Income Tax Assessment Act 1936

s 155 — Permanent reduction of income

(1) Where a taxpayer establishes that, owing to his or her retirement from his or her occupation, or from any other cause (but not including a change in the investment of assets from which assessable income was derived into assets from which the taxpayer derives income which is not liable to be assessed under this Act), his or her taxable income has been permanently reduced to an amount which is less than two ‑ thirds of his or her average taxable income, he or she shall be assessed, and the provisions of this Division shall apply to the income thereafter derived by him or her, as if he or she had never been a taxpayer before that year. (2) For the purposes of the application of subsection (1) in relation to a taxpayer in relation to a year of income, a reference in that subsection to the average taxable income of the taxpayer shall be construed as a reference to the amount that would be the average income of the taxpayer in relation to that year of income ascertained in accordance with section 149 if there were excluded from the assessable income of the taxpayer of the average years any income received by him or her from sources from which he or she does not usually receive income.

Amendment history: Amended by No 57 of 1977, item 10, effective s 3–15 and 18: 16 June 1977 (s 2(1)) s 16: 1 July 1976 (s 2(2)) | Amended by No 126 of 1977, item 13, effective 10 Nov 1977 (s 2) | Amended by No 41 of 2011, Sch 5 item 302 | Sch 5 item 303 | Sch 5 item 304 | Sch 5 item 305 | Sch 5 item 306 | Sch 5 item 307, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 156 — Rebate of tax for, or complementary tax payable by, certain primary producers

(1) In this section: actual taxable income from primary production , in relation to a taxpayer in relation to a year of income, means the amount (if any) remaining after deducting from the assessable primary production income of the taxpayer of the year of income so much of the aggregate of the relevant primary production deductions of the taxpayer of the year of income as does not exceed that assessable income. assessable primary production income , in relation to a taxpayer in relation to a year of income, means so much of the assessable income of the taxpayer of the year of income as was derived from the carrying on of a primary production business by the taxpayer or was included in the assessable income of the taxpayer of the year of income in consequence of the carrying on of a primary production business by the taxpayer. deemed taxable income from primary production , in relation to a taxpayer in relation to a year of income, means: (a) if the taxpayer did not have a non ‑ primary production profit in relation to the year of income—the taxable income of the taxpayer; and (b) in any other case—the sum of the actual taxable income from primary production of the taxpayer of the year of income and the notional taxable income from primary production of the taxpayer of the year of income. notional taxable income from primary production , in relation to a taxpayer in relation to a year of income, being a taxpayer who had a non ‑ primary production profit in relation to the year of income, means: (a) where the taxpayer did not incur a primary production loss in relation to the year of income: (i) in a case to which subparagraph (ii) does not apply—the amount ascertained by deducting from the taxable income of the taxpayer of the year of income the actual taxable income from primary production of the taxpayer of the year of income; and (ii) where the taxable income of the taxpayer of the year of income exceeds the actual taxable income from primary production of the taxpayer of the year of income and that excess is greater than $5,000—$5,000 reduced by $1 for each whole dollar by which the amount of that excess exceeds $5,000; and (b) where the taxpayer incurred a primary production loss in relation to the year of income: (i) in a case where the sum of the taxable income of the taxpayer of the year of income and the amount of the primary production loss is less than or equal to $5,000—the taxable income of the taxpayer of the year of income; and (ii) in a case where the sum of the taxable income of the taxpayer of the year of income and the amount of the primary production loss (which sum is in this subparagraph referred to as the non ‑ farm income ) exceeds $5,000—an amount ascertained by deducting from $5,000 one dollar for each whole dollar by which so much of the non ‑ farm income as does not exceed $10,000 exceeds $5,000 and deducting from the resultant amount so much (if any) of the amount of the primary production loss as does not exceed that resultant amount. relevant primary production deductions , in relation to a taxpayer in relation to a year of income, means: (a) any deductions allowed or allowable in the taxpayer’s assessment in respect of income of the year of income that relate exclusively to assessable primary production income of the taxpayer of a year of income; (b) so much of any other deductions (other than apportionable deductions) allowed or allowable in the taxpayer’s assessment in respect of income of the year of income as, in the opinion of the Commissioner, may appropriately be related to assessable primary production income of the taxpayer of a year of income; and (c) the amount that bears to the apportionable deductions allowed or allowable in the taxpayer’s assessment the same proportion as the amount ascertained by deduction from the assessable primary production income of the taxpayer of the year of income any deductions allowable from that assessable income in accordance with paragraphs (a) and (b) bears to the sum of the taxable income of the taxpayer of the year of income and the apportionable deductions. (2) For the purposes of subsection (1), a taxpayer shall be taken to have a non ‑ primary production profit in relation to a year of income if the assessable income of the taxpayer of the year of income other than assessable primary production income exceeds the aggregate of the deductions (other than relevant primary production deductions) allowable to the taxpayer in respect of the year of income. (3) For the purposes of subsection (1), a taxpayer shall be taken to have incurred a primary production loss in relation to a year of income if the aggregate of the relevant primary production deductions in relation to the year of income exceeds the assessable primary production income of the taxpayer of the year of income, and the amount of that loss shall be taken to be the amount of the excess. (5) Where: (a) this Division applies to a share of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of subsection 98(1) or (2) or to the net income or a part of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of section 99 (which share, net income or part, as the case may be, is in this subsection referred to as the eligible net income ); and (b) the amount of tax that would, apart from this section, section 94, Division 6AA and Part VIIB and but for any rebate or credit to which the trustee is entitled, be payable by the trustee in respect of the eligible net income exceeds the amount of tax that would, apart from this section, section 94, Division 6AA and Part VIIB and but for any rebate or credit to which the trustee is entitled, be payable by the trustee in respect of the eligible net income if the notional rates declared by the Parliament for the purposes of this section were the rates of tax payable by the trustee in respect of the eligible net income; the trustee is entitled, in his or her assessment in respect of the eligible net income, to a rebate of tax of an amount ascertained in accordance with the formula , where: A is the number of whole dollars in the amount of the deemed net income from primary production. B is the excess referred to in paragraph (b); and C is the number of whole dollars in the eligible net income. (5A) Where: (a) this Division applies to a share of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of subsection 98(1) or (2) or to the net income or a part of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of section 99 (which share, net income or part, as the case may be, is in this subsection referred to as the eligible net income ); and (b) the amount of tax that would, apart from this section, section 94, Division 6AA and Part VIIB and but for any rebate or credit to which the trustee is entitled, be payable by the trustee in respect of the eligible net income if the notional rates declared by the Parliament for the purposes of this section were the rates of tax payable by the trustee in respect of the eligible net income exceeds the amount of tax that would, apart from this section, section 94, Division 6AA and Part VIIB and but for any rebate or credit to which the trustee is entitled, be payable by the trustee in respect of the eligible net income; the trustee is liable to pay complementary tax, at the rate declared by the Parliament for the purposes of this subsection, on so much of the net income of the trust estate as is equal to the deemed net income from primary production. (6) For the purposes of the application of this section in relation to a share of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of subsection 98(1) or (2) or in relation to the net income or a part of the net income of a trust estate of a year of income in respect of which a trustee is liable to be assessed and to pay tax in pursuance of section 99 (which share, net income or part, as the case may be, is in this subsection referred to as the eligible net income ): actual net income from primary production means so much of the net income from primary production of the trust estate as is included in the eligible net income. assessable primary production income means so much of the assessable income of the trust estate of the year of income as was derived from the carrying on of a primary production business by the trustee or was included in the assessable income of the trust estate of the year of income in consequence of the carrying on of a primary production business by the trustee. deemed net income from primary production means: (a) if the trust estate did not have a non ‑ primary production profit in relation to the year of income—the eligible net income; and (b) in any other case—the sum of the actual net income from primary production of the trust estate of the year of income and the notional net income from primary production of the trust estate of the year of income. eligible part of the primary production loss , in relation to a primary production loss incurred by the trust estate in the year of income, means so much of the primary production loss as is equal to the amount by which the eligible net income would have been increased if the aggregate of the relevant primary production deductions allowable in calculating the amount of the net income of the trust estate of the year of income had been equal to the assessable primary production income of the trust estate of the year of income. net income from primary production means the amount (if any) remaining after deducting from the assessable primary production income of the trust estate of the year of income so much of the aggregate of the relevant primary production deductions allowable in calculating the net income of the trust estate as does not exceed that assessable primary production income. notional net income from primary production means: (a) where the trust estate had a non ‑ primary production profit in relation to the year of income and did not incur a primary production loss in relation to the year of income: (i) in a case to which subparagraph (ii) does not apply—the amount ascertained by deducting from the eligible net income the actual net income from primary production (if any); and (ii) where the eligible net income exceeds the actual net income from primary production in relation to the year of income and that excess is greater than $5,000—$5,000 reduced by $1 for each whole dollar by which the amount of that excess exceeds $5,000; and (b) where the trust estate had a non ‑ primary production profit in relation to the year of income and incurred a primary production loss in relation to the year of income: (i) in a case where the sum of the eligible net income and the eligible part of the primary production loss is less than or equal to $5,000—the eligible net income; and (ii) in a case where the sum of the eligible net income and the eligible part of the primary production loss (which sum is in this subparagraph referred to as the non ‑ farm income ) exceeds $5,000—an amount ascertained by deducting from $5,000 one dollar for each whole dollar by which so much of the non ‑ farm income as does not exceed $10,000 exceeds $5,000 and deducting from the resultant amount so much (if any) of the eligible part of the primary production loss as does not exceed that resultant amount. relevant primary production deductions means: (a) any deductions allowed or allowable in calculating the amount of the net income of the trust estate of the year of income that relate exclusively to assessable primary production income of a year of income; (b) so much of any other deductions (other than apportionable deductions) allowed or allowable in calculating the amount of that net income as, in the opinion of the Commissioner, may appropriately be related to assessable primary production income of the trust estate of a year of income; and (c) the amount that bears to the apportionable deductions allowed or allowable in calculating the amount of that net income the same proportion as the amount ascertained by deducting from the assessable primary production income of the trust estate of the year of income any deductions allowable from that assessable primary production income in accordance with paragraphs (a) and (b) bears to the sum of the net income of the trust estate and the apportionable deductions. (7) For the purposes of subsection (6), a trust estate shall be taken to have incurred a primary production loss in relation to a year of income if the aggregate of the relevant primary production deductions allowable in calculating the amount of the net income of the trust estate of the year of income exceeds the assessable primary production income of the trust estate of the year of income, and the amount of that loss shall be taken to be the amount of the excess. (8) For the purposes of subsection (6), a trust estate shall be taken to have a non ‑ primary production profit in relation to a year of income if the assessable income of the trust estate of the year of income other than assessable primary production income exceeds the aggregate of the deductions (other than relevant primary production deductions) allowable in calculating the amount of the net income of the trust estate of the year of income.

Amendment history: Repealed and substituted by No 123 of 1978, item 8 | item 11 | item 13 | item 20, effective 13 Oct 1978 (s 2) | Amended by No 149 of 1979, item 19 | item 27, effective s 3–23 and 25–27: 28 Nov 1979 (s 2(1)) s 24: 21 July 1979 (s 2(2)) | Amended by No 19 of 1980, item 17, effective 30 Apr 1980 (s 2) | Amended by No 14 of 1983, item 55, effective s 4: 14 Feb 1983 (s 2(2)) Remainder: 14 June 1983 (s 2(1)) | Amended by No 103 of 1983, item 11 | item 12 | item 25, effective s 3: 22 Dec 1983 (s 2(2)) Remainder: 23 Nov 1983 (s 2(1)) | Amended by No 63 of 1996, Sch 1 item 3 | Sch 1 item 4 | Sch 1 item 5 | Sch 1 item 6, effective s 3 and Sch 1: 1 Jan 1997 (s 2) | Amended by No 46 of 1998, Sch 10 item 21 | Sch 10 item 27, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4)) | Amended by No 83 of 1999, Sch 10 item 15 | Sch 10 item 16, effective Sch 10 (item 22): 10 Dec 1999 (s 2(6A)) Sch 10 (items 7–21, 23, 68): 1 July 2000 (s 2(2)) | Amended by No 101 of 2006, Sch 2 item 359 | Sch 2 item 360, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 41 of 2011, Sch 5 item 308 | Sch 5 item 309, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 157 — Application of Division to primary producers

(1) In respect of income derived during the year ending on 30 June 1938 and during any subsequent year or during any accounting period adopted in lieu of any such year, the foregoing provisions of this Division shall not apply except in respect of income derived by a primary producer. (2) For the purposes of this section, primary producer means a person who carries on in Australia a primary production business. (3) Subject to subsection (3A), for the purposes only of determining whether a person is carrying on a primary production business, a beneficiary in a trust estate shall, to the extent to which he or she is presently entitled to the income or part of the income of that estate, be deemed to be carrying on the business carried on by the trustees of the estate which produces that income. (3A) Subsection (3) does not operate to deem a beneficiary in a trust estate who is presently entitled to the income or a part of the income of that estate to be carrying on the business carried on by the trustees of the trust estate in a year of income unless: (a) the share of the income of that trust estate of the year of income to which the beneficiary is presently entitled is not less than $1,040; or (b) the Commissioner is satisfied that the interest of the beneficiary in the trust estate was not acquired by, or granted to, the beneficiary for the purpose, or primarily for the purpose, of enabling the provisions of this Division to apply in respect of income derived by the beneficiary. (4) If in any year in respect of which this Division applies only to taxpayers who are primary producers, a taxpayer was not carrying on business as a primary producer, that year shall not be counted as an average year and the provisions of this Division shall apply to the income thereafter derived by the taxpayer as if he or she had never been a taxpayer before that year.

Amendment history: Amended by No 50 of 1942, effective s 26: 28 July 1942 (s 26(2)) Remainder: 6 Oct 1942 (s 2) | Amended by No 18 of 1960, effective 17 June 1960 | Amended by No 51 of 1973, item 3, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 164 of 1973, effective s 3–17, 19–22 and Sch: 11 Dec 1973 (s 2) | Amended by No 80 of 1975, item 43, effective 20 June 1975 (s 2) | Amended by No 57 of 1978, item 17, effective 22 June 1978 (s 2) | Amended by No 108 of 1981, item 124, effective s 4–25: 24 June 1981 (s 2) | Amended by No 101 of 2006, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 41 of 2011, Sch 5 item 310 | Sch 5 item 311, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 158 — Application of Division

This Division shall not apply in any case where there are not at least 2 average years or where the taxpayer is assessed in accordance with section 99A in respect of the year of income, and shall not apply to the taxable income of a company except income in respect of which it is assessable as a trustee.

Amendment history: Amended by No 110 of 1964, effective s 3–46: 23 Nov 1964 (s 2(1)) | Amended by No 51 of 1973, item 3, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 108 of 1981, item 124, effective s 4–25: 24 June 1981 (s 2)

s 158A — Election that Division not apply

(1) A taxpayer may elect that this Division shall not apply in relation to income of the taxpayer of a year of income specified in the election and of all subsequent years of income. (2) An election in pursuance of subsection (1) shall be made in writing and lodged with the Commissioner on or before the date of lodgment of the return of income of the taxpayer for the year of income specified in the election or within such further time as the Commissioner allows. (3) Where a taxpayer makes an election under subsection (1), this Division shall not apply in relation to income of the taxpayer of the year of income specified in the election or of any subsequent year of income.

Amendment history: Inserted by No 44 of 1951, effective 7 Dec 1951 (s 2) | Amended by No 50 of 1966, effective s 17: 4 Mar 1968 (s 2(2)) Remainder: 26 Oct 1966 (s 2(1)) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 126 of 1977, effective 10 Nov 1977 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Repealed and substituted by No 103 of 1983, effective s 3: 22 Dec 1983 (s 2(2)) Remainder: 23 Nov 1983 (s 2(1))

s 159GE — Interpretation

(1) In this Division: arrangement includes: (a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and (b) any scheme, plan, proposal, action, course of action or course of conduct whether unilateral or otherwise. arrangement payment , in relation to an arrangement relating to the use, or the control of the use, of an item of property, means so much of any payment liable to be made under the arrangement as represents consideration for any one or more of the following: (a) the use of the item; (b) the control of the use of the item; (c) the sale or disposal of the item. arrangement period , in relation to an item of eligible property that is, or is included in, arrangement property in relation to an arrangement at a particular time, means the period that is at that time the total period during which the arrangement is likely to be in force in relation to that item of eligible property (including any period before that time when the arrangement was in force in relation to that item of eligible property). arrangement property means property that is, or is to be, used, or the use of which is, or is to be, controlled, under an arrangement. assessable arrangement payment means an arrangement payment that, apart from this Division, would be included in whole or in part in the assessable income of a taxpayer of a year of income. associate means, in relation to a person other than an exempt public body, any person who is an associate, within the meaning of section 318, in relation to the person or, in relation to an exempt public body: (a) a partner of the exempt public body or a partnership in which the exempt public body is a partner; or (b) if a partner of the exempt public body is a natural person otherwise than in the capacity of trustee—the spouse or a child of that partner; or (c) a trustee of a trust where the exempt public body, or another entity that is an associate of the exempt public body because of paragraph (a), (b) or (d), benefits under the trust; or (d) a company where: (i) the company is sufficiently influenced by: (A) the exempt public body; or (B) another entity that is an associate of the exempt public body because of paragraph (a), (b) or (c); or (C) another company that is an associate of the exempt public body because of another application of this paragraph; or (D) 2 or more entities covered by the preceding sub ‑ subparagraphs; or (ii) a majority voting interest in the company is held by: (A) the exempt public body; or (B) the entities that are associates of the primary entity because of subparagraph (i) of this paragraph and paragraphs (a), (b) and (c); or (C) the exempt public body and the entities that are associates of the exempt public body because of subparagraph (i) of this paragraph and because of paragraphs (a), (b) and (c). Subsections 318(6) and (7) apply for the purposes of paragraphs (a) to (d) in the same way as those subsections apply for the purposes of section 318. capital expenditure deduction means a deduction: (a) under the former Division 10, 10AAA, 10AA, 10A, 10C or 10D of this Part; or (b) under Subdivision 40 ‑ B of the Income Tax Assessment Act 1997 for a depreciating asset that is a forestry road or timber mill building; or (c) under Division 43 of that Act; or (d) under section 40 ‑ 830 of that Act for an amount that is a project amount under subsection 40 ‑ 840(1) (about mining capital expenditure and transport capital expenditure); or (e) under the former Subdivision 330 ‑ C, 330 ‑ H or 387 ‑ G of that Act. control means effectively control. depreciation deduction means a deduction: (a) in respect of depreciation under Division 3 of this Act or the former Division 42 of the Income Tax Assessment Act 1997 ; or (b) for the decline in value of a depreciating asset under Division 40 of the Income Tax Assessment Act 1997 . Division 10, 10AA or 10A property means property in relation to which there has been incurred: (a) allowable capital expenditure within the meaning of the former Division 10 or 10AA of this Part or the former Subdivision 330 ‑ C of the Income Tax Assessment Act 1997 or mining capital expenditure within the meaning of section 40 ‑ 860 of that Act; (b) expenditure taken into account in ascertaining an amount of residual capital expenditure specified in the former paragraph 122C(1)(a); or (c) capital expenditure specified in the former subsection 124F(1) or 124JA(1) of this Act or the former section 387 ‑ 460 of the Income Tax Assessment Act 1997 ; or (d) capital expenditure on a forestry road in connection with a timber operation, or capital expenditure for the construction or acquisition of a timber mill building. Division 10AAA property means property in relation to which there has been incurred capital expenditure to which the former Division 10AAA of this Part applies or transport capital expenditure within the meaning of the former Subdivision 330 ‑ H, or section 40 ‑ 865 of the Income Tax Assessment Act 1997 . Division 10C or 10D property means property in relation to which there has been incurred qualifying expenditure within the meaning of the former Division 10C or 10D or for which there is a pool of construction expenditure within the meaning of Division 43 of the Income Tax Assessment Act 1997 . effective life , in relation to an item of eligible property at a particular time, means the period (if any) that the Commissioner estimates will be, or would be, at that time the effective life of the property after that time assuming that it is or would be maintained in reasonably good order and condition. eligible amount , in relation to an item of eligible property, means: (a) where the item is an item of eligible depreciation property—the amount that: (i) was the cost of the item of property within the meaning of Division 40, or the former Division 42, of the Income Tax Assessment Act 1997 to the taxpayer who holds it; or (ii) would have been the cost of the item of property to the taxpayer for the purposes of that Division if that Division had applied in relation to the item of property; and (b) where the item is an item of eligible capital expenditure property—any amount of eligible capital expenditure in relation to the item of property. eligible capital expenditure , in relation to an item of eligible capital expenditure property, means expenditure by reason of which the item of property is eligible capital expenditure property. eligible capital expenditure property means Division 10, 10AA or 10A property, Division 10AAA property, Division 10C or 10D property or eligible spectrum licences. eligible depreciation property means: (a) plant or articles within the meaning of the former section 54 of this Act; or (b) plant within the meaning of the former section 42 ‑ 18 of the Income Tax Assessment Act 1997 or plant within the meaning of section 45 ‑ 40 of that Act; or (c) a depreciating asset within the meaning of Division 40 of that Act. eligible property means: (a) eligible depreciation property; (b) Division 10, 10AA or 10A property; (c) Division 10AAA property; (d) Division 10C or 10D property; or (e) eligible spectrum licences. eligible real property , means eligible property that is: (a) a building or a part of a building; or (b) a structure that is a fixture or a part of such a structure. eligible spectrum licence means a spectrum licence within the meaning of the Income Tax Assessment Act 1997 . exempt public body means: (a) the Commonwealth, a State or a Territory; or (aa) an STB (within the meaning of Division 1AB) the income of which is wholly exempt from tax; or (b) a municipal corporation or other local governing body, the income of which is wholly exempt from tax; or (c) a public authority: (i) that is constituted by or under a law of the Commonwealth, a State or a Territory; and (ii) the income of which is wholly exempt from tax. payment portion , in relation to an arrangement payment in relation to an eligible amount in relation to an item of eligible property, means so much of the arrangement payment as the Commissioner considers is attributable to the eligible amount in relation to the item of eligible property. person includes an exempt public body. total notional principal , in relation to an eligible amount in relation to an item of eligible property in relation to an application period, means the sum of all notional principal amounts (if any) in relation to payment portions of arrangement payments in relation to the eligible amount in relation to the application period. Note: This Division applies to deductions under Division 40 (Capital allowances) and Division 43 (Capital works) of the Income Tax Assessment Act 1997 as if you were the owner of an asset you hold (under that Division) instead of any other person: see section 40 ‑ 135 of that Act. (2) For the purposes of the definition of arrangement period in subsection (1), a reference in that definition to the total period during which an arrangement is, at a particular time, likely to be in force in relation to an item of eligible property that at that time is, or is included in, arrangement property in relation to the arrangement is a reference to: (a) where at that time the total period during which the arrangement was, or is, to be in force in relation to that item of eligible property (including any period before that time when the arrangement was in force in relation to that item) was or is specified in or ascertainable in accordance with the arrangement—that period; and (b) in any other case—such period as would have been, or is, at that time the period during which the arrangement would be, or is, likely to be in force in relation to the item of property (including any period before that time when the arrangement was in force in relation to the item), having regard to the provisions of the arrangement and any other relevant circumstances in relation to the arrangement, or in relation to the item of property. (3) Nothing in this Division prevents an item of eligible property from being an item of eligible property by reason of the application of 2 or more paragraphs of the definition of eligible property in subsection (1). (4) For the purposes of the definition of total notional principal in subsection (1), where: (a) under section 159GK there is an interest amount within the meaning of that section in relation to a payment portion (not being a notional final payment portion within the meaning of that section) in relation to an arrangement payment; and (b) the interest amount is less than the amount of the payment portion; there shall be taken to be a notional principal amount in relation to the payment portion of an amount equal to the difference between the interest amount and the amount of the payment portion. (5) Where: (a) under 2 or more successive arrangements relating to the use by a person, or the control by a person of the use, of property owned by another person, the same property is used by, or the use of the same property is controlled by, the same person or by persons who, in relation to each other, are associates; and (b) the Commissioner considers that the arrangements should be taken, for the purposes of this Division, to be a single arrangement; the arrangements shall, for the purposes of this Division, be deemed to be a single arrangement entered into at the same time as the first of the arrangements, coming into force at the same time as the first of the arrangements and continuing in force until the expiration of the second or last, as the case requires, of the arrangements. (6) A reference in subsection (5) to successive arrangements includes a reference to: (a) where the arrangement periods of 2 or more arrangements overlap—those arrangements; and (b) where there is a period between the expiration of an arrangement and the commencement of another arrangement and the Commissioner considers that the arrangements should be taken to be successive arrangements for the purposes of that subsection—those arrangements. (7) Where this Division applies in relation to an item of eligible property in relation to a qualifying arrangement, a reference in this Division to the application period in relation to that application of this Division in relation to the item of eligible property is a reference to the period commencing at the time at which this Division in that application commences to apply and ending at the time at which this Division in that application ceases to apply. (8) For the purposes of this Division, where one or more of the partners in a partnership uses, or controls the use of, an item of property, each of the partners in the partnership shall be taken to use, or to control the use of, the item of property and the partnership shall be taken not to use, or to control the use of, the item of property. (10) For the purpose of this Division, disregard an acquisition or disposal of property by way of the transfer of the property for the provision or redemption of a security. Consequently this Division applies as if the person who was the owner of the property before the transfer continues to be the owner after the transfer.

Amendment history: Inserted by No 123 of 1985, effective s 10–36: 28 Oct 1985 (s 2) | Amended by No 169 of 1995, Sch 1 item 11 | Sch 1 item 12, effective Sch 1 (items 1–14, 16), Sch 2 (items 1–8, 11–15), Sch 3 (items 1–36, 40–44) and Sch 8 (items 1–5): 16 Dec 1995 (s 2(1)) Sch 3 (items 37–39): 1 July 1994 (s 2(2)) Sch 10 (item 2): 13 Oct 1994 (s 2(5)) | Amended by No 39 of 1997, Sch 4 item 211 | Sch 4 item 212 | Sch 4 item 213 | Sch 4 item 214, effective Sch 1: 1 July 1997 (s 2) | Amended by No 121 of 1997, Sch 6 item 85 | Sch 6 item 86 | Sch 6 item 87 | Sch 6 item 88 | Sch 11 item 45 | Sch 11 item 46, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 174 of 1997, Sch 6 item 21, effective s 4, Sch 1–5, Sch 6 (items 17–23(2), (3)), Sch 7 (items 1–16, 32(1)) and Sch 9 (items 24–30(2), (3)): 21 Nov 1997 (s 2(1)–(3)) | Amended by No 54 of 1999, Sch 1 item 5 | Sch 1 item 6 | Sch 1 item 7 | Sch 1 item 8, effective s 4, Sch 1 (items 2–13, 36), Sch 3, Sch 5 (items 11–15), Sch 6 and Sch 7 (items 1, 3): 5 July 1999 (s 2(1)) | Amended by No 72 of 2001, Sch 2 item 106, effective Sch 2 (items 2–6, 62–65, 101–107, 108(2), 109(2), 110): 30 June 2001 (s 2) | Amended by No 77 of 2001, Sch 2 item 63 | Sch 2 item 64 | Sch 2 item 65 | Sch 2 item 66 | Sch 2 item 67 | Sch 2 item 68 | Sch 2 item 69 | Sch 2 item 70 | Sch 2 item 71 | Sch 2 item 72, effective Sch 2 (items 20–148, 488(1)): 30 June 2001 (s 2(1)) | Amended by No 101 of 2006, Sch 2 item 362 | Sch 2 item 363 | Sch 2 item 364 | Sch 2 item 365 | Sch 2 item 366 | Sch 2 item 367 | Sch 2 item 368 | Sch 2 item 369 | Sch 2 item 370, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 159GEA — Division applies to certain State/Territory bodies

In addition to any other operation that this Division has, this Division operates as if the references to an exempt public body included a reference to a prescribed excluded STB (within the meaning of Division 1AB).

Amendment history: Inserted by No 169 of 1995, effective Sch 1 (items 1–14, 16), Sch 2 (items 1–8, 11–15), Sch 3 (items 1–36, 40–44) and Sch 8 (items 1–5): 16 Dec 1995 (s 2(1)) Sch 3 (items 37–39): 1 July 1994 (s 2(2)) Sch 10 (item 2): 13 Oct 1994 (s 2(5))

s 159GF — Residual amounts

(1) Subject to subsection 159GJ(1), in this Division a reference to the residual amount at a particular time (in this subsection referred to as the relevant time ) in relation to the eligible amount by reason of which an item of property is eligible depreciation property at the relevant time is a reference to the eligible amount reduced by: (a) where the item of property was not dealt with by the taxpayer who holds the item in the prescribed manner at any time during the period (in this subsection referred to as the relevant period ) before the relevant time when it was held by the taxpayer (within the meaning of Division 40 of the Income Tax Assessment Act 1997 )—the total amount of deductions for depreciation or decline in value that would, but for any deduction denying provision, have been allowable to the taxpayer under this Act or the Income Tax Assessment Act 1997 in respect of that item of property for the relevant period if: (i) at all times during the relevant period the taxpayer had wholly and exclusively dealt with the item of property in the prescribed manner; and (ii) those deductions were calculated using the diminishing value method; and (iii) section 57AG, as in force immediately before the commencement of section 1 of the Taxation Laws Amendment Act 1992 , did not apply in relation to the item of property; (b) where the item of property was wholly and exclusively dealt with by the taxpayer who held the item in the prescribed manner at all times during the relevant period—the total amount of deductions for depreciation or decline in value that were or, but for any deduction denying provision, would have been, allowed or allowable to the taxpayer in respect of the item of property for that period under this Act or the Income Tax Assessment Act 1997 ; and (c) in any other case—the total amount of deductions for depreciation or decline in value that, but for any deduction denying provision, would have been allowable to the taxpayer who holds the item of property in respect of the item under this Act or the Income Tax Assessment Act 1997 for the relevant period if: (i) the taxpayer had wholly and exclusively dealt with the item of property in the prescribed manner at all times during the relevant period; and (ii) in respect of any part of the relevant period for which deductions for depreciation or decline in value were or, but for any deduction denying provision, would have been allowed or allowable under this Act or the Income Tax Assessment Act 1997 —the deductions were allowable on the same basis and at the same percentage as was or would have been allowed or allowable for that part of the relevant period; and (iii) in respect of any other part (in this subparagraph referred to as the relevant part ) of the relevant period—the deductions were allowable: (A) where the relevant part was immediately succeeded by another part of the relevant period in respect of which deductions for depreciation or decline in value were or, but for any deduction denying provision, would have been allowed or allowable under this Act or the Income Tax Assessment Act 1997 —on the same basis and at the same percentage as was or would have been allowed or allowable in respect of that other part; and (B) in any other case—on the same basis and at the same percentage as was or, but for any deduction denying provision, would have been allowed or allowable under this Act or the Income Tax Assessment Act 1997 in respect of the part of the relevant period for which deductions for depreciation or decline in value was or would have been allowed or allowable, being the part that immediately preceded the relevant part. (2) For the purposes of subsection (1): (a) an item of eligible depreciation property shall be taken to be dealt with by a taxpayer in the prescribed manner at a particular time if: (i) the item of property is used by the taxpayer at that time for the purpose of producing assessable income; or (ii) the item of property is, at that time, installed ready for use for the purpose of producing assessable income and held in reserve by the taxpayer; and (b) a reference to a deduction denying provision is a reference to a provision of this Act that would have the effect of denying an entitlement in whole or in part to a deduction otherwise wholly allowable under this Act. (3) Subject to subsection 159GJ(2), where any of the following amounts (in this subsection referred to as the attributable amount ): (a) an amount of residual previous capital expenditure within the meaning of the former Division 10 or 10AA; (b) an amount of residual capital expenditure within the meaning of the former Division 10, 10AA or 10A; (c) an amount of residual (1 May 1981 to 18 August 1981) capital expenditure within the meaning of the former Division 10 or 10AA; (d) an amount of residual (19 August 1981 to 19 July 1982) capital expenditure within the meaning of the former Division 10 or 10AA; (e) so much as is unrecouped of an amount of allowable (post ‑ 19 July 1982) capital expenditure within the meaning of the former Division 10 or 10AA; (f) so much as is unrecouped of an amount of allowable capital expenditure within the meaning of the former Subdivision 330 ‑ C of the Income Tax Assessment Act 1997 ; (fa) so much of an amount of mining capital expenditure or transport capital expenditure (within the meaning of the Income Tax Assessment Act 1997 ) as has not been deducted under Division 40 of that Act; (g) the difference between capital expenditure and previous deductions as defined in the former subsection 387 ‑ 470(1) of the Income Tax Assessment Act 1997 ; (h) the difference between the cost of a forestry road or timber mill building for the purposes of Division 40 of the Income Tax Assessment Act 1997 and its adjustable value for the purposes of that Division; ascertained as at the end of a year of income, is attributable in whole or in part to an amount of expenditure (in this subsection referred to as the relevant expenditure ) by reason of which an item of property is Division 10, 10AA or 10A property, in this Division a reference to the residual amount at any time during the year of income in relation to the relevant expenditure is a reference to so much of the attributable amount as is attributable to the relevant expenditure. (4) Subject to subsection 159GJ(3), in this Division a reference to the residual amount at a particular time in relation to an amount of expenditure by reason of which an item of property is Division 10AAA property is a reference to the amount of expenditure reduced by any part of that expenditure that has been allowed or is allowable as a deduction under the former Division 10AAA of this Part or the former Subdivision 330 ‑ H of the Income Tax Assessment Act 1997 , or under Subdivision 40 ‑ I of that Act for transport capital expenditure, from the assessable income of any taxpayer of a year of income preceding the year of income in which the particular time occurs. (5) Subject to subsection 159GJ(4), in this Division a reference to the residual amount at a particular time in relation to an amount of expenditure by reason of which an item of property is Division 10C or 10D property is a reference to the residual capital expenditure within the meaning of the former Division 10C or 10D of this Part, or to the undeducted construction expenditure within the meaning of Division 43 of the Income Tax Assessment Act 1997 , as appropriate, at that time in relation to the amount of expenditure. (6) In this Division, a reference to the residual amount at a particular time in relation to an amount of expenditure because of which an item of property is an eligible spectrum licence is a reference to: (a) the amount of unrecouped expenditure (within the meaning of the former section 380 ‑ 20 of the Income Tax Assessment Act 1997 ) on that licence at that time; or (b) the adjustable value of that licence (within the meaning of Division 40 of that Act) at that time.

Amendment history: Inserted by No 123 of 1985, item 1984 | item 10A | item 10D, effective s 10–36: 28 Oct 1985 (s 2) | Amended by No 80 of 1992, item 22, effective s 52(2) and 53(2): 1 July 1992 (s 2(3)) Remainder: 30 June 1992 (s 2(1)) | Amended by No 39 of 1997, Sch 4 item 215 | Sch 4 item 216 | Sch 4 item 217, effective Sch 1: 1 July 1997 (s 2) | Amended by No 121 of 1997, Sch 6 item 89 | Sch 11 item 47, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 54 of 1999, Sch 1 item 9 | Sch 1 item 10, effective s 4, Sch 1 (items 2–13, 36), Sch 3, Sch 5 (items 11–15), Sch 6 and Sch 7 (items 1, 3): 5 July 1999 (s 2(1)) | Amended by No 77 of 2001, Sch 2 item 73 | Sch 2 item 74 | Sch 2 item 75 | Sch 2 item 76 | Sch 2 item 77 | Sch 2 item 78 | Sch 2 item 79 | Sch 2 item 80 | Sch 2 item 81, effective Sch 2 (items 20–148, 488(1)): 30 June 2001 (s 2(1)) | Amended by No 101 of 2006, Sch 2 item 372 | Sch 2 item 373, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 159GG — Qualifying arrangements

(1) For the purposes of this Division, where at any time (in this subsection referred to as the relevant time ) any of the following conditions is satisfied in relation to an arrangement relating to the use by a person (in this subsection referred to as the end ‑ user ), or to the control by a person (in this subsection also referred to as the end ‑ user ) of the use, of property owned by another person who is a party to the arrangement, being property that is or includes an item of eligible property: (a) the arrangement contains provision to the effect that: (i) if: (A) on the termination or expiration of the arrangement, the owner sells or otherwise disposes of the whole of the arrangement property, or part of the arrangement property that is or includes the item of eligible property, to any person; and (B) the owner or an associate receives in respect of the sale or disposal no consideration, or consideration of an amount less than an amount (in this subparagraph referred to as the guaranteed residual value ) specified in, or ascertainable under, the provision; the end ‑ user or an associate will pay to the owner or an associate an amount equal to the guaranteed residual value, or to the amount by which the guaranteed residual value exceeds the consideration, as the case may be; (ii) at or after the termination or expiration of the arrangement, the whole of the arrangement property or part of the arrangement property that is or includes the item of eligible property is to be transferred (whether or not for any consideration) to the end ‑ user or an associate; (iii) the end ‑ user or an associate has or will have the right to purchase or to require the transfer of the whole of the arrangement property or part of the arrangement property that is or includes the item of eligible property; or (iv) the arrangement period in relation to the item of eligible property in relation to the arrangement is a period that exceeds 1 year and the end ‑ user or an associate will be liable to carry out, to expend money in respect of or to reimburse the owner or an associate for expenditure in respect of, repairs that may be required to the whole of the arrangement property or to part of the arrangement property that is or includes the item of eligible property; (b) the arrangement period in relation to the item of eligible property in relation to the arrangement is equal to or greater than: (i) where the item is an item of eligible real property—50% of the effective life of that item at the commencement of the arrangement period; or (ii) in any other case—75% of the effective life of that item at the commencement of the arrangement period; (c) the sum of: (i) the payment portions of arrangement payments that were liable to be made at or before the relevant time in relation to the eligible amount, or in relation to all of the eligible amounts (including any eligible amount in respect of expenditure incurred after the commencement of the arrangement period), in relation to the item of eligible property; and (ii) the payment portions of arrangement payments that, having regard to the provisions of the arrangement and any other relevant circumstances, are or were, at the relevant time, likely to become liable to be made after the relevant time in relation to the eligible amount, or in relation to all of the eligible amounts (including any eligible amount in respect of expenditure that, having regard to the provisions of the arrangement and any other relevant circumstances, is or was likely to be incurred during the arrangement period), in relation to the item of eligible property; is equal to or greater than 90% of the sum of: (iii) the residual amount in relation to the eligible amount, or the sum of the residual amounts in relation to the eligible amounts, in respect of which expenditure was incurred before the commencement of the arrangement period in relation to the item of eligible property, as ascertained at the commencement of the arrangement period; and (iv) the amount of any expenditure that was, or is likely to be, incurred during the arrangement period, being expenditure giving rise to an eligible amount in relation to the item of eligible property; the arrangement shall be taken to be, or to have been, a qualifying arrangement in relation to the item of eligible property: (d) at the relevant time; and (e) at all times before the relevant time when the arrangement was in force in relation to the item of eligible property. (2) For the purposes of this Division, where: (a) an item of eligible property is, or is included in, arrangement property in relation to an arrangement relating to the use by a person (in this subsection referred to as the end ‑ user ), or to the control by a person (in this subsection also referred to as the end ‑ user ) of the use, of property owned by another person who is a party to the arrangement; and (b) the ownership of the item of eligible property is transferred to the end ‑ user or an associate within 1 year after the arrangement ceases to be in force (whether by termination or expiration) in relation to the item of eligible property; the arrangement shall be taken to have been a qualifying arrangement in relation to the item of eligible property at all times during the period during which the arrangement was in force in relation to the item of eligible property. (3) For the purposes of subsections (1) and (2): (a) a lease to a person of property owned by another person shall be taken to be an arrangement relating to the use by the person of property owned by the other person; and (b) any arrangement entered into in relation to the lease referred to in paragraph (a) shall be taken to be part of the arrangement referred to in that paragraph. (4) Where, but for this subsection, an arrangement would be a qualifying arrangement in relation to an item of eligible property at a particular time (in this subsection referred to as the relevant time ) and the Commissioner, having regard to: (a) the circumstances by reason of which the arrangement is a qualifying arrangement in relation to that item of eligible property; and (b) any other relevant circumstances; considers it unreasonable that the arrangement should be a qualifying arrangement at the relevant time in relation to the item of eligible property, the arrangement shall be taken not to be a qualifying arrangement at the relevant time in relation to the item of eligible property. (5) Where an arrangement is a qualifying arrangement in relation to an item of eligible property at a particular time (in this subsection referred to as the relevant time ) and the arrangement ceases to be a qualifying arrangement in relation to that item of eligible property at a later time, the arrangement shall not be taken not to have been a qualifying arrangement in relation to that item of eligible property at the relevant time by reason of it ceasing to be a qualifying arrangement in relation to that item of eligible property at the later time.

Amendment history: Inserted by No 123 of 1985, item 10C | item 1984 | item 10D, effective s 10–36: 28 Oct 1985 (s 2)

s 159GH — Application of Division in relation to property

(1A) This Division does not apply in relation to the item of eligible property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997 ) if the tax preferred use: (a) starts on or after 1 July 2007; and (b) does not occur under a legally enforceable arrangement entered into before 1 July 2007. (1B) This Division does not apply in relation to the item of eligible property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997 ) if: (a) the tax preferred use starts on or after 1 July 2007; and (b) the tax preferred use occurs under a legally enforceable arrangement that was entered into before 1 July 2007; and (c) an election is made under item 71 of Schedule 1 to the Tax Laws Amendment (2007 Measures No. 5) Act 2007 to have subitem 71(2) of that Schedule apply to the property. (1) Subject to subsections (1A), (1B) and (2), where: (a) at a particular time (in this subsection referred to as the relevant time ) an arrangement is a qualifying arrangement under subsection 159GG(1) or (2) in relation to an item of eligible property; and (b) either of the following conditions is satisfied: (i) the qualifying arrangement was entered into after 5 o’clock in the afternoon, by standard time in the Australian Capital Territory, on 15 May 1984 and the end ‑ user referred to in subsection 159GG(1) or (2) is an exempt public body; (ii) the arrangement was entered into after 5 o’clock in the afternoon, by legal time in the Australian Capital Territory, on 16 December 1984 and the use of the property referred to in subsection 159GG(1) or (2) takes place, or will take place, outside Australia and is, or will be, wholly or partly for the purpose of producing exempt income; this Division applies in relation to the item of eligible property at the relevant time. (2) This Division does not apply in relation to an item of eligible property at a particular time if at that time section 51AD applies to the item of eligible property in relation to a taxpayer.

Amendment history: Inserted by No 123 of 1985, item 10D, effective s 10–36: 28 Oct 1985 (s 2) | Amended by No 164 of 2007, Sch 1 item 27 | Sch 1 item 33 | Sch 1 item 34, effective s 4, Sch 1 (items 27–35, 71), Sch 8 (items 1–5, 13(1)), Sch 10 (items 2–6) and Sch 11 (items 1–48, 78–80): 25 Sept 2007 (s 2(1) items 1, 2, 5, 8) Sch 10 (items 26–56): 1 July 2010 (s 2(1) item 6) Sch 12 (items 66–71): 27 Sept 2007 (s 2(1) item 9)

s 159GJ — Effect of application of Division on certain deductions etc.

(1) Where this Division applies in relation to an item of eligible depreciation property: (b) in relation to any year of income the whole of which is included in or comprises the application period—no depreciation deduction shall be allowable to any taxpayer in relation to the item of property for that year of income; (c) in relation to any other year of income in which the whole or a part of the application period occurs: (i) in relation to any part (in this subsection referred to as the pre ‑ application part ) of the year of income that precedes the application period—there shall be allowable to a taxpayer as a depreciation deduction in relation to the item of property: (A) where this Division has not previously applied in relation to the item of property—the same depreciation deduction (if any) as would, apart from this Division, be allowable to the taxpayer; and (B) in any other case—the same depreciation deduction (if any) as would, but for this application of this section, be allowable to the taxpayer; (ii) in relation to the part of the year of income during which this Division applies—no depreciation deduction shall be allowable to any taxpayer in relation to the item of property; and (iii) in relation to any part (in this subsection referred to as the post ‑ application part ) of the year of income that occurs after the application period (not being a part that occurs after the commencement of a subsequent application period): (A) the residual amount in relation to the item of eligible depreciation property at any time (in this sub ‑ subparagraph referred to as the relevant time ) during the post ‑ application part is an amount ascertained in accordance with the formula: where: A is the amount that, but for this application of this section, would be the residual amount at the relevant time in relation to the eligible amount (in this subparagraph referred to as the relevant eligible amount ) by reason of which the item is an item of eligible depreciation property. B is: (a) where paragraph (b) of this component does not apply—the amount that, in determining the residual amount in component A, would be taken into account as depreciation under subsection 159GF(1) in respect of the application period; and (b) where, in determining the residual amount in component A, depreciation deductions taken into account in respect of the post ‑ application part would be calculated under this Act or the Income Tax Assessment Act 1997 using the diminishing value method—the amount that, in determining the residual amount in component A, would be taken into account under subsection 159GF(1) as depreciation deductions in respect of the application period and the part of the post ‑ application part before the relevant time; and C is: (a) where paragraph (a) of component B applies—an amount equal to the total notional principal in relation to the relevant eligible amount in relation to the application period; and (b) where paragraph (b) of component B applies—the sum of: (i) the total notional principal in relation to the relevant eligible amount in relation to the application period; and (ii) the amount that, in determining the residual amount in component A, would be taken into account as depreciation deductions under subsection 159GF(1) in respect of the part of the post ‑ application part before the relevant time if the depreciated value under this Act, the undeducted cost under the former Division 42 of the Income Tax Assessment Act 1997 or the adjustable value under Division 40 of that Act, of the item of eligible depreciation property at the beginning of the year of income in which this Division ceases to apply were equal to the residual amount at the beginning of the application period as reduced by the total notional principal in relation to the relevant eligible amount in relation to the application period; (B) for the purposes of any application of this Act or the Income Tax Assessment Act 1997 , in relation to the item of property in relation to the post ‑ application part—the depreciated value, within the meaning of Division 3 of this Part, the undeducted cost under the former Division 42 of the Income Tax Assessment Act 1997 or the adjustable value under Division 40 of that Act, of the item of property at any time during the post ‑ application part shall be taken to be an amount equal to the residual amount in relation to the relevant eligible amount at that time as ascertained in accordance with sub ‑ subparagraph (A); and (C) the depreciation deduction (if any) allowable to a taxpayer in relation to the item of property in relation to the post ‑ application part is the depreciation deduction that would be allowable in respect of that period if this Division did not apply and, in the case of an item of property in relation to which the former paragraph 56(1)(a) of this Act or the diminishing value method under the former Division 42, or Division 40, of the Income Tax Assessment Act 1997 would, apart from this Division, apply, if the depreciated value, within the meaning of the former section 62 of this Act, the undeducted cost, under the former Division 42 of the Income Tax Assessment Act 1997 or the adjustable value under Division 40 of that Act, of the item of property at the beginning of the year of income were equal to the residual amount, as ascertained under sub ‑ subparagraph (A), in relation to the relevant eligible amount at the commencement of the post ‑ application part; (d) the residual amount at any time (in this paragraph referred to as the relevant time ) after the year of income in which the application period ends (not being a time after the commencement of a subsequent application period) in relation to the eligible amount (in this paragraph referred to as the relevant eligible amount ) by reason of which the item is an item of eligible depreciation property is the amount that would be the residual amount in relation to the relevant eligible amount in relation to the relevant time under sub ‑ subparagraph (1)(c)(iii)(A) if the post ‑ application part referred to in that sub ‑ subparagraph extended to include the relevant time; and (e) for the purpose of the application of this Act and the Income Tax Assessment Act 1997 in relation to the item of property at any time after the year of income in which the application period ends—there shall be taken to have been allowed as a depreciation deduction in relation to the item of property in relation to the application period an amount equal to the total notional principal in relation to the eligible amount by reason of which the item of property is eligible depreciation property in relation to the application period. (2) Where this Division applies in relation to an item of Division 10, 10AA or 10A property: (a) no deduction is allowable to any taxpayer under: (ii) section 40 ‑ 830 of the Income Tax Assessment Act 1997 for a project amount that is mining capital expenditure within the meaning of that Act; or (iii) Subdivision 40 ‑ B of that Act for a depreciating asset that is a forestry road or timber mill building; in relation to any amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10, 10AA or 10A property for any year of income in which the whole or a part of the application period occurs; (b) the residual amount at any time after the application period (not being a time after the commencement of a subsequent application period) in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10, 10AA or 10A property is an amount equal to the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(3) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and (c) for the purposes of the application of: (ii) section 40 ‑ 830 of the Income Tax Assessment Act 1997 for a project amount that is mining capital expenditure within the meaning of that Act; or (iii) Subdivision 40 ‑ B of that Act for a depreciating asset that is a forestry road or timber mill building; in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10, 10AA or 10A property at any time after the application period, there shall be taken to have been allowed in respect of the amount of expenditure a deduction under whichever of those provisions applies in respect of the amount of expenditure of an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period. (3) Where this Division applies in relation to an item of Division 10AAA property: (a) no deduction is allowable to any taxpayer under section 40 ‑ 830 of the Income Tax Assessment Act 1997 for a project amount that is transport capital expenditure within the meaning of that Act in relation to any amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10AAA property for any year of income in which the whole or a part of the application period occurs; and (b) the residual amount at any time after the application period (not being a time after the commencement of a subsequent application period) in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10AAA property is an amount equal to the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(4) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and (c) for the purposes of the application of section 40 ‑ 830 of the Income Tax Assessment Act 1997 , for a project amount that is transport capital expenditure within the meaning of that Act, in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10AAA property for any year of income after the year of income in which this Division ceases to apply—it is taken to be a requirement of that section that the deduction allowable under that section in respect of the amount of expenditure does not exceed the residual amount in relation to the amount of expenditure as worked out in accordance with paragraph (b). (4) Where this Division applies in relation to an item of Division 10C or 10D property: (a) in relation to any year of income the whole of which is included in or comprises the application period—no deduction shall be allowable to any taxpayer under Division 43 of the Income Tax Assessment Act 1997 , in relation to any amount of expenditure by reason of which the item is Division 10C or 10D property for that year of income; (b) in relation to any other year of income in which the whole or a part of the application period occurs: (i) in relation to any part (in this subsection referred to as the pre ‑ application part ) of the year of income that precedes the application period—there shall be allowable to the taxpayer as a deduction under Division 43 of the Income Tax Assessment Act 1997 in relation to an amount of expenditure by reason of which the item is Division 10C or 10D property: (A) where this Division has not previously applied in relation to the amount of expenditure—the same deduction (if any) as would, apart from this Division, be allowable under that Division; and (B) in any other case—the same deduction (if any) as would, but for this application of this section, be allowable under that Division; (ii) in relation to the part of the year of income during which this Division applies—no deduction shall be allowable to any taxpayer under Division 43 of the Income Tax Assessment Act 1997 in relation to any amount of expenditure by reason of which the item is Division 10C or 10D property; and (iii) in relation to any part (in this subsection referred to as the post ‑ application part ) of the year of income that occurs after the application period (not being a part that occurs after the commencement of a subsequent application period): (A) the residual amount at any time during the post ‑ application part in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property is an amount equal to the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(5) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and (C) the deduction (if any) allowable to a taxpayer in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property under Division 43 of the Income Tax Assessment Act 1997 in relation to the post ‑ application part is the deduction (if any) that would be allowable to the taxpayer under that Division in respect of that period if this Division (other than this sub ‑ subparagraph) did not apply and if it were a requirement of that Division that the deduction did not exceed the residual amount in relation to the amount of expenditure as ascertained in accordance with sub ‑ subparagraph (A); (c) the residual amount at any time after the year of income in which the application period ends (not being a time after the commencement of a subsequent application period) in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property is the amount that, but for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF (5) reduced by an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and (d) in the application of Division 43 of the Income Tax Assessment Act 1997 in relation to any year of income after the year of income in which this Division ceases to apply, in relation to an amount of expenditure (not being expenditure incurred after the application period) by reason of which the item is Division 10C or 10D property it shall be taken to be a requirement of Division 43 of the Income Tax Assessment Act 1997 that the deduction (if any) allowable to a taxpayer under that Division in respect of the amount of expenditure does not exceed the residual amount in relation to the amount of expenditure as ascertained in accordance with paragraph (c). (5) If this Division applies in relation to an item of property that is an eligible spectrum licence: (a) an amount cannot be deducted under Division 40 of the Income Tax Assessment Act 1997 in relation to any amount of expenditure (other than expenditure incurred after the application period) by reason of which the item is an eligible spectrum licence for any year of income in which any of the application period occurs; and (b) the residual amount at any time after the application period (but before the start of a later application period) in relation to an amount of expenditure (other than expenditure incurred after the application period) because of which the item is an eligible spectrum licence is an amount equal to: • the amount that, if not for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(6); reduced by: • an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and (c) for the purposes of applying Division 40 of the Income Tax Assessment Act 1997 in relation to an amount of expenditure (other than expenditure incurred after the application period) because of which the item is an eligible spectrum licence at any time after the application period, a deduction under that Division is taken to have been allowed, for the amount of expenditure, of an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period.

Amendment history: Inserted by No 123 of 1985, item 10C | item 10A | item 10D, effective s 10–36: 28 Oct 1985 (s 2) | Amended by No 18 of 1993, item 28, effective s 8–29, 54–57, 59 and Sch: 9 June 1993 (s 2(1)) s 30–53: 1 Jan 1993 (s 2(2)) | Amended by No 31 of 1995, Sch 1 item 7, effective Sch 1: 7 Apr 1995 (s 2) | Amended by No 39 of 1997, Sch 4 item 218 | Sch 4 item 219 | Sch 4 item 220 | Sch 4 item 221 | Sch 4 item 222 | Sch 4 item 223 | Sch 4 item 224 | Sch 4 item 229, effective Sch 1: 1 July 1997 (s 2) | Amended by No 121 of 1997, Sch 1 item 42 | Sch 6 item 97 | Sch 11 item 48 | Sch 11 item 49, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 54 of 1999, Sch 1 item 10, effective s 4, Sch 1 (items 2–13, 36), Sch 3, Sch 5 (items 11–15), Sch 6 and Sch 7 (items 1, 3): 5 July 1999 (s 2(1)) | Amended by No 77 of 2001, Sch 2 item 73 | Sch 2 item 82 | Sch 2 item 83 | Sch 2 item 84 | Sch 2 item 85 | Sch 2 item 86 | Sch 2 item 87 | Sch 2 item 88, effective Sch 2 (items 20–148, 488(1)): 30 June 2001 (s 2(1)) | Amended by No 101 of 2006, Sch 1 item 140 | Sch 2 item 378 | Sch 2 item 379 | Sch 2 item 380 | Sch 2 item 385, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 159GK — Effect of application of Division on assessability of arrangement payments

(1) Where this Division applies in relation to an item of eligible property in relation to which there is an assessable arrangement payment or assessable arrangement payments in relation to a taxpayer in respect of the application period, there shall be included in the assessable income of the taxpayer so much only of any payment portion of each assessable arrangement payment in relation to an eligible amount as does not exceed the interest amount (if any) in relation to the payment portion. (2) For the purposes of subsection (1), a reference to the interest amount in relation to a payment portion of an assessable arrangement payment in relation to an eligible amount is a reference to the amount (if any) ascertained in accordance with the formula A (1 + B) t – A , where: A is the eligible principal in relation to the payment portion; B is: (a) where the sum of the payment portions of the likely arrangement payments in relation to the eligible amount in respect of the likely application period (including any notional final payment portion of an arrangement payment) exceeds the residual amount, as ascertained at the commencement of the application period, in relation to the eligible amount—the fraction that is the effective annual interest rate, ascertained at the commencement of the application period referred to in subsection (1), at which the sum of the present values of the payment portions equals the residual amount; and (b) in any other case—nil; and t is the number of whole days in the arrangement payment period divided by 365. (3) For the purposes of subsection (2): (a) a reference in that subsection to the eligible principal in relation to a payment portion of an arrangement payment in relation to an eligible amount is a reference to: (i) where the arrangement payment is the first arrangement payment in the likely application period referred to in that subsection—the residual amount in relation to the eligible amount, as ascertained at the commencement of the arrangement payment period in relation to the arrangement payment; and (ii) in the case of any other arrangement payment—an amount ascertained in accordance with the formula A ‑ B + C , where: A is the eligible principal in relation to the payment portion of the immediately preceding arrangement payment; B is the amount of the payment portion of the immediately preceding arrangement payment; and C is the interest amount in relation to the payment portion of the immediately preceding arrangement payment; and (b) a reference in that subsection to the arrangement payment period in relation to an arrangement payment is a reference to: (i) where the arrangement payment is the first arrangement payment liable to be made in respect of the application period referred to in that subsection—the period commencing at the beginning of the application period and ending at the time at which the arrangement payment is liable to be made; and (ii) in the case of any other arrangement payment—the period commencing at the time at which the immediately preceding arrangement payment was liable to be made and ending at the time at which the arrangement payment concerned is liable to be made. (4) Where the qualifying arrangement in relation to an item of eligible property in relation to which this Division applies does not provide for the sale or disposal of the item to a person who is a party to the qualifying arrangement or to an associate, for the purposes of this section an arrangement payment (not being an assessable arrangement payment) that includes a payment portion (which portion is in this section referred to as a notional final payment portion ) in relation to any eligible amount by reason of which the item is an item of eligible property shall be taken to be liable to be made at the end of the likely application period of an amount equal to: (a) where the qualifying arrangement is a qualifying arrangement by reason of the application of subparagraph 159GG(1)(a)(i)—so much of the guaranteed residual value referred to in that subparagraph as is attributable to the eligible amount; or (b) in any other case—the amount that in the opinion of the Commissioner was, or would have been, at the commencement of the application period, the market value at the end of the application period of so much of the item of eligible property as is attributable to the eligible amount. (5) Where an amount of eligible capital expenditure is incurred in relation to an item of eligible property at any time after this Division commences to apply in relation to the item of eligible property, this section applies in respect of that expenditure as if this Division had commenced to apply in relation to the item of eligible property at the time at which the expenditure was incurred. (6) In this section: (a) likely application period , in relation to an application of this Division, means the period that, having regard to the provisions of the qualifying arrangement referred to in section 159GH and to any other relevant circumstances, was, at the time at which that application of this Division commenced, the likely length of the application period; and (b) likely arrangement payment , in relation to a likely application period, means an arrangement payment that, having regard to the provisions of the qualifying arrangement referred to in section 159GH and to any other relevant circumstances, was, at the time at which the likely application period commenced, likely to become liable to be made during the likely application period.

Amendment history: Inserted by No 123 of 1985, item 10C | item 10D, effective s 10–36: 28 Oct 1985 (s 2)

s 159GL — Special provision relating to Division 10C or 10D property

(1) If: (a) section 159GH applies in relation to an item of Division 10C or 10D property; and (b) at the time at which that section commenced to apply in relation to the item of property, the sum of the present values of the net Division 16D amounts, for each year of income during which the whole or a part of the likely application period occurs, in relation to an amount of expenditure by reason of which the property is Division 10C or 10D property will be less than the sum of the present values, at that time, of the net Division 10C or 10D amounts for each such year of income in relation to the expenditure; sections 159GJ and 159GK do not apply in relation to the amount of expenditure in relation to the application period. (2) In subsection (1): (a) a reference to the net Division 10C or 10D amounts for a year of income in relation to an amount of expenditure by reason of which an item of property is Division 10C or 10D property is a reference to the sum of the payment portions of any assessable arrangement payments likely to become liable to be made in relation to the amount of expenditure in relation to that year of income reduced by the deduction (if any) that, but for this Division, would be allowable under the former Division 10C or 10D of this Part, or under Division 43 of the Income Tax Assessment Act 1997 , for the year of income in respect of the amount of expenditure; (b) a reference to the net Division 16D amounts for a year of income in relation to an amount of expenditure by reason of which an item of property is Division 10C or 10D property is a reference to the sum of so much of the payment portions of any assessable arrangement payments likely to become liable to be made during the year of income in relation to the amount of expenditure as would, but for this section, be included in the assessable income of any taxpayer of the year of income under section 159GK; and (c) likely application period has the same meaning as in section 159GK.

Amendment history: Inserted by No 123 of 1985, effective s 10–36: 28 Oct 1985 (s 2) | Amended by No 39 of 1997, Sch 4 item 230, effective Sch 1: 1 July 1997 (s 2) | Amended by No 101 of 2006, Sch 2 item 387, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 159GM — Special provision where cost of plant etc. is also eligible capital expenditure

Where: (a) at a particular time (in this section referred to as the relevant time ) an item of eligible property is both eligible depreciation property and eligible capital expenditure property; and (b) the expenditure by reason of which the item of property is eligible capital expenditure property is the amount that: (i) was the cost of the item of property to the taxpayer who incurred the expenditure for the purpose of the former Subdivision 42 ‑ B, or Subdivision 40 ‑ C, of the Income Tax Assessment Act 1997 ; or (ii) would have been the cost to the taxpayer for the purpose of that Subdivision if it applied in relation to the item of property; for the purpose of ascertaining the residual amount at the relevant time in relation to the amount of expenditure: (c) if a capital expenditure deduction would, apart from this Division, be allowable to a taxpayer in respect of the amount of eligible capital expenditure in relation to the year of income in which the relevant time occurs—the item of eligible property shall be taken to be at the relevant time an item of eligible capital expenditure property and not an item of eligible depreciation property; and (d) in any other case—the item of eligible property shall be taken to be at the relevant time an item of eligible depreciation property and not an item of eligible capital expenditure property.

Amendment history: Inserted by No 123 of 1985, effective s 10–36: 28 Oct 1985 (s 2) | Amended by No 121 of 1997, Sch 6 item 98 | Sch 6 item 99, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 77 of 2001, Sch 2 item 89, effective Sch 2 (items 20–148, 488(1)): 30 June 2001 (s 2(1)) | Amended by No 101 of 2006, Sch 2 item 388, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 159GN — Effect of use of property under qualifying arrangement for producing assessable income

(1) Where: (a) this Division applies in relation to an item of eligible property by reason of the application of subparagraph 159GH(1)(b)(i) in relation to the use by an exempt public body, or the control by an exempt public body of the use, of the item of eligible property under a qualifying arrangement; (b) the exempt public body jointly uses, or jointly controls the use of, the item of eligible property together with another person, or one or more other persons, who are not exempt public bodies; (c) the item of eligible property is or will be used during the arrangement period in relation to the qualifying arrangement for producing income of an amount that, having regard to the provisions of the qualifying arrangement and any other relevant circumstances, is not likely to be less than the total amount of the arrangement payments under the qualifying arrangement in relation to the item of eligible property; and (d) the income, or a part of the income, referred to in paragraph (c) will be included in the assessable income of one or more persons (which person, or each of which persons, is in this subsection referred to as an assessable person ); the following provisions have effect: (e) where all of the income referred to in paragraph (c) will be included in the assessable income of one or more persons—sections 159GJ and 159GK do not apply in relation to the item of eligible property; (f) where paragraph (e) does not apply: (i) there is allowable to a taxpayer so much of any deduction that, but for this section, would not, by reason of the application of section 159GJ, be allowable to the taxpayer in relation to any eligible amount in relation to the item of eligible property in respect of the application period as is ascertained in accordance with the formula AB , where: A is the amount of the deduction that, but for this section would not, by reason of the application of section 159GJ, be allowable to the taxpayer; and B is the assessable person fraction for the purposes of the application of this Division concerned; (ii) for the purposes of section 159GJ, a reference in that section to the total notional principal in relation to an eligible amount in relation to the item of eligible property in respect of the application period shall be taken to be a reference to the amount that, but for this subparagraph, would be the total notional principal, as increased by the amount of any deduction allowable under subparagraph (i) of this paragraph in relation to the eligible amount in respect of the application period; and (iii) for the purposes of the application of section 159GK, any eligible amount in relation to the item of property in respect of the application period shall be ascertained in accordance with the formula AB , where: A is the amount that, but for this section, would be the eligible amount; and B is the non ‑ assessable person fraction in relation to the application of this Division concerned. (2) For the purposes of subsection (1): (a) a reference in that subsection to the assessable person fraction in relation to an application of this Division in relation to an item of eligible property is a reference to the interest of all of the assessable persons in the income referred to in paragraph (1)(c) expressed as a fraction of the interests of all of the persons entitled to that income; and (b) a reference in that subsection to the non ‑ assessable person fraction in relation to an application of this Division in relation to an item of eligible property is a reference to the fraction ascertained by subtracting the assessable person fraction in relation to that application of this Division in relation to the item of eligible property from the number 1. (3) Where: (a) this Division applies in relation to an item of eligible property by reason of the application of subparagraph 159GH(1)(b)(ii) in relation to the use of the item of property outside Australia partly for the purpose of producing exempt income; and (b) that use is also partly for the purpose of producing assessable income; the following provisions have effect: (c) there is allowable to a taxpayer so much of any deduction that, but for this section, would not, by reason of the application of section 159GJ, be allowable to the taxpayer in relation to any eligible amount in relation to the item of eligible property in respect of the application period as is ascertained in accordance with the formula AB , where: A is the amount of the deduction that, but for this section would not, by reason of the application of section 159GJ, be allowable to the taxpayer; and B is the assessable income fraction for the purposes of the application of this Division concerned; (d) for the purposes of section 159GJ, a reference in that section to the total notional principal in relation to an eligible amount in relation to the item of eligible property in respect of the application period shall be taken to be a reference to the amount that, but for this paragraph, would be the total notional principal, as increased by the amount of any deduction allowable under paragraph (c) of this subsection in relation to the eligible amount in respect of the application period; and (e) for the purposes of the application of section 159GK, any eligible amount in relation to the item of property in respect of the application period shall be ascertained in accordance with the formula AB , where: A is the amount that, but for this section, would be the eligible amount; and B is the exempt income fraction in relation to the application of this Division concerned. (4) For the purposes of subsection (3): (a) a reference in that subsection to the assessable income fraction in relation to an application of this Division in relation to an item of eligible property is a reference to the amount of the assessable income referred to in paragraph (3)(b) expressed as a fraction of the sum of that assessable income and the exempt income referred to in paragraph (3)(a); and (b) a reference in that subsection to the exempt income fraction in relation to an application of this Division in relation to an item of eligible property is a reference to the fraction ascertained by subtracting the assessable income fraction in relation to that application of this Division in relation to the item of eligible property from the number 1.

s 159GO — Special provisions relating to partnerships

(1) Where: (a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income ); (b) either a deduction or an arrangement payment, or both, were taken into account in calculating that net income or partnership loss; (c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction ), or the arrangement payment or a part of the arrangement payment (which arrangement payment or part of the arrangement payment, as the case may be, is referred to in this subsection as the relevant arrangement payment ) would not have been taken into account for the purpose of that calculation if this Division applied in relation to the partnership in relation to particular property that is arrangement property in relation to a qualifying arrangement; (d) this Division does not apply in relation to the partnership in relation to the property by reason only that the qualifying arrangement was entered into before the time (in this subsection referred to as the earliest application time ) referred to in whichever subparagraph of paragraph 159GH(1)(b) would be applicable if this Division applied as mentioned in paragraph (c); and (e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer after the earliest application time; the following provisions have effect: (f) there shall be included in the assessable income of the taxpayer of the relevant year of income an amount that bears to the amount of the relevant deduction the same proportion as the individual interest of the taxpayer in that net income bears to that net income or, as the case requires, as the individual interest of the taxpayer in that partnership loss bears to that partnership loss; (g) there shall be allowable as a deduction in the assessment of the taxpayer of the relevant year of income an amount that bears to the amount of the relevant arrangement payment the same proportion as the individual interest of the taxpayer in that net income bears to that net income or, as the case requires, as the individual interest of the taxpayer in that partnership loss bears to that partnership loss. (2) Where: (a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income ); (b) either a deduction or an arrangement payment, or both, were taken into account in calculating that net income or partnership loss; (c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction ), or the arrangement payment or a part of the arrangement payment (which arrangement payment or part of the arrangement payment, as the case may be, is referred to in this subsection as the relevant arrangement payment ), would not have been taken into account for the purpose of that calculation if this Division applied in relation to the partnership in relation to particular property that is arrangement property in relation to a qualifying arrangement; (d) this Division does not apply in relation to the partnership in relation to the property by reason only that the qualifying arrangement was entered into before the time (in this subsection referred to as the earliest application time ) referred to in whichever subparagraph of paragraph 159GH(1)(b) would be applicable if this Division applied as mentioned in paragraph (c); (e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer before the earliest application time; (f) after the earliest application time, the taxpayer made or agreed to make a contribution or contributions (which contribution is or contributions are in this subsection referred to as the additional contribution ) to the capital of the partnership in addition to any contribution or contributions to the capital of the partnership that, under a contract or contracts entered into at or before that time, the taxpayer had made or agreed to make; and (g) by reason of making or agreeing to make the additional contribution, the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss, is greater than it would otherwise have been; the following provisions have effect: (h) where a deduction was taken into account in calculating that net income or partnership loss—there shall be included in the assessable income of the taxpayer of the relevant year of income an amount ascertained in accordance with the formula A (B – C) ; (j) where an arrangement payment was taken into account in calculating that net income or partnership loss—there shall be allowable as a deduction in the assessment of the taxpayer of the relevant year of income an amount ascertained in accordance with the formula A (B – C) ; where: A is the amount of the relevant deduction or of the relevant arrangement payment, as the case requires; B is the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss; and C is the fraction that would be B if that fraction were ascertained on the basis of the individual interests of the partners immediately before the earliest application time and the net income or partnership loss at that time were equal to the net income or partnership loss of the relevant year of income.

s 159GP — Interpretation

(1) In this Division, unless the contrary intention appears: accrual amount has the meaning given by subsection 159GQB(1). accrual period has the meaning given by section 159GQA. agreement has the same meaning as in Subdivision D of Division 3. annuity has the same meaning as in section 10 of the Superannuation Industry (Supervision) Act 1993 . associate has the same meaning as in Subdivision D of Division 3. deferred superannuation income stream has the same meaning as in the Income Tax Assessment Act 1997 . eligible return has the meaning given by subsection (3). fixed return security means a qualifying security under which the amount or amounts payable are or consist of: (a) a specified amount or specified amounts; (b) an amount or amounts the method of calculation of which does not involve an interest or indexation rate or other factor, being a rate or factor that varies or may vary during the term of the security; or (c) any combination of amounts referred to in paragraph (a) or (b). holder , in relation to a security at a particular time, means the person who, if the amount or amounts payable under the security were due and payable at that time, would be entitled to receive payment of the amount or amounts. implicit interest rate has the meaning given by subsection 159GQB(2). ineligible annuity means: (a) an annuity that is issued by a life assurance company to or for the benefit of a natural person other than in the capacity of trustee of a trust estate; or (b) an annuity that is issued by a life assurance company to a complying superannuation fund if: (i) the annuity is held by the fund for the sole purpose of meeting its liabilities to provide one or more deferred superannuation income streams to one or more members of the fund; and (ii) the value of the annuity and the one or more deferred superannuation income streams is the same or substantially the same; and (iii) the terms on which the annuity and the one or more deferred superannuation income streams are payable are the same or substantially the same; or (c) an annuity that is issued by a life assurance company to an RSA provider if: (i) the annuity is held by the RSA provider for the sole purpose of meeting its liabilities to provide one or more deferred superannuation income streams to one or more holders of the RSA; and (ii) the value of the annuity and the one or more deferred superannuation income streams is the same or substantially the same; and (iii) the terms on which the annuity and the one or more deferred superannuation income streams are payable are the same or substantially the same. issue , in relation to a security other than a bill of exchange, means the creation of the liability to pay an amount or amounts under the security. issue price , in relation to a security, means the consideration (if any) for the issue of the security. issuer , in relation to a security (other than a bill of exchange) at a particular time, means the person who, if the amount or amounts payable under the security were due and payable at that time, would be liable to pay the amount or amounts. partial redemption , in relation to a security, means the discharging of a part (other than the final part) of a liability to pay an amount or amounts under the security representing a return of the issue price of the security. partial redemption payment , in relation to a security, means a payment that has the effect of partially redeeming the security. qualifying security means any security: (a) that is issued after 16 December 1984; (ba) that is not part of an exempt series (see subsection (9A)); (c) the term of which, ascertained as at the time of issue of the security will, or is reasonably likely to, exceed 1 year; (d) that has an eligible return; and (e) where the precise amount of the eligible return is able to be ascertained at the time of issue of the security—in relation to which the amount of the eligible return is greater than 1 ½ % of the amount ascertained by multiplying the amount of the payment or the sum of the payments (excluding any periodic interest) liable to be made under the security by the number (including any fraction) of years in the term of the security; but does not, except as provided by subsection (10), include an annuity. redemption , in relation to a security, means the discharging of all liability to pay any amount or amounts under the security representing a return of the issue price of the security. redemption payment , in relation to a security, means any payment that has the effect of redeeming the security. security means: (a) stock, a bond, debenture, certificate of entitlement, bill of exchange, promissory note or other security; (b) a deposit with a bank or other financial institution; (c) a secured or unsecured loan; or (d) any other contract, whether or not in writing, under which a person is liable to pay an amount or amounts, whether or not the liability is secured. taxpayer’s maximum term , in relation to a security held by a taxpayer, means: (a) if the security was issued to the taxpayer—the term of the security; or (b) if the security was transferred to the taxpayer—the part of the term remaining after the transfer. term , in relation to a security, means the period from the issue of the security until the time at which the liability to make the payment or final payment or payments, as the case requires, under the security arises. transfer , in relation to a security, means transfer, sell, assign or dispose in any way of the security or of the right to receive payment of the amount or amounts payable under the security, but does not include a redemption or partial redemption of the security. transfer price , in relation to the transfer of a security, means the consideration (if any) for the transfer of the security. variable return security means a qualifying security that is not a fixed return security. (2) Where: (a) the Commissioner, having regard to any connection between the parties to the issue or transfer of a security and to any other relevant circumstances, is satisfied that the parties were not dealing with each other at arm’s length in relation to the issue or transfer; and (b) the Commissioner determines that this subsection should apply in relation to the issue or transfer; then, for the purposes of the application of the definition of issue price or transfer price , as the case may be, in subsection (1) in relation to the issue or transfer, the consideration for the issue or transfer shall be taken to be equal to: (c) the consideration that might reasonably be expected for the issue or transfer if the parties to the issue or transfer were independent parties dealing at arm’s length with each other in relation to the issue or transfer; or (d) where, for any reason (including an insufficiency of information available to the Commissioner), it is not possible or not practicable for the Commissioner to ascertain the amount referred to in paragraph (c)—such amount as the Commissioner determines. (3) For the purposes of this Division, there shall be taken to be an eligible return in relation to a security if at the time when the security is issued it is reasonably likely, by reason that the security was issued at a discount, bears deferred interest or is capital indexed or for any other reason, having regard to the terms of the security, for the sum of all payments (other than periodic interest payments) under the security to exceed the issue price of the security, and the amount of the eligible return is the amount of the excess. (6) For the purposes of this Division, where an amount of interest is payable under a security, the amount shall be taken to be periodic interest if the period between the commencement of the period in respect of which the interest is expressed to be payable and the time at which the interest is payable is less than or equal to one year. (7) Where: (a) but for this subsection, an amount of interest payable under a security would, by reason of the application of subsection (6), be taken, for the purposes of this Division, to be periodic interest; and (b) the Commissioner, having regard to the amount of the interest, considers that it is properly attributable to a period in excess of one year; then, for purposes of the application of this Division: (c) the amount of interest shall not be taken to be periodic interest; and (d) the amount of interest shall be taken to be attributable to the period to which the Commissioner considers it is properly attributable. (8) Where 2 or more of the amounts payable under a security are payable to different persons and in return for consideration given by different persons, the 2 or more amounts shall, for the purposes of this Division, be taken to be payable under a separate security having such of the terms of the first ‑ mentioned security as are relevant. (9) For the purposes of the application of this Division in relation to the holding of a security acquired by a taxpayer on transfer, any prior holding of the security by the taxpayer, whether on issue or transfer, shall be disregarded. (9A) For the purposes of paragraph (ba) of the definition of qualifying security in subsection (1), if: (a) after 16 December 1984, a person issues a security (the first in the series ) that is not a qualifying security; and (b) during the period from the end of 16 December 1984 until the issuing of the first in the series, the person did not issue any qualifying security with exactly the same payment dates, payment amounts and other terms as the first in the series; and (c) after issuing the first in the series, the person issues another security (the later security ) with exactly the same payment dates, payment amounts and other terms as the first in the series; the later security is part of an exempt series . (9B) In determining for the purposes of paragraph (9A)(b) or (c) whether a security has exactly the same other terms as another security, the fact that the first ‑ mentioned security has a different issue price than the second ‑ mentioned security is to be disregarded. (10) Where: (a) an annuity is issued on or after 29 October 1987; (b) the requirements of paragraphs (b) to (e) (inclusive) of the definition of qualifying security in subsection (1) are satisfied in relation to the annuity; and (c) the annuity is not an ineligible annuity; the annuity is a qualifying security for the purposes of this Division.

Amendment history: Inserted by No 49 of 1986, item 11 | item 12 | item 26C | item 265B | item 25 | item 223 | item 16E, effective s 4–29: 24 June 1986 (s 2(1)) | Amended by No 138 of 1987, Sch 2 item 39 | Sch 2 item 1986 | Sch 2 item 49, effective s 4, 5 and 7–52: 18 Dec 1987 (s 2(1)) s 6: 21 Dec 1987 (s 2(2)) | Amended by No 7 of 1993, item 32, effective s 4–6, 8–11 and 30–34: 27 May 1993 (s 2(1)) s 7 and 12–29: 1 July 1994 (s 2(2)(a), (3)) | Amended by No 82 of 1993, item 24, effective s 15, 16(1) and 17–35: 1 July 1994 (s 2(2)(d)) s 16(2): 1 Dec 1993 (s 2(1)) | Amended by No 82 of 1994, item 9 | item 23, effective s 8–43, 47–71, 80–83, 93–112, 114–119, 122, 128–134: 23 June 1994 (s 2(1)) s 7, 120 and 121: 22 Oct 1986 (s 2(2)) s 44–46: 9 June 1993 (s 2(3)) s 72–79: 1 Jan 1993 (s 2(4)) s 84–92: 30 June 1992 (s 2(5)) s 113: 21Dec 1992 (s 2(6)) s 123–127): 24 Dec 1992 (s 2(7)) | Amended by No 44 of 1999, Sch 4 item 90, effective Sch 7 (items 59–104): 1 July 1999 (s 3(2)(e)) Sch 8 (items 18, 22, 23): 17 June 1999 (s 2(1)) | Amended by No 101 of 2004, effective s 4, Sch 1 (items 1, 4), Sch 8, Sch 10 (items 1–6) and Sch 11 (items 161, 162): 30 June 2004 (s 2(1) items 1, 2, 9, 10, 18) Sch 11 (items 1, 2): 16 July 1999 (s 2(1) item 11) Sch 11 (items 17–34, 38–43): 30 June 2000 (s 2(1) item 13) Sch 11 (items 44–46, 49–51, 60–87, 101–127): 1 July 2000 (s 2(1) item 14) Sch 11 (items 131–140): 1 July 2001 (s 2(1) item 16) | Amended by No 47 of 2016, Sch 6 item 13, effective Sch 6 (items 8–15, 19–25): 6 May 2016 (s 2(1) item 8) | Amended by No 8 of 2019, Sch 8 item 29 | Sch 8 item 30 | Sch 8 item 31, effective Sch 6 (items 1, 2): 1 July 2018 (s 2(1) item 6) Sch 7 (item 1) and Sch 8 (items 12, 27–34): 1 Apr 2019 (s 2(1) items 7, 11)

s 159GQ — Tax treatment of holder of qualifying security

Accrual amounts to be worked out (1) If a taxpayer holds a qualifying security for all or part of a year of income, the effect on the taxpayer’s taxable income is determined by working out the accrual amount (see section 159GQB) for each accrual period (see section 159GQA) in the year of income and then summing the accrual amounts. Positive sum assessable (2) If the sum is a positive amount, the amount is included in the assessable income of the taxpayer of the year of income. Negative sum deductible (3) If the sum is a negative amount, a deduction of the amount is allowable in the assessment of the taxpayer of the year of income.

Amendment history: Inserted by No 49 of 1986, item 6 | item 26C | item 25, effective s 4–29: 24 June 1986 (s 2(1)) | Repealed and substituted by No 82 of 1994, item 10 | item 19, effective s 8–43, 47–71, 80–83, 93–112, 114–119, 122, 128–134: 23 June 1994 (s 2(1)) s 7, 120 and 121: 22 Oct 1986 (s 2(2)) s 44–46: 9 June 1993 (s 2(3)) s 72–79: 1 Jan 1993 (s 2(4)) s 84–92: 30 June 1992 (s 2(5)) s 113: 21Dec 1992 (s 2(6)) s 123–127): 24 Dec 1992 (s 2(7))

s 159GQA — Accrual period

Taxpayer’s maximum term to be divided into accrual periods (1) The taxpayer’s maximum term for the qualifying security is divided into accrual periods in accordance with this section. Whole year of income (2) If a year of income is wholly taken up by any of the taxpayer’s maximum term, the year of income is divided into 2 accrual periods of 6 months. Beginning of taxpayer’s maximum term (3) If the taxpayer’s maximum term begins after the beginning of the year of income: (a) if it begins less than 6 months after the beginning of the year of income—the period from the beginning of the taxpayer’s maximum term until the middle of the year of income is an accrual period and the second 6 months of the year of income is an accrual period; and (b) in any other case—the part of the year of income taken up by the taxpayer’s maximum term is an accrual period. End of taxpayer’s maximum term (4) If the taxpayer’s maximum term ends before the end of a year of income: (a) if it ends no later than 6 months after the beginning of the year of income—the part of the year of income taken up by the taxpayer’s maximum term is an accrual period; and (b) in any other case—the first 6 months of the year of income is an accrual period and the period from the middle of the year of income until the end of the taxpayer’s maximum term is an accrual period. Example (5) For example, if the taxpayer’s year of income is a financial year and a security with a 2 year term is issued to the taxpayer on 1 April, the accrual periods will be as follows: 1st year 2nd year 3rd year of income of income of income 1 Apr. 1 July 1 Jan. 1 July 1 Jan. 1 Apr. 3 month 6 month 6 month 6 month 3 month accrual accrual accrual accrual accrual period period period period period

s 159GQB — Accrual amount

Formula (1) The accrual amount for an accrual period is worked out using the formula: Implicit interest rate (2) In the formula in subsection (1), Implicit interest rate means the rate of interest worked out under section 159GQC (for a fixed return security) or 159GQD (for a variable return security), properly adjusted to take account of the case where the accrual period is less than 6 months. Opening balance (3) In the formula in subsection (1), Opening balance means the amount worked out using the formula: Issue/transfer price + Previous accruals – Payments where: Issue/transfer price means the issue price or transfer price, as the case requires, of the security; and Previous accruals means: (a) if paragraph (b) does not apply—the sum, whether positive or negative, of all accrual amounts for previous accrual periods in the taxpayer’s maximum term; or (b) if the accrual period is the first in the taxpayer’s maximum term—nil; and Payments means all payments (other than of periodic interest) made or liable to be made under the security during all previous accrual periods in the taxpayer’s maximum term. Periodic interest etc. (4) In the formula in subsection (1), Periodic interest etc. means the sum of: (a) all periodic interest payments made or liable to be made under the security during the accrual period, properly adjusted in the case of any payment made other than at the end of the period; and (b) if any payments (other than of periodic interest) made or liable to be made under the security during the accrual period are made or liable to be made other than at its end—an amount to adjust properly for the making of the payments other than at the end of the period.

s 159GQC — Implicit interest rate for fixed return security

For the purposes of the formula component Implicit interest rate in subsection 159GQB(1), the rate of interest for a fixed return security in relation to a taxpayer is the rate of compound interest per period of 6 months at which: (a) the sum of the present values of all amounts payable under the security during the taxpayer’s maximum term; equals: (b) the issue price or the transfer price, as the case requires, of the security.

s 159GQD — Implicit interest rate for variable return security

Implicit interest rate to be recalculated each year etc. (1) For the purposes of the formula component Implicit interest rate in subsection 159GQB(1), the rate of interest for a variable return security must be worked out in accordance with subsection (2) separately for each year of income during the taxpayer’s maximum term. If there are 2 accrual periods of 6 months in the year of income, the rate is the same for both periods. It is possible for the rate to be negative. Rate (2) The rate applicable in relation to a year of income is the rate of compound interest per period of 6 months in the calculation period (see subsection (3)) at which: (a) the sum of the present values of all amounts payable under the security during the calculation period; equals: (b) the opening balance, mentioned in subsection 159GQB(1), for the accrual period that begins the calculation period. Calculation period (3) The calculation period means the part of the taxpayer’s maximum term that occurs after the beginning of the year of income. Where amount payable is not known (4) For the purposes of paragraph (2)(a), if by the end of the year of income it is not possible to determine whether an amount will be payable, or the size of the amount that will be payable, after the end of the year of income, the determination is to be made by applying subsection (5), (7) or (11), or a combination of those subsections. Assumption of constant level (5) Subject to subsection (7), if an amount payable is worked out to any extent by reference to the amount or level, at a particular time, of a rate, price, index or other thing, it is to be assumed that the rate, price, index or thing will be the same at all times after the end of the year of income as it was at the end of the year of income (or, if it was not available at the end of the year of income, at the time when it was last available in the year of income). Examples (6) For the purposes of subsection (5): (a) an example of an amount worked out wholly by reference to the amount of a rate at a particular time is an interest payment under a floating rate note. The amount payable is the product of an interest rate indicator (such as the prevailing bank bill rate) and the face or par value of the note; and (b) an example of an amount worked out wholly by reference to the amount of a price at a particular time is a redemption payment under a commodity linked security where the amount of the payment is the product of the prevailing price of a commodity (such as gold) and the face or par value of the security. Assumption of continuing rate of change (7) If an amount payable is worked out to any extent by reference to the amount of change in an index or other thing that occurs during a period, it is to be assumed that the index or other thing will continue to change at the same rate as it did: (a) if the index or other thing was available at the end of the year of income—during the year of income; or (b) in any other case—during the period of 12 months in respect of which the index or other thing was last available in the year of income. Example (8) An example for the purposes of subsection (7) is a payment whose amount is the product of the face or par value of a security and the percentage increase in the All Groups Consumer Price Index number (the CPI ) during the year ending on 30 June 1995. If the year of income for which the implicit interest rate is being worked out is the 1993 ‑ 94 year of income and the CPI increases by 2% during the year ending on 31 March 1994 (the date of the last available number during the year of income), the CPI is assumed to increase by 2% during the year ending on 30 June 1995. Disguised continuing rate of change case (9) For the purposes of subsection (7), if an amount payable is worked out to any extent by reference to the quotient of: (a) the amount or level of an index or other thing at a particular time; and (b) either: (i) the amount or level of the index or other thing at a different time; or (ii) another amount that, while not expressed to be the amount or level of the index or other thing at a different time, may reasonably be regarded as representing the amount or level of the index or other thing at a different time; the amount payable is taken to be worked out to that extent by reference to the amount of change in the index or other thing that occurs during the period between the 2 times. Example (10) An example for the purposes of subsection (9) is a payment under a security issued in December 1994 that is worked out by multiplying a number of dollars by the quotient of: (a) the All Groups Consumer Price Index number in respect of the quarter ending on 31 December 1997; and (b) the number 114. Assume that the number in paragraph (b) is the same as the All Groups Consumer Price Index number in respect of the quarter ending on 31 December 1994. In this case, it would be reasonable to regard the number as representing the amount of the index at 31 December 1994, and therefore to apply subsection (7). General assumption (11) If it is not possible to make the determination mentioned in subsection (4) in respect of the whole or part of any amount by applying subsection (5) or (7), or both, (for example, because no information about a rate, price or index was available during the year of income), the determination in respect of that whole or part is to be made on the basis of what is most likely in the circumstances.

s 159GR — Consequences of actual payments

(1) Where a payment (not being a payment that is, or to the extent that it consists of, a periodic interest payment, a redemption payment or a partial redemption payment) is made or liable to be made in a year of income to a taxpayer under a qualifying security: (a) no amount shall be included in the assessable income of the taxpayer of the year of income in respect of the payment otherwise than under section 159GQ; and (b) where the taxpayer acquired the qualifying security on transfer—no amount shall be allowable as a deduction from the assessable income of the taxpayer of the year of income in respect of the payment otherwise than under section 159GQ.

s 159GS — Balancing adjustments on transfer of qualifying security

(1) Where there is a profit amount in relation to the transfer of a qualifying security by a taxpayer in a year of income: (a) if there is a net assessable amount in relation to the transfer and: (i) the profit amount exceeds the net assessable amount—an amount equal to the excess shall be included in the assessable income of the taxpayer of the year of income; or (ii) the net assessable amount exceeds the profit amount—an amount equal to the excess shall be allowable as a deduction from the assessable income of the taxpayer of the year of income; and (b) if there is a net deductible amount in relation to the transfer—an amount equal to the sum of that amount and the profit amount shall be included in the assessable income of the taxpayer of the year of income. (2) Where there is a loss amount in relation to the transfer of a qualifying security by a taxpayer in a year of income and: (a) there is a net assessable amount in relation to the transfer—an amount equal to the net assessable amount shall be allowable as a deduction from the assessable income of the taxpayer of the year of income; or (b) there is a net deductible amount in relation to the transfer that exceeds the loss amount—an amount equal to the excess shall be included in the assessable income of the taxpayer of the year of income. (3) For the purposes of the application of this section in relation to the transfer (in this subsection referred to as the relevant transfer ) of a qualifying security by a taxpayer: (a) where the transfer price, as increased by the amount of any payments (other than periodic interest payments) made to the taxpayer under the security in respect of the period when the security was held by the taxpayer exceeds: (i) the issue price of the security; or (ii) where the security was acquired by the taxpayer on transfer—the transfer price in relation to that transfer; there shall be taken to be a profit amount in relation to the relevant transfer of an amount equal to the excess; (b) where the issue price of the security or, where the security was acquired by the taxpayer on transfer, the transfer price in relation to that transfer exceeds the sum of the transfer price in relation to the relevant transfer and any payments (other than periodic interest payments) made to the taxpayer under the security in respect of the period when the security was held by the taxpayer, there shall be taken to be a loss amount in relation to the relevant transfer of an amount equal to the excess; (c) where the sum of all amounts (if any) included under section 159GQ in the assessable income of the taxpayer in respect of the security in respect of the period when the security was held by the taxpayer exceeds the sum of all amounts (if any) allowable under those sections as deductions from the assessable income of the taxpayer in respect of the security in respect of that period, there shall be taken to be a net assessable amount in relation to the relevant transfer of an amount equal to the excess; and (d) where the sum of all amounts (if any) allowable under section 159GQ as deductions from the assessable income of the taxpayer in respect of the security in respect of the period when the taxpayer held the security exceeds the sum of all amounts (if any) included under those sections in the assessable income of the taxpayer in respect of the security in respect of that period, there shall be taken to be a net deductible amount in relation to the relevant transfer of an amount equal to the excess.

s 159GT — Tax treatment of issuer of a qualifying security

(1) Subsections (1A) and (1B) apply if a taxpayer is an issuer of a qualifying security to which this section applies during a period (the issuer period ) comprising the whole or part of a year of income. (1A) If, on the assumptions in subsection (1C), an amount would be included in the taxpayer’s assessable income of the year of income in respect of the issuer period, then, subject to this section, the taxpayer is entitled to a deduction in his or her assessment for the year of income equal to that amount. (1B) If, on the assumptions in subsection (1C), a deduction would be allowable in the taxpayer’s assessment for the year of income, then an amount equal to the deduction is included in the taxpayer’s assessable income of the year of income. (1C) For the purposes of subsections (1A) and (1B), the assumptions are that: (a) the security was issued to the taxpayer (rather than the taxpayer being the issuer of the security); and (b) the taxpayer held the security during the whole of the issuer period; and (c) the taxpayer did not transfer the security at the end of the issuer period; and (d) sections 159GW, 159GX and 159GY were not enacted. (2) A deduction is not allowable to a taxpayer under subsection (1A) in relation to a qualifying security to which this section applies unless the taxpayer would, but for this Division, be entitled to a deduction under section 8 ‑ 1 of the Income Tax Assessment Act 1997 in respect of payments (not being redemption payments, partial redemption payments or periodic interest payments) made or liable to be made under the security in respect of the relevant period referred to in that subsection. (3) Where a payment (not being a payment that is, or to the extent that it consists of, a periodic interest payment, a redemption payment or a partial redemption payment) is made or liable to be made in a year of income by a taxpayer under a qualifying security to which this section applies, no amount shall be allowable as a deduction from the assessable income of the taxpayer of the year of income in respect of the payment otherwise than under this section. (5) Subject to subsection (6), this section applies to: (a) any qualifying security issued on or before 22 May 1986; and (b) any qualifying security issued in Australia after 22 May 1986 other than a negotiable instrument issued payable to bearer. (6) This section does not apply to a qualifying security issued by a taxpayer after 5 o’clock in the evening, by standard time in the Australian Capital Territory, on 23 April 1987: (a) to, on behalf of or otherwise for the benefit of, a non ‑ resident or a prescribed dual resident associate of the taxpayer; or (b) subject to an agreement between the taxpayer and an associate of the taxpayer under which the security is or was to be transferred to a non ‑ resident or a prescribed dual resident associate of the taxpayer.

Amendment history: Inserted by No 49 of 1986, effective s 4–29: 24 June 1986 (s 2(1)) | Amended by No 138 of 1987, item 41 | Sch 2 item 40 | Sch 2 item 16F, effective s 4, 5 and 7–52: 18 Dec 1987 (s 2(1)) s 6: 21 Dec 1987 (s 2(2)) | Amended by No 82 of 1994, item 13, effective s 8–43, 47–71, 80–83, 93–112, 114–119, 122, 128–134: 23 June 1994 (s 2(1)) s 7, 120 and 121: 22 Oct 1986 (s 2(2)) s 44–46: 9 June 1993 (s 2(3)) s 72–79: 1 Jan 1993 (s 2(4)) s 84–92: 30 June 1992 (s 2(5)) s 113: 21Dec 1992 (s 2(6)) s 123–127): 24 Dec 1992 (s 2(7)) | Amended by No 39 of 1997, Sch 4 item 231, effective Sch 1: 1 July 1997 (s 2) | Amended by No 95 of 1997, Sch 3 item 5, effective Sch 1 (item 23): 30 June 1997 (s 2(1))

s 159GU — Effect of Division on certain transfer profits and losses

(1) Where, apart from this Division, a profit that is made by a resident taxpayer in relation to a transfer of a qualifying security that does not form part of the trading stock of the taxpayer would be included in the assessable income of the taxpayer of a year of income, the profit shall not be so included in the assessable income of the taxpayer. (2) Where, apart from this Division, a loss that is incurred by a resident taxpayer in relation to a transfer of a qualifying security that does not form part of the trading stock of the taxpayer would be allowable as a deduction from the assessable income of the taxpayer of a year of income and there is a net deductible amount, within the meaning of section 159GS, in relation to the transfer, so much only of the amount of the loss as exceeds the net deductible amount shall be so allowable as a deduction.

s 159GV — Consequence of variation of terms of security

(1) Where, after 22 May 1986, a material variation is made in the terms of a security, for the purposes of the application of this Division in relation to the security in respect of the period after the variation and before any subsequent material variation: (a) the security shall be taken to have been issued on the terms on which it was originally issued as varied by the material variation and any prior variation; (b) where consideration for the variation is paid or payable by the holder of the security—the issue price of the security shall be taken to be an amount equal to the amount that was the issue price of the security immediately before this application of this subsection increased by the amount of that consideration; (c) where consideration for the variation is paid or payable by the issuer of the security—the issue price of the security shall be taken to be an amount equal to the amount that was the issue price of the security immediately before this application of this subsection reduced by the amount of that consideration; and (d) paragraph (a) of the definition of qualifying security in subsection 159GP(1) shall be disregarded. (2) Where: (a) subsection (1) applies in relation to a security held by a taxpayer in relation to a material variation in the terms of the security; and (b) if: (i) that subsection had effect not only in relation to the period after the variation but also in relation to the whole of the term of the security before the variation; and (ii) any previous material variations were taken into account but any subsequent material variations were disregarded; the sum (in this subsection referred to as the total notional taxable income ) of the taxable incomes of the taxpayer in respect of the year of income in which the variation is made and all previous years of income would have differed from the sum (in this subsection referred to as the total actual taxable income ) of the actual taxable incomes of the taxpayer of those years of income; the following provisions have effect: (c) where the total notional taxable income exceeds the total actual taxable income—an amount equal to the excess shall be included in the assessable income of the taxpayer of the year of income in which the variation is made; (d) where the total actual taxable income exceeds the total notional taxable income—an amount equal to the excess shall be allowable as a deduction from the assessable income of the taxpayer of the year of income in which the variation is made. (3) In this section, a reference to a material variation of the terms of a security is a reference to a variation of the terms of the security: (a) that has the effect that a security that was not a qualifying security before the variation would, if the security had been originally issued with the terms as varied and if paragraph (a) of the definition of qualifying security in subsection 159GP(1) were disregarded, have been a qualifying security when the security was issued; (b) that has the effect that a security that is a qualifying security would, if originally issued with the terms as varied, not have been a qualifying security at the time of issue; or (c) that has the effect that the amount, or time of making, of a payment under the security, or that the holder or issuer of the security, is varied. (4) Where any right or option under a security to extend the term of, or otherwise vary the effect of, the security is exercised, then, for the purposes of this section, the exercise of that right or option shall be taken to be a variation of the terms of the security to provide for the extension or other effect.

s 159GW — Effect of Division in relation to non ‑ residents

(1) Subject to subsection (2), where during the whole or a part of a year of income (which whole or part is in this subsection referred to as the period of non ‑ residence ) a taxpayer is not a resident: (a) no amount shall be included in, or allowable as a deduction from, the assessable income of the taxpayer of the year of income under section 159GQ in relation to the period of non ‑ residence; and (c) no amount shall be included in, or allowable as a deduction from, the assessable income of the taxpayer of the year of income under section 159GS in relation to any transfer of the security that occurred during the period of non ‑ residence. (2) Where: (a) a payment is made or liable to be made under a qualifying security to a resident taxpayer; and (b) the taxpayer was not a resident for the whole or a part (which whole or part is in this subsection referred to as the period of non ‑ residence ) of the period during which the taxpayer held the security; the following provisions have effect: (c) there shall be included in the assessable income of the taxpayer of the year of income in which the payment is made or liable to be made an amount equal to the amount that, but for subsection (1), would have been included in the assessable income of the taxpayer of any year or years of income under section 159GQ in respect of the payment in respect of the period of non ‑ residence; (d) there shall be allowable as a deduction from the assessable income of the taxpayer of the year of income in which the payment is made or liable to be made an amount equal to the amount that, but for subsection (1), would have been allowable as a deduction from the assessable income of the taxpayer of any year or years of income under section 159GQ in respect of the payment in respect of the period of non ‑ residence.

s 159GX — Effect of Division where certain payments not assessable

Where, but for this section, an amount would be included in, or allowable as a deduction from, the assessable income of a taxpayer of a year of income under section 159GQ in respect of the whole or a part of a payment under a qualifying security, no amount shall be so included or allowable unless the payment or a part of the payment, when actually made or liable to be made, would, disregarding section 128D, be included in the assessable income of the taxpayer of a year of income.

s 159GY — Effect of Division where qualifying security is trading stock

No amount shall be included in, or allowable as a deduction from, the assessable income of a taxpayer: (a) under section 159GQ in relation to a qualifying security in respect of any year or part of a year of income during which the qualifying security forms part of the trading stock of the taxpayer; or (c) under section 159GS in relation to the transfer of a qualifying security by the taxpayer where, immediately before the transfer, the qualifying security was or formed part of the trading stock of the taxpayer.

s 159GZ — Stripped securities

(1) Where: (a) at any time a taxpayer acquires or acquired a security (in this subsection referred to as the underlying security ) in relation to which there are or were 2 or more payment rights; and (b) the taxpayer transfers or transferred one or some but not all of those rights to a particular person or particular persons jointly; for the purposes of the application of this Division (including any subsequent application of this subsection) in relation to any period after the transfer of the right or rights: (c) instead of the underlying security, there shall be taken to have been originally issued: (i) a separate security under which the payment right or payment rights transferred to the person or persons referred to in paragraph (b) were created; (ii) where at the time at which that right or those rights were transferred, another payment right or other payment rights in relation to the underlying security was or were transferred to another person or to other persons jointly—a separate security under which that other right or those other rights were created; and (iii) where immediately after the transfer the taxpayer retains or retained any payment right or rights—a separate security under which that right or those rights were created; (d) where the underlying security was issued to the taxpayer—the issue price of each separate security referred to in paragraph (c) shall be taken to be so much of the issue price of the underlying security as bears to that amount the proportion that the market value of the separate security at the time of issue of the underlying security bears to the market value of the underlying security at that time; and (e) where the underlying security was acquired by the taxpayer on transfer—the transfer price, in relation to that transfer, of each separate security referred to in paragraph (c) shall be taken to be so much of the transfer price of the underlying security as bears to that amount the proportion that the market value of the separate security at the time of transfer bears to the market value of the underlying security at that time. (2) Where, by reason of the application of subsection (1) in relation to the transfer after 16 December 1984 of a payment right or payment rights in relation to a security to a particular person or particular persons jointly, the payment right or rights is or are taken to comprise a separate security, then, for the purposes of the application of this Division in relation to the separate security in relation to any period after the transfer, paragraph (a) of the definition of qualifying security in subsection 159GP(1) shall be disregarded. (3) In subsections (1) and (2), payment right , in relation to a security, means a right to receive a particular payment that is liable to be made under the security. (4) Where: (a) at any time a taxpayer acquires or acquired a security (in this subsection referred to as the underlying security ) on issue or transfer; (b) after 16 December 1984, the taxpayer issues a qualifying security (in this subsection referred to as the stripped security ); and (c) but for this subsection, a deduction of an amount equal to the whole or a part of the issue price or, where the underlying security was acquired on transfer, the transfer price of the underlying security would be allowable from the assessable income of the taxpayer of the year of income in which the taxpayer issues the stripped security in respect of the issue of the stripped security; the amount of the deduction allowable shall be an amount that bears to the issue price or transfer price, as the case may be, of the underlying security the same proportion as the market value of the stripped security at the time of issue or purchase, as the case may be, bears to the market value of the underlying security at that time.

Amendment history: Inserted by No 49 of 1986, effective s 4–29: 24 June 1986 (s 2(1)) | Amended by No 11 of 1988, item 25, effective s 9–13 and 15–40: 26 Apr 1988 (s 2(1)) s 14: 24 June 1986 (s 2(2))

s 159GZZZC — Interpretation—general

(1) In this Division: associate has the same meaning as in section 318. cancellation includes redemption. disposal includes cancellation. entity means a company, a partnership or a trust estate. pre ‑ cancellation period , in relation to a cancellation of shares to which this Division applies, means the period beginning when the holding company concerned became a holding company of the subsidiary concerned and ending at the time of the cancellation. security means stock, a bond or debenture, or any other document evidencing the indebtedness of a person, whether or not the debt is secured. (3) For the purposes of this Division, a company is: (a) a subsidiary of another company; or (b) the holding company of another company; if the first ‑ mentioned company is such for the purposes of the Corporations Act 2001 . (4) For the purposes of this Division, a reference to an interest in an entity is a reference to a legal or equitable interest in: (a) if the entity is a company—shares in the company; (b) if the entity is a partnership—capital or profits of the partnership; (c) if the entity is a trust estate—corpus or income of the trust estate; or (d) in any case—securities issued by the entity.

Amendment history: Inserted by No 97 of 1989, effective s 4–9, 11–15 and Sch 1: 30 June 1989 (s 2) | Amended by No 135 of 1990, item 39, effective s 7–33, 38(1), (2), 39(1) and Sch (Pt 1): 28 Dec 1990 (s 2(1)) s 38(3), 39(2) and Sch (Part 3): 1 July 1993 (s 2(3)) s. 38(4), 39(3) and Sch (Part 4): 8 Jan 1991 (s 2(4)) | Amended by No 55 of 2001, Sch 3 item 224, effective s 4–14 and Sch 3 (items 220–263): 15 July 2001 (s 2(1), (3)) | Amended by No 101 of 2006, Sch 1 item 145 | Sch 2 item 389, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 159GZZZD — Meaning of eligible entity , eligible interest and eligible proportion

For the purposes of this Division, where a holding company holds interests in a subsidiary of the holding company either directly or indirectly through interposed entities: (a) a reference to an eligible entity in relation to the holding company and the subsidiary is a reference to the holding company or any of the interposed entities; (b) a reference to an eligible interest of an eligible entity is a reference to any interest held by the eligible entity directly in the subsidiary or directly in any other eligible entity in relation to the holding company and the subsidiary; and (c) a reference to the eligible proportion in relation to an eligible interest of an eligible entity is a reference to the proportion of the total interests held directly in the subsidiary by all persons and entities that is represented by: (i) if the eligible entity holds the eligible interest directly in the subsidiary—the eligible interest; or (ii) if, by virtue of holding the eligible interest, the eligible entity holds an interest in the subsidiary indirectly through another eligible entity or other eligible entities—that interest in the subsidiary.

s 159GZZZE — Share cancellations to which this Division applies

Where a holding company cancels shares in itself that are held by a subsidiary of that company, this Division applies to the cancellation of the shares.

s 159GZZZF — Effect on subsidiary of share cancellations to which this Division applies

(1) Where: (a) this Division applies to a cancellation of shares; and (b) apart from this section, either: (i) the subsidiary concerned would not receive or be entitled to receive any capital proceeds in respect of the cancellation; or (ii) the capital proceeds that the subsidiary concerned would receive or be entitled to receive in respect of the cancellation would be less than the adjusted market value of the shares; the following provisions have effect for the purposes of this Act: (c) where subparagraph (b)(i) applies—the subsidiary shall be taken to have received or to be entitled to receive, as capital proceeds in respect of the cancellation, an amount equal to the adjusted market value of the shares; (d) where subparagraph (b)(ii) applies—the amount of the capital proceeds that the subsidiary receives or is entitled to receive in respect of the cancellation shall be taken to be increased by an amount so that it equals the adjusted market value of the shares. (2) For the purposes of subsection (1), the adjusted market value of the shares is the amount that would have been their market value at the time of the cancellation if the cancellation did not occur and was never proposed to occur.

s 159GZZZG — Pre ‑ cancellation disposals of eligible interests

(1) Where: (a) this Division applies to a cancellation of shares; (b) during the pre ‑ cancellation period, there is a disposal of an eligible interest held by an eligible entity in relation to the holding company and the subsidiary concerned; and (c) apart from this section, either: (i) the eligible entity would not have received or been entitled to receive any capital proceeds in respect of the disposal; or (ii) the capital proceeds that the eligible entity would have received or been entitled to receive in respect of the disposal would have been less than the adjusted market value of the eligible interest; the following provisions have effect for the purposes of this Act: (d) where subparagraph (c)(i) applies—the eligible entity shall be taken to have received or to have been entitled to receive, as capital proceeds in respect of the disposal, an amount equal to the adjusted market value of the eligible interest; (e) where subparagraph (c)(ii) applies—the amount of the capital proceeds that the eligible entity received or was entitled to receive in respect of the disposal shall be taken to be increased by an amount so that it equals the adjusted market value of the eligible interest. (2) For the purposes of subsection (1), the adjusted market value of the eligible interest is the amount that would have been its market value at the time of the disposal if the cancellation of the shares to which this Division applies did not occur and was never proposed to occur.

s 159GZZZH — Post ‑ cancellation disposals of eligible interests etc.

(1) Where: (a) as a result of the application of section 159GZZZF in relation to a cancellation of shares, the subsidiary concerned is taken to have received or to be entitled to receive an amount of capital proceeds or an increase in an amount of capital proceeds (which amount or increase is in this section called the cancellation adjustment amount ) in relation to the cancellation of the shares; and (b) an eligible entity in relation to the holding company and the subsidiary concerned holds an eligible interest at the time of the share cancellation; then this section applies in relation to the eligible interest. (2) For the purposes of this Act (other than Parts 3 ‑ 1 and 3 ‑ 3 of the Income Tax Assessment Act 1997 ): (a) if the eligible interest is not trading stock—in determining: (i) the amount of any deduction allowed or allowable to the eligible entity in respect of the acquisition of the eligible interest; or (ii) the amount of any profit included in, or loss allowable as a deduction from, the assessable income of the eligible entity in respect of the acquisition and any subsequent disposal of the eligible interest; the capital proceeds in respect of the acquisition of the eligible interest shall be taken to have been reduced by the eligible interest’s eligible proportion of the cancellation adjustment amount; and (b) if the eligible interest is trading stock—the capital proceeds in respect of any subsequent disposal of the eligible interest shall be taken to be increased by the eligible interest’s eligible proportion of the cancellation adjustment amount. (3) For the purposes of Parts 3 ‑ 1 and 3 ‑ 3 of the Income Tax Assessment Act 1997 , if a CGT event happens in relation to the eligible interest, the cost base and reduced cost base of the eligible interest is reduced by the eligible interest’s eligible proportion of the cancellation adjustment amount. (5) This section applies in relation to the acquisition of the eligible interest held by the eligible entity, and to a CGT event happening in relation to the eligible interest, even if the entity was not an eligible entity, and the interest was not an eligible interest, at the time of the acquisition or CGT event.

Amendment history: Inserted by No 97 of 1989, Sch 2 item 11, effective s 4–9, 11–15 and Sch 1: 30 June 1989 (s 2) | Amended by No 46 of 1998, Sch 10 item 112 | Sch 10 item 377 | Sch 10 item 379, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4)) | Amended by No 94 of 1999, Sch 6 item 68 | Sch 6 item 69, effective s 4, Sch 3 (items 1–3), Sch 4, Sch 5 (items 23–35) and Sch 6 (items 67–73): 16 July 1999 (s 2(1))

s 159GZZZI — Additional application of sections 159GZZZG and 159GZZZH to associates

(1) Subject to this section, where a natural person is an associate of a holding company (otherwise than solely because of being the trustee of a trust estate), sections 159GZZZG and 159GZZZH apply (in addition to any application apart from this application of this section) as if references in those sections to: (a) an eligible entity in relation to the holding company and the subsidiary concerned; (b) an eligible interest of such an entity; or (c) the eligible proportion in relation to such an interest; were references to what would, if the natural person were a holding company in relation to the subsidiary, be respectively: (d) an eligible entity in relation to the natural person and the subsidiary; (e) an eligible interest of such an entity; or (f) the eligible proportion in relation to such an interest. (2) For the purposes of applying section 159GZZZG or 159GZZZH in accordance with subsection (1): (a) any interest of an entity that is an eligible interest for the purposes of the application of that section apart from subsection (1) shall be taken not to be an eligible interest; and (b) any eligible interest of an eligible entity (including the natural person) held in the actual holding company referred to in subsection (1), or in any eligible entity interposed between the natural person and that holding company, shall be taken not to be an eligible interest.

Amendment history: Inserted by No 97 of 1989, effective s 4–9, 11–15 and Sch 1: 30 June 1989 (s 2)

s 159GZZZIA — Application of Division to non ‑ share dividends

(1) This Division: (a) applies to a non ‑ share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non ‑ share dividend in the same way as it applies to a dividend. (2) Paragraph (1)(a) does not apply to subsection 159GZZZP(1).

Amendment history: Inserted by No 163 of 2001, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2)

s 159GZZZJ — Interpretation

In this Division: buy ‑ back has the meaning given by paragraph 159GZZZK(a). off ‑ market purchase has the meaning given by paragraph 159GZZZK(d). on ‑ market purchase has the meaning given by paragraph 159GZZZK(c). purchase price has the meaning given by section 159GZZZM. seller has the meaning given by paragraph 159GZZZK(b).

s 159GZZZK — Explanation of terms

For the purposes of this Division, where a company buys a share in itself from a shareholder in the company: (a) the purchase is a buy ‑ back; and (b) the shareholder is the seller; and (c) if: (i) the share is listed for quotation in the official list of a stock exchange in Australia or elsewhere; and (ii) the buy ‑ back is made in the ordinary course of trading on that stock exchange; the buy ‑ back is an on ‑ market purchase; and (d) if the buy ‑ back is not covered by paragraph (c)—the buy ‑ back is an off ‑ market purchase.

s 159GZZZL — Special buy ‑ backs not made in ordinary course of trading on a stock exchange

For the purposes of this Division, a buy ‑ back is not made in the ordinary course of trading on a stock exchange in Australia if, when reported to the stock exchange, the transaction under which the buy ‑ back is made, is, under the stock exchange’s rules, described as special .

s 159GZZZM — Purchase price in respect of buy ‑ back

For the purposes of this Division, the purchase price in respect of a buy ‑ back of a share is: (a) if the seller has received or is entitled to receive an amount or amounts of money as a result of or in respect of the buy ‑ back—that amount or the sum of those amounts; or (b) if the seller has received or is entitled to receive property other than money as a result of or in respect of the buy ‑ back—the market value of that property at the time of the buy ‑ back; or (c) if the seller has received or is entitled to receive both an amount or amounts of money and property other than money as a result of or in respect of the buy ‑ back—the sum of that amount or those amounts and the market value of that property at the time of the buy ‑ back.

s 159GZZZN — Buy ‑ back and cancellation disregarded for certain purposes

If a company buys ‑ back a share then the buy ‑ back, and any subsequent cancellation of the share, are disregarded for the purposes of: (a) determining for the purposes of this Act: (i) whether an amount is included in the assessable income of the company under a provision of this Act (other than a provision of Part 3 ‑ 1 or 3 ‑ 3 of the Income Tax Assessment Act 1997 (about CGT)); or (ii) whether an amount is allowable as a deduction to the company; or (b) determining whether the company makes a capital gain or capital loss.

Amendment history: Inserted by No 58 of 1990, effective s 10–22 and 24–35: 16 June 1990 (s 2(1), (2)) s 23: 4 Dec 1989 (s 2(3)) | Repealed and substituted by No 46 of 1998, Sch 10 item 118 | Sch 10 item 380, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4))

s 159GZZZP — Part of off ‑ market purchase price is a dividend if the company is not a listed public company

(1) For the purposes of this Act, but subject to subsection (1A), where a buy ‑ back of a share or non ‑ share equity interest by a company is an off ‑ market purchase, the difference between: (a) the purchase price; and (b) the part (if any) of the purchase price in respect of the buy ‑ back of the share or non ‑ share equity interest which is debited against amounts standing to the credit of: (i) the company’s share capital account if it is a share that is bought back; or (ii) the company’s share capital account or non ‑ share capital account if it is a non ‑ share equity interest that is bought back; is taken to be a dividend paid by the company: (c) to the seller as a shareholder in the company; and (d) out of profits derived by the company; and (e) on the day the buy ‑ back occurs. (1A) If the dividend is included to any extent in the seller’s assessable income of any year of income, it is not taken into account to that extent under section 118 ‑ 20 of the Income Tax Assessment Act 1997 . (2) The remainder of the purchase price is taken not to be a dividend for the purposes of this Act. (3) This section does not apply if the company is a listed public company.

Amendment history: Inserted by No 58 of 1990, item 16, effective s 10–22 and 24–35: 16 June 1990 (s 2(1), (2)) s 23: 4 Dec 1989 (s 2(3)) | Amended by No 82 of 1994, item 64 | item 65, effective s 8–43, 47–71, 80–83, 93–112, 114–119, 122, 128–134: 23 June 1994 (s 2(1)) s 7, 120 and 121: 22 Oct 1986 (s 2(2)) s 44–46: 9 June 1993 (s 2(3)) s 72–79: 1 Jan 1993 (s 2(4)) s 84–92: 30 June 1992 (s 2(5)) s 113: 21Dec 1992 (s 2(6)) s 123–127): 24 Dec 1992 (s 2(7)) | Amended by No 170 of 1995, Sch 1 item 23, effective Sch 1 and Sch 2 (items 1–53), Sch 3 (items 15, 16): 16 Dec 1995 (s 2(1)) | Amended by No 31 of 1996, Sch 1 item 3 | Sch 1 item 4 | Sch 1 item 7 | Sch 1 item 8, effective 9 July 1996 (s 2) | Amended by No 46 of 1998, Sch 10 item 118 | Sch 10 item 381, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4)) | Amended by No 63 of 1998, Sch 7 item 48 | Sch 7 item 49 | Sch 7 item 50, effective Sch 1–4 and Sch 5 (items 1–22, 25–53, 58–67): 1 July 1998 (s 2(1) and gaz 1998, No S325) Sch 5 (items 23, 24, 54–57): 1 July 1998 (s 2(2)) | Amended by No 163 of 2001, Sch 1 item 87 | Sch 1 item 88 | Sch 1 item 89, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2) | Amended by No 101 of 2023, Sch 4 item 1 | Sch 4 item 2 | Sch 4 item 3, effective Sch 4 (items 1–5, 9–12): 1 Jan 2024 (s 2(1) item 6)

s 159GZZZPA — No part of off ‑ market purchase price is a dividend if the company is a listed public company

For the purposes of this Act, where a buy ‑ back of a share by a listed public company is an off ‑ market purchase, no part of the purchase price in respect of the buy ‑ back of the share is taken to be a dividend.

Amendment history: Inserted by No 101 of 2023, effective Sch 4 (items 1–5, 9–12): 1 Jan 2024 (s 2(1) item 6)

s 159GZZZQ — Consideration in respect of off ‑ market purchase

(1) Subject to this section, if a buy ‑ back of a share is an off ‑ market purchase, then: (a) in determining, for the purposes of this Act: (i) whether an amount is included in the assessable income of the seller under a provision of this Act other than Parts 3 ‑ 1 and 3 ‑ 3 of the Income Tax Assessment Act 1997 (about CGT); or (ii) whether an amount is allowable as a deduction to the seller; or (b) whether the seller makes a capital gain or capital loss; in respect of the buy ‑ back, the seller is taken to have received or to be entitled to receive, as consideration in respect of the sale of the share, an amount equal to the purchase price in respect of the buy ‑ back. Deemed consideration increased to market value (2) If apart from this section: (a) the purchase price in respect of the buy ‑ back; is less than: (b) the amount that would have been the market value of the share at the time of the buy ‑ back if the buy ‑ back did not occur and was never proposed to occur; then, subject to subsection (3), in making the determinations mentioned in paragraphs (1)(a) and (b), the amount of consideration that the seller is taken to have received or to be entitled to receive in respect of the sale of the share is equal to the market value mentioned in paragraph (b) of this subsection. Deemed consideration reduced where dividend assessable etc. (3) Subject to subsections (3A) and (8), if there is a reduction amount in respect of the buy ‑ back (see subsection (4)), then, in making the determinations mentioned in paragraphs (1)(a) and (b), the amount of consideration that the seller is taken to have received or to be entitled to receive in respect of the sale of the share, after any application of subsection (2), is reduced by the reduction amount. (3A) Subsection (3) does not apply if the buy ‑ back is by a listed public company. Reduction amount (4) The following steps are to be taken in working out whether there is a reduction amount in respect of the buy ‑ back: (a) first, work out whether the whole or part of the purchase price in respect of the buy ‑ back is taken to be a dividend by section 159GZZZP; (b) second, for any amount satisfying paragraph (a), work out whether the whole or part of it is either: (i) included in the seller’s assessable income of any year of income (disregarding section 128D of this Act and section 802 ‑ 15 of the Income Tax Assessment Act 1997 ); or (ii) an eligible non ‑ capital amount (see subsection (5)). The amount worked out is the reduction amount in respect of the buy ‑ back. Eligible non ‑ capital amount (5) An amount is an eligible non ‑ capital amount if it is neither: (a) debited against a share capital account or a reserve to the extent that it consists of profits from the revaluation of assets of the company that have not been disposed of by the company; nor (b) attributable, either directly or indirectly, to amounts that were transferred from such an account or reserve of the company. Debit for deemed dividend (7) For the purposes of subsection (5), an amount of the purchase price that is taken to be a dividend by section 159GZZZP is taken to have been debited against the account or reserves against which the purchase price was debited, and to the same extent. Offsetable amount excluded from reduction where loss (8) If: (aa) the seller is a corporate tax entity; and (a) the amount of consideration that the seller is taken by subsection (1) or (2) to have received or to be entitled to receive in respect of the sale of the share is, apart from this subsection, reduced by a reduction amount under subsection (3); and (b) the dividend mentioned in paragraph (4)(a), so far as it does not exceed the reduction amount, consists to any extent of an offsetable amount (see subsection (9)); and (c) disregarding this subsection, as a result of the operation of this section: (i) for the purposes of Parts 3 ‑ 1 and 3 ‑ 3 of the Income Tax Assessment Act 1997 (about CGT), the seller incurs a capital loss or an increased capital loss (which loss or increase is the loss amount ) in respect of the buy ‑ back; or (ii) a loss, or an increased loss, (which loss or increase is also the loss amount ) in respect of the buy ‑ back is allowable as a deduction to the seller under a provision of a Part of this Act other than Part 3 ‑ 1 or 3 ‑ 3 of the Income Tax Assessment Act 1997 ; or (iii) the amount of a deduction allowable from the seller’s assessable income of any year of income in respect of the issue or acquisition of the share exceeds, or exceeds by a greater amount, (the excess or increased excess is also the loss amount ) the amount included in the seller’s assessable income of any year of income in respect of the buy ‑ back of the share; then the reduction in the amount of the consideration under subsection (3) is instead a reduction equal to: (d) the reduction amount; less: (e) so much of the offsetable amount as does not exceed the loss amount. Meaning of offsetable amount (9) For the purposes of subsection (8), if the seller is entitled to a tax offset under Division 207 of the Income Tax Assessment Act 1997 in the seller’s assessment for a year of income in respect of the dividend, the dividend consists of an offsetable amount worked out using the formula:

Amendment history: Inserted by No 58 of 1990, effective s 10–22 and 24–35: 16 June 1990 (s 2(1), (2)) s 23: 4 Dec 1989 (s 2(3)) | Amended by No 82 of 1994, item 66, effective s 8–43, 47–71, 80–83, 93–112, 114–119, 122, 128–134: 23 June 1994 (s 2(1)) s 7, 120 and 121: 22 Oct 1986 (s 2(2)) s 44–46: 9 June 1993 (s 2(3)) s 72–79: 1 Jan 1993 (s 2(4)) s 84–92: 30 June 1992 (s 2(5)) s 113: 21Dec 1992 (s 2(6)) s 123–127): 24 Dec 1992 (s 2(7)) | Amended by No 170 of 1995, Sch 1 item 24 | Sch 1 item 25, effective Sch 1 and Sch 2 (items 1–53), Sch 3 (items 15, 16): 16 Dec 1995 (s 2(1)) | Amended by No 31 of 1996, Sch 1 item 5 | Sch 1 item 6 | Sch 1 item 7 | Sch 1 item 9, effective 9 July 1996 (s 2) | Amended by No 46 of 1998, Sch 10 item 140 | Sch 10 item 383, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4)) | Amended by No 63 of 1998, Sch 7 item 4 | Sch 7 item 51 | Sch 7 item 52 | Sch 7 item 53, effective Sch 1–4 and Sch 5 (items 1–22, 25–53, 58–67): 1 July 1998 (s 2(1) and gaz 1998, No S325) Sch 5 (items 23, 24, 54–57): 1 July 1998 (s 2(2)) | Amended by No 23 of 2005, Sch 3 item 48 | Sch 3 item 49 | Sch 3 item 50 | Sch 3 item 51, effective s 4 and Sch 3 (items 14–74, 111(3)–(5), 112–114): 21 Mar 2005 (s 2(1) items 1, 6) | Amended by No 147 of 2005, effective Sch 1 (items 1–3, 169(1)), Sch 2 (items 2–11, 27(1)–(4), 28(1)–(3)), Sch 4 (items 1–3, 12), Sch 5 (items 1–12, 20) and Sch 7 (items 1–13, 19, 20): 14 Dec 2005 (s 2(1) items 2, 3, 5, 6) | Amended by No 101 of 2023, Sch 4 item 4 | Sch 4 item 5, effective Sch 4 (items 1–5, 9–12): 1 Jan 2024 (s 2(1) item 6)

s 159GZZZR — No part of on ‑ market purchase price is a dividend

For the purposes of this Act, where a buy ‑ back by a company of a share is an on ‑ market purchase, no part of the purchase price in respect of the buy ‑ back of the share is taken to be a dividend.

Amendment history: Inserted by No 58 of 1990, effective s 10–22 and 24–35: 16 June 1990 (s 2(1), (2)) s 23: 4 Dec 1989 (s 2(3))

s 159GZZZS — Consideration in respect of on ‑ market purchase

Where a buy ‑ back is an on ‑ market purchase, then: (a) in determining, for the purposes of this Act: (i) whether an amount is included in the assessable income of the seller under a provision of this Act other than Parts 3 ‑ 1 and 3 ‑ 3 of the Income Tax Assessment Act 1997 (about CGT); or (ii) whether an amount is allowable as a deduction to the seller; or (b) whether the seller makes a capital gain or capital loss; in respect of the buy ‑ back, the seller is taken to have received or to be entitled to receive, as consideration in respect of the sale of the share, the purchase price in respect of the buy ‑ back of the share.

Amendment history: Inserted by No 58 of 1990, effective s 10–22 and 24–35: 16 June 1990 (s 2(1), (2)) s 23: 4 Dec 1989 (s 2(3)) | Amended by No 46 of 1998, Sch 10 item 387, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4))

s 159H — Application

This Subdivision applies in relation to an assessment in respect of the income of a taxpayer if and only if: (a) the taxpayer is a resident and is not a company, and the assessment is not in respect of income derived by him or her in a representative capacity as an agent or trustee; or (b) both of the following requirements are satisfied: (i) the taxpayer is a trustee who is liable to be assessed under section 98 in respect of a share of the net income of a trust estate in respect of a beneficiary; (ii) the beneficiary is a resident and is not a company.

Amendment history: Inserted by No 117 of 1975, effective s 3–11(1)(b) and (d)–34: 11 Nov 1975 (s 2(1)) s 11(1)(c): 9 Feb 1976 (s 2(2)) s 30: never commenced (s 2(3)) | Amended by No 124 of 1984, effective s 3(b): 1 July 1984 (s 2(2)) Remainder: 19 Oct 1984 (s 2(1)) | Amended by No 135 of 1990, item 39, effective s 7–33, 38(1), (2), 39(1) and Sch (Pt 1): 28 Dec 1990 (s 2(1)) s 38(3), 39(2) and Sch (Part 3): 1 July 1993 (s 2(3)) s. 38(4), 39(3) and Sch (Part 4): 8 Jan 1991 (s 2(4)) | Amended by No 97 of 2008, Sch 3 item 27 | Sch 3 item 28, effective Sch 1 (items 1, 2, 12) and Sch 3 (items 5–43): 3 Oct 2008 (s 2(1) items 2, 3) | Amended by No 41 of 2011, Sch 5 item 312, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23) | Amended by No 62 of 2011, Sch 2 item 40, effective Sch 1 (items 4, 5, 14), Sch 2 (items 1–7, 28–44, 51) and Sch 4 (items 1–32, 34): 29 June 2011 (s 2(1) items 2, 6)

s 159ZR — Interpretation

(1) In this Subdivision, unless the contrary intention appears: accrual year , in relation to the total arrears amount, means a year of income in which any part of the total arrears amount accrued. annual arrears amount , in relation to an accrual year, means so much of the total arrears amount as accrued in that year. associate has the same meaning as in section 318. BSWAT payment amount means a payment amount paid to a person under the Business Services Wage Assessment Tool Payment Scheme Act 2015 . current year means the year of income for which the rebate is being calculated. distant accrual year means an accrual year that is not a recent accrual year. eligible income means: (a) salary or wages to the extent to which they accrued during a period ending more than 12 months before the date on which they are paid; (b) salary or wages paid to a person after re ‑ instatement to duty following a period of suspension of the person from duty, to the extent to which the salary or wages accrued during the period of suspension; (c) a payment covered by section 12 ‑ 80 or 12 ‑ 120 in Schedule 1 to the Taxation Administration Act 1953 ; (d) a Commonwealth education or training payment (see subsection 6(1)); (e) a payment that is covered by Division 52, 53 or 55 of the Income Tax Assessment Act 1997 , but that is not exempt from income tax under that Division; (f) a payment under a law of a foreign country that is similar to a payment covered by paragraph (e); but does not include so much of any such amount as was taken into account in calculating the amount of a tax reimbursement payment by the Commonwealth that was authorised under section 65 of the Public Governance, Performance and Accountability Act 2013 (which deals with act of grace payments by the Commonwealth). eligible lump sum , in relation to a year of income, means a lump sum payment of eligible income received on or after 1 July 1986 that is included in the assessable income of the year of income and accrued, in whole or in part, in an earlier year or years of income. gross tax means the tax payable before the allowance of any rebates or credits. law of a foreign country includes a law of any part of, or place in, a foreign country. normal taxable income is the amount that would be the taxable income if: (a) no amount were included in assessable income under Division 82, section 83 ‑ 10 or 83 ‑ 80 or Division 301 or 302 of the Income Tax Assessment Act 1997 or Division 82 of the Income Tax (Transitional Provisions) Act 1997 ; and (b) the taxable income were reduced by any above ‑ average special professional income included in the taxable income under section 405 ‑ 15 of the Income Tax Assessment Act 1997 ; and (c) no amount were included in assessable income under section 102 ‑ 5 of the Income Tax Assessment Act 1997 (about including net capital gains in assessable income). notional tax amount has the meaning given by sections 159ZRC and 159ZRD. rebated tax means the tax payable after the allowance of any tax offset under Division 82, 83, 301 or 302 of the Income Tax Assessment Act 1997 , subsection 392 ‑ 35(2) of that Act (which allows some primary producers tax offsets) or Division 82 of the Income Tax (Transitional Provisions) Act 1997 , but before the allowance of any other tax offsets or any credits. rebate year means a year of income for which the conditions in paragraphs 159ZRA(1)(a) and (b) are satisfied. recent accrual year , in relation to the total arrears amount, means: (a) if there are 3 or more accrual years for the total arrears amount—the most recent 2 of those years; or (b) in any other case—the accrual year, or each of the accrual years, for the total arrears amount. salary or wages means payments covered by sections 12 ‑ 35, 12 ‑ 40 (except payments of remuneration to a director of the company who is also an associate of the company), 12 ‑ 45, 12 ‑ 80, 12 ‑ 110, 12 ‑ 115 and 12 ‑ 120 in Schedule 1 to the Taxation Administration Act 1953 . total arrears amount , in relation to a year of income, means the aggregate of the eligible lump sums included in the assessable income of the year of income to the extent to which those eligible lump sums accrued in an earlier year or years of income. (2) This Subdivision applies in relation to a BSWAT payment amount as if: (a) the BSWAT payment amount were an eligible lump sum accrued wholly in an earlier year or years of income; and (b) the wages by reference to which the BSWAT payment amount was worked out were eligible income accrued in the year of income to which the wages relate.

Amendment history: Inserted by No 153 of 1988, effective s 9–42 and 44: 26 Dec 1988 (s 2(1)) s 43: 1 Jan 1989 (s 2(2)) | Amended by No 135 of 1990, item 39, effective s 7–33, 38(1), (2), 39(1) and Sch (Pt 1): 28 Dec 1990 (s 2(1)) s 38(3), 39(2) and Sch (Part 3): 1 July 1993 (s 2(3)) s. 38(4), 39(3) and Sch (Part 4): 8 Jan 1991 (s 2(4)) | Amended by No 100 of 1991, Sch 2 item 48, effective s 15–28, 30–32, 33(b), (e), (f), 34–76 and 79–84): 27 June 1991 (s 2(1)) s 29 and 77: 24 Apr 1991 (s 2(3), (6)) s 33(a): 16 June 1990 (s 2(4)) s 33(c) and (d): 30 June 1989 (s 2(5)) s 78: 8 Jan 1991 (s 2(7)) | Amended by No 216 of 1991, Sch 3 item 133, effective s 10, 12–39, 41, 43, 44, 67–81, 83–86, 89(1), (3)–(19), 91, 92, 102, 103 and Sch 1–4: 24 Dec 1991 (s 2(1)) s 11 and 89(2): 22 Jan 1991 (s 2(2)) s 40 and 42: 6 Jan 1992 (s 2(3)) s 45, 46, 48–51, 54–58, 60–66, 90(1), (3)–(14), 93–96 and 98–101: 21 Aug 1991 (s 2(4)) s 47, 52, 53, 59, 90(2) and 97: 3 pm (A.C.T) 20 Aug 1991 (s 2(5)) s 82(2): 25 Dec 1991 (s 2(6)) | Amended by No 121 of 1997, Sch 2 item 29 | Sch 3 item 55 | Sch 3 item 56, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 122 of 1997, Sch 1 item 10, effective s 4, Sch 1 (items 1–15, 20), Sch 3 (items 1, 2, 6–21) and Sch 5: 8 July 1997 (s 2(1)) Sch 1 (items 17–19): 3 June 1990 (s 2(2)) Sch 1 (items 22, 23): 1 Sept 1994 (s 2(4)) Sch 1 (item 24): 1 Jan 1993 (s 2(3)) Sch 3 (items 3, 4): 24 June 1986 (s 2(6)) Sch 3 (item 5): 30 June 1992 (s 2(7)) Sch 4: 20 Jan 1997 (s 2(8)) Sch 6: 27 June 1996 (s 2(9)) Sch 8: 19 Dec 1996 (s 2(11)) | Amended by No 152 of 1997, Sch 2 item 880, effective Sch 2 (items 877–880): 1 Jan 1998 (s 2(2)) | Amended by No 41 of 1998, Sch 2 item 1, effective s 4, Sch 1 (items 4–16, 18–26), Sch 2 (items 1–4), Sch 3 (items 1–3, 7(1)), Sch 4 (items 4, 5), Sch 5 (items 16, 18) and Sch 6 (items 1, 2, 4, 5, 7–13, 15–18, 27): 4 June 1998 (s 2(1)) Sch 1 (item 17): 9 Apr 1999 (s 2(2)) Sch 5 (items 17, 19): 12 Dec 1995 (s 2(5)) Sch 6 (item 3): 16 Dec 1985 (s 2(6)) Sch 6 (item 6): 1 Jan 1993 (s 2(7)) Sch 6 (item 14): never commenced (s 2(9)) Sch 6 (item 16): 1 July 1998 (s 2(10)) | Amended by No 46 of 1998, Sch 10 item 390 | Sch 10 item 23 | Sch 10 item 3, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4)) | Amended by No 54 of 1999, Sch 5 item 13, effective s 4, Sch 1 (items 2–13, 36), Sch 3, Sch 5 (items 11–15), Sch 6 and Sch 7 (items 1, 3): 5 July 1999 (s 2(1)) | Amended by No 94 of 1999, Sch 6 item 70, effective s 4, Sch 3 (items 1–3), Sch 4, Sch 5 (items 23–35) and Sch 6 (items 67–73): 16 July 1999 (s 2(1)) | Amended by No 179 of 1999, Sch 18 item 31 | Sch 18 item 32, effective Sch 2 (items 20–47), Sch 3 (items 3–6), Sch 5 (item 74), Sch 6 (items 1–13, 24(1)–(4)), Sch 10 (items 22–24), Sch 11 (item 44), Sch 16 (items 3–17, 37) and Sch 17 (items 1, 2): 22 Dec 1999 (s 2(1), (4), (7)(b)–(d)) Sch 5 (items 1–64), Sch 11 (items 14–43, 45–79) and Sch 12 (item 3): 1 July 2000 (s 2(9), (12)) | Amended by No 101 of 2006, Sch 2 item 394 | Sch 2 item 395 | Sch 2 item 396 | Sch 2 item 397, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 4 of 2007, Sch 2 item 4, effective Sch 2 (items 1–10): 19 Feb 2007 (s 2(1) item 4) | Amended by No 15 of 2007, Sch 1 item 105 | Sch 1 item 106, effective Sch 1 (items 1–8, 22–149, 406(1)–(3)) and Sch 3 (items 6, 7): 15 Mar 2007 (s 2(1) items 2, 6) | Amended by No 36 of 2015, Sch 5 item 38, effective Sch 5 (items 38, 39, 74–77) and Sch 7: 14 Apr 2015 (s 2) | Amended by No 112 of 2015, Sch 1 item 1 | Sch 1 item 2, effective Sch 1 (items 1, 2): 1 July 2015 (s 2(1) item 2)

s 159ZRA — Eligibility for rebate

(1) Where: (a) the assessable income of the taxpayer of a year of income (in this Subdivision called the current year ) includes one or more eligible lump sums; and (b) the total arrears amount is not less than 10% of the amount (if any) remaining after deducting that total arrears amount from the normal taxable income of the current year; the taxpayer is entitled to a rebate of tax, in the taxpayer’s assessment for the current year, of the amount (if any) calculated in accordance with this Subdivision. (2) The rebate is only available to a natural person (otherwise than in the capacity of a trustee).

s 159ZRB — Calculation of rebate

The rebate is calculated in accordance with the formula: Tax on arrears – Notional tax on arrears where: Tax on arrears is the amount by which the rebated tax on the taxable income of the current year exceeds the rebated tax on the taxable income of the current year, being that taxable income reduced by the total arrears amount. Notional tax on arrears is the total of the notional tax amounts for the accrual years.

s 159ZRC — Notional tax amount for recent accrual years

The notional tax amount for a recent accrual year is calculated in accordance with the formula: Tax on increased income – Tax on actual income where: Tax on increased income is the rebated tax on the taxable income of the accrual year, being that taxable income adjusted as follows: (a) the annual arrears amount for the accrual year is to be added; (b) if the accrual year is also a rebate year—the total arrears amount for the accrual year is to be deducted; and (c) if, during the accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year—the amount that so accrued during the accrual year is to be added. Tax on actual income is the rebated tax on the taxable income of the accrual year, being that taxable income adjusted as follows (if applicable): (d) if the accrual year is also a rebate year—the total arrears amount for the accrual year is to be deducted; and (e) if, during the accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year—the amount that so accrued during the accrual year is to be added.

s 159ZRD — Notional tax amount for distant accrual years

(1) The notional tax amount for a distant accrual year is calculated in accordance with the formula: Arrears amount  Average tax rate on recent arrears where: Arrears amount is the annual arrears amount in relation to the accrual year. Average tax rate on recent arrears is the average of the rates calculated in accordance with the following formula in respect of each of the recent accrual years: where: Increased normal tax is the gross tax on the normal taxable income of the recent accrual year, being that normal taxable income adjusted as follows: (a) the annual arrears amount for the recent accrual year is to be added; (b) if the recent accrual year is also a rebate year—the total arrears amount for the recent accrual year is to be deducted; and (c) if, during the recent accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year—the amount that so accrued during the recent accrual year is to be added. Normal tax is the gross tax on the normal taxable income of the recent accrual year, being that normal taxable income adjusted as follows (if applicable): (d) if the recent accrual year is also a rebate year—the total arrears amount for the recent accrual year is to be deducted; and (e) if, during the recent accrual year, there accrued an amount that is, or is part of, the total arrears amount for a rebate year before the current year—the amount that so accrued during the recent accrual year is to be added. Arrears amount is the annual arrears amount for the recent accrual year. (2) A rate calculated for the purposes of subsection (1) in respect of a recent accrual year shall be calculated as a decimal fraction to 3 decimal places. (3) If a rate so calculated would end with a number greater than 4 if it were calculated to 4 decimal places, the rate shall be increased by 0.001.

s 160AAAA — Tax rebate for low income aged persons and pensioners

(1) Subject to subsection 160AAA(4), a taxpayer who is an individual (other than in the capacity as trustee) is entitled to a rebate of tax in the taxpayer’s assessment in respect of income of a year of income of an amount (if any), ascertained in accordance with the regulations, if the taxpayer satisfies the conditions in subsections (2) and (3). (2) The first condition is that: (a) on at least one day during the year of income, the taxpayer: (i) is eligible for a pension, allowance or benefit under the Veterans’ Entitlements Act 1986 (other than Part VII); and (ii) has reached pension age, within the meaning of that Act; and (iii) is not in gaol; or (b) on at least one day during the year of income, the taxpayer: (i) is qualified for an age pension under the Social Security Act 1991 ; and (ii) is not in gaol; or (c) the assessable income of the taxpayer of the year of income includes an amount of: (i) social security pension or education entry payment (within the meaning of the Social Security Act 1991 ); or (ii) service pension, carer service pension or income support supplement under the Veterans’ Entitlements Act 1986 ; and, on at least one day during the year of income, the taxpayer is not in gaol. (3) The second condition is that the taxpayer’s rebate income for the year of income is less than an amount ascertained in accordance with the regulations. (4) If the taxpayer is the spouse of another person, the amount applicable to the taxpayer under subsection (3) is half of the sum of: (a) the taxpayer’s rebate income for the year of income; and (b) the taxpayer’s spouse’s rebate income for the year of income (reduced by any amount included in the spouse’s assessable income under section 100); and (c) an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 98 in respect of the taxpayer’s spouse. (5) Regulations made for the purposes of this section may be expressed to apply in relation to a year of income any part of which occurred before the notification of the regulations.

Amendment history: Inserted by No 78 of 1996, effective Sch 1, 2 and Sch 4 (items 1–57): 19 Dec 1996 (s 2(1), (2)) Sch 4 (items 56, 57): 5 pm (A.C.T.) 23 July 1996 (s 2(4)) | Amended by No 44 of 2001, Sch 1 item 1 | Sch 1 item 2 | Sch 1 item 3 | Sch 1 item 10 | Sch 1 item 12 | Sch 2 item 1 | Sch 2 item 2 | Sch 2 item 6 | Sch 2 item 7, effective Sch 1: 25 May 2001 (s 2) | Amended by No 57 of 2002, effective Sch 1: 1 July 2001 (s 2(1) item 2) Sch 3, 5, 6, Sch 9 (items 1–8, 41–44), Sch 11 (items 1, 5), Sch 12 ,(items 8–10, 14, 15): 3 July 2002 (s 2(1) items 4, 7, 8, 16, 18, 24, 27) Sch 4 (items 1, 2, 4) and Sch 12 (item 42): 1 July 2000 (s 2(1) items 5, 46) Sch 10: 17 Nov 1999 (s 2(1) item 17) Sch 12 (items 4, 11): 1 July 1998 (s 2(1) items 21, 25) Sch 12 (items 5, 6): 21 Dec 1998 (s 2(1) item 22) Sch 12 (item 7): 7 Dec 1998 (s 2(1) item 23) Sch 12 (items 12, 13): 23 June 1998 (s 2(1) item 26) Sch 12 (item 38): 1 Oct 1997 (s 2(1) item 42) Sch 12 (item 40): 22 Dec 1999 (s 2(1) item 44) Sch 12 (items 43, 65): 1 July 1997 (s 2(1) items 47, 63) | Amended by No 27 of 2009, Sch 3 item 40 | Sch 3 item 41, effective Sch 3 (items 1–5, 40–43, 94–100, 102(1)): 27 Mar 2009 (s 2(1) item 5) | Amended by No 62 of 2011, Sch 2 item 41, effective Sch 1 (items 4, 5, 14), Sch 2 (items 1–7, 28–44, 51) and Sch 4 (items 1–32, 34): 29 June 2011 (s 2(1) items 2, 6) | Amended by No 159 of 2011, Sch 3 item 2 | Sch 3 item 3 | Sch 3 item 4 | Sch 3 item 6 | Sch 3 item 15, effective Sch 1 (items 1–3) and Sch 3 (items 1–16, 24): 1 July 2012 (s 2(1) items 2, 5) Sch 1 (items 4–6): repealed before commencing (s 2(1) item 3) | Amended by No 142 of 2021, Sch 1 item 14, effective Sch 1 (items 10–14): 1 Jan 2022 (s 2(1) item 2) | Amended by No 17 of 2025, Sch 8 item 37, effective Sch 8 (items 33–37): 1 July 2026 (s 2(1) item 6)

s 160AAAB — Tax rebate for low income aged persons and pensioners—trustees assessed under section 98

(1) Subject to subsection 160AAA(4A), a trustee who is liable to be assessed under section 98 in respect of a beneficiary’s share of the net income of the trust estate is entitled to a rebate of tax in the trustee’s assessment in respect of income of a year of income of an amount (if any), ascertained in accordance with the regulations, if the conditions in subsections (2) and (3) are satisfied. (2) The first condition is that: (a) on at least one day during the year of income, the beneficiary: (i) is eligible for a pension, allowance or benefit under the Veterans’ Entitlements Act 1986 (other than Part VII); and (ii) has reached pension age, within the meaning of that Act; and (iii) is not in gaol; or (b) on at least one day during the year of income, the beneficiary: (i) is qualified for an age pension under the Social Security Act 1991 ; and (ii) is not in gaol; or (c) the assessable income of the beneficiary of the year of income includes an amount of: (i) social security pension or education entry payment (within the meaning of the Social Security Act 1991 ); or (ii) service pension, carer service pension or income support supplement under the Veterans’ Entitlements Act 1986 ; and, on at least one day during the year of income, the beneficiary is not in gaol. (3) The second condition is that the beneficiary has an amount applicable under subsection (4) or (5) for the year of income less than an amount ascertained in accordance with the regulations. (4) If the beneficiary is not the spouse of another person, the amount applicable to the beneficiary under subsection (3) is the amount that would be the beneficiary’s rebate income for the year of income if the beneficiary’s taxable income for that year were the beneficiary’s share of the net income of the trust estate. (5) If the beneficiary is the spouse of another person, the amount applicable to the beneficiary under subsection (3) is half the sum of: (a) the amount that would be applicable to the beneficiary under subsection (3) if the beneficiary were not the spouse of another person; and (b) the beneficiary’s spouse’s rebate income for the year of income (reduced by any amount included in the spouse’s assessable income under section 100); and (c) an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 98 in respect of the taxpayer’s spouse. (6) Regulations made for the purposes of this section may be expressed to apply in relation to a year of income any part of which occurred before the notification of the regulations.

Amendment history: Inserted by No 78 of 1996, effective Sch 1, 2 and Sch 4 (items 1–57): 19 Dec 1996 (s 2(1), (2)) Sch 4 (items 56, 57): 5 pm (A.C.T.) 23 July 1996 (s 2(4)) | Amended by No 44 of 2001, Sch 1 item 4 | Sch 1 item 5 | Sch 1 item 6 | Sch 1 item 7 | Sch 1 item 10 | Sch 1 item 12 | Sch 2 item 7, effective Sch 1: 25 May 2001 (s 2) | Amended by No 57 of 2002, effective Sch 1: 1 July 2001 (s 2(1) item 2) Sch 3, 5, 6, Sch 9 (items 1–8, 41–44), Sch 11 (items 1, 5), Sch 12 ,(items 8–10, 14, 15): 3 July 2002 (s 2(1) items 4, 7, 8, 16, 18, 24, 27) Sch 4 (items 1, 2, 4) and Sch 12 (item 42): 1 July 2000 (s 2(1) items 5, 46) Sch 10: 17 Nov 1999 (s 2(1) item 17) Sch 12 (items 4, 11): 1 July 1998 (s 2(1) items 21, 25) Sch 12 (items 5, 6): 21 Dec 1998 (s 2(1) item 22) Sch 12 (item 7): 7 Dec 1998 (s 2(1) item 23) Sch 12 (items 12, 13): 23 June 1998 (s 2(1) item 26) Sch 12 (item 38): 1 Oct 1997 (s 2(1) item 42) Sch 12 (item 40): 22 Dec 1999 (s 2(1) item 44) Sch 12 (items 43, 65): 1 July 1997 (s 2(1) items 47, 63) | Amended by No 27 of 2009, Sch 3 item 42, effective Sch 3 (items 1–5, 40–43, 94–100, 102(1)): 27 Mar 2009 (s 2(1) item 5) | Amended by No 62 of 2011, Sch 2 item 42, effective Sch 1 (items 4, 5, 14), Sch 2 (items 1–7, 28–44, 51) and Sch 4 (items 1–32, 34): 29 June 2011 (s 2(1) items 2, 6) | Amended by No 159 of 2011, Sch 3 item 7 | Sch 3 item 8 | Sch 3 item 9 | Sch 3 item 11 | Sch 3 item 16, effective Sch 1 (items 1–3) and Sch 3 (items 1–16, 24): 1 July 2012 (s 2(1) items 2, 5) Sch 1 (items 4–6): repealed before commencing (s 2(1) item 3) | Amended by No 142 of 2021, Sch 1 item 14, effective Sch 1 (items 10–14): 1 Jan 2022 (s 2(1) item 2)