed excluded STB (within the meaning of Division 1AB) is taken to be exempt.

Amendment history: Inserted by No 14 of 1984, effective 12 Apr 1984 (s 2) | Amended by No 169 of 1995, Sch 1 item 5, effective Sch 1 (items 1–14, 16), Sch 2 (items 1–8, 11–15), Sch 3 (items 1–36, 40–44) and Sch 8 (items 1–5): 16 Dec 1995 (s 2(1)) Sch 3 (items 37–39): 1 July 1994 (s 2(2)) Sch 10 (item 2): 13 Oct 1994 (s 2(5)) | Amended by No 121 of 1997, Sch 1 item 42 | Sch 4 item 70 | Sch 4 item 71 | Sch 4 item 72 | Sch 4 item 73 | Sch 4 item 74 | Sch 4 item 75 | Sch 4 item 76, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 174 of 1997, Sch 6 item 17, effective s 4, Sch 1–5, Sch 6 (items 17–23(2), (3)), Sch 7 (items 1–16, 32(1)) and Sch 9 (items 24–30(2), (3)): 21 Nov 1997 (s 2(1)–(3)) | Amended by No 72 of 2001, Sch 2 item 2 | Sch 2 item 101, effective Sch 2 (items 2–6, 62–65, 101–107, 108(2), 109(2), 110): 30 June 2001 (s 2) | Amended by No 77 of 2001, Sch 2 item 26 | Sch 2 item 27 | Sch 2 item 43, effective Sch 2 (items 20–148, 488(1)): 30 June 2001 (s 2(1)) | Amended by No 101 of 2006, Sch 2 item 215 | Sch 2 item 216 | Sch 2 item 217 | Sch 2 item 218, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 164 of 2007, Sch 1 item 25 | Sch 1 item 26 | Sch 1 item 27 | Sch 1 item 28 | Sch 2E item 61 | Sch 2E item 62 | Sch 2E item 71, effective s 4, Sch 1 (items 27–35, 71), Sch 8 (items 1–5, 13(1)), Sch 10 (items 2–6) and Sch 11 (items 1–48, 78–80): 25 Sept 2007 (s 2(1) items 1, 2, 5, 8) Sch 10 (items 26–56): 1 July 2010 (s 2(1) item 6) Sch 12 (items 66–71): 27 Sept 2007 (s 2(1) item 9) | Amended by No 41 of 2011, Sch 5 item 225 | Sch 5 item 226, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 51AEA — Meal entertainment—election under section 37AA of Fringe Benefits Tax Assessment Act 1986 to use 50/50 split method

(1) If a meal entertainment fringe benefit arises for a taxpayer for an FBT year and the taxpayer elects that Division 9A of Part III of the Fringe Benefits Tax Assessment Act 1986 applies to the taxpayer for the FBT year, and has not elected that Subdivision C of that Division applies: (a) for each expense incurred in the FBT year by the taxpayer in providing meal entertainment, a deduction equal to 50% of that expense is allowable to the taxpayer for the year of income in which it is incurred; and (b) no other deduction under any provision of this Act is allowable to the taxpayer for the expense. (2) Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986 .

Amendment history: Inserted by No 145 of 1995, Sch 1 item 6, effective Sch 1 (item 6) and Sch 2 (item 15): 12 Dec 1995 (s 2)

s 51AEB — Meal entertainment—election under section 37CA of Fringe Benefits Tax Assessment Act 1986 to use the 12 week register method

(1) If a taxpayer has made an election under section 37CA of the Fringe Benefits Tax Assessment Act 1986 : (a) for each expense incurred in the FBT year by the taxpayer in providing meal entertainment, a deduction equal to the amount worked out using the following formula is allowable to the taxpayer for the year of income in which it is incurred: (b) no other deduction under any provision of this Act is allowable to the taxpayer for the expense. (2) The register percentage is the percentage worked out using the formula: where: Total deductions for register meal entertainment means the total of deductions that would (but for this section and section 51AEA) be allowable to the taxpayer for expenses incurred by the taxpayer in providing meal entertainment in the 12 week period covered by the register kept by the employer under Subdivision C of Division 9A of the Fringe Benefits Tax Assessment Act 1986 . Total register meal entertainment expenses means the total of expenses incurred by the taxpayer in providing meal entertainment during that 12 week period. (3) Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986 .

Amendment history: Inserted by No 145 of 1995, effective Sch 1 (item 6) and Sch 2 (item 15): 12 Dec 1995 (s 2) | Amended by No 41 of 1998, Sch 5 item 16, effective s 4, Sch 1 (items 4–16, 18–26), Sch 2 (items 1–4), Sch 3 (items 1–3, 7(1)), Sch 4 (items 4, 5), Sch 5 (items 16, 18) and Sch 6 (items 1, 2, 4, 5, 7–13, 15–18, 27): 4 June 1998 (s 2(1)) Sch 1 (item 17): 9 Apr 1999 (s 2(2)) Sch 5 (items 17, 19): 12 Dec 1995 (s 2(5)) Sch 6 (item 3): 16 Dec 1985 (s 2(6)) Sch 6 (item 6): 1 Jan 1993 (s 2(7)) Sch 6 (item 14): never commenced (s 2(9)) Sch 6 (item 16): 1 July 1998 (s 2(10))

s 51AEC — Entertainment facility—election under section 152B of Fringe Benefits Tax Assessment Act 1986 to use 50/50 split method

(1) If a taxpayer has made an election under section 152B of the Fringe Benefits Tax Assessment Act 1986 : (a) for each entertainment facility leasing expense incurred in the FBT year by the taxpayer, a deduction equal to 50% of that expense is allowable to the taxpayer for the year of income in which it is incurred; and (b) no other deduction under any provision of this Act is allowable to the taxpayer for entertainment facility leasing expenses incurred in the FBT year. (2) Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986 .

Amendment history: Inserted by No 145 of 1995, effective Sch 1 (item 6) and Sch 2 (item 15): 12 Dec 1995 (s 2)

s 51AF — Car expenses incurred by employee

(1) Where: (a) during a particular period, an employer provides a car for the exclusive use of a person who is, or of persons any of whom is, an employee of the employer or a relative of such an employee; and (b) at any time during that period, the employee or a relative of the employee is entitled to use the car for private purposes; a deduction is not allowable under this Act in respect of a car expense that relates to the car and: (c) is incurred by the employee during that period; or (d) is incurred by the employee and is wholly or partly attributable to that period. (2) In this section: car has the meaning given by section 995 ‑ 1 of the Income Tax Assessment Act 1997 , but does not include a car covered by section 28 ‑ 165 of that Act. car expense has the meaning given by section 28 ‑ 13 of the Income Tax Assessment Act 1997 , but does not include a car expense covered by section 28 ‑ 165 of that Act. employee means a person who receives, or is entitled to receive, work and income support related withholding payments and benefits. employer means a person who pays or is liable to pay work and income support related withholding payments and benefits, and includes: (a) in the case of an unincorporate body of persons other than a partnership—the manager or other principal officer of that body; and (b) in the case of a partnership—each partner; and (c) an Australian government agency as defined in subsection 995 ‑ 1(1) of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 173 of 1985, item 23, effective s 4, 5(3), 17 and 20–22: 22 May 1986 (s 2(4)) s 5(1): 6 June 1985 (s 2(2)) s 5(2): 1 Nov 1985 (s 2(3)) s 6–12, 14–16, 18, 19, 23, 24: 16 Dec 1985 (s 2(1)) s 13: never commenced (s 2(4)) | Amended by No 135 of 1990, item 39, effective s 7–33, 38(1), (2), 39(1) and Sch (Pt 1): 28 Dec 1990 (s 2(1)) s 38(3), 39(2) and Sch (Part 3): 1 July 1993 (s 2(3)) s. 38(4), 39(3) and Sch (Part 4): 8 Jan 1991 (s 2(4)) | Amended by No 30 of 1995, Sch 2 item 3, effective Sch 1 and 2: 7 Apr 1995 (s 2) | Amended by No 39 of 1997, Sch 4 item 43, effective Sch 1: 1 July 1997 (s 2) | Amended by No 101 of 2006, Sch 2 item 219 | Sch 2 item 220, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 51AGA — No deduction to employee for certain car parking expenses

No deduction (1) A deduction is not allowable to an employee under this Act in respect of expenditure to the extent to which it is incurred in respect of the provision of car parking facilities for a car on a day if: (a) on that day, the employee has a primary place of employment; and (b) on that day, the car is parked for one or more daylight periods exceeding 4 hours in total at, or in the vicinity of, that primary place of employment; and (c) the expenditure is in respect of the provision of the parking facilities to which that parking relates; and (d) on that day, the car was used in connection with travel by the employee between: (i) the place of residence of the employee; and (ii) that primary place of employment; and (e) the provision of parking facilities for the car during the period or periods is not taken, under the regulations, to be excluded from this section; and (f) the day is on or after 1 July 1993. Definitions (2) In this section: car has the same meaning as in the Fringe Benefits Tax Assessment Act 1986 . daylight period has the same meaning as in the Fringe Benefits Tax Assessment Act 1986 . employee has the same meaning as in the Fringe Benefits Tax Assessment Act 1986 . place of residence has the same meaning as in the Fringe Benefits Tax Assessment Act 1986 . primary place of employment has the same meaning as in the Fringe Benefits Tax Assessment Act 1986 .

Amendment history: Inserted by No 237 of 1992, item 10, effective s 9 and 10: 24 Dec 1992 (s 2)

s 51AH — Deductions not allowable where expenses incurred by employee are reimbursed

(1) Where: (a) either of the following subparagraphs applies: (i) a person makes a payment in discharge, in whole or in part, of an obligation of the taxpayer to pay an amount to a third person in respect of an amount of a loss or outgoing incurred by the taxpayer; (ii) a person reimburses the taxpayer, in whole or in part, in respect of an amount of a loss or outgoing incurred by the taxpayer; (b) the payment or reimbursement, as the case may be, constitutes: (i) a fringe benefit; or (ii) a benefit that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 , would be a fringe benefit; and (c) in the case of a reimbursement—the amount of the reimbursement is not included in the taxpayer’s assessable income under section 15 ‑ 70 of the Income Tax Assessment Act 1997 ; the amount of the deduction that, but for this section, has been allowed or would be allowable in respect of the loss or outgoing shall be: (d) if it would be concluded that the amount of the payment or reimbursement would have been the same even if the loss or outgoing were not incurred in producing assessable income of the taxpayer—calculated as if the loss or outgoing were reduced by the amount of the payment or reimbursement; or (e) in any other case—reduced by the amount of the payment or reimbursement. (2) Expressions (other than “fringe benefit”) used in this section and in the Fringe Benefits Tax Assessment Act 1986 have the same respective meanings in this section as they have in that Act. (3) This section does not apply to deductions under Division 40 of the Income Tax Assessment Act 1997 (about capital allowances).

Amendment history: Inserted by No 41 of 1986, effective s 4 and Sch: 24 June 1986 (s 2(1)) | Amended by No 139 of 1987, item 65 | item 66, effective s 64–75: 18 Dec 1987 (s 2) | Amended by No 101 of 2006, Sch 2 item 221 | Sch 2 item 222, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 59 of 2008, Sch 1 item 6, effective Sch 1 (items 6, 7, 10–13): 30 June 2008 (s 2) | Amended by No 97 of 2008, Sch 3 item 13, effective Sch 1 (items 1, 2, 12) and Sch 3 (items 5–43): 3 Oct 2008 (s 2(1) items 2, 3)

s 51AJ — Deductions not allowable for private component of contributions for fringe benefits etc.

(1) Where: (a) any of the following benefits is provided in respect of the employment of an employee of an employer: (i) an airline transport benefit; (ii) a board benefit; (iii) a loan benefit; (iv) a property benefit; (v) a residual benefit; (b) the benefit is: (i) a fringe benefit; or (ii) a benefit that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 , would be a fringe benefit; (c) in the case of a loan benefit—the taxpayer, being the recipient or the employee, incurs interest (in this section called the recipients interest ) in respect of the loan; (d) in the case of a benefit other than a loan benefit—the taxpayer, being the recipient or the employee, incurs consideration (in this section called the recipients contribution ) to the provider or to the employer in respect of the provision of the recipients transport, the recipients meal, the recipients property or the recipients benefit, as the case may be; (e) it would be concluded that, in calculating the amount of the recipients interest, or the amount of the recipients contribution, as the case may be, the provider or the employer made an allowance for a particular level of application or use of the benefit in producing assessable income of the taxpayer; and (f) it would be concluded that the amount of the recipients interest, or the amount of the recipients contribution, as the case may be, would have been greater if it had been calculated without making that allowance; the following provisions have effect: (g) if the extent of the application or use of the benefit concerned in producing assessable income of the taxpayer is equal to, or less than, that level—a deduction is not allowable to the taxpayer under this Act in respect of the recipients interest or the recipients contribution; (h) if the extent of the application or use of the benefit concerned in producing assessable income of the taxpayer exceeds that level—the amount of the deduction that, but for this section, has been allowed or would be allowable to the taxpayer under this Act in respect of the recipients interest or the recipients contribution shall not exceed the amount calculated in accordance with the formula: where: D is the amount of the deduction that, but for this section, would have been allowable to the taxpayer under this Act in respect of the amount of the recipients interest or the amount of the recipients contribution if it had been calculated without making that allowance; and A is the amount of that allowance. (2) Expressions (other than “recipients contribution” and “fringe benefit”) used in this section and in the Fringe Benefits Tax Assessment Act 1986 have the same respective meanings in this section as they have in that Act.

Amendment history: Inserted by No 139 of 1987, effective s 64–75: 18 Dec 1987 (s 2) | Amended by No 101 of 2006, Sch 2 item 223, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 51AK — Agreements for the provision of non ‑ deductible non ‑ cash business benefits

(1) Subject to this section, where: (a) under an agreement: (i) a taxpayer incurs expenditure; and (ii) a non ‑ cash business benefit is provided to the taxpayer or another person; and (b) that benefit is not exclusively for use or application for the purpose of producing assessable income of the taxpayer; the taxpayer shall be treated, for the purposes of this Act, as if so much of the expenditure as does not exceed the arm’s length value of the benefit had been incurred by the taxpayer exclusively in respect of that benefit. (2) This section does not apply so as to treat particular expenditure, or the cost of particular property, to be a particular amount for a particular purpose if there is another provision of this Act that deems that expenditure, or the cost of that property, to be a lesser amount for that purpose. (3) A reference in this section to producing assessable income includes a reference to: (a) gaining assessable income; or (b) carrying on a business for the purpose of gaining or producing assessable income. (4) Expressions used in this section and in section 21A have the same respective meanings in this section as they have in that section. (5) In this section: agreement means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. expenditure includes a loss or outgoing.

Amendment history: Inserted by No 95 of 1988, effective s 12–43, 44(b), 45–52, 54–58 and Sch: 24 Nov 1988 (s 2(1)) s 44(a) and 54(11): 16 Mar 1989 (s 2(2))

s 52 — Loss on property acquired for profit ‑ making

(1AA) This section does not apply to a loss arising in the 1997 ‑ 98 year of income or a later year of income from the carrying on or carrying out of a profit ‑ making undertaking or scheme, even if the undertaking or scheme was entered into, or began to be carried on or carried out, before the 1997 ‑ 98 year of income. Note: Section 25 ‑ 40 (Loss from profit ‑ making scheme) of the Income Tax Assessment Act 1997 deals with such a loss. (1A) This section does not apply in respect of the sale of property acquired on or after 20 September 1985. (1) Any loss incurred by the taxpayer in the year of income upon the sale of any property or from the carrying on or carrying out of any undertaking or scheme, the profit (if any) from which sale, undertaking or scheme would have been included in the taxpayer’s assessable income, shall be an allowable deduction: Provided that, in respect of property acquired by the taxpayer after the date of the commencement of this proviso, no deduction shall be allowable under this section (except where the Commissioner, being satisfied that the property was acquired by the taxpayer for the purpose of profit ‑ making by sale or for the carrying on or carrying out of any profit ‑ making undertaking or scheme, otherwise directs) unless the taxpayer, not later than the date upon which he or she lodges his or her first return under this Act after having acquired the property, notifies the Commissioner that the property has been acquired by the taxpayer for the purpose of profit ‑ making by sale or for the carrying on or carrying out of any profit ‑ making undertaking or scheme. (2) Where: (a) a taxpayer sells property (in this subsection referred to as the relevant property ) that is deemed by subsection 25A(5) or (8) to have been acquired by the taxpayer for the purpose of profit ‑ making by sale; (b) the Commissioner is satisfied that the relevant property has not been held or used by the taxpayer in a manner inconsistent with such a purpose; and (c) the Commissioner, having regard to: (i) the amount of the consideration paid by the person who transferred the relevant property or, in a case to which subsection 25A(8) applies, the property referred to in paragraph 25A(8)(b), to the taxpayer in respect of the purchase of the property so transferred; and (ii) such other matters as the Commissioner considers relevant; considers that it is appropriate that a loss be deemed to be incurred by the taxpayer upon the sale of the relevant property; the taxpayer shall be deemed, for the purposes of this section, to have incurred a loss upon the sale of the relevant property of such amount as the Commissioner considers appropriate. (3) Except as provided by subsection (2), a deduction is not allowable to a taxpayer under this section in respect of a loss incurred upon a sale of property to which paragraph (2)(a) applies. (4) Where: (a) a loss is incurred by a taxpayer upon the sale of property (in this subsection referred to as the relevant property ); and (b) the taxpayer is deemed to have acquired the relevant property for the purpose of profit ‑ making by sale by virtue of the application of subsection 25A(6) in accordance with subparagraph (b)(ii) of that subsection; the deduction that would, but for this subsection, be allowable to the taxpayer under subsection (1) in respect of the loss shall be reduced by such amount (if any) as the Commissioner considers reasonable having regard to the extent to which the relevant property is attributable to the interest in property that was acquired by the taxpayer for the purpose of profit ‑ making by sale as mentioned in that subparagraph. (5) A deduction is not allowable to a taxpayer under subsection (1) in respect of a loss incurred by the taxpayer upon the sale of property if: (a) the sale is a transfer in the prescribed manner by the taxpayer for the purposes of section 25A; or (b) the property is deemed by subsection 25A(2) to have been acquired by the taxpayer for the purposes of profit ‑ making by sale and was not actually acquired by the taxpayer for that purpose.

Amendment history: Amended by No 58 of 1941, effective s 27: 13 Oct 1939 (s 27(2)) Remainder: 31 Dec 1941 | Amended by No 47 of 1984, item 17 | item 60, effective 25 June 1984 (s 2) | Amended by No 52 of 1986, item 11, effective 24 June 1986 (s 2) | Amended by No 121 of 1997, Sch 1 item 25 | Sch 1 item 52 | Sch 1 item 2 | Sch 1 item 3 | Sch 1 item 4 | Sch 1 item 6 | Sch 1 item 7 | Sch 1 item 15 | Sch 1 item 16 | Sch 1 item 17 | Sch 1 item 19 | Sch 1 item 20 | Sch 1 item 22 | Sch 1 item 23 | Sch 1 item 24 | Sch 1 item 26 | Sch 1 item 27 | Sch 1 item 28 | Sch 1 item 29 | Sch 1 item 30 | Sch 1 item 32 | Sch 1 item 33 | Sch 1 item 34 | Sch 1 item 1 | Sch 1 item 9 | Sch 3 item 19 | Sch 3 item 24 | Sch 3 item 29 | Sch 3 item 53 | Sch 3 item 54 | Sch 3 item 60 | Sch 4 item 80, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 41 of 2011, Sch 5 item 227 | Sch 5 item 228 | Sch 5 item 229 | Sch 5 item 230, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 52A — Certain amounts disregarded in ascertaining taxable income

(1) Notwithstanding section 8 ‑ 1 of the Income Tax Assessment Act 1997 , losses or outgoings consisting of expenditure incurred by a taxpayer in the purchase or acquisition, after 7 April 1978, of any prescribed property as trading stock of the taxpayer shall, if the Commissioner considers that it would be unreasonable that a deduction be allowable to the taxpayer in respect of the whole of those losses or outgoings, be allowable as a deduction to the taxpayer to the extent only that the Commissioner considers that it is reasonable in the circumstances that a deduction be allowable to the taxpayer in respect of those losses or outgoings. (2) Where: (a) expenditure incurred by a taxpayer in the purchase or acquisition, after 7 April 1978, of any prescribed property that was purchased or acquired in the carrying on or carrying out of any profit ‑ making undertaking or scheme would, but for this subsection, be taken into account for the purpose of ascertaining whether any profit arose, or any loss was incurred, from the carrying on or carrying out of the undertaking or scheme and for the purpose of ascertaining the amount of any such profit or loss; and (b) the Commissioner considers that it would be unreasonable that the whole of that expenditure be taken into account for those purposes; that expenditure shall be taken into account for those purposes to the extent only that the Commissioner considers that it is reasonable in the circumstances that the expenditure be taken into account for those purposes. (2A) Where: (a) prescribed property that was acquired by a taxpayer after 24 September 1978 and before the commencement of this subsection or is acquired after the commencement of this subsection was or is treated or used by the taxpayer as an asset of a business carried on by the taxpayer; (b) but for this subsection, a deduction would be allowable to the taxpayer in respect of the value of that property; and (c) the Commissioner considers that it would be unreasonable that a deduction be allowable to the taxpayer in respect of the value of the property to the extent to which, but for this subsection, a deduction would be allowable to the taxpayer in respect of the value of the property; a deduction shall be allowable to the taxpayer in respect of the value of the property to the extent only that the Commissioner considers that it is reasonable in the circumstances that a deduction be allowable to the taxpayer in respect of that value. (2B) Where: (a) the value of any prescribed property that: (i) was acquired by a taxpayer after 24 September 1978 and before the commencement of this subsection or is acquired after the commencement of this subsection; and (ii) was or is used by the taxpayer in the carrying on or carrying out of any profit ‑ making undertaking or scheme; would, but for this subsection, be taken into account for the purpose of ascertaining whether or not any profit arose, or any loss was incurred, from the carrying on or the carrying out of the undertaking or scheme and for the purpose of ascertaining the amount of any such profit or loss; and (b) the Commissioner considers that it would be unreasonable that the value of the property be taken into account for those purposes to the extent to which the value would, but for this subsection, be taken into account for those purposes; the value of the property shall be taken into account for those purposes to the extent only that the Commissioner considers that it is reasonable in the circumstances that that value be taken into account for those purposes. (3) In forming an opinion for the purposes of subsection (1) or (2A) as to the extent to which it is reasonable that a deduction be allowable to a taxpayer in respect of expenditure incurred in the purchase or acquisition of prescribed property or in respect of the value of prescribed property, as the case may be, or in forming an opinion for the purposes of subsection (2) or (2B) as to the extent to which it is reasonable that expenditure incurred by a taxpayer in the purchase or acquisition of prescribed property should be taken into account for the purposes referred to in subsection (2) or that the value of prescribed property should be taken into account for the purposes referred to in subsection (2B), as the case may be: (a) if the taxpayer expended moneys in purchasing or acquiring the prescribed property—the Commissioner shall have regard to the circumstances in which, and the person or persons from whom, the taxpayer obtained moneys: (i) that were expended by the taxpayer in purchasing or acquiring the prescribed property; or (ii) that, in the opinion of the Commissioner, were obtained by, or paid to, the taxpayer to enable the taxpayer to expend moneys in purchasing or acquiring the prescribed property; (b) if the taxpayer borrowed from another person (in this paragraph referred to as the lender ) moneys that were expended by the taxpayer in purchasing or acquiring the prescribed property or moneys that, in the opinion of the Commissioner, were obtained by, or paid to, the taxpayer to enable the taxpayer to expend moneys in purchasing or acquiring the prescribed property—the Commissioner shall have regard to: (i) the circumstances in which, and the terms and conditions on which, the taxpayer borrowed those moneys from the lender; and (ii) whether, in the opinion of the Commissioner, the taxpayer and the lender were dealing with each other at arm’s length in connexion with the borrowing of those moneys by the taxpayer; (c) if, either before or after the purchase or acquisition of the prescribed property by the taxpayer, an agreement or arrangement (whether or not enforceable by legal proceedings and whether or not intended to be so enforceable) was entered into, or an understanding was reached, as a result of which there has been, or there could reasonably be expected to be, a substantial reduction in the value of the prescribed property—the Commissioner shall have regard to that agreement, arrangement or understanding; (d) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the transaction, operation, undertaking, scheme or arrangement, had not been entered into or carried out, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the transaction, operation, undertaking, scheme or arrangement had not been entered into or carried out—the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement; (e) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that the Commissioner is satisfied was by way of dividend stripping or was similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping—the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement; (f) if: (i) the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, money was to be paid, or other property was to be transferred or made available by a person other than the taxpayer, whether before or after the purchase or acquisition of the prescribed property, to the taxpayer, to the taxpayer and a person or persons other than the taxpayer or to a person or persons other than the taxpayer; (ii) the Commissioner is satisfied that the amount of money so to be paid, or the value of the property so to be transferred or made available, as the case may be, was to be not less than, or not substantially less than, the amount expended by the taxpayer in the purchase or acquisition of the prescribed property; the Commissioner shall have regard to the fact that the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of such a transaction, operation, undertaking, scheme or arrangement; (g) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, other prescribed property was to be issued or allotted by a company (whether to the taxpayer or any other person or persons) and it could reasonably be expected that, as a result of the issue or allotment of that other prescribed property, the value of the prescribed property purchased or acquired by the taxpayer would be substantially reduced—the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement; (h) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, rights in respect of the prescribed property or in respect of other prescribed property (whether that other prescribed property had been issued or allotted before the time of the purchase or acquisition by the taxpayer of the first ‑ mentioned prescribed property or was to be issued or allotted at a later time) were to be withdrawn or varied and it could reasonably be expected that, as a result of a withdrawal or variation of those rights, the value of the prescribed property purchased or acquired by the taxpayer would be substantially reduced—the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement; and (j) the Commissioner shall have regard to any other matters that he or she considers relevant. (4) In this section, prescribed property means any chose in action. (4A) In the preceding provisions of this section, references to the value of any prescribed property shall, unless the contrary intention appears, be read as including references to part of the value of that prescribed property. (5) For the purposes of this section: (a) a person to whom prescribed property is issued or allotted by a company shall be taken to have acquired that prescribed property; (b) a person upon whom prescribed property devolves by reason of the death of a person shall be taken to have acquired that prescribed property; and (c) a person in whom prescribed property vests by the operation of any trust or the exercise of any power under a trust shall be taken to have acquired that prescribed property. (6) The reference in paragraph (3)(b) to terms and conditions shall be read as including a reference to implied terms and conditions and to terms and conditions that are not enforceable by legal proceedings whether or not they were intended to be so enforceable. (7) Where, by virtue of the application of the preceding provisions of this section, the amount (in this subsection referred to as the relevant amount ) of the deduction that is allowable to a taxpayer in respect of losses or outgoings incurred by the taxpayer in the purchase or acquisition of prescribed property is less than the amount of those losses and outgoings, the cost of that prescribed property shall, for the purposes of the application of Divisions 70 (Trading stock) and 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the taxpayer, be taken to be an amount that is the same as the relevant amount. (8) References in this section to expenditure incurred by a taxpayer in the purchase or acquisition of any prescribed property shall, in the case of prescribed property being a share or stock in the capital of a company, be read as including references to any payment made or other consideration given by the taxpayer to the company in respect of the prescribed property, whether as a payment of unpaid capital in respect of the prescribed property or otherwise and whether on application for or allotment of the prescribed property, to meet calls or otherwise. (9) Subsection (8) applies to a non ‑ share equity interest in the same way as it applies to a share.

Amendment history: Inserted by No 57 of 1978, effective 22 June 1978 (s 2) | Amended by No 146 of 1979, item 6, effective 28 Nov 1979 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 39 of 1997, effective Sch 1: 1 July 1997 (s 2) | Amended by No 121 of 1997, Sch 5 item 68 | Sch 5 item 69, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 63 of 1998, Sch 7 item 16, effective Sch 1–4 and Sch 5 (items 1–22, 25–53, 58–67): 1 July 1998 (s 2(1) and gaz 1998, No S325) Sch 5 (items 23, 24, 54–57): 1 July 1998 (s 2(2)) | Amended by No 163 of 2001, Sch 1 item 66, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2) | Amended by No 41 of 2011, Sch 5 item 231, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 63 — Bad debts

Where a debt in respect of the whole or a part of a payment that has, or will, become liable to be made under a qualifying security within the meaning of Division 16E is written off as a bad debt by a taxpayer during a year of income, then, for the purposes of paragraph 25 ‑ 35(1)(a) of the Income Tax Assessment Act 1997 , there is taken to have been included in the taxpayer’s assessable income of a year of income so much of the debt as equals the amount (if any) ascertained in accordance with the formula A – B , where: A is the amount (if any) or the sum of the amounts (if any) included in the assessable income of the taxpayer of any year or years of income under section 159GQ that is or are attributable to the payment or to the part of the payment, as the case requires; and B is the amount (if any) or the sum of the amounts (if any) allowable as a deduction or deductions from the assessable income of the taxpayer of any year or years of income under section 159GQ that is or are attributable to the payment or to the part of the payment, as the case requires.

Amendment history: Amended by No 43 of 1954, effective 6 Nov 1954 (s 2) | Amended by No 69 of 1963, effective s 3, 4, 6(b), (c) and 7–56: 31 Oct 1963 (s 2(1)) s 5: 9 May 1963 (s 2(2)) s 6(a): 12 Dec 1957 (s 2(3)) | Amended by No 49 of 1986, item 6, effective s 4–29: 24 June 1986 (s 2(1)) | Amended by No 48 of 1991, item 13, effective s 9, 15, 33, 70 and 81–83: 8 Jan 1991 (s 2(2)) s 10–14, 16–31, 34(a), 35, 37–39, 41–51(1), 52–59(1), 60, 61,67, 68(1), 69, 71–80, 84(1)–(8), (10), (11), (13)–(17), 85, 86 and 88–90: 24 Apr 1991 (s 2(1)) s 32 and 84(9): 1 July 1991 (s 2(4)) s 34(b), 36, 40 and 87: 21 Aug 1990 (s 2(3)) s 51(2), 59(2), 62–66, 68(2) and 84(12): 25 Apr 1991 (s 2(5)) | Amended by No 98 of 1992, item 22 | item 102N, effective s 4–31 and 37–81: 30 June 1992 (s 2(1)) s 32–36: 1 July 1992 (s 2(2)) | Amended by No 82 of 1994, item 17 | Sch 4 item 130, effective s 8–43, 47–71, 80–83, 93–112, 114–119, 122, 128–134: 23 June 1994 (s 2(1)) s 7, 120 and 121: 22 Oct 1986 (s 2(2)) s 44–46: 9 June 1993 (s 2(3)) s 72–79: 1 Jan 1993 (s 2(4)) s 84–92: 30 June 1992 (s 2(5)) s 113: 21Dec 1992 (s 2(6)) s 123–127): 24 Dec 1992 (s 2(7)) | Amended by No 76 of 1996, Sch 2C item 245 | Sch 2C item 14, effective s 4 and Sch 1 (items 1–43, 47): 18 Dec 1996 (s 2(1)) Sch 1 (items 44–46): 1 Jan 1993 (s 2(2)) Sch 2: 27 June 1996 (s 2(3)) Sch 4 (items 19–24): 16 Feb 1997 (s 2(4)) | Amended by No 39 of 1997, Sch 4 item 49 | Sch 4 item 50 | Sch 4 item 51 | Sch 4 item 52 | Sch 4 item 90, effective Sch 1: 1 July 1997 (s 2) | Amended by No 95 of 1997, Sch 2E item 2, effective Sch 1 (item 23): 30 June 1997 (s 2(1)) | Amended by No 121 of 1997, Sch 1 item 25 | Sch 3 item 64 | Sch 3 item 68 | Sch 4 item 83 | Sch 4 item 84 | Sch 4 item 119 | Sch 4 item 137 | Sch 8 item 32 | Sch 8 item 33 | Sch 8 item 52, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Inserted by No 58 of 2000, effective s 4, Sch 1, Sch 2 (items 1, 4(1)), Sch 3 (item 3), Sch 6 (item 34), Sch 10 (items 1–11, 17(1), (2), 18–30, 38(1), (2)) and Sch 11 (items 1, 11): 31 May 2000 (s 2(1), (2)) Sch 3 (items 1, 2, 4–7) and Sch 6 (item 33): 16 July 1999 (s 2(3)–(6), (12)) Sch 8 (items 1–17, 21): 1 July 1998 (s 2(13)) Sch 8 (item 18): 1 July 1999 (s 2(13)) | Inserted by No 58 of 2000, effective s 4, Sch 1, Sch 2 (items 1, 4(1)), Sch 3 (item 3), Sch 6 (item 34), Sch 10 (items 1–11, 17(1), (2), 18–30, 38(1), (2)) and Sch 11 (items 1, 11): 31 May 2000 (s 2(1), (2)) Sch 3 (items 1, 2, 4–7) and Sch 6 (item 33): 16 July 1999 (s 2(3)–(6), (12)) Sch 8 (items 1–17, 21): 1 July 1998 (s 2(13)) Sch 8 (item 18): 1 July 1999 (s 2(13)) | Amended by No 41 of 2005, effective s 4, Sch 3 (items 1–16, 22), Sch 6 (items 1, 6–11), Sch 8, Sch 9 (items 3–13), Sch 10 (items 19–35, 270) and Sch 11 (items 1–3, 5): 1 Apr 2005 (s 2(1) items 1, 2, 4, 5, 23, 24) Sch 9 (items 1, 2): 29 June 2004 (s 2(1) item 3) | Amended by No 41 of 2005, effective s 4, Sch 3 (items 1–16, 22), Sch 6 (items 1, 6–11), Sch 8, Sch 9 (items 3–13), Sch 10 (items 19–35, 270) and Sch 11 (items 1–3, 5): 1 Apr 2005 (s 2(1) items 1, 2, 4, 5, 23, 24) Sch 9 (items 1, 2): 29 June 2004 (s 2(1) item 3) | Inserted by No 41 of 2005, effective s 4, Sch 3 (items 1–16, 22), Sch 6 (items 1, 6–11), Sch 8, Sch 9 (items 3–13), Sch 10 (items 19–35, 270) and Sch 11 (items 1–3, 5): 1 Apr 2005 (s 2(1) items 1, 2, 4, 5, 23, 24) Sch 9 (items 1, 2): 29 June 2004 (s 2(1) item 3) | Amended by No 101 of 2006, Sch 2 item 19 | Sch 2 item 49 | Sch 2 item 224 | Sch 2 item 225 | Sch 2 item 226 | Sch 2 item 227 | Sch 2 item 523 | Sch 2 item 533, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 63D — Bad debts etc. of money ‑ lenders not allowable deductions where attributable to listed country or unlisted country branches

(1) Subject to section 63F, if: (a) apart from this section and section 63F, a deduction would be allowable to a taxpayer: (i) under section 8 ‑ 1 or 25 ‑ 35 of the Income Tax Assessment Act 1997 in respect of the writing off of a debt as bad; or (ii) under section 63E of this Act in respect of a debt/equity swap in relation to a debt; and (b) the debt was created or acquired in the ordinary course of a money ‑ lending business of the taxpayer who carries on that business; and (c) during any part or parts (the foreign country branch period ) of the period since the debt was so created or acquired (the debt holding period ), it is the case that, if income had been derived by the taxpayer in respect of the debt, the income would not, because of section 23AH of this Act, have been included in the assessable income of the taxpayer; then only a proportion of the deduction is allowable, being the proportion calculated using the formula: where: debt holding period means the number of days in the debt holding period. eligible debt term means: (a) where the debt was acquired from a person other than an associate, within the meaning of section 318 of this Act—the number of days in the debt holding period; or (b) in any other case—the number of days in the period beginning on the day on which the debt was created (whether by the taxpayer or another person) and ending at the end of the day on which it was written off. foreign country branch period means the number of days in the foreign country branch period. (2) Where a debt that is written off, or in respect of which there is a debt/equity swap (within the meaning of section 63E), was acquired from another person, the creation, and any previous acquisition, of the debt is to be disregarded for the purposes of applying subsection (1), other than paragraph (b) of the definition of eligible debt term in subsection (1). (3) Where a part of a debt is written off as bad, this section applies as if the part were an entire debt that is written off as bad.

Amendment history: Inserted by No 48 of 1991, effective s 9, 15, 33, 70 and 81–83: 8 Jan 1991 (s 2(2)) s 10–14, 16–31, 34(a), 35, 37–39, 41–51(1), 52–59(1), 60, 61,67, 68(1), 69, 71–80, 84(1)–(8), (10), (11), (13)–(17), 85, 86 and 88–90: 24 Apr 1991 (s 2(1)) s 32 and 84(9): 1 July 1991 (s 2(4)) s 34(b), 36, 40 and 87: 21 Aug 1990 (s 2(3)) s 51(2), 59(2), 62–66, 68(2) and 84(12): 25 Apr 1991 (s 2(5)) | Amended by No 100 of 1991, Sch 2 item 29 | Sch 2 item 76, effective s 15–28, 30–32, 33(b), (e), (f), 34–76 and 79–84): 27 June 1991 (s 2(1)) s 29 and 77: 24 Apr 1991 (s 2(3), (6)) s 33(a): 16 June 1990 (s 2(4)) s 33(c) and (d): 30 June 1989 (s 2(5)) s 78: 8 Jan 1991 (s 2(7)) | Amended by No 98 of 1992, item 26 | item 27, effective s 4–31 and 37–81: 30 June 1992 (s 2(1)) s 32–36: 1 July 1992 (s 2(2)) | Amended by No 39 of 1997, effective Sch 1: 1 July 1997 (s 2) | Amended by No 121 of 1997, Sch 4 item 94 | Sch 4 item 95, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 46 of 1998, Sch 10 item 137 | Sch 10 item 6, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4)) | Amended by No 96 of 2004, effective Sch 2 (items 1–80, 85–138, 140, 141) and Sch 3: 29 June 2004 (s 2(1) items 3, 5, 6)

s 63E — Debt/equity swaps

Meaning of debt/equity swap (1) For the purposes of this section, a debt/equity swap occurs if: (a) under an arrangement (defined in subsection (6)), a taxpayer discharges, releases or otherwise extinguishes the whole or part of a debt owed to the taxpayer in return for the issue by the debtor to the taxpayer of shares (other than redeemable preference shares), or units, in the debtor; and (b) the debtor is: (i) a company; or (ii) a trading trust (within the meaning of section 102N), or a public unit trust (within the meaning of section 102P), in relation to the year of income in which the units are issued; and (c) the debt either: (i) has been brought to account by the taxpayer as assessable income of any year of income; or (ii) is in respect of money lent in the ordinary course of the business of the lending of money by the taxpayer who carries on that business. Meaning of equity value and swap loss (2) For the purposes of this section: (a) the equity value of the shares or units is the greater of: (i) their market value at the time of their issue to the taxpayer; and (ii) their value shown in the accounts of the taxpayer as at the time of their issue to the taxpayer; and (b) a swap loss occurs if the amount of the whole or the part of the debt that is extinguished is greater than the equity value of the shares or units. Swap loss is deductible etc. (3) If a debt/equity swap occurs: (a) subject to section 63F, any swap loss is allowable as a deduction from the taxpayer’s assessable income of the year of income in which the shares or units are issued; and (b) no amount is allowable as a deduction from the assessable income of the taxpayer of any year of income under section 8 ‑ 1 or 25 ‑ 35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of the debt as bad in connection with the debt/equity swap; and (c) for the purposes of any application of Subdivision 20 ‑ A of the Income Tax Assessment Act 1997 in relation to the issue of the shares or units to the taxpayer, the amount received in respect of the issue is taken to be the same as the equity value of the shares or units. Effect of debt/equity swap on later equity disposal etc. (4) If a debt/equity swap occurs and the taxpayer later disposes of any of the shares or units or they are cancelled or redeemed: (a) except in accordance with paragraph (b), no amount is included in, or allowable as a deduction from, the taxpayer’s assessable income of any year of income under this Act in respect of the later disposal, cancellation or redemption; and (b) if the consideration received or receivable by the taxpayer in respect of the disposal, cancellation or redemption is different from the equity value of the shares or units: (i) if the consideration is greater—the difference is included in the taxpayer’s assessable income of the year of income in which the disposal, cancellation or redemption occurs; or (ii) if it is less—the difference is allowable as a deduction from that assessable income. Consideration of a nil amount (5) For the purposes of subsection (4), if no consideration is received or receivable by the taxpayer in respect of the disposal, cancellation or redemption, then consideration of a nil amount is taken to have been so received or receivable. (5A) Subdivisions 165 ‑ C, 166 ‑ C and 175 ‑ C of the Income Tax Assessment Act 1997 apply to an allowable deduction under this section in respect of the whole or part of a debt that is extinguished, in the same way as they apply to a debt (or part of a debt) that is written off as bad. Meaning of arrangement (6) In this section: arrangement means any agreement, arrangement, understanding, promise, undertaking or scheme, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings.

Amendment history: Inserted by No 98 of 1992, item 21 | item 23 | item 24 | item 25 | item 26 | item 102N | item 28 | item 29 | item 30 | item 31, effective s 4–31 and 37–81: 30 June 1992 (s 2(1)) s 32–36: 1 July 1992 (s 2(2)) | Amended by No 39 of 1997, Sch 4 item 49 | Sch 4 item 51, effective Sch 1: 1 July 1997 (s 2) | Amended by No 121 of 1997, Sch 4 item 35 | Sch 4 item 93 | Sch 4 item 96 | Sch 4 item 98 | Sch 4 item 100 | Sch 8 item 33, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 46 of 1998, Sch 10 item 17, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4)) | Amended by No 101 of 2006, Sch 2 item 225, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 63F — Limit on deductions where debt write offs and debt/equity swaps occur

Situations where limit is to be applied (1) If: (a) apart from this section, a deduction ( the current deduction ) would be allowable to a taxpayer: (i) under section 8 ‑ 1 or 25 ‑ 35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of a debt as bad; or (ii) under section 63E of this Act in respect of a debt/equity swap relating to the whole or part of a debt; and (b) a deduction ( a previous deduction ) was allowed or allowable to the taxpayer under any of those sections, under former section 51 of this Act or under section 63 in respect of any number of occurrences of either or both of the following: (i) a previous writing off as bad of the whole or part of a debt ( a previous debt ) that was the same as, or included, the debt mentioned in subparagraph (a)(i) or (ii); (ii) a previous debt/equity swap relating to a part of a debt ( a previous debt ) that was the same as, or included, the debt mentioned in subparagraph (a)(i) or (ii); and (c) the current deduction or at least one previous deduction is a deduction allowable under section 63E of this Act in respect of a debt/equity swap; then the current deduction is only allowable to the extent that it does not exceed the limit worked out under subsection (2). Calculation of limit (2) The limit is worked out as follows: Step 1: Take the amount of the previous debt in respect of the earliest or only writing off or debt/equity swap to which paragraph (1)(b) applies. Step 2: Reduce the amount by the previous deduction in respect of that writing off or debt/equity swap. Step 3: If one or more of the following events occur after the writing off or debt/equity swap, progressively reduce the balance of the amount in the way set out below and in the order in which the events occur: Event How balance reduced A writing off or debt/equity swap in respect of which there is a previous deduction. Reduce the balance by the amount of that previous deduction. If the reduced balance is higher than the level of the debt owing after the event, further reduce the balance to that lower level. Any other event (e.g. a repayment) that reduces the amount of debt owing, being an event that occurs before the writing off or debt/equity swap in respect of the current deduction. If the balance at the time of the event is higher than the level of the debt owing after the event occurs, reduce the balance to that lower level The limit is the resulting balance.

Amendment history: Inserted by No 98 of 1992, item 26 | item 102N, effective s 4–31 and 37–81: 30 June 1992 (s 2(1)) s 32–36: 1 July 1992 (s 2(2)) | Amended by No 39 of 1997, effective Sch 1: 1 July 1997 (s 2) | Amended by No 121 of 1997, Sch 4 item 99 | Sch 4 item 100, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 101 of 2006, Sch 2 item 226, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 63G — Bad debts etc. of trust not allowable in certain circumstances

If: (a) a deduction is allowable from a trust’s assessable income of any year of income: (i) under former section 51 of this Act, under section 63 of this Act or under section 8 ‑ 1 or 25 ‑ 35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of a debt as bad; or (ii) under subsection 63E(3) or (4) in respect of the extinguishment of the whole or part of a debt; and (b) the debt was incurred as well as written off or extinguished on the last day of the year of income; the deduction is not allowable. Schedule 2F may also prevent a taxpayer deducting an amount in respect of a debt in other circumstances.

Amendment history: Inserted by No 17 of 1998, Sch 2F item 18, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 101 of 2006, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 65 — Payments to associated persons and relatives

(1B) Where, by virtue of section 26 ‑ 35 (Reduction of deduction for amounts paid to related entities) of the Income Tax Assessment Act 1997 , an amount is not allowable as a deduction in calculating in accordance with section 90 of this Act the net income, or a partnership loss, of a partnership in which a company, being a private company in relation to the year of income of the company to which the individual interest of the company in the net income of the partnership or in the partnership loss relates, is a partner: (a) the company shall, for the purposes of this Act other than Division 11A, be deemed to have paid, on the last day of that year of income, a dividend of an amount ascertained in accordance with subsection (1C); and (b) subsection 26 ‑ 35(4) of the Income Tax Assessment Act 1997 does not apply in relation to so much of the amount that is not so allowable as a deduction as is equal to the amount of the dividend that the company is to be so deemed to have paid. (1C) For the purposes of subsection (1B), the amount of the dividend that the company is to be deemed to have paid is: (a) where the effect of the disallowance of the deduction has been to increase the net income of the partnership—an amount equal to the difference between the amount of the individual interest of the company in the net income of the partnership and the amount that would have been the individual interest of the company in the net income of the partnership if the deduction had been allowed; (b) where the effect of the disallowance of the deduction has been to reduce the partnership loss—an amount equal to the difference between the amount of the individual interest of the company in the partnership loss and the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed; (c) where there is net income of the partnership and the amount of the deduction that was disallowed is equal to that net income—an amount equal to the individual interest of the company in the net income of the partnership; (d) where there is net income of the partnership and, but for the disallowance of the deduction, there would have been a partnership loss—an amount equal to the sum of the amount of the individual interest of the company in the net income of the partnership and the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed; and (e) where there is no net income of the partnership and, but for the disallowance of the deduction, there would have been a partnership loss—an amount equal to the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed.

Amendment history: Amended by No 110 of 1964, effective s 3–46: 23 Nov 1964 (s 2(1)) | Amended by No 51 of 1973, item 3, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 108 of 1981, item 27, effective s 4–25: 24 June 1981 (s 2) | Amended by No 107 of 1989, Sch 1 item 12, effective s 9–23, 32 and Sch 1: 30 June 1989 (s 2(1)) | Amended by No 135 of 1990, item 39, effective s 7–33, 38(1), (2), 39(1) and Sch (Pt 1): 28 Dec 1990 (s 2(1)) s 38(3), 39(2) and Sch (Part 3): 1 July 1993 (s 2(3)) s. 38(4), 39(3) and Sch (Part 4): 8 Jan 1991 (s 2(4)) | Amended by No 121 of 1997, Sch 1 item 26 | Sch 4 item 103 | Sch 4 item 104 | Sch 4 item 105 | Sch 4 item 106, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 101 of 2006, Sch 2 item 228 | Sch 2 item 1042, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 70B — Deduction for loss on disposal or redemption of traditional securities

(1) Expressions used in this section that are also used in section 26BB have the same meanings in this section as in section 26BB. (2) Where a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed, the amount of any loss on the disposal or redemption is allowable as a deduction from the assessable income of the taxpayer of the year of income in which the disposal or redemption takes place. (2A) A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of traditional securities that are: (a) segregated exempt assets (for the purposes of the Income Tax Assessment Act 1997 ) of a life assurance company; or (b) segregated current pension assets (as defined in the Income Tax Assessment Act 1997 ) of a complying superannuation fund. (2B) A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of a traditional security if: (a) the disposal or redemption occurs because the traditional security is converted into ordinary shares in a company that is: (i) the issuer of the traditional security; or (ii) a connected entity of the issuer of the traditional security; and (b) the traditional security was issued on the basis that it will or may convert into ordinary shares in: (i) the issuer of the traditional security; or (ii) the connected entity. (2C) A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of a traditional security if: (a) the disposal or redemption is in exchange for ordinary shares in a company that is neither: (i) the issuer of the traditional security; nor (ii) a connected entity of the issuer of the traditional security; and (b) in the case of a disposal—the disposal is to: (i) the issuer of the traditional security; or (ii) a connected entity of the issuer of the traditional security; and (c) the traditional security was issued on the basis that it will or may be: (i) disposed of to the issuer of the traditional security or to the connected entity; or (ii) redeemed; in exchange for ordinary shares in the company. (3) Where the Commissioner, having regard to any connection between the parties to the transaction by which the taxpayer disposed of the traditional security or by which it was redeemed, or by which the taxpayer acquired the traditional security, is satisfied that the parties were not dealing with each other at arm’s length in relation to the transaction, then, for the purposes of determining under subsection (2) the amount of any loss on the disposal or redemption, the consideration for the transaction shall be taken to be: (a) the amount that might reasonably be expected for the transaction if the parties were independent parties dealing at arm’s length with each other; or (b) where, for any reason it is not possible or practicable for the Commissioner to ascertain that amount—such amount as the Commissioner determines. (4) If: (a) a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed; and (b) there is a loss on the disposal or redemption; and (c) in the case of a disposal or redemption of a marketable security: (i) the taxpayer did not acquire the security in the ordinary course of trading on a securities market; and (ii) at the time the taxpayer acquired the security, it was not open to the taxpayer to acquire an identical security in the ordinary course of trading on a securities market; and (d) in the case of a disposal of a marketable security—the disposal did not take place in the ordinary course of trading on a securities market; and (e) having regard to: (i) the financial position of the issuer of the security; and (ii) perceptions of the financial position of the issuer of the security; and (iii) other relevant matters; it would be concluded that the disposal or redemption took place for the reason, or for reasons that included the reason, that there was an apprehension or belief that the issuer was, or would be likely to be, unable or unwilling to discharge all liability to pay amounts under the security; a deduction is not allowable to the taxpayer under this section in respect of so much of the amount of the loss as is a loss of capital or a loss of a capital nature. (5) A reference in this section to the disposal by a taxpayer of a security, or to the redemption of a security of a taxpayer, does not include a reference to the waiver or release by the taxpayer of: (a) the whole or a part of the debt the subject of the security; or (b) any other right of the taxpayer under the security. (6) Subsection (5) does not, by implication, affect the meaning of an expression used in: (a) a provision of this Act other than this section; or (b) any other law of the Commonwealth. (7) In this section: issuer , in relation to a security at a particular time, means the person who, if the amount or amounts payable under the security were due and payable at that time, would be liable to pay the amount or amounts. marketable security means a traditional security that is covered by paragraph (a) of the definition of security in subsection 159GP(1). securities market means a market, exchange or other place at which, or a facility by means of which, offers to sell, purchase or exchange marketable securities are regularly made or accepted.

Amendment history: Inserted by No 107 of 1989, effective s 9–23, 32 and Sch 1: 30 June 1989 (s 2(1)) | Amended by No 224 of 1992, item 22 | item 19 | item 21, effective s 4–13, 14(1), 15(1), 16(1), 17(1) and 18–87: 24 Dec 1992 (s 2(1)) s 14(2), 15(2), 16(2) and 17(2): 1 July 1993 (s 2(1)) | Amended by No 89 of 2000, Sch 2 item 6, effective s 4, Sch 1 (item 66), Sch 2 (items 1–24, 35, 36, 48, 53–62), Sch 3 (items 1–29, 98–100), Sch 5 (items 32–34(1)) and Sch 8 (items 1–8, 11): 30 June 2000 (s 2(1)) Sch 1 (item 67): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 2 (items 25, 26) and Sch 3 (items 30–97): 1 July 2000 (s 2(3), (8), (9)) | Amended by No 133 of 2003, Sch 1 item 3, effective Sch 1 (items 1–3, 17(1)) and Sch 4 (items 21–37, 77, 78): 17 Dec 2003 (s 2) | Amended by No 58 of 2006, effective s 4 and Sch 7 (items 35–50, 241–256): 22 June 2006 (s 2(1) items 1, 6, 24) Sch 7 (items 173, 175): 30 June 2000 (s 2(1) items 9, 11) Sch 7 (item 174): 24 Oct 2002 (s 2(1) item 10) Sch 7 (items 176, 178): 30 June 2004 (s 2(1) items 12, 14) Sch 7 (item 177): 24 Dec 1992 (s 2(1) item 13) | Amended by No 15 of 2007, Sch 1 item 72, effective Sch 1 (items 1–8, 22–149, 406(1)–(3)) and Sch 3 (items 6, 7): 15 Mar 2007 (s 2(1) items 2, 6)

s 73A — Expenditure on scientific research

(1A) This section has effect subject to Division 245 of the Income Tax Assessment Act 1997 . (1) The following payments made, and expenditure incurred, during the year of income (other than any amount which is allowable as a deduction under any other section of this Act) by a person carrying on a business for the purpose of gaining or producing assessable income shall be allowable deductions: (a) Payments to: (i) an approved research institute for scientific research related to that business; or (ii) an approved research institute, the object of which is the undertaking of scientific research related to the class of business to which that business belongs; and (b) Expenditure of a capital nature on scientific research related to that business (except to the extent that it is expenditure on plant, machinery, land or buildings or on alterations, additions or extensions to buildings or in the acquisition of rights in or arising out of scientific research). (2) Where, on or after the first day of the year of income ending on 30 June 1946, a taxpayer carrying on a business for the purpose of gaining or producing assessable income incurs expenditure of a capital nature in the construction or acquisition of a building, or part of a building, or in making any alteration or addition to a building, in which scientific research related to that business is to be carried on by or on behalf of the taxpayer, and the building, part of a building, alteration or addition, as the case may be, is of use for scientific research purposes only, an amount equal to one ‑ third of that expenditure shall be an allowable deduction: (a) from the assessable income of the year of income in which the building, part of a building, alteration or addition is first used by or on behalf of the taxpayer for such scientific research; and (b) from the assessable income of each of the 2 years of income next succeeding that year of income, if the taxpayer continues to carry on that business during the year in which that assessable income was derived. (2A) Subsection (2) does not apply to expenditure incurred by a taxpayer in the construction of a building or part of a building, in the making of an alteration or addition to a building or in the acquisition of a building or part of a building unless: (a) either of the following subparagraphs applies: (i) that construction or making commenced, or that acquisition occurred, before 21 November 1987; (ii) any contract in respect of that construction, making or acquisition was entered into before 21 November 1987; and (b) if the expenditure was incurred after 20 November 1987—the taxpayer intended, on 20 November 1987, that: (i) scientific research, being research related to a business carried on by the taxpayer for the purpose of gaining or producing assessable income, would be carried on by or on behalf of the taxpayer in the building; and (ii) the building, part of the building, alteration or addition, as the case may be, would be of use for scientific research purposes only. (3) Where any expenditure or payment to which this section refers is incurred or made outside Australia and the business in relation to which it is so incurred or made is carried on partly in and partly out of Australia, the deduction allowable under this section shall be such part of the amount which would otherwise be allowable as the Commissioner considers reasonable in the circumstances. (4) Where any expenditure has been allowed or is allowable as a deduction under subsection (2) and: (a) the taxpayer sells, transfers or otherwise disposes of the building or any part thereof; or (b) the building or any part thereof is destroyed; the termination value of the building or part shall, to the extent of the expenditure so allowed or allowable as a deduction, be included in the assessable income of the year of income in which the disposal or destruction occurs: Provided that where the Commissioner is of opinion that part only, or no part, of that termination value relates to the disposal or destruction of any property which was acquired or created by that expenditure, that part only, or no part, as the case may be, of the termination value shall be taken into account for the purposes of this subsection. (4A) If: (a) a person has purchased from another person a building, or part of a building, where the vendor had incurred capital expenditure of a kind in respect of which deductions are or have been allowable under subsection (2); and (b) it would be concluded that, having regard to any connection between the vendor and the purchaser or to any other relevant circumstances, those persons were not dealing with each other at arm’s length; and (c) the purchase price is greater or lesser than the market value of the building, or the part of the building, at the time of the purchase; the purchase price is, for all purposes of the application of this Act in relation to the vendor, taken to have been the amount of the market value of the property at the time of the purchase. (5) If the purchase of the building is a creditable acquisition by the vendor, references in subsection (4A) to the purchase price are taken to be references to that price reduced by the amount of the net input tax credit to which the purchaser is entitled for the acquisition. (6) In this section: an approved research institute means the Commonwealth Scientific and Industrial Research Organization, or any university, college, institute, association or organization which is approved in writing for the purposes of this section by that Organization, by the Chief Executive Officer of the NHMRC or by the Research Secretary, as an institution, association or organization for undertaking scientific research which is or may prove to be of value to Australia. NHMRC means the National Health and Medical Research Council established by section 5B of the National Health and Medical Research Council Act 1992 . Research Secretary means the Secretary of the Department administered by the Minister administering the Australian Research Council Act 2001 . scientific research means any activities in the fields of natural or applied science for the extension of knowledge. termination value has the meaning given by subsection 995 ‑ 1(1) of the Income Tax Assessment Act 1997 . (7) An approval for the purposes of subsection (6) may: (a) operate as from a date, whether before or after the date of the approval, specified in the instrument of approval; and (b) be withdrawn at any time. (8) In this section, any reference to scientific research related to a business or class of business shall be read as including a reference to: (i) any scientific research which may lead to or facilitate an extension, or an improvement in the technical efficiency, of that business, or, as the case may be, of businesses of that class; and (ii) any scientific research of a medical nature which is of special relation to the welfare of workers employed in that business or, as the case may be, in businesses of that class. (9) This section does not apply in relation to payments made, or expenditure incurred, after 30 June 1995.

Amendment history: Inserted by No 6 of 1946, effective 13 Apr 1946 (s 2) | Amended by No 65 of 1957, effective s 3–23: 28 Nov 1957 (s 2) | Amended by No 18 of 1960, effective 17 June 1960 | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 164 of 1973, effective s 3–17, 19–22 and Sch: 11 Dec 1973 (s 2) | Amended by No 216 of 1973, effective Sch 1: 31 Dec 1973 (s 2) | Amended by No 20 of 1974, effective Sch 1: 31 Dec 1973 (s 2) | Amended by No 80 of 1975, effective 20 June 1975 (s 2) | Amended by No 50 of 1976, effective s 3–19 and Sch: 4 June 1976 (s 2) | Amended by No 27 of 1979, effective s 5: 5 Dec 1978 (s 2(2)) s 6: 23 June 1977 (s 2(3)) Remainder: 4 June 1979 (s 2(1)) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 80 of 1982, effective s 280(2), (3) and Sch 12: 22 Sept 1982 (s 2(1)) | Amended by No 165 of 1984, effective s 9 and Sch 1: 13 Dec 1984 (s 2(29) and gaz 1984, No S519) | Amended by No 112 of 1986, effective s 15–34, 46 and 47: 4 Nov 1986 (s 2) | Amended by No 11 of 1988, item 12, effective s 9–13 and 15–40: 26 Apr 1988 (s 2(1)) s 14: 24 June 1986 (s 2(2)) | Amended by No 97 of 1989, item 13 | Sch 2 item 4 | Sch 2 item 3 | Sch 2 item 13, effective s 4–9, 11–15 and Sch 1: 30 June 1989 (s 2) | Amended by No 167 of 1989, item 6, effective s 4–30 and 32: 19 Dec 1989 (s 2(1)) s 31: 19 Jan 1989 (s 2(2)) | Amended by No 35 of 1992, item 27 | item 23 | item 26 | item 73A | item 1992 | item 64 | item 55 | item 69 | item 1988, effective s 7–75: 25 May 1992 (s 2) | Amended by No 76 of 1996, Sch 2C item 245 | Sch 2C item 18, effective s 4 and Sch 1 (items 1–43, 47): 18 Dec 1996 (s 2(1)) Sch 1 (items 44–46): 1 Jan 1993 (s 2(2)) Sch 2: 27 June 1996 (s 2(3)) Sch 4 (items 19–24): 16 Feb 1997 (s 2(4)) | Amended by No 176 of 1999, Sch 8 item 24, effective Sch 8 (items 16–25): 1 July 2000 (s 2(17)) | Amended by No 101 of 2006, Sch 1 item 79 | Sch 2 item 229 | Sch 2 item 230 | Sch 2 item 231 | Sch 2 item 232 | Sch 2 item 233, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 97 of 2008, Sch 3 item 15 | Sch 3 item 16 | Sch 3 item 17 | Sch 3 item 18, effective Sch 1 (items 1, 2, 12) and Sch 3 (items 5–43): 3 Oct 2008 (s 2(1) items 2, 3) | Amended by No 14 of 2009, Sch 4 item 8, effective Sch 4 (items 6–10): 26 Mar 2009 (s 2(1) item 2) Sch 5 (items 1, 14(1)): 29 Jan 2009 (s 2(1) items 3, 7) Sch 5 (item 4): never commenced (s 2(1) item 4) | Amended by No 88 of 2009, Sch 5 item 74, effective s 4, Sch 1, Sch 3 (items 2–4), Sch 4 (items 1, 5) and Sch 5 (items 21–112, 306–318): 18 Sept 2009 (s 2(1) items 1, 2, 6, 7, 10) Sch 2 (items 2, 3): 1 Oct 2009 (s 2(1) item 3) | Amended by No 79 of 2010, Sch 2 item 245, effective Sch 1 (items 1, 2, 17–26, 53, 57, 66), Sch 3 (item 1), Sch 4 (items 1, 9–37, 51) and Sch 5 (items 1, 3–5, 13): 1 July 2010 (s 2(1) items 2, 4) Sch 2 (items 1, 10–15): 1 July 2010 (s 2(1) item 3) | Amended by No 41 of 2011, Sch 5 item 232 | Sch 5 item 233, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23) | Amended by No 110 of 2014, Sch 5 item 11, effective Sch 2 (items 1, 6–12, 23): 17 Oct 2014 (s 2(1) item 2) Sch 5 (items 7–15, 95–97): 16 Oct 2014 (s 2(1) items 4, 7)

s 73AA — Section 73A roll ‑ over relief in the case of certain CGT roll ‑ overs

Roll ‑ over relief where CGT roll ‑ over relief allowed (1) This section applies to the disposal of a building, or part of a building, by a taxpayer (in this section called the transferor ) to another taxpayer (in this section called the transferee ) if: (b) subject to subsection (7), deductions have been allowed or are allowable under subsection 73A(2) to the transferor in respect of the building or the part of the building; and (c) the disposal involves a CGT event; and (d) the conditions in an item in the table are satisfied. CGT roll ‑ overs that qualify transferor for relief Item Type of CGT roll ‑ over Conditions 1 Disposal of asset to wholly ‑ owned company There is a roll ‑ over under Subdivision 122 ‑ A of the Income Tax Assessment Act 1997 for the CGT event. 2 Disposal of asset by partnership to wholly ‑ owned company The transferor is a partnership, the building or part is partnership property, and there is a roll ‑ over under Subdivision 122 ‑ B of the Income Tax Assessment Act 1997 for the disposal by the partners of the CGT assets consisting of their interests in the building or part. 3 Marriage or relationship breakdown There is a roll ‑ over under Subdivision 126 ‑ A of the Income Tax Assessment Act 1997 for the CGT event. 4 Disposal of asset to another member of the same wholly ‑ owned group There is a roll ‑ over under Subdivision 126 ‑ B of the Income Tax Assessment Act 1997 for the CGT event. No balancing charges (2) Subsection 73A(4) (which deals with balancing charges) does not apply to the disposal of the building or the part of the building by the transferor. Transferee to inherit certain characteristics from transferor (3) Section 73A applies as if: (a) the transferee had acquired the building or the part of the building for a consideration equal to the cost of the building or the part of the building to the transferor; and (b) deductions were not allowable to the transferee under subsection 73A(2) in respect of: (i) so much of the cost of the building or the part of the building to the transferor as was allowed or allowable as a deduction to the transferor under that subsection in respect of the building or the part of the building; or (ii) if there have been 2 or more prior successive applications of this section—so much of the cost of the building or the part of the building to the transferor as was allowed or allowable as a deduction to the prior successive transferors under that subsection in respect of the building or the part of the building; and (c) deductions were not allowable to the transferor under subsection 73A(2) in respect of the building or the part of the building for the year of income in which the disposal took place or for a subsequent year of income. Subsection 73A(2A)—special rules (4) If subsection 73A(2A) applies to the transferor and in relation to the building or the part of the building, that subsection applies in relation to the transferee and in relation to the building or the part of the building. Disposal by transferee where no roll ‑ over relief—inheritance of deductions (5) If: (a) after the disposal of the building or the part of the building to the transferee, the building or the part of the building is lost or destroyed or the transferee disposes of the building or the part of the building; and (b) in the case of a disposal by the transferee—this section does not apply to the disposal; then, for the purposes of the application of subsection 73A(4) in relation to the loss, destruction or disposal, the total of: (c) the deductions allowed or allowable to the transferor under subsection 73A(2) in relation to the building or the part of the building; and (d) if there have been 2 or more prior successive applications of this section—the deductions allowed or allowable to the prior successive transferors under subsection 73A(2) in relation to the building or the part of the building; are taken to have been deductions allowed or allowable to the transferee under subsection 73A(2) in relation to the building or the part of the building. Meaning of cost (6) A reference in this section to the cost of a building or of a part of a building to the transferor is a reference to expenditure of a capital nature incurred by the transferor in the construction or acquisition of the building or the part of the building, or in making any alteration or addition to the building or to the part of the building. Second or subsequent application of section—paragraph (1)(b) does not apply (7) If, apart from this subsection, this section has applied to the disposal of the building or the part of the building to the transferee, then, in working out whether this section applies to a subsequent disposal of the building or the part of the building by: (a) the transferee; or (b) one or more subsequent successive transferees; this section has effect as if paragraph (1)(b) (which deals with deductions) had not been enacted.

Amendment history: Inserted by No 35 of 1992, effective s 7–75: 25 May 1992 (s 2) | Amended by No 224 of 1992, item 47, effective s 4–13, 14(1), 15(1), 16(1), 17(1) and 18–87: 24 Dec 1992 (s 2(1)) s 14(2), 15(2), 16(2) and 17(2): 1 July 1993 (s 2(1)) | Amended by No 46 of 1998, Sch 10 item 138 | Sch 10 item 139, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4)) | Amended by No 144 of 2008, Sch 14 item 13, effective Sch 14 (items 7–58): 10 Dec 2008 (s 2(1) item 36)

s 78A — Certain gifts not to be allowable deductions

(1) In this section: agreement includes any agreement, arrangement or understanding, whether formal or informal or express or implied, and whether or not enforceable by legal proceedings (whether or not the agreement, arrangement or understanding was intended to be so enforceable). associate , in relation to the donor of a gift, means: (a) in the case of a donor being a natural person: (i) a relative of the donor; (ii) a partner of the donor; (iii) if a partner of the donor is a natural person—the spouse of that partner; (iv) a trustee of a trust estate where the donor or a person who is an associate of the donor by virtue of subparagraph (i), (ii), (iii) or (v) benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; or (v) a company where: (A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the donor, of a person who is an associate of the donor by virtue of subparagraph (i), (ii), (iii) or (iv) or of a company that is an associate of the donor by virtue of another application of this subparagraph; or (B) the donor is, the persons who are associates of the donor by virtue of subparagraphs (i), (ii), (iii) and (iv) are, or the donor and the persons who are associates of the donor by virtue of those paragraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company; or (b) in the case of a donor being a company: (i) a partner of the donor company; (ii) if a partner of the donor company is a natural person—the spouse of that partner; (iii) another person where: (A) the donor company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, whether those directions, instructions or wishes are communicated directly to the donor company or its directors, or through any interposed companies; or (B) that person is, or that person and the persons who, if that person were the donor, would be associates of that person by virtue of paragraph (a) or by virtue of another subparagraph of this paragraph are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the donor company; (iv) a trustee of a trust estate where the donor company or a person who is an associate of the donor company by virtue of subparagraph (i), (ii), (iii), (v) or (vi) benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; (v) another company where: (A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the donor company, of a person who is an associate of the donor company by virtue of subparagraph (i), (ii), (iii), (iv) or (vi) or of a company that is an associate of the donor company by virtue of another application of this subparagraph; or (B) the donor company is, the persons who are associates of the donor company by virtue of subparagraphs (i), (ii), (iii), (iv) and (vi) are, or the donor company and the persons who are associates of the donor company by virtue of those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or (vi) another person who, if a third person who is an associate of the donor company by virtue of subparagraph (iii) were the donor, would be an associate of that third person by virtue of paragraph (a) or by virtue of another subparagraph of this paragraph. (2) Subject to this section, a gift of money, or of property other than money, made by a person (in this section referred to as the donor ) to a fund, authority, institution or person is not an allowable deduction under Division 30 of the Income Tax Assessment Act 1997 where: (a) by reason of any act, transaction or circumstance that has occurred, will occur, or may reasonably be expected to occur, being an act, transaction or circumstance occurring as part of, in connexion with or as a result of: (i) the making or receipt of the gift; or (ii) any agreement or scheme entered into in association with the making or receipt of the gift; the amount or value of the benefit derived by the fund, authority, institution or person as a consequence of the gift is, will be, or may reasonably be expected to be, less than the amount or value at the time when the gift was made of the property comprising the gift; (b) by reason of any act, transaction or circumstance of a kind referred to in paragraph (a), any fund, authority, institution or person other than the fund, authority, institution or person to which the gift was made, makes, becomes liable to make, or may reasonably be expected to make or to become liable to make, a payment, or transfers, becomes liable to transfer, or may reasonably be expected to transfer or to become liable to transfer, any property, to any person or incurs, becomes liable to incur, or may reasonably be expected to incur or to become liable to incur, any other detriment, disadvantage, liability or obligation; (c) by reason of any act, transaction or circumstance of a kind referred to in paragraph (a), the donor or an associate of the donor has obtained, will obtain or may reasonably be expected to obtain any benefit, advantage, right or privilege other than the benefit of any deduction that, but for this section, would be allowable from the assessable income of the donor under Division 30 of the Income Tax Assessment Act 1997 ; or (d) by reason of any agreement or scheme entered into as part of or in association with the making of the gift, any property, other than property comprising the gift, has been acquired or will be acquired, whether directly or indirectly, from the donor or an associate of the donor by that fund, authority, institution or person or by another fund, authority, institution or person. (3) Without limiting the application of subsection (2), where the terms and conditions on which a gift of property other than money is made are such that the fund, authority, institution or person to which the gift is made does not receive immediate custody and control of the property, does not have the unconditional right to retain custody and control of the property in perpetuity to the exclusion of the donor or an associate of the donor or does not obtain an immediate, indefeasible and unencumbered legal and equitable title to the property, paragraph (2)(c) shall be deemed to apply in relation to that gift. (4) Paragraph (2)(a) does not prevent a deduction under Division 30 of the Income Tax Assessment Act 1997 from being allowed from the assessable income of the donor where the amount or value of the benefit derived by the fund, authority, institution or person as a consequence of the gift is, will be, or may reasonably be expected to be, less than the amount or value at the time when the gift was made of the property comprising the gift by reason only that the fund, authority, institution or person has incurred, will incur, or may reasonably be expected to incur, expenses for the purpose of obtaining or soliciting the gift, being expenses that, in the opinion of the Commissioner, are reasonable in relation to the value of the gift. (5) This section does not prevent a deduction under section 30 ‑ 15 of the Income Tax Assessment Act 1997 (because of item 4, 5 or 6 of the table in that section) from being allowed from the assessable income of the donor in respect of a gift of property other than money by reason only that the terms and conditions on which the gift was made are such, or the effect of any arrangement (within the meaning of that Act) entered into in association with the making or receipt of the gift is such, that the value of the gift may be reduced in accordance with section 30 ‑ 220 of that Act. Income Tax Assessment Act 1936 No. 27, 1936 Compilation No. 191 Compilation date: 1 April 2026 Includes amendments: Act No. 12, 2026 This compilation is in 7 volumes Volume 1: sections 1-78A Volume 2: sections 79A-121L Volume 3: sections 124ZM-204 Volume 4: sections 251R-468 Volume 5: Schedules Volume 6: Endnotes 1-4 Volume 7: Endnote 5 Each volume has its own contents About this compilation This compilation This is a compilation of the Income Tax Assessment Act 1936 that shows the text of the law as amended and in force on 1 April 2026 (the compilation date ). The notes at the end of this compilation (the endnotes ) include information about amending laws and the amendment history of provisions of the compiled law. Uncommenced amendments The effect of uncommenced amendments is not shown in the text of the compiled law. The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). Application, saving and transitional provisions If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes. Editorial changes For more information about any editorial changes made in this compilation, see the endnotes. Presentational changes The Legislation Act 2003 provides for First Parliamentary Counsel to make presentational changes to a compilation. Presentational changes are applied to give a more consistent look and feel to legislation published on the Register, and enable the user to more easily navigate those documents. Modifications If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. Any modifications affecting the law are accessible on the Register. Self ‑ repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes. Contents

Amendment history: Inserted by No 57 of 1978, item 21, effective 22 June 1978 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 124 of 1984, effective s 3(b): 1 July 1984 (s 2(2)) Remainder: 19 Oct 1984 (s 2(1)) | Amended by No 18 of 1993, item 10, effective s 8–29, 54–57, 59 and Sch: 9 June 1993 (s 2(1)) s 30–53: 1 Jan 1993 (s 2(2)) | Amended by No 121 of 1997, Sch 9 item 33 | Sch 9 item 34 | Sch 9 item 35 | Sch 9 item 36 | Sch 9 item 37, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 65 of 2006, effective Sch 4 (items 11, 12): 22 June 2006 (s 2(1) item 22)

s 79A — Rebates for residents of isolated areas

(1) For the purpose of granting to residents of the prescribed area an income tax concession in recognition of the disadvantages to which they are subject because of the uncongenial climatic conditions, isolation and high cost of living in Zone A and, to a lesser extent, in Zone B, in comparison with parts of Australia not included in the prescribed area, a taxpayer (not being a company or a taxpayer in the capacity of a trustee) who is a resident of the prescribed area in the year of income is entitled, in the taxpayer’s assessment in respect of income of that year of income, to a rebate of tax ascertained in accordance with this section. (2) Subject to subsections (2A) and 79B(4), the rebate allowable under this section in the assessment of a taxpayer in respect of income of the year of income is: (a) if the taxpayer is a resident of the special area in Zone A, or of the special area in Zone B, in the year of income—an amount equal to the sum of: (i) $1,173; and (ii) an amount equal to 50% of the relevant rebate amount in relation to the taxpayer in relation to the year of income; or (b) if the taxpayer is a resident of Zone A (but not of the special area in Zone A or of the special area in Zone B) in the year of income—an amount equal to the sum of: (i) $338; and (ii) an amount equal to 50% of the relevant rebate amount in relation to the taxpayer in relation to the year of income; or (c) if the taxpayer is a resident of Zone B (but not of Zone A or of the special area in Zone B) in the year of income—an amount equal to the sum of: (i) $57; and (ii) an amount equal to 20% of the relevant rebate amount in relation to the taxpayer in relation to the year of income; or (f) in any other case—such amount as, in the opinion of the Commissioner, is reasonable in the circumstances, being an amount not greater than the amount of the rebate to which the taxpayer would have been entitled under this section if paragraph (a) had applied to the taxpayer in respect of the year of income and not less than the amount of rebate to which the taxpayer would have been so entitled if paragraph (c) had so applied to the taxpayer. (2A) The amount of any rebate that would, but for this subsection, be allowable to a taxpayer under this section in the taxpayer’s assessment in respect of income of a year of income shall be reduced by the amount of any prescribed allowance paid to the taxpayer in respect of the year of income. (3) Any alteration of the boundaries of any area referred to in Schedule 2 made (otherwise than by an amendment of this Act) after the commencement of this section shall not affect the operation of this section. (3A) This section has effect subject to section 23AB. (3B) For the purposes of this section, a taxpayer is a resident of a particular area, being the prescribed area, Zone A, Zone B, the special area in Zone A or the special area in Zone B (in this subsection referred to as the relevant area ) in a year of income if: (a) the taxpayer had his or her usual place of residence in the relevant area in the year of income for a period of more than one ‑ half of the year of income; or (c) the taxpayer died during the year of income and at the date of his or her death had his or her usual place of residence in the relevant area; or (d) the following conditions are satisfied: (i) the taxpayer had his or her usual place of residence in the relevant area in the year of income for a period of not more than one ‑ half of the year of income; (ii) the taxpayer had his or her usual place of residence in the relevant area in the next preceding year of income for a period of not more than one ‑ half of the next preceding year of income; (iii) for the purposes of this section, the taxpayer was not a resident of the relevant area in the next preceding year of income; (iv) the sum of: (A) the number of days in the period mentioned in subparagraph (i); and (B) the number of days in the period mentioned in subparagraph (ii), other than days included in a period to which subsection 23AB(8) or 79B(3) applied in relation to the taxpayer in relation to the next preceding year of income; exceeds 182; or (e) the following conditions are satisfied: (i) the taxpayer had his or her usual place of residence in the relevant area in the year of income for a period of not more than one ‑ half of the year of income, being a period that included the first day of the year of income; (ii) the taxpayer had his or her usual place of residence in the relevant area, in a relevant preceding year of income, for a period of not more than one ‑ half of that relevant preceding year of income; (iii) for the purposes of this section, the taxpayer was not a resident of the relevant area in that relevant preceding year of income; (iv) the sum of: (A) the number of days in the period mentioned in subparagraph (i); and (B) the number of days in the period mentioned in subparagraph (ii), other than days included in a period to which subsection 23AB(8) or 79B(3) applied in relation to the taxpayer in relation to that relevant preceding year of income; exceeds 182; (v) the taxpayer had his or her usual place of residence in the relevant area continuously from the commencement of the period mentioned in subparagraph (ii) until the end of the period mentioned in subparagraph (i). (3C) In subsection (3B), a reference to a taxpayer having his or her usual place of residence in a particular area in a year of income for a period of more than, or not more than, one ‑ half of the year of income is a reference to the taxpayer: (a) having his or her usual place of residence in that area in the year of income for one period of more than, or not more than, as the case may be, one ‑ half of the year of income; or (b) having his or her usual place of residence in that area in the year of income for 2 or more periods the aggregate of the lengths of which is more than, or not more than, as the case may be, one ‑ half of the year of income. (3D) For the purposes of this section: (a) the special area within Zone A or Zone B is constituted by: (i) the points in that Zone that were not, as at 1 November 1981, situated at a distance of 250 kilometres or less by the shortest practicable surface route, from the centre point of the nearest urban centre (whether or not within that Zone) with a census population of not less than 2,500; and (ii) the points in that Zone that were within the special area in that Zone for the purposes of this section as in force immediately before the commencement of the Income Tax Assessment Amendment Act (No. 4) 1984 ; and (b) the distance, by the shortest practicable surface route, between a point in Zone A or Zone B and the centre point of an urban centre is: (i) where there is only one location within that urban centre from which distances between the urban centre and other places are usually measured—the distance, by the shortest practicable surface route, between that point in Zone A or Zone B and that location; and (ii) where there are 2 or more locations within that urban centre from which distances between parts of the urban centre and other places are usually measured—the distance, by the shortest practicable surface route, between that point in Zone A or Zone B and the one of those locations that is in the principal one of those parts. (3E) For the purposes of this section other than this subsection, the Commissioner may, if he or she considers it appropriate having regard to all the circumstances, treat a point in Zone A or Zone B that is not in the special area in that Zone but is adjacent to or in close proximity to the special area in that Zone as being a point in the special area in that Zone. (3F) For the purposes of this section, the census population of Nhulunbuy is taken to be less than 2,500. (4) In this section: census population , in relation to an urban centre, means the population of that urban centre specified in the results of the Census of Population and Housing taken by the Australian Statistician on 30 June 1981, being the results published by the Australian Bureau of Statistics in the documents entitled “Persons and Dwellings in Local Government Areas and Urban Centres”. prescribed allowance means so much of a payment under the Social Security Act 1991 or the Veterans’ Entitlements Act 1986 as was included in the payment by way of remote area allowance. relevant preceding year of income , in relation to a year of income, means any of the next 4 preceding years of income other than the immediately preceding year of income. relevant rebate amount , in relation to a taxpayer in relation to a year of income, means the sum of the following rebates (if any): (a) any tax offset to which the taxpayer is entitled under Subdivision 61 ‑ A of the Income Tax Assessment Act 1997 ; (b) any notional tax offset to which the taxpayer is entitled under Subdivision 961 ‑ A of the Income Tax Assessment Act 1997 ; (c) any notional tax offset to which the taxpayer is entitled under Subdivision 961 ‑ B of the Income Tax Assessment Act 1997 . surface route means a route other than an air route. the prescribed area means the area comprised in Zone A and Zone B. urban centre means an area that is described as an urban centre or bounded locality in the results of the Census of Population and Housing taken by the Australian Statistician on 30 June 1981, being the results published by the Australian Bureau of Statistics in the documents entitled “Persons and Dwellings in Local Government Areas and Urban Centres”. Zone A means the area described in Part I of Schedule 2. Zone B means the area described in Part II of Schedule 2.

Amendment history: Inserted by No 4 of 1945, effective 15 June 1945 | Amended by No 11 of 1947, effective 3 June 1947 (s 2) | Amended by No 62 of 1955, effective s 3–12: 4 Nov 1955 (s 2) | Amended by No 101 of 1956, effective s 3–13(b) and 14–26: 15 Nov 1956 (s 2(1)) s 13(c): 1 July 1956 (s 2(2)) | Amended by No 55 of 1958, effective 1 Oct 1958 (s 2) | Amended by No 94 of 1961, effective s 3–23: 30 Oct 1961 (s 2) | Amended by No 69 of 1963, effective s 3, 4, 6(b), (c) and 7–56: 31 Oct 1963 (s 2(1)) s 5: 9 May 1963 (s 2(2)) s 6(a): 12 Dec 1957 (s 2(3)) | Amended by No 68 of 1964, effective s 3–10: 20 Oct 1964 (s 2(1)) | Amended by No 143 of 1965, effective 14 Feb 1966 (s 2) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 117 of 1975, item 5 | item 22 | item 27, effective s 3–11(1)(b) and (d)–34: 11 Nov 1975 (s 2(1)) s 11(1)(c): 9 Feb 1976 (s 2(2)) s 30: never commenced (s 2(3)) | Amended by No 56 of 1976, effective s 3–18: 4 June 1976 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 29 of 1982, item 10, effective s 3–24: 17 May 1982 (s 2(1)) | Amended by No 103 of 1983, effective s 3: 22 Dec 1983 (s 2(2)) Remainder: 23 Nov 1983 (s 2(1)) | Amended by No 124 of 1984, effective s 3(b): 1 July 1984 (s 2(2)) Remainder: 19 Oct 1984 (s 2(1)) | Amended by No 49 of 1986, item 8 | item 29, effective s 4–29: 24 June 1986 (s 2(1)) | Amended by No 78 of 1988, item 66, effective s 8–13, 14(1), 16–36, 38, 55(1)–(14), 56, 57 and Sch: 24 June 1988 (s 2(1)) s 14(2): 1 July 1988 (s 2(2)) s 15: 22 Dec 1986 (s 2(3)) s 37, 39–53 and 55(15)–(25):1 Nov 1988 (s 2(4) and gaz 1988, No S331) | Amended by No 4 of 1991, item 7, effective s 4–37: 8 Jan 1991 (s 2(1)) | Amended by No 100 of 1991, Sch 2 item 32, effective s 15–28, 30–32, 33(b), (e), (f), 34–76 and 79–84): 27 June 1991 (s 2(1)) s 29 and 77: 24 Apr 1991 (s 2(3), (6)) s 33(a): 16 June 1990 (s 2(4)) s 33(c) and (d): 30 June 1989 (s 2(5)) s 78: 8 Jan 1991 (s 2(7)) | Amended by No 224 of 1992, item 15, effective s 4–13, 14(1), 15(1), 16(1), 17(1) and 18–87: 24 Dec 1992 (s 2(1)) s 14(2), 15(2), 16(2) and 17(2): 1 July 1993 (s 2(1)) | Amended by No 125 of 1994, item 91, effective Sch (items 89–93): 18 Oct 1994 (s 2) | Amended by No 138 of 1994, item 55, effective s 4, 5, 8–10, 14–16, 21–24, 27–33, 44–92, 99–116 and Sch: 28 Nov 1994 (s 2(1)) s 11–13, 17–20, 25, 26 and 34–43: 1 Jan 1993 (s 2(2)) s 93–98: 28 Nov 1994 (s 2(3)) | Amended by No 184 of 1994, Sch 3 item 59, effective Sch 3 (items 55–62): 1 Jan 1995 (s 2) | Amended by No 1 of 1996, Sch 11 item 9 | Sch 11 item 16, effective Sch 11 (items 1–7): 1 July 1996 (s 2(4)(d)) Sch 11 (items 8, 9): 20 Sept 1996 (s 2(5)(d)) Sch 11 (items 10–21): 1 July 1997 (s 2(6)) | Amended by No 179 of 1997, Sch 2 item 10, effective Sch 2 (items 10, 11): 25 Nov 1997 (s 2) | Amended by No 45 of 1998, Sch 12 item 6, effective Sch 12 (items 1–24): 1 July 1998 (s 2(1)) | Amended by No 82 of 1999, Sch 9 item 7 | Sch 9 item 8 | Sch 9 item 9 | Sch 9 item 10 | Sch 9 item 11 | Sch 9 item 12, effective Sch 8 (items 1–25, 29): 1 July 2000 (s 2(2)) | Amended by No 45 of 2000, Sch 4 item 15 | Sch 4 item 16 | Sch 4 item 17 | Sch 4 item 18, effective Sch 4 (items 11–28): 1 July 2000 (s 2(10), (11) Sch 4 (item 29): 3 May 2000 (s 2(1)) | Amended by No 144 of 2000, Sch 2 item 5, effective Sch 2 (items 5, 6) and Sch 3 (item 7(3), 8):18 Dec 2000 (s 2(2) and gaz, 2000 No S634) | Amended by No 75 of 2007, Sch 1 item 2 | Sch 1 item 4, effective Sch 1 (items 1–13): 21 June 2007 (s 2) | Amended by No 105 of 2010, Sch 1 item 42 | Sch 1 item 43 | Sch 1 item 44, effective Sch 1 (items 37–52) and Sch 2 (items 1, 2): 1 Oct 2010 (s 2(1) items 9–11, 14) | Amended by No 41 of 2011, Sch 5 item 234 | Sch 5 item 235 | Sch 5 item 236 | Sch 5 item 237 | Sch 5 item 238 | Sch 5 item 239 | Sch 5 item 240, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23) | Amended by No 62 of 2011, Sch 4 item 5 | Sch 4 item 6, effective Sch 1 (items 4, 5, 14), Sch 2 (items 1–7, 28–44, 51) and Sch 4 (items 1–32, 34): 29 June 2011 (s 2(1) items 2, 6) | Amended by No 71 of 2012, Sch 4 item 4, effective Sch 4: 27 June 2012 (s 2(1) item 5) | Amended by No 13 of 2014, Sch 2 item 31, effective Sch 2 (items 31, 32, 56): 1 July 2014 (s 2(1) item 3) | Amended by No 70 of 2015, Sch 2 item 5 | Sch 2 item 6 | Sch 2 item 7 | Sch 2 item 961, effective Sch 1 (items 47–64, 195–205): 1 July 2015 (s 2(1) items 3, 6) Sch 2 (items 1–16, 18–23, 38), Sch 3 and Sch 7 (items 2, 3, 11): 25 June 2015 (s 2(1) items 7, 20) | Amended by No 162 of 2015, Sch 2 item 1 | Sch 2 item 2 | Sch 2 item 3 | Sch 2 item 4 | Sch 2 item 5 | Sch 2 item 6 | Sch 2 item 7 | Sch 2 item 13, effective Sch 2: 30 Nov 2015 (s 2(1) item 2)

s 79B — Rebates for members of Defence Force serving overseas

(1) Subject to this section, a taxpayer who, during the year of income, serves as a member of the Defence Force at an overseas locality is entitled, in his or her assessment in respect of income of the year of income, to a rebate of tax ascertained in accordance with this section. (1A) A taxpayer is not entitled to a rebate under this section in relation to service: (a) as or under an attaché at an Australian Embassy or Legation in an overseas locality at a time as at which that locality was, or is deemed to have been, a specified locality for the purposes of this subsection; or (b) with the South ‑ East Asia Treaty Organization Military Planning Office. (1B) Where the Chief of the Defence Force or a person authorized by the Chief of the Defence Force to give certificates under this subsection certifies, and the Minister is satisfied, that any service of a taxpayer in any locality was or will be performed in circumstances similar to those in which any service referred to in subsection (1A) is performed, the taxpayer is not entitled to a rebate under this section in relation to that service. (2) Subject to the succeeding provisions of this section, the rebate allowable under this section in the assessment of a taxpayer in respect of income of the year of income is: (a) where the total period of service of the taxpayer at overseas localities during the year of income is more than one ‑ half of the year of income, or where the taxpayer dies at an overseas locality during the year of income—an amount equal to the sum of: (i) $338; and (ii) an amount equal to 50% of the concessional rebate amount; or (b) in any other case—such amount as, in the opinion of the Commissioner, is reasonable in the circumstances, being an amount not greater than the amount of the rebate to which the taxpayer would have been entitled under this section if paragraph (a) had applied to him or her in respect of the year of income. (3) For the purposes of subsection (2), the total periods of service of the taxpayer in any year of income at overseas localities shall be deemed to include any period of service of the taxpayer as a member of the Defence Force in that year of income in the prescribed area. (3A) For the purposes of subsection (2), the total periods of service of the taxpayer in any year of income at overseas localities shall be deemed not to include any period of service of the taxpayer in respect of which an exemption from income tax applies under section 23AD or 23AG. (4) The aggregate of the rebates allowable under this section and section 23AB or under this section and section 79A in the assessment of a taxpayer in respect of income of a year of income shall not exceed an amount equal to the sum of: (a) $338; and (b) an amount equal to 50% of the concessional rebate amount. (4A) Where: (a) but for subsection (4) and this subsection, a rebate would be allowable under this section and a rebate would be allowable under section 79A in the assessment of a taxpayer in respect of income of a year of income; and (b) the rebate allowable under section 79A exceeds an amount equal to the sum of: (i) $338; and (ii) an amount equal to 50% of the concessional rebate amount; the taxpayer is not entitled to a rebate under this section in that assessment and subsection (4) does not apply in relation to that assessment. (5) For the purposes of this section the Minister may, by writing signed by the Minister and deposited with the Commissioner, declare that a locality outside Australia specified in the declaration shall: (a) by reason of the uncongenial nature of service in that locality and the isolation of the locality, be, or be deemed to have been, as from a date, or during a period, (whether before or after the date of the declaration) specified in the declaration, a locality in relation to which this section applies; or (b) as from a date (whether before or after the date of the declaration) specified in the declaration, cease, or be deemed to have ceased, to be such a locality; and this section shall apply, or be deemed to have applied, and shall cease to apply, or be deemed to have ceased to apply, in relation to any such locality accordingly. (5A) The Minister may, by writing signed by the Minister and deposited with the Commissioner, declare that an overseas locality specified in the declaration shall become, or be deemed to have become, on a specified date, or shall cease, or be deemed to have ceased, on a specified date, to be, a specified locality for the purposes of subsection (1A). (5B) Nothing in section 170 prevents the amendment of an assessment at any time for the purpose of allowing a rebate to which the taxpayer has become entitled under this section after the making of the assessment. (6) For the purpose of this section: concessional rebate amount , in relation to a taxpayer in relation to a year of income, means the sum of the following rebates (if any): (a) any tax offset to which the taxpayer is entitled under Subdivision 61 ‑ A of the Income Tax Assessment Act 1997 ; (b) any notional tax offset to which the taxpayer is entitled under Subdivision 961 ‑ A of the Income Tax Assessment Act 1997 ; (c) any notional tax offset to which the taxpayer is entitled under Subdivision 961 ‑ B of the Income Tax Assessment Act 1997 . locality means an area of land or waters or an area of land and waters. overseas locality means, in relation to service during any period or death at any time, a locality in relation to which, during that period or at that time, this section applies or is deemed to have applied; and the prescribed area has the same meaning as that expression has in section 79A.

Amendment history: Inserted by No 63 of 1947, effective s 3–13 and 15: 15 Dec 1947 (s 2) | Amended by No 101 of 1956, effective s 3–13(b) and 14–26: 15 Nov 1956 (s 2(1)) s 13(c): 1 July 1956 (s 2(2)) | Amended by No 55 of 1958, effective 1 Oct 1958 (s 2) | Amended by No 18 of 1960, effective 17 June 1960 | Amended by No 94 of 1961, effective s 3–23: 30 Oct 1961 (s 2) | Amended by No 98 of 1962, effective s 3–5: 28 May 1963 (s 2) | Amended by No 69 of 1963, effective s 3, 4, 6(b), (c) and 7–56: 31 Oct 1963 (s 2(1)) s 5: 9 May 1963 (s 2(2)) s 6(a): 12 Dec 1957 (s 2(3)) | Amended by No 103 of 1965, effective 14 Dec 1965 (s 2) | Amended by No 143 of 1965, effective 14 Feb 1966 (s 2) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 164 of 1973, effective s 3–17, 19–22 and Sch: 11 Dec 1973 (s 2) | Amended by No 80 of 1975, effective 20 June 1975 (s 2) | Amended by No 117 of 1975, item 1, effective s 3–11(1)(b) and (d)–34: 11 Nov 1975 (s 2(1)) s 11(1)(c): 9 Feb 1976 (s 2(2)) s 30: never commenced (s 2(3)) | Amended by No 56 of 1976, effective s 3–18: 4 June 1976 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 29 of 1982, item 11, effective s 3–24: 17 May 1982 (s 2(1)) | Amended by No 124 of 1984, effective s 3(b): 1 July 1984 (s 2(2)) Remainder: 19 Oct 1984 (s 2(1)) | Amended by No 135 of 1990, item 29 | item 11 | item 25, effective s 7–33, 38(1), (2), 39(1) and Sch (Pt 1): 28 Dec 1990 (s 2(1)) s 38(3), 39(2) and Sch (Part 3): 1 July 1993 (s 2(3)) s. 38(4), 39(3) and Sch (Part 4): 8 Jan 1991 (s 2(4)) | Amended by No 224 of 1992, item 16, effective s 4–13, 14(1), 15(1), 16(1), 17(1) and 18–87: 24 Dec 1992 (s 2(1)) s 14(2), 15(2), 16(2) and 17(2): 1 July 1993 (s 2(1)) | Amended by No 18 of 1993, item 19, effective s 8–29, 54–57, 59 and Sch: 9 June 1993 (s 2(1)) s 30–53: 1 Jan 1993 (s 2(2)) | Amended by No 138 of 1994, item 56, effective s 4, 5, 8–10, 14–16, 21–24, 27–33, 44–92, 99–116 and Sch: 28 Nov 1994 (s 2(1)) s 11–13, 17–20, 25, 26 and 34–43: 1 Jan 1993 (s 2(2)) s 93–98: 28 Nov 1994 (s 2(3)) | Amended by No 1 of 1997, Sch 2 item 135, effective Sch 2 (item 135): 19 Feb 1997 (s 2(1)) | Amended by No 82 of 1999, Sch 9 item 13 | Sch 9 item 14 | Sch 9 item 15 | Sch 9 item 16 | Sch 9 item 17 | Sch 9 item 18, effective Sch 8 (items 1–25, 29): 1 July 2000 (s 2(2)) | Amended by No 45 of 2000, Sch 4 item 19 | Sch 4 item 20 | Sch 4 item 21 | Sch 4 item 22, effective Sch 4 (items 11–28): 1 July 2000 (s 2(10), (11) Sch 4 (item 29): 3 May 2000 (s 2(1)) | Amended by No 101 of 2004, effective s 4, Sch 1 (items 1, 4), Sch 8, Sch 10 (items 1–6) and Sch 11 (items 161, 162): 30 June 2004 (s 2(1) items 1, 2, 9, 10, 18) Sch 11 (items 1, 2): 16 July 1999 (s 2(1) item 11) Sch 11 (items 17–34, 38–43): 30 June 2000 (s 2(1) item 13) Sch 11 (items 44–46, 49–51, 60–87, 101–127): 1 July 2000 (s 2(1) item 14) Sch 11 (items 131–140): 1 July 2001 (s 2(1) item 16) | Amended by No 75 of 2007, Sch 1 item 3 | Sch 1 item 4, effective Sch 1 (items 1–13): 21 June 2007 (s 2) | Amended by No 105 of 2010, Sch 1 item 45 | Sch 1 item 46 | Sch 1 item 47, effective Sch 1 (items 37–52) and Sch 2 (items 1, 2): 1 Oct 2010 (s 2(1) items 9–11, 14) | Amended by No 41 of 2011, Sch 5 item 241 | Sch 5 item 242, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23) | Amended by No 62 of 2011, Sch 4 item 8 | Sch 4 item 9 | Sch 4 item 10 | Sch 4 item 11 | Sch 4 item 12 | Sch 4 item 13, effective Sch 1 (items 4, 5, 14), Sch 2 (items 1–7, 28–44, 51) and Sch 4 (items 1–32, 34): 29 June 2011 (s 2(1) items 2, 6) | Amended by No 71 of 2012, Sch 4 item 6 | Sch 4 item 8, effective Sch 4: 27 June 2012 (s 2(1) item 5) | Amended by No 110 of 2014, effective Sch 2 (items 1, 6–12, 23): 17 Oct 2014 (s 2(1) item 2) Sch 5 (items 7–15, 95–97): 16 Oct 2014 (s 2(1) items 4, 7) | Amended by No 2 of 2015, Sch 2 item 101, effective Sch 2 (items 73, 100–110) and Sch 4 (items 9–23, 79): 25 Feb 2015 (s 2(1) items 5, 6) Sch 2 (items 24–28): 1 July 2015 (s 2(1) item 4) | Amended by No 70 of 2015, Sch 2 item 10 | Sch 2 item 11 | Sch 2 item 14 | Sch 2 item 15 | Sch 2 item 961, effective Sch 1 (items 47–64, 195–205): 1 July 2015 (s 2(1) items 3, 6) Sch 2 (items 1–16, 18–23, 38), Sch 3 and Sch 7 (items 2, 3, 11): 25 June 2015 (s 2(1) items 7, 20) | Amended by No 164 of 2015, Sch 2 item 56, effective Sch 2 (items 56, 80): 1 July 2016 (s 2(1) item 2)

s 82 — Double deductions

Where the profit arising from the sale of any property is included in the assessable income of any person, or where the loss arising from the sale is an allowable deduction, and any expenditure incurred by the person in connexion with that property has been allowed or is allowable as a deduction under this Act, that expenditure shall not be deducted in ascertaining the amount of the profit or loss.

Amendment history: Amended by No 55 of 1958, effective 1 Oct 1958 (s 2) | Amended by No 70 of 1959, effective s. 1(4): 14 Jan 1960 (s 1(5)) Remainder: 20 Nov 1959 (s 2) | Amended by No 60 of 1968, item 14, effective s 2(2), (3) and 3–23: 25 June 1968 (s 2(1)) | Amended by No 93 of 1969, item 12, effective s 3–19: 27 Sept 1969 (s 2) | Amended by No 51 of 1973, item 4 | item 14 | item 21 | item 3, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 108 of 1981, item 13 | item 14 | item 15 | item 16 | item 23 | item 27, effective s 4–25: 24 June 1981 (s 2) | Amended by No 107 of 1989, effective s 9–23, 32 and Sch 1: 30 June 1989 (s 2(1)) | Amended by No 39 of 1997, Sch 4 item 78 | Sch 4 item 82, effective Sch 1: 1 July 1997 (s 2) | Amended by No 101 of 2006, Sch 2 item 254 | Sch 2 item 255, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 41 of 2011, Sch 4 item 3 | Sch 5 item 244, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)