Income Tax Assessment Act 1997

s 320-180 — Consequences of a valuation under section 320 ‑ 175

Transfer from the complying superannuation asset pool (1) If the total * transfer value of the company’s * complying superannuation assets as at a * valuation time exceeds the sum of: (a) the company’s * complying superannuation liabilities as at that time; and (b) any reasonable provision made by the company at that time in its accounts for liability for income tax in respect of those assets; the company must transfer, from the * complying superannuation asset pool, assets of any kind having a total transfer value equal to the excess. (2) A transfer under subsection (1) must be made within the period of 30 days starting immediately after: (a) the day on which the total * transfer value and the * complying superannuation liabilities (as at the * valuation time) were calculated; or (b) if those amounts were calculated on different days—the later of those days. The transfer, once made, is taken to have been made at the valuation time (whether or not the transfer is made within those 30 days). Note: A life insurance company that fails to comply with subsections (1) and (2) is liable to an administrative penalty: see section 288 ‑ 70 in Schedule 1 to the Taxation Administration Act 1953 . Transfer to the complying superannuation asset pool (3) If the total * transfer value of the company’s * complying superannuation assets as at a * valuation time is less than the sum of: (a) the company’s * complying superannuation liabilities as at that time; and (b) any reasonable provision made by the company at that time in its accounts for liability for income tax in respect of those assets; the company can transfer, to the * complying superannuation asset pool, assets of any kind having a total transfer value not exceeding the difference. (4) A transfer under subsection (3) is taken to have been made at the * valuation time if it is made within the period of 30 days starting immediately after: (a) the day on which the total * transfer value and the * complying superannuation liabilities (as at the valuation time) were calculated; or (b) if those amounts were calculated on different days—the later of those days.

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Repealed and substituted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 320-185 — Transfer of assets to complying superannuation asset pool otherwise than as a result of a valuation under section 320 ‑ 175

(1) If a * life insurance company determines, at a time other than a * valuation time, that the total * transfer value of the company’s * complying superannuation assets as at that time is less than the sum of: (a) the company’s * complying superannuation liabilities as at that time; and (b) any reasonable provision made by the company at that time in its accounts for liability for income tax in respect of those assets; the company can transfer, to the * complying superannuation asset pool, assets of any kind having a total transfer value not exceeding the difference. (2) A * life insurance company can at any time transfer an asset of any kind to a * complying superannuation asset pool in exchange for an amount of money equal to the * transfer value of the asset at the time of the transfer. (3) A * life insurance company can transfer to a * complying superannuation asset pool in an income year assets of any kind having a total * transfer value not exceeding the total amount of the * life insurance premiums paid to the company in that income year for the purchase of * complying superannuation life insurance policies. (4) Except as provided by this section and subsections 320 ‑ 180(3) and 320 ‑ 250(1A), a * life insurance company cannot transfer an asset to a * complying superannuation asset pool.

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015 | Amended by No 81 of 2016, effective Sch 1 (items 2–6, 26–32, 36), Sch 2 (items 1–8, 13–18, 20), Sch 3 (items 1–5, 9), Sch 5–8, Sch 9 (items 1–3, 5), Sch 10 (items 72–80, 93) and Sch 11: 1 Jan 2017 (s 2(1) items 2, 4, 6, 9) Sch 10 (items 2–27, 49–54): 1 July 2018 (s 2(1) item 5)

s 320-190 — Complying superannuation liabilities

(1) The amount of the * complying superannuation liabilities of a * life insurance company is to be worked out in accordance with subsection (2) in respect only of * life insurance policies issued by the company: (a) that are * complying superannuation life insurance policies; and (b) the liabilities under which are to be discharged out of the company’s * complying superannuation assets. (2) The amount of the complying superannuation liabilities of a * life insurance company at a particular time is the sum of the following amounts at that time, as calculated by an * actuary: (a) for policies providing for * participating benefits or * discretionary benefits: (i) the values of supporting assets, as defined in the * Valuation Standard; and (ii) the * policy owners’ retained profits; (b) for other policies—the * current termination values.

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

s 320-195 — Transfer of assets and payment of amounts from a complying superannuation asset pool otherwise than as a result of a valuation under section 320 ‑ 175

(1) If: (a) a * life insurance policy issued by a * life insurance company becomes an * exempt life insurance policy; and (b) immediately before the policy became an exempt life insurance policy, the policy was a policy referred to in subsection 320 ‑ 190(1); the company can transfer from a * complying superannuation asset pool, to its * segregated exempt assets, assets of any kind whose total * transfer value does not exceed the company’s liabilities in respect of the policy. (2) A * life insurance company can at any time transfer an asset from a * complying superannuation asset pool in exchange for an amount of money equal to the * transfer value of the asset at the time of the transfer. (3) If a * life insurance company: (a) imposes any fees or charges in respect of * complying superannuation assets; or (b) imposes any fees or charges in respect of * complying superannuation life insurance policies other than policies: (i) that provide * superannuation death benefits, * disability superannuation benefits or temporary disability benefits of a kind referred to in paragraph 295 ‑ 460(c), that are * participating benefits; and (ii) the liabilities under which are to be discharged out of the company’s * complying superannuation asset pool; or (c) determines, at a time other than a * valuation time, that the total * transfer value of the company’s complying superannuation assets as at that time exceeds the sum of: (i) the company’s * complying superannuation liabilities at that time; and (ii) any reasonable provision made by the company at that time in its accounts for liability for income tax in respect of those assets; the company must, when the fees or charges are imposed or the excess is determined, as the case may be, transfer, from the * complying superannuation asset pool, assets having a total transfer value equal to the fees, charges or excess, as the case may be. (4) If: (a) any liabilities arise for the discharge of which a * life insurance company’s * complying superannuation asset pool is established; or (b) any expenses are incurred by a life insurance company directly in respect of * complying superannuation assets in relation to a period during which the assets are complying superannuation assets; or (c) any liabilities to pay * PAYG instalments, or income tax, that are attributable to the company’s * complying superannuation assets; the life insurance company must pay, from the complying superannuation asset pool, any amounts required to discharge the liabilities, or amounts equal to the expenses (as appropriate).

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 320-200 — Consequences of transfer of assets to or from complying superannuation asset pool

(1) This section applies if: (a) an asset (other than money) is transferred from a * complying superannuation asset pool under subsection 320 ‑ 180(1) or 320 ‑ 195(2) or (3); or (b) an asset (other than money) is transferred to a complying superannuation asset pool under subsection 320 ‑ 180(3) or section 320 ‑ 185. (2) In determining: (a) for the purposes of this Act (other than Parts 3 ‑ 1 and 3 ‑ 3) whether an amount is included in, or can be deducted from, the assessable income of a * life insurance company in respect of the transfer of the asset; or (b) for the purposes of Parts 3 ‑ 1 and 3 ‑ 3: (i) whether the company made a * capital gain in respect of the transfer of the asset; or (ii) whether the company made a * capital loss in respect of the transfer of the asset; the company is taken: (c) to have sold, immediately before the transfer, the asset transferred for a consideration equal to its * market value; and (d) to have purchased the asset again at the time of the transfer for a consideration equal to its market value. (2A) Without limiting subsection (2), where the asset transferred is a * depreciating asset, Division 40 has effect for the company as if: (a) in relation to the sale of the asset that is taken to have occurred under paragraph (2)(c): (i) the sale were a * balancing adjustment event; and (ii) the * termination value of the asset for that event were equal to the consideration for the sale under that paragraph; and (iii) the company had stopped * holding the asset at the time of the sale; and (b) in relation to the purchase of the asset that is taken to have occurred under paragraph (2)(d): (i) the company had only begun to hold the asset after the purchase; and (ii) the first element of the asset’s * cost were equal to the consideration for the purchase under that paragraph; and (iii) the company had acquired the asset from an * associate of the company. Note: This means that, amongst other things, as a result of the transfer: the asset’s cost for the purposes of working out a deduction under Division 40 is reset; and the company’s assessable income might be adjusted under section 40 ‑ 285. (3) If, apart from this subsection and section 320 ‑ 55, a * life insurance company could deduct an amount or make a * capital loss as a result of a transfer of an asset to or from its * complying superannuation asset pool, the deduction or capital loss is disregarded until: (a) the asset ceases to exist; or (b) the asset, or a greater than 50% interest in it, is * acquired by an entity other than an entity that is an * associate of the company immediately after the transfer. (4) Subsection (3) does not apply in relation to an amount that the company can deduct under a provision in Division 40.

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 320-220 — What this Subdivision is about

This Subdivision explains how a life insurance company can segregate assets to be used for the sole purpose of discharging its liabilities under life insurance policies where the income derived by the company from those policies is exempt from income tax. Table of sections Operative provisions 320 ‑ 225 Segregation of assets for purpose of discharging exempt life insurance policy liabilities 320 ‑ 230 Valuations of segregated exempt assets and exempt life insurance policy liabilities for each valuation time 320 ‑ 235 Consequences of a valuation under section 320 ‑ 230 320 ‑ 240 Transfer of assets to segregated exempt assets otherwise than as a result of a valuation under section 320 ‑ 230 320 ‑ 245 Exempt life insurance policy liabilities 320 ‑ 246 Exempt life insurance policy 320 ‑ 247 Policy split into an exempt life insurance policy and another life insurance policy 320 ‑ 250 Transfer of assets and payment of amounts from segregated exempt assets otherwise than as a result of a valuation under section 320 ‑ 230 320 ‑ 255 Consequences of transfer of assets to or from segregated exempt assets

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11))

s 320-225 — Segregation of assets for purpose of discharging exempt life insurance policy liabilities

(1) A * life insurance company may, on or after 1 July 2000, segregate in accordance with subsections (2) and (3) any of its assets for the sole purpose of discharging its * exempt life insurance policy liabilities out of those assets. Note: Section 320 ‑ 225 of the Income Tax (Transitional Provisions) Act 1997 provides that a life insurance company may transfer a part of an asset to its segregated exempt assets before 1 October 2000. (1A) Except as provided by section 320 ‑ 225 of the Income Tax (Transitional Provisions) Act 1997 , an asset is taken not to be included in the segregated assets under this Subdivision unless the whole of the asset is included among the segregated assets. (2) The assets segregated must, at the time of the segregation, be a representative sample of all the company’s assets that support its * exempt life insurance policy liabilities immediately before the segregation. (3) The assets segregated must have, as at the time of the segregation, a total * transfer value that does not exceed the amount of the company’s * exempt life insurance policy liabilities as at that time. (4) A * life insurance company that segregates assets as mentioned in subsections (1) to (3) at a time after 1 July 2000 but before 1 October 2000 is taken to have segregated those assets in accordance with those subsections on 1 July 2000. (5) If a segregation of assets is made in accordance with the above subsections, the company must use the * segregated exempt assets, and any other assets afterwards included among the segregated assets, only for the purpose of discharging its * exempt life insurance policy liabilities. (6) In this Subdivision: (a) a reference to the transfer of an asset to, or from, a * life insurance company’s * segregated exempt assets: (i) is a reference to the inclusion of an asset among the segregated exempt assets, or the exclusion of an asset from the segregated exempt assets, as the case may be; and (ii) includes a reference to the transfer of money to, or from, those assets, as the case may be; and (b) if an asset transferred to or from those assets is money, a reference to the * transfer value of the asset transferred is a reference to the amount of the money.

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 320-230 — Valuations of segregated exempt assets and exempt life insurance policy liabilities for each valuation time

(1) A * life insurance company that has segregated any of its assets in accordance with section 320 ‑ 225 must cause the following amounts to be calculated within the period of 60 days starting immediately after each * valuation time: (a) the total * transfer value of the company’s * segregated exempt assets as at the valuation time; (b) the amount of the company’s * exempt life insurance policy liabilities as at the valuation time. Note: The time when a life insurance company joins or leaves a consolidated group is also a valuation time: see section 713 ‑ 525. (2) These are the valuation times : (a) the end of the income year in which the segregation occurred; (b) the end of each later income year. Note 1: The time when a life insurance company joins or leaves a consolidated group is also a valuation time: see sections 713 ‑ 525 and 713 ‑ 585. Note 2: A life insurance company that fails to comply with this section is liable to an administrative penalty: see section 288 ‑ 70 in Schedule 1 to the Taxation Administration Act 1953 .

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Repealed and substituted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 320-235 — Consequences of a valuation under section 320 ‑ 230

Transfer from the segregated exempt assets (1) If: (a) the total * transfer value of the company’s * segregated exempt assets as at a * valuation time; exceeds (b) the amount of the company’s * exempt life insurance policy liabilities as at that time; the company must transfer, from the segregated exempt assets, assets of any kind having a total transfer value equal to the excess. (2) A transfer under subsection (1) must be made within the period of 30 days starting immediately after: (a) the day on which the total * transfer value and the * exempt life insurance policy liabilities (as at the * valuation time) were calculated; or (b) if those amounts were calculated on different days—the later of those days. The transfer, once made, is taken to have been made at the valuation time (whether or not the transfer is made within those 30 days). Note: A life insurance company that fails to comply with subsections (1) and (2) is liable to an administrative penalty: see section 288 ‑ 70 in Schedule 1 to the Taxation Administration Act 1953 . Transfer to the segregated exempt assets (3) If: (a) the total * transfer value of the company’s * segregated exempt assets as at a * valuation time; is less than (b) the amount of the company’s * exempt life insurance policy liabilities as at that time; the company can transfer, to the segregated exempt assets, assets of any kind having a total transfer value not exceeding the difference. (4) A transfer under subsection (3) is taken to have been made at the * valuation time if it is made within the period of 30 days starting immediately after: (a) the day on which the total * transfer value and the * exempt life insurance policy liabilities (as at the valuation time) were calculated; or (b) if those amounts were calculated on different days—the later of those days.

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Repealed and substituted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 320-240 — Transfer of assets to segregated exempt assets otherwise than as a result of a valuation under section 320 ‑ 230

(1) If a * life insurance company determines, at a time other than a * valuation time, that: (a) the total * transfer value of the company’s * segregated exempt assets as at that time; is less than (b) the company’s * exempt life insurance policy liabilities as at that time; the company can transfer, to the segregated exempt assets, assets of any kind having a total transfer value not exceeding the difference. (2) A * life insurance company can at any time transfer an asset of any kind to its * segregated exempt assets in exchange for an amount of money equal to the * transfer value of the asset at the time of the transfer. (3) A * life insurance company can transfer, to its * segregated exempt assets in an income year, assets of any kind having a total * transfer value not exceeding the total amount of the * life insurance premiums paid to the company in that income year for the purchase of * exempt life insurance policies. (4) Except as provided by this section and subsections 320 ‑ 195(1) and 320 ‑ 235(3), a * life insurance company cannot transfer an asset to its * segregated exempt assets.

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 320-245 — Exempt life insurance policy liabilities

(1) The amount of the * exempt life insurance policy liabilities of a * life insurance company is to be worked out in accordance with subsection (2) in respect only of * life insurance policies issued by the company: (a) that are * exempt life insurance policies; and (b) the liabilities under which are to be discharged out of the company’s * segregated exempt assets. (2) The amount of the exempt life insurance policy liabilities of a * life insurance company at a particular time is the sum of the following amounts at that time, as calculated by an * actuary: (a) for policies providing for allocated benefits (other than * participating benefits or * discretionary benefits)—the * current termination values; (b) for policies providing for participating benefits or discretionary benefits: (i) the values of supporting assets, as defined in the * Valuation Standard; and (ii) the * policy owner’s retained profits; (c) for other policies—the policy liabilities, as defined in the Valuation Standard. (3) An * exempt life insurance policy provides for allocated benefits if: (a) the policy: (i) is held by the trustee of a * complying superannuation fund; and (iii) provides for an * allocated pension; or (b) the policy: (i) is held by a * life insurance company other than the life insurance company that issued the policy; and (ii) is a * segregated exempt asset of the life insurance company that issued the policy; and (iii) provides for an allocated pension; or (c) the policy provides for an * allocated annuity.

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 320-246 — Exempt life insurance policy

(1) An exempt life insurance policy is a * life insurance policy (other than an * RSA): (a) that is held by the trustee of a * complying superannuation fund and provides solely for the discharge of the fund’s liabilities (contingent or not) in respect of * superannuation income stream benefits that are currently * RP superannuation income stream benefits of the fund; or (b) that is held by the trustee of a * pooled superannuation trust, where: (i) the policy provides solely for the discharge of the liabilities (contingent or not) in respect of * superannuation income stream benefits that are currently * RP superannuation income stream benefits of complying superannuation funds; and (ii) the funds are unit holders of the trust; or (c) that is held by another * life insurance company and is a * segregated exempt asset of that other company; or (d) that is held by the trustee of a * constitutionally protected fund; or (e) that provides for an * immediate annuity that: (i) was purchased on or before 9 December 1987; or (ii) is a * superannuation income stream that is in the * retirement phase; or (iii) satisfies whichever of the conditions in subsection (3) are applicable; or (ea) that provides for an * annuity that: (i) is not an * immediate annuity; and (ii) is a superannuation income stream that is in the retirement phase; or (f) that provides for either or both of the following: (i) a * personal injury annuity, payments of which are exempt from income tax under Division 54; (ii) a * personal injury lump sum, payment of which is exempt from income tax under Division 54. Note: A part of a life insurance policy may be taken to be an exempt life insurance policy under section 320 ‑ 247. (3) The following table sets out the conditions mentioned in subparagraph (1)(e)(iii): Annuity conditions Item Column 1 The condition in column 2 applies in the following circumstances ... Column 2 The condition is that ... 1 there is a residual capital value (within the meaning of section 27H of the Income Tax Assessment Act 1936 ) in relation to the * immediate annuity. the contract under which the annuity is payable does not permit the residual capital value to exceed the annuity’s purchase price (within the meaning of that section). 2 the contract under which the * immediate annuity is payable provides that the annuity is payable until the end of a term of years certain. the contract does not permit the total of the amounts paid for the annuity’s commutation (whether in whole or in part) to exceed the annuity’s purchase price (within the meaning of that section), reduced by the sum of the deductible amounts excluded from assessable income under that section. 3 the contract under which the * immediate annuity is payable: (a) provides that the annuity is payable until the later of: (i) the death of a person (or the death of the last of 2 or more persons to die); or (ii) the end of a term of years certain; and (b) permits one or more amounts ( commutation payments ) to become payable before the end of the term of years certain for the annuity’s commutation (whether in whole or in part). the contract does not permit the total of the commutation payments that may become payable before the end of the term of years certain to exceed the annuity’s purchase price (within the meaning of that section), reduced by the sum of the deductible amounts excluded from assessable income under that section. 4 all circumstances. there is no unreasonable deferral of the payments of the * immediate annuity, having regard to: (a) to the extent to which the payments depend on the returns of the investment of the assets of the * life insurance company paying the annuity—when the payments are made and when those returns are * derived; and (b) to the extent to which the payments do not depend on those returns—the relative sizes of the annual totals of the payments from year to year; and (c) any other relevant factors.

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13) | Amended by No 81 of 2016, effective Sch 1 (items 2–6, 26–32, 36), Sch 2 (items 1–8, 13–18, 20), Sch 3 (items 1–5, 9), Sch 5–8, Sch 9 (items 1–3, 5), Sch 10 (items 72–80, 93) and Sch 11: 1 Jan 2017 (s 2(1) items 2, 4, 6, 9) Sch 10 (items 2–27, 49–54): 1 July 2018 (s 2(1) item 5)

s 320-247 — Policy split into an exempt life insurance policy and another life insurance policy

When is a part of a policy taken to be an exempt life insurance policy? (1) A part of a * life insurance policy (the original policy ) is taken to be an * exempt life insurance policy for the purposes of this Act if: (a) the part provides solely for the discharge of the liabilities (contingent or not) in respect of * superannuation income stream benefits that are currently * RP superannuation income stream benefits of a * complying superannuation fund; and (b) the trustee of the fund holds the original policy. (2) A part of a * life insurance policy (the original policy ) is taken to be an * exempt life insurance policy for the purposes of this Act if: (a) the part provides solely for the discharge of liabilities that are attributable to the liabilities (contingent or not) in respect of * superannuation income stream benefits that are currently * RP superannuation income stream benefits of * complying superannuation funds; and (b) the trustee of a * pooled superannuation trust holds the original policy; and (c) the funds are unit holders of the trust. What happens to the rest of the policy? (3) If a part of a policy (the original policy ) is taken to be an * exempt life insurance policy under subsection (1) or (2), the rest of the original policy is taken to be another * life insurance policy for the purposes of this Act.

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 81 of 2016, effective Sch 1 (items 2–6, 26–32, 36), Sch 2 (items 1–8, 13–18, 20), Sch 3 (items 1–5, 9), Sch 5–8, Sch 9 (items 1–3, 5), Sch 10 (items 72–80, 93) and Sch 11: 1 Jan 2017 (s 2(1) items 2, 4, 6, 9) Sch 10 (items 2–27, 49–54): 1 July 2018 (s 2(1) item 5)

s 320-250 — Transfer of assets and payment of amounts from segregated exempt assets otherwise than as a result of a valuation under section 320 ‑ 230

(1A) If: (a) a * life insurance policy issued by a * life insurance company becomes a policy referred to in subsection 320 ‑ 190(1); and (b) immediately before the policy became a policy referred to in subsection 320 ‑ 190(1), the policy was an * exempt life insurance policy; the company can transfer from its * segregated exempt assets, to a * complying superannuation asset pool, assets of any kind whose total * transfer value does not exceed the company’s liabilities in respect of the policy. (1) A * life insurance company can at any time transfer an asset from its * segregated exempt assets in exchange for an amount of money equal to the * transfer value of the asset at the time of the transfer. (2) If a * life insurance company: (a) imposes any fees or charges in respect of * segregated exempt assets; or (b) imposes any fees or charges in respect of * exempt life insurance policies where the liabilities under the policies are to be discharged out of the company’s segregated exempt assets; or (c) determines, at a time other than a * valuation time, that the total * transfer value of the company’s segregated exempt assets as at that time exceeds the amount of the company’s * exempt life insurance policy liabilities as at that time; the company must, when the fees or charges are imposed or the excess is determined, as the case may be, transfer from the segregated exempt assets, assets having a total transfer value equal to the fees, charges or excess, as the case may be. (3) If: (a) any liabilities arise for the discharge of which a * life insurance company has * segregated exempt assets; or (b) any expenses are incurred by a life insurance company directly in respect of segregated exempt assets in relation to a period during which the assets are segregated exempt assets; the life insurance company must pay from the segregated exempt assets any amounts required to discharge the liabilities or amounts equal to the expenses, as the case may be.

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 81 of 2016, effective Sch 1 (items 2–6, 26–32, 36), Sch 2 (items 1–8, 13–18, 20), Sch 3 (items 1–5, 9), Sch 5–8, Sch 9 (items 1–3, 5), Sch 10 (items 72–80, 93) and Sch 11: 1 Jan 2017 (s 2(1) items 2, 4, 6, 9) Sch 10 (items 2–27, 49–54): 1 July 2018 (s 2(1) item 5)

s 320-255 — Consequences of transfer of assets to or from segregated exempt assets

(1) This section applies if: (a) an asset (other than money) is transferred from the company’s * segregated exempt assets under subsection 320 ‑ 235(1) or 320 ‑ 250(1A), (1) or (2); or (b) an asset (other than money) is transferred to the company’s * segregated exempt assets under subsection 320 ‑ 235(3) or section 320 ‑ 240. (2) In determining: (a) for the purposes of this Act (other than Division 40 and Parts 3 ‑ 1 and 3 ‑ 3) whether an amount is included in, or can be deducted from, the assessable income of a * life insurance company in respect of the transfer of the asset; or (b) for the purposes of Parts 3 ‑ 1 and 3 ‑ 3: (i) whether the company made a * capital gain in respect of the transfer; or (ii) whether the company made a * capital loss in respect of the transfer; the company is taken: (c) to have sold, immediately before the transfer, the asset transferred for a consideration equal to its * market value; and (d) to have purchased the asset again at the time of the transfer for a consideration equal to its market value. (3) If, apart from this subsection, section 320 ‑ 60 and subsection 320 ‑ 105(1), a * life insurance company could deduct an amount or apply a * capital loss as a result of the transfer of an asset to its * segregated exempt assets, the deduction or capital loss is disregarded until: (a) the asset ceases to exist; or (b) the asset, or a greater than 50% interest in it, is * acquired by an entity other than an entity that is an * associate of the company, immediately after the acquisition. (3A) Subsection (3) does not apply in relation to an amount that the company can deduct under a provision in Division 40. (4) A * life insurance company cannot deduct an amount or apply a * capital loss as a result of the transfer of an asset from its * segregated exempt assets. (6) If a * depreciating asset is transferred to the * segregated exempt assets of a * life insurance company, then, in determining for the purposes of Division 40 whether an amount is included in, or can be deducted from, the company’s assessable income as a result of the transfer, the company is taken: (a) to have, at the time immediately before the transfer, sold the asset for a consideration equal to its * market value at that time; and (b) to have, at the time of the transfer, purchased the asset again for a consideration equal to its market value at that time. (7) If a * depreciating asset that has been included in the * segregated exempt assets of a * life insurance company since the asset was acquired by the company or the initial segregation of those assets took place is transferred from those assets, then the company must assume for the purposes of Division 40 that: (a) if the asset’s * market value at the time of the transfer is greater than its * adjustable value at that time, the company: (i) had, at the time immediately before the transfer, sold the asset for a consideration equal to its adjustable value at that time; and (ii) had, at the time of the transfer, purchased the asset again for a consideration equal to its adjustable value at that time; or (b) if the asset’s market value at the time of the transfer is equal to or less than its adjustable value at that time, the company: (i) had, at the time immediately before the transfer, sold the asset for a consideration equal to its market value at that time; and (ii) had, at the time of the transfer, purchased the asset again for a consideration equal to its market value at that time. (8) If a * depreciating asset that was previously transferred to the * segregated exempt assets of a * life insurance company is transferred from those assets, then, the company must assume, for the purposes of Division 40 that: (a) if the asset’s * market value at the time of its transfer from those assets is greater than its market value at the time when it was transferred to those assets, the company: (i) had, at the time immediately before the transfer from those assets, sold the asset for a consideration equal to its market value at the time when it was transferred to those assets; and (ii) had, at the time of the transfer from those assets, purchased the asset again for a consideration equal to its market value at the time when it was transferred to those assets; or (b) if the asset’s market value at the time of its transfer from those assets is equal to or less than its market value at the time when it was transferred to those assets, the company: (i) had, at the time immediately before the transfer from those assets, sold the asset for a consideration equal to its market value at that time; and (ii) had, at the time of the transfer from those assets, purchased the asset again for a consideration equal to its market value at that time. (9) Division 40 has effect in relation to an asset covered by subsection (6), (7) or (8) as if: (a) in relation to the sale of the asset that is taken to have occurred under that subsection: (i) the sale were a * balancing adjustment event; and (ii) the * termination value of the asset for that event were equal to the consideration for the sale under that subsection; and (iii) the company had stopped * holding the asset at the time of the sale; and (b) in relation to the purchase of the asset that is taken to have occurred under that subsection: (i) the company had only begun to hold the asset after the purchase; and (ii) the first element of the asset’s * cost were equal to the consideration for the purchase under that subsection; and (iii) the company had acquired the asset from an * associate of the company. Note: This means that, amongst other things, as a result of the transfer: the asset’s cost for the purposes of working out a deduction under Division 40 is reset; and the company’s assessable income might be adjusted under section 40 ‑ 285 if the transfer is a transfer to the company’s segregated exempt assets.

Amendment history: Inserted by No 89 of 2000, effective s 4, Sch 1 (items 1–17, 19–25, 30–32, 34–65, 65A, 68), Sch 2 (items 63–66, 69, 71–79, 79A, 79B, 80–83, 83A, 84), Sch 4, Sch 5 (items 1–31, 34), Sch 6 and Sch 9 (items 5, 9, 26, 43, 55–57, 62, 63, 66, 67): 30 June 2000 (s 2(1)) Sch 1 (item 18): 1 pm (A.C.T.) 11 Nov 1999 (s 2(2)) Sch 1 (items 26–29, 33): 31 May 2000 (s 2(3)) Sch 2 (items 67, 68, 70): 1 July 2001 (s 2(5)) Sch 9 (items 1–4, 6–8, 10–25, 27–42, 44–54, 58–61, 64, 65, 68–73): 1 July 2000 (s 2(11)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 81 of 2016, effective Sch 1 (items 2–6, 26–32, 36), Sch 2 (items 1–8, 13–18, 20), Sch 3 (items 1–5, 9), Sch 5–8, Sch 9 (items 1–3, 5), Sch 10 (items 72–80, 93) and Sch 11: 1 Jan 2017 (s 2(1) items 2, 4, 6, 9) Sch 10 (items 2–27, 49–54): 1 July 2018 (s 2(1) item 5)

s 320-300 — What this Subdivision is about

This Subdivision contains special rules that apply when all or part of the life insurance business of a life insurance company is transferred to another life insurance company under the Life Insurance Act 1995 or the Financial Sector (Transfer and Restructure) Act 1999 . Table of sections Operative provisions 320 ‑ 305 When this Subdivision applies 320 ‑ 310 Special deductions and amounts of assessable income 320 ‑ 315 Complying superannuation asset pool and segregated exempt assets 320 ‑ 320 Certain amounts treated as life insurance premiums 320 ‑ 325 Friendly societies 320 ‑ 330 Immediate annuities 320 ‑ 335 Parts of assets treated as separate assets 320 ‑ 340 Continuous disability policies 320 ‑ 345 Exemption of management fees

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 117 of 2007, effective 28 June 2007 | Amended by No 10 of 2018, effective Sch 7 (items 4–11): 5 Mar 2018 (s 2(1) item 2)

s 320-305 — When this Subdivision applies

The rules in this Subdivision have effect if all or part of the * life insurance business of a * life insurance company (the originating company ) is transferred to another life insurance company (the recipient company ): (a) in accordance with a scheme confirmed by the Federal Court of Australia under Part 9 of the Life Insurance Act 1995 ; or (b) under the Financial Sector (Transfer and Restructure) Act 1999 .

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 117 of 2007, effective 28 June 2007 | Amended by No 10 of 2018, effective Sch 7 (items 4–11): 5 Mar 2018 (s 2(1) item 2)

s 320-310 — Special deductions and amounts of assessable income

Deduction for originating company (1) If the originating company pays an amount to the recipient company in respect of liabilities under the * net risk components of * life insurance policies transferred to the recipient company, the originating company can deduct that amount for the income year in which the transfer took place. Amount included in originating company’s assessable income (2) If the originating company receives an amount from the recipient company in respect of liabilities under the * net risk components of * life insurance policies transferred to the recipient company, that amount is included in the assessable income of the originating company for the income year in which the transfer took place. Deduction for recipient company (3) If the recipient company pays an amount to the originating company in respect of liabilities under the * net risk components of * life insurance policies transferred to the recipient company, the recipient company can deduct that amount for the income year in which the transfer took place.

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

s 320-315 — Complying superannuation asset pool and segregated exempt assets

(1) Assets that were * complying superannuation assets of the originating company just before the transfer took place and that are transferred to the recipient company become complying superannuation assets of the recipient company. (2) Assets that were * segregated exempt assets of the originating company just before the transfer took place and that are transferred to the recipient company become segregated exempt assets of the recipient company.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 320-320 — Certain amounts treated as life insurance premiums

(1) This Division applies to the recipient company as if the amount or value of any consideration received by the recipient company in respect of liabilities under * life insurance policies transferred to the company were * life insurance premiums paid to the company at the time the transfer took place. (2) However, subsection (1) does not apply to consideration: (a) that relates to liabilities that, just before the transfer took place, were discharged out of the originating company’s * complying superannuation assets or * segregated exempt assets; or (b) that relates to the part of a * life insurance policy that has been reinsured under a * contract of reinsurance (except consideration that relates to a risk, or part of a risk, in relation to which subsection 148(1) of the Income Tax Assessment Act 1936 applies).

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 320-325 — Friendly societies

(1) This section has effect if the originating company and the recipient company were * friendly societies just before the transfer took place. (2) For the purposes of paragraph 320 ‑ 37(1)(d), an * income bond, * funeral policy, * sickness policy or * scholarship plan issued by the recipient company in substitution for an income bond, funeral policy, sickness policy or scholarship plan (the original policy ) transferred from the originating company is taken to have been issued at the time the original policy was issued if the terms of the substituted policy are not materially different from those of the original policy.

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

s 320-330 — Immediate annuities

For the purposes of section 320 ‑ 246, a * life insurance policy that provides for an * immediate annuity issued by the recipient company in substitution for a policy (also the original policy ) transferred from the originating company is taken to have been issued at the time the original policy was issued if the terms of the substituted policy are not materially different from those of the original policy.

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

s 320-335 — Parts of assets treated as separate assets

If: (a) an asset is transferred to the recipient company from the originating company; and (b) parts of that asset were, under section 320 ‑ 170 or 320 ‑ 225 of the Income Tax (Transitional Provisions) Act 1997 , treated as separate assets of the originating company just before the transfer took place; those parts of that asset are also treated as separate assets of the recipient company.

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

s 320-340 — Continuous disability policies

(1) This section has effect if: (a) the originating company and the recipient company were members of the same * wholly ‑ owned group just before the transfer took place; and (b) all of the liabilities under the * continuous disability policies of the originating company are transferred to the recipient company; and (c) the transfer took place before the income year in which 1 July 2005 occurs; and (d) an amount (the section 320 ‑ 30 amount ) would have been included in the assessable income of the originating company under section 320 ‑ 30 for the income year in which the transfer took place if the transfer had not taken place. (2) Section 320 ‑ 30 does not apply to the originating company for the income year in which the transfer took place or a later income year. (3) The amount worked out using this formula is included in the assessable income of the originating company for the income year in which the transfer took place: where: continuous disability policy days means the number of days during the income year in which the transfer took place that the originating company held * continuous disability policies. (4) The section 320 ‑ 30 amount, reduced by the amount included in the assessable income of the originating company under subsection (3), is included in the assessable income of the recipient company for the income year in which the transfer took place. (5) For each income year after the year in which the transfer took place and that is a relevant income year for the purposes of section 320 ‑ 30, the recipient company’s assessable income includes the amount that would have been included in the originating company’s assessable income under that section for that year if the transfer had not taken place.

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

s 320-345 — Exemption of management fees

(1) This section has effect if: (a) the originating company and the recipient company were members of the same * wholly ‑ owned group just before the transfer took place; and (b) a * life insurance policy (also the original policy ): (i) is constituted by a contract made with the originating company before 1 July 2000; and (ii) is transferred to the recipient company before 1 July 2005. (2) For the purposes of section 320 ‑ 40, a * life insurance policy issued by the recipient company in substitution for the original policy is taken to have been constituted by a contract made with the recipient company before 1 July 2000 if the terms of the substituted policy are not materially different from those of the original policy. (3) Subsection 320 ‑ 40(4) applies to so much of the sum of the amounts applicable in respect of the substituted policy under subsections 320 ‑ 40(5), (6) and (7) as does not exceed any fees or charges made by the recipient company that the originating company would have been entitled to make under the terms of the original policy as applying just before 1 July 2000.

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

s 321-10 — Assessable income to include amount for reduction in adjusted liability for incurred claims

A * general insurance company’s assessable income for the * current year includes an amount equal to the amount (if any) by which: (a) the value, at the end of the previous income year, of the company’s adjusted * liability for incurred claims under * general insurance policies; exceeds (b) the value, at the end of the current year, of that liability. Note: Those values are worked out under section 321 ‑ 20.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 52 of 2024, effective sch 3 (items 1 ‑ 5): 29 June 2024 (s 2(1) item 3) sch 4 ‑ 7: 1 July 2024 (s 2(1) item 4)

s 321-15 — Deduction for increase in adjusted liability for incurred claims

A * general insurance company can deduct for the * current year an amount equal to the amount (if any) by which: (a) the value, at the end of the current year, of the company’s adjusted * liability for incurred claims under * general insurance policies; exceeds (b) the value, at the end of the previous income year, of that liability. Note: Those values are worked out under section 321 ‑ 20.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 52 of 2024, effective sch 3 (items 1 ‑ 5): 29 June 2024 (s 2(1) item 3) sch 4 ‑ 7: 1 July 2024 (s 2(1) item 4)

s 321-20 — How the value of adjusted liability for incurred claims is worked out

Work out the value, at the end of an income year, of a * general insurance company’s adjusted * liability for incurred claims under * general insurance policies in this way: Method statement Step 1. Use the * applicable insurance contracts accounting standard to measure, at the end of the income year, the company’s * liability for incurred claims under * general insurance policies, but when doing so disregard any claims handling costs that are neither attached to, nor directly attributable to, a particular claim. Step 2. Using that standard, reduce the result from step 1 by so much of that result as the company expects at the end of the income year to recover under a reinsurance contract: (a) within the meaning of that standard; but (b) that is not one to which subsection 148(1) of the Income Tax Assessment Act 1936 (about reinsurance with non ‑ residents) applies.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Repealed and substituted by No 52 of 2024, effective sch 3 (items 1 ‑ 5): 29 June 2024 (s 2(1) item 3) sch 4 ‑ 7: 1 July 2024 (s 2(1) item 4)

s 321-25 — Deduction for claims paid during current year

A * general insurance company can deduct for the * current year amounts paid during that year in respect of claims under * general insurance policies.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4)

s 321-45 — Assessable income to include gross premiums

A * general insurance company’s assessable income for the * current year includes the gross premiums received by the company during the current year in respect of * general insurance policies.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 52 of 2024, effective sch 3 (items 1 ‑ 5): 29 June 2024 (s 2(1) item 3) sch 4 ‑ 7: 1 July 2024 (s 2(1) item 4)

s 321-50 — Assessable income to include amount for reduction in adjusted liability for remaining coverage

A * general insurance company’s assessable income for the * current year includes an amount equal to the amount (if any) by which: (a) the value, at the end of the previous income year, of the company’s adjusted * liability for remaining coverage under * general insurance policies; exceeds (b) the value, at the end of the current year, of that liability. Note: Those values are worked out under section 321 ‑ 60.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 52 of 2024, effective sch 3 (items 1 ‑ 5): 29 June 2024 (s 2(1) item 3) sch 4 ‑ 7: 1 July 2024 (s 2(1) item 4)

s 321-55 — Deduction for increase in adjusted liability for remaining coverage

A * general insurance company can deduct for the * current year an amount equal to the amount (if any) by which: (a) the value, at the end of the current year, of the company’s adjusted * liability for remaining coverage under * general insurance policies; exceeds (b) the value, at the end of the previous income year, of that liability. Note: Those values are worked out under section 321 ‑ 60.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 52 of 2024, effective sch 3 (items 1 ‑ 5): 29 June 2024 (s 2(1) item 3) sch 4 ‑ 7: 1 July 2024 (s 2(1) item 4)

s 321-60 — How the value of adjusted liability for remaining coverage is worked out

Work out the value, at the end of an income year, of a * general insurance company’s adjusted * liability for remaining coverage under * general insurance policies in this way: Method statement Step 1. Use the * applicable insurance contracts accounting standard to measure, at the end of the income year, the company’s * liability for remaining coverage under * general insurance policies, but when doing so disregard that standard’s treatment of loss components and loss ‑ recovery components of onerous contracts (within the meaning of that standard). Step 2. Using that standard, reduce the result from step 1 by any * asset for insurance acquisition cash flows. Step 3. Using that standard, reduce the result from step 2 by any premiums paid or payable by the company, in that or an earlier income year, for the reinsurance of risks covered by those * general insurance policies in respect of later income years, except: (a) reinsurance premiums that the company cannot deduct because of subsection 148(1) of the Income Tax Assessment Act 1936 (about reinsurance with non ‑ residents); and (b) reinsurance premiums that were paid or payable in respect of a particular class of * insurance business if, under the reinsurance contract (within the meaning of that standard), the reinsurer agreed to pay, in respect of a loss incurred by the company that is covered by the relevant policy, some or all of the excess over an agreed amount. Step 4. Using that standard, add to the result from step 3 any reinsurance commissions received or receivable by the company that relate to reinsurance premiums counted under step 3.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Repealed and substituted by No 52 of 2024, effective sch 3 (items 1 ‑ 5): 29 June 2024 (s 2(1) item 3) sch 4 ‑ 7: 1 July 2024 (s 2(1) item 4)

s 321-80 — Assessable income to include amount for reduction in outstanding claims liability

The assessable income for the * current year of a company that is not required by law to insure, and does not insure, against liability for workers’ compensation claims includes an amount equal to the amount (if any) by which: (a) the value, at the end of the previous income year, of the company’s liability for such claims that: (i) arose from events that occurred in that or an earlier income year; and (ii) were not paid in full before the end of the previous income year; exceeds (b) the value, at the end of the current year, of that liability. Note: Those values are worked out under section 321 ‑ 90.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4)

s 321-85 — Deduction for outstanding claims liability

A company that is not required by law to insure, and does not insure, against liability for workers’ compensation claims can deduct for the * current year an amount equal to the amount (if any) by which: (a) the value, at the end of the current year, of the company’s liability for such claims that: (i) arose from events that occurred in the current or an earlier income year; and (ii) were not paid in full before the end of the current year; exceeds (b) the value, at the end of the previous income year, of that liability. Note: Those values are worked out under section 321 ‑ 90.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4)

s 321-90 — How value of outstanding claims liability is worked out

Work out the value, at the end of an income year, of a company’s liability for claims covered by section 321 ‑ 80 or 321 ‑ 85 by adding up the amounts that, at the end of that income year, the company determines, based on proper and reasonable estimates, to be appropriate to set aside and invest in order to meet: (a) liabilities for those claims; and (b) direct settlement costs associated with those claims.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4)

s 321-95 — Deductions for claims paid during current year

A company that is not required by law to insure, and does not insure, against liability for workers’ compensation claims can deduct for the * current year amounts paid during that year in respect of such claims.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4)

s 322-1 — What this Division is about

This Division sets out special measures to assist in the rescue package provided in response to the collapse of the HIH group and deals with the tax treatment of entitlements under Part VC (Financial claims scheme for policyholders with insolvent general insurers) of the Insurance Act 1973 . Table of sections 322 ‑ 5 Rescue payments treated as insurance payments by HIH 322 ‑ 10 HIH Trust exempt from tax 322 ‑ 15 Certain capital gains and capital losses disregarded

Amendment history: Inserted by No 169 of 2001, effective s 4, Sch 4, Sch 5 (items 1–9) and Sch 6 (items 1–4, 4A–4C, 5, 5A, 6–16, 16L–16N, 17, 19): 1 Oct 2001 (s 2(1), (4), (4B), (4C), (5)) | Amended by No 42 of 2009, effective Schedule 1 (items 17–26), Schedule 2 (items 2–16, 19–39, 41–48), Schedule 4 (items 2–12), Schedule 5 (items 1–12, 15) and Schedule 8 (items 1, 2, 5): Royal Assent Sch 2 (item 1): 21 June 2007 (s 2(1) item 3) Schedule 3: 1 July 2009 Schedule 8 (items 3, 4): 1 July 2011

s 322-5 — Rescue payments treated as insurance payments by HIH

(1) This Act applies to you as if a payment you receive from the Commonwealth, the * HIH Trust or a prescribed entity for assignment of your rights under or in relation to a * general insurance policy you held with an * HIH company: (a) had been made by the HIH company; and (b) had been made under the terms and conditions of the general insurance policy you held with the HIH company. (2) The HIH Trust is the HIH Claims Support Trust (established on 6 July 2001). (3) An HIH company is: (a) CIC Insurance Limited; or (b) FAI General Insurance Company Limited; or (c) FAI Reinsurances Pty Limited; or (d) FAI Traders Insurance Company Pty Limited; or (e) HIH Casualty and General Insurance Limited; or (f) HIH Underwriting and Insurance (Australia) Pty Limited; or (g) World Marine and General Insurances Pty Limited; or (h) another related company specified in writing by the Commissioner.

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

s 322-10 — HIH Trust exempt from tax

The total * ordinary income and * statutory income of: (a) the HIH Trust; and (b) an entity prescribed for the purposes of this Division; is exempt from income tax.

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

s 322-15 — Certain capital gains and capital losses disregarded

A * capital gain or * capital loss you make because you assign a right under or in relation to a * general insurance policy you held with an * HIH company to the Commonwealth, the trustee of the * HIH Trust or a prescribed entity is disregarded.

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

s 322-20 — What this Subdivision is about

This Act applies to a payment of an entitlement under Part VC (Financial claims scheme for policyholders with insolvent general insurers) of the Insurance Act 1973 as if the payment were made by the insurer under the insurance policy concerned. Disregard a capital gain or loss from: (a) the disposal to APRA under that Part of rights against the insurer under an insurance policy; or (b) the payment of an entitlement under that Part. Table of sections Operative provisions 322 ‑ 25 Payment of entitlement under financial claims scheme treated as payment from insurer 322 ‑ 30 Disposal of rights against insurer to APRA and meeting of financial claims scheme entitlement have no CGT effects

Amendment history: Inserted by No 42 of 2009, effective Schedule 1 (items 17–26), Schedule 2 (items 2–16, 19–39, 41–48), Schedule 4 (items 2–12), Schedule 5 (items 1–12, 15) and Schedule 8 (items 1, 2, 5): Royal Assent Sch 2 (item 1): 21 June 2007 (s 2(1) item 3) Schedule 3: 1 July 2009 Schedule 8 (items 3, 4): 1 July 2011

s 322-25 — Payment of entitlement under financial claims scheme treated as payment from insurer

(1) This Act applies to you as if an amount paid to you, or applied for your benefit, to meet your entitlement under Part VC (Financial claims scheme for policyholders with insolvent general insurers) of the Insurance Act 1973 relating to a * general insurance policy issued by a * general insurance company had been paid to you by the company under the terms and conditions of the policy. (2) To avoid doubt, subsection (1) does not affect the operation of Part 2 ‑ 5 in Schedule 1 to the Taxation Administration Act 1953 . Note: Division 21 in Schedule 1 to the Taxation Administration Act 1953 contains special provisions about how Part 2 ‑ 5 in that Schedule operates in relation to the meeting of entitlements under Part VC of the Insurance Act 1973 .

Amendment history: Inserted by No 42 of 2009, effective Schedule 1 (items 17–26), Schedule 2 (items 2–16, 19–39, 41–48), Schedule 4 (items 2–12), Schedule 5 (items 1–12, 15) and Schedule 8 (items 1, 2, 5): Royal Assent Sch 2 (item 1): 21 June 2007 (s 2(1) item 3) Schedule 3: 1 July 2009 Schedule 8 (items 3, 4): 1 July 2011

s 322-30 — Disposal of rights against insurer to APRA and meeting of financial claims scheme entitlement have no CGT effects

Disregard a * capital gain or * capital loss you make because: (a) under section 62ZZL of the Insurance Act 1973 , you * dispose of a * CGT asset consisting of your rights against a * general insurance company to * APRA; or (b) your entitlement under section 62ZZF, 62ZZFA, 62ZZG or 62ZZGA of that Act is met. Note 1: Section 62ZZL of the Insurance Act 1973 causes you to cease to be the owner, and APRA to become the owner, of rights against a general insurance company relating to a general insurance policy when your entitlement arises under Part VC of that Act in relation to the policy. Note 2: Sections 62ZZF, 62ZZFA, 62ZZG and 62ZZGA of the Insurance Act 1973 entitle persons with valid claims based on general insurance policies issued by certain general insurance companies that have since become insolvent to be paid the amount of those claims by APRA.

Amendment history: Inserted by No 42 of 2009, effective Schedule 1 (items 17–26), Schedule 2 (items 2–16, 19–39, 41–48), Schedule 4 (items 2–12), Schedule 5 (items 1–12, 15) and Schedule 8 (items 1, 2, 5): Royal Assent Sch 2 (item 1): 21 June 2007 (s 2(1) item 3) Schedule 3: 1 July 2009 Schedule 8 (items 3, 4): 1 July 2011 | Amended by No 10 of 2018, effective Sch 7 (items 4–11): 5 Mar 2018 (s 2(1) item 2)

s 328-5 — What this Division is about

This Division explains the meaning of the terms small business entity , annual turnover , aggregated turnover and related concepts (Subdivision 328 ‑ C). If you are a small business entity, this Division allows you to change the way the income tax law applies to you in these ways: (a) you can choose to put your depreciating assets into a general pool and treat the pool as a single asset (Subdivision 328 ‑ D); (b) you can choose not to account for annual changes in trading stock value that are not more than $5,000 (Subdivision 328 ‑ E). In usual circumstances, these changes will simplify the working out of your taxable income, and so reduce your compliance costs. You may be entitled to a tax offset for any small business income included in your assessable income, if you are an individual (Subdivision 328 ‑ F). Table of sections 328 ‑ 10 Concessions available to small business entities

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Repealed and substituted by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 114 of 2015, effective Sch 1 and 2: 26 Aug 2015 (s 2(1) item 1)

s 328-10 — Concessions available to small business entities

(1) If you are a small business entity for an income year, you can choose to take advantage of the concessions set out in the following table. Some of the concessions have additional, specific conditions that must also be satisfied. Item Concession Provision 1A Immediate deductibility for small business start ‑ up expenses Subsection 40 ‑ 880(2A) of this Act 1 CGT 15 ‑ year asset exemption Subdivision 152 ‑ B of this Act 2 CGT 50% active asset reduction Subdivision 152 ‑ C of this Act 3 CGT retirement exemption Subdivision 152 ‑ D of this Act 4 CGT roll ‑ over Subdivision 152 ‑ E of this Act 5 Simpler depreciation rules Subdivision 328 ‑ D of this Act 6 Simplified trading stock rules Subdivision 328 ‑ E of this Act 6A Small business income tax offset Subdivision 328 ‑ F of this Act 6B Restructures of small businesses Subdivision 328 ‑ G of this Act 7 Deducting certain prepaid business expenses immediately Sections 82KZM and 82KZMD of the Income Tax Assessment Act 1936 8 Accounting for GST on a cash basis Section 29 ‑ 40 of the GST Act 9 Annual apportionment of input tax credits for acquisitions and importations that are partly creditable Section 131 ‑ 5 of the GST Act 10 Paying GST by quarterly instalments Section 162 ‑ 5 of the GST Act 11 FBT car parking exemption Section 58GA of the Fringe Benefits Tax Assessment Act 1986 12 PAYG instalments based on GDP ‑ adjusted notional tax Section 45 ‑ 130 in Schedule 1 to the Taxation Administration Act 1953 Note 1: The CGT concessions mentioned in items 1, 2, 3 and 4 of the table apply only if you are a CGT small business entity (see section 152 ‑ 10). Note 2: The small business income tax offset mentioned in item 6A of the table applies only if you are a small business entity as defined for the purposes of Subdivision 328 ‑ F (see section 328 ‑ 357). Note 3: Some of these concessions are also available to medium businesses (for example, see subsection 328 ‑ 285(2)). (2) Also, if you are a small business entity for an income year, the standard 2 ‑ year period for amending your assessment applies to you (section 170 of the Income Tax Assessment Act 1936 ).

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Repealed by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Inserted by No 80 of 2007, effective 21 June 2007 | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 114 of 2015, effective Sch 1 and 2: 26 Aug 2015 (s 2(1) item 1) | Amended by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1) | Amended by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 328-50 — Objects of this Division

(1) The main object of this Division is to offer eligible small businesses the choice of a new platform to deal with their tax. The platform is designed to benefit those businesses in one or more of these ways: • reducing their tax; • providing simpler rules for determining their income and deductions; • providing simpler capital allowances and trading stock requirements; • reducing their compliance costs. (2) This Division also provides rules that are intended to prevent other businesses from taking advantage of those benefits.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1))

s 328-105 — What this Subdivision is about

This Subdivision explains the meaning of the terms small business entity , annual turnover , aggregated turnover and related concepts. Table of sections Operative provisions 328 ‑ 110 Meaning of small business entity 328 ‑ 115 Meaning of aggregated turnover 328 ‑ 120 Meaning of annual turnover 328 ‑ 125 Meaning of connected with an entity 328 ‑ 130 Meaning of affiliate

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Repealed by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Inserted by No 80 of 2007, effective 21 June 2007

s 328-110 — Meaning of small business entity

General rule: based on aggregated turnover worked out as at the beginning of the current income year (1) You are a small business entity for an income year (the current year ) if: (a) you carry on a * business in the current year; and (b) one or both of the following applies: (i) you carried on a business in the income year (the previous year ) before the current year and your * aggregated turnover for the previous year was less than $10 million; (ii) your aggregated turnover for the current year is likely to be less than $10 million. Note 1: The $10 million thresholds in this subsection and in subsections (3) and (4) have been increased to $50 million for certain concessions (for example, see subsection 328 ‑ 285(2)). Note 2: If you are or would (if the $10 million thresholds in this subsection and subsection (3) were increased to $50 million) be a small business entity for an income year, you may apply for permission: (a) under section 61C of the Excise Act 1901 to deliver goods for home consumption (without entering them for that purpose) in respect of a calendar month or a quarter; or (b) under section 69 of the Customs Act 1901 to deliver like customable goods or excise ‑ equivalent goods into home consumption (without entering them for that purpose) in respect of a calendar month or, for excise ‑ equivalent goods, a quarter. (2) You work out your * aggregated turnover for the current year for the purposes of subparagraph (1)(b)(ii): (a) as at the first day of the current year; or (b) if you start to carry on a * business during the current year—as at the day you start to carry on the business. Note: Subsection 328 ‑ 120(5) provides for how to work out your annual turnover (which is relevant to working out your aggregated turnover) if you do not carry on a business for the whole of an income year. Exception: aggregated turnover for 2 previous income years was $10 million or more (3) However, you are not a small business entity for an income year (the current year ) because of subparagraph (1)(b)(ii) if: (a) you carried on a * business in each of the 2 income years before the current year; and (b) your * aggregated turnover for each of those income years was $10 million or more. Note: Section 328 ‑ 110 of the Income Tax (Transitional Provisions) Act 1997 affects the operation of this subsection in relation to the 2007 ‑ 08 and 2008 ‑ 09 income years. Additional rule: based on aggregated turnover worked out as at the end of the current income year (4) You are also a small business entity for an income year (the current year ) if: (a) you carry on a * business in the current year; and (b) your * aggregated turnover for the current year, worked out as at the end of that year, is less than $10 million. Note: If you are a small business entity only because of subsection (4), you cannot choose any of the following concessions: (a) paying PAYG instalments based on GDP ‑ adjusted notional tax: see section 45 ‑ 130 in Schedule 1 to the Taxation Administration Act 1953 ; (b) accounting for GST on a cash basis: see section 29 ‑ 40 of the GST Act; (c) making an annual apportionment of input tax credits for acquisitions and importations that are partly creditable: see section 131 ‑ 5 of the GST Act; (d) paying GST by quarterly instalments: see section 162 ‑ 5 of the GST Act; (e) applying for permission under the Excise Act 1901 to deliver goods for home consumption (without entering them for that purpose) in respect of a calendar month or a quarter: see section 61C of that Act; (f) applying for permission under the Customs Act 1901 to deliver like customable goods or excise ‑ equivalent goods for home consumption (without entering them for that purpose) in respect of a calendar month or, for excise ‑ equivalent goods, a quarter: see section 69 of that Act. Winding up a business previously carried on (5) This Subdivision applies to you as if you carried on a * business in an income year if: (a) in that year you were winding up a business you previously carried on; and (b) you were a * small business entity for the income year in which you stopped carrying on that business. Note 1: Subsection 328 ‑ 120(5) provides for how to work out your annual turnover (which is relevant to working out your aggregated turnover) if you do not carry on a business for the whole of an income year. Note 2: A special rule applies if you were an STS taxpayer under this Division (as in force immediately before the commencement of this section) in the income year in which you stopped carrying on the business: see section 328 ‑ 111 of the Income Tax (Transitional Provisions) Act 1997 . Partners in a partnership (6) A person who is a partner in a partnership in an income year is not, in his or her capacity as a partner, a small business entity for the income year.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Repealed by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Inserted by No 80 of 2007, effective 21 June 2007 | Amended by No 42 of 2009, effective Schedule 1 (items 17–26), Schedule 2 (items 2–16, 19–39, 41–48), Schedule 4 (items 2–12), Schedule 5 (items 1–12, 15) and Schedule 8 (items 1, 2, 5): Royal Assent Sch 2 (item 1): 21 June 2007 (s 2(1) item 3) Schedule 3: 1 July 2009 Schedule 8 (items 3, 4): 1 July 2011 | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011 | Amended by No 36 of 2012, effective Schedule 1 (items 26, 27): Royal Assent | Amended by No 37 of 2012, effective Sch 1 (items 11, 12): 15 Apr 2012 (s 2(1) item 3) Sch 1 (items 13, 14): 15 Apr 2012 (s 2(1) item 4) | Amended by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7) | Amended by No 40 of 2023, effective sch 2, sch 4 (items 14-16): 1 July 2023 (s 2(1) items 3, 5) sch 3: 1 Jan 2024 (s 2(1) item 4)

s 328-115 — Meaning of aggregated turnover

(1) Your aggregated turnover for an income year is the sum of the relevant annual turnovers (see subsection (2)) excluding any amounts covered by subsection (3). Note: For small business CGT relief purposes, additional entities may be treated as being connected with you or your affiliate under sections 152 ‑ 48 and 152 ‑ 78. (2) The relevant annual turnovers are: (a) your * annual turnover for the income year; and (b) the annual turnover for the income year of any entity (a relevant entity ) that is * connected with you at any time during the income year; and (c) the annual turnover for the income year of any entity (a relevant entity ) that is an * affiliate of yours at any time during the income year. (3) Your aggregated turnover for an income year does not include the following amounts: (a) amounts * derived in the income year by you or a relevant entity from dealings between you and the relevant entity while the relevant entity is * connected with you or is your * affiliate; (b) amounts derived in the income year by a relevant entity from dealings between the relevant entity and another relevant entity while each relevant entity is connected with you or is your affiliate; (c) amounts derived in the income year by a relevant entity while the relevant entity is not connected with you and is not your affiliate.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Repealed by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Inserted by No 80 of 2007, effective 21 June 2007 | Amended by No 42 of 2009, effective Schedule 1 (items 17–26), Schedule 2 (items 2–16, 19–39, 41–48), Schedule 4 (items 2–12), Schedule 5 (items 1–12, 15) and Schedule 8 (items 1, 2, 5): Royal Assent Sch 2 (item 1): 21 June 2007 (s 2(1) item 3) Schedule 3: 1 July 2009 Schedule 8 (items 3, 4): 1 July 2011 | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011

s 328-120 — Meaning of annual turnover

General rule (1) An entity’s annual turnover for an income year is the total * ordinary income that the entity * derives in the income year in the ordinary course of carrying on a * business. Exclusion of amounts relating to GST (2) In working out an entity’s * annual turnover for an income year, do not include any amount that is * non ‑ assessable non ‑ exempt income under section 17 ‑ 5 (which is about GST). Exclusion of amounts derived from sales of retail fuel (3) In working out an entity’s * annual turnover for an income year, do not include any amounts of * ordinary income the entity * derives from sales of * retail fuel. Amounts derived from dealings with associates (4) In working out an entity’s * annual turnover for an income year, the amount of * ordinary income the entity * derives from any dealing with an * associate of the entity is the amount of ordinary income the entity would derive from the dealing if it were at * arm’s length. Note: Amounts derived in an income year from any dealings between an entity and an associate that is a relevant entity within the meaning of section 328 ‑ 115 are not included in the entity’s aggregated turnover for that year: see subsection 328 ‑ 115(3). Business carried on for part of income year only (5) If an entity does not carry on a * business for the whole of an income year, the entity’s * annual turnover for the income year must be worked out using a reasonable estimate of what the entity’s annual turnover for the income year would be if the entity carried on a business for the whole of the income year. Regulations may provide for different calculation of annual turnover (6) The regulations may provide that an entity’s * annual turnover for an income year is to be calculated in a different way, but only so that it would be less than the amount worked out under this section.

Amendment history: Inserted by No 80 of 2007, effective 21 June 2007

s 328-125 — Meaning of connected with an entity

(1) An entity is connected with another entity if: (a) either entity controls the other entity in a way described in this section; or (b) both entities are controlled in a way described in this section by the same third entity. Note 1: See Subdivision 106 ‑ B if a CGT asset of yours is vested in a trustee in bankruptcy or a liquidator. Note 2: See Subdivision 106 ‑ C if you are absolutely entitled to a CGT asset as against the trustee of a trust. Note 3: See Subdivision 106 ‑ D if you provided security over an asset to another entity. Direct control of an entity other than a discretionary trust (2) An entity (the first entity ) controls another entity if the first entity, its * affiliates, or the first entity together with its affiliates: (a) except if the other entity is a discretionary trust—own, or have the right to acquire the ownership of, interests in the other entity that carry between them the right to receive a percentage (the control percentage ) that is at least 40% of: (i) any distribution of income by the other entity; or (ii) if the other entity is a partnership—the net income of the partnership; or (iii) any distribution of capital by the other entity; or (b) if the other entity is a company—own, or have the right to acquire the ownership of, * equity interests in the company that carry between them the right to exercise, or control the exercise of, a percentage (the control percentage ) that is at least 40% of the voting power in the company. Direct control of a discretionary trust (3) An entity (the first entity ) controls a discretionary trust if a trustee of the trust acts, or could reasonably be expected to act, in accordance with the directions or wishes of the first entity, its * affiliates, or the first entity together with its affiliates. (4) An entity (the first entity ) controls a discretionary trust for an income year if, for any of the 4 income years before that year: (a) the trustee of the trust paid to, or applied for the benefit of: (i) the first entity; or (ii) any of the first entity’s * affiliates; or (iii) the first entity and any of its affiliates; any of the income or capital of the trust; and (b) the percentage (the control percentage ) of the income or capital paid or applied is at least 40% of the total amount of income or capital paid or applied by the trustee for that year. Note: Section 328 ‑ 112 of the Income Tax (Transitional Provisions) Act 1997 affects the operation of this subsection in relation to the 2007 ‑ 08, 2008 ‑ 09, 2009 ‑ 10 and 2010 ‑ 11 income years. (5) An entity does not control a discretionary trust because of subsection (4) if the entity is: (a) an * exempt entity; or (b) a * deductible gift recipient. Commissioner may determine that an entity does not control another entity (6) If the control percentage referred to in subsection (2) or (4) is at least 40%, but less than 50%, the Commissioner may determine that the first entity does not control the other entity if the Commissioner thinks that the other entity is controlled by an entity other than, or by entities that do not include, the first entity or any of its * affiliates. Indirect control of an entity (7) This section applies to an entity (the first entity ) that directly controls another entity (the second entity ) as if the first entity also controlled any other entity that is directly, or indirectly by any other application or applications of this section, controlled by the second entity. (8) However, subsection (7) does not apply if the second entity is an entity of any of the following kinds: (a) a company * shares in which (except shares that carry the right to a fixed rate of * dividend) are listed for quotation in the official list of an * approved stock exchange; (b) a * publicly traded unit trust; (c) a * mutual insurance company; (d) a * mutual affiliate company; (e) a company (other than one covered by paragraph (a)) all the shares in which are owned by one or more of the following: (i) a company covered by paragraph (a); (ii) a publicly traded unit trust; (iii) a mutual insurance company; (iv) a mutual affiliate company.

Amendment history: Inserted by No 80 of 2007, effective 21 June 2007 | Amended by No 119 of 2013, effective Sch 1: 30 June 2013 (s 2(1) item 2) Remainder: 29 June 2013(s 2(1) items 1, 3, 4)

s 328-130 — Meaning of affiliate

(1) An individual or a company is an affiliate of yours if the individual or company acts, or could reasonably be expected to act, in accordance with your directions or wishes, or in concert with you, in relation to the affairs of the * business of the individual or company. (2) However, an individual or a company is not your affiliate merely because of the nature of the business relationship you and the individual or company share. Note: For small business relief purposes, a spouse or a child under 18 years may also be an affiliate under section 152 ‑ 47. Example: A partner in a partnership would not be an affiliate of another partner merely because the first partner acts, or could reasonably be expected to act, in accordance with the directions or wishes of the second partner, or in concert with the second partner, in relation to the affairs of the partnership. Directors of the same company, or the company and a director of that company, would be in a similar position.

Amendment history: Inserted by No 80 of 2007, effective 21 June 2007 | Amended by No 42 of 2009, effective Schedule 1 (items 17–26), Schedule 2 (items 2–16, 19–39, 41–48), Schedule 4 (items 2–12), Schedule 5 (items 1–12, 15) and Schedule 8 (items 1, 2, 5): Royal Assent Sch 2 (item 1): 21 June 2007 (s 2(1) item 3) Schedule 3: 1 July 2009 Schedule 8 (items 3, 4): 1 July 2011 | Amended by No 84 of 2013, effective s 4, Sch 1 (items 2–9, 19–23), Sch 2, Sch 3, Sch 6 and Sch 8 (items 27–32): 28 June 2013 (s 2(1) items 1, 2, 4)

s 328-170 — What this Subdivision is about

If you are a small business entity, you can choose to deduct amounts for most of your depreciating assets on a diminishing value basis using a pool that is treated as a single depreciating asset. Broadly, the pool is made up of the costs of the depreciating assets that are allocated to it or, in some cases, a proportion of those costs. The pool rate is 30%. There is a deduction for assets whose cost is less than $1,000 in the income year in which you start to use the asset or have it installed ready for use. This Subdivision sets out how to calculate the pool deductions, and also sets out the consequences of: (a) disposal of depreciating assets; and (b) not choosing to use this Subdivision for an income year after having chosen to do so for an earlier income year; and (c) changing the business use of depreciating assets. Table of sections Operative provisions 328 ‑ 175 Calculations for depreciating assets 328 ‑ 180 Assets costing less than $1,000 328 ‑ 185 Pooling 328 ‑ 190 Calculation 328 ‑ 195 Opening pool balance 328 ‑ 200 Closing pool balance 328 ‑ 205 Estimate of taxable use 328 ‑ 210 Low pool value 328 ‑ 215 Disposal etc. of depreciating assets 328 ‑ 220 What happens if you are not a small business entity or do not choose to use this Subdivision for an income year 328 ‑ 225 Change in business use 328 ‑ 230 Estimate where deduction denied 328 ‑ 235 Interaction with Divisions 85 and 86 Special rules about roll ‑ overs 328 ‑ 243 Roll ‑ over relief 328 ‑ 245 Consequences of roll ‑ over 328 ‑ 247 Pool deductions 328 ‑ 250 Deductions for assets first used in BAE year 328 ‑ 253 Deductions for cost addition amounts 328 ‑ 255 Closing pool balance etc. below zero 328 ‑ 257 Taxable use

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9)

s 328-175 — Calculations for depreciating assets

(1) You can choose to calculate your deductions and some amounts of assessable income under this Subdivision instead of under Division 40 for an income year for all the * depreciating assets that you * hold if: (a) you are a * small business entity for the income year; and (b) you started to use the assets or have them * installed ready for use, for a * taxable purpose during or before that income year. This subsection has effect subject to subsections (2) to (10). Note: If you choose to use this Subdivision for an income year, you continue to use this Subdivision for your general small business pool for a later income year even if you are not a small business entity, or do not choose to use this Subdivision, for the later year: see section 328 ‑ 220. Exception: assets to which Division 40 does not apply (2) This Subdivision does not apply to a * depreciating asset to which Division 40 does not apply because of section 40 ‑ 45. Exception: primary production (3) If you are a * small business entity for the income year, for each * depreciating asset you use to carry on a * primary production business and for which you could deduct amounts under Subdivision 40 ‑ F (about primary production depreciating assets) or Subdivision 40 ‑ G (about capital expenditure of primary producers and other landholders) apart from subsection (1), you can choose: (a) to deduct amounts for it under Subdivision 40 ‑ F or 40 ‑ G; or (b) to calculate your deductions for it under this Subdivision. Note: A choice made by a transferor under this subsection for an asset applies also to the transferee if roll ‑ over relief under subsection 40 ‑ 340(1) or (3) is chosen: see section 328 ‑ 245. (4) You must make the choice under subsection (3) for each * depreciating asset of the kind referred to in that subsection for the later of: (a) the first income year for which you are, or last were, a * small business entity; or (b) the income year in which you started to use the asset, or have it * installed ready for use, for a * taxable purpose. Once you have made the choice for an asset, you cannot change it. Exception: horticultural plants (5) You cannot deduct amounts for * horticultural plants (including grapevines) under this Subdivision. Exception: asset let on depreciating asset lease (6) You cannot deduct amounts for a * depreciating asset under this Subdivision if the asset is being or might reasonably be expected to be let predominantly on a * depreciating asset lease. Exception: assets in a low ‑ value or software development pool (7) You cannot deduct amounts for a * depreciating asset under this Subdivision if: (a) the asset was allocated to your low ‑ value pool under Subdivision 40 ‑ E, or to your pool under the former Subdivision 42 ‑ L, during an income year for which you were not a * small business entity or had not chosen to use this Subdivision; or (b) the asset is * in ‑ house software and expenditure on the asset is allocated to a software development pool under that Subdivision. Note: You will have to continue deducting amounts for these assets under Division 40. (8) A * depreciating asset referred to in subsection (7) is not allocated to your * general small business pool under this Subdivision and does not qualify for a deduction under section 328 ‑ 180. Exception: assets for which previously entitled to a tax offset under the R&D provisions (9) You cannot deduct amounts for a * depreciating asset for any period under this Subdivision if you are entitled under section 355 ‑ 100 to a * tax offset for a deduction under section 355 ‑ 305 for the asset for the same or an earlier period. Exception: second ‑ hand assets used in residential property (9A) You cannot deduct amounts for a * depreciating asset under this Subdivision to the extent that section 40 ‑ 27 prevents you from deducting amounts under subsection 40 ‑ 25(1) for the asset. Exception: restriction on choosing to use this Subdivision (10) If: (a) you choose to use this Subdivision to deduct amounts for your * depreciating assets for an income year; and (b) you do not choose to use this Subdivision for a later income year for which you satisfy the conditions to make this choice (see subsection (1)); you cannot choose to use this Subdivision until at least 5 years after the first later income year for which you satisfied the conditions to make this choice but did not do so. Note 1: Your ability to choose to use this Subdivision may also be restricted by section 328 ‑ 440 of the Income Tax (Transitional Provisions) Act 1997 . Note 2: If you choose to use this Subdivision for an income year, you continue to use it for assets that have been allocated to your general small business pool for a later income year even if you are not a small business entity, or do not choose to use this Subdivision, for the later year: see section 328 ‑ 220. Note 3: Subsections 328 ‑ 180(2) and (3) of the Income Tax (Transitional Provisions) Act 1997 affect the operation of this subsection in relation to income years ending on or after 12 May 2015.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 170 of 2001, effective Sch 2 (items 28–44, 51): 12 pm (A.C.T.) 29 Jan 2001 (s 2(2)) Sch 2 (items 69–84, 92): 30 June 2001 (s 2(3)) Sch 3 (items 11–13, 19(1)): 1 Oct 2001 (s 2(1)) | Amended by No 119 of 2002, effective s 4, Sch 1 (items 2–5, 8), Sch 2 and Sch 3 (item 100): 2 Dec 2002 (s 2(1) items 1, 2, 10) Sch 1 (items 6, 7): ( see Sch 10 (item 242) of Act No. 41, 2005) Sch 3 (items 4–78): 30 June 2001 (s 2(1) items 3–8) | Amended by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 67 of 2015, effective Sch 1 (items 1–8) and Sch 2: 22 June 2015 (s 2(1) items 2, 5) Sch 1 (items 10–14): repealed before commencing (s 2(1) items 3, 4) | Amended by No 126 of 2017, effective Sch 1 and 2: 1 Jan 2018 (s 2(1) item 2)

s 328-180 — Assets costing less than $1,000

(1) You deduct the * taxable purpose proportion of the * adjustable value of a * depreciating asset for the income year in which you start to use the asset, or have it * installed ready for use, for a * taxable purpose if: (a) you were a * small business entity for that year and the year in which you started to * hold it; and (ab) you chose to use this Subdivision for each of those years; and (b) the asset is a depreciating asset whose * cost as at the end of the income year in which you start to use it, or have it installed ready for use, for a taxable purpose is less than $1,000. Note: This threshold may be affected by section 328 ‑ 180 (about temporary increased access to accelerated depreciation) or 328 ‑ 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 . (2) You can also deduct, for an income year for which you are a * small business entity and you choose to use this Subdivision, the * taxable purpose proportion of an amount included in the second element of the * cost of an asset for which you have deducted an amount under subsection (1) if: (a) the amount so included is less than $1,000; and Note: This threshold may be affected by section 328 ‑ 180 (about temporary increased access to accelerated depreciation) or 328 ‑ 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 . (b) you started to use the asset, or have it * installed ready for use, for a * taxable purpose during an earlier income year. Note: Paragraph (b) may not apply for costs included after 31 December 2020 for assets you first acquire between 12 May 2015 and 31 December 2020: see subsection 328 ‑ 180(5A) of the Income Tax (Transitional Provisions) Act 1997 . (3) An asset for which you have deducted an amount under this section is allocated to your * general small business pool if: (a) an amount of $1,000 or more is included in the second element of the asset’s * cost; or Note: This threshold may be affected by section 328 ‑ 180 (about temporary increased access to accelerated depreciation) or 328 ‑ 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 . (b) any amount is included in the second element of the asset’s cost and you have deducted or can deduct an amount under subsection (2) for an amount previously included in the second element of the asset’s cost. (4) This Division applies to the asset as if its * adjustable value were the amount included in the second element of its * cost as mentioned in subsection (3). (5) Subsection (3) applies even if the amount is included in the second element of the asset’s * cost during an income year for which you are not a * small business entity or do not choose to use this Subdivision.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 119 of 2002, effective s 4, Sch 1 (items 2–5, 8), Sch 2 and Sch 3 (item 100): 2 Dec 2002 (s 2(1) items 1, 2, 10) Sch 1 (items 6, 7): ( see Sch 10 (item 242) of Act No. 41, 2005) Sch 3 (items 4–78): 30 June 2001 (s 2(1) items 3–8) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9) | Amended by No 67 of 2015, effective Sch 1 (items 1–8) and Sch 2: 22 June 2015 (s 2(1) items 2, 5) Sch 1 (items 10–14): repealed before commencing (s 2(1) items 3, 4) | Amended by No 56 of 2017, effective Sch 1 (items 1–7): 1 July 2017 (s 2(1) item 2) | Amended by No 109 of 2018, effective Sch 1 (items 1–7): 1 Oct 2018 (s 2(1) item 2) | Amended by No 51 of 2019, effective Sch 1 (items 1–7) and Sch 2: 1 July 2019 (s 2(1) item 1) | Amended by No 22 of 2020, effective Sch 1 (items 1–14), Sch 2 (items 1–6) and Sch 4 (items 12–22): 25 Mar 2020 (s 2(1) items 2, 4) Sch 3 (items 1, 2): 24 Mar 2020 (s 2(1) item 3) | Amended by No 61 of 2020, effective Sch 2: 1 July 2020 (s 2(1) item 5) Sch 4 (items 1–17): 20 June 2020 (s 2(1) item 6) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 328-185 — Pooling

(1) If you are a * small business entity for an income year and you have chosen to use this Subdivision for that year, you deduct amounts for your * depreciating assets (except assets for which you have deducted or can deduct an amount under section 328 ‑ 180) through a pool, which allows you to deduct amounts for them as if they were a single asset, thereby simplifying your calculations. You use one rate for the pool. (2) There is a general small business pool to which * depreciating assets are allocated. Allocating assets to a pool (3) A * depreciating asset: (a) that you * hold just before, and at the start of, the first income year for which you are, or last were, a * small business entity; and (b) for which you calculate your deductions under this Subdivision instead of under Division 40; and (c) that has not previously been allocated to your * general small business pool; and (d) that you have started to use, or have * installed ready for use, for a * taxable purpose; is automatically allocated to your general small business pool. (4) A * depreciating asset that you start to use, or have * installed ready for use, for a * taxable purpose during an income year for which you are a * small business entity and you choose to use this Subdivision is allocated to the * general small business pool at the end of that year. Note: The allocation happens even if you no longer hold the asset at the end of that income year. Exception for assets used or installed before 1 July 2001 (5) You can choose not to have a * depreciating asset allocated to the * general small business pool if you started to use it, or have it * installed ready for use, for a * taxable purpose before 1 July 2001. Note: If you make this choice, you would continue to deduct amounts for the asset under Division 40. (6) You must make that choice for the first income year for which you are a * small business entity and you choose to use this Subdivision. Once you have made the choice for an asset, you cannot change it. No re ‑ allocation (7) Once a * depreciating asset is allocated to your * general small business pool, it is not re ‑ allocated, even if you are not a * small business entity for a later income year or you do not choose to use this Subdivision for that later year. Note: If you chose to use this Subdivision for an income year, you continue to use it for your general small business pool for a later income year even if you are not a small business entity, or do not choose to use this Subdivision, for the later year: see section 328 ‑ 220.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7)

s 328-190 — Calculation

(1) You calculate your deduction for your * general small business pool for an income year using this formula: Note: You use section 328 ‑ 210 instead if the pool has a low pool value. (2) Your deduction for each * depreciating asset that you start to use, or have * installed ready for use, for a * taxable purpose during an income year for which you are a * small business entity and choose to use this Subdivision is 15% of the * taxable purpose proportion of its * adjustable value. (3) You can also deduct for an income year for which you are a * small business entity and choose to use this Subdivision the amount worked out under subsection (4) for an amount (the cost addition amount ) included in the second element of the * cost of a * depreciating asset for that year if you started to use the asset, or have it * installed ready for use, for a * taxable purpose during an earlier income year. Note: The second element of cost is worked out under section 40 ‑ 190. (4) The amount you can deduct is 15% of the * taxable purpose proportion of the cost addition amount. Note: The amounts that a transferor and transferee can deduct under this section are modified if roll ‑ over relief under section 40 ‑ 340 is chosen: see sections 328 ‑ 243 and 328 ‑ 247.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9)

s 328-195 — Opening pool balance

(1) For the first income year for which you are a * small business entity and choose to use this Subdivision, the opening pool balance of your * general small business pool is the sum of the * taxable purpose proportions of the * adjustable values of * depreciating assets allocated to the pool under subsection 328 ‑ 185(3). (2) For a later income year, the opening pool balance of your * general small business pool is that pool’s * closing pool balance for the previous income year, reduced or increased by any adjustment required under section 328 ‑ 225 (about change in the business use of an asset). Note: You continue to deduct amounts using your general small business pool even if you are not a small business entity, or do not choose to use this Subdivision, for a later income year: see section 328 ‑ 220. (3) However, if: (a) you are not a * small business entity for an income year or you do not choose to use this Subdivision for that year; but (b) you are a small business entity for a later income year and you choose to use this Subdivision for the later year; the opening pool balance of your * general small business pool includes the sum of the * taxable purpose proportions of the * adjustable values of * depreciating assets allocated to the pool under subsection 328 ‑ 185(3) for that year.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7)

s 328-200 — Closing pool balance

You work out the closing pool balance of your * general small business pool for an income year in this way: Method statement Step 1. Add to the * opening pool balance of the pool for the income year: (a) the sum of the * taxable purpose proportions of the * adjustable values of * depreciating assets you started to use, or have * installed ready for use, for a * taxable purpose during the income year and that are allocated to the pool; and (b) the taxable purpose proportion of any cost addition amounts (see subsection 328 ‑ 190(3)) for the income year for assets allocated to the pool. Step 2. Subtract from the step 1 amount: (a) the * taxable purpose proportions of the * termination values of * depreciating assets allocated to the pool and for which a * balancing adjustment event occurred during the income year; and (b) your deduction under subsection 328 ‑ 190(1) for the pool for the income year; and (c) your deductions under subsection 328 ‑ 190(2) for * depreciating assets you started to use, or have * installed ready for use, for a * taxable purpose during the income year and that are allocated to the pool; and (d) your deductions under subsection 328 ‑ 190(3) for the income year for cost addition amounts for assets allocated to the pool. Step 3. The result is the closing pool balance of the pool for the income year. Note: A transferor does not subtract anything for certain balancing adjustment events under paragraph (a) of step 2 if roll ‑ over relief under section 40 ‑ 340 is chosen: see sections 328 ‑ 243 and 328 ‑ 245.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9)

s 328-205 — Estimate of taxable use

(1) You must, for the first income year for which you are, or last were, a * small business entity, make a reasonable estimate for that year of the proportion you will use, or have * installed ready for use, each * depreciating asset that you * held just before, and at the start of, that year for a * taxable purpose if: (a) the asset has not previously been allocated to your * general small business pool; and (b) you have started to use it, or have it installed ready for use, for a taxable purpose; and (c) you have chosen to calculate your deductions for it under this Subdivision. Note 1: That proportion will be 100% for an asset that you expect to use, or have installed ready for use, solely for a taxable purpose. Note 2: Your estimate will be zero for an income year if another provision of this Act denies a deduction for that year: see section 328 ‑ 230. Note 3: This subsection does not apply to a transferee for certain assets if roll ‑ over relief under section 40 ‑ 340 is chosen: see sections 328 ‑ 243 and 328 ‑ 257. (2) You must also make this estimate for each * depreciating asset that you * hold and start to use, or have * installed ready for use, for a * taxable purpose during an income year for which you are a * small business entity and you choose to use this Subdivision. You must make the estimate for the income year in which you start to use it, or have it installed ready for use, for such a purpose. (3) The taxable purpose proportion of a * depreciating asset’s * adjustable value, or of an amount included in the second element of its * cost, is that part of that amount that represents: (a) the proportion you estimated under subsection (1) or (2); or (b) if you have had to make an adjustment under section 328 ‑ 225 for the asset—the proportion most recently applicable to the asset under that section. Note: An amount included in the second element of the cost of a depreciating asset is referred to in this Division as a cost addition amount: see subsection 328 ‑ 190(3). (4) The taxable purpose proportion of a * depreciating asset’s * termination value is that part of that amount that represents: (a) if you have not had to make an adjustment under section 328 ‑ 225 for the asset—the proportion you estimated under subsection (1) or (2); or (b) if you have had to make at least one such adjustment—the average of: (i) the proportion you estimated under subsection (1) or (2); and (ii) the proportion applicable to the asset for each of the 3 income years you * held the asset after the one in which the asset was allocated to the pool. Example: When Bria’s computer was allocated to her general small business pool for the 2012 ‑ 13 income year, she estimated that it would be used 50% for her florist business. Due to increasing business, Bria estimates the computer’s use to be 70% for the 2013 ‑ 14 year, and 90% for the 2014 ‑ 15 year. She makes an adjustment under section 328 ‑ 225 for both those years. Bria sells the computer for $1,000 at the start of the 2016 ‑ 17 income year. She must now average the business use estimates for the computer for the year it was allocated to the pool and the next 3 years to work out the taxable purpose proportion of its termination value. The average is worked out as follows: 50% (original estimate); plus 70% (2013 ‑ 14 estimate); plus 90% (2014 ‑ 15 estimate); plus 90% (no change on previous year); =300% ÷ 4 = 75% The taxable purpose proportion of the computer’s termination value is, therefore: 75% of $1,000 = $750

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7)

s 328-210 — Low pool value

(1) Your deduction for a * general small business pool for an income year is the amount worked out under subsection (2) (instead of an amount calculated under section 328 ‑ 190) if that amount is less than $1,000 but more than zero. Note 1: See section 328 ‑ 215 for the result when the amount is less than zero. Note 2: This threshold may be affected by section 328 ‑ 180 (about temporary increased access to accelerated depreciation) or 328 ‑ 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 . (2) The amount is the sum of: (a) the pool’s * opening pool balance for the income year; and (b) the * taxable purpose proportion of the * adjustable value of each * depreciating asset you started to use, or have * installed ready for use, for a * taxable purpose during the income year and that is allocated to the pool; and (c) the taxable purpose proportion of any cost addition amounts (see subsection 328 ‑ 190(3)) for the income year for assets allocated to the pool; less the sum of the taxable purpose proportion of the * termination values of depreciating assets allocated to the pool and for which a * balancing adjustment event occurred during the income year. (3) In that case, the * closing pool balance of the pool for that income year then becomes zero. Example: Amanda’s Graphics is a small business entity for the 2014 ‑ 15 income year and chooses to use this Subdivision for that year. The business has an opening pool balance of $8,500 for its general small business pool for that year. During that year, Amanda acquired a new computer for $2,000. The taxable purpose proportion of its adjustable value is: $2,000 x 80% business use estimate = $1,600 Amanda also sold her business car for $9,600 during that year. The car was used 100% in the business. To work out whether she can deduct an amount under this section, Amanda uses this calculation: $8,500 + $1,600 ‑ $9,600 = $500 Because the result is less than $1,000, Amanda can deduct the $500 for the income year. The pool’s closing balance for the year is zero.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9) | Amended by No 67 of 2015, effective Sch 1 (items 1–8) and Sch 2: 22 June 2015 (s 2(1) items 2, 5) Sch 1 (items 10–14): repealed before commencing (s 2(1) items 3, 4) | Amended by No 56 of 2017, effective Sch 1 (items 1–7): 1 July 2017 (s 2(1) item 2) | Amended by No 109 of 2018, effective Sch 1 (items 1–7): 1 Oct 2018 (s 2(1) item 2) | Amended by No 51 of 2019, effective Sch 1 (items 1–7) and Sch 2: 1 July 2019 (s 2(1) item 1) | Amended by No 22 of 2020, effective Sch 1 (items 1–14), Sch 2 (items 1–6) and Sch 4 (items 12–22): 25 Mar 2020 (s 2(1) items 2, 4) Sch 3 (items 1, 2): 24 Mar 2020 (s 2(1) item 3) | Amended by No 61 of 2020, effective Sch 2: 1 July 2020 (s 2(1) item 5) Sch 4 (items 1–17): 20 June 2020 (s 2(1) item 6) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 328-215 — Disposal etc. of depreciating assets

(1) This section sets out adjustments you may have to make if a * balancing adjustment event occurs for a * depreciating asset for which you calculate your deductions under this Subdivision. (2) If the asset is allocated to your * general small business pool and: (a) the * closing pool balance of the pool for the income year in which the event occurred is less than zero; or (b) the amount worked out under subsection 328 ‑ 210(2) for that income year is less than zero; the amount by which that balance or amount is less than zero is included in your assessable income for that year. (3) In that case, the * closing pool balance of the pool for that income year then becomes zero. (4) If the asset was one for which you deducted an amount under section 328 ‑ 180 (about assets costing less than $1,000), you include the * taxable purpose proportion of the asset’s * termination value in your assessable income.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9)

s 328-220 — What happens if you are not a small business entity or do not choose to use this Subdivision for an income year

(1) If you are not a * small business entity for an income year or you do not choose to use this Subdivision for that year, this Subdivision continues to apply to your * general small business pool for that year and later income years. (2) However, * depreciating assets you started to use, or have * installed ready for use, for a * taxable purpose during an income year for which you are not a * small business entity or do not choose to use this Subdivision cannot be allocated to your * general small business pool under this Subdivision until an income year for which you are a small business entity and you choose to use this Subdivision. (3) This section applies to a transferee referred to in subsection 328 ‑ 243(1) or (1A) who: (a) was not a * small business entity for the income year in which the relevant * balancing adjustment events occurred; or (b) did not choose to use this Subdivision for that year; as if the transferee had been a small business entity for an earlier income year and had chosen to use this Subdivision for the earlier year. This rule applies even if roll ‑ over relief is not chosen.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Repealed and substituted by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7)

s 328-225 — Change in business use

(1) You must, for each income year (the present year ) after the year in which a * depreciating asset is allocated to a pool, make a reasonable estimate of the proportion you use the asset, or have it * installed ready for use, for a * taxable purpose in that year. Note: This section is modified in its application to a transferee for certain assets if roll ‑ over relief under section 40 ‑ 340 is chosen: see sections 328 ‑ 243 and 328 ‑ 257. (1A) You must make an adjustment for the present year if your estimate for that year under subsection (1) is different by more than 10 percentage points from: (a) your original estimate (see section 328 ‑ 205); or (b) if you have made an adjustment under this section—the most recent estimate you made under subsection (1) that resulted in an adjustment under this section. (2) The adjustment is made to the * opening pool balance of the * general small business pool to which the asset was allocated, and it must be made before you calculate your deduction under this Subdivision for the present year. Note: The opening pool balance will be reduced if the adjustment worked out under subsection (3) is a negative amount. It will be increased if the adjustment is positive. (3) The adjustment is: where: asset value is: (a) for a * depreciating asset you started to use, or have * installed ready for use, for a * taxable purpose during an income year for which you were a * small business entity and chose to use this Subdivision—the asset’s * adjustable value at that time; or (b) for an asset you started to use, or have installed ready for use, for a taxable purpose during an income year for which you were not a * small business entity or did not choose to use this Subdivision—its adjustable value at the start of the income year for which it was allocated to a * general small business pool; increased by any amounts included in the second element of the asset’s * cost from the time mentioned in paragraph (a) or (b) until the beginning of the income year for which you are making the adjustment. last estimate is: (a) your original estimate of the proportion you use, or have * installed ready for use, a * depreciating asset for a * taxable purpose (see section 328 ‑ 205); or (b) if you have made an adjustment under this section—the latest estimate taken into account under this section. present year estimate is your reasonable estimate of the proportion you use the asset, or have it * installed ready for use, for a * taxable purpose during the present year. reduction factor is the number worked out under subsection (4). (4) The reduction factor in the formula in subsection (3) is: (a) for a * depreciating asset you started to use, or have * installed ready for use, for a * taxable purpose during an income year for which you were a * small business entity and chose to use this Subdivision: (b) for an asset you started to use, or have * installed ready for use, for a taxable purpose during an income year for which you were not a * small business entity or did not choose to use this Subdivision: where: n is the number of income years (counting part of an income year as a whole year) before the present year for which you have deducted or can deduct an amount for the * depreciating asset under this Subdivision. rate is the rate applicable to the pool to which the asset is allocated. Note: The reduction factor for a depreciating asset in your general small business pool which you started to use, or have installed ready for use, for a taxable purpose during an income year for which you were not a small business entity or did not choose to use this Subdivision is: 0.7 for the income year after it is allocated to the pool; and 0.49 for the income year after that; and 0.343 for the income year after that. The reduction factor for a depreciating asset in your general small business pool which you started to use, or have installed ready for use, for a taxable purpose during an income year for which you were a small business entity and chose to use this Subdivision is: 0.85 for the income year after it is allocated to the pool; and 0.595 for the income year after that; and 0.417 for the income year after that. Exceptions (5) However: (a) you do not need to make an estimate or an adjustment under this section for a * depreciating asset for an income year that is at least 3 income years after the income year in which the asset was allocated; and (b) you cannot make an adjustment for a depreciating asset if your reasonable estimate of the proportion you use a depreciating asset, or have it * installed ready for use, for a * taxable purpose changes in a later income year by the 10 percentage points mentioned in subsection (1) or less.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 119 of 2002, effective s 4, Sch 1 (items 2–5, 8), Sch 2 and Sch 3 (item 100): 2 Dec 2002 (s 2(1) items 1, 2, 10) Sch 1 (items 6, 7): ( see Sch 10 (item 242) of Act No. 41, 2005) Sch 3 (items 4–78): 30 June 2001 (s 2(1) items 3–8) | Amended by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 8 of 2010, effective Sch 1 (item 33) and Sch 5 (item 137(a)): 1 Mar 2010 (s 2(1) items 4, 38) | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7)

s 328-230 — Estimate where deduction denied

This Subdivision applies to you as if you had estimated that you will not use, or have * installed ready for use, a * depreciating asset at all for a * taxable purpose during an income year if a provision of this Act outside this Division denies a deduction for the asset for that year.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1))

s 328-235 — Interaction with Divisions 85 and 86

(1) Despite sections 85 ‑ 10 and 86 ‑ 60, if you are a * small business entity for an income year you can deduct amounts for * depreciating assets under this Subdivision. (2) However, you cannot deduct an amount for a * car under this Subdivision if, had you not been a * small business entity and chosen to use this Subdivision, sections 86 ‑ 60 and 86 ‑ 70 would have prevented you deducting an amount for it.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 80 of 2007, effective 21 June 2007

s 328-243 — Roll ‑ over relief

(1A) There is roll ‑ over relief under subsection 40 ‑ 340(1) (as affected by subsection 40 ‑ 340(2)) if: (a) * balancing adjustment events occur for * depreciating assets on a day (the BAE day ) because an entity (the transferor ) disposes of the assets in an income year to another entity (the transferee ); and (b) the disposal involves a * CGT event; and (c) the conditions in item 1, 2, 3 or 8 of the table in subsection 40 ‑ 340(1) are satisfied; and (d) deductions for the assets are calculated under this Subdivision; and (e) the transferor and the transferee jointly choose the roll ‑ over relief; and (f) the condition in subsection (2) is met. (1) Roll ‑ over relief can be chosen under subsection 40 ‑ 340(3) if: (a) * balancing adjustment events occur for * depreciating assets on a day (the BAE day ) because of subsection 40 ‑ 295(2); and (b) deductions for the assets are calculated under this Subdivision; and (c) the entity or entities that had an interest in the assets just before the balancing adjustment events occurred (the transferor ) and the entity or entities that have an interest in the assets just after the events occurred (the transferee ) jointly choose the roll ‑ over relief; and (d) the condition in subsection (2) is met. (2) All of the * depreciating assets that, just before the * balancing adjustment events occurred, were: (a) * held by the transferor; and (b) allocated to the transferor’s * general small business pool; must be held by the transferee just after those events occurred.

Amendment history: Inserted by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)

s 328-245 — Consequences of roll ‑ over

(1) The transferor does not subtract anything for the * balancing adjustment events under: (a) paragraph (a) of step 2 in the method statement in section 328 ‑ 200; or (b) subsection 328 ‑ 210(2). (2) Subsection 328 ‑ 215(4) does not apply to the * balancing adjustment events for the transferor. (3) A choice made by the transferor for a * depreciating asset under subsection 328 ‑ 175(3) (about primary production assets) applies to the transferee as if it had been made by the transferee. (4) Sections 328 ‑ 247 to 328 ‑ 257 have effect.

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

s 328-247 — Pool deductions

(1) The amount that can be deducted for the transferor’s * general small business pool for the income year (the BAE year ) in which the * balancing adjustment events occurred under subsection 328 ‑ 190(1) or section 328 ‑ 210 for the BAE year is split equally between: (a) the transferor and the transferee; or (b) if there are 2 or more occurrences of balancing adjustment events for relevant entities for the BAE year and a roll ‑ over is chosen for each occurrence—the entities concerned. Example: John and Dave operate a dry cleaning business in partnership (the transferor). The transferor is a small business entity for the relevant income year and has chosen to use this Subdivision for that year. On the 90th day of an income year, Jonathan joins the partnership. The new partnership (the transferee) is a small business entity for the income year and chooses to use this Subdivision for that year. Had there been no partnership change, a deduction of $6,600 would have been available for the transferor’s general small business pool. The transferor and transferee jointly choose the roll ‑ over. The deduction available to the transferor and the transferee for the pool under section 328 ‑ 210 is $3,300 each. (2) The transferor cannot deduct any amount for the transferor’s * general small business pool for an income year after the BAE year.

Amendment history: Inserted by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7)

s 328-250 — Deductions for assets first used in BAE year

(1) This section applies in working out the amount that the transferor or transferee can deduct for the BAE year under subsection 328 ‑ 180(1) (assets costing less than $1,000) or subsection 328 ‑ 190(2) (assets that will be pooled) for a * depreciating asset that the transferor or transferee started to use, or have * installed ready for use, for a * taxable purpose during the BAE year. Note: This threshold may be affected by section 328 ‑ 180 (about temporary increased access to accelerated depreciation) or 328 ‑ 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 . Asset first used by transferor (2) If the asset was first used or * installed ready for use by the transferor, the amount that can be deducted under subsection 328 ‑ 180(1) or 328 ‑ 190(2) for the asset for the BAE year is split equally between: (a) the transferor and the transferee; or (b) if there are 2 or more occurrences of * balancing adjustment events for relevant entities for the BAE year and a roll ‑ over is chosen for each occurrence—the entities concerned. Asset first used by transferee (3) If the asset was first used or * installed ready for use by the transferee: (a) the transferor cannot deduct anything for the asset for the BAE year; and (b) the amount that can be deducted under subsection 328 ‑ 180(1) or 328 ‑ 190(2) for the asset for the BAE year is: (i) deductible by the transferee; or (ii) if there are 2 or more occurrences of * balancing adjustment events for relevant entities for the BAE year and a roll ‑ over is chosen for each occurrence—split equally between the entities concerned (except ones that did not use the asset or have it installed ready for use). Example: To continue the example from section 328 ‑ 247, the transferee buys an asset on the 150th day of the BAE year for $800. On the 250th day of the year, Evan joins the transferee partnership. The new transferee partnership is a small business entity for the BAE year, and chooses to use this Subdivision for that year, and a further roll ‑ over is chosen. The original transferor cannot deduct anything for the asset. The original transferee (now a transferor) and the new transferee can deduct $400 each. Special rule for assets costing less than $1,000 (4) Subsection (5) applies if: (a) the transferor started to use, or have * installed ready for use, an asset of a kind mentioned in paragraph 328 ‑ 180(1)(b) during the BAE year; and (b) a * balancing adjustment event occurs for that asset before the BAE day. Note: This threshold may be affected by section 328 ‑ 180 (about temporary increased access to accelerated depreciation) or 328 ‑ 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 . (5) The transferee cannot deduct anything for the asset for the BAE year, and subsection 328 ‑ 215(4) does not apply to the transferee in relation to the asset.

Amendment history: Inserted by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9) | Amended by No 67 of 2015, effective Sch 1 (items 1–8) and Sch 2: 22 June 2015 (s 2(1) items 2, 5) Sch 1 (items 10–14): repealed before commencing (s 2(1) items 3, 4) | Amended by No 56 of 2017, effective Sch 1 (items 1–7): 1 July 2017 (s 2(1) item 2) | Amended by No 109 of 2018, effective Sch 1 (items 1–7): 1 Oct 2018 (s 2(1) item 2) | Amended by No 51 of 2019, effective Sch 1 (items 1–7) and Sch 2: 1 July 2019 (s 2(1) item 1) | Amended by No 22 of 2020, effective Sch 1 (items 1–14), Sch 2 (items 1–6) and Sch 4 (items 12–22): 25 Mar 2020 (s 2(1) items 2, 4) Sch 3 (items 1, 2): 24 Mar 2020 (s 2(1) item 3) | Amended by No 61 of 2020, effective Sch 2: 1 July 2020 (s 2(1) item 5) Sch 4 (items 1–17): 20 June 2020 (s 2(1) item 6) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 328-253 — Deductions for cost addition amounts

(1) This section applies in working out the amount that the transferor or transferee can deduct for the BAE year under subsection 328 ‑ 180(2) or 328 ‑ 190(3) for expenditure incurred by the transferor or transferee during the BAE year that is included in the second element of the * cost of a depreciating asset. Expenditure incurred by transferor (2) If the expenditure was incurred by the transferor, the amount that can be deducted under subsection 328 ‑ 180(2) or 328 ‑ 190(3) for the BAE year is split equally between: (a) the transferor and the transferee; or (b) if there are 2 or more occurrences of * balancing adjustment events for relevant entities for the BAE year and a roll ‑ over is chosen for each occurrence—the entities concerned. Expenditure incurred by transferee (3) If the expenditure was incurred by the transferee: (a) the transferor cannot deduct anything for the expenditure for the BAE year; and (b) the amount that can be deducted under subsection 328 ‑ 180(2) or 328 ‑ 190(3) for the expenditure for the BAE year is: (i) deductible by the transferee; or (ii) if there are 2 or more occurrences of * balancing adjustment events for relevant entities for the BAE year and a roll ‑ over is chosen for each occurrence—split equally between the entities concerned. Special rule for expenditure on assets costing less than $1,000 (4) Subsection (5) applies if: (a) the transferor incurred the expenditure in relation to an asset of a kind mentioned in paragraph 328 ‑ 180(1)(b); and (b) a * balancing adjustment event occurs for that asset before the BAE day. Note: This threshold may be affected by section 328 ‑ 180 (about temporary increased access to accelerated depreciation) or 328 ‑ 181 (about temporary full expensing) of the Income Tax (Transitional Provisions) Act 1997 . (5) The transferee cannot deduct anything for the expenditure for the BAE year, and subsection 328 ‑ 215(4) does not apply to the transferee in relation to the asset.

Amendment history: Inserted by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9) | Amended by No 67 of 2015, effective Sch 1 (items 1–8) and Sch 2: 22 June 2015 (s 2(1) items 2, 5) Sch 1 (items 10–14): repealed before commencing (s 2(1) items 3, 4) | Amended by No 56 of 2017, effective Sch 1 (items 1–7): 1 July 2017 (s 2(1) item 2) | Amended by No 109 of 2018, effective Sch 1 (items 1–7): 1 Oct 2018 (s 2(1) item 2) | Amended by No 51 of 2019, effective Sch 1 (items 1–7) and Sch 2: 1 July 2019 (s 2(1) item 1) | Amended by No 22 of 2020, effective Sch 1 (items 1–14), Sch 2 (items 1–6) and Sch 4 (items 12–22): 25 Mar 2020 (s 2(1) items 2, 4) Sch 3 (items 1, 2): 24 Mar 2020 (s 2(1) item 3) | Amended by No 61 of 2020, effective Sch 2: 1 July 2020 (s 2(1) item 5) Sch 4 (items 1–17): 20 June 2020 (s 2(1) item 6) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 328-255 — Closing pool balance etc. below zero

(1) This section applies if: (a) the * closing pool balance of the transferor’s * general small business pool for the BAE year is less than zero; or (b) the amount worked out under subsection 328 ‑ 210(2) for the pool for the BAE year is less than zero; because a * balancing adjustment event occurred for an asset allocated to that pool during that year. (2) The amount included in assessable income under subsection 328 ‑ 215(2) is split equally between: (a) the transferor and transferee; or (b) if there are 2 or more occurrences of * balancing adjustment events for relevant entities for the BAE year and a roll ‑ over is chosen for each occurrence—the entities concerned.

Amendment history: Inserted by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Sch 1 (items 1–6, 10), Sch 2 (items 1–64, 67–75) and Sch 3: 29 Mar 2012 (s 2(1) items 2–5) Sch 5: 1 July 2013 (s 2(1) item 7)

s 328-257 — Taxable use

(1) This section applies to * depreciating assets (the previously held assets ) that were * held by the transferor just before the * balancing adjustment events occurred. (2) Subsection 328 ‑ 205(1) (about estimates of taxable use) does not apply to previously held assets in the hands of the transferee for the BAE year. Instead, the transferee uses for the BAE year: (a) the estimate made by the transferor under that subsection for the asset; or (b) if the transferor had made one or more estimates for the asset under subsection 328 ‑ 225(1) that resulted in an adjustment under section 328 ‑ 225 (about change in business use)—that estimate or the most recent of those estimates. (3) Section 328 ‑ 225 applies to the transferee for each previously held asset for income years after the BAE year as if: (a) the transferee had * held the asset during the period that the transferor held it; and (b) estimates applicable to the transferor for the asset under that section were also applicable to the transferee.

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

s 328-280 — What this Subdivision is about

Small and medium business entities can choose not to account for their trading stock in some circumstances. This Subdivision modifies the rules in Division 70 about trading stock for those entities. Table of sections Operative provisions 328 ‑ 285 Trading stock for small and medium business entities 328 ‑ 295 Value of trading stock on hand

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 328-285 — Trading stock for small and medium business entities

(1) You can choose not to account for changes in the * value of your * trading stock for an income year if: (a) you are a * small business entity, or an entity covered by subsection (2), for that year; and (b) the difference between the value of all your trading stock on hand at the start of that year and the value you reasonably estimate of all your trading stock on hand at the end of that year is not more than $5,000. Note 1: As a result, sections 70 ‑ 35 and 70 ‑ 45 (about comparing the value of each item of trading stock on hand at the start and end of an income year) will not apply to you for the income year. Note 2: When making a reasonable estimate of the value of trading stock on hand: (a) special valuation rules may be used, for example, obsolete stock, natural increase of live stock, horse breeding stock; and (b) the estimated value disregards an amount equal to the amount of input tax credits (if any) to which you would be entitled for an item if the acquisition of the item had been solely for a creditable purpose: see subsection 70 ‑ 45(1A). Note 3: If you choose to account for changes in the value of your trading stock for an income year, you will have to do a stocktake and account for the change in the value of all your trading stock: see Subdivision 70 ‑ C. (2) An entity is covered by this subsection for an income year if: (a) the entity is not a * small business entity for the income year; and (b) the entity would be a small business entity for the income year if: (i) each reference in Subdivision 328 ‑ C (about what is a small business entity) to $10 million were instead a reference to $50 million; and (ii) the reference in paragraph 328 ‑ 110(5)(b) to a small business entity were instead a reference to an entity covered by this subsection.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 15 of 2017, effective Sch 1 (item 1): 1 Mar 2017 (s 2(1) item 2) Sch 2 and Sch 4 (items 26–69, 71–83): 1 Apr 2017 (s 2(1) items 3, 8, 10) Sch 4 (item 70): 19 Mar 2015 (s 2(1) item 9) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 328-295 — Value of trading stock on hand

(1) If you make a choice under section 328 ‑ 285 for an income year, the * value of all your * trading stock on hand at the start of the income year is: (a) the same amount as was taken into account under this Act at the end of the previous income year; or (b) zero if no item of trading stock was taken into account under this Act at the end of the previous income year. Note: The amount taken into account at the end of the previous income year is worked out under either section 70 ‑ 45 or subsection (2) of this section. (2) If you make a choice under section 328 ‑ 285 for an income year, this Act applies to you as if the * value of all your * trading stock on hand at the end of the year were equal to the value of all your trading stock on hand at the start of the year. Note: If you do not make a choice under section 328 ‑ 285, the value of trading stock on hand at the end of the year is worked out using section 70 ‑ 45. Example: Angela operates a riding school, and also sells riding gear. Her business is a small business entity for the 2008 ‑ 09 income year and makes a choice under section 328 ‑ 285 for that year. At the start of the 2008 ‑ 09 income year, the opening value of Angela’s trading stock is $30,000. Using her reliable inventory system, she estimates the closing value to be $34,000. The closing value for the 2008 ‑ 09 income year, and the opening value for the 2009 ‑ 10 income year, will be $30,000.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 119 of 2002, effective s 4, Sch 1 (items 2–5, 8), Sch 2 and Sch 3 (item 100): 2 Dec 2002 (s 2(1) items 1, 2, 10) Sch 1 (items 6, 7): ( see Sch 10 (item 242) of Act No. 41, 2005) Sch 3 (items 4–78): 30 June 2001 (s 2(1) items 3–8) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 80 of 2007, effective 21 June 2007

s 328-350 — What this Subdivision is about

You may be entitled to a tax offset if you are an individual: (a) who is a small business entity; or (b) whose assessable income includes a share of the net small business income of an unincorporated small business entity; or (c) whose assessable income includes an amount because you are a partner in a partnership, or a beneficiary in a trust, that is a small business entity. In working out whether you are or another entity is a small business entity, a special $5 million turnover threshold applies (see section 328 ‑ 357). Table of sections Operative provisions 328 ‑ 355 Entitlement to the small business income tax offset 328 ‑ 357 Special meaning of small business entity for the purposes of this Subdivision—$5 million turnover threshold 328 ‑ 360 Amount of your tax offset 328 ‑ 365 Net small business income 328 ‑ 370 Relevant attributable deductions 328 ‑ 375 Modification if you are under 18 years old

Amendment history: Inserted by No 114 of 2015, effective Sch 1 and 2: 26 Aug 2015 (s 2(1) item 1) | Amended by No 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1) | Repealed and substituted by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19)

s 328-355 — Entitlement to the small business income tax offset

You are entitled to a * tax offset for an income year if you are an individual: (a) who is a * small business entity for the income year; or (b) whose assessable income for the income year includes an amount that is a share of the * net small business income, for the income year, of a small business entity that is not a * corporate tax entity; or (c) whose assessable income for the income year includes an amount that: (i) would not have been so included if you had not been a partner in a partnership, or a beneficiary in a trust, that is a small business entity for the income year; and (ii) is not included in the partnership’s or trust’s assessable income for an income year; and (iii) would have formed part of the partnership’s or trust’s net small business income for an income year if the amount were included in the partnership’s or trust’s assessable income for an income year. Note: This section does not apply to an individual in his or her capacity as the trustee of a trust (see subsection 960 ‑ 100(4)).

Amendment history: Inserted by No 114 of 2015, effective Sch 1 and 2: 26 Aug 2015 (s 2(1) item 1) | Amended by No 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1)

s 328-357 — Special meaning of small business entity for the purposes of this Subdivision—$5 million turnover threshold

For the purposes of this Subdivision, in working out whether you are a * small business entity for an income year, assume that each reference in section 328 ‑ 110 to $10 million were a reference to $5 million.

Amendment history: Inserted by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19)

s 328-360 — Amount of your tax offset

(1) The amount of your * tax offset is equal to 16% of the following: where: your total net small business income for the income year means so much of the sum of the following as does not exceed your taxable income for the income year: (a) your * net small business income for the income year, if you are a * small business entity for the income year; (b) an amount referred to in paragraph 328 ‑ 355(b) or (c) that is included in your assessable income for the income year, reduced (but not below zero) by your deductions to the extent that they are attributable to that amount and covered by section 328 ‑ 370. Note: If you are under 18 years old, your total net small business income will probably be worked out under section 328 ‑ 375. (2) However, the amount of your * tax offset is $1,000 if the amount worked out under subsection (1) exceeds $1,000. Note: Your tax offset is capped at $1,000 regardless of the number of small business entities that cause you to be entitled to the tax offset for the income year.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Repealed by No 80 of 2007, effective 21 June 2007 | Inserted by No 114 of 2015, effective Sch 1 and 2: 26 Aug 2015 (s 2(1) item 1) | Amended by No 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1) | Amended by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19)

s 328-365 — Net small business income

(1) A * small business entity’s net small business income for an income year is the result of: (a) working out the entity’s assessable income for the income year to the extent that it relates to the entity carrying on a * business, but disregarding: (i) any * net capital gain; and (ii) any * personal services income not produced from conducting a * personal services business; and (b) subtracting the entity’s deductions to the extent that they are attributable to that assessable income and covered by section 328 ‑ 370. (2) However, the entity’s net small business income for the income year is zero if that result is less than zero.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Repealed by No 80 of 2007, effective 21 June 2007 | Inserted by No 114 of 2015, effective Sch 1 and 2: 26 Aug 2015 (s 2(1) item 1)

s 328-370 — Relevant attributable deductions

For the purposes of this Subdivision, this section covers all attributable deductions other than any under: (a) section 25 ‑ 5 (about tax ‑ related expenses); or (b) Division 30 (about gifts or contributions); or (c) Subdivision 290 ‑ C (about personal superannuation contributions).

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Repealed by No 80 of 2007, effective 21 June 2007 | Inserted by No 114 of 2015, effective Sch 1 and 2: 26 Aug 2015 (s 2(1) item 1)

s 328-375 — Modification if you are under 18 years old

(1) Despite subsection 328 ‑ 360(1), your total net small business income for the income year is worked out under this section if you are a prescribed person (within the meaning of section 102AC of the Income Tax Assessment Act 1936 ) for the income year. (2) Your total net small business income for the income year is the result of: (a) working out your business income (within the meaning of subsection 102AE(5) of that Act) for the income year to the extent that it relates to you carrying on: (i) a * business as a * small business entity for the income year; or (ii) a business as a partner in a partnership, if the partnership is a small business entity for the income year; and (b) subtracting your deductions, and each partnership’s deductions, to the extent that they are attributable to that business income and covered by section 328 ‑ 370. (3) However, your total net small business income for the income year is: (a) zero if that result is less than zero; or (b) equal to your taxable income for the income year if that result exceeds that taxable income.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Repealed by No 80 of 2007, effective 21 June 2007 | Inserted by No 114 of 2015, effective Sch 1 and 2: 26 Aug 2015 (s 2(1) item 1)

s 328-420 — What this Subdivision is about

There are tax ‑ neutral consequences for a small business entity that restructures the ownership of the assets of the business, without changing the ultimate economic ownership of the assets. Table of sections Object of this Subdivision 328 ‑ 425 Object of this Subdivision Requirements for a roll ‑ over under this Subdivision 328 ‑ 430 When a roll ‑ over is available 328 ‑ 435 Genuine restructures—safe harbour rule 328 ‑ 440 Ultimate economic ownership—discretionary trusts 328 ‑ 445 Residency requirement Consequences of a roll ‑ over under this Subdivision 328 ‑ 450 Small business transfers not to affect income tax positions 328 ‑ 455 Effect of small business restructures on transferred cost of assets 328 ‑ 460 Effect of small business restructures on acquisition times of pre ‑ CGT assets 328 ‑ 465 New membership interests as consideration for transfer of assets 328 ‑ 470 Membership interests affected by transfers of assets 328 ‑ 475 Small business restructures involving assets already subject to small business roll ‑ over

Amendment history: Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)

s 328-425 — Object of this Subdivision

The object of this Subdivision is to facilitate flexibility for owners of small business entities to restructure their businesses, and the way their business assets are held, while disregarding tax gains and losses that would otherwise arise.

Amendment history: Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)

s 328-430 — When a roll ‑ over is available

(1) A roll ‑ over under this Subdivision is available in relation to an asset that, under a transaction, an entity (the transferor ) transfers to one or more other entities ( transferees ) if: (a) the transaction is, or is a part of, a genuine restructure of an ongoing * business; and (b) each party to the transfer is an entity to which any one or more of the following applies: (i) it is a * small business entity for the income year during which the transfer occurred; (ii) it has an * affiliate that is a small business entity for that income year; (iii) it is * connected with an entity that is a small business entity for that income year; (iv) it is a partner in a partnership that is a small business entity for that income year; and (c) the transaction does not have the effect of materially changing: (i) which individual has, or which individuals have, the ultimate economic ownership of the asset; and (ii) if there is more than one such individual—each such individual’s share of that ultimate economic ownership; and (d) the asset is a * CGT asset (other than a * depreciating asset) that is, at the time the transfer takes effect: (i) if subparagraph (b)(i) applies—an * active asset; or (ii) if subparagraph (b)(ii) or (iii) applies—an active asset in relation to which subsection 152 ‑ 10(1A) is satisfied in that income year, or would be satisfied in that income year if paragraph 152 ‑ 10(1AA)(b) were disregarded; or (iii) if subparagraph (b)(iv) applies—an active asset and an interest in an asset of the partnership referred to in that subparagraph; and (e) the transferor and each transferee meet the residency requirement in section 328 ‑ 445 for an entity; and (f) the transferor and each transferee choose to apply a roll ‑ over under this Subdivision in relation to the assets transferred under the transaction. Note: The roll ‑ over of a depreciating asset transferred in the restructuring of a small business is addressed in item 8 of the table in subsection 40 ‑ 340(1). (2) However, a roll ‑ over under this Subdivision is not available if the transferor, or any transferee, is either an * exempt entity or a * complying superannuation entity.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Repealed by No 80 of 2007, effective 21 June 2007 | Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1) | Amended by No 64 of 2020, effective Sch 3 (items 72–122): 1 July 2020 (s 2(1) item 5) Sch 3 (items 228–239, 325, 326): 1 Oct 2020 (s 2(1) item 6) Sch 3 (items 327–330): 1 July 2017 (s 2(1) item 7)

s 328-435 — Genuine restructures—safe harbour rule

For the purposes of paragraph 328 ‑ 430(1)(a) (but without limiting that paragraph), a transaction is, or is a part of, a genuine restructure of an ongoing * business if, in the 3 year period after the transaction takes effect: (a) there is no change in ultimate economic ownership of any of the significant assets of the business (other than * trading stock) that were transferred under the transaction; and (b) those significant assets continue to be * active assets; and (c) there is no significant or material use of those significant assets for private purposes.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Repealed by No 80 of 2007, effective 21 June 2007 | Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)

s 328-440 — Ultimate economic ownership—discretionary trusts

For the purposes of paragraph 328 ‑ 430(1)(c), a transaction does not have the effect of changing the ultimate economic ownership of an asset, or any individual’s share of that ultimate economic ownership, if: (a) either or both of the following applies: (i) just before the transaction took effect, the asset was included in the property of a * non ‑ fixed trust that was a * family trust; (ii) just after the transaction takes effect, the asset is included in the property of a non ‑ fixed trust that is a family trust; and (b) every individual who, just before the transfer took effect, had the ultimate economic ownership of the asset was a member of the family group (within the meaning of Schedule 2F to the Income Tax Assessment Act 1936 ) relating to the trust or trusts referred to in paragraph (a); and (c) every individual who, just after the transfer takes effect, has the ultimate economic ownership of the asset is a member of that family group.

Amendment history: Inserted by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Repealed by No 80 of 2007, effective 21 June 2007 | Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)

s 328-445 — Residency requirement

For the purposes of paragraph 328 ‑ 430(1)(e), the residency requirement for an entity is that: (a) if the entity is an individual or a company—the entity is an Australian resident; or (b) if the entity is a trust—it is a * resident trust for CGT purposes; or (c) if the entity is a partnership (other than a * corporate limited partnership)—at least one of the partners is an Australian resident; or (d) if the entity is a corporate limited partnership—it is, under section 94T of the Income Tax Assessment Act 1936 , a resident for the purposes of the * income tax law.

Amendment history: Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)

s 328-450 — Small business transfers not to affect income tax positions

(1) Except as provided by this Subdivision, a transfer of an asset has no direct consequences under the * income tax law if: (a) the transfer occurs under a transaction in relation to which section 328 ‑ 430 applies; and (b) a roll ‑ over under this Subdivision is available under that section in relation to the asset. Example: If the transfer were a transfer of the asset from a company to a shareholder, it would not be treated as a payment of a dividend under Division 7A of Part III of the Income Tax Assessment Act 1936 . (2) To avoid doubt, this section does not affect the application of the * income tax law in relation to: (a) anything that happens in relation to the asset that does not directly relate to the transfer; or (b) the ownership of the asset at any time.

Amendment history: Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)

s 328-455 — Effect of small business restructures on transferred cost of assets

(1) The * income tax law applies to an entity in relation to the transfer of an asset by the entity, or to the entity, as if the transfer takes place for the asset’s * roll ‑ over cost if: (a) the transfer occurs under a transaction in relation to which section 328 ‑ 430 applies; and (b) a roll ‑ over under this Subdivision is available under that section in relation to the asset. (2) The asset’s roll ‑ over cost is whichever of the following amounts is applicable in relation to the transfer: (a) in relation to the application of subsection (1) to the asset as a * CGT asset (other than * trading stock, a * revenue asset or a * depreciating asset)—the transferor’s * cost base for the asset just before the transfer takes effect; (b) in relation to the application of subsection (1) to the asset as trading stock—the amount equal to: (i) the * cost of the item for the transferor; or (ii) if the transferor held the item as trading stock at the start of the income year—the * value of the item for the transferor then; (c) in relation to the application of subsection (1) to the asset as a revenue asset—the amount that would give rise to the transferor not making a profit or a loss on the transfer.

Amendment history: Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)

s 328-460 — Effect of small business restructures on acquisition times of pre ‑ CGT assets

For the purposes of applying subsection 328 ‑ 455(1) to the asset as a * CGT asset (other than a * revenue asset) that is a * pre ‑ CGT asset, a transferee is taken to have * acquired the asset before 20 September 1985.

Amendment history: Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)

s 328-465 — New membership interests as consideration for transfer of assets

(1) If: (a) section 328 ‑ 455 applies in relation to the transfer of an asset under a transaction; and (b) the transaction provides for * membership interests to be issued; and (c) the membership interests constitute all or part of the consideration provided for the transfer of assets ( transferred assets ) under the transaction; then: (d) the first element of the membership interests’ * cost base is the sum of: (i) the * roll ‑ over costs of the transferred assets that are neither * depreciating assets nor * pre ‑ CGT assets; and (ii) the * adjustable values of the transferred assets that are depreciating assets; (less any liabilities that a transferee of any of the transferred assets undertakes to discharge in respect of the transferred assets) divided by the number of membership interests; and (e) the first element of the membership interests’ * reduced cost base is worked out similarly. (2) However, if the * membership interests constituted only a part of the total consideration provided for the transfer of the transferred assets, reduce accordingly the amounts worked out under paragraphs (1)(d) and (e).

Amendment history: Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)

s 328-470 — Membership interests affected by transfers of assets

If: (a) section 328 ‑ 455 applies in relation to the transfer of an asset under a transaction; and (b) an entity holds, either directly or indirectly: (i) a * membership interest in the transferor or a transferee; or (ii) a membership interest that was issued as provided for by the transaction; disregard a * capital loss from a * CGT event that arises in relation to the membership interest after the transaction takes effect, except to the extent that the entity can demonstrate that the loss is attributable to a matter other than the transaction.

Amendment history: Inserted by No 18 of 2016, effective 1 Apr 2016 (s 2(1) item 1)