Income Tax Assessment Act 1997

s 61-200 — What this Subdivision is about

You can choose to claim a tax offset for a premium, or an amount in respect of a premium, paid under a private health insurance policy instead of having the premium reduced under Division 23 of the Private Health Insurance Act 2007 . Table of sections Operative provisions 61 ‑ 205 Entitlement to the private health insurance tax offset 61 ‑ 210 Amount of the private health insurance tax offset 61 ‑ 215 Reallocation of the private health insurance tax offset between spouses

Amendment history: Inserted by No 32 of 2007, effective Schedule 2 (item 52): 1 Apr 2007 ( see s. 2(1)) Schedule 3 (items 7A, 8, 9, 9A–9C): 1 July 2007 | Amended by No 105 of 2013, effective Sch 2 (items 22–26, 28(3)): 1 July 2013 (s 2)

s 61-205 — Entitlement to the private health insurance tax offset

(1) You are entitled to a * tax offset for the 2012 ‑ 13 income year or a later income year if: (a) a premium, or an amount in respect of a premium, was paid by you or another entity during the income year under a * complying health insurance policy in respect of a period (the premium period ); and (b) you are a * PHIIB in respect of the premium or amount; and (c) each person insured under the policy during the premium period is, for the whole of the time that he or she is insured under the policy during the premium period: (i) an eligible person (within the meaning of section 3 of the Health Insurance Act 1973 ); or (ii) treated as such because of section 6, 6A or 7 of that Act. (2) You are also entitled to the * tax offset if: (a) you are a trustee who is liable to be assessed under section 98 of the Income Tax Assessment Act 1936 in respect of a share of the net income of a trust estate; and (b) the beneficiary who is presently entitled to the share of the income of the trust estate would be entitled to the tax offset because of subsection (1).

Amendment history: Inserted by No 32 of 2007, effective Schedule 2 (item 52): 1 Apr 2007 ( see s. 2(1)) Schedule 3 (items 7A, 8, 9, 9A–9C): 1 July 2007 | Amended by No 26 of 2012, effective Schedule 1 (items 3–9, 48): 1 July 2012

s 61-210 — Amount of the private health insurance tax offset

(1) The amount of the * tax offset is your * share of the PHII benefit in respect of the premium or amount. Reduction because PHII benefit received in another form (2) Subsections (3), (4) and (5) apply if the amount of the premium was reduced because of the operation or purported operation of Division 23 of the Private Health Insurance Act 2007 . (3) Divide the total of the reduction by the number of persons who are * PHIIBs in respect of the premium or amount. (4) Reduce your * tax offset under subsection (1) to nil if the amount worked out under subsection (3) equals or exceeds your * share of the PHII benefit in respect of the premium or amount. Note: If the amount worked out under subsection (3) exceeds your share of the PHII benefit, you are liable to pay the excess to the Commonwealth. See section 282 ‑ 18 of the Private Health Insurance Act 2007 (Liability for excess private health insurance premium reduction or refund). (5) Otherwise, reduce your * tax offset under subsection (1) by the amount worked out under subsection (3).

Amendment history: Inserted by No 32 of 2007, effective Schedule 2 (item 52): 1 Apr 2007 ( see s. 2(1)) Schedule 3 (items 7A, 8, 9, 9A–9C): 1 July 2007 | Repealed and substituted by No 26 of 2012, effective Schedule 1 (items 3–9, 48): 1 July 2012 | Amended by No 105 of 2013, effective Sch 2 (items 22–26, 28(3)): 1 July 2013 (s 2)

s 61-215 — Reallocation of the private health insurance tax offset between spouses

(1) You can make a choice under this section in relation to the income year if: (a) you are a * PHIIB in respect of the premium or amount; and (b) on the last day of the income year, you are married (within the meaning of the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 ; and (c) the individual to whom you are married is also a PHIIB in respect of the premium or amount; and (d) the individual to whom you are married has not made a choice under this section in relation to the income year. Note: If you make a choice under this section, you might be liable to pay an amount under section 282 ‑ 18 of the Private Health Insurance Act 2007 (Liability for excess private health insurance premium reduction or refund). (2) If you make a choice under this section in relation to the income year: (a) the amount (if any) of the * tax offset for the income year under section 61 ‑ 205 in respect of the premium or amount of the individual to whom you are married is reduced to nil; and (b) your tax offset for the income year under that section in respect of the premium or amount is increased by that amount. (3) A choice under this section in relation to the income year can only be made in your * income tax return for the income year. (4) A choice under this section in relation to an income year has effect for all premiums, or amounts in respect of premiums, paid during the income year.

Amendment history: Inserted by No 32 of 2007, effective Schedule 2 (item 52): 1 Apr 2007 ( see s. 2(1)) Schedule 3 (items 7A, 8, 9, 9A–9C): 1 July 2007 | Repealed and substituted by No 26 of 2012, effective Schedule 1 (items 3–9, 48): 1 July 2012

s 61-575 — What this Subdivision is about

You may get a tax offset under this Subdivision if: (a) Medicare levy surcharge is payable by you for the current year; and (b) a substantial lump sum was paid to you in the current year; and (c) the lump sum accrued in whole or in part in a previous year. The amount of the offset is the amount of additional Medicare levy surcharge payable by you for the current year because of your lump sums and your spouse’s lump sums. Alternatively, you may get a tax offset under this Subdivision if your spouse gets a tax offset under this Subdivision. The amount of the offset is the amount of additional Medicare levy surcharge payable by you for the current year because of your spouse’s lump sums. Table of sections Operative provisions 61 ‑ 580 Entitlement to a tax offset 61 ‑ 585 The amount of a tax offset 61 ‑ 590 Definition of MLS lump sums

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

s 61-580 — Entitlement to a tax offset

Tax offset for MLS lump sums paid to you (1) You are entitled to a * tax offset for the * current year if: (a) you are an individual; and (b) * Medicare levy surcharge is payable by you for the current year because of: (i) section 8B, 8C or 8D of the Medicare Levy Act 1986 ; or (ii) the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 ; and (c) your assessable income or * exempt foreign employment income for the current year includes one or more * MLS lump sums paid to you; and (d) the total of the MLS lump sums paid to you is greater than or equal to one ‑ eleventh of the total of the following amounts: (i) your normal taxable income (within the meaning of section 159ZR of the Income Tax Assessment Act 1936 ) for the current year, disregarding your * assessable FHSS released amount for the current year; (ii) your exempt foreign employment income for the current year; (iii) your * reportable fringe benefits total for the current year; (iv) the amounts that would be included in your assessable income for the current year if, and only if, subsection 271 ‑ 105(1) (family trust distribution tax) in Schedule 2F to the Income Tax Assessment Act 1936 were ignored; (v) your * reportable superannuation contributions for the current year; (vi) your * total net investment loss for the current year. Note: The test in paragraph (d) is similar to the 10% test in paragraph 159ZRA(1)(b) of the Income Tax Assessment Act 1936 , which also deals with a tax offset for lump sum payments in arrears. Tax offset for MLS lump sums paid to your spouse (2) You are also entitled to a * tax offset for the * current year if: (a) during all or part of the current year, you were married to an individual (within the meaning of section 3 of the Medicare Levy Act 1986 or section 7 of the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 ); and (b) the individual is entitled to a tax offset for the current year under subsection (1); and (c) * Medicare levy surcharge is payable by you for the current year because of: (i) section 8D of the Medicare Levy Act 1986 ; or (ii) Division 4 of Part 3 of the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 ; (which are about Medicare Levy surcharge for individuals who are married); and (d) you are not entitled to a tax offset for the current year under subsection (1); and (e) less of the Medicare levy surcharge referred to in paragraph (c) would be payable by you for the current year if the * MLS lump sums paid to the individual referred to in paragraph (a) were disregarded.

Amendment history: Inserted by No 80 of 2006, effective Schedule 1 (items 2–4), Schedule 2, Schedule 4 (items 1, 5–9, 14, 20, 23–30), Schedule 5, Schedule 6 (items 3–7) and Schedule 11 (items 1, 2, 4–24): Royal Assent Schedule 3 (items 2–5): 30 June 2006 (s 2(1) item 3) | Amended by No 27 of 2009, effective Schedule 2 (items 43–52) and Schedule 3 (items 6–10, 44–47, 102(1)): 27 Mar 2009 | Amended by No 132 of 2017, effective Sch 1 (items 6–12, 21, 27–31): 1 July 2018 (s 2(1) item 2) Sch 2 (items 1–5, 7): 1 Jan 2018 (s 2(1) item 3)

s 61-585 — The amount of a tax offset

(1) The amount of a * tax offset under subsection 61 ‑ 580(1) is the amount worked out using the following formula: where: total Medicare levy surcharge means the total of the * Medicare levy surcharge referred to in paragraph 61 ‑ 580(1)(b) that is payable by you for the * current year. total non ‑ arrears Medicare levy surcharge means the amount that would be the total Medicare levy surcharge if the * MLS lump sums paid to you (and the MLS lump sums paid to the individual referred to in paragraph 61 ‑ 580(2)(a)) were disregarded. (2) The amount of a * tax offset under subsection 61 ‑ 580(2) is the amount worked out using the following formula: where: total family Medicare levy surcharge means the total of the * Medicare levy surcharge referred to in paragraph 61 ‑ 580(2)(c) that is payable by you for the * current year. total non ‑ arrears family Medicare levy surcharge means the amount that would be the total family Medicare levy surcharge if the * MLS lump sums referred to in paragraph 61 ‑ 580(2)(e) were disregarded.

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

s 61-590 — Definition of MLS lump sums

Both of the following are MLS lump sums paid to an individual: (a) a lump sum payment of eligible income (within the meaning of section 159ZR of the Income Tax Assessment Act 1936 ) that is included in the individual’s assessable income for the * current year (but only to the extent that it accrued in an earlier income year); (b) a lump sum payment that is included in the individual’s * exempt foreign employment income for the current year (but only to the extent that it accrued during a period ending more than 12 months before the date on which it was paid).

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

s 61-695 — What this Subdivision is about

A company may get a refundable tax offset for withholding payments made to Australian seafarers for overseas voyages if: (a) the voyage is made by a vessel for which the company, or another entity, has a certificate under the Shipping Reform (Tax Incentives) Act 2012 ; and (b) the company employs or engages the seafarer on such voyages for at least 91 days in the income year. Table of sections Operative provisions 61 ‑ 700 Object of this Subdivision 61 ‑ 705 Who is entitled to the seafarer tax offset 61 ‑ 710 Amount of the seafarer tax offset

Amendment history: Inserted by No 57 of 2012, effective Schedules 1–3: Royal Assent

s 61-700 — Object of this Subdivision

The object of this Subdivision is to stimulate opportunities for Australian seafarers to: (a) be employed or engaged on overseas voyages; and (b) acquire maritime skills.

Amendment history: Inserted by No 57 of 2012, effective Schedules 1–3: Royal Assent

s 61-705 — Who is entitled to the seafarer tax offset

(1) A company is entitled to a * tax offset for an income year if: (a) the company is a corporation to which paragraph 51(xx) of the Constitution applies; and (b) there is at least one individual in respect of whom the company has 91 days or more in the income year that qualify for the tax offset as mentioned in subsection (2). (2) A particular day qualifies for the * tax offset under this Subdivision for a company for an individual if: (a) on the day, the individual is an Australian resident who: (i) is employed by the company; or (ii) performs work or services under an * arrangement under which the company makes, at any time, a payment that is a * withholding payment covered by subsection 12 ‑ 60(1) in Schedule 1 to the Taxation Administration Act 1953 (about labour hire arrangements); and (b) on the day, the individual is so employed, or performs the work or services, on a voyage of a vessel as master, deck officer, integrated rating, steward or engineer; and (c) the company, or another entity, has a certificate for the vessel that applies to the day under Part 2 of the Shipping Reform (Tax Incentives) Act 2012 ; and (d) in the course of the voyage, the vessel travels between: (i) a port in Australia and a port outside Australia; or (ii) a port in Australia and a place in the waters of the sea above the continental shelf of a country other than Australia; or (iii) a port outside Australia and a place in the waters of the sea above the continental shelf of Australia; or (iv) a place in the waters of the sea above the continental shelf of Australia and a place in the waters of the sea above the continental shelf of a country other than Australia; or (v) ports outside Australia; or (vi) places beyond the continental shelf of Australia; whether or not the ship travels between 2 or more ports in Australia in the course of the voyage. Note 1: An entity may be entitled to a certificate for a vessel under Part 2 of the Shipping Reform (Tax Incentives) Act 2012 if it meets the requirements (relating to such things as tonnage, registration and usage) in that Act. Note 2: An entity cannot be entitled to a certificate for a vessel under Part 2 of that Act for a day before 1 July 2012: see paragraph 8(4)(b) of that Act. (3) For the purposes of paragraph (2)(b), the voyage of a vessel is taken to: (a) start on the earliest day on which one or more of the following occurs: (i) * shipping cargo to be carried on the voyage, or any part of the voyage, is first loaded into the vessel; (ii) * shipping passengers to be carried on the voyage, or any part of the voyage, first board the vessel; (iii) the voyage begins; and (b) end on the latest day on which any of the following occurs: (i) all shipping cargo carried on the voyage, or any part of the voyage, is completely unloaded from the vessel; (ii) all shipping passengers carried on the voyage, or any part of the voyage, finally disembark from the vessel; (iii) the voyage ends.

Amendment history: Inserted by No 57 of 2012, effective Schedules 1–3: Royal Assent

s 61-710 — Amount of the seafarer tax offset

The amount of the company’s * tax offset for the income year is the amount (rounded up to the nearest whole dollar) worked out using the formula: where: gross payment amounts means the total amount of * withholding payments covered by section 12 ‑ 35 or subsection 12 ‑ 60(1) in Schedule 1 to the Taxation Administration Act 1953 payable by the company in the income year: (a) to individuals in respect of whom the company has 91 days or more in the income year that qualify for the offset as mentioned in subsection 61 ‑ 705(2); and (b) in respect of any of the following: (i) the employment of, or the work or services performed by, such individuals in relation to which the company so qualifies for the offset; (ii) leave accrued by such individuals during such employment, work or services; (iii) training of such individuals that relates to such employment, work or services.

Amendment history: Inserted by No 57 of 2012, effective Schedules 1–3: Royal Assent

s 61-750 — What this Subdivision is about

A limited partner in an ESVCLP may be entitled to a tax offset for investing in the ESVCLP. Table of sections Operative provisions 61 ‑ 755 Object of this Subdivision 61 ‑ 760 Who is entitled to the ESVCLP tax offset 61 ‑ 765 Amount of the ESVCLP tax offset—general case 61 ‑ 770 Amount of the ESVCLP tax offset—members of trusts or partnerships 61 ‑ 775 Amount of the ESVCLP tax offset—trustees

Amendment history: Inserted by No 54 of 2016, effective Sch 1 (items 1, 12–14, 19) and Sch 2 (items 1–5, 8–14, 20–34, 44–51, 53–56, 63–74, 76): 1 July 2016 (s 2(1) items 2–5, 7)

s 61-755 — Object of this Subdivision

The object of this Subdivision is to encourage new investment in early stage venture capital by providing investors with a * tax offset to reduce the effective cost of such investments.

Amendment history: Inserted by No 54 of 2016, effective Sch 1 (items 1, 12–14, 19) and Sch 2 (items 1–5, 8–14, 20–34, 44–51, 53–56, 63–74, 76): 1 July 2016 (s 2(1) items 2–5, 7)

s 61-760 — Who is entitled to the ESVCLP tax offset

General case (1) A * limited partner of an * ESVCLP is entitled to a * tax offset for an income year if: (a) the partner contributes to the ESVCLP during the income year; and (b) the partner is not a trust or partnership. Members of trusts or partnerships (2) A * member of a trust or partnership is entitled to a * tax offset for an income year if the trust or partnership would be entitled to a tax offset, under this section, for the income year if it were an individual. Trustees (3) A trustee of a trust is entitled to a * tax offset for an income year if: (a) the trust would be entitled to a tax offset, under this section, for the income year if it were an individual; and (b) in a case where the trustee has determined percentages under subsection 61 ‑ 770(2) in relation to the * members of the trust—the sum of those percentages is not 100%; and (c) the trustee is liable to be assessed or has been assessed, and is liable to pay * tax, on a share of, or all or a part of, the trust’s * net income under section 98, 99 or 99A of the Income Tax Assessment Act 1936 for that income year.

Amendment history: Inserted by No 54 of 2016, effective Sch 1 (items 1, 12–14, 19) and Sch 2 (items 1–5, 8–14, 20–34, 44–51, 53–56, 63–74, 76): 1 July 2016 (s 2(1) items 2–5, 7)

s 61-765 — Amount of the ESVCLP tax offset—general case

(1) If subsection 61 ‑ 760(1) applies, the amount of the * tax offset for the income year is 10% of the lesser of: (a) the sum of the amounts the partner contributes to the * ESVCLP during the income year, reduced by any amounts excluded under subsection (2); and (b) the amount (the investment related amount ) worked out under subsection (3). (2) The following amounts are excluded for the purposes of paragraph (1)(a) in relation to the income year: (a) any parts of a contribution the partner made to the * ESVCLP that the ESVCLP is, or will become, obliged to repay to the partner, whether or not: (i) the obligation arises during the income year; or (ii) the obligation arises only when the partner requests repayment; (b) any parts of a contribution the partner made to the ESVCLP that, during the income year, are repaid to the partner within 12 months after the contribution was made; (c) any parts of a contribution the partner made to the ESVCLP to the extent that they comprise a commitment to provide money or property in the future. (3) Work out the investment related amount as follows: where: partner’s share is the partner’s share of the capital of the * ESVCLP at the end of the income year, expressed as a percentage of the entire capital of the ESVCLP. sum of eligible venture capital investments is the sum of: (a) all the amounts of the * eligible venture capital investments made by the * ESVCLP during the period starting at the start of the income year and ending 2 months after the end of the income year; and (b) all the incidental costs, incurred during that period, of making those investments; and (c) all the administrative expenses, incurred during that period, associated with those investments. (4) For the purposes of paragraph (a) of the definition of sum of eligible venture capital investments in subsection (3), disregard the amounts of any * eligible venture capital investments that were taken into account in working out the amount of a * tax offset under this Subdivision for a preceding income year.

Amendment history: Inserted by No 54 of 2016, effective Sch 1 (items 1, 12–14, 19) and Sch 2 (items 1–5, 8–14, 20–34, 44–51, 53–56, 63–74, 76): 1 July 2016 (s 2(1) items 2–5, 7)

s 61-770 — Amount of the ESVCLP tax offset—members of trusts or partnerships

(1) If subsection 61 ‑ 760(2) applies, the amount of the * member’s * tax offset for the income year is as follows: where: determined share of notional tax offset is the percentage determined under subsection (2) for the * member. notional tax offset amount is what would, under section 61 ‑ 765, have been the amount of the trust’s or partnership’s * tax offset (the notional tax offset ) if the trust or partnership had been an individual. (2) The trustee or partnership may determine the percentage of the notional tax offset that is the * member’s share of the notional tax offset. (3) If, under the terms and conditions under which the trust or partnership operates, the * member would be entitled to a fixed proportion of any * capital gain from a * disposal: (a) relating to the trust or partnership; and (b) of investments made as a result of the contributions that gave rise to the notional tax offset; and (c) happening at the end of the income year to which the notional tax offset relates; the percentage determined under subsection (2) must be equivalent to that fixed proportion, and a determination of any other percentage has no effect. (4) The trustee or partnership must give the * member written notice of the determination. The notice: (a) must enable the member to work out the amount of the member’s * tax offset by including enough information to enable the member to work out the member’s share of the notional tax offset; and (b) must be given to the member within 3 months after the end of the income year, or within such further time as the Commissioner allows. (5) The sum of all the percentages determined under subsection (2) in relation to the * members of the trust or partnership must not exceed 100%.

Amendment history: Inserted by No 54 of 2016, effective Sch 1 (items 1, 12–14, 19) and Sch 2 (items 1–5, 8–14, 20–34, 44–51, 53–56, 63–74, 76): 1 July 2016 (s 2(1) items 2–5, 7) | Amended by No 8 of 2020, effective Sch 2 (items 1–17): 1 Apr 2020 (s 2(1) item 3)

s 61-775 — Amount of the ESVCLP tax offset—trustees

If subsection 61 ‑ 760(3) applies, the amount of the * tax offset for the income year is the difference between: (a) what would, under section 61 ‑ 765, have been the amount of the tax offset to which the trust would have been entitled if it had been an individual; and (b) if * members of the trust are entitled to tax offsets under subsection 61 ‑ 760(2) arising from the same contributions from which the trustee’s entitlement arises under subsection 61 ‑ 760(3)—the sum of the amounts, under section 61 ‑ 770, of those tax offsets.

Amendment history: Inserted by No 54 of 2016, effective Sch 1 (items 1, 12–14, 19) and Sch 2 (items 1–5, 8–14, 20–34, 44–51, 53–56, 63–74, 76): 1 July 2016 (s 2(1) items 2–5, 7)

s 63-1 — What this Division is about

This Division sets out some rules that are common to all tax offsets. Table of sections 63 ‑ 10 Priority rules

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

s 63-10 — Priority rules

(1) If you have one or more * tax offsets for an income year, apply them against your basic income tax liability in the order shown in the table. To the extent that an amount of a tax offset remains, the table tells you what happens to it. Order of applying tax offsets Item Tax offset What happens to any excess 3 * Tax offset under Subdivision 61 ‑ E (working Australians tax offset) You cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year 5 * Tax offset under section 160AAAA of the Income Tax Assessment Act 1936 (tax offset for low income aged persons and pensioners) Your entitlement to it is transferred in accordance with regulations made under that Act 10 * Tax offset under section 160AAAB of the Income Tax Assessment Act 1936 (tax offset for low income aged persons and pensioners —trustee assessed under section 98) Your entitlement to it is transferred in accordance with regulations made under that Act 15 * Tax offset under section 160AAA of the Income Tax Assessment Act 1936 (tax offset in respect of certain benefits) Your entitlement to it is transferred in accordance with regulations made under that Act 20 Any * tax offset not covered by another item in this table You cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year 21 * Tax offset under Subdivision 301 ‑ F (veterans’ superannuation (invalidity pension) tax offset) Apply it against your liability (if any) to pay * Medicare levy for the income year. To the extent that an amount of it remains, apply it against your liability (if any) to pay * Medicare levy (fringe benefits) surcharge for the income year. To the extent that an amount of it remains, you cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year 22 * Tax offset for * foreign income tax under Division 770 Apply it against your liability (if any) to pay * Medicare levy for the income year. To the extent that an amount of it remains, apply it against your liability (if any) to pay * Medicare levy (fringe benefits) surcharge for the income year. To the extent that an amount of it remains, you cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year 30 Landcare and water facility * tax offset under the former Subdivision 388 ‑ A You may carry it forward to a later income year (under Division 65) 32 ESVCLP * tax offset under Subdivision 61 ‑ P You may carry it forward to a later income year (under Division 65) 33 * Tax offset under Subdivision 360 ‑ A (about early stage investors in innovation companies) You may carry it forward to a later income year (under Division 65) 35 A * tax offset under Division 355 (about R&D) that is not covered by section 67 ‑ 30 You may carry it forward to a later income year (under Division 65) 40 * Tax offset that is subject to the refundable tax offset rules (see Division 67) You can get a refund of the remaining amount 45 * Tax offset arising from payment of * franking deficit tax (see section 205 ‑ 70) You may carry it forward to a later income year (under section 205 ‑ 70) Note 1: Section 13 ‑ 1 lists tax offsets. Note 2: Former Division 388 was repealed by the New Business Tax System (Capital Allowances—Transitional and Consequential) Act 2001 . Note 4: The remaining amount of a carry forward tax offset may be reduced by section 65 ‑ 30 or 65 ‑ 35 to take account of net exempt income. Note 5: Tax offsets mentioned in items 5 and 10 are more commonly referred to as the Senior Australians Tax Offset. (2) Within each item, apply the tax offsets in the order in which they arose. Note: This would be relevant if you have carry forward tax offsets of the same category for different income years.

Amendment history: Inserted by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6) | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 43 of 2011, effective s. 4, Schedule 2 (items 4–6) and Schedule 3 (items 1–9): Royal Assent | 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 159 of 2011, effective Schedule 3 (items 17–21, 24): 1 July 2012 | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29) | Amended by No 54 of 2016, effective Sch 1 (items 1, 12–14, 19) and Sch 2 (items 1–5, 8–14, 20–34, 44–51, 53–56, 63–74, 76): 1 July 2016 (s 2(1) items 2–5, 7) | Amended by No 47 of 2018, effective Sch 1 (items 1, 6, 7): 1 July 2018 (s 2(1) item 2) Sch 1 (items 11–15, 19, 20): repealed before commencing (s 2(1) item 3) | Amended by No 49 of 2019, effective Sch 3 (item 1) and Sch 4 (items 71–94, 111): 1 July 2019 (s 2(1) items 10, 12) | Amended by No 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 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5) | Amended by No 49 of 2026, effective sch 1 (items 1-51, 54-59, 64-79A, 82-84), sch 3, sch 4 (items 1-17): 1 July 2026 (s 2(1) items 2-4, 6) sch 2 (items 1-5): 27 June 2026 (s 2(1) item 5)

s 65-10 — What this Division is about

This Division sets out the rules about carrying forward excess tax offsets to later income years. You can only carry forward certain tax offsets. Before you can apply a tax offset to reduce the amount of income tax that you will pay in a later year, you must apply it to reduce certain amounts of net exempt income. The same rules that prevent companies from utilising certain losses of earlier income years prevent companies from applying tax offsets that they have carried forward. Table of sections Operative provisions 65 ‑ 30 Amount carried forward 65 ‑ 35 How to apply carried forward tax offsets 65 ‑ 40 When a company cannot apply a tax offset 65 ‑ 50 Effect of bankruptcy 65 ‑ 55 Deduction for amounts paid for debts incurred before bankruptcy

Amendment history: Inserted by No 91 of 1998, effective Sch 1 (items 1–13, 19): 14 July 1998 (s 2(1)) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15)

s 65-30 — Amount carried forward

(1) The amount of the * tax offset that is carried forward is the amount of the excess worked out under Division 63. (2) However, reduce the * tax offset by the amount worked out by multiplying your * net exempt income by: (a) if you are a base rate entity (within the meaning of the Income Tax Rates Act 1986 ) for the income year—0.25; or (b) otherwise—0.3; if you have a taxable income for the income year.

Amendment history: Inserted by No 91 of 1998, effective Sch 1 (items 1–13, 19): 14 July 1998 (s 2(1)) | Amended by No 66 of 2003, effective s 4, Sch 2 (items 1–5, 17), Sch 3 (items 49–70, 71–128, 129–131, 140, 141), Sch 4, Sch 6 (items 1, 3) and Sch 7 (items 6–9): 30 June 2003 (s 2(1) items 1, 3, 6–8, 8B–12, 12B, 14, 15, 17, 18) Sch 3 (items 70A, 128A): 2 Apr 2003 (s 2(1) items 8A, 12A) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Repealed and substituted by No 66 of 2015, effective Sch 1 (items 6–29, 32): 22 June 2015 (s 2(1) items 3, 5) | Amended by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19)

s 65-35 — How to apply carried forward tax offsets

(1) A * tax offset that you have carried forward decreases the amount of income tax that you would otherwise have to pay under section 4 ‑ 10 in a later income year. (2) You apply a * tax offset that is carried forward to a later year in accordance with the priorities set out in Division 63 as if it were a tax offset for that later year. (3) Before you apply a * tax offset to reduce the amount of income tax that you pay in a later income year in which you have a taxable income, you must apply it to reduce to nil any * net exempt income for: (a) that later income year; or (b) any income year after the year in which the tax offset arose and before the later income year in which you had a taxable income but did not apply the tax offset to reduce the amount of income tax you had to pay. Note: Paragraph (b) would apply to cases such as where your taxable income was below your tax ‑ free threshold or where you had other tax offsets that reduced your income tax to nil. (3A) In reducing * net exempt income for an income year under subsection (3): (a) if you were a base rate entity (within the meaning of the Income Tax Rates Act 1986 ) for the year—each 25 cents of * tax offset reduces the net exempt income by $1; or (b) otherwise—each 30 cents of tax offset reduces the net exempt income by $1. (4) You can only apply a * tax offset that you have carried forward to the extent that it has not already been applied. Note: Section 65 ‑ 40 contains special restrictions on applying carried forward tax offsets.

Amendment history: Inserted by No 91 of 1998, effective Sch 1 (items 1–13, 19): 14 July 1998 (s 2(1)) | Amended by No 66 of 2003, effective s 4, Sch 2 (items 1–5, 17), Sch 3 (items 49–70, 71–128, 129–131, 140, 141), Sch 4, Sch 6 (items 1, 3) and Sch 7 (items 6–9): 30 June 2003 (s 2(1) items 1, 3, 6–8, 8B–12, 12B, 14, 15, 17, 18) Sch 3 (items 70A, 128A): 2 Apr 2003 (s 2(1) items 8A, 12A) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 66 of 2015, effective Sch 1 (items 6–29, 32): 22 June 2015 (s 2(1) items 3, 5) | Amended by No 41 of 2017, effective Sch 2 (item 1), Sch 3 (items 1–21), Sch 4 (items 1–29) and Sch 5 (items 1, 2): 1 July 2016 (s 2(1) items 9, 14, 16, 18) Sch 2 (item 2) and Sch 5 (items 17, 18): repealed before commencing (s 2(1) items 10, 20) Sch 2 (item 3) and Sch 5 (items 19, 20): 1 July 2020 (s 2(1) items 11, 21) Sch 2 (item 4) and Sch 5 (items 21, 22): 1 July 2021 (s 2(1) items 12, 22) Sch 2 (item 5), Sch 3 (item 22) and Sch 4 (item 58): 19 May 2017 (s 2(1) items 13, 15, 17) Sch 5 (items 3–8): 1 July 2017 (s 2(1) item 19)

s 65-40 — When a company cannot apply a tax offset

(1) In working out its * tax offset for the * current year, a company cannot apply a * tax offset it has carried forward if, assuming: (a) the tax offset were a * tax loss of the company for the income year in which it became entitled to the tax offset; and (b) section 165 ‑ 20 (deducting part of a tax loss) were disregarded; Subdivision 165 ‑ A would prevent the company from deducting it for the current year. Note: Subdivision 165 ‑ A deals with the deductibility of a company’s tax loss for an earlier income year if there has been a change in the ownership or control of the company in the loss year or the income year. (2) If subsection (1) prevents the company from applying the * tax offset, it can apply the part of the tax offset that it is reasonable to consider relates to a part of the income year in which it became entitled to the tax offset, but only if, assuming that part of that income year had been treated as the whole of it, the company would have been entitled to apply the tax offset.

Amendment history: Inserted by No 91 of 1998, effective Sch 1 (items 1–13, 19): 14 July 1998 (s 2(1))

s 65-50 — Effect of bankruptcy

(1) If during the * current year: (a) you became bankrupt; or (b) you were released from debts under a law relating to bankruptcy; you cannot apply a * tax offset that you have carried forward from an earlier income year in working out the tax offset for the current year or a later income year. (2) Subsection (1) applies even though your bankruptcy is annulled if: (a) the annulment happens under section 74 of the Bankruptcy Act 1966 because your creditors have accepted your proposal for a composition or scheme of arrangement; and (b) under the composition or scheme of arrangement concerned, you were, will be or may be released from debts from which you would have been released if instead you had been discharged from the bankruptcy.

Amendment history: Inserted by No 16 of 1999, effective s 4, Sch 3 (items 11, 12(3)), Sch 4 and Sch 7 (items 9–14): 9 Apr 1999 (s 2(1))

s 65-55 — Deduction for amounts paid for debts incurred before bankruptcy

(1) If: (a) you pay an amount in the * current year for a debt that you incurred in an earlier income year; and (b) you have a * tax offset referred to in section 65 ‑ 50 for that earlier income year; you can deduct the amount paid, but only to the extent that it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in calculating the amount of the tax offset. (2) The total of the following amounts cannot exceed the total of the expenditure that the Commissioner is satisfied was taken into account in calculating the amount of the * tax offset that you are unable to apply because of section 66 ‑ 50: (a) your deductions under subsection (1) for amounts paid in the * current year or an earlier income year for debts incurred in the income year for which you have the tax offset; and (b) the expenditure that the Commissioner is satisfied was taken into account in calculating any amounts of the tax offset that, apart from section 65 ‑ 50, would have been applied in reducing your * net exempt income for the current year or earlier income years.

Amendment history: Inserted by No 16 of 1999, effective s 4, Sch 3 (items 11, 12(3)), Sch 4 and Sch 7 (items 9–14): 9 Apr 1999 (s 2(1))

s 67-10 — What this Division is about

If your total tax offsets exceed your basic income tax liability, and some of those offsets are subject to the refundable tax offset rules, you may get a refund instead of paying income tax (see section 63 ‑ 10). This Division tells you which tax offsets are subject to the refundable tax offset rules. Table of sections Operative provisions 67 ‑ 20 Which tax offsets this Division applies to 67 ‑ 23 Refundable tax offsets 67 ‑ 25 Refundable tax offsets—franked distributions 67 ‑ 30 Refundable tax offsets—R&D

Amendment history: Inserted by No 128 of 1998, effective 21 Dec 1998 | Repealed and substituted by No 79 of 2000, effective s 4: 30 June 2000 (s 2(1)) Sch 1 (items 3, 4(2)), Sch 2 (items 1–7) and Sch 6 (items 1–11, 15): 1 July 2000 (s 2(2)) | Repealed and substituted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 67-20 — Which tax offsets this Division applies to

This Division only applies to a * tax offset if it is stated to be subject to the refundable tax offset rules.

Amendment history: Inserted by No 128 of 1998, effective 21 Dec 1998 | Repealed and substituted by No 79 of 2000, effective s 4: 30 June 2000 (s 2(1)) Sch 1 (items 3, 4(2)), Sch 2 (items 1–7) and Sch 6 (items 1–11, 15): 1 July 2000 (s 2(2))

s 67-23 — Refundable tax offsets

The following * tax offsets are subject to the refundable tax offset rules: Refundable tax offsets Item Subject matter Tax offset 3 * principal beneficiary of a * special disability trust the * tax offset available under subsection 95AB(5) of the Income Tax Assessment Act 1936 5 private health insurance private health insurance tax offsets under Subdivision 61 ‑ G, other than those arising under subsection 61 ‑ 205(2) 13 seafarers the * tax offset available under Subdivision 61 ‑ N 14 corporate losses * loss carry back tax offset under Division 160 14A attribution managed investment trusts—foreign resident member the * tax offset available under section 276 ‑ 110 15 no ‑ TFN contributions income the * tax offset available under Subdivision 295 ‑ J 20 films the * tax offsets available under Division 376 21 * digital games the * tax offsets available under Division 378 23 National Rental Affordability Scheme the * tax offsets available under Division 380 27 junior minerals exploration incentive the * tax offset available under Subdivision 418 ‑ B 28 critical minerals production incentive the * CMPTI tax offset (see Division 419) 29 hydrogen production incentive the * tax offset available under Division 421 30 life insurance company’s subsidiary joining consolidated group the * tax offset available under subsection 713 ‑ 545(5) Note 1: Subsection 61 ‑ 205(2) of this Act deals with tax offsets for trustees who are assessed and liable to pay tax under section 98 of the Income Tax Assessment Act 1936 . Note 2: For the tax offsets available under Division 207 and Subdivision 210 ‑ H (franked distributions), see section 67 ‑ 25. Note 3: For the tax offsets available under Division 355 (about R&D), see section 67 ‑ 30.

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 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 90 of 2010, effective Sch 2, Sch 4 (items 5–8) and Sch 5 (items 1–3, 6–8): 29 June 2010 (s 2(1) item 3) | 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 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 50 of 2012, effective Schedule 3: 27 May 2012 | Amended by No 57 of 2012, effective Schedules 1–3: Royal Assent | Amended by No 75 of 2012, effective Schedule 3 and Schedule 4 (items 1–10, 20): Royal Assent | 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) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 118 of 2013, effective Sch 1 (items 1, 4–11, 16–26, 38–79, 88–96, 110): 29 June 2013 (s 2(1) items 2–5, 11) Sch 1 (item 97): 1 July 2013 (s 2(1) item 6) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9) | Amended by No 109 of 2014, effective Sch 10 (items 13–15, 21–48): 17 Oct 2014 (s 2(1) item 8) | Amended by No 21 of 2015, effective s 4 and Sch 6 (items 1, 2, 16–25, 73): 19 Mar 2015 (s 2(1) items 1, 7–11, 13) Sch 1 (items 1–17, 49), Sch 3 and Sch 7 (items 13–21): 20 Mar 2015 (s 2(1) items 2, 4, 15) Sch 4 (items 1–5, 9–17): 1 July 2015 (s 2(1) item 5) Sch 6 (items 51–59, 74–79): never commences (s 2(1) items 12, 14) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4) | Amended by No 15 of 2018, effective Sch 1 (items 1–6A, 11–26, 65–67): 1 Apr 2018 (s 2(1) items 2, 4) Sch 1 (items 42–52, 68–73): repealed before commencing (s 2(1) items 3, 5) | Amended by No 49 of 2019, effective Sch 3 (item 1) and Sch 4 (items 71–94, 111): 1 July 2019 (s 2(1) items 10, 12) | Amended by No 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 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5) | Amended by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 67-25 — Refundable tax offsets—franked distributions

(1) * Tax offsets available under Division 207 (which sets out the effects of receiving a * franked distribution) or Subdivision 210 ‑ H (which sets out the effects of receiving a * distribution * franked with a venture capital credit) are subject to the refundable tax offset rules, unless otherwise stated in this section. (1A) Where the trustee of a * non ‑ complying superannuation fund or a * non ‑ complying approved deposit fund is entitled to a * tax offset under Division 207 because a * franked distribution is made to, or * flows indirectly to, the trustee, the tax offset is not subject to the refundable tax offset rules. (1B) If: (a) the trustee of a trust to whom a * franked distribution * flows indirectly under subsection 207 ‑ 50(4) is entitled to a * tax offset under Division 207 for an income year because of the distribution; and (b) the trustee is liable to be assessed under section 98 or 99A of the Income Tax Assessment Act 1936 on a share of, or all or a part of, the trust’s * net income for that income year; the tax offset is not subject to the refundable tax offset rules. (1C) Where a * corporate tax entity is entitled to a * tax offset under Division 207 because a * franked distribution is made to the entity, the tax offset is not subject to the refundable tax offset rules unless: (a) the entity is an * exempt institution that is eligible for a refund; or (b) the entity is a * life insurance company and the * membership interest on which the distribution was made was not held by the company on behalf of its shareholders at any time during the period: (i) starting at the beginning of the income year of the company in which the distribution is made; and (ii) ending when the distribution is made. (1D) Where a * corporate tax entity is entitled to a * tax offset under Division 207 because a * franked distribution * flows indirectly to the entity, the tax offset is not subject to the refundable tax offset rules unless: (a) the entity is an * exempt institution that is eligible for a refund; or (b) the entity is a * life insurance company and the company’s interest in the * membership interest on which the distribution was made was not held by the company on behalf of its shareholders at any time during the period: (i) starting at the beginning of the income year of the company in which the distribution is made; and (ii) ending when the distribution is made. (1DA) A * tax offset is not subject to the refundable tax offset rules if: (a) an entity is entitled to the tax offset under Division 207 because a * franked distribution is made, or * flows indirectly, to the entity; and (b) the entity is a foreign resident and carries on business in Australia at or through a permanent establishment of the entity in Australia, being a permanent establishment within the meaning of: (i) a double tax agreement (as defined in Part X of the Income Tax Assessment Act 1936 ) that relates to a foreign country and affects the entity; or (ii) subsection 6(1) of that Act, if there is no such agreement; and (c) the distribution is attributable to the permanent establishment. (1E) Where a * corporate tax entity is entitled to a * tax offset under Subdivision 210 ‑ H because a * distribution * franked with a venture capital credit is made to the entity, the tax offset is not subject to the refundable tax offset rules unless: (a) the entity is a * life insurance company; and (b) the * membership interest on which the distribution was made was not held by the company on behalf of its shareholders at any time during the period: (i) starting at the beginning of the income year of the company in which the distribution is made; and (ii) ending when the distribution is made.

Amendment history: Inserted by No 128 of 1998, effective 21 Dec 1998 | Repealed and substituted by No 79 of 2000, effective s 4: 30 June 2000 (s 2(1)) Sch 1 (items 3, 4(2)), Sch 2 (items 1–7) and Sch 6 (items 1–11, 15): 1 July 2000 (s 2(2)) | 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 27 of 2002, effective 4 Apr 2002 | Amended by No 32 of 2002, effective 30 May 2002 | Amended by No 57 of 2002, effective Sch 2: 1 July 2002 (s 2(1) item 3) Sch 4 (items 3, 4): 1 July 2000 (s 2(1) item 5) Sch 4 (items 5–8), Sch 7, Sch 9 (items 9, 11, 12, 15–20, 22–40, 45), Sch 11 (items 2–5), Sch 12 (items 16–18, 20, 25, 26): 3 July 2002 (s 2(1) items 6, 7, 9, 11, 13, 15, 16, 18, 28, 30, 33) Sch 9 (items 10, 13, 14, 21) and Sch 12 (items 23, 24): 1 July 1997 (s 2(1) items 10, 12, 14, 32) Sch 12 (item 19): 30 June 1998 (s 2(1) item 29) Sch 12 (items 21, 22): 22 June 1998 (s 2(1) item 31) Sch 12 (items 27, 28): 16 Apr 1998 (s 2(1) item 34) Sch 12 (item 29): 19 Sept 1997 (s 2(1) item 35) | Amended by No 66 of 2003, effective s 4, Sch 2 (items 1–5, 17), Sch 3 (items 49–70, 71–128, 129–131, 140, 141), Sch 4, Sch 6 (items 1, 3) and Sch 7 (items 6–9): 30 June 2003 (s 2(1) items 1, 3, 6–8, 8B–12, 12B, 14, 15, 17, 18) Sch 3 (items 70A, 128A): 2 Apr 2003 (s 2(1) items 8A, 12A) | 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 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent | Amended by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 32 of 2007, effective Schedule 2 (item 52): 1 Apr 2007 ( see s. 2(1)) Schedule 3 (items 7A, 8, 9, 9A–9C): 1 July 2007 | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 130 of 2008, effective 1 July 2008 | Amended by No 141 of 2008, effective Schedule 1 (items 2–5, 10): Royal Assent | 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 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 67-30 — Refundable tax offsets—R&D

(1) A * tax offset to which an * R&D entity is entitled under section 355 ‑ 100 (about R&D) for an income year is subject to the refundable tax offset rules if the amount of the tax offset is worked out in accordance with item 1 of the table in subsection 355 ‑ 100(1) (disregarding subsection 355 ‑ 100(3)). Note: Otherwise, the tax offset will be a non ‑ refundable tax offset (see item 35 of the table in subsection 63 ‑ 10(1)). (2) Without limiting its effect apart from this subsection, subsection (1) also has the effect it would have if: (a) subsection (3) had not been enacted; and (b) the reference in subsection (1) to an * R&D entity were, by express provision, confined to an R&D entity that: (i) is a * constitutional corporation; or (ii) has its registered office (within the meaning of the Corporations Act 2001 ) or principal place of business (within the meaning of that Act) located in a Territory. (3) Without limiting its effect apart from this subsection, subsection (1) also has the effect it would have if: (a) subsection (2) had not been enacted; and (b) this Act applied so that * tax offsets under section 355 ‑ 100 could only be worked out in respect of * R&D activities conducted or to be conducted: (i) solely in a Territory; or (ii) solely outside of Australia; or (iii) solely in a Territory and outside of Australia; or (iv) for the dominant purpose of supporting * core R&D activities conducted, or to be conducted, solely in a Territory. Income Tax Assessment Act 1997 No. 38, 1997 Compilation No. 266 Compilation date: 1 July 2026 Includes amendments: Act No. 17, 2025, Act No. 57, 2025, Act No. 49, 2026 and Act No. 58, 2026 This compilation is in 12 volumes Volume 1: Chapter 1, Part 1 ‑ 1 to Chapter 2, Part 2 ‑ 5 sections 1 ‑ 1 to 36 ‑ 55 Volume 2: Chapter 2, Part 2 ‑ 10 to Chapter 2, Part 2 ‑ 20 sections 40 ‑ 1 to 67 ‑ 30 Volume 3: Chapter 2, Part 2 ‑ 25 to Chapter 3, Part 3 ‑ 1 sections 70 ‑ 1 to 121 ‑ 35 Volume 4: Chapter 3, Part 3 ‑ 3 to Chapter 3, Part 3 ‑ 5 sections 122 ‑ 1 to 197 ‑ 85 Volume 5: Chapter 3, Part 3 ‑ 6 to Chapter 3, Part 3 ‑ 10 sections 200 ‑ 1 to 253 ‑ 15 Volume 6: Chapter 3, Part 3 ‑ 25 to Chapter 3, Part 3 ‑ 30 sections 275 ‑ 1 to 313 ‑ 85 Volume 7: Chapter 3, Part 3 ‑ 32 to Chapter 3, Part 3 ‑ 50 sections 315 ‑ 1 to 421 ‑ 85 Volume 8: Chapter 3, Part 3 ‑ 80 to Chapter 3, Part 3 ‑ 90 sections 615 ‑ 1 to 721 ‑ 40 Volume 9: Chapter 3, Part 3 ‑ 95 to Chapter 4, Part 4 ‑ 5 sections 723 ‑ 1 to 880 ‑ 205 Volume 10: Chapter 5, Part 5 ‑ 30 to Chapter 6, Part 6 ‑ 5 sections 900 ‑ 1 to 995 ‑ 1 Volume 11: Endnotes 1 to 3 Volume 12: Endnote 4 Each volume has its own contents About this compilation This compilation This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 1 July 2026 (the compilation date ). The notes at the end of this compilation (the endnotes ) include information about amending laws and the amendment history of provisions of the compiled law. Uncommenced amendments The effect of uncommenced amendments is not shown in the text of the compiled law. The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). Application, saving and transitional provisions If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes. Editorial changes For more information about any editorial changes made in this compilation, see the endnotes. Presentational changes The Legislation Act 2003 provides for First Parliamentary Counsel to make presentational changes to a compilation. Presentational changes are applied to give a more consistent look and feel to legislation published on the Register, and enable the user to more easily navigate those documents. Modifications If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. Any modifications affecting the law are accessible on the Register. Self ‑ repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes. Contents

Amendment history: Inserted by No 128 of 1998, effective 21 Dec 1998 | Repealed and substituted by No 79 of 2000, effective s 4: 30 June 2000 (s 2(1)) Sch 1 (items 3, 4(2)), Sch 2 (items 1–7) and Sch 6 (items 1–11, 15): 1 July 2000 (s 2(2)) | Amended by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Repealed by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Inserted 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 13 of 2015, effective Sch 1 (items 1–6, 9): 5 Mar 2015 (s 2(1) item 2) Sch 1 (items 10–14, 17): repealed before commencing (s 2(1) item 3) | 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 70-1 — What this Division is about

This Division deals with amounts you can deduct, and amounts included in your assessable income, because of these situations: • you acquire an item of trading stock; • you carry on a business and hold trading stock at the start or the end of the income year; • you dispose of an item of trading stock outside the ordinary course of business, or it ceases to be trading stock in certain other circumstances. Table of sections 70 ‑ 5 The 3 key features of tax accounting for trading stock

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 70-5 — The 3 key features of tax accounting for trading stock

The purpose of income tax accounting for trading stock is to produce an overall result that (apart from concessions) properly reflects your activities with your trading stock during the income year. There are 3 key features: (1) You bring your gross outgoings and earnings to account, not your net profits and losses on disposal of trading stock. (2) Those outgoings and earnings are on revenue account, not capital account. As a result: (a) the gross outgoings are usually deductible as general deductions under section 8 ‑ 1 (when the trading stock becomes trading stock on hand); and (b) the gross earnings are usually assessable as ordinary income under section 6 ‑ 5 (when the trading stock stops being trading stock on hand). (3) You must bring to account any difference between the value of your trading stock on hand at the start and at the end of the income year. This is done in such a way that, in effect: (a) you account for the value of your trading stock as assessable income; and (b) you carry that value over as a corresponding deduction for the next income year. Note: You may not have to bring to account that difference if you are a small business entity: see Division 328.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended 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 70-10 — Meaning of trading stock

(1) Trading stock includes: (a) anything produced, manufactured or acquired that is held for purposes of manufacture, sale or exchange in the ordinary course of a * business; and (b) * live stock. (2) Trading stock does not include: (a) a * Division 230 financial arrangement; or (b) a * CGT asset covered by section 275 ‑ 105 that: (i) is owned by a * complying superannuation entity; or (ii) is a * complying superannuation asset of a * life insurance company. Note 1: Shares in a PDF are not trading stock. See section 124ZO of the Income Tax Assessment Act 1936 . Note 2: If a company becomes a PDF, its shares are taken not to have been trading stock before it became a PDF. See section 124ZQ of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Repealed and substituted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 71 of 2012, effective Sch 1, Sch 2 and Sch 3 (items 1, 2): 27 June 2012 (s 2(1) items 2, 3) Sch 5 (items 1–3): 1 July 2012 (s 2(1) item 6) | Amended by No 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 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 70-12 — Registered emissions units

A * registered emissions unit is not * trading stock.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1))

s 70-15 — In which income year do you deduct an outgoing for trading stock?

(1) This section tells you in which income year to deduct under section 8 ‑ 1 (about general deductions) an outgoing incurred in connection with acquiring an item of * trading stock. (The outgoing must be deductible under that section.) (2) If the item becomes part of your * trading stock on hand before or during the income year in which you incur the outgoing, deduct it in that income year. (3) Otherwise, deduct the outgoing in the first income year: (a) during which the item becomes part of your * trading stock on hand; or (b) for which an amount is included in your assessable income in connection with the disposal of that item. Note You can deduct your capital costs of acquiring land carrying trees or of acquiring a right to fell trees, to the extent that the trees are felled for sale, or for use in manufacture, by you. (This is because the trees will then usually become your trading stock.) See section 70 ‑ 120.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended 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)

s 70-20 — Non ‑ arm’s length transactions

If: (a) you incur an outgoing that is directly attributable to your buying or obtaining delivery of an item of your * trading stock; and (b) you and the seller of the item did not deal with each other at * arm’s length; and (c) the amount of the outgoing is greater than the * market value of what the outgoing is for; the amount of the outgoing is instead taken to be that market value. This has effect for the purposes of applying this Act to you and also to the seller. Note: This section also affects the value of the item of trading stock at the end of an income year if you value it at its cost under section 70 ‑ 45 (Value of trading stock at end of income year).

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 101 of 2013, effective Sch 2 (items 2, 20–43, 50): 29 June 2013 (s 2(1) item 3) Sch 2 (items 55–57): 8 Sept 2012 (s 2(1) item 4)

s 70-25 — Cost of trading stock is not a capital outgoing

An outgoing you incur in connection with acquiring an item of * trading stock is not an outgoing of capital or of a capital nature. Note: This means that paragraph 8 ‑ 1(2)(a) does not prevent the outgoing from being a general deduction under section 8 ‑ 1.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 70-30 — Starting to hold as trading stock an item you already own

(1) If you start holding as * trading stock an item you already own, but do not hold as trading stock, you are treated as if:. (a) just before it became trading stock, you had sold the item to someone else (at * arm’s length) for whichever of these amounts you elect: • its cost (as worked out under subsection (3) or (4)); • its * market value just before it became trading stock; and (b) you had immediately bought it back for the same amount. Example: You start holding a depreciating asset as part of your trading stock. You are treated as having sold it just before that time, and immediately bought it back, for its cost or market value, whichever you elect. (Subdivision 40 ‑ D provides for the consequences of selling depreciating assets.) The same amount is normally a general deduction under section 8 ‑ 1 as an outgoing in connection with acquiring trading stock. The amount is also taken into account in working out the item’s cost for the purposes of section 70 ‑ 45 (about valuing trading stock at the end of the income year). Note: Depending on how you elect under paragraph (1)(a), the sale may or may not give rise to a capital gain or a capital loss for the purposes of Parts 3 ‑ 1 and 3 ‑ 3 (about CGT). It does not if you elect to be treated as having sold the item for what would have been its cost: see subsection 118 ‑ 25(2). However, it can if you elect market value. When you must make the election (2) You must make the election by the time you lodge your * income tax return for the income year in which you start holding the item as * trading stock. (If you do not make the election by then because you do not realise until later that you started to hold the item as trading stock, you must make the election as soon as is reasonable after realising that.) However, the Commissioner can allow you to make it later (in either case). How to work out the item’s cost (3) The item’s cost is what would have been its cost for the purposes of section 70 ‑ 45 (about valuing trading stock at the end of the income year) if it had been your * trading stock ever since you last acquired it. In working that out, disregard section 70 ‑ 55 (about acquiring live stock by natural increase). (4) However, if you last acquired the item for no consideration, its cost is worked out using this table: Cost of item acquired for no consideration Item In this case: The cost is: 1 you acquired the item during or after the 1998 ‑ 99 income year, and the acquisition involved a * CGT event the item’s * market value when you last acquired it 2 you acquired the item before or during the 1997 ‑ 98 income year, and the acquisition involved a disposal of the item to you within the meaning of former Part IIIA (Capital gains and capital losses) of the Income Tax Assessment Act 1936 the item’s * market value when you last acquired it 3 your acquisition of the item involved the item: (a) devolving to you as someone’s * legal personal representative; or (b) * passing to you as a beneficiary in someone’s estate; and, if a * CGT event had happened in relation to the item just before you started holding it as * trading stock, a * capital gain or * capital loss could have resulted that would have been taken into account in working out your * net capital gain or * net capital loss for the income year of the event (a) if the person died during or after his or her 1998 ‑ 99 income year—the dead person’s * cost base for the item just before his or her death; or (b) if the person died before or during his or her 1997 ‑ 98 income year—the dead person’s indexed cost base (within the meaning of former Part IIIA (Capital gains and capital losses) of the Income Tax Assessment Act 1936 ) for the item just before his or her death (but worked out disregarding former section 160ZG (which affects the indexed cost base for a non ‑ listed personal use asset) of that Act) 4 any other case where you last acquired the item for no consideration a nil amount Exceptions (5) Subsection (1) does not apply if you start holding any of the following as * trading stock because they are severed from land: (a) standing or growing crops; (b) crop ‑ stools; (c) trees planted and tended for sale. (This does not prevent subsection (1) from applying to a severed item that you later start holding as trading stock.) (6) Subsection (1) does not apply if: (a) you start holding an item as * trading stock; and (b) immediately before you started holding the item as trading stock, you * held the item as a * registered emissions unit. Note: A transaction that this section treats as having occurred is disregarded for the purposes of these provisions of the Income Tax Assessment Act 1936 : • subsection 47A(10) (which treats certain benefits as dividends paid by a CFC) • paragraph 103A(3A)(c) (which affects whether a company is a public company for an income year).

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15)

s 70-35 — You include the value of your trading stock in working out your assessable income and deductions

(1) If you carry on a * business, you compare: (a) the * value of all your * trading stock on hand at the start of the income year; and (b) the * value of all your trading stock on hand at the end of the income year. Note: You may not need to do this stocktaking if you are a small business entity: see Division 328. (2) Your assessable income includes any excess of the * value at the end of the income year over the value at the start of the income year. (3) On the other hand, you can deduct any excess of the * value at the start of the income year over the value at the end of the income year.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended 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 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 70-40 — Value of trading stock at start of income year

(1) The value of an item of * trading stock on hand at the start of an income year is the same amount at which it was taken into account under this Division or Subdivision 328 ‑ E (about trading stock for small business entities) at the end of the last income year. (2) The value of the item is a nil amount if the item was not taken into account under this Division or Subdivision 328 ‑ E (about trading stock for small business entities) at the end of the last income year.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended 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 70-45 — Value of trading stock at end of income year

(1) You must elect to value each item of * trading stock on hand at the end of an income year at: (a) its * cost; or (b) its market selling value; or (c) its replacement value. Note: An item’s market selling value at a particular time may not be the same as its market value. (1A) In working out the * cost, market selling value or replacement value of an item of * trading stock (other than an item the * supply of which cannot be a * taxable supply) at the end of an income year, disregard an amount equal to the amount of the * input tax credit (if any) to which you would be entitled if: (a) you had * acquired the item at that time; and (b) the acquisition had been solely for a * creditable purpose; and Note: Some assets, such as shares, cannot be the subject of a taxable supply. (2) The rest of this Subdivision deals with cases where the normal operation of this section is modified, or where a different valuation method may or must be used. The table sets out other cases where that happens because of provisions outside this Subdivision. Rules about the value of trading stock Item For this situation: See: 2 In working out the attributable income of a non ‑ resident trust estate, trading stock is taken to be valued at cost. Section 102AAY of the Income Tax Assessment Act 1936 3 In working out the attributable income of a controlled foreign corporation, the corporation must value at cost. Section 397 of the Income Tax Assessment Act 1936 4 Some anti ‑ avoidance provisions reduce the amount that is taken to be the cost of an item of trading stock. Subsections 52A(7), 82KH(1N), 82KL(6) and 100A(6B) of the Income Tax Assessment Act 1936 5 The value of the item at the end of an income year may be the same as at the start of the year for a small business entity Subdivision 328 ‑ E of this Act 6 The hybrid mismatch rules disallow an amount of a deduction for an outgoing incurred in connection with acquiring an item of * trading stock Section 832 ‑ 60 of this Act

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 78 of 2001, effective Sch 1 and 2: 30 June 2001 (s 2(1)) | Amended by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 80 of 2007, effective 21 June 2007 | Amended by No 84 of 2018, effective Sch 1 (items 1, 8–13, 15), Sch 2 (items 1–3, 6–10), Sch 3, Sch 4 (items 2–4) and Sch 5: 1 Oct 2018 (s 2(1) item 1)

s 70-50 — Valuation if trading stock obsolete etc.

You may elect to value an item of your * trading stock below all the values in section 70 ‑ 45 if: (a) that is warranted because of obsolescence or any other special circumstances relating to that item; and (b) the value you elect is reasonable.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 70-55 — Working out the cost of natural increase of live stock

(1) The cost of an animal you hold as * live stock that you acquired by natural increase is whichever of these you elect: (a) the actual cost of the animal; (b) the cost prescribed by the regulations for each animal in the applicable class of live stock. (2) However, if you incur a service fee for insemination and, as a result, acquire a horse by natural increase, its cost is the greater of: (a) the amount worked out under subsection (1); and (b) the part of the service fee that is attributable to your acquiring the horse. (3) An election under this section must be made by the time you lodge your * income tax return for the income year in which you acquired the animal. However, the Commissioner can allow you to make it later.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 70-60 — Valuation of horse breeding stock

(1) For a horse at least 3 years old that you acquired under a contract and hold for breeding, you can elect a value other than the values in section 70 ‑ 45. (2) The value you can elect for the horse at the end of the income year is worked out using the table: Value of horse breeding stock If the horse is: ... you can value it at this amount: female 12 years or over $1 any other horse the * horse opening value less the * horse reduction amount (see section 70 ‑ 65) (3) However, if the value worked out under subsection (2) would be less than $1, you must elect the value of $1. (4) A horse’s age is to be measured in whole years as at the end of the relevant income year. The age of a horse not born on 1 August is determined as if the horse had been born on the last 1 August before it was actually born.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 70-65 — Working out the horse opening value and the horse reduction amount

(1) The horse opening value is: (a) if the horse has been your * live stock ever since the start of the income year—its * value as * trading stock at the start of the income year; or (b) otherwise—the horse’s base amount (see subsection (3)). (2) The horse reduction amount is worked out as follows: (a) for female horses under 12 years of age: (b) for any male horse: (3) In this section: base amount is the lesser of: (a) the horse’s * cost; and (b) the horse’s * adjustable value when it most recently became your * live stock. breeding days is the number of whole days in the income year since you most recently began to hold the horse for breeding. nominated percentage is any percentage, up to 25%, you nominate when you make the election in section 70 ‑ 60. reduction factor is the greater of: (a) 3; and (b) the difference between 12 and the horse’s age when you most recently began to hold it for breeding.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1))

s 70-75 — What this Subdivision is about

Your assessable income includes the market value of an item of trading stock if you dispose of it outside the ordinary course of business or it ceases to be trading stock in certain other circumstances. This Subdivision treats certain other assets in the same way as trading stock. Table of sections 70 ‑ 80 Why the rules in this Subdivision are necessary Operative provisions 70 ‑ 85 Application of this Subdivision to certain other assets 70 ‑ 90 Assessable income on disposal of trading stock outside the ordinary course of business 70 ‑ 95 Purchase price is taken to be market value 70 ‑ 100 Notional disposal when you stop holding an item as trading stock 70 ‑ 105 Death of owner 70 ‑ 110 You stop holding an item as trading stock but still own it 70 ‑ 115 Compensation for lost trading stock

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 70-80 — Why the rules in this Subdivision are necessary

(1) When you dispose of an item of your trading stock in the ordinary course of business, what you get for it is included in your assessable income (under section 6 ‑ 5) as ordinary income. Note: An incorporated body is treated as disposing of an item of its trading stock in the ordinary course of business if the body ceases to exist and disposes of the asset to a company that has not significantly different ownership: see Division 620. (2) If an item stops being your trading stock for certain other reasons, an amount is generally included in your assessable income to balance the reduction in trading stock on hand, which is a transaction on revenue account. (3) The other reasons for an item to stop being your trading stock are: (a) you dispose of it outside the ordinary course of business; or (b) interests in it change; or (c) you die; or (d) you stop holding it as trading stock.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 70-85 — Application of this Subdivision to certain other assets

This Subdivision (except section 70 ‑ 115) applies to certain assets of a * business as if they were * trading stock on hand of the entity that carries on that business. The assets are: (a) standing or growing crops; and (b) crop ‑ stools; and (c) trees planted and tended for sale. Note: Section 70 ‑ 115 assesses insurance or indemnity amounts for lost trading stock.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 70-90 — Assessable income on disposal of trading stock outside the ordinary course of business

(1) If you dispose of an item of your * trading stock outside the ordinary course of a * business: (a) that you are carrying on; and (b) of which the item is an asset; your assessable income includes the * market value of the item on the day of the disposal. (1A) If the disposal is the giving of a gift of property by you for which a valuation under section 30 ‑ 212 is obtained, you may choose that the * market value is replaced with the value of the property as determined under the valuation. You can only make this choice if the valuation was made no more than 90 days before or after the disposal. (2) Any amount that you actually receive for the disposal is not included in your assessable income (nor is it * exempt income). Note 1: In the case of an asset covered by section 70 ‑ 85 (which applies this Subdivision to certain other assets), the disposal will usually involve disposing of the land of which the asset forms part. Note 2: For certain disposals of live stock by primary producers, special rules apply: see Subdivision 385 ‑ E. Note 3: If the disposal is by way of gift, you may be able to deduct the gift: see Division 30 (Gifts). Note 4: If the disposal is of trees, you can deduct the relevant portion of your capital costs of acquiring the land carrying the trees or of acquiring a right to fell the trees: see section 70 ‑ 120. Note 5: This section and section 70 ‑ 95 also apply to disposals of certain items on hand at the end of 1996 ‑ 97 that are not trading stock but were trading stock as defined in the Income Tax Assessment Act 1936 : see section 70 ‑ 10 of the Income Tax (Transitional Provisions) Act 1997 .

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 16 of 1998, effective s 4, Sch 3–5, Sch 10 (items 1–19) and Sch 11: 16 Apr 1998 (s 2(1)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 58 of 2000, effective s 4, Sch 2 (items 2–4(2)), Sch 5, Sch 6 (items 1–13, 17, 18, 20–32, 34), Sch 9 and Sch 10 (items 12–17(3)–(6), 31–38(3)–(7)): 31 May 2000 (s 2(1)) Sch 4: 17 Dec 1999 (s 2(8)) Sch 6 (items 14–16): never commenced (s 2(10)) Sch 6 (item 19): 16 July 1999 (s 2(11)) Sch 8 (item 19): 1 July 1998 (s 2(13)) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 70-95 — Purchase price is taken to be market value

If an entity disposes of an item of the entity’s * trading stock outside the ordinary course of * business, the entity acquiring the item is treated as having bought it for the amount included in the disposing entity’s assessable income under section 70 ‑ 90.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 58 of 2000, effective s 4, Sch 2 (items 2–4(2)), Sch 5, Sch 6 (items 1–13, 17, 18, 20–32, 34), Sch 9 and Sch 10 (items 12–17(3)–(6), 31–38(3)–(7)): 31 May 2000 (s 2(1)) Sch 4: 17 Dec 1999 (s 2(8)) Sch 6 (items 14–16): never commenced (s 2(10)) Sch 6 (item 19): 16 July 1999 (s 2(11)) Sch 8 (item 19): 1 July 1998 (s 2(13))

s 70-100 — Notional disposal when you stop holding an item as trading stock

(1) An item of * trading stock is treated as having been disposed of outside the ordinary course of * business if it stops being trading stock on hand of an entity (the transferor ) and, immediately afterwards: (a) the transferor is not the item’s sole owner; but (b) an entity that owned the item (alone or with others) immediately beforehand still has an interest in the item. Example: A grocer decides to take her daughters into partnership with her. Her trading stock becomes part of the partnership assets, owned by the partners equally. As a result, it becomes trading stock on hand of the partnership instead of the grocer. This section treats the grocer as having disposed of the trading stock to the partnership outside the ordinary course of her business. Note: If the transferor is the item’s sole owner after it stops being trading stock on hand of the transferor, section 70 ‑ 110 applies instead of this section. (2) As a result, the transferor’s assessable income includes the * market value of the item on the day it stops being * trading stock on hand of the transferor. (3) The entity or entities (the transferee ) that own the item immediately after it stops being * trading stock on hand of the transferor are treated as having bought the item for the same value on that day. Election to treat item as disposed of at closing value (4) However, an election can be made to treat the item as having been disposed of for what would have been its * value as * trading stock of the transferor on hand at the end of an income year ending on that day. (5) If this election is made, this * value is included in the transferor’s assessable income for the income year that includes that day. The transferee is treated as having bought the item for the same value on that day. (6) This election can only be made if: (a) immediately after the item stops being * trading stock on hand of the transferor, it is an asset of a * business carried on by the transferee; and (b) immediately after the item stops being trading stock on hand of the transferor, the entities that owned it immediately beforehand have (between them) interests in the item whose total value is at least 25% of the item’s * market value on that day; and (c) the * value elected is less than that market value; and (d) the item is not a thing in action. (7) Also, the election can only be made before 1 September following the end of the * financial year in which the item stops being * trading stock on hand of the transferor. However, the Commissioner can allow the election to be made later. (8) An election must be in writing and signed by or on behalf of each of: (a) the entities that own the item immediately before it stops being * trading stock on hand of the transferor; and (b) the entities that own it immediately afterwards. (9) If a person whose signature is required for the election has died, the * legal personal representative of that person’s estate may sign instead. When election has no effect (10) An election has no effect if: (a) the item stops being * trading stock on hand of the transferor outside the course of ordinary family or commercial dealing; and (b) the * consideration receivable by the transferor (or by any of the entities constituting the transferor) substantially exceeds what would reasonably be expected to be the consideration receivable by the entity concerned if the * market value of the item immediately before it stops being trading stock on hand of the transferor were the * value elected under subsection (4). Note: Section 960 ‑ 255 may be relevant to determining family relationships for the purposes of paragraph (10)(a). (11) Consideration receivable by an entity means so much of the value of any benefit as it is reasonable to expect that the entity will obtain in connection with the item ceasing to be * trading stock on hand of the transferor.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 144 of 2008, effective Schedule 14 (items 59–96): 10 Dec 2008 | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 70-105 — Death of owner

(1) When you die, your assessable income up to the time of your death includes the * market value at that time of the * trading stock of your * business (if any). Note: In the case of trees, you can deduct the relevant portion of your capital costs of acquiring the land carrying the trees or of acquiring a right to fell the trees: see section 70 ‑ 120. (2) The entity on which the * trading stock devolves is treated as having bought it for its * market value at that time. (3) However, your * legal personal representative can elect to have included in your assessable income (instead of the * market value) the amount that would have been the * value of the * trading stock at the end of an income year ending on the day of your death. (4) In the case of an asset covered by section 70 ‑ 85 (which applies this Subdivision to certain other assets), your * legal personal representative can elect to have a nil amount included in your assessable income (instead of the * market value). (5) Your * legal personal representative can make an election only if: (a) the * business is carried on after your death; and (b) the * trading stock continues to be held as trading stock of that business, or the asset continues to be held as an asset of that business, as appropriate. (6) If an election is made, the entity on which the * trading stock devolves is treated as having bought it for the amount referred to in subsection (3) or (4). (7) An election can only be made on or before the day when your * legal personal representative lodges your * income tax return for the period up to your death. However, the Commissioner can allow it to be made later.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 70-110 — You stop holding an item as trading stock but still own it

(1) If you stop holding an item as * trading stock, but still own it, you are treated as if: (a) just before it stopped being trading stock, you had sold it to someone else (at * arm’s length and in the ordinary course of business) for its * cost; and (b) you had immediately bought it back for the same amount. Example 1: You are a sheep grazier and take a sheep from your stock to slaughter for personal consumption. You are treated as having sold it for its cost. This amount is assessable income, just like the proceeds of sale of any of your trading stock. Although you are also treated as having bought the sheep for the same amount, it would not be deductible because the sheep is for personal consumption. Example 2: You stop holding an item as trading stock and begin to use it as a depreciating asset for the purpose of producing your assessable income. You are treated as having sold it for its cost. This amount is assessable income, just like the proceeds of sale of any of your trading stock. You are also treated as having bought the item for the same amount, which is relevant to working out the item’s cost for capital allowance purposes (see Subdivision 40 ‑ C) and the item’s cost base for CGT purposes (see Division 110). (2) This section does not apply if: (a) you stop holding an item as * trading stock; and (b) immediately after you stopped holding the item as trading stock, you start to * hold the item as a * registered emissions unit. Note: A transaction that this section treats as having occurred is disregarded for the purposes of these provisions of the Income Tax Assessment Act 1936 : • subsection 47A(10) (which treats certain benefits as dividends paid by a CFC) • paragraph 103A(3A)(c) (which affects whether a company is a public company for an income year).

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 54 of 1999, effective 5 July 1999 (s 2(1), (2)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15)

s 70-115 — Compensation for lost trading stock

Your assessable income includes an amount that: (a) you receive by way of insurance or indemnity for a loss of * trading stock; and (b) is not assessable as * ordinary income under section 6 ‑ 5.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5))

s 70-120 — Deducting capital costs of acquiring trees

(1) This section gives you deductions for your capital costs of acquiring land carrying trees or of acquiring a right to fell trees. Note: This section is included in this Division because: • trees felled for sale, or for use in manufacture, by you will usually become your trading stock; and • before they are felled, the trees are covered by sections 70 ‑ 90 and 70 ‑ 105 because of section 70 ‑ 85. Land carrying trees (2) You can deduct the amount you paid to acquire land carrying trees if: (a) some or all of the trees are felled during the income year for sale, or for use in manufacture, by you for the * purpose of producing assessable income; or (b) some or all of the trees are felled during the income year under a right you granted to another entity in consideration of payments as or by way of * royalty; or (c) the * market value of some or all of the trees is included in your assessable income for the income year by section 70 ‑ 90 (because you disposed of the trees outside the ordinary course of * business) or section 70 ‑ 105 (because of your death). (It does not matter when you acquired the land.) Note: The market value of trees is not included in your assessable income for the income year by section 70 ‑ 105 (because of your death) if your legal personal representative elects under subsection 70 ‑ 105(4) to have a nil amount included instead. Right to fell trees (3) You can deduct the amount you paid to acquire a right to fell trees if: (a) some or all of the trees are felled during the income year for sale, or for use in manufacture, by you for the * purpose of producing assessable income; or (b) some or all of the trees are felled during the income year under a right you granted to another entity in consideration of payments as or by way of * royalty. (It does not matter when you acquired the right.) How much you can deduct for costs of acquiring land or right (4) You can deduct for the income year so much of the amount you paid as is attributable to the trees covered by a paragraph of subsection (2) or (3). (5) If you can deduct an amount because of paragraph (2)(c), you can also deduct for the income year so much of any other capital expenditure you incurred as is attributable to acquiring the trees covered by that paragraph (except so far as you have deducted it, or can deduct it, for any income year under a provision of this Act outside this section). No deduction for carbon sink forests (5A) You cannot deduct under this section so much of an amount you paid or incurred as is attributable to the establishment of trees for which any entity has deducted, or can deduct, an amount for any income year under Subdivision 40 ‑ J. Non ‑ arm’s length transactions (6) If: (a) you can deduct an amount under this section for expenditure incurred in connection with a transaction; and (b) the parties to the transaction did not deal with each other at * arm’s length; and (c) the amount of the expenditure is greater than the * market value of what the expenditure is for; the amount of the expenditure is instead taken to be that market value. This has effect for the purposes of working out what you can deduct under this section.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 38 of 2008, effective Schedule 1, Schedules 3–6, Schedule 7 (items 1–3, 5), Schedule 8 (items 1–11), Schedule 9 (items 2–4), Schedule 10, Schedule 12 and Schedule 13: 24 June 2008 Schedule 8 (items 12–21): 1 July 2012 | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15)

s 80-1 — What this Division is about

This Division sets out rules that apply throughout the Part. The rules are about holding an office, the termination of employment, the transfer of property and receiving and making payments. Table of sections Operative provisions 80 ‑ 5 Holding of an office 80 ‑ 10 Application to the termination of employment 80 ‑ 15 Transfer of property 80 ‑ 20 Payments for your benefit or at your direction or request

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 80-5 — Holding of an office

If a person holds (or has held) an office, this Part applies to the person in the same way as it would apply if the person were (or had been) employed.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 80-10 — Application to the termination of employment

For the purposes of this Part, treat the termination of employment as including: (a) retirement from employment; and (b) the cessation of employment because of death.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 80-15 — Transfer of property

(1) Any of the following payments covered by this Part (but no others covered by this Part) can be or include a transfer of property: (a) an * employment termination payment; (b) a * genuine redundancy payment; (c) an * early retirement scheme payment; (d) a payment covered by Subdivision 83 ‑ D (Foreign termination payments); (e) a payment that would be an employment termination payment but for paragraph 82 ‑ 130(1)(b) (see Subdivision 83 ‑ E). Note: An unused annual leave payment or an unused long service leave payment cannot include a transfer of property. (2) The amount of the payment is or includes the * market value of the property. (3) The * market value is reduced by the value of any consideration given for the transfer of the property.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3)

s 80-20 — Payments for your benefit or at your direction or request

(1) This section applies for the purposes of: (a) determining whether Division 82 or 83 applies to a payment; and (b) determining whether a payment mentioned in Division 82 or 83 is made to you, or received by you. (2) A payment is treated as being made to you, or received by you, if it is made: (a) for your benefit; or (b) to another person or to an entity at your direction or request.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-1 — What this Division is about

This Division tells you how employment termination payments are treated for the purpose of income tax.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-5 — What this Subdivision is about

If you receive a life benefit termination payment, part of the payment may be tax free (the tax free component). You are entitled to a tax offset on the remaining part of the payment (the taxable component), subject to limitations. The extent of your entitlement to the offset depends on your age in the year you receive the offset, on the total amount of payments you receive in the same year, and on the total amount of payments you receive in consequence of the same employment termination. Table of sections Operative provisions 82 ‑ 10 Taxation of life benefit termination payments

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-10 — Taxation of life benefit termination payments

Tax free component (1) The * tax free component of a * life benefit termination payment you receive is not assessable income and is not * exempt income. Taxable component (2) The * taxable component of the payment is assessable income. (3) You are entitled to a * tax offset that ensures that the rate of income tax on the amount mentioned in subsection (4) does not exceed: (a) if you are your * preservation age or older on the last day of the income year in which you receive the payment—15%; or (b) otherwise—30%. Note: The remainder of the taxable component is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986 . (4) The amount is so much of the * taxable component of the payment as does not exceed the smallest of the following: (a) the * ETP cap amount reduced (but not below zero) by: (i) if the payment is a payment of a kind referred to in subsection (6) (an excluded payment )—the amount worked out under this subsection for each * life benefit termination payment you have received earlier in the income year to the extent that it is an excluded payment; or (ii) if the payment is not an excluded payment—the amount worked out under this subsection for each life benefit termination payment you have received earlier in the income year; (b) the ETP cap amount reduced (but not below zero) by: (i) if the payment is an excluded payment—the amount worked out under this subsection for each life benefit termination payment you have received earlier in consequence of the same employment termination (whether in the income year or an earlier income year) to the extent that it is an excluded payment; or (ii) if the payment is not an excluded payment—the amount worked out under this subsection for each life benefit termination payment you have received earlier in consequence of the same employment termination (whether in the income year or an earlier income year); (c) if the payment is not an excluded payment—$180,000, reduced (but not below zero) by your taxable income for the income year in which the payment is made. Note 1: For the ETP cap amount , see section 82 ‑ 160. Note 2: If you have also received a death benefit termination payment in the same income year, your entitlement to a tax offset under this section is not affected by your entitlement (if any) to a tax concession for the death benefit termination payment (under section 82 ‑ 65 or 82 ‑ 70). Note 3: Certain other life benefit termination payments made before 1 July 2012 may be treated as earlier payments under paragraph (4)(b): see section 82 ‑ 10H of the Income Tax (Transitional Provisions) Act 1997 . (5) In working out, for the purposes of paragraph (4)(c), your taxable income for the income year, disregard: (a) the taxable component of the payment; and (b) the taxable component of each * life benefit termination payment you receive later in the income year. (6) Paragraph (4)(c) does not apply in relation to * life benefit termination payments: (a) that are * genuine redundancy payments, or that would be genuine redundancy payments but for paragraph 83 ‑ 175(2)(a); or (b) that are * early retirement scheme payments; or (c) that include * invalidity segments, or what would be invalidity segments included in such payments but for paragraph 82 ‑ 150(1)(c); or (d) that: (i) are paid in connection with a genuine dispute; and (ii) are principally compensation for personal injury, unfair dismissal, harassment, discrimination or a matter prescribed by the regulations; and (iii) exceed the amount that could, at the time of the termination of your employment, reasonably be expected to be received by you in consequence of the voluntary termination of your employment. (7) If the payment is partly an excluded payment: (a) subsection (4) applies as if the payment were 2 payments as follows: (i) first, a payment consisting only of the part of the payment that is an excluded payment; (ii) second, another payment, made immediately after the first payment, consisting only of the part of the payment that is not an excluded payment; and (b) subsection (4) applies to the second payment as if a reference in subsection (5) to the taxable component of a payment were a reference to so much of the taxable component as relates to the part of the payment that is not an excluded payment. (8) Despite subsections (4) and (7), the amount mentioned in subsection (4) in relation to the payment must not exceed either of the following: (a) the * ETP cap amount reduced (but not below zero) by the amount worked out under subsection (4) for each * life benefit termination payment you have received earlier in the income year; (b) the ETP cap amount reduced (but not below zero) by the amount worked out under subsection (4) for each life benefit termination payment you have received earlier in consequence of the same employment termination (whether in the income year or an earlier income year).

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 58 of 2012, effective Schedule 1 (items 2–6): 21 June 2012 ( see s. 2(1)) Schedule 4: Royal Assent Schedule 5: 1 July 2012

s 82-60 — What this Subdivision is about

If you receive a death benefit termination payment after the death of a person, part of the payment may be tax free (the tax free component). You are entitled to a tax offset on the remaining part of the payment (the taxable component), subject to limitations. The extent of your entitlement to the offset depends on whether or not you were a death benefits dependant of the deceased, and on the total amount of payments you receive in consequence of the same employment termination. If a death benefit termination payment is payable to the trustee of the estate of the deceased for the benefit of another person, the payment is taxed in the hands of the trustee in the same way as it would be taxed if it had been paid directly to the other person. Table of sections Operative provisions 82 ‑ 65 Death benefits for dependants 82 ‑ 70 Death benefits for non ‑ dependants 82 ‑ 75 Death benefits paid to trustee of deceased estate

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-65 — Death benefits for dependants

Tax free component (1) The * tax free component of a * death benefit termination payment that you receive after the death of a person of whom you are a * death benefits dependant is not assessable income and is not * exempt income. Taxable component (2) If you receive a * death benefit termination payment after the death of a person of whom you are a * death benefits dependant: (a) the part of the * taxable component of the payment mentioned in subsection (3) is not assessable income and is not * exempt income; and (b) the remainder of the taxable component (if any) of the payment is assessable income. Note: The remainder of the taxable component is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986 . (3) The amount is so much of the * taxable component of the payment as does not exceed the * ETP cap amount. Note: For the ETP cap amount, see section 82 ‑ 160. (4) The * ETP cap amount is reduced (but not below zero) by the amount worked out under subsection (3) for each * death benefit termination payment (if any) you have received earlier in consequence of the same employment termination, whether in the income year or an earlier income year. Note 1: See subsection 82 ‑ 75(2) for the tax treatment of any amount by which you may have benefited from an employment termination payment to the trustee of the estate of the deceased. Note 2: If you have also received a life benefit termination payment in the same income year, your entitlement to a tax concession under this section is not affected by your entitlement (if any) to an offset for the life benefit termination payment (under section 82 ‑ 10).

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-70 — Death benefits for non ‑ dependants

Tax free component (1) The * tax free component of a * death benefit termination payment that you receive after the death of a person of whom you are not a * death benefits dependant is not assessable income and is not * exempt income. Taxable component (2) If you receive a * death benefit termination payment after the death of a person of whom you are not a * death benefits dependant, the * taxable component of the payment is assessable income. (3) You are entitled to a * tax offset that ensures that the rate of income tax on the amount mentioned in subsection (4) does not exceed 30%. Note: The remainder of the taxable component is taxed at the top marginal rate in accordance with the Income Tax Rates Act 1986 . (4) The amount is so much of the * taxable component of the payment as does not exceed the * ETP cap amount. Note: For the ETP cap amount, see section 82 ‑ 160. (5) The * ETP cap amount is reduced (but not below zero) by the amount worked out under subsection (4) for each * death benefit termination payment (if any) you have received earlier in consequence of the same employment termination, whether in the income year or an earlier income year. Note 1: See subsection 82 ‑ 75(3) for the tax treatment of any amount by which you may have benefited from an employment termination payment to the trustee of the estate of the deceased. Note 2: If you have also received a life benefit termination payment in the same income year, your entitlement to a tax offset under this section is not affected by your entitlement (if any) to an offset for the life benefit termination payment (under section 82 ‑ 10).

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-75 — Death benefits paid to trustee of deceased estate

(1) This section applies to you if: (a) you are the trustee of a deceased estate; and (b) a * death benefit termination payment is made to you in your capacity as trustee. Note: See also subsection 101A(3) of the Income Tax Assessment Act 1936 . Dependants of deceased benefit from payment (2) To the extent that 1 or more beneficiaries of the estate who were * death benefits dependants of the deceased have benefited, or may be expected to benefit, from the payment: (a) the payment is treated as if it had been made to you as a person who was a death benefits dependant of the deceased; and (b) the payment is taken to be income to which no beneficiary is presently entitled. Note: Section 82 ‑ 65 deals with the taxation of employment termination payments made to persons who are death benefits dependants of deceased persons. Non ‑ dependants of deceased benefit from payment (3) To the extent that 1 or more beneficiaries of the estate who were not * death benefits dependants of the deceased have benefited, or may be expected to benefit, from the payment: (a) the payment is treated as if it had been made to you as a person who was not a death benefits dependant of the deceased; and (b) the payment is taken to be income to which no beneficiary is presently entitled. Note: Section 82 ‑ 70 deals with the taxation of employment termination payments made to persons who are not death benefits dependants of deceased persons.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-125 — What this Subdivision is about

This Subdivision defines an employment termination payment as a payment made in consequence of the termination of a person’s employment that is received no later than 12 months after the termination (though the 12 month restriction is relaxed in some circumstances). An employment termination payment can be a life benefit termination payment (received by the person whose employment is terminated) or a death benefit termination payment (received by another person after the death of a person whose employment is terminated). Certain types of payments are declared not to be employment termination payments. Various other terms used in describing the taxation treatment of employment termination payments are defined in the Subdivision. Table of sections Operative provisions 82 ‑ 130 What is an employment termination payment ? 82 ‑ 135 Payments that are not employment termination payments 82 ‑ 140 Tax free component of an employment termination payment 82 ‑ 145 Taxable component of an employment termination payment 82 ‑ 150 What is an invalidity segment of an employment termination payment? 82 ‑ 155 What is a pre ‑ July 83 segment of an employment termination payment? 82 ‑ 160 What is the ETP cap amount ?

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-130 — What is an employment termination payment ?

(1) A payment is an employment termination payment if: (a) it is received by you: (i) in consequence of the termination of your employment; or (ii) after another person’s death, in consequence of the termination of the other person’s employment; and (b) it is received no later than 12 months after that termination (but see subsection (4)); and (c) it is not a payment mentioned in section 82 ‑ 135. Note 1: If a payment would be an employment termination payment but for paragraph (b), see subsection (4) and section 83 ‑ 295. Note 2: The holding of an office is treated as employment for this Part: see section 80 ‑ 5. Also, the termination of employment is treated as including the termination of employment by retirement or by death: see section 80 ‑ 10. Types of employment termination payment (2) A life benefit termination payment is an * employment termination payment to which subparagraph (1)(a)(i) applies. (3) A death benefit termination payment is an * employment termination payment to which subparagraph (1)(a)(ii) applies. Exemption from 12 month rule (4) Paragraph (1)(b) does not apply to you if: (a) you are covered by a determination under subsection (5) or (7); or (b) the payment is a * genuine redundancy payment or an * early retirement scheme payment. Note: The part of a genuine redundancy payment or an early retirement scheme payment worked out under section 83 ‑ 170 is not an employment termination payment: see section 82 ‑ 135. (5) The Commissioner may determine, in writing, that paragraph (1)(b) does not apply to you if the Commissioner considers the time between the employment termination and the payment to be reasonable, having regard to the following: (a) the circumstances of the employment termination, including any dispute in relation to the termination; (b) the circumstances of the payment; (c) the circumstances of the person making the payment; (d) any other relevant circumstances. (6) A determination under subsection (5) is not a legislative instrument. (7) The Commissioner may, by legislative instrument, determine that paragraph (1)(b) does not apply to either or both of the following, as specified in the determination: (a) a class of payments; (b) a class of recipients of payments. (8) A determination under subsection (7) may provide for paragraph (1)(b) not to apply in circumstances relating to any (or all) of the following, as specified in the determination: (a) a class of employment termination (including a class described by reference to disputes of a specified type); (b) a class of payments; (c) a class of persons making payments; (d) the period after the employment termination until payment is received; (e) any other relevant circumstances.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-135 — Payments that are not employment termination payments

The following payments you receive are not employment termination payments : (a) a * superannuation benefit (see Divisions 301 to 307); (b) a payment of a pension or an * annuity (whether or not the payment is a superannuation benefit); and (c) an * unused annual leave payment (see Subdivision 83 ‑ A); (d) an * unused long service leave payment (see Subdivision 83 ‑ B); (e) the part of a * genuine redundancy payment or an * early retirement scheme payment worked out under section 83 ‑ 170 (see Subdivision 83 ‑ C); (f) a payment to which Subdivision 83 ‑ D (Foreign termination payments) applies; (fa) a payment (or part of one) made by a company or trust as mentioned in subsection 152 ‑ 310(2); (g) a payment that is an advance or a loan to you on terms and conditions that would apply if you and the payer were dealing at * arm’s length; (h) a payment that is deemed to be a * dividend under this Act; (i) a capital payment for, or in respect of, personal injury to you so far as the payment is reasonable having regard to the nature of the personal injury and its likely effect on your capacity to * derive income from personal exertion (within the meaning of the definition of income derived from personal exertion in subsection 6(1) of the Income Tax Assessment Act 1936 ); (j) a capital payment for, or in respect of, a legally enforceable contract in restraint of trade by you so far as the payment is reasonable having regard to the nature and extent of the restraint; (k) a payment: (i) received by you, or to which you are entitled, as the result of the commutation of a pension payable from a * constitutionally protected fund; and (ii) wholly applied in paying any superannuation contributions surcharge (as defined in section 37 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 ); (l) a payment: (i) received by you, or to which you are entitled, as the result of the commutation of a pension payable by a superannuation provider (within the meaning of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 ); and (ii) wholly applied in paying any superannuation contributions surcharge (as defined in section 43 of that Act); (m) an amount included in your assessable income under Division 83A of this Act (which deals with employee share schemes). Note: For paragraph (e)—the remaining part of a genuine redundancy payment or an early retirement scheme payment (apart from the amount mentioned in the paragraph) is an employment termination payment if section 82 ‑ 130 applies to that part.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 82-140 — Tax free component of an employment termination payment

The tax free component of an * employment termination payment is so much of the payment as consists of the following: (a) the * invalidity segment of the payment; (b) the * pre ‑ July 83 segment of the payment.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-145 — Taxable component of an employment termination payment

The taxable component of an * employment termination payment is the amount of the payment less the * tax free component of the payment (see section 82 ‑ 140).

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-150 — What is an invalidity segment of an employment termination payment?

(1) An * employment termination payment includes an invalidity segment if: (a) the payment was made to a person because he or she stops being * gainfully employed; and (b) the person stopped being gainfully employed because he or she suffered from ill ‑ health (whether physical or mental); and (c) the gainful employment stopped before the person’s * last retirement day; and (d) 2 legally qualified medical practitioners have certified that, because of the ill ‑ health, it is unlikely that the person can ever be gainfully employed in capacity for which he or she is reasonably qualified because of education, experience or training. (2) Work out the amount of the invalidity segment by applying the following formula: where: days to retirement is the number of days from the day on which the person’s employment was terminated to the * last retirement day. employment days is the number of days of employment to which the payment relates.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-155 — What is a pre ‑ July 83 segment of an employment termination payment?

(1) An * employment termination payment includes a pre ‑ July 83 segment if any of the employment to which the payment relates occurred before 1 July 1983. (2) Work out the amount of the pre ‑ July 83 segment as follows: Step 1. Subtract the * invalidity segment (if any) from the * employment termination payment. Step 2. Multiply the amount at step 1 by the fraction:

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 82-160 — What is the ETP cap amount ?

The ETP cap amount for the 2007 ‑ 2008 income year is $140,000. This amount is indexed annually. Note 1: Subdivision 960 ‑ M shows how to index amounts. However, annual indexation does not necessarily increase the ETP cap amount: see section 960 ‑ 285. Note 2: The ETP cap amount may be reduced for the purpose of working out tax offsets for individual employment termination payments.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-1 — What this Division is about

This Division sets out the taxation treatment for a variety of payments, other than employment termination payments, that are made in consequence of the termination of employment.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-5 — What this Subdivision is about

You are entitled to a tax offset for a payment that you receive in consequence of the termination of your employment that is for unused annual leave. Table of sections Operative provisions 83 ‑ 10 Unused annual leave payment is assessable 83 ‑ 15 Entitlement to tax offset

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-10 — Unused annual leave payment is assessable

Application—annual leave (1) This section applies to leave ( annual leave ) of the following types (whether it is made available as an entitlement or as a privilege): (a) leave ordinarily known as annual leave, including recreational leave and annual holidays; (b) any other leave made available in circumstances similar to those in which the leave mentioned in paragraph (a) is ordinarily made available. Unused annual leave payments (2) Your assessable income includes an * unused annual leave payment that you receive. (3) A payment that you receive in consequence of the termination of your employment is an unused annual leave payment if: (a) it is for annual leave you have not used; or (b) it is a bonus or other additional payment for annual leave you have not used; or (c) it is for annual leave, or is a bonus or other additional payment for annual leave, to which you were not entitled just before the employment termination, but that would have been made available to you at a later time if it were not for the employment termination.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-15 — Entitlement to tax offset

You are entitled to a * tax offset to ensure that the rate of tax on an * unused annual leave payment does not exceed 30%, to the extent that: (a) the payment was made in connection with a payment that includes, or consists of, any of the following: (i) a * genuine redundancy payment; (ii) an * early retirement scheme payment; (iii) the * invalidity segment of an * employment termination payment or * superannuation benefit; or (b) the payment was made in respect of employment before 18 August 1993.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-65 — What this Subdivision is about

You are entitled to a tax offset for a payment that you receive in consequence of the termination of your employment that is for unused long service leave. Table of sections General 83 ‑ 70 Application—long service leave 83 ‑ 75 Meaning of unused long service leave payment 83 ‑ 80 Taxation of unused long service leave payments 83 ‑ 85 Entitlement to tax offset 83 ‑ 90 Meaning of pre ‑ 16/8/78 period , pre ‑ 18/8/93 period , post ‑ 17/8/93 period and long service leave employment period Employment wholly full ‑ time or wholly part ‑ time 83 ‑ 95 How to work out amount of payment attributable to each period 83 ‑ 100 How to work out unused days of long service leave for each period 83 ‑ 105 How to work out long service leave accrued in each period Employment partly full ‑ time and partly part ‑ time 83 ‑ 110 Leave accrued in pre ‑ 16/8/78, pre ‑ 18/8/93 and post ‑ 17/8/93 periods—employment full ‑ time and part ‑ time Long service leave taken at less than full pay 83 ‑ 115 Working out used days of long service leave if leave taken at less than full pay

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-70 — Application—long service leave

This Subdivision applies to leave ( long service leave ) of the following types (whether it is made available as an entitlement or as a privilege), other than annual leave to which section 83 ‑ 10 applies: (a) leave ordinarily known as long service leave, including long leave, furlough and extended leave; (b) any other leave made available in circumstances similar to those in which the leave mentioned in paragraph (a) is ordinarily made available; (c) if your employer has entered into a * scheme or * arrangement for leave and, because of the existence and nature of the scheme or arrangement, the employer does not have to comply with the requirements of a law of the Commonwealth, or of a State or Territory, relating to leave mentioned in paragraph (a) or (b)—leave made available under the scheme or arrangement.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-75 — Meaning of unused long service leave payment

A payment that you receive in consequence of the termination of your employment is an unused long service leave payment if: (a) it is for long service leave you have not used; or (b) it is for long service leave to which you were not entitled just before the employment termination, but that would have been made available to you at a later time if it were not for the employment termination.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-80 — Taxation of unused long service leave payments

Assessable and tax ‑ free parts of unused long service leave payments (1) If you receive an * unused long service leave payment, your assessable income includes the part of the payment shown in this table: * Unused long service leave payments Item To the extent the payment is attributable to the … Your assessable income includes this part of it … 1 * pre ‑ 16/8/78 period 5% 2 * pre ‑ 18/8/93 period 100% 3 * post ‑ 17/8/93 period 100% (2) The remainder of that part (if any) of an * unused long service leave payment that is attributable to the * pre ‑ 16/8/78 period is not assessable income and is not * exempt income. Note 1: If your employment was wholly full ‑ time or wholly part ‑ time during a period, see sections 83 ‑ 95, 83 ‑ 100 and 83 ‑ 105 to work out the amount of an unused long service leave payment that is attributable to the period. Note 2: If your employment was partly full ‑ time and partly part ‑ time during a period, see section 83 ‑ 110 to work out the amount of an unused long service leave payment that is attributable to the period.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-85 — Entitlement to tax offset

(1) You are entitled to a * tax offset on an * unused long service leave payment that ensures that the rate of income tax on the amount of the payment mentioned in subsection (2) does not exceed 30%. (2) The amount is the part of the * unused long service leave payment included in your assessable income under subsection 83 ‑ 80(1): (a) to the extent that it is attributable to the * pre ‑ 18/8/93 period; and (b) to the extent that it is attributable to the * post ‑ 17/8/93 period, if the payment was made in connection with a payment that includes, or consists of, any of the following: (i) a * genuine redundancy payment; or (ii) an * early retirement scheme payment; or (iii) an * invalidity segment of an * employment termination payment or a * superannuation benefit.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-90 — Meaning of pre ‑ 16/8/78 period , pre ‑ 18/8/93 period , post ‑ 17/8/93 period and long service leave employment period

(1) The pre ‑ 16/8/78 period consists of each day (if any) in your * long service leave employment period that occurred before 16 August 1978. (2) The pre ‑ 18/8/93 period consists of each day (if any) in your * long service leave employment period to which the payment relates that occurred after 15 August 1978 and before 18 August 1993. (3) The post ‑ 17/8/93 period consists of each day (if any) in your * long service leave employment period to which the payment relates that occurred after 17 August 1993. (4) Your long service leave employment period , for a period of long service leave, is: (a) the period of employment to which the long service leave relates; or (b) if your entitlement to long service leave changes so that it accrues over a shorter period—the period that would apply under paragraph (a) assuming the change had not happened.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-95 — How to work out amount of payment attributable to each period

(1) Work out how much of an * unused long service leave payment is attributable to a period as follows: (a) for the * pre ‑ 18/8/93 period or to the * post ‑ 17/8/93 period—use the formula in subsection (2); (b) for the * pre ‑ 16/8/78 period—subtract the sum of the amounts (if any) worked out for paragraph (a) for the other 2 periods from the total amount of the payment. (2) For the * pre ‑ 18/8/93 period or the * post ‑ 17/8/93 period, the formula is: where: total unused long service leave days means the total number of unused days of long service leave in the * long service leave employment period for the payment. unused long service leave days in the relevant period means the number of unused days of long service leave in the * pre ‑ 18/8/93 period or the * post ‑ 17/8/93 period (as applicable), worked out under section 83 ‑ 100. Note 1: For the meaning of unused days of long service leave , see section 83 ‑ 100. Note 2: Section 83 ‑ 110 explains how to work out the period of unused long service leave if your employment was partly full ‑ time and partly part ‑ time during the period.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-100 — How to work out unused days of long service leave for each period

(1) The number of unused days of long service leave for each of the * pre ‑ 16/8/78 period, the * pre ‑ 18/8/93 period and the * post ‑ 17/8/93 period is the number of days of long service leave that accrued to you during that period less the number of days of long service leave that you used in the period. Exception if days used exceed days accrued in the pre ‑ 18/8/93 period and the post ‑ 17/8/93 period (2) To the extent that the number of days of long service leave that you used during the * pre ‑ 18/8/93 period or the * post ‑ 17/8/93 period exceeds the number of days of long service leave that accrued to you during the period, apply the excess days as shown in this table: How to apply excess days Item If there are excess days in this period: Apply the excess days as follows: If, after you apply the excess days as shown in column 2, excess days remain, apply the remaining days as follows: 1 * pre ‑ 18/8/93 period Subtract the excess days from the unused days in the * post ‑ 17/8/93 period Subtract the excess days from the unused days in the * pre ‑ 16/8/78 period 2 * post ‑ 17/8/93 period Subtract the excess days from the unused days in the * pre ‑ 18/8/93 period Subtract the excess days from the unused days in the * pre ‑ 16/8/78 period (3) The number of unused days of long service leave in each period is the number of days after applying the table. Note: Section 83 ‑ 115 explains how to work out the number of days of long service leave you are taken to have used if you took long service leave at less than the full pay rate.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-105 — How to work out long service leave accrued in each period

(1) Work out the number of days of long service leave that accrued to you during each part of your * long service leave employment period as follows: (a) for the * pre ‑ 18/8/93 period or the * post ‑ 17/8/93 period—use the formula in subsection (2); (b) for the * pre ‑ 16/8/78 period—subtract the sum of the number of days (if any) worked out under paragraph (a) for the other 2 periods from the total number of days of long service leave accrued to you during the long service leave employment period. (2) For the * pre ‑ 18/8/93 period or the * post ‑ 17/8/93 period, the formula is: where: relevant period means the * pre ‑ 18/8/93 period or the * post 17/8/93 period (as applicable). How to treat fraction of day (3) If long service leave accrued to you during the * pre ‑ 18/8/93 period and the * post ‑ 17/8/93 period but not during the * pre ‑ 16/8/78 period, and the number of days worked out under subsection (2) for the post ‑ 17/8/93 period includes a fraction, treat the fraction as having accrued during the pre ‑ 18/8/93 period. (4) If long service leave accrued to you during all 3 periods and the number of days worked out under subsection (2) for the * post ‑ 17/8/93 period or the * pre ‑ 18/8/93 period includes a fraction, treat the fraction as having accrued during the * pre ‑ 16/8/78 period.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-110 — Leave accrued in pre ‑ 16/8/78, pre ‑ 18/8/93 and post ‑ 17/8/93 periods—employment full ‑ time and part ‑ time

(1) This section applies if the * long service leave employment period for an * unused long service leave payment includes: (a) 1 or more periods when you were employed on a full ‑ time basis; and (b) 1 or more periods when you were employed on a part ‑ time basis. (2) Work out how much of the payment is attributable to the period or periods when you were employed on a full ‑ time basis (the full ‑ time payment ) and how much to the period or periods when you were employed on a part ‑ time basis (the part ‑ time payment ). (3) The amount of the payment that is attributable to each of the * pre ‑ 16/8/78 period, the * pre ‑ 18/8/93 period and the * post ‑ 17/8/93 period is the sum of the amounts worked out in accordance with sections 83 ‑ 95, 83 ‑ 100 and 83 ‑ 105 that would be attributable to those periods if the full ‑ time payment and the part ‑ time payment were each * unused long service leave payments.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-115 — Working out used days of long service leave if leave taken at less than full pay

If you used days of long service leave at a rate of pay that is less than the rate to which you are entitled, the number of days of long service leave you are taken to have used (disregarding fractions of days) is as follows: Example: If you took 100 actual days of long service leave at a rate of pay of $30 per hour, while the rate of pay to which you were entitled when taking leave is $40 per hour, you are taken to have used 75 days of long service leave, worked out as follows:

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-165 — What this Subdivision is about

This Subdivision defines what are genuine redundancy payments and early retirement scheme payments. If you receive a genuine redundancy payment or an early retirement scheme payment, you do not have to pay income tax on the payment so far as it does not exceed a certain amount worked out under this Subdivision. A part of a genuine redundancy payment or an early retirement scheme payment that is not tax free under this Subdivision will normally be an employment termination payment. Table of sections Operative provisions 83 ‑ 170 Tax ‑ free treatment of genuine redundancy payments and early retirement scheme payments 83 ‑ 175 What is a genuine redundancy payment ? 83 ‑ 180 What is an early retirement scheme payment ?

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-170 — Tax ‑ free treatment of genuine redundancy payments and early retirement scheme payments

(1) This section applies if you receive a * genuine redundancy payment or an * early retirement scheme payment. Note: A payment cannot be both a genuine redundancy payment and an early retirement scheme payment, because of the nature of each of these types of payment: see sections 83 ‑ 175 and 83 ‑ 180. (2) So much of the relevant payment as does not exceed the amount worked out under subsection (3) is not assessable income and is not * exempt income. (3) Work out the amount using the formula: where: base amount means: (a) for the income year 2006 ‑ 2007—$6,783; and (b) for a later income year—the amount mentioned in paragraph (a) indexed annually. Note: Subdivision 960 ‑ M shows you how to index the base amount. service amount means: (a) for the income year 2006 ‑ 2007—$3,392; and (b) for a later income year—the amount mentioned in paragraph (a) indexed annually. Note: Subdivision 960 ‑ M shows you how to index the service amount. years of service means the number of whole years in the period, or sum of periods, of employment to which the payment relates. Note: The remaining part of a genuine redundancy payment or an early retirement scheme payment (apart from the amount mentioned in subsection (3)) is an employment termination payment if section 82 ‑ 130 applies to that part.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-175 — What is a genuine redundancy payment ?

(1) A genuine redundancy payment is so much of a payment received by an employee who is dismissed from employment because the employee’s position is genuinely redundant as exceeds the amount that could reasonably be expected to be received by the employee in consequence of the voluntary termination of his or her employment at the time of the dismissal. (2) A genuine redundancy payment must satisfy the following conditions: (a) the employee is dismissed before the earlier of the following: (i) the day the employee reached * pension age; (ii) if the employee’s employment would have terminated when he or she reached a particular age or completed a particular period of service—the day he or she would reach the age or complete the period of service (as the case may be); (b) if the dismissal was not at * arm’s length—the payment does not exceed the amount that could reasonably be expected to be made if the dismissal were at arm’s length; (c) at the time of the dismissal, there was no * arrangement between the employee and the employer, or between the employer and another person, to employ the employee after the dismissal. (3) However, a genuine redundancy payment does not include any part of a payment that was received by the employee in lieu of * superannuation benefits to which the employee may have become entitled at the time the payment was received or at a later time. Payments not covered (4) A payment is not a genuine redundancy payment if it is a payment mentioned in section 82 ‑ 135 (apart from paragraph 82 ‑ 135(e)). Note: Paragraph 82 ‑ 135(e) provides that the part of a genuine redundancy payment or an early retirement scheme payment worked out under section 83 ‑ 170 is not an employment termination payment.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 94 of 2019, effective Sch 1: 29 Oct 2019 (s 2(1) item 2)

s 83-180 — What is an early retirement scheme payment ?

(1) An early retirement scheme payment is so much of a payment received by an employee because the employee retires under an * early retirement scheme as exceeds the amount that could reasonably be expected to be received by the employee in consequence of the voluntary termination of his or her employment at the time of the retirement. (2) An early retirement scheme payment must satisfy the following conditions: (a) the employee retires before the earlier of the following: (i) the day the employee reached * pension age; (ii) if the employee’s employment would have terminated when he or she reached a particular age or completed a particular period of service—the day he or she would reach the age or complete the period of service (as the case may be); (b) if the retirement is not at * arm’s length—the payment does not exceed the amount that could reasonably be expected to be made if the retirement were at arm’s length; (c) at the time of the retirement, there was no * arrangement between the employee and the employer, or between the employer and another person, to employ the employee after the retirement. (3) A scheme is an early retirement scheme if: (a) all the employer’s employees who comprise such a class of employees as the Commissioner approves may participate in the scheme; and (b) the employer’s purpose in implementing the scheme is to rationalise or re ‑ organise the employer’s operations by making any change to the employer’s operations, or the nature of the work force, that the Commissioner approves; and (c) before the scheme is implemented, the Commissioner, by written instrument, approves the scheme as an early retirement scheme for the purposes of this section. (4) A scheme is also an early retirement scheme if: (a) paragraph (3)(a) or (b) does not apply; and (b) the Commissioner is satisfied that special circumstances exist in relation to the scheme that make it reasonable to approve the scheme; and (c) before the scheme is implemented, the Commissioner, by written instrument, approves the scheme as an early retirement scheme for the purposes of this section. (5) However, an early retirement scheme payment does not include any part of the payment that was paid to the employee in lieu of * superannuation benefits to which the employee may have become entitled at the time the payment was made or at a later time. Payments not covered (6) A payment is not an early retirement scheme payment if it is a payment mentioned in section 82 ‑ 135 (apart from paragraph 82 ‑ 135(e)). Note: Paragraph 82 ‑ 135(e) provides that the part of a genuine redundancy payment or an early retirement scheme payment worked out under section 83 ‑ 170 is not an employment termination payment.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 94 of 2019, effective Sch 1: 29 Oct 2019 (s 2(1) item 2)

s 83-230 — What this Subdivision is about

This Subdivision deals with termination payments that arise out of foreign employment. These payments are not employment termination payments, and are tax free (except for amounts worked out under this Subdivision). Table of sections Operative provisions 83 ‑ 235 Termination payments tax free—foreign resident period 83 ‑ 240 Termination payments tax free—Australian resident period

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-235 — Termination payments tax free—foreign resident period

A payment received by you is not assessable income and is not * exempt income if: (a) it was received in consequence of the termination of your employment in a foreign country; and (b) it is not a * superannuation benefit; and (c) it is not a payment of a pension or an * annuity (whether or not the payment is a superannuation benefit); and (d) it relates only to a period of employment when you were not an Australian resident.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-240 — Termination payments tax free—Australian resident period

(1) A payment received by you is not assessable income and is not * exempt income if: (a) it was received in consequence of: (i) the termination of your employment in a foreign country; or (ii) the termination of your engagement on qualifying service on an approved project (within the meaning of section 23AF of the Income Tax Assessment Act 1936 ), in relation to a foreign country; and (b) it relates only to the period of that employment or engagement; and (c) it is not a * superannuation benefit; and (d) it is not a payment of a pension or an * annuity (whether or not the payment is a superannuation benefit); and (e) you were an Australian resident during the period of the employment or engagement; and (f) the payment is not exempt from income tax under the law of the foreign country; and (g) for a period of employment—your foreign earnings from the employment are exempt from income tax under section 23AG of the Income Tax Assessment Act 1936 ; and (h) for a period of engagement—your * eligible foreign remuneration from the service is exempt from income tax under section 23AF of that Act. (2) For the purposes of subparagraph (1)(a)(ii), treat the termination of engagement on qualifying service on an approved project as including: (a) retirement from the engagement; and (b) cessation of the engagement because of the person’s death. Note: The termination of a person’s employment is treated in the same way: see section 80 ‑ 10.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-290 — What this Subdivision is about

If a payment you receive in consequence of the termination of your employment is made more than 12 months after the termination of your employment, it does not qualify as an employment termination payment, subject to certain exceptions (see section 82 ‑ 130). The payment is treated as assessable income and no tax concession is allowed under Division 82. Table of sections Operative provisions 83 ‑ 295 Termination payments made more than 12 months after termination etc.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83-295 — Termination payments made more than 12 months after termination etc.

A payment received by you that would be an * employment termination payment but for paragraph 82 ‑ 130(1)(b) is assessable income.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (items 1, 2, 5–17, 24(1)), Schedule 2 (items 1, 2), Schedule 3, Schedule 5 (items 6–8, 36(1)) and Schedule 10: Royal Assent

s 83A-1 — What this Division is about

Your assessable income includes discounts on shares, rights and stapled securities you (or your associate) acquire under an employee share scheme. You may be entitled: (a) to have the amount included in your assessable income reduced; or (b) to have the income year in which it is included deferred.

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

s 83A-5 — Objects of Division

The objects of this Division are: (a) to ensure that benefits provided to employees under * employee share schemes are subject to income tax at the employees’ marginal rates under * income tax law (instead of being subject to * fringe benefits tax law); and (b) to increase the extent to which the interests of employees are aligned with those of their employers, by providing a tax concession to encourage lower and middle income earners to acquire * shares under such schemes; and (c) to increase the number of new entrepreneurial companies in Australia by assisting them to attract and retain employees by providing those employees with a tax concession for acquiring shares under such schemes.

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

s 83A-10 — Meaning of ESS interest and employee share scheme

(1) An ESS interest , in a company, is a beneficial interest in: (a) a * share in the company; or (b) a right to acquire a beneficial interest in a share in the company. (2) An employee share scheme is a * scheme under which * ESS interests in a company are provided to employees, or * associates of employees, (including past or prospective employees) of: (a) the company; or (b) * subsidiaries of the company; in relation to the employees’ employment. Note: See section 83A ‑ 325 for relationships similar to employment.

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

s 83A-15 — What this Subdivision is about

Generally, a discount you receive on shares, rights or stapled securities you acquire under an employee share scheme is included in your assessable income when you acquire the beneficial interest in those shares, rights or securities. You may be entitled to reduce the amount included in your assessable income if you meet one of 2 sets of conditions. If you are a foreign resident, only the part of the discount that relates to your employment in Australia is included in your assessable income. Table of sections Operative provisions 83A ‑ 20 Application of Subdivision 83A ‑ 25 Discount to be included in assessable income 83A ‑ 30 Amount for which discounted ESS interest acquired 83A ‑ 33 Reducing amounts included in assessable income—start ups 83A ‑ 35 Reducing amounts included in assessable income—other cases 83A ‑ 45 Further conditions for reducing amounts included in assessable income

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

s 83A-20 — Application of Subdivision

(1) This Subdivision applies to an * ESS interest if you acquire the interest under an * employee share scheme at a discount. Note 1: This Subdivision does not apply if Subdivision 83A ‑ C applies: see section 83A ‑ 105. Note 2: If an associate of yours acquires an interest in relation to your employment, this Division applies as if you, rather than your associate, acquired the interest: see section 83A ‑ 305. (2) However, this Subdivision does not apply if the * ESS interest is a beneficial interest in a * share that you acquire as a result of exercising a right, if you acquired a beneficial interest in the right under an * employee share scheme.

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

s 83A-25 — Discount to be included in assessable income

(1) Your assessable income for the income year in which you acquire the * ESS interest includes the discount given in relation to the interest. Note: Regulations made for section 83A ‑ 315 may be relevant to working out whether you acquire the ESS interest at a discount. (2) Treat an amount included in your assessable income under subsection (1) as being from a source other than an * Australian source to the extent that it relates to your employment outside Australia. Note: For the CGT treatment of employee share schemes, see Subdivision 130 ‑ D.

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

s 83A-30 — Amount for which discounted ESS interest acquired

(1) For the purposes of this Act (other than this Division), the * ESS interest (and the * share or right of which it forms part) is taken to have been acquired for its * market value (rather than for its discounted value). Note: Regulations made for the purposes of section 83A ‑ 315 may substitute a different amount for the market value of the ESS interest. (2) Subsection (1) does not apply to an * ESS interest that is a beneficial interest in a right (or to the right of which it forms part), if section 83A ‑ 33 (about start ups) reduces the amount to be included in your assessable income in relation to the interest.

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

s 83A-33 — Reducing amounts included in assessable income—start ups

(1) Reduce the total amount included in your assessable income under subsection 83A ‑ 25(1) for an income year by the total of the amounts included in your assessable income under that subsection, for the income year, for * ESS interests to which all of the following provisions apply: (a) subsections (2) to (6) of this section; (b) section 83A ‑ 45 (about further conditions); (c) for ESS interests that are beneficial interests in * shares—subsection 83A ‑ 105(2) (about broad availability of schemes). No equity interests listed on a stock exchange (2) This subsection applies to an * ESS interest in a company (the first company ) if no * equity interests in any of the following companies are listed for quotation in the official list of any * approved stock exchange at the end of the first company’s most recent income year before you acquired the interest: (a) the first company; (b) any * subsidiary of the first company at the end of that income year; (c) any holding company (within the meaning of the Corporations Act 2001 ) of the first company at the end of that income year; (d) any subsidiary of a holding company (within the meaning of that Act) of the first company at the end of that income year. Note: For identifying any holding company, see also subsection (7). Incorporated for less than 10 years (3) This subsection applies to an * ESS interest in a company if: (a) the company (the first company ); and (b) each of the other companies referred to in subsection (2); was incorporated by or under an * Australian law or * foreign law less than 10 years before the end of the first company’s most recent income year before you acquired the interest. Company has aggregated turnover not exceeding $50 million (4) This subsection applies to an * ESS interest in a company if the company has an * aggregated turnover not exceeding $50 million for the company’s most recent income year before the income year in which you acquire the ESS interest. Note: For working out aggregated turnover, see also subsection (7). Conditions relating to market value (5) This subsection applies to an * ESS interest in a company if: (a) in the case of an ESS interest that is a beneficial interest in a * share—the discount on the ESS interest is no more than 15% of its * market value when you acquire it; or (b) in the case of an ESS interest that is a beneficial interest in a right—the amount that must be paid to exercise the right is greater than or equal to the market value of an ordinary share in the company when you acquire the ESS interest. Employer to be an Australian resident company (6) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest, your employer is an Australian resident. Disregard certain investments (7) For the purposes of subsections (2) and (4), disregard: (a) * eligible venture capital investments by a * VCLP, * ESVCLP or * AFOF; and (b) investments by an * exempt entity that is a * deductible gift recipient; when identifying any holding company (within the meaning of the Corporations Act 2001 ) or working out * aggregated turnover.

Amendment history: Inserted by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2)

s 83A-35 — Reducing amounts included in assessable income—other cases

Reduction and income test (1) Reduce the total amount included in your assessable income under subsection 83A ‑ 25(1) for an income year by the total of the amounts included in your assessable income under that subsection, for the income year, for * ESS interests to which all of the following provisions apply: (a) subsections (6) and (7) of this section; (b) section 83A ‑ 45 (about further conditions). (2) However: (a) do not reduce the total amount by more than $1,000; and (b) only make the reduction if the sum of the following does not exceed $180,000: (i) your taxable income for the income year (including any amount that would be included in your taxable income if you disregarded this section, but not including your * assessable FHSS released amount for the income year); (ii) your * reportable fringe benefits total for the income year; (iii) your * reportable superannuation contributions (if any) for the income year; (iv) your * total net investment loss for the income year; and (c) subsection (1) does not apply if section 83A ‑ 33 (about start ups) reduces the amount to be included in your assessable income for the income year for the * ESS interests. Scheme must be non ‑ discriminatory (6) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest, both: (a) the employee share scheme; and (b) any scheme for the provision of financial assistance in respect of acquisitions of ESS interests under the employee share scheme; are operated on a non ‑ discriminatory basis in relation to at least 75% of the permanent employees of your employer who have completed at least 3 years of service (whether continuous or non ‑ continuous) with your employer and who are Australian residents. No risk of losing interest or share under the conditions of the scheme (7) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest: (a) if the ESS interest is a beneficial interest in a * share—there is no real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it); or (b) if the ESS interest is a beneficial interest in a right to acquire a beneficial interest in a * share: (i) there is no real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it, exercising the right or letting the right lapse); and (ii) there is no real risk that, under the conditions of the scheme, if you exercise the right, you will forfeit or lose the beneficial interest in the share (other than by disposing of it).

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2) | Amended by No 132 of 2017, effective Sch 1 (items 6–12, 21, 27–31): 1 July 2018 (s 2(1) item 2) Sch 2 (items 1–5, 7): 1 Jan 2018 (s 2(1) item 3)

s 83A-45 — Further conditions for reducing amounts included in assessable income

Employment (1) This subsection applies to an * ESS interest in a company if, when you acquire the interest, you are employed by: (a) the company; or (b) a * subsidiary of the company. Employee share scheme relates only to ordinary shares (2) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest, all the ESS interests available for acquisition under the scheme relate to ordinary * shares. Integrity rule about share trading and investment companies. (3) This subsection applies to an * ESS interest in a company unless, when you acquire the interest: (a) the predominant business of the company (whether or not stated in its constituent documents) is the acquisition, sale or holding of * shares, securities or other investments (whether directly or indirectly through one or more companies, partnerships or trusts); and (b) you are employed by the company; and (c) you are also employed by any other company that is: (i) a * subsidiary of the first company; or (ii) a holding company (within the meaning of the Corporations Act 2001 ) of the first company; or (iii) a subsidiary of a holding company (within the meaning of the Corporations Act 2001 ) of the first company. Minimum holding period (4) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, at all times during the interest’s * minimum holding period, the scheme is operated so that every acquirer of an ESS interest (the scheme interest ) under the scheme is not permitted to dispose of: (a) the scheme interest; or (b) a beneficial interest in a * share acquired as a result of the scheme interest; during the scheme interest’s minimum holding period. Note: This subsection is taken to apply in the case of a takeover or restructure: see subsection 83A ‑ 130(3). (5) An * ESS interest’s minimum holding period is the period starting when the interest is acquired under the * employee share scheme and ending at the earlier of: (a) 3 years later, or such earlier time as the Commissioner allows if the Commissioner is satisfied that: (i) the operators of the scheme intended for subsection (4) to apply to the interest during the 3 years after that acquisition of the interest; and (ii) at the earlier time that the Commissioner allows, all * membership interests in the relevant company were disposed of under a particular * scheme; and (b) when the acquirer of the interest ceases being employed by the relevant employer. 10% limit on shareholding and voting power (6) This subsection applies to an * ESS interest in a company if, immediately after you acquire the interest: (a) you do not hold a beneficial interest in more than 10% of the * shares in the company; and (b) you are not in a position to cast, or to control the casting of, more than 10% of the maximum number of votes that might be cast at a general meeting of the company. (7) For the purposes of subsection (6), you are taken to: (a) hold a beneficial interest in any * shares in the company that you can acquire under an * ESS interest that is a beneficial interest in a right to acquire a beneficial interest in such shares; and (b) be in a position to cast votes as a result of holding that interest in those shares.

Amendment history: Inserted by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2)

s 83A-100 — What this Subdivision is about

If there is a real risk you might forfeit the share, right or stapled security you acquired under an employee share scheme, you don’t include the discount in your assessable income when you acquired it. Instead, in the first income year you are able to dispose of the share, right or security, your assessable income will include any gain you have made to that time. If 15 years pass, the gain is included in that income year instead. This deferred taxing point can also apply to: (a) a share or stapled security you acquire under salary sacrifice arrangements, if you get no more than $5,000 worth of shares under those arrangements; or (b) a right, if the scheme restricted you immediately disposing of the right, and stated that this Subdivision applies. Table of sections Main provisions 83A ‑ 105 Application of Subdivision 83A ‑ 110 Amount to be included in assessable income 83A ‑ 115 ESS deferred taxing point—shares 83A ‑ 120 ESS deferred taxing point—rights to acquire shares 83A ‑ 125 Tax treatment of ESS interests held after ESS deferred taxing points Takeovers and restructures 83A ‑ 130 Takeovers and restructures

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2) | Amended by No 8 of 2022, effective sch 5 (items 1-4, 8-14): 1 July 2022 (s 2(1) item 4) sch 5 (items 15-19): repealed before commencing (s 2(1) item 5) sch 6 (items 1-22, 24), sch 7, sch 8 (items 33, 34), sch 10: 1 Apr 2022 (s 2(1) items 6-8, 10, 14)

s 83A-105 — Application of Subdivision

Scope of Subdivision (1) This Subdivision applies, and Subdivision 83A ‑ B does not apply, to an * ESS interest in a company if: (a) Subdivision 83A ‑ B would, apart from this section, apply to the interest (see section 83A ‑ 20); and (aa) after applying section 83A ‑ 315, there is still a discount given in relation to the interest; and (ab) section 83A ‑ 33 (about start ups) does not reduce the amount to be included in your assessable income in relation to the interest; and (b) subsections 83A ‑ 45(1), (2), (3) and (6) apply to the interest; and (c) if the interest is a beneficial interest in a * share: (i) subsection (2) of this section applies to the interest; and (ii) subsection (3) or (4) applies to the interest; and (d) if the interest is a beneficial interest in a right to acquire a beneficial interest in a share—subsection (3) or (6) applies to the interest. Note: Subsections 83A ‑ 45(1), (2), (3) and (6) contain conditions relating to the following: (a) your employment; (b) the types of shares available under the employee share scheme; (c) share trading and investment companies; (d) your shareholding and voting power in the company. Broad availability of schemes (2) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest, at least 75% of the permanent employees of your employer who have completed at least 3 years of service (whether continuous or non ‑ continuous) with your employer and who are Australian residents are, or at some earlier time had been, entitled to acquire: (a) ESS interests under the scheme; or (b) ESS interests in: (i) your employer; or (ii) a holding company (within the meaning of the Corporations Act 2001 ) of your employer; under another employee share scheme. Real risk of losing interest or share under the conditions of the scheme (3) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest: (a) if the ESS interest is a beneficial interest in a * share—there is a real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it); or (b) if the ESS interest is a beneficial interest in a right to acquire a beneficial interest in a share: (i) there is a real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it, exercising the right or letting the right lapse); or (ii) there is a real risk that, under the conditions of the scheme, if you exercise the right, you will forfeit or lose the beneficial interest in the share (other than by disposing of it). Salary sacrifice arrangement (4) This subsection applies to an * ESS interest you acquire under an * employee share scheme during an income year at a discount if: (a) the interest is provided: (i) because you agreed to acquire the interest in return for a reduction in your salary or wages that would not have happened apart from the agreement; or (ii) as part of your remuneration package, in circumstances where it is reasonable to conclude that your salary or wages would be greater if the interest was not made part of that package; and (b) at the time you acquire the interest: (i) the discount equals the * market value of the ESS interest; and (ii) all of the ESS interests available for acquisition under the scheme are ESS interests to which subsection (3) applies, beneficial interests in * shares, or both; and (iii) the governing rules of the scheme expressly state that this Subdivision applies to the scheme (subject to the requirements of this Act); and (c) the total * market value of the * ESS interests in your employer and any holding company (within the meaning of the Corporations Act 2001 ) of your employer: (i) that you acquire during the year under any employee share scheme or schemes; and (ii) to which both this Subdivision and this subsection apply; does not exceed $5,000. (5) For the purposes of paragraph (4)(c), work out the * market value of each * ESS interest as at the time you acquire it. Note: Regulations made for the purposes of section 83A ‑ 315 may substitute a different amount for the market value of the ESS interest. Scheme’s rules state that this Subdivision applies (6) This subsection applies to an * ESS interest you acquire under an * employee share scheme during an income year at a discount if: (a) the interest is a beneficial interest in a right; and (b) at the time you acquired the interest: (i) the scheme genuinely restricted you immediately disposing of the right; and (ii) the governing rules of the scheme expressly stated that this Subdivision applies to the scheme (subject to the requirements of this Act).

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

s 83A-110 — Amount to be included in assessable income

(1) Your assessable income for the income year in which the * ESS deferred taxing point for the * ESS interest occurs includes the * market value of the interest at the ESS deferred taxing point, reduced by the * cost base of the interest. Note: Regulations made for the purposes of section 83A ‑ 315 may substitute a different amount for the market value of the ESS interest. (2) Treat an amount included in your assessable income under subsection (1) as being from a source other than an * Australian source to the extent that it relates to your employment outside Australia. Note: For the CGT treatment of employee share schemes, see Subdivision 130 ‑ D.

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

s 83A-115 — ESS deferred taxing point—shares

Scope (1) This section applies if the * ESS interest is a beneficial interest in a * share. Meaning of ESS deferred taxing point (2) The ESS deferred taxing point for the * ESS interest is the earlier of the times mentioned in subsections (4) and (6). (3) However, the ESS deferred taxing point for the * ESS interest is instead the time you dispose of the interest, if that time occurs within 30 days after the time worked out under subsection (2). No restrictions on disposing of share (4) The first possible taxing point is the earliest time when: (a) there is no real risk that, under the conditions of the * employee share scheme, you will forfeit or lose the * ESS interest (other than by disposing of it); and (b) if, at the time you acquired the interest, the scheme genuinely restricted you immediately disposing of the interest—the scheme no longer so restricts you. Maximum time period for deferral (6) The 2nd possible taxing point is the end of the 15 year period starting when you acquired the interest.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2) | Amended by No 8 of 2022, effective sch 5 (items 1-4, 8-14): 1 July 2022 (s 2(1) item 4) sch 5 (items 15-19): repealed before commencing (s 2(1) item 5) sch 6 (items 1-22, 24), sch 7, sch 8 (items 33, 34), sch 10: 1 Apr 2022 (s 2(1) items 6-8, 10, 14)

s 83A-120 — ESS deferred taxing point—rights to acquire shares

Scope (1) This section applies if the * ESS interest is a beneficial interest in a right to acquire a beneficial interest in a * share. Meaning of ESS deferred taxing point (2) The ESS deferred taxing point for the * ESS interest is the earliest of the times mentioned in subsections (4), (6) and (7). (3) However, the ESS deferred taxing point for the * ESS interest is: (a) the time you dispose of the ESS interest (other than by exercising the right); or (b) if you exercise the right—the time you dispose of the beneficial interest in the * share; if that time occurs within 30 days after the time worked out under subsection (2). No restrictions on disposing of right (4) The first possible taxing point is the earliest time when: (a) you have not exercised the right; and (b) there is no real risk that, under the conditions of the * employee share scheme, you will forfeit or lose the * ESS interest (other than by disposing of it, exercising the right or letting the right lapse); and (c) if, at the time you acquired the ESS interest, the scheme genuinely restricted you immediately disposing of the ESS interest—the scheme no longer so restricts you. Maximum time period for deferral (6) The 2nd possible taxing point is the end of the 15 year period starting when you acquired the interest. No restrictions on disposing of a share after exercising the right (7) The 3rd possible taxing point is the earliest time when: (a) you exercise the right; and (c) there is no real risk that, under the conditions of the scheme, after exercising the right, you will forfeit or lose the beneficial interest in the * share (other than by disposing of it); and (d) if, at the time you acquired the ESS interest, the scheme genuinely restricted you immediately disposing of the beneficial interest in the share if you exercised the right—the scheme no longer so restricts you.

Amendment history: Inserted by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2) | Amended by No 8 of 2022, effective sch 5 (items 1-4, 8-14): 1 July 2022 (s 2(1) item 4) sch 5 (items 15-19): repealed before commencing (s 2(1) item 5) sch 6 (items 1-22, 24), sch 7, sch 8 (items 33, 34), sch 10: 1 Apr 2022 (s 2(1) items 6-8, 10, 14)

s 83A-125 — Tax treatment of ESS interests held after ESS deferred taxing points

For the purposes of this Act (other than this Division), the * ESS interest (and the * share or right of which it forms part) is taken to have been acquired immediately after the * ESS deferred taxing point for the interest for its * market value, unless the ESS deferred taxing point occurs at the time the interest is disposed of. Note: Regulations made for the purposes of section 83A ‑ 315 may substitute a different amount for the market value of the ESS interest.

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