Income Tax Assessment Act 1997

s 419-35 — Meaning of registered CMPTI processing activity

(1) A company has a registered CMPTI processing activity for an income year if: (a) the activity is registered for the company under subsection (2); or (b) a registration of the activity is transferred to the company under subsection 419 ‑ 55(2); and the registration is in force for the company and the income year. Note: For when the registration is in force, see section 419 ‑ 50. The registration will not be in force if: (a) it has already expired (see section 419 ‑ 50); or (b) it is suspended or has been revoked (see section 419 ‑ 65 or 419 ‑ 70). Initial registration (2) The * Industry Secretary must register an activity for a company if: (a) the company applies to the Industry Secretary for the activity to be registered under this subsection; and (b) the application identifies: (i) the activity and each facility where the activity is to be carried on; and (ii) the basis on which the company considers it will satisfy the requirements to be entitled to a * CMPTI tax offset in relation to the activity; and (c) the application states that the company is the legal entity that is or will be carrying on the activity at those facilities; and (d) the application is in a form approved under subsection 419 ‑ 150(1); and (e) the Industry Secretary is satisfied that the activity is a * CMPTI processing activity; and (f) the Industry Secretary has no reason to believe that: (i) the information provided by the company is not true, correct and complete; or (ii) the company will not satisfy the requirements to be entitled to a CMPTI tax offset in relation to the activity; and (g) the company has paid the application fee (if any) prescribed by the regulations. Note: Any revocation of the registration does not prevent the company from applying under this subsection to re ‑ register the activity. Any re ‑ registration will not re ‑ start the maximum 10 ‑ year period that the activity can be registered (see subsections 419 ‑ 50(4) and (5)).

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-40 — Notice of decision about an application for registration

(1) The * Industry Secretary must give written notice of a decision under subsection 419 ‑ 35(2) about an application (of a company) to the company and the Commissioner. Certificates of registration (2) If the decision is to register an activity for the company, the notice must include a certificate of registration that includes the following: (a) the company’s name and * ABN; (b) the day the certificate is issued; (c) a description of the activity; (d) a description of each facility where the activity is to be carried on; (e) the matters (if any) prescribed by the regulations.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-45 — Annual report about a registered CMPTI processing activity

Content of the annual report (1) A company that has a * registered CMPTI processing activity for an income year must prepare a written report that is in a form approved under subsection 419 ‑ 150(1). (2) Without limiting subsection 419 ‑ 150(1), an instrument under that subsection may require the report to contain information about: (a) the outputs for the activity for the income year; and (b) the expected outputs for the activity for the next income year; and (c) any significant events that arose during the income year, or that are expected for the next income year, that could affect the company’s: (i) entitlement to the * CMPTI tax offset; or (ii) registration of the activity. (3) Despite subsection 419 ‑ 150(1), an instrument under that subsection must require the report to contain information about any matters prescribed by the regulations. Giving the annual report (4) The company must give the report to the * Industry Secretary within the period determined under subsection (5) that starts at the end of the income year. (5) The * Industry Secretary may, by legislative instrument, determine a period of at least 30 days for giving reports under this section that starts at the end of each income year. (6) The * Industry Secretary must give the Commissioner a copy of each report given under this section.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-50 — A registration is in force for up to 10 income years

Usual case (1) The registration of a company’s * registered CMPTI processing activity is in force for the 10 ‑ year period starting at the start of the income year chosen under subsection (2). (2) The company may choose: (a) the income year in which the * Industry Secretary receives the company’s application for registration of the activity under subsection 419 ‑ 35(2); or (b) a later income year. The way the company prepares its * income tax returns is sufficient evidence of the making of the choice. (3) A choice under subsection (2) is irrevocable. If the registration is a transfer or re ‑ registration (4) Despite subsection (1), if the registration of a company’s * registered CMPTI processing activity: (a) results from a transfer under subsection 419 ‑ 55(2) of a registration that has already come into force; or (b) will not be the first registration of the activity under subsection 419 ‑ 35(2) that has come into force for any company; the registration of the company’s registered CMPTI processing activity comes into force at the start of the income year that includes the day the * Industry Secretary receives the application that results in that registration. (5) The registration ceases to be in force at the same time that the first registration of the activity: (a) under subsection 419 ‑ 35(2); and (b) that came into force for any company; would have ceased to be in force if that first registration had continued in force for its full 10 ‑ year period. If the activity is similar to another registered activity (6) Despite subsections (1), (4) and (5), if the * Industry Secretary decides that: (a) the company’s * registered CMPTI processing activity (the current activity ) is similar to another activity that is or was a registered CMPTI processing activity of any company; and (b) the registration of the other activity is the first to have come into force; then: (c) unless paragraph (d) applies—the registration of the current activity ceases to be in force at the same time that the registration of the other activity ceases to be in force; or (d) if the registration of the other activity has already ceased to be in force—the current activity is taken, for the purposes of this Division, never to have been registered for the company and any income year. (7) The * Industry Secretary must take the following into account in deciding under subsection (6) whether an activity is similar to another activity: (a) the extent to which the assets and facilities used in carrying on one activity are used in carrying on the other activity; (b) the extent to which the processes and operations undertaken as part of one activity are the same as those undertaken as part of the other activity; (c) the extent of similarity between the inputs to and outputs of the activities; (d) if the activities are carried on by different companies, the nature of any arrangements between those companies in respect of the activities; (e) it is irrelevant if the other activity is no longer being carried on; (f) any other criteria prescribed by the regulations. The 10 ‑ year registration period is subject to revocation (8) Nothing in this section prevents a company’s registration from being revoked under section 419 ‑ 70.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-55 — Transferring a registration

(1) This section applies if a * constitutional corporation (the acquirer ): (a) acquires one or more of the facilities used in carrying on an activity that is a * registered CMPTI processing activity for another company (the disposer ); and (b) the acquirer commences carrying on the activity at those facilities at or after: (i) the time the disposer ceases carrying on the activity at those facilities; and (ii) the time the disposer’s registration of the activity comes into force (see section 419 ‑ 50); and (c) the acquirer seeks a transfer of the registration of the activity after the day of the acquisition. Note 1: Transferring the registration will not re ‑ start the maximum 10 ‑ year period that the activity can be registered (see subsections 419 ‑ 50(4) and (5)). Note 2: If the disposer’s registration of the activity has not come into force (for example, by the disposer not having made a choice under subsection 419 ‑ 50(2)), the acquirer should instead apply to register the activity under subsection 419 ‑ 35(2). (2) The * Industry Secretary must transfer the registration of the activity to the acquirer if: (a) the acquirer requests the transfer by applying to the Industry Secretary before the end of the period determined under subsection (3) that starts on the day of the acquisition; and (b) the application identifies: (i) the activity and each facility where the activity is to be carried on; and (ii) the basis on which the acquirer considers it will satisfy the requirements to be entitled to a * CMPTI tax offset in relation to the activity; and (c) the application states: (i) that the acquirer is the legal entity that is or will be carrying on the activity at those facilities (after the disposer ceases to do so); and (ii) the time the acquirer is to commence carrying on the activity at those facilities, and the time the disposer is to cease to do so; and (d) the application is in a form approved under subsection 419 ‑ 150(1); and (e) the Industry Secretary has no reason to believe that: (i) the information provided by the acquirer is not true, correct and complete; or (ii) the acquirer will not satisfy the requirements to be entitled to a CMPTI tax offset in relation to the activity; and (f) the acquirer has paid the application fee (if any) prescribed by the regulations. (3) The * Industry Secretary may, by legislative instrument, determine a period of at least 30 days for requesting transfers under this section. For each such request, the period starts on the day of the relevant acquisition. (4) The * Industry Secretary must give written notice of a decision under subsection (2) to the acquirer, the disposer and the Commissioner. (5) If the decision is to transfer the registration, the notice must include a certificate of registration that reflects the transfer.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-60 — Varying a registration

Variations on application (1) The * Industry Secretary must decide whether to vary the registration of a * registered CMPTI processing activity of a company if: (a) the company applies to the Industry Secretary for a variation of the registration; and (b) the application is in a form approved under subsection 419 ‑ 150(1); and (c) the company has paid the application fee (if any) prescribed by the regulations. Variations on the Industry Secretary’s own initiative (2) The * Industry Secretary may, on the Industry Secretary’s own initiative, vary the registration of a * registered CMPTI processing activity of a company. Matters relevant to such a decision (3) In deciding under subsection (1) or (2) whether to vary the registration of an activity, the * Industry Secretary: (a) in the case of an application under subsection (1)—must consider if there is any reason to believe that the information provided by the company is not true, correct and complete; and (b) in every case: (i) must have regard to any proposed changes relating to the activity; and (ii) must have regard to the matters prescribed by the regulations; and (iii) may have regard to any other matter that the Industry Secretary considers relevant. Notice of such a decision (4) The * Industry Secretary must give written notice of a decision under subsection (1) or (2) to: (a) the company to whom the certificate of registration was issued; and (b) the Commissioner. (5) If the decision is to vary the registration, the notice must include the varied certificate of registration.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-65 — Automatic suspension of a registration for failing to give an annual report or requested further information

(1) The registration of a * registered CMPTI processing activity of a company is suspended if (and while) the company fails to: (a) give a report under section 419 ‑ 45 during an income year about the activity; or (b) comply with a request, given under subsection 419 ‑ 80(2) during an income year, for further information about the registration. Note 1: The registration may be automatically revoked if the report or requested information is not given before the end of an extended period (see subsections 419 ‑ 70(1) to (3)). Note 2: Suspending the registration will not suspend the maximum 10 ‑ year period that the registration of the activity can be in force (see section 419 ‑ 50). (2) For the purposes of this Division (other than this section), the activity is taken: (a) during the period of the suspension, never to have been registered for the company and the income year mentioned in paragraph (1)(a) or (b); but (b) if that period ends, to have been registered during that period for the company and the income year. Paragraph (b) of this subsection is subject to the registration being revoked under section 419 ‑ 70. Note: This means that if an assessment of a company’s income tax for the income year is made on the basis that the company is entitled to the CMPTI tax offset for the activity, during the suspension the assessment may be amended to take account of the fact that the company was never entitled to the offset for the activity (see section 419 ‑ 90).

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-70 — Revoking a registration

Automatic revocation if annual report or requested information is not given before the end of an extended period (1) The registration of a * registered CMPTI processing activity of a company is revoked at the start of an income year if the company: (a) is required during the income year to give a report under section 419 ‑ 45 about the activity (for the previous income year); and (b) fails to do so before the end of the income year. (2) The registration of a * registered CMPTI processing activity of a company is revoked at the start of an income year if the company: (a) is required to comply with a request, given under subsection 419 ‑ 80(2) during the income year, for further information about the registration; and (b) fails to do so before the end of the 60 ‑ day period starting at the end of the period mentioned in that subsection for complying with the request. (3) However, subsection (1) or (2) is taken never to have applied for a failure mentioned in that subsection if: (a) the company eventually gives the * Industry Secretary: (i) for subsection (1)—a report about the activity for the previous income year that complies with subsections 419 ‑ 45(1) to (3); or (ii) for subsection (2)—the requested further information in a way that complies with subsection 419 ‑ 80(4); and (b) the company applies to the Industry Secretary for the late report or information (the late material ) to be accepted; and (c) the application is in a form approved under subsection 419 ‑ 150(1); and (d) the Industry Secretary decides to accept the late material because the Industry Secretary is satisfied that the delay in giving the late material was due to exceptional circumstances beyond the company’s control; and (e) the company has paid the application fee (if any) prescribed by the regulations. Revocation on other grounds (4) The * Industry Secretary may decide to revoke all registrations of a * registered CMPTI processing activity if the Industry Secretary: (a) is satisfied that the first registration of the activity under subsection 419 ‑ 35(2) for any company: (i) was based on untrue, incorrect or incomplete information; or (ii) was obtained by fraud or serious misrepresentation; or (b) is satisfied that no company ever satisfied the requirements to be entitled to a * CMPTI tax offset in relation to the activity. Note: This subsection can apply to a registration a company used to hold before it was transferred to the current holder. (5) The * Industry Secretary may decide to revoke the registration of a * registered CMPTI processing activity of a company if the Industry Secretary: (a) becomes satisfied that information provided by the company to the Industry Secretary during an income year in relation to the registration involved fraud or serious misrepresentation by or on behalf of the company; or (b) reasonably believes: (i) that, for an income year, the registration is not based on true, correct and complete information; or (ii) that the company does not satisfy the requirements to be entitled to a * CMPTI tax offset in relation to the activity and an income year. Notice of decisions (6) The Industry Secretary must, within 30 days after making a decision under paragraph (3)(d) or subsection (4) or (5), give written notice of the decision to: (a) the company, or each company, that holds or held a registration affected by the decision; and (b) the Commissioner.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-75 — Effect of revocations

(1) If the registration of a * registered CMPTI processing activity of a company is revoked under subsection 419 ‑ 70(4), the activity is taken, for the purposes of this Division, never to have been registered for the company and any income year. Note: This means that if an assessment of a company’s income tax for an income year is made on the basis that the company is entitled to the CMPTI tax offset for the activity, the assessment will be amended to take account of the fact that the company was never entitled to the offset for the activity (see section 419 ‑ 90). (2) If the registration of a * registered CMPTI processing activity of a company is revoked under subsection 419 ‑ 70(1), (2) or (5), the revocation applies in relation to the income year referred to in that subsection and each later income year. (3) Subsection (1), or subsection (2) to the extent that it relates to a revocation under subsection 419 ‑ 70(5), does not apply for the purposes of: (a) the operation of section 419 ‑ 70, this section or Subdivision 419 ‑ E; or (b) a review by a court or the * ART of the decision to revoke the registration.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-80 — Industry Secretary may request further information

(1) The * Industry Secretary may request an applicant under: (a) subsection 419 ‑ 35(2) (about registrations); or (b) subsection 419 ‑ 55(2) (about transfers); or (c) subsection 419 ‑ 60(1) (about variations); or (d) subsection 419 ‑ 70(3) (about late material); to give specified information, or specified kinds of information, to the Industry Secretary about the application. (2) The * Industry Secretary may request a company that has a * registered CMPTI processing activity to give specified information, or specified kinds of information, to the Industry Secretary about the registration within: (a) the 30 ‑ day period starting when the request is given; or (b) such longer period as the Industry Secretary allows. The request must mention that the registration will be suspended and then revoked if the request is not complied with. (3) The * Industry Secretary need not consider an application while waiting for information requested under subsection (1) about the application. (4) A request under subsection (1) or (2) may be for the information or kinds of information to be given in a form approved under subsection 419 ‑ 150(1).

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-85 — Advising the Commissioner about a registration

Based on all information the * Industry Secretary has about a company’s registration of a * registered CMPTI processing activity for an income year, the Industry Secretary must advise the Commissioner: (a) whether the activity is being carried on in accordance with the registration; and (b) whether the company is carrying on any * CMPTI processing activities during the income year that are not registered CMPTI processing activities; and (c) whether the company is carrying on any other activities during the income year that the Industry Secretary believes may be relevant to the Commissioner’s administration of this Division. Note: Such advice could be based on information from sources including: (a) applications under sections 419 ‑ 35, 419 ‑ 55 and 419 ‑ 60; and (b) annual reports given under section 419 ‑ 45; and (c) requests made under section 419 ‑ 80.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-90 — Amendment of assessments

Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment given to a company for the purposes of giving effect to this Division for an income year if the registration of a * registered CMPTI processing activity for the company is transferred, varied, suspended or revoked. Note: Section 170 of the Income Tax Assessment Act 1936 specifies the periods within which assessments may be amended.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-95 — Expenditure incurred while not at arm’s length

If: (a) a company incurs * CMPTI expenditure to another entity in carrying on all or part of a * registered CMPTI processing activity; and (b) either: (i) when the company incurs the expenditure, the company and the other entity do not deal with each other at * arm’s length; or (ii) the other entity is the company’s * associate; and (c) the expenditure exceeds the * market value of the relevant activity or part (as appropriate); for the purposes of this Division (other than this section), the company is treated as if the amount of expenditure it incurred in carrying on the relevant activity or part (as appropriate) were equal to that market value.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-100 — Reducing a company’s CMPTI expenditure to reflect mark ‑ ups within the company’s group

(1) This section applies to a company if: (a) the company is entitled to a * CMPTI tax offset for * CMPTI expenditure in carrying on one or more of the company’s * registered CMPTI processing activities; and (b) some or all of that expenditure (the group expenditure ) is incurred to another entity (the group entity ) for goods or services provided in relation to those activities when: (i) the group entity is * connected with the company; or (ii) the group entity is an * affiliate of the company or the company is an affiliate of the group entity. Reducing the company’s CMPTI expenditure by group mark ‑ ups (2) For the purposes of this Division (other than this section), disregard so much of the company’s group expenditure as exceeds the actual cost to the group entity of providing those goods or services. Note: This section can apply more than once if the company incurs CMPTI expenditure to more than one group entity.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-105 — Disregarding registration of an activity that a company is paid to carry on

If: (a) a company is or will be paid by another entity for carrying on an activity during an income year that is a * registered CMPTI processing activity for the company and the income year; and (b) the activity is or could be a registered CMPTI processing activity for any of the following for the income year: (i) the other entity; (ii) a * constitutional corporation * connected with the other entity; (iii) a constitutional corporation that is an * affiliate of the other entity; (iv) a constitutional corporation of which the other entity is an affiliate; for the purposes of section 419 ‑ 5 (about entitlement to the * CMPTI tax offset), disregard that registration of the activity for the company and the income year.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-110 — Reviewable decisions

Each of the following decisions of the * Industry Secretary is reviewable under this Subdivision (a reviewable decision ): (a) a decision under subsection 419 ‑ 35(2) (about registering an activity); (b) a decision under subsection 419 ‑ 50(6) (about whether an activity is similar to another activity); (c) a decision under subsection 419 ‑ 55(2) (about transferring the registration of an activity); (d) a decision under subsection 419 ‑ 60(1) or (2) (about varying the registration of an activity); (e) a decision under paragraph 419 ‑ 70(3)(d) (about refusing to accept late material); (f) a decision under subsection 419 ‑ 70(4) or (5) (about revoking the registration of an activity); (g) a decision under subsection 419 ‑ 120(3) (about refusing to allow a further period to apply for review).

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-115 — Notice of reviewable decision and internal review rights, and requesting statement of reasons

(1) When making a reviewable decision affecting a company, the * Industry Secretary must give written notice to the company of the following things: (a) the making of the decision; (b) the company’s right to have the decision reviewed under this Subdivision. (2) If written notice of either of these things is given to the company under another provision of this Division, notice of the thing does not have to be given twice. (3) The company or the Commissioner may request, in writing, the * Industry Secretary to give a statement of reasons for the decision. The Industry Secretary must comply with the request. (4) A failure to comply with this section does not affect the validity of the decision.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-120 — Applications for internal review of reviewable decisions

Applications by affected companies (1) An application for review of a reviewable decision affecting a company may be made by or on behalf of the company. (2) The application must be in a form approved under subsection 419 ‑ 150(1). (3) The application must be made within: (a) 28 days after the company is notified of the decision under this Division; or (b) such further period as the * Industry Secretary allows. Applications by Commissioner (4) The Commissioner may, at any time, apply to the * Industry Secretary for review of a reviewable decision.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-125 — Internal review of reviewable decisions

(1) After receiving an application for review of a reviewable decision, the * Industry Secretary must review the decision. (2) The * Industry Secretary may request the applicant to give specified information, or specified kinds of information, to the Industry Secretary about the application. Making internal review decisions (3) After reviewing the reviewable decision, the * Industry Secretary must make a decision (an internal review decision ): (a) confirming the reviewable decision; or (b) varying the reviewable decision; or (c) setting aside the reviewable decision and substituting a new decision. Note: An internal review decision is reviewable by the ART (see section 419 ‑ 135). Under the Administrative Review Tribunal Act 2024 , notice of the internal review decision must be given to any person whose interests are affected by the decision. Deemed internal review decisions (4) If the * Industry Secretary does not make a decision under subsection (3) before the end of the 60 ‑ day period that: (a) starts on the day the Industry Secretary receives the application for review; and (b) pauses while the Industry Secretary waits for any information requested under subsection (2) about the application for review; the Industry Secretary is taken, at the end of that period, to have made a decision (also an internal review decision ) confirming the reviewable decision. (5) However, an internal review decision (the deemed decision ) is taken not to have been made under subsection (4) if: (a) after the end of the period referred to in that subsection, the * Industry Secretary makes a decision under subsection (3) about the applicable reviewable decision; and (b) an application has yet to be made under section 419 ‑ 135 to the * ART for review of the deemed decision.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-130 — Matters relevant to internal review decisions

(1) For the purposes of this Act, an internal review decision takes effect on the day the relevant reviewable decision took effect. (2) The * Industry Secretary must give the Commissioner written notice of the making of an internal review decision. (3) The applicant or the Commissioner may request, in writing, the * Industry Secretary to give a statement of reasons for the internal review decision. The Industry Secretary must comply with the request. (4) A failure to comply with this section does not affect the validity of the internal review decision.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-135 — External review by ART of internal review decisions

(1) An application may be made to the * ART for review of an internal review decision of the * Industry Secretary. (2) Subsections 108(2) and (4) of the Administrative Review Tribunal Act 2024 have effect for the purposes of this Act for: (a) an internal review decision as varied by the * ART under section 105 of the Administrative Review Tribunal Act 2024 ; or (b) a decision made by the ART under that section in substitution for an internal review decision. Note: This means that the varied or substituted decision takes effect from the day on which the reviewable decision took effect (see subsection 419 ‑ 130(1) of this Act).

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-140 — Information sharing

(1) Each of the following regulators: (a) the * Industry Secretary; (b) the Commissioner; may request the other regulator to provide them with information held by the other regulator that is reasonably necessary or convenient for the requesting regulator’s administration of this Division. (2) The other regulator must comply with the request. Note 1: The request could be an ad hoc or standing request, and the information requested could be general or specific. Note 2: A disclosure enabling the Commissioner to comply with such a request is within an exception to the confidentiality provisions in Schedule 1 to the Taxation Administration Act 1953 (see section 355 ‑ 50 in that Schedule).

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-145 — CMPTI community benefit rules

(1) The Minister may, by legislative instrument, make the following rules (the CMPTI community benefit rules ): (a) rules that: (i) apply to companies within a specified class for an income year; and (ii) specify conditions that must be met for such a company to be entitled to a * CMPTI tax offset for the income year; (b) rules that: (i) apply to companies within a specified class for an income year; and (ii) specify circumstances that, if they exist for such a company, will reduce the amount of the company’s CMPTI tax offset for the income year by a specified proportion. Note: For subparagraph (b)(ii), different proportions may be specified for different circumstances (see subsection 33(3A) of the Acts Interpretation Act 1901 ). (2) In making the CMPTI community benefit rules, the Minister must have regard to the community benefit principles (within the meaning of subsection 10(3) of the Future Made in Australia Act 2024 ). (3) When doing so, the Minister is to treat this Division as if it were Future Made in Australia support (within the meaning of that Act). (4) This section does not apply if the Future Made in Australia Act 2024 has not commenced.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-150 — Forms approved by the Industry Secretary

(1) The * Industry Secretary may, by notifiable instrument, approve a form for the purposes of a specified provision of this Division. Note: An instrument may approve different forms for the purposes of different provisions of this Division (see subsection 33(3A) of the Acts Interpretation Act 1901 ). (2) Without limiting subsection (1), the instrument may require the form to be accompanied by specified kinds of information, documents or other materials.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 419-155 — Delegation by the Industry Secretary

(1) The * Industry Secretary may, in writing, delegate all or any of the Industry Secretary’s powers under this Division to an SES employee, or acting SES employee, in the * Industry Department. (2) In exercising powers under a delegation, the delegate must comply with any directions of the * Industry Secretary.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 420-1 — What this Division is about

This Division deals with amounts you can deduct, and amounts included in your assessable income, because of these situations: • you acquire a registered emissions unit; • you hold a registered emissions unit at the start or the end of the income year; • you dispose of a registered emissions unit. Table of sections 420 ‑ 5 The 4 key features of tax accounting for registered emissions units

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

s 420-5 — The 4 key features of tax accounting for registered emissions units

The purpose of income tax accounting for registered emissions units is to produce the same tax treatment, irrespective of your purpose in acquiring or holding the registered emissions units. There are 4 key features: (1) You bring your gross expenditure and gross proceeds to account, not your net profits and losses on disposal of a registered emissions unit. (2) The gross expenditure is deductible. (3) The gross proceeds are assessable income. (4) You must bring to account any difference between the value of your registered emissions units held at the start and at the end of the income year. This is done in such a way that: (a) any increase in value is included in assessable income; and (b) any decrease in value is a deduction.

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

s 420-10 — Meaning of registered emissions unit

A registered emissions unit is: (b) a * Kyoto unit; or (d) an * Australian carbon credit unit; or (e) a * safeguard mechanism credit unit; for which there is an entry in a Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ).

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7) | Amended by No 14 of 2023, effective sch 1 (items 64-66): 12 Apr 2023 (s 2(1) item 2)

s 420-12 — Meaning of hold a registered emissions unit

(1) You hold a * registered emissions unit if you are the entity in whose Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) there is an entry for the unit. (2) However, if the entity (the nominee entity ) in whose Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) there is an entry for a * registered emissions unit holds the unit as nominee for another entity: (a) the other entity is taken to hold the unit; and (b) the nominee entity is taken not to hold the unit.

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

s 420-13 — Meaning of primary producer registered emissions unit

A * registered emissions unit you start to * hold, hold or cease to hold is a primary producer registered emissions unit if: (a) the unit is an * Australian carbon credit unit; and (b) you are an individual; and (c) your holding of the unit starts on or after 1 July 2022 because the unit: (i) is issued to you under the Carbon Credits (Carbon Farming Initiative) Act 2011 in relation to an eligible offsets project (within the meaning of that Act); or (ii) is transferred to you by a * carbon service provider that was holding the unit because the unit was issued to the provider on or after 1 July 2022 under that Act in relation to such a project; and (d) at all times while the project is carried on, a * primary production business is carried on: (i) in the same area as the project; or (ii) in an area connected to an area in which the project is carried on; and (e) at all times while the project is carried on, you are: (i) carrying on a primary production business covered by paragraph (d); or (ii) a beneficiary of a trust that is carrying on a primary production business covered by paragraph (d); or (iii) a partner in a partnership that is carrying on a primary production business covered by paragraph (d). Note 1: If you cease to hold the registered emissions unit, the unit is not a primary producer registered emissions unit for any new holder of the unit (see paragraph (c)). Note 2: A consequence of paragraph (c) is that the unit will not be a primary producer registered emissions unit for you for a subsequent holding of it. That is, if after disposing of the unit you later reacquire it. Note 3: Different subparagraphs of paragraph (e) may apply to you at different times.

Amendment history: Inserted by No 28 of 2023, effective sch 3: 1 July 2023 (s 2(1) item 3) sch 6: 24 June 2023 (s 2(1) item 7)

s 420-15 — What you can deduct

(1) You can deduct expenditure to the extent that you incur it in becoming the * holder of a * registered emissions unit. Timing (2) You deduct the expenditure in the income year in which you start to * hold the * registered emissions unit. Australian carbon credit units (4) You cannot deduct under this section expenditure you incur in becoming the * holder of an * Australian carbon credit unit issued to you in accordance with the Carbon Credits (Carbon Farming Initiative) Act 2011 unless you incur the expenditure in preparing or lodging: (a) an application for a certificate of entitlement (within the meaning of that Act); or (b) an offsets report (within the meaning of that Act). No deduction if sale proceeds would not be assessable (5) You cannot deduct under this section expenditure you incur in becoming the * holder of a * registered emissions unit if, assuming that you had sold the unit to someone else immediately after you started to * hold the unit, the proceeds of the sale would not have been included in your assessable income under section 420 ‑ 25. Note: Under the International Tax Agreements Act 1953 , for some foreign residents, the proceeds of the sale of a registered emissions unit are not assessable income in Australia.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7)

s 420-20 — Non ‑ arm’s length transactions and transactions with associates

(1) If: (a) an entity becomes the * holder of a * registered emissions unit; and (b) either: (i) the entity and the previous holder of the unit did not deal with each other at * arm’s length; or (ii) the previous holder is the entity’s * associate; and (c) the entity did not pay or give consideration equal to the * market value of the unit for becoming the holder of the unit; the entity is treated as if: (d) the entity had incurred expenditure in becoming the holder of the unit; and (e) the amount of the expenditure were equal to that market value. (2) This section does not apply if a * registered emissions unit * held by an individual just before the individual’s death: (a) devolves to the individual’s * legal personal representative; or (b) * passes to a beneficiary in the individual’s estate. (3) This section does not apply to the issue of an * Australian carbon credit unit under the Carbon Credits (Carbon Farming Initiative) Act 2011 .

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 101 of 2013, effective Sch 2 (items 2, 20–43, 50): 29 June 2013 (s 2(1) item 3) Sch 2 (items 55–57): 8 Sept 2012 (s 2(1) item 4) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7)

s 420-21 — Incoming international transfers of emissions units

Unit held as trading stock or as a revenue asset (1) If: (a) any of the following conditions is satisfied: (iii) a * Kyoto unit is transferred from your foreign account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) to your Registry account (within the meaning of that Act) or your nominee’s Registry account (within the meaning of that Act); (iv) a Kyoto unit is transferred from your nominee’s foreign account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) to your Registry account (within the meaning of that Act) or your nominee’s Registry account (within the meaning of that Act); (v) an * Australian carbon credit unit is transferred from your foreign account (within the meaning of the Carbon Credits (Carbon Farming Initiative) Act 2011 ) to your Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) or your nominee’s Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ); (vi) an Australian carbon credit unit is transferred from your nominee’s foreign account (within the meaning of the Carbon Credits (Carbon Farming Initiative) Act 2011 ) to your Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) or your nominee’s Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ); and (b) as a result of the transfer, you start to * hold the unit as a * registered emissions unit; and (c) just before the transfer, the unit was your * trading stock or * revenue asset; you are treated as if: (d) just before the transfer, you had sold the unit to someone else for its * cost; and (e) you had, immediately after the sale, bought it back as a registered emissions unit for the same amount. Example: An Australian resident company carries on a business of trading in emissions units. The units are trading stock. The company owns 10,000 emission reduction units (a type of Kyoto unit) that are registered in New Zealand. 5,000 of those emission reduction units are transferred from the company’s New Zealand registry account to the company’s Australian registry account. The company is treated as having sold each unit to someone else at its cost just before it became a registered emissions unit. As the unit was previously held as trading stock, the unit ceases to be trading stock (section 70 ‑ 12). The cost of the unit just before it became a registered emissions unit is included in the company’s assessable income. The company is also treated as having bought 5,000 registered emissions units for the same amount. The company is entitled to a deduction for that amount (section 420 ‑ 15). Unit held otherwise than as trading stock or as a revenue asset (2) If: (a) any of the following conditions is satisfied: (iii) a * Kyoto unit is transferred from your foreign account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) to your Registry account (within the meaning of that Act) or your nominee’s Registry account (within the meaning of that Act); (iv) a Kyoto unit is transferred from your nominee’s foreign account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) to your Registry account (within the meaning of that Act) or your nominee’s Registry account (within the meaning of that Act); (v) an * Australian carbon credit unit is transferred from your foreign account (within the meaning of the Carbon Credits (Carbon Farming Initiative) Act 2011 ) to your Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) or your nominee’s Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ); (vi) an Australian carbon credit unit is transferred from your nominee’s foreign account (within the meaning of the Carbon Credits (Carbon Farming Initiative) Act 2011 ) to your Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) or your nominee’s Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ); and (b) as a result of the transfer, you start to * hold the unit as a * registered emissions unit; and (c) just before the transfer, the unit was neither your * trading stock nor your * revenue asset; you are treated as if: (d) just before the transfer, you had sold the unit to someone else for its * market value just before the transfer; and (e) you had, immediately after the sale, bought it back as a registered emissions unit for the same amount.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7)

s 420-22 — Becoming taxable in Australia on the proceeds of sale of registered emissions units

If: (a) you start to * hold a * registered emissions unit at a particular time; and (b) assuming that you had sold the unit to someone else immediately after you started to hold the unit, the proceeds of the sale would not have been included in your assessable income under section 420 ‑ 25; and (c) you hold the unit until a later time (the taxable status commencement time ), where the following conditions are satisfied: (i) assuming that you had sold the unit to someone else immediately before the taxable status commencement time, the proceeds of the sale would not have been included in your assessable income under section 420 ‑ 25; (ii) assuming that you had sold the unit to someone else at the taxable status commencement time, the proceeds of the sale would have been included in your assessable income under section 420 ‑ 25; you are treated as if: (d) immediately after the taxable status commencement time, you had bought the unit from someone else for its * market value; and (e) you had started to hold the unit immediately after the taxable status commencement time instead of at the time mentioned in paragraph (a). Note: Under the International Tax Agreements Act 1953 , for some foreign residents, the proceeds of the sale of a registered emissions unit are not assessable income in Australia.

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

s 420-25 — Assessable income on disposal of registered emissions units

(1) Your assessable income includes an amount that you are entitled to receive because you cease to * hold a * registered emissions unit. Timing (2) The amount is included in your assessable income for the income year in which you cease to * hold the unit. Source (3) An amount included in your assessable income under subsection (1) is taken, for the purposes of the * income tax laws, to have a source in Australia.

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

s 420-30 — Non ‑ arm’s length transactions and transactions with associates

If: (a) an entity (the transferor ) ceases to * hold a * registered emissions unit; and (b) the cessation is because of the transfer of the unit to: (i) a Registry account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ); or (ii) a foreign account (within the meaning of that Act); kept by another entity (the transferee ); and (c) either: (i) the transferor and the transferee did not deal with each other at * arm’s length; or (ii) the transferee is the transferor’s * associate; and (d) the transferee did not pay or give consideration equal to the * market value of the unit for the transfer of the unit; the transferor is treated as if the transferor were entitled to receive an amount equal to that market value because the transferor ceased to be the holder of the unit.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 101 of 2013, effective Sch 2 (items 2, 20–43, 50): 29 June 2013 (s 2(1) item 3) Sch 2 (items 55–57): 8 Sept 2012 (s 2(1) item 4)

s 420-35 — Outgoing international transfers of emissions units

If: (a) you stop * holding a * registered emissions unit; and (b) you do so as a result of the transfer of the unit to: (ii) if the unit is a * Kyoto unit—your foreign account (within the meaning of the Australian National Registry of Emissions Units Act 2011 ) or your nominee’s foreign account (within the meaning of that Act); or (iii) if the unit is an * Australian carbon credit unit—your foreign account (within the meaning of the Carbon Credits (Carbon Farming Initiative) Act 2011 ) or your nominee’s foreign account (within the meaning of that Act); you are treated as if: (c) just before the transfer, you had sold the unit to someone else for its * market value just before the transfer; and (d) you had, immediately after the sale, bought it back for the same amount. Example: An Australian resident company carries on a business of trading in emission units. The company owns 10,000 emission reduction units (a type of Kyoto unit) that are registered in Australia. 5,000 of those units are transferred from the company’s Australian registry account to the company’s New Zealand registry account. The company is treated as having sold each unit to someone else at its market value just before it stopped being a registered emissions unit. As the unit was a registered emissions unit, the market value is included in the company’s assessable income (section 420 ‑ 25). The company is also treated as having bought 5,000 emission reduction units for the same amount. As those units are trading stock, the company may be able to deduct that amount under section 8 ‑ 1.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7)

s 420-40 — Disposal of registered emissions units for a purpose other than gaining assessable income

(1) If: (a) an entity (the first entity ) incurs expenditure in: (i) becoming the * holder of a * registered emissions unit; or (ii) ceasing to hold a registered emissions unit; and (b) the first entity has deducted or can deduct the expenditure under section 420 ‑ 15 or 420 ‑ 42; and (c) the first entity ceases to hold the unit in a particular income year; and (d) the cessation is neither: (i) in gaining or producing the first entity’s assessable income; nor (ii) in carrying on a * business for the purpose of gaining or producing the first entity’s assessable income; and (e) section 420 ‑ 30 (non ‑ arm’s length transactions and transactions with associates) did not apply to the first entity ceasing to hold the unit; the first entity’s assessable income for that income year includes an amount equal to the amount the first entity has deducted or can deduct. Death (2) If: (a) the first entity is an individual; and (b) the cessation is because of the first entity’s death; and (c) the * registered emissions unit devolves to the first entity’s * legal personal representative; then: (d) the first entity’s legal personal representative is treated as having bought the unit for the amount included in the first entity’s assessable income under subsection (1); and (e) if the unit * passes to a beneficiary in the first entity’s estate: (i) the first entity’s legal personal representative is treated as having disposed of the unit for the amount included in the first entity’s assessable income under subsection (1); and (ii) the beneficiary is treated as having bought the unit for the amount included in the first entity’s assessable income under subsection (1). (3) If: (a) the first entity is an individual; and (b) the cessation is because of the first entity’s death; and (c) the * registered emissions unit * passes to a beneficiary in the first entity’s estate without devolving to the first entity’s * legal personal representative; the beneficiary is treated as having bought the unit for the amount included in the first entity’s assessable income under subsection (1). Transfer—treatment of acquirer (4) If: (a) the cessation is because of the transfer of the unit to another entity; and (b) neither subsection (2) nor (3) applies; the other entity is treated as having bought the unit for the amount included in the first entity’s assessable income under subsection (1). (5) If subsection (4) applies to the transfer of the unit to another entity: (a) the first entity must inform the other entity that, as a result of subsection (4) applying, the other entity is treated as having bought the unit for a particular amount; and (b) the first entity must do so: (i) at, or as soon as practicable after, the time of the transfer; or (ii) by a later time allowed by the Commissioner. Source (6) An amount included in the first entity’s assessable income under subsection (1) is taken, for the purposes of the * income tax laws, to have a source in Australia.

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

s 420-41 — Ceasing to be taxable in Australia on the proceeds of sale of registered emissions units

If: (a) you start to * hold a * registered emissions unit; and (b) assuming that you had sold the unit to someone else immediately after you started to hold the unit, the proceeds of sale would have been included in your assessable income under section 420 ‑ 25; and (c) you hold the unit until a later time (the taxable status cessation time ), where the following conditions are satisfied: (i) assuming that you had sold the unit to someone else immediately before the taxable status cessation time, the proceeds of the sale would have been included in your assessable income under section 420 ‑ 25; (ii) assuming that you had sold the unit to someone else at the taxable status cessation time, the proceeds of sale would not have been included in your assessable income under section 420 ‑ 25; you are treated as if: (d) just before the taxable status cessation time, you had sold the unit to someone else for its * market value; and (e) you had, at the taxable status cessation time, bought it back for the same amount. Note: Under the International Tax Agreements Act 1953 , for some foreign residents, the proceeds of the sale of a registered emissions unit are not assessable income in Australia.

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

s 420-42 — Deduction for expenses incurred in ceasing to hold a registered emissions unit

(1) You can deduct expenditure to the extent that you incur it in ceasing to * hold a * registered emissions unit. Timing (2) You deduct the expenditure in the income year in which you cease to * hold the * registered emissions unit.

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

s 420-45 — You include the value of your registered emissions units in working out your assessable income and deductions

(1) You compare: (a) the * value of all * registered emissions units you * held at the start of the income year; and (b) the value of all registered emissions units you held at the end of the income year. Increase in value is included in assessable income (2) Your assessable income includes any excess of the * value at the end of the income year over the value at the start of the income year. Decrease in value is a deduction (3) On the other hand, you can deduct any excess of the * value at the start of the income year over the value at the end of the income year. Source (4) An amount included in your assessable income under subsection (2) is taken, for the purposes of the * income tax laws, to have a source in Australia. Disregard value of unit if sale proceeds would not be assessable (5) For the purposes of this Subdivision, disregard the * value of a * registered emissions unit you * held at the end of the income year if, assuming that you had sold the unit to someone else immediately after you started to hold the unit, the proceeds of the sale would not have been included in your assessable income under section 420 ‑ 25. Note: Under the International Tax Agreements Act 1953 , for some foreign residents, the proceeds of the sale of a registered emissions unit are not assessable income in Australia.

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

s 420-50 — Value of registered emissions units at start of income year

(1) The value of a * registered emissions unit you * held at the start of an income year is the same amount at which it was taken into account under this Subdivision at the end of the last income year. (2) The value of the unit is a nil amount if the unit was not taken into account under this Subdivision at the end of the last income year.

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

s 420-51 — Valuation methods

The value of a * registered emissions unit you * held at the end of an income year is worked out using one of the following methods: (a) the * FIFO cost method; (b) the * actual cost method; (c) the * market value method. Sections 420 ‑ 55 and 420 ‑ 57 tell you which method applies.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7)

s 420-52 — FIFO cost method of working out the value of units

The FIFO cost method for working out the * value of the * registered emissions units you * held at the end of an income year means that the value of the units is the * cost of the registered emissions units, and, for the purposes of the application of this Subdivision to you for the income year: (a) if any of the registered emissions units are: (ii) eligible international emissions units (within the meaning of the Australian National Registry of Emissions Units Act 2011 ); or (iii) * Australian carbon credit units; or (iv) * safeguard mechanism credit units; you must account for those units on a first ‑ in first ‑ out basis; and (c) if any of the registered emissions units are * Kyoto units that are not eligible international emissions units (within the meaning of the Australian National Registry of Emissions Units Act 2011 )—you must account for those units on a first ‑ in first ‑ out basis.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7) | Amended by No 14 of 2023, effective sch 1 (items 64-66): 12 Apr 2023 (s 2(1) item 2)

s 420-53 — Actual cost method of working out the value of units

The actual cost method for working out the value of the * registered emissions units you * held at the end of the income year means that the value of the units is the * cost of the units, and, for the purposes of the application of this Subdivision to you for the income year, you must not account for any of those units on a first ‑ in first ‑ out basis.

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

s 420-54 — Market value method of working out the value of units

The market value method for working out the value of the * registered emissions units you * held at the end of the income year means that the value of the units is the * market value of the units at the end of the income year.

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

s 420-55 — Valuation method for first income year at the end of which you held registered emissions units

Scope (1) This section applies if: (a) you * held one or more * registered emissions units at the end of an income year; and (b) the income year is the first income year at the end of which you held one or more registered emissions units. Choice of method (2) You may choose one of the following methods: (a) the * FIFO cost method; (b) the * actual cost method; (c) the * market value method; for working out the value of the * registered emissions units you * held at the end of the income year. FIFO cost method applies if no choice made (3) If you do not make a choice under subsection (2) for the income year, the value of the * registered emissions units you * held at the end of the income year is worked out using the * FIFO cost method. Time for making choice (4) You must make a choice under subsection (2) before you lodge your * income tax return for the income year for which you make the choice. No revocation of choice (5) A choice made under subsection (2) cannot be revoked.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7)

s 420-57 — Valuation method for later income years at the end of which you held registered emissions units

Scope (1) This section applies if: (a) you * held one or more * registered emissions units at the end of an income year (the current income year ); and (b) the current income year is not the first income year at the end of which you held one or more registered emissions units. Choice of method (2) You may choose one of the following methods: (a) the * FIFO cost method; (b) the * actual cost method; (c) the * market value method; for working out the value of the * registered emissions units you * held at the end of the current income year. Previous method applies if no choice made (3) If you do not make a choice under subsection (2) for the current income year, the value of the * registered emissions units you * held at the end of the current income year is worked out using the method that applied to the most recent income year at the end of which you held one or more registered emissions units. Limitation on choice—before 2015 ‑ 16 income year (4) If the current income year is before the 2015 ‑ 16 income year, you must not make a choice under subsection (2) for the current income year if you have previously made a choice under that subsection for an earlier income year. Limitation on choice—2015 ‑ 16 income year or a later income year (5) If the current income year is: (a) the 2015 ‑ 16 income year; or (b) a later income year; you must not make a choice under subsection (2) for the current income year unless: (c) the same method applied for each of the 4 most recent income years at the end of which you * held one or more * registered emissions units; and (d) the method mentioned in paragraph (c) is different from the method to which your choice for the current income year relates. Limitation on choice—change from FIFO cost method to actual cost method (6) You must not choose under subsection (2) the * actual cost method for the current income year if the * FIFO cost method applied for the most recent income year at the end of which you * held one or more * registered emissions units. Time for making choice (7) You must make a choice under subsection (2) before you lodge your * income tax return for the income year for which you make the choice. No revocation of choice (8) A choice made under subsection (2) cannot be revoked.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7)

s 420-60 — Cost of registered emissions units

Australian carbon credit units (3) If an * Australian carbon credit unit was issued to you under the Carbon Credits (Carbon Farming Initiative) Act 2011 , the cost of the unit is its * market value immediately after you began to * hold the unit. Other registered emissions units (4) The cost of a * registered emissions unit (other than an * Australian carbon credit unit to which subsection (3) applies) is the total of the expenditure that you: (a) incurred in becoming the * holder of the unit; and (b) can deduct under section 420 ‑ 15.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7) | Amended by No 21 of 2015, effective s 4 and Sch 6 (items 1, 2, 16–25, 73): 19 Mar 2015 (s 2(1) items 1, 7–11, 13) Sch 1 (items 1–17, 49), Sch 3 and Sch 7 (items 13–21): 20 Mar 2015 (s 2(1) items 2, 4, 15) Sch 4 (items 1–5, 9–17): 1 July 2015 (s 2(1) item 5) Sch 6 (items 51–59, 74–79): never commences (s 2(1) items 12, 14)

s 420-62 — Primary producer registered emissions units

This Subdivision (other than section 420 ‑ 60) does not apply to you in relation to a * primary producer registered emissions unit.

Amendment history: Inserted by No 28 of 2023, effective sch 3: 1 July 2023 (s 2(1) item 3) sch 6: 24 June 2023 (s 2(1) item 7)

s 420-65 — Exclusivity of deductions etc.

Expenditure incurred in becoming the holder of a registered emissions unit (1) You cannot deduct under any provision of this Act outside this Division any expenditure to the extent that you incur it in becoming the * holder of a * registered emissions unit. (2) To the extent you incur expenditure in becoming the * holder of a * registered emissions unit, the expenditure is not to be taken into account in working out: (a) an amount you can deduct; or (b) an amount included in your assessable income; under any provision of this Act outside this Division. Australian carbon credit units (4) Subsections (1) and (2) do not affect the application of a provision of this Act outside this Division to expenditure you incur in becoming the * holder of an * Australian carbon credit unit issued to you in accordance with the Carbon Credits (Carbon Farming Initiative) Act 2011 if you do not incur the expenditure in preparing or lodging: (a) an application for a certificate of entitlement (within the meaning of that Act); or (b) an offsets report (within the meaning of that Act). (5) Subsections (1) and (2) do not affect the operation of Division 30 (deductions for gifts and contributions). Note: If you make a gift or contribution, Division 30 applies in the normal way to determine whether you can deduct the amount of the gift or contribution. Expenditure incurred in ceasing to hold a registered emissions unit (6) You cannot deduct under any provision of this Act outside this Division any expenditure to the extent that you incur it in ceasing to * hold a * registered emissions unit. Primary producer registered emissions units (7) Subsections (1), (2) and (6) do not affect the application of: (a) Division 392 (long ‑ term averaging of primary producers’ tax liability); or (b) Division 393 (farm management deposits); to expenditure to the extent that you incur it in becoming the * holder of, or ceasing to hold, a * primary producer registered emissions unit.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7) | Amended by No 28 of 2023, effective sch 3: 1 July 2023 (s 2(1) item 3) sch 6: 24 June 2023 (s 2(1) item 7)

s 420-70 — Exclusivity of assessable income etc.

(1) An amount that you are entitled to receive because you ceased to * hold a * registered emissions unit is not to be: (a) included in your assessable income; or (b) taken into account in working out your assessable income; or (c) taken into account in working out an amount you can deduct; under any provision of this Act outside this Division. (2) Subsection (1) does not affect the operation of Division 6 so far as that Division provides for the significance of residence or source for the assessability of ordinary and statutory income. Note: An amount included in your assessable income under this Division may be ordinary or statutory income for the purposes of Division 6. (3) Subsections (1) and (4) do not affect the application of: (a) Division 392 (long ‑ term averaging of primary producers’ tax liability); or (b) Division 393 (farm management deposits); to an amount that you are entitled to receive because you ceased to * hold a * primary producer registered emissions unit. Australian carbon credit units (4) An amount is not to be included in your assessable income under any provision of this Act outside this Division because an * Australian carbon credit unit was issued to you in accordance with the Carbon Credits (Carbon Farming Initiative) Act 2011 . Note 1: A capital gain or capital loss you make from a registered emissions unit is disregarded (subsection 118 ‑ 15(1)). Note 2: A capital gain or capital loss you make from a right to receive an Australian carbon credit unit is disregarded (subsection 118 ‑ 15(3)).

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 83 of 2014, effective Sch 1 (items 156–195, 336): 1 July 2014 (s 2(1) items 2, 3) Sch 3 (items 3–7): 18 July 2014 (s 2(1) item 7) | Amended by No 28 of 2023, effective sch 3: 1 July 2023 (s 2(1) item 3) sch 6: 24 June 2023 (s 2(1) item 7)

s 421-1 — What this Division is about

A company may be entitled to a refundable tax offset in respect of hydrogen produced in Australia between the start of 1 July 2027 and the end of 30 June 2040. One requirement for entitlement to the offset is that the company must have created a certificate (called a PGO certificate) that relates to the hydrogen. The certificate is created under the Future Made in Australia (Guarantee of Origin) Act 2024 and it must be registered under that Act. Another requirement is that the facility at which the hydrogen is produced, and the production pathway for the hydrogen, must be specified in a production profile that is certified by the Clean Energy Regulator under this Division. The hydrogen must also have been produced during a particular period (which is called an offset period, and which cannot be longer than 10 years) that is associated with production at the facility in accordance with the production pathway. The amount of the tax offset is $2 per whole kilogram of hydrogen (though this may be reduced in certain circumstances).

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-5 — Company entitled to refundable tax offset for hydrogen produced in Australia

(1) A company is entitled to a * tax offset under this section (the hydrogen production tax offset ) for an income year in respect of a kilogram of hydrogen produced in Australia during the income year if: (a) the income year: (i) starts on or after 1 July 2027; and (ii) ends before 1 July 2040; and (b) there is a * registered PGO certificate that relates to the kilogram of hydrogen and which states: (i) that the kilogram of hydrogen was produced at a particular facility that is specified in a * production profile, in accordance with a particular * production pathway that is specified in that production profile; and (ii) that the kilogram of hydrogen has a * production emissions intensity that is less than or equal to 0.6 kilograms of carbon dioxide per 1 kilogram of hydrogen (see section 421 ‑ 20); and (iii) if the facility is connected to an electricity grid—that the electricity (if any) that the facility obtained from the grid and used to produce the kilogram of hydrogen satisfies the * grid matching requirements (see section 421 ‑ 25); and (c) at the time when the kilogram of hydrogen was produced, the production profile mentioned in subparagraph (b)(i) of this subsection was certified in relation to the facility and the production pathway under Subdivision 421 ‑ B; and (d) the kilogram of hydrogen was produced during the * offset period for the facility and the production pathway (see section 421 ‑ 30); and (e) the * initial reconciliation period for the PGO certificate has ended (see section 421 ‑ 35); and (f) no * correction notice for the PGO certificate is in force (see section 421 ‑ 40); and (g) the company satisfies the requirements in subsection (2) of this section. Note 1: For paragraph (c), when a production profile is certified, or a certification of a production profile is revoked, under Subdivision 421 ‑ B, the certification or revocation may have retrospective effect. Note 2: The hydrogen production tax offset is a refundable tax offset (see section 67 ‑ 23). (2) The company satisfies the requirements in this subsection if: (a) the company is a * constitutional corporation; and (b) the company was the person who created the * registered PGO certificate under the Future Made in Australia (Guarantee of Origin) Act 2024 ; and (c) the company created the PGO certificate in the course of carrying on an enterprise in the indirect tax zone; and (d) at each time when the company carries on that enterprise in the indirect tax zone during the income year, either: (i) the company is an Australian resident and has an * ABN; or (ii) the company is a foreign resident and has a * permanent establishment in Australia and an ABN; and (e) the company is not an * exempt entity; and (f) if * HPTO community benefit rules under paragraph 421 ‑ 45(1)(a) of this Act apply to the company for the income year—the company meets the conditions specified in those rules. (3) In subsection (2), carried on in the indirect tax zone and indirect tax zone have the same meaning as in the * GST Act.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-10 — Amount of hydrogen production tax offset

(1) If a company is entitled to the * hydrogen production tax offset for an income year in respect of one or more kilograms of hydrogen, the amount of the offset for the income year is $2 in respect of each whole kilogram of hydrogen. (2) However, if: (a) * HPTO community benefit rules under paragraph 421 ‑ 45(1)(b) apply to the company for the income year; and (b) circumstances specified in those rules exist for the company; then the amount of the * hydrogen production tax offset is reduced by the proportion specified in those rules for those circumstances.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-15 — When hydrogen is produced

(1) For the purposes of this Division, a kilogram of hydrogen is taken to be produced at a facility at the time when the last part of the batch of hydrogen that contains the kilogram leaves the production gate (within the meaning of the Future Made in Australia (Guarantee of Origin) Act 2024 ) for hydrogen at the facility. (2) However, if: (a) the production of the batch of hydrogen commenced before 1 July 2027; and (b) the last part of the batch of hydrogen leaves the production gate for hydrogen at the facility on or after 1 July 2027; then, for the purposes of this Division, each kilogram of hydrogen contained in the batch is taken to be produced at the facility before 1 July 2027. Note: A company is not entitled to the hydrogen production tax offset in respect of hydrogen produced before 1 July 2027: see paragraph 421 ‑ 5(1)(a).

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-20 — Production emissions intensity

(1) This section applies if there is a * registered PGO certificate that: (a) relates to a particular quantity of hydrogen (for example, a particular kilogram of hydrogen); and (b) states that the quantity of hydrogen was produced at a particular facility in accordance with a particular * production pathway. (2) The production emissions intensity of the quantity of hydrogen is the emissions intensity of that quantity of hydrogen taking into account all, and only, greenhouse gases emitted in relation to that quantity of hydrogen from production emissions sources for the * production pathway. (3) In subsection (2), emissions intensity , greenhouse gas and production emissions source have the same meaning as in the Future Made in Australia (Guarantee of Origin) Act 2024 .

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-25 — Grid matching requirements

The grid matching requirements are the requirements prescribed by the Minister by legislative instrument for the purposes of this section.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-30 — Offset period

Notice of offset start date (1) The * holder of a * registered production profile may, by notice given to the Commissioner in the * approved form, specify for the purposes of this section a date (the offset start date ) in relation to the production of hydrogen: (a) at a particular facility specified in the profile; and (b) in accordance with a particular * production pathway specified in the profile. (2) The offset start date specified in the notice: (a) must be the first day of an income year for the * holder of the * registered production profile; and (b) must not be earlier than the first day of the income year for the holder of the registered production profile in which the notice is given; and (c) must be: (i) on or after 1 July 2027; and (ii) before 1 July 2040. (3) A notice given under subsection (1) cannot be varied or revoked. (4) If a notice has been given under subsection (1) in relation to a facility and a * production pathway, then no further notice may be given under that subsection in relation to the facility and the production pathway. Offset period (5) If a notice has been given under subsection (1) in relation to a facility and a * production pathway, the offset period for the facility and the production pathway is the period that: (a) starts at the beginning of the offset start date specified in the notice; and (b) ends at the earlier of the following: (i) the end of the period of 10 years starting on the offset start date; (ii) the end of 30 June 2040. Exception—where production pathways at same facility are not substantially different (6) However, if: (a) two or more notices are given under subsection (1) in relation to the same facility (whether the notices are given at the same time or at different times); and (b) the Clean Energy Regulator determines under subsection (7) that a group consisting of 2 or more of those notices should be treated together for the purposes of subsection (5); then subsection (5) applies in relation to each notice in the group as if the offset start date specified in the notice was the earliest of the offset start dates specified in any of the notices in the group. Note: If this subsection applies, the effect is that there will be a single, common offset period for the facility and each of the production pathways specified in the notices in the group. Determination by Clean Energy Regulator (7) If 2 or more notices are given as mentioned in paragraph (6)(a), the Clean Energy Regulator may, in writing, determine that a group consisting of 2 or more of those notices should be treated together for the purposes of subsection (5). (8) The Clean Energy Regulator may do so only if it is satisfied that production at the facility in accordance with the * production pathway specified in any one of the notices in the group is not substantially different from production at the facility in accordance with a production pathway specified in any other notice in the group. (9) In deciding whether to make a determination under subsection (7), the Clean Energy Regulator may have regard to any matters that the Clean Energy Regulator considers relevant, including: (a) the nature of the facility; and (b) the nature of the * production pathways specified in the notices; and (c) if some of the notices are given at different times—the nature of any changes to the facility made between those times.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-35 — Initial reconciliation period for registered PGO certificate

(1) The initial reconciliation period for a * registered PGO certificate is the period that: (a) starts immediately after the end of the financial year (the registration year for the certificate) in which the certificate was registered; and (b) ends at the time specified by subsection (2) or (3), whichever is later. (2) If: (a) a person is given a statement under section 60 of the Future Made in Australia (Guarantee of Origin Act) 2024 ; and (b) the statement relates to PGO certificate activity (within the meaning of that Act) in connection with the * registered PGO certificate in the registration year for the certificate; then the time specified by this subsection is the latest time by which such person is required, under section 61 of that Act, to give the Clean Energy Regulator a declaration in relation to such a statement. Note: If more than one person is given such a statement, different people may be required to give the Clean Energy Regulator declarations by different times. The time specified by this subsection is the latest of those times. (3) If: (a) a person is given a statement under section 60 of the Future Made in Australia (Guarantee of Origin Act) 2024 (the Guarantee of Origin Act ); and (b) the statement relates to PGO certificate activity (within the meaning of the Guarantee of Origin Act) in connection with the * registered PGO certificate in the registration year for the certificate; and (c) after the end of the registration year, and at or before the time specified by subsection (2) of this section, the person gives the Clean Energy Regulator declarations and information of the kind mentioned in paragraph 61(b) of the Guarantee of Origin Act; and (d) the declarations include a declaration that particular information stated in the registered PGO certificate is not accurate or complete; then the time specified by this subsection is the latest time at which the Clean Energy Regulator may decide, under section 62 of the Guarantee of the Origin Act, to correct the registered PGO certificate in response to declarations and information given by a person as mentioned in paragraphs (c) and (d) of this subsection. Note: If more than one person gives the Clean Energy Regulator declarations and information as mentioned in paragraphs (c) and (d) of this subsection then, for each such set of declarations and information, there will be a last time at which the Clean Energy Regulator may correct the PGO certificate in response to that set of declarations and information. The time specified by this subsection is the latest of those last times.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-40 — Correction notice for registered PGO certificate

(1) The Clean Energy Regulator must issue a notice (a correction notice ) for a * registered PGO certificate that relates to a kilogram of hydrogen if: (a) the * initial reconciliation period for the PGO certificate has ended; and (b) the PGO certificate states: (i) that the kilogram of hydrogen has a * production emissions intensity that is less than or equal to 0.6 kilograms of carbon dioxide per 1 kilogram of hydrogen; and (ii) if the facility that produced the hydrogen is connected to an electricity grid—that the electricity (if any) that the facility obtained from the grid and used to produce the kilogram of hydrogen satisfies the * grid matching requirements; and (c) the Clean Energy Regulator is satisfied that one or both of the conditions in subparagraphs (b)(i) and (ii) are not met. (2) The * correction notice must state that the Clean Energy Regulator is satisfied that one or both of the conditions in subparagraphs (1)(b)(i) and (ii) are not met. (3) The * correction notice is in force until it is revoked under subsection (4). Revocation of correction notice (4) The Clean Energy Regulator may, in writing, revoke a * correction notice for a * registered PGO certificate that relates to a kilogram of hydrogen if the Clean Energy Regulator is satisfied that: (a) the * initial reconciliation period for the PGO certificate had not ended at the time when the correction notice was issued, and that period has still not ended; or (b) the PGO certificate does not state that the conditions in subparagraphs (1)(b)(i) and (ii) are met in relation to the kilogram of hydrogen; or (c) the conditions in subparagraphs (1)(b)(i) and (ii) are met in relation to the kilogram of hydrogen. Copies of correction notice and revocation (5) If the Clean Energy Regulator: (a) issues a * correction notice under subsection (1) for a * registered PGO certificate that relates to a kilogram of hydrogen; or (b) revokes such a correction notice under subsection (4); then the Clean Energy Regulator must give copies of the correction notice or the revocation to the following: (c) each person who is, at the time the correction notice is issued or revoked, the * holder of a * registered production profile that specifies the facility at which the hydrogen was produced; (d) the Commissioner. Other matters (6) Subsection (1) and paragraph (4)(c) do not impose a duty on the Clean Energy Regulator to: (a) seek information about whether the conditions in subparagraphs (1)(b)(i) and (ii) are met; or (b) consider whether the Clean Energy Regulator is satisfied that those conditions are, or are not, met. (7) The issuing of a * correction notice for a * registered PGO certificate does not have any effect on the content or status of the PGO certificate under the Future Made in Australia (Guarantee of Origin Act) 2024 .

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-45 — HPTO community benefit rules

(1) The Minister may, by legislative instrument, make the following rules (the HPTO community benefit rules ): (a) rules that: (i) apply to companies within a specified class for an income year; and (ii) specify conditions that must be met for such a company to be entitled to a * hydrogen production tax offset for the income year; (b) rules that: (i) apply to companies within a specified class for an income year; and (ii) specify circumstances that, if they exist for such a company, will reduce the amount of the company’s hydrogen production tax offset for the income year by a specified proportion. Note: For subparagraph (b)(ii), different proportions may be specified for different circumstances (see subsection 33(3A) of the Acts Interpretation Act 1901 ). (2) In making the * HPTO community benefit rules, the Minister must have regard to the community benefit principles (within the meaning of subsection 10(3) of the Future Made in Australia Act 2024 ). (3) When having regard to those principles, the Minister is to treat the * hydrogen production tax offset as if it were Future Made in Australia support (within the meaning of the Future Made in Australia Act 2024 ). (4) This section does not apply if the Future Made in Australia Act 2024 has not commenced.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-50 — Application for certification

(1) The * holder of a * registered production profile for hydrogen may apply to the Clean Energy Regulator for the profile to be certified: (a) in relation to a particular facility, and a particular * production pathway, specified in the profile; and (b) from a particular time. (2) The time specified in the application, as mentioned in paragraph (1)(b), must not be later than the start of the day when the application is made (and may be any time before the start of that day). (3) The application is taken not to be made unless: (a) it is in a form (if any) prescribed under subsection (5); and (b) it is accompanied by any information, documents or other materials prescribed under subsection (5); and (c) without limiting paragraphs (a) and (b) of this subsection—it is accompanied by an eligibility statement for the * registered production profile that relates to the facility and the * production pathway. (4) For the purposes of paragraph (3)(c), an eligibility statement for the * registered production profile that relates to the facility and the * production pathway is a statement by the * holder of the profile to the effect that there are reasonable grounds to believe that, if the profile is certified, a company will be entitled to the * hydrogen production tax offset for an income year in respect of one or more kilograms of hydrogen produced at the facility in accordance with the production pathway. (5) The Clean Energy Regulator may, by notifiable instrument, do any of the following: (a) prescribe a form for the purposes of paragraph (3)(a); (b) prescribe information, documents or other materials for the purposes of paragraph (3)(b).

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-55 — Certification of production profile

Certification (1) If: (a) the Clean Energy Regulator receives an application for a * registered production profile to be certified in relation to a facility and a * production pathway from a particular time (the start time ); and (b) the Clean Energy Regulator is satisfied that: (i) the condition in subsection (3) was met at the start time, and has continued to be met since that time; and (ii) the conditions in subsections (5) (if applicable) and (7) are met; then: (c) Clean Energy Regulator must, in writing, certify the registered production profile in relation to the facility and the production pathway; and (d) the instrument of certification must state that the certification has effect from the start time. Exception—failure to provide information etc. (2) However, the Clean Energy Regulator may refuse to certify a * registered production profile under subsection (1) if: (a) the Clean Energy Regulator has given the * holder of the production profile a notice under section 421 ‑ 70(1) that relates to the application for certification, requesting that the holder give the Clean Energy Regulator specified information, documents or other materials before a specified time; and (b) the holder of the production profile does not comply with the request before the specified time. Condition relating to facility and production pathway (3) The condition in this subsection is that: (a) the facility is located on a single site in Australia; and (b) the facility has a capacity to produce hydrogen, in accordance with the * production pathway, that is at least equal to that of an electrolyser with a nameplate capacity of 10 megawatts; and (c) the production pathway does not involve producing hydrogen using any of the following: (i) coal gasification; (ii) steam reformation of natural gas (within the meaning of the National Greenhouse and Energy Reporting Act 2007 ); (iii) a process prescribed by the regulations for the purposes of this subparagraph. Note: The Clean Energy Regulator may prescribe circumstances in which a facility is taken to have the capacity mentioned in paragraph (b) (see section 421 ‑ 60). Condition relating to early investment (4) Subsection (5) applies if the start time for the certification (see subsection (1)) is on or after 1 July 2030. (5) The condition in this subsection is that a final investment decision was made before 1 July 2030 to: (a) construct the facility with a capacity to produce hydrogen, in accordance with the * production pathway, that is at least equal to the nominal capacity of the facility to produce hydrogen in accordance with the production pathway; or (b) upgrade the facility so that it has a capacity to produce hydrogen, in accordance with the production pathway, that is at least equal to that nominal capacity. (6) For the purposes of subsection (5), the nominal capacity of the facility to produce hydrogen in accordance with the * production pathway is the capacity of the facility, at the start time, to produce hydrogen in accordance with the production pathway. Note: The Clean Energy Regulator may prescribe how the capacity of a facility to produce hydrogen is to be determined (see section 421 ‑ 60). Condition relating to eligibility statement (7) The condition in this subsection is that, on the basis of information that the Clean Energy Regulator possesses at the time when the instrument of certification is made, it would not be reasonable for the Clean Energy Regulator to believe that the eligibility statement for the * registered production profile that accompanied the application for certification (see paragraph 421 ‑ 50(3)(c)) is incorrect. Note: The Clean Energy Regulator does not have a duty to seek information about whether the eligibility statement is correct (see subsection (9)). Notification of certification (8) If the Clean Energy Regulator certifies a * registered production profile with effect from a particular time (the start time ), the Clean Energy Regulator must notify the following of the certification: (a) the person who applied under section 421 ‑ 50 for the certification; (b) the person who was the * holder of the production profile at the start time; (c) each person who was a holder of the production profile at any time between: (i) the start time; and (ii) the time when the instrument of certification is made; (d) the Commissioner. No duty to seek information about eligibility statement (9) This section does not impose a duty on the Clean Energy Regulator to seek information relevant to assessing whether the eligibility statement for the * registered production profile is incorrect that goes beyond: (a) information possessed by the Clean Energy Regulator at the time when the Clean Energy Regulator received the application for certification of the registered production profile; and (b) information that was contained in, or that accompanied, that application.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-60 — Capacity of facility to produce hydrogen

The Clean Energy Regulator may, by legislative instrument, prescribe any of the following: (a) how the capacity of a facility to produce hydrogen is to be expressed for the purposes of section 421 ‑ 55; (b) how the capacity of a facility to produce hydrogen is to be determined for the purposes of section 421 ‑ 55; (c) without limiting paragraph (a) or (b) of this section—circumstances in which a facility is taken, for the purposes of subsection 421 ‑ 55(3), to have a capacity to produce hydrogen that is at least equal to that of an electrolyser with a nameplate capacity of 10 megawatts.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-65 — Revocation of certification

(1) This section applies if a * production profile has been certified in relation to a facility and a * production pathway with effect from a particular time (the original start time ). Revocation—substantive grounds (2) The Clean Energy Regulator may, in writing, revoke the certification if: (a) on or after the original start time, the registration of the * production profile is suspended, cancelled or surrendered under the Future Made in Australia (Guarantee of Origin) Act 2024 ; or (b) there is a time, on or after the original start time, when the condition in subsection 421 ‑ 55(3) of this Act (condition relating to facility and production pathway) is not met in relation to the facility and the * production pathway; or (c) at the time when the instrument of revocation made, the Clean Energy Regulator reasonably believes that the eligibility statement for the production profile that accompanied the application for certification (see paragraph 421 ‑ 50(3)(c)) is incorrect. (3) A revocation under subsection (2) has effect from the time (the new end time for the certification) specified in the instrument of revocation, which must be: (a) if the certification is revoked under paragraph (2)(a)—the time when the registration of the * production profile was suspended, cancelled or surrendered; or (b) if the certification is revoked under paragraph (2)(b)—the earliest time, on or after the original start time, when the condition in subsection 421 ‑ 55(3) is not met in relation to the facility and the * production pathway; or (c) if the certification is revoked under paragraph (2)(c)—no earlier than the time when the instrument of revocation is made. Note: If the certification is revoked under paragraph (2)(a) or (b), the revocation will have retrospective effect. Revocation—failure to provide information etc. (4) In addition, the Clean Energy Regulator may, in writing, revoke the certification if: (a) the Clean Energy Regulator has given the * holder of the * production profile a notice under section 421 ‑ 70(2) that relates to the certification, requesting that the holder give the Clean Energy Regulator specified information, documents or other materials before a specified time; and (b) the holder of the production profile does not comply with the request before the specified time. (5) A revocation under subsection (4) has effect from the time (also the new end time for the certification) specified in the instrument of revocation, which must not be before the time specified in the notice mentioned in paragraph (4)(a). Note: A revocation under subsection (4) may be given retrospective effect. Consequences of revocation (6) If the new end time for the certification is the same as the original start time, then the certification is taken never to have been in effect. (7) If the new end time for the certification is later than the original start time, then: (a) the certification is taken to have been in effect for the period that: (i) begins at the original start time; and (ii) ends at the new end time; and (b) the certification is taken not to have been in effect after the new end time. Note: The operation of subsections (6) and (7) may affect whether paragraph 421 ‑ 5(1)(c) (which sets out a condition for entitlement to the hydrogen production tax offset) is satisfied in a particular case. (8) If a certification of a * production profile that relates to a particular facility and * production pathway is revoked, that does not prevent: (a) an application later being made for a new certification of the production profile, including a certification that relates to the same facility and production pathway; or (b) the Clean Energy Regulator subsequently issuing such a new certification of the production profile. Notification of revocation (9) If the Clean Energy Regulator revokes a certification of a * production profile, the Clean Energy Regulator must notify the following of the revocation: (a) the person who was the * holder of the production profile at the original start time for the certification; (b) each person who was a holder of the production profile at any time between: (i) the original start time for the certification; and (ii) the time when the instrument of revocation is made; (c) the Commissioner.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-70 — Requests for further information etc.

Request before certification (1) If the Clean Energy Regulator has received an application for a * registered production profile to be certified, the Clean Energy Regulator may, before making a decision about whether to certify the profile under section 421 ‑ 55, give a written notice to the * holder of the profile: (a) requesting that the holder give the Clean Energy Regulator, before a specified time, specified information, documents or other materials that are relevant to making that decision; and (b) stating that, if the request is not complied with before the specified time, the Clean Energy Regulator may refuse to certify the production profile. Request after certification (2) If the Clean Energy Regulator has certified a * registered production profile under section 421 ‑ 55, the Clean Energy Regulator may give a written notice to the * holder of the profile: (a) requesting that the holder give the Clean Energy Regulator, before a specified time, specified information, documents or other materials that are relevant to deciding whether to revoke the certification under subsection 421 ‑ 65(2) (revocation on substantive grounds); and (b) stating that, if the request is not complied with before the specified time, the Clean Energy Regulator may revoke the certification.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-75 — Review of decisions by the Administrative Review Tribunal

Applications may be made to the * ART for review of the following decisions made by the Clean Energy Regulator: (a) a decision under subsection 421 ‑ 30(7) to make a determination; (b) a decision under subsection 421 ‑ 40(1) to issue a * correction notice; (c) a decision under subsection 421 ‑ 40(4) to revoke a correction notice; (d) a decision under section 421 ‑ 55 to certify a * registered production profile; (e) a decision under section 421 ‑ 55 not to certify a registered production profile (after an application to certify the profile has been made under section 421 ‑ 50); (f) a decision under section 421 ‑ 65 to revoke a certification of a * production profile.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-80 — Information sharing

(1) Each of the following regulators: (a) the Clean Energy Regulator; (b) the Commissioner; may request the other regulator to provide them with information held by the other regulator that is reasonably necessary or convenient for the requesting regulator’s administration of this Division. (2) The other regulator must comply with the request. Note: The request could be an ad hoc or standing request, and the information requested could be general or specific.

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 421-85 — Period for amending assessments

Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an entity’s assessment for the purposes of giving effect to this Division for an income year if: (a) the Clean Energy Regulator: (i) issues, or revokes, a * correction notice under section 421 ‑ 40; or (ii) makes an instrument under section 421 ‑ 65 revoking a certification of a * production profile, with effect from a specified time (which may be different from the time when the instrument is made); and (b) as a result, there is a change to: (i) whether the entity is entitled to a * hydrogen production tax offset for the income year; or (ii) the amount of hydrogen production tax offset that the entity is entitled to for the income year; and (c) the amendment of the entity’s assessment is made during the period of 4 years starting on the day when the Clean Energy Regulator issues or revokes the correction notice, or makes the instrument revoking the certification of the production profile (whichever applies). Note: Section 170 of the Income Tax Assessment Act 1936 specifies the periods within which assessments may be amended. Income Tax Assessment Act 1997 No. 38, 1997 Compilation No. 266 Compilation date: 1 July 2026 Includes amendments: Act No. 17, 2025, Act No. 57, 2025, Act No. 49, 2026 and Act No. 58, 2026 This compilation is in 12 volumes Volume 1: Chapter 1, Part 1 ‑ 1 to Chapter 2, Part 2 ‑ 5 sections 1 ‑ 1 to 36 ‑ 55 Volume 2: Chapter 2, Part 2 ‑ 10 to Chapter 2, Part 2 ‑ 20 sections 40 ‑ 1 to 67 ‑ 30 Volume 3: Chapter 2, Part 2 ‑ 25 to Chapter 3, Part 3 ‑ 1 sections 70 ‑ 1 to 121 ‑ 35 Volume 4: Chapter 3, Part 3 ‑ 3 to Chapter 3, Part 3 ‑ 5 sections 122 ‑ 1 to 197 ‑ 85 Volume 5: Chapter 3, Part 3 ‑ 6 to Chapter 3, Part 3 ‑ 10 sections 200 ‑ 1 to 253 ‑ 15 Volume 6: Chapter 3, Part 3 ‑ 25 to Chapter 3, Part 3 ‑ 30 sections 275 ‑ 1 to 313 ‑ 85 Volume 7: Chapter 3, Part 3 ‑ 32 to Chapter 3, Part 3 ‑ 50 sections 315 ‑ 1 to 421 ‑ 85 Volume 8: Chapter 3, Part 3 ‑ 80 to Chapter 3, Part 3 ‑ 90 sections 615 ‑ 1 to 721 ‑ 40 Volume 9: Chapter 3, Part 3 ‑ 95 to Chapter 4, Part 4 ‑ 5 sections 723 ‑ 1 to 880 ‑ 205 Volume 10: Chapter 5, Part 5 ‑ 30 to Chapter 6, Part 6 ‑ 5 sections 900 ‑ 1 to 995 ‑ 1 Volume 11: Endnotes 1 to 3 Volume 12: Endnote 4 Each volume has its own contents About this compilation This compilation This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 1 July 2026 (the compilation date ). The notes at the end of this compilation (the endnotes ) include information about amending laws and the amendment history of provisions of the compiled law. Uncommenced amendments The effect of uncommenced amendments is not shown in the text of the compiled law. The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). Application, saving and transitional provisions If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes. Editorial changes For more information about any editorial changes made in this compilation, see the endnotes. Presentational changes The Legislation Act 2003 provides for First Parliamentary Counsel to make presentational changes to a compilation. Presentational changes are applied to give a more consistent look and feel to legislation published on the Register, and enable the user to more easily navigate those documents. Modifications If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. Any modifications affecting the law are accessible on the Register. Self ‑ repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes. Contents

Amendment history: Inserted by No 9 of 2025, effective sch 1 (items 1 ‑ 4): 1 Jan 2026 (s 2(1) item 2) sch 2 (items 1, 12 ‑ 14): 1 Apr 2025 (s 2(1) item 5)

s 615-1 — What this Division is about

You can choose for transactions under a scheme to restructure a company’s or unit trust’s business to be tax neutral if, under the scheme: (a) you cease to own shares in the company or units in the trust; and (b) in exchange, you become the owner of new shares in another company.

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-5 — Disposing of interests in one entity for shares in a company

(1) You can choose to obtain a roll ‑ over if: (a) you are a * member of a company or a unit trust (the original entity ); and (b) you and at least one other entity (the exchanging members ) own all the * shares or units in it; and (c) under a * scheme for reorganising its affairs, the exchanging members * dispose of all their shares or units in it to a company (the interposed company ) in exchange for shares in the interposed company (and nothing else); and (d) the requirements in Subdivision 615 ‑ B are satisfied. Note 1: For paragraph (c), see section 124 ‑ 20 if an exchanging member uses a share sale facility. Note 2: After the completion of the scheme, later dealings between the interposed company and the original entity may be subject to the rules for consolidated groups (see Part 3 ‑ 90). (2) You are taken to have chosen to obtain the roll ‑ over if: (a) immediately before the completion time (see section 615 ‑ 15), the original entity is the * head company of a * consolidated group; and (b) immediately after the completion time, the interposed company is the head company of the group. Note: The consolidated group continues in existence because of section 703 ‑ 70.

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-10 — Redeeming or cancelling interests in one entity for shares in a company

(1) You can choose to obtain a roll ‑ over if you are a * member of a company or a unit trust (the original entity ), and under a * scheme for reorganising its affairs: (a) a company (the interposed company ) * acquires one or more, but not all, of the * shares or units in the original entity; and (b) these are the first shares or units that the interposed company acquires in the original entity; and (c) you and at least one other entity (the exchanging members ) own all the remaining shares or units in the original entity; and (d) those remaining shares or units are redeemed or cancelled; and (e) each exchanging member receives shares (and nothing else) in the interposed company in return for their shares or units in the original entity being redeemed or cancelled; and the requirements in Subdivision 615 ‑ B are satisfied. Note: For paragraph (e), see section 124 ‑ 20 if an exchanging member uses a share sale facility. (2) You are taken to have chosen to obtain the roll ‑ over if: (a) immediately before the completion time (see section 615 ‑ 15), the original entity is the * head company of a * consolidated group; and (b) immediately after the completion time, the interposed company is the head company of the group. Note: The consolidated group continues in existence because of section 703 ‑ 70. (3) The original entity, or its trustee if it is a unit trust, can issue other * shares or units to the interposed company as part of the * scheme. Note: Some of the interposed company’s shares or units in the original entity may be taken to be acquired before 20 September 1985: see section 615 ‑ 65.

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2) | Amended by No 15 of 2017, effective Sch 1 (item 1): 1 Mar 2017 (s 2(1) item 2) Sch 2 and Sch 4 (items 26–69, 71–83): 1 Apr 2017 (s 2(1) items 3, 8, 10) Sch 4 (item 70): 19 Mar 2015 (s 2(1) item 9)

s 615-15 — Interposed company must own all the original interests

The interposed company must own all the * shares or units in the original entity immediately after the time (the completion time ) all the exchanging members have had their shares or units in the original entity disposed of, redeemed or cancelled under the * scheme.

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-20 — Requirements relating to your interests in the original entity

(1) Immediately after the completion time, each exchanging member must own: (a) a whole number of * shares in the interposed company; and (b) a percentage of the shares in the interposed company that were issued to all the exchanging members that is equal to the percentage of the shares or units in the original entity that were: (i) owned by the member; and (ii) disposed of, redeemed or cancelled under the * scheme. (2) The following ratios must be equal: (a) the ratio of: (i) the * market value of each exchanging member’s * shares in the interposed company; to (ii) the market value of the shares in the interposed company issued to all the exchanging members (worked out immediately after the completion time); (b) the ratio of: (i) the market value of that member’s shares or units in the original entity that were disposed of, redeemed or cancelled under the * scheme; to (ii) the market value of all the shares or units in the original entity that were disposed of, redeemed or cancelled under the scheme (worked out immediately before the first disposal, redemption or cancellation). Example 1: There are 100 shares in A Pty Ltd (the original entity), all having the same rights. B Pty Ltd (the interposed company) acquires all the shares in A by issuing each shareholder in A 10 shares in itself for each share they have in A. All shares in B have the same rights. Bill owned 15 shares in A and received 150 shares in B in exchange. Example 2: There are 1,000 units in the A unit trust (the original entity), all having the same rights. 2 new units in A are issued to B Pty Ltd (the interposed company), and all other units in A are cancelled. Each unitholder in A is issued 10 shares in B for each 100 units they have in A. All shares in B have the same rights. Alison owned 200 units in A and received 20 shares in B in exchange. (3) Either: (a) you are an Australian resident at the time your * shares or units in the original entity are disposed of, redeemed or cancelled under the * scheme; or (b) if you are a foreign resident at that time: (i) your shares or units in the original entity were * taxable Australian property immediately before that time; and (ii) your shares in the interposed company are taxable Australian property immediately after the completion time.

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-25 — Requirements relating to the interposed company

(1) The * shares issued in the interposed company must not be * redeemable shares. (2) Each exchanging member who is issued * shares in the interposed company must own the shares from the time they are issued until at least the completion time. (3) Immediately after the completion time: (a) the exchanging members must own all the * shares in the interposed company; or (b) entities other than those members must own no more than 5 shares in the interposed company, and the * market value of those shares expressed as a percentage of the market value of all the shares in the interposed company must be such that it is reasonable to treat the exchanging members as owning all the shares.

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-30 — Interposed company must make a particular choice

(1) Unless subsection (2) applies, the interposed company must choose that section 615 ‑ 65 applies. (2) The interposed company must choose that a * consolidated group continues in existence at and after the completion time with the interposed company as its * head company, if: (a) immediately before the completion time, the consolidated group consisted of the original entity as head company and one or more other members (the other group members ); and (b) immediately after the completion time, the interposed company is the head company of a * consolidatable group consisting only of itself and the other group members. Note: Sections 703 ‑ 65 to 703 ‑ 80 deal with the effects of the choice for the consolidated group. (3) A choice under subsection (1) or (2) must be made: (a) within 2 months after the completion time, if the choice is under subsection (1); or (b) within 28 days after the completion time, if the choice is under subsection (2); or (c) within such further time as the Commissioner allows. The choice cannot be revoked. (4) The way the interposed company prepares its * income tax returns is sufficient evidence of the making of the choice.

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-35 — ADI restructures—disregard certain preference shares

For the purposes of this Division, disregard any * shares in the original entity that can be disregarded under subsection 703 ‑ 37(4) if: (a) the interposed company is a non ‑ operating holding company within the meaning of the Financial Sector (Transfer and Restructure) Act 1999 ; and (b) a restructure instrument under Part 4A of that Act is in force in relation to the interposed company; and (c) because of the restructure to which the instrument relates, an * ADI becomes a subsidiary (within the meaning of that Act) of the interposed company; and (d) the original entity is: (i) the ADI; or (ii) part of an extended licensed entity (within the meaning of the * prudential standards) that includes the ADI.

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2) | Amended by No 10 of 2018, effective Sch 7 (items 4–11): 5 Mar 2018 (s 2(1) item 2)

s 615-40 — CGT consequences

The consequences set out in Subdivision 124 ‑ A also apply to a roll ‑ over under this Division as if that roll ‑ over were a roll ‑ over covered by Division 124 (about replacement ‑ asset roll ‑ overs). Note: Those consequences generally involve: (a) disregarding a capital gain or capital loss you make from the disposal, redemption or cancellation of your shares or units in the original entity; and (b) working out the first element of the cost base of each of your new shares in the interposed entity by reference to the cost bases of your shares or units in the original entity.

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-45 — Additional consequences—deferral of profit or loss

The additional consequences in sections 615 ‑ 50 and 615 ‑ 55 apply if: (a) under this Division: (i) you are taken to have chosen to obtain the roll ‑ over; or (ii) you otherwise choose to obtain the roll ‑ over; and (b) if subparagraph (a)(ii) applies to you, you choose for these additional consequences to apply; and (c) some or all of your * shares or units in the original entity at the time immediately before they were: (i) disposed of as described in paragraph 615 ‑ 5(1)(c); or (ii) redeemed or cancelled as described in paragraph 615 ‑ 10(1)(d); had the character of being your * trading stock or * revenue assets; and (d) the shares in the interposed company that you acquired in return for those shares or units have the same character. Note 1: Apply this section separately for assets of each character. Note 2: The CGT exemption for trading stock does not prevent you obtaining the roll ‑ over (see section 615 ‑ 60).

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-50 — Trading stock

(1) The amount included in your assessable income because of the disposal, redemption or cancellation of each of your * shares or units described in paragraph 615 ‑ 45(c) that was your * trading stock at the time mentioned in that paragraph is equal to: (a) if the share or unit had been your trading stock ever since the start of the income year that included that time—the total of: (i) its * value as trading stock at the start of the income year; and (ii) the amount (if any) by which its cost had increased since the start of the income year; or (b) otherwise—its cost at that time. (2) For each of the * shares that you acquired as described in paragraph 615 ‑ 45(d) that is your * trading stock, you are taken to have paid: (3) For the purposes of Division 70 (about trading stock), you, the original entity and the interposed company are taken to have dealt with each other in the ordinary course of * business and at * arm’s length for each of the transactions referred to in paragraph 615 ‑ 5(1)(c) or 615 ‑ 10(1)(d) or (e).

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-55 — Revenue assets

(1) For each of your * shares or units that: (a) is described in paragraph 615 ‑ 45(c); and (b) was a * revenue asset immediately before its disposal, redemption or cancellation; your gross proceeds for that disposal, redemption or cancellation are taken to be the amount you would have needed to have received in order to have a nil profit and nil loss for that disposal, redemption or cancellation. (2) For the purpose of calculating any profit or loss on a future disposal, cessation of ownership, or other realisation of a * share that: (a) you acquired as described in paragraph 615 ‑ 45(d); and (b) is a * revenue asset; you are taken to have paid the following for your acquisition of that share:

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-60 — Disregard CGT exemption for trading stock

For the purposes of this Division, disregard section 118 ‑ 25 (which gives a CGT exemption for trading stock).

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 615-65 — Consequences for the interposed company

(1) This section applies if the interposed company so chooses under subsection 615 ‑ 30(1). (2) A number of the * shares or units that the interposed company owns in the original entity (immediately after the completion time) are taken to have been * acquired before 20 September 1985 if any of the original entity’s assets as at the completion time were acquired by it before that day. Note: Generally, a capital gain or capital loss you make from a CGT asset that you acquired before 20 September 1985 can be disregarded: see Division 104. (3) That number (worked out as at the completion time) is the greatest possible whole number that (when expressed as a percentage of all the * shares or units) does not exceed: (a) the * market value of the original entity’s assets that it * acquired before 20 September 1985; less (b) its liabilities (if any) in respect of those assets; expressed as a percentage of the market value of all the original entity’s assets less all of its liabilities. (4) The first element of the * cost base of the interposed company’s * shares or units in the original entity that are not taken to have been * acquired before 20 September 1985 is: (a) the total of the cost bases (as at the completion time) of the original entity’s assets that it acquired on or after that day; less (b) its liabilities (if any) in respect of those assets. The first element of the * reduced cost base of those shares or units is worked out similarly. (5) A liability of the original entity that is not a liability in respect of a specific asset or assets of the original entity is taken to be a liability in respect of all the assets of the original entity. Note: An example is a bank overdraft. (6) If a liability is in respect of 2 or more assets, the proportion of the liability that is in respect of any one of those assets is equal to:

Amendment history: Inserted by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 620-5 — What this Subdivision is about

There are tax ‑ neutral consequences of a body, that is incorporated under one law and ceases to exist, disposing of an asset to a company incorporated under another law, if the ownership of the company is not significantly different from the ownership of the body. Table of sections Application and object of this Subdivision 620 ‑ 10 Application 620 ‑ 15 Object CGT consequences 620 ‑ 20 Disregard body’s capital gains and losses from CGT assets 620 ‑ 25 Cost base and pre ‑ CGT status of CGT asset for company Consequences for depreciating assets 620 ‑ 30 Roll ‑ over relief for balancing adjustment events Consequences for trading stock 620 ‑ 40 Body taken to have sold trading stock to company Consequences for revenue assets 620 ‑ 50 Body taken to have sold revenue assets to company

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

s 620-10 — Application

This Subdivision applies to a body that is incorporated under one law and ceases to exist, and to a company incorporated under another law, if section 124 ‑ 525 applies in relation to the body and the company. Note: That section applies if the ownership of the company is not significantly different from the ownership of the body and rights relating to the body.

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

s 620-15 — Object

The object of this Subdivision is to ensure tax ‑ neutral consequences when the body ceases to hold an asset and also if the asset becomes held by the company.

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

s 620-20 — Disregard body’s capital gains and losses from CGT assets

(1) This section applies if: (a) the body * disposes of a * CGT asset to the company because the body ceases to exist; or (b) another * CGT event happens to a CGT asset of the body because the body ceases to exist. (2) A * capital gain or a * capital loss the body makes from the * CGT asset is disregarded.

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

s 620-25 — Cost base and pre ‑ CGT status of CGT asset for company

(1) This section applies to a * CGT asset if the body * disposes of it to the company because the body ceases to exist. (2) The first element of the * CGT asset’s * cost base for the company is equal to the asset’s cost base for the body in connection with the * disposal. (3) The first element of the * CGT asset’s * reduced cost base for the company is worked out similarly. (4) If the body * acquired the * CGT asset before 20 September 1985, the company is taken to have acquired the CGT asset before that day.

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

s 620-30 — Roll ‑ over relief for balancing adjustment events

(1) This section applies if: (a) there is a * balancing adjustment event because the body disposes of a * depreciating asset in an income year to the company because the body ceases to exist; and (b) the disposal involves a * CGT event. (2) This Act applies as if: (a) there were roll ‑ over relief under subsection 40 ‑ 340(1) for the * balancing adjustment event; and (b) the body were the transferor mentioned in that subsection and subsection 328 ‑ 243(1A); and (c) the company were the transferee mentioned in that subsection and subsection 328 ‑ 243(1A). Note: Some effects of this are as follows: (a) the balancing adjustment event does not affect the body’s assessable income or deductions (see subsection 40 ‑ 345(1)); (b) the company can deduct for the decline in value of the asset on the same basis as the body did (see subsection 40 ‑ 345(2)); (c) Division 45 (Disposal of leases and leased plant) applies to the company as if it had done the things the body did (see subsection 40 ‑ 350(1)). (3) Disregard paragraph 328 ‑ 243(1A)(c) in determining whether subsection 328 ‑ 243(1A) applies.

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

s 620-40 — Body taken to have sold trading stock to company

(1) This subsection applies to each item of * trading stock that the body disposes of to the company because the body ceases to exist. (2) The body is taken to have sold, and the company is taken to have bought, the item (in the ordinary course of * business and dealing with each other at * arm’s length), at the time of the disposal (or just before that time if the disposal occurred when the body ceased to exist), for: (a) the * cost of the item for the body; or (b) if the body held the item as * trading stock at the start of the income year, the * value of the item for the body then. (3) The company is taken to have held the item as * trading stock when it bought the item.

Amendment history: Inserted by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15)

s 620-50 — Body taken to have sold revenue assets to company

Disposal (1) Subsections (2) and (3) apply to a * CGT asset: (a) that the body * disposes of to the company because the body ceases to exist; and (b) that is a * revenue asset of the body just before the disposal. Note: Trading stock and depreciating assets are not revenue assets. See section 977 ‑ 50. (2) The body is taken to have disposed of the * revenue asset to the company for an amount such that the body would not make a profit or a loss on the disposal. (3) For the purpose of calculating any profit or loss on a future disposal of, cessation of owning, or other realisation of, the * revenue asset, the company is taken to have paid the body that amount for the disposal of the revenue asset to the company. Ceasing to own or other realising (4) Subsection (5) applies to a * CGT asset: (a) that the body ceases to own, or otherwise realises, because the body ceases to exist; and (b) that is a * revenue asset of the body just before the cessation or realisation. Note: Trading stock and depreciating assets are not revenue assets. See section 977 ‑ 50. (5) The body is taken to have disposed of the * revenue asset for an amount such that the body would not make a profit or a loss on the disposal.

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

s 700-1 — What this Part is about

This Part allows certain groups of entities to be treated as single entities for income tax purposes. Following a choice to consolidate, subsidiary members are treated as part of the head company of the group rather than as separate income tax identities. The head company inherits their income tax history when they become subsidiary members of the group. On ceasing to be subsidiary members, they take with them an income tax history that recognises that they are different from when they became subsidiary members. This is supported by rules that: (a) set the cost for income tax purposes of assets that subsidiary members bring into the group; and (b) determine the income tax history that is taken into account when entities become, or cease to be, subsidiary members of the group; and (c) deal with the transfer of tax attributes such as losses and franking credits to the head company when entities become subsidiary members of the group.

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

s 700-5 — Overview of this Part

(1) The single entity rule determines how the income tax liability of a consolidated group will be ascertained. The basic principle is contained in the Core Rules in Division 701. (2) Essentially, a consolidated group consists of an Australian resident head company and all of its Australian resident wholly ‑ owned subsidiaries (which may be companies, trusts or partnerships). Special rules apply to foreign ‑ owned groups with no single Australian resident head company. (3) An eligible wholly ‑ owned group becomes a consolidated group after notice of a choice to consolidate is given to the Commissioner. (4) This Part also contains rules which set the cost for income tax purposes of assets of entities when they become subsidiary members of a consolidated group and of membership interests in those entities when they cease to be subsidiary members of the group. (5) Certain tax attributes (such as losses and franking credits) of entities that become subsidiary members of a consolidated group are transferred under this Part to the head company of the group. These tax attributes remain with the group after an entity ceases to be a subsidiary member.

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

s 700-10 — Objects of this Part

The objects of this Part are: (a) to prevent double taxation of the same economic gain realised by a consolidated group; and (b) to prevent a double tax benefit being obtained from an economic loss realised by a consolidated group; and (c) to provide a systematic solution to the prevention of such double taxation and double tax benefits that will: (i) reduce the cost of complying with this Act; and (ii) improve business efficiency by removing complexities and promoting simplicity in the taxation of wholly ‑ owned groups.

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

s 701-1 — Single entity rule

(1) If an entity is a * subsidiary member of a * consolidated group for any period, it and any other subsidiary member of the group are taken for the purposes covered by subsections (2) and (3) to be parts of the * head company of the group, rather than separate entities, during that period. Head company core purposes (2) The purposes covered by this subsection (the head company core purposes ) are: (a) working out the amount of the * head company’s liability (if any) for income tax calculated by reference to any income year in which any of the period occurs or any later income year; and (b) working out the amount of the head company’s loss (if any) of a particular * sort for any such income year. Note: The single entity rule would affect the head company’s income tax liability calculated by reference to income years after the entity ceased to be a member of the group if, for example, assets that the entity held when it became a subsidiary member remained with the head company after the entity ceased to be a subsidiary member. Entity core purposes (3) The purposes covered by this subsection (the entity core purposes ) are: (a) working out the amount of the entity’s liability (if any) for income tax calculated by reference to any income year in which any of the period occurs or any later income year; and (b) working out the amount of the entity’s loss (if any) of a particular * sort for any such income year. Note: An assessment of the entity’s liability calculated by reference to income tax for a period when it was not a subsidiary member of the group may be made, and that tax recovered from it, even while it is a subsidiary member. What is a sort of loss? (4) Each of these paragraphs identifies a sort of loss: (a) * tax loss; (b) * film loss; (c) * net capital loss. This subsection lists all the sorts of loss.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 701-5 — Entry history rule

For the head company core purposes in relation to the period after the entity becomes a * subsidiary member of the group, everything that happened in relation to it before it became a subsidiary member is taken to have happened in relation to the * head company. Note 1: Other provisions of this Part may affect the tax history that is inherited (e.g. asset cost base history is affected by section 701 ‑ 10 and tax loss history is affected by Division 707). Note 3: Section 165 ‑ 212E overrides this rule for the purposes of the business continuity test.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 701-10 — Cost to head company of assets of joining entity

(1) This section has effect for the head company core purposes when the entity becomes a * subsidiary member of the group. Assets to which section applies (2) This section applies in relation to each asset that would be an asset of the entity at the time it becomes a * subsidiary member of the group, assuming that subsection 701 ‑ 1(1) (the single entity rule) did not apply. Note: See subsection 705 ‑ 35(3) for the treatment of a goodwill asset resulting from the head company’s ownership and control of the joining entity. Object (3) The object of this section (and Division 705 which relates to it) is to recognise the cost to the * head company of such assets as an amount reflecting the group’s cost of acquiring the entity. Setting tax cost of assets (4) Each asset’s * tax cost is set at the time the entity becomes a * subsidiary member of the group at the asset’s * tax cost setting amount. Multiple setting of tax cost for same trading stock or registered emissions unit (5) However, if: (a) the asset is * trading stock or a * registered emissions unit; and (b) the asset’s * tax cost is set by this section at more than one time (each of which is a setting time ) for the same income year; then, except where subsection (6) applies, only the amount at which the tax cost is set at the last of the setting times is to be taken into account. (6) If: (a) the * head company’s * terminating value for the asset; or (b) the * value of the asset at the start of the income year; is required to be worked out for one or more occasions when an entity (whether or not the same entity) ceases to be a * subsidiary member of the group in the income year, then the amount at which the asset’s * tax cost is set by this section at a particular setting time is only taken into account in working out the head company’s terminating value for a particular occasion if: (c) the setting time occurs before the occasion; and (d) there is no intervening setting time or occasion.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 99 of 2012, effective s 4 and Sch 3: 29 June 2012 (s 2(1) items 1, 7–10) Sch 1 (items 10, 11, 23): 30 June 2012 (s 2(1) item 3) Sch 2 (items 1–4, 6): 26 Mar 2009 (s 2(1) item 6)

s 701-15 — Cost to head company of membership interests in entity that leaves group

(1) If the entity ceases to be a * subsidiary member of the group, this section has effect for the head company core purposes, so far as they relate to the income year in which the entity ceases to be a subsidiary member or any later income year. Note: This section could have effect, for example, if an entity ceases to be a subsidiary member of the group because: (a) it ceases to satisfy the requirements to be a subsidiary member; or (b) the head company ceases to satisfy the requirements to be a head company (thereby bringing the group to an end). Object (2) The object of this section is to preserve the alignment of the * head company’s costs for * membership interests in each entity and its assets by recognising, when an entity ceases to be a * subsidiary member of the group, the cost of those interests as an amount equal to the cost of the entity’s assets at that time reduced by the amount of its liabilities. Note: The head company’s costs for membership interests in entities was aligned with the costs of their assets when the entities became subsidiary members of the group. Setting tax cost of membership interests (3) For each * membership interest that the * head company of the group holds in an entity that ceases to be a * subsidiary member, the interest’s * tax cost is set just before the entity ceases to be a subsidiary member at the interest’s * tax cost setting amount. Note 1: The membership interests would include those that are actually held by subsidiary members of the group, but which are treated as those of the head company under the single entity rule. Note 2: If the entity is a partnership, Subdivision 713 ‑ E sets the tax cost of interests in partnership assets, rather than membership interests in the partnership.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 701-20 — Cost to head company of assets consisting of certain liabilities owed by entity that leaves group

(1) If the entity ceases to be a * subsidiary member of the group, this section has effect for the head company core purposes, so far as they relate to the income year in which the entity ceases to be a subsidiary member or any later income year. Assets to which section applies (2) This section applies in relation to each asset, consisting of a liability owed by the entity, that becomes an asset of the * head company because subsection 701 ‑ 1(1) (the single entity rule) ceases to apply to the entity when it ceases to be a * subsidiary member. This is a liability that, ignoring that subsection, is owed to a * member of the group. Object (3) The object of this section is to set a cost for the asset to enable income tax consequences for the * head company in respect of the asset to be determined. Setting tax cost of assets (4) The asset’s * tax cost is set at the time the entity ceases to be a * subsidiary member of the group at the asset’s * tax cost setting amount. Note: If the entity is a partnership, Subdivision 713 ‑ E sets the tax cost of assets consisting of a partner’s share of a liability owed by the partnership to a member of the group.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 701-25 — Tax ‑ neutral consequence for head company of ceasing to hold assets when entity leaves group

(1) If the entity ceases to be a * subsidiary member of the group, this section has effect for the head company core purposes, so far as they relate to the income year in which the entity ceases to be a subsidiary member or any later income year. Assets to which section applies (2) This section applies in relation to an asset if: (a) either: (i) the asset is * trading stock of the * head company; or (ii) the asset is a * registered emissions unit and an asset of the head company; and (b) the asset becomes an asset of the entity because subsection 701 ‑ 1(1) (the single entity rule) ceases to apply to the entity when it ceases to be a * subsidiary member of the group; and (c) the asset is not again an asset of the head company at or before the end of the income year. Object (3) The object of this section is to ensure that there is no income tax consequence for the * head company in respect of the asset. Note: In the case of assets other than trading stock or registered emissions units, the fact that the head company ceases to hold them when the single entity rules ceases to apply to them would not constitute a disposal or other event having tax consequences for the head company. Setting value of trading stock at tax ‑ neutral amount (4) If subparagraph (2)(a)(i) applies, the asset is taken to be * trading stock of the * head company at the end of the income year (but not at the start of the next income year) and its * value at that time is taken to be equal to: (a) if the asset was trading stock of the head company at the start of the income year (including as a result of its * tax cost being set)—the asset’s value at that time; or (b) if paragraph (a) does not apply and the asset is * live stock that was acquired by natural increase—the * cost of the asset; or (c) in any other case—the amount of the outgoing incurred by the head company in connection with the acquisition of the asset; increased by the amount of any outgoing forming part of the cost of the asset that was incurred by the head company during its current holding of the asset. Note: As a consequence of fixing the trading stock’s value at the end of the income year under this subsection, no election would be available under section 70 ‑ 45 to value the trading stock at that time. Setting value of registered emissions unit at tax ‑ neutral amount (5) If subparagraph (2)(a)(ii) applies, the asset is taken to be an asset of the * head company at the end of the income year (but not at the start of the next income year) and the head company’s * value for the asset at that time is taken to be equal to: (a) if the asset was * held by the head company at the start of the income year—the value of the asset at the start of the income year; or (b) otherwise—the expenditure incurred by the head company in becoming the holder of the asset.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 15 of 2017, effective Sch 1 (item 1): 1 Mar 2017 (s 2(1) item 2) Sch 2 and Sch 4 (items 26–69, 71–83): 1 Apr 2017 (s 2(1) items 3, 8, 10) Sch 4 (item 70): 19 Mar 2015 (s 2(1) item 9)

s 701-30 — Where entity not subsidiary member for whole of income year

Object (1) The object of this section is to provide for a method of working out how the entity core rules apply to the entity for periods in the income year when the entity is not part of the group. The method involves treating each period separately with no netting off between them. When section has effect (2) This section has effect for the entity core purposes if: (a) the entity is a * subsidiary member of the group for some but not all of an income year; and (b) there are one or more periods in the income year (each of which is a non ‑ membership period ) during which the entity is not a subsidiary member of any * consolidated group. Tax position of each non ‑ membership period to be worked out (3) For every non ‑ membership period, work out the entity’s taxable income (if any) for the period, the income tax (if any) payable on that taxable income and the entity’s loss (if any) (a non ‑ membership period loss ) of each * sort for the period. Work them out: (a) as if the start and end of the period were the start and end of the income year; and (b) ignoring the operation of this section in relation to each other non ‑ membership period (if any); and (c) so that each relevant item is either: (i) allocated to only one of the non ‑ membership periods or to a period that is all or part of the rest of the income year; or (ii) apportioned among such periods (for example, by Subdivision 716 ‑ A (see note to this subsection)). Note: Other provisions of this Part are to be applied in working out the taxable income or loss, for example: • section 701 ‑ 40 (Exit history rule); and • Subdivision 716 ‑ A (about assessable income and deductions spread over several membership or non ‑ membership periods); and • section 716 ‑ 850 (about grossing up threshold amounts for periods of less than 365 days). Subdivision 716 also affects the tax position of the head company of a group of which the entity has been a subsidiary member for some but not all of the income year. (3A) For the purposes of working out the entity’s taxable income (if any) for the non ‑ membership period, determine: (a) whether the entity can * utilise a loss of any * sort transferred to the entity in the period; and (b) if the period started at the start of the income year—whether the entity can utilise a loss of any sort: (i) made by the entity, without a transfer, for an earlier income year; or (ii) transferred to the entity in an earlier income year; as if the time just after the end of the period were the end of the income year and the entity carried on at that time the same business that it carried on just before that time. Paragraph (3)(a) has effect subject to this subsection. Note: This means that things that happen in relation to the entity at the time it becomes a subsidiary member of the group are taken into account in determining whether the entity can utilise such a loss to affect its taxable income for the non ‑ membership period. Income tax for the financial year (4) The entity’s income tax (if any) for the * financial year concerned is the total of every amount of income tax worked out for the entity under subsection (3). Taxable income for the income year (5) The entity’s taxable income for the income year is the total of every amount of taxable income worked out for the entity under subsection (3). (6) The entity’s income tax worked out under subsection (4) is taken to be payable on the entity’s taxable income for the income year worked out under subsection (5), even if the amount of the tax differs from the amount that would be worked out by reference to that taxable income apart from subsection (5). Loss for the income year (7) The entity has a loss of a particular * sort for the income year if and only if it has a non ‑ membership period loss of that sort for the non ‑ membership period (if any) ending at the end of the income year. The amount of the loss for the income year is the amount of the non ‑ membership period loss. Utilisation and transfer of non ‑ membership period loss (8) However, the provisions of this Act relating to transfer or * utilisation of a loss of any * sort have effect in relation to a non ‑ membership period loss of that sort for any non ‑ membership period as if the non ‑ membership period loss were the entity’s loss for an income year that: (a) started at the start of the period; and (b) ended at the end of the period. (9) Subsection (8) has effect not only for the entity core purposes, but also (despite subsection (2)) for other purposes. Excess franking deficit tax offset for the income year (10) For the purposes of applying section 205 ‑ 70 in relation to an income year after the income year (the current income year ) to which this section applies, the entity has an excess mentioned in paragraph 205 ‑ 70(1)(c) (about excess franking deficit tax offsets) for the current income year only if it has such an excess for the non ‑ membership period (if any) ending at the end of the current income year. The amount of the excess for the current income year is the amount of the excess for the non ‑ membership period.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 701-35 — Tax ‑ neutral consequence for entity of ceasing to hold assets when it joins group

(1) When the entity becomes a * subsidiary member of the group, this section has effect for the entity core purposes. Assets to which section applies (2) This section applies in relation to an asset if: (a) the asset is * trading stock of the entity just before it becomes a * subsidiary member of the group; or (b) the asset is: (i) a * registered emissions unit; and (ii) an asset of the entity; just before it becomes a subsidiary member of the group. Object (3) The object of this section is to ensure that there is no income tax consequence for the entity in respect of the asset. Note: In the case of assets other than trading stock or registered emissions units, the fact that the entity ceases to hold them when the single entity rule begins to apply to them would not constitute a disposal or other event having tax consequences for the entity. Setting value of trading stock at tax ‑ neutral amount (4) If paragraph (2)(a) applies, the * value of the * trading stock at the end of the income year that ends, or, if section 701 ‑ 30 applies, of the income year that is taken by subsection (3) of that section to end, when the entity becomes a * subsidiary member is taken to be equal to: (a) if the asset was trading stock of the entity at the start of the income year—the asset’s value at that time; or (b) if paragraph (a) does not apply and the asset is * live stock that was acquired by natural increase—the * cost of the asset; or (c) in any other case—the amount of the outgoing incurred by the entity in connection with the acquisition of the asset; increased by the amount of any outgoing forming part of the cost of the asset that was incurred by the entity during its current holding of the asset. Note: As a consequence of fixing the trading stock’s value at the end of the income year under this subsection, no election would be available under section 70 ‑ 45 to value the trading stock at that time. Setting value of registered emissions unit at tax ‑ neutral amount (5) If paragraph (2)(b) applies, the * value of the * registered emissions unit at the end of the income year that ends, or, if section 701 ‑ 30 applies, of the income year that is taken by subsection (3) of that section to end, when the entity becomes a * subsidiary member is taken to be equal to: (a) if the unit was * held by the joining entity at the start of the income year—the value of the unit at the start of the income year; or (b) otherwise—the expenditure incurred by the joining entity in becoming the holder of the unit. Note: See also section 701A ‑ 7 of the Income Tax (Transitional Provisions) Act 1997 .

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 15 of 2017, effective Sch 1 (item 1): 1 Mar 2017 (s 2(1) item 2) Sch 2 and Sch 4 (items 26–69, 71–83): 1 Apr 2017 (s 2(1) items 3, 8, 10) Sch 4 (item 70): 19 Mar 2015 (s 2(1) item 9)

s 701-40 — Exit history rule

(1) If the entity ceases to be a * subsidiary member of the group, this section has effect for the entity core purposes, so far as they relate to any thing covered by subsection (2) (an eligible asset etc. ) after it becomes that of the entity because subsection 701 ‑ 1(1) (the single entity rule) ceases to apply to the entity. Assets, liabilities and businesses covered (2) This subsection covers the following: (a) any asset; (b) any liability or other thing that, in accordance with * accounting principles, is a liability; (c) any business; that becomes that of the entity because subsection 701 ‑ 1(1) (the single entity rule) ceases to apply to the entity when it ceases to be a * subsidiary member of the group. Head company history inherited (3) Everything that happened in relation to any eligible asset etc. while it was that of the * head company, including because of any application of section 701 ‑ 5 (the entry history rule), is taken to have happened in relation to it as if it had been an eligible asset etc. of the entity. Note 1: If the eligible asset etc. was brought into the group when an entity became a subsidiary member, section 701 ‑ 5 (the entry history rule) would have had the effect that things happening to the eligible asset etc. while it was that of the entity would be taken to have happened as if it was that of the head company. Such things will in turn be taken by this subsection to have happened in relation to the eligible asset etc. as if it were that of the entity that takes the asset out of the group. Note 2: Other provisions of this Part may affect the tax history that is inherited (e.g. asset cost base history is affected by section 701 ‑ 45).

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent

s 701-45 — Cost of assets consisting of liabilities owed to entity by members of the group

(1) If the entity ceases to be a * subsidiary member of the group, this section has effect for the entity core purposes, so far as they relate to the income year in which the entity ceases to be a subsidiary member or any later income year. Assets to which section applies (2) This section applies in relation to an asset if: (a) it becomes an asset of the entity because subsection 701 ‑ 1(1) (the single entity rule) ceases to apply to the entity when it ceases to be a * subsidiary member of the group; and (b) the asset consists of a liability owed to the entity by a * member of the group. Object (3) The object of this section is to set the cost of the asset to enable income tax consequences for the entity in respect of the asset to be determined. Note: In the case of other assets, the fact that the entity inherits their history under section 701 ‑ 40 when the entity ceases to be a subsidiary member of the group means that the assets would be treated as having the same cost as they would for the head company at that time. However, assets consisting of liabilities do not have such a history because they are only recognised when the entity ceases to be a subsidiary member and the single entity rule ceases to apply. Setting the asset’s tax cost (4) The asset’s * tax cost is set at the time the entity ceases to be a * subsidiary member of the group at the asset’s * tax cost setting amount. Note 1: If section 701 ‑ 30 (Where entity not subsidiary member for whole of income year) applies, the time the entity ceases to be a subsidiary member will be treated as the start of an income year. Note 2: If the entity is a partnership, Subdivision 713 ‑ E sets the tax cost of a partner’s interest in an asset consisting of a liability that a member of the group owes to the partnership.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 701-50 — Cost of certain membership interests of which entity becomes holder on leaving group

(1) If: (a) the entity and one or more other entities cease to be * subsidiary members of the group at the same time because of an event happening in relation to one of them; and (b) when the entity ceases to be a subsidiary member, it holds an asset consisting of a * membership interest in any of the other entities; this section has effect for the entity core purposes. Object (2) The cost of any * membership interest that one of the entities holds in another is to be treated in the same way as membership interests held by the * head company. In both cases the object is to preserve the alignment of costs for membership interests and assets (that was established when each entity became a * subsidiary member) by recognising the cost of those interests, when it ceases to be a subsidiary member, as an amount equal to the cost of the entity’s assets at that time reduced by the amount of its liabilities. Setting tax cost of membership interests (3) The asset’s * tax cost is set just before the entity ceases to be a * subsidiary member of the group at the asset’s * tax cost setting amount. Note: If the asset consists of a membership interest in a partnership, Subdivision 713 ‑ E sets the tax cost of interests in partnership assets, rather than membership interests in the partnership.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 701-55 — Setting the tax cost of an asset

(1) This section states the meaning of the expression an asset’s tax cost is set at a particular time at the asset’s * tax cost setting amount. Depreciating asset provisions (2) If any of Subdivisions 40 ‑ A to 40 ‑ D, sections 40 ‑ 425 to 40 ‑ 445 and Subdivisions 328 ‑ D and 355 ‑ E is to apply in relation to the asset, the expression means that the provisions apply as if: (a) the asset were * acquired at the particular time for a payment equal to its * tax cost setting amount; and (b) at that time the same method of working out the decline in value were chosen for the asset as applied to it just before that time; and (c) where just before that time the prime cost method applied for working out the asset’s decline in value and the asset’s tax cost setting amount does not exceed the joining entity’s * terminating value for the asset—at that time an * effective life were chosen for the asset equal to the remainder of the effective life of the asset just before that time; and (d) where just before that time the prime cost method applied for working out the asset’s decline in value and the asset’s * tax cost setting amount exceeds the joining entity’s terminating value for the asset—either: (i) the * head company were required to choose at that time an effective life for the asset in accordance with subsections 40 ‑ 95(1) and (3), and any choice of an effective life determined by the Commissioner were limited to one in force at that time; or (ii) an effective life for the asset were worked out under subsection 40 ‑ 95(7), (8), (9) or (10) at that time; and (e) where neither paragraph (c) nor (d) applies—at that time an effective life were chosen for the asset equal to the asset’s effective life just before that time. Trading stock provisions (3) If Division 70 (other than Subdivision 70 ‑ E) is to apply in relation to the asset, the expression means that the Division applies as if the asset were * trading stock at the start of the income year in which the particular time occurs and its * value at that time were equal to its * tax cost setting amount. Registered emissions unit provisions (3A) If Division 420 is to apply in relation to the asset, the expression means that the Division applies as if the asset were a * registered emissions unit at the start of the income year in which the particular time occurs, and its * value at that time were equal to the asset’s * tax cost setting amount. Qualifying security provisions (4) If Division 16E of Part III of the Income Tax Assessment Act 1936 is to apply in relation to the asset, the expression means that the Division applies as if the asset were acquired at the particular time for a payment equal to the asset’s * tax cost setting amount. Capital gain and loss provisions (5) If Part 3 ‑ 1 or 3 ‑ 3 is to apply in relation to the asset, the expression means that the Part applies as if the asset’s * cost base or * reduced cost base were increased or reduced so that the cost base or reduced cost base at the particular time equals the asset’s * tax cost setting amount. Division 230 (financial arrangements) (5A) If Division 230 is to apply in relation to the asset, the expression means that the Division applies as if the asset were acquired at the particular time for a payment equal to: (a) unless paragraph (b) applies—the asset’s * tax cost setting amount; or (b) if the asset’s tax cost is set because an entity becomes a * subsidiary member of a * consolidated group, and Subdivision 230 ‑ C (fair value method), Subdivision 230 ‑ D (foreign exchange retranslation method) or Subdivision 230 ‑ F (reliance on financial reports method) is to apply in relation to the asset—the asset’s * Division 230 starting value at the particular time. (5B) To avoid doubt, for the purposes of paragraph (5A)(b), determine the asset’s * Division 230 starting value by reference to the relevant standards (as mentioned in section 230 ‑ 230, 230 ‑ 280 or 230 ‑ 420) that apply in relation to the * head company’s financial report for the income year in which the entity becomes a subsidiary member of the group. WIP amount assets (5C) If: (a) the asset’s tax cost is set because an entity becomes a * subsidiary member of a * consolidated group at the particular time; and (b) the asset is a * WIP amount asset; the expression means that section 25 ‑ 95 applies as if the * head company had paid a * work in progress amount for the income year in which the particular time occurs equal to the * tax cost setting amount of the asset. Consumable stores (5D) If: (a) the asset’s tax cost is set because an entity becomes a * subsidiary member of a * consolidated group at the particular time; and (b) the asset is consumable stores; the expression means that, for the purposes of section 8 ‑ 1, the * head company of the group is taken to have incurred an outgoing at the particular time in acquiring the asset equal to the asset’s * tax cost setting amount. Other provisions (6) If any provision of this Act that is not mentioned above is to apply in relation to the asset by including an amount in assessable income, or by allowing an amount as a deduction, in a way that brings into account (directly or indirectly) any of the following amounts: (a) the cost of the asset; (b) outgoings incurred, or amounts paid, in respect of the asset; (c) expenditure in respect of the asset; (d) an amount of a similar kind in respect of the asset; the expression means that the provision applies, for the purpose of determining the amount included in assessable income or the amount of the deduction, as if the cost, outgoing, expenditure or other amount had been incurred or paid to acquire the asset at the particular time for an amount equal to its * tax cost setting amount. Note 2: For specific clarifications of the operation of this subsection in relation to bad debts, see Subdivision 716 ‑ S.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 99 of 2012, effective s 4 and Sch 3: 29 June 2012 (s 2(1) items 1, 7–10) Sch 1 (items 10, 11, 23): 30 June 2012 (s 2(1) item 3) Sch 2 (items 1–4, 6): 26 Mar 2009 (s 2(1) item 6) | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7)

s 701-56 — Application of subsection 701 ‑ 55(6)

(1) Subsection (2) applies in relation to each asset that would be an asset of an entity at the time (the joining time ) it becomes a * subsidiary member of a * consolidated group, assuming that subsection 701 ‑ 1(1) (the single entity rule) did not apply. (1A) Subsection (2) applies only to the extent necessary for the purposes of subsection 701 ‑ 55(6) to determine whether a provision of this Act is to apply in relation to each of those assets on and after the joining time. (1B) Subsection (2) applies despite section 701 ‑ 5 (the entry history rule). (2) Treat the * head company as having acquired each of those assets at the joining time as part of acquiring the business of the joining entity as a going concern. Certain depreciating assets etc. (3) Subsection 701 ‑ 55(6) does not apply in relation to an asset if any of the following provisions are to apply in relation to the asset: (a) Subdivision 40 ‑ F (Primary production depreciating assets); (b) Subdivision 40 ‑ G (Capital expenditure of primary producers and other landholders); (c) Subdivision 40 ‑ H (Capital expenditure that is immediately deductible); (d) Subdivision 40 ‑ I (Capital expenditure that is deductible over time); (e) Subdivision 40 ‑ J (Capital expenditure for the establishment of trees in carbon sink forests); (f) Division 41 (Additional deduction for certain new business investment); (g) Division 43 (Deductions for capital works).

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 99 of 2012, effective s 4 and Sch 3: 29 June 2012 (s 2(1) items 1, 7–10) Sch 1 (items 10, 11, 23): 30 June 2012 (s 2(1) item 3) Sch 2 (items 1–4, 6): 26 Mar 2009 (s 2(1) item 6)

s 701-58 — Effect of setting the tax cost of an asset that the head company does not hold under the single entity rule

(1) This section applies if: (a) the * tax cost of an asset was set at the time (the joining time ) an entity became a * subsidiary member of a * consolidated group, at the asset’s * tax cost setting amount; and (b) ignoring the operation of subsection 701 ‑ 1(1) (the single entity rule), the entity held the asset at the joining time; and (c) taking into account the operation of subsection 701 ‑ 1(1) (the single entity rule), the * head company of the group did not hold the asset at the joining time. Example: A debt owed by a member of the group to the joining entity at the joining time. (2) To avoid doubt, the asset’s * tax cost setting amount mentioned in paragraph (1)(a) is not to be taken into account in applying the provisions mentioned in subsections 701 ‑ 55(2), (3) (3A),, (4), (5), (5A), (5C), (5D) and (6) in relation to the asset at and after the joining time.

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1)) | Amended by No 99 of 2012, effective s 4 and Sch 3: 29 June 2012 (s 2(1) items 1, 7–10) Sch 1 (items 10, 11, 23): 30 June 2012 (s 2(1) item 3) Sch 2 (items 1–4, 6): 26 Mar 2009 (s 2(1) item 6)

s 701-60 — Tax cost setting amount

The asset’s tax cost setting amount is worked out using this table. Tax cost setting amount Item If the asset’s tax cost is set by: The asset’s tax cost setting amount is: 1 section 701 ‑ 10 (Cost to head company of assets of joining entity) the amount worked out in accordance with Division 705 2 section 701 ‑ 15 (Cost to head company of membership interests in entity that leaves group) the amount worked out in accordance with section 711 ‑ 15 or 711 ‑ 55 3 section 701 ‑ 20 (Cost to head company of assets consisting of certain liabilities owed by entity that leaves group) the * market value of the asset 3A section 701 ‑ 45 (Cost of assets consisting of liabilities owed to entity by members of the group) the amount worked out in accordance with section 701 ‑ 60A 4 section 701 ‑ 50 (Cost of certain membership interests of which entity becomes holder on leaving group) the amount worked out in accordance with section 711 ‑ 55 Note 1: The tax cost setting amount of certain interests in partnership assets is worked out under Subdivision 713 ‑ E. Note 2: The tax cost setting amount of certain assets of a life insurance company is worked out under Subdivision 713 ‑ L.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 14 of 2018, effective Sch 1: 1 Apr 2018 (s 2(1) items 2–4)

s 701-60A — Tax cost setting amount for asset emerging when entity leaves group

(1) This section applies for the purpose of working out the * tax cost setting amount of an asset if: (a) an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group (the old group ) at a time (the leaving time ); and (b) the asset’s tax cost is set under section 701 ‑ 45 because it consists of a liability (the corresponding liability ) owed to the leaving entity. (2) The * tax cost setting amount is: (a) unless subsection (3) or (4) applies—the * market value of the asset at the leaving time; or (b) if subsection (3) applies—nil; or (c) if subsection (4) applies—the least of the following amounts: (i) the tax cost setting amount mentioned in paragraph (4)(c); (ii) if the * head company of the old group was entitled to a deduction in respect of the asset for an income year ending on or before the leaving time—the tax cost setting amount mentioned in paragraph (4)(c) reduced by the amount of the deduction; (iii) the market value of the asset at the leaving time. (3) This subsection applies if: (a) the corresponding liability is not a debt; and (b) either: (i) at the time the corresponding liability arose, the entity to whom the corresponding liability was owed and the entity owing the corresponding liability were both * members of the old group; or (ii) if subparagraph (i) does not apply—after the time the corresponding liability arose, a member of the old group * acquired the asset or started to have the corresponding liability. (4) This subsection applies if: (a) the corresponding liability is not a debt; and (b) at the time the corresponding liability arose, the entity to whom the corresponding liability was owed and the entity owing the corresponding liability were not both members of the old group; and (c) the * tax cost of the asset was set under section 701 ‑ 10 at the time an entity became a * subsidiary member of the old group, at the asset’s * tax cost setting amount (whether or not section 701 ‑ 58 applied in relation to the setting of that tax cost).

Amendment history: Inserted by No 14 of 2018, effective Sch 1: 1 Apr 2018 (s 2(1) items 2–4)

s 701-61 — Assets in relation to Division 230 financial arrangement—head company’s assessable income or deduction

(1) This section applies if: (a) an entity (the joining entity ) becomes a * subsidiary member of a * consolidated group; and (b) paragraph 701 ‑ 55(5A)(b) applies in relation to one or more assets of the joining entity. (2) Work out if the total of the * Division 230 starting values for those assets exceeds or falls short of the total of their * tax cost setting amounts. (3) If there is an excess, an amount equal to 25% of that excess is included in the * head company’s assessable income for: (a) the income year in which the particular time mentioned in subsection 701 ‑ 55(5A) occurs; and (b) each of the 3 subsequent income years. (4) If there is a shortfall, the * head company is entitled to a deduction equal to 25% of that shortfall for: (a) the income year in which the particular time mentioned in subsection 701 ‑ 55(5A) occurs; and (b) each of the 3 subsequent income years.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)