Income Tax Assessment Act 1997

s 376-160 — Qualifying Australian production expenditure—treatment of services embodied in goods

If: (a) a company incurs expenditure for the provision of what is essentially a service; and (b) the results of the service are provided to the company by being embodied in goods that are delivered to the company; and (c) the service that is embodied in the goods was predominantly performed outside Australia; the service is not provided to the company in Australia merely because the goods are delivered to the company in Australia. Note: Paragraph (b)—a document, for example, might set out legal or other professional advice or a computer disk might contain a program that has been made or data that has been compiled.

Amendment history: Inserted 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 376-165 — Qualifying Australian production expenditure—special rules for the location offset and the PDV offset

(1) For the purposes of the location offset and the PDV offset, the following expenditure of a company is also qualifying Australian production expenditure of the company on a * film: Special Australian expenditure—location offset and PDV offset Item Type of expenditure 1 Australian business overheads general business overheads of the company that: (a) are not incurred in, or in relation to, the * making of the * film; and (b) are not reasonably attributable to: (i) the use of equipment or other facilities for; or (ii) activities undertaken in; the making of the film; to the extent to which they: (c) are incurred for, or are reasonably attributable to: (i) goods and services provided in Australia; or (ii) the use of land located in Australia; or (iii) the use of goods that are located in Australia at the time they are used in the making of the film; and (d) represent a reasonable apportionment of those overheads between the making of the film and the other activities undertaken by the company This item has effect subject to subsection (2). 2 Travel to Australia expenditure of the company in relation to an individual’s travel to Australia to undertake activities in Australia in relation to the * making of the * film, if the remuneration paid to the individual for those activities is * qualifying Australian production expenditure of the company 3 Expenditure incurred in freighting goods to Australia expenditure incurred in freighting goods to Australia, to the extent that the goods will be used in the * making of the * film (2) General business overheads of the company are covered by item 1 of the table in subsection (1) only to the extent to which they do not exceed the lesser of: (a) 2% of the total of all the company’s * production expenditure on the * film; and (b) $500,000.

Amendment history: Inserted 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 376-170 — Qualifying Australian production expenditure—special rules for the producer offset

Expenditure that is qualifying Australian production expenditure (1) For the purposes of subsections 376 ‑ 65(6) and (7), expenditure on a * film incurred in a foreign country is qualifying Australian production expenditure of a company on the film if: (a) the expenditure is incurred by the company claiming the offset, or by another entity that is involved in the * making of the film; and (b) the expenditure would be qualifying Australian production expenditure if it had been incurred for, or reasonably attributable to: (i) goods and services provided in Australia; or (ii) the use of land located in Australia; or (iii) the use of goods that are located in Australia at the time they are used in the * making of the film; and (c) the film is made under an * arrangement entered into between the Commonwealth or an authority of the Commonwealth and the foreign country or an authority of the foreign country. Note: This means that such expenditure is taken into account for the purposes of determining whether to issue a certificate for the producer offset to the company under section 376 ‑ 65. It is not taken into account in working out the amount of the producer offset to which the company is entitled. (2) For the purposes of the producer offset, the following expenditure of a company is also qualifying Australian production expenditure of the company on a * film: Special Australian expenditure—producer offset Item Type of expenditure 1 Australian business overheads general business overheads of the company that: (a) are not incurred in, or in relation to, the * making of the * film; and (b) are not reasonably attributable to: (i) the use of equipment or other facilities for; or (ii) activities undertaken in; the making of the film; to the extent to which they: (c) are incurred for, or are reasonably attributable to: (i) goods and services provided in Australia; or (ii) the use of land located in Australia; or (iii) the use of goods that are located in Australia at the time they are used in the making of the film; and (d) represent a reasonable apportionment of those overheads between the making of the film and the other activities undertaken by the company This item has effect subject to subsection (3). 2 Travel to Australia and other countries expenditure of the company in relation to an individual’s travel: (a) to Australia, to undertake activities in relation to the * making of the * film; and (b) to or within any other country, to undertake activities in relation to the making of the film, if the remuneration paid to the individual for those activities would be * qualifying Australian production expenditure of the company under item 4 of this table. 3 Expenditure incurred in freighting goods within and between countries expenditure incurred in freighting goods within and between countries, to the extent that the goods will be used in the * making of the * film. 4 Expenditure incurred in other countries expenditure incurred outside Australia: (a) for the remuneration of an Australian resident, or the purchase of goods or services from companies or * permanent establishments that have an * ABN; and (b) during the period in which principal photography for the film takes place outside Australia if the subject matter of the film reasonably requires the location in which the expenditure is incurred to be used for principal photography. 5 Other expenditure expenditure incurred in Australia in respect of any of the following: (a) obtaining an independent opinion of the amount of a film’s * qualifying Australian production expenditure required for use in relation to the financing of the film; (b) offset carbon emissions created during the making of the film. 6 Expenditure incurred in producing Australian copyright promotional material expenditure incurred in Australia in the income year of the * completion of the * film or an earlier year in respect of any of the following: (a) producing material for publicising or otherwise promoting the film where the copyright in the material is held or partially held by a company that is an Australian resident; (b) unit publicist fees. 7 Expenditure incurred in delivering or distributing the film expenditure incurred by the applicant company in delivering or distributing the film prior to the end of the income year in which the * film is complete to the extent to which it is incurred for, or reasonably attributable to, any of the following: (a) acquiring Australian classification certificates; (b) sound mix mastering licenses; (c) re ‑ versioning the film in Australia; (d) freight services provided by a company in Australia for delivery of contracted deliverables in relation to the film; (e) storing the film in a film vault in Australia. (3) General business overheads of the company are covered by item 1 of the table in subsection (2) only to the extent to which they do not exceed the lesser of: (a) 5% of the total of all the company’s * total film expenditure on the * film; and (b) $500,000. (3A) Expenditure incurred for the purchase of services is not covered by item 4 of the table in subsection (2) if the services are, to any extent, performed by an individual who is not an Australian resident. Expenditure that is not qualifying Australian production expenditure (4) For the purposes of the producer offset, the following expenditure of a company is not qualifying Australian production expenditure of a company on a * film: (a) expenditure on the film that is paid for with * development assistance received from any of the following bodies: (ii) Film Australia Limited; (iii) the Australian Film Commission; (iv) the Australian Film, Television and Radio School; (v) Screen Australia; unless the amount or value of the assistance has been repaid; (b) subject to subsection (4A), the following expenditure: (i) * development expenditure on the film; (ii) remuneration provided to the principal director, producers and principal cast associated with the film; to the extent that such expenditure comprises greater than 20% of the company’s * total film expenditure on the film; (c) for a series other than a drama series, or a season of a series other than a drama series—expenditure on an episode beyond the episode in which the 65th commercial hour of the series is reached. (4A) Paragraph (4)(b) does not apply to a * film that is a * documentary. (5) In applying paragraph (4)(c), episodes completed before 1 July 2011 count towards the limit in that paragraph. (6) Total film expenditure on a film means: (a) expenditure covered by sections 376 ‑ 125, 376 ‑ 130, 376 ‑ 150 and 376 ‑ 170; and (b) expenditure mentioned in column 2 of the table in section 376 ‑ 135, to the extent that it is not covered by paragraph (a).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 13 of 2008, effective Sch 1 (items 3, 4): 1 July 2008 (s 2(1) item 2) | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011 | Amended by No 147 of 2011, effective s. 4, Schedule 1, Schedule 5 (items 1–9, 16–20), Schedule 6 (items 1, 6) and Schedule 9: Royal Assent Schedule 8 (items 2–9, 37, 38, 41): 1 Jan 2012 | Amended by No 85 of 2013, effective s 4, Sch 1, Sch 2 (items 1–3), Sch 4 (items 1–11) and Sch 7 (items 1, 7–10): 28 June 2013 (s 2(1) items 1–3, 7, 10) Sch 2 (item 6): 1 July 2016 (s 2(1) item 4) Sch 2 (items 7–9): 1 July 2017 (s 2(1) item 5) Sch 4 (items 12, 13): 1 July 2022 (s 2(1) item 8) Sch 4 (items 14, 15): 1 July 2023 (s 2(1) item 9) Sch 8 (items 1–48, 55–64): 26 Mar 2009 (s 2(1) item 11) | Amended by No 84 of 2018, effective Sch 1 (items 1, 8–13, 15), Sch 2 (items 1–3, 6–10), Sch 3, Sch 4 (items 2–4) and Sch 5: 1 Oct 2018 (s 2(1) item 1) | Amended by No 127 of 2021, effective Sch 1 and Sch 3 (items 42, 49–63, 65–69, 71, 72): 1 Jan 2022 (s 2(1) items 2, 5) Sch 2 (item 56) and Sch 3 (items 3–5, 33–35): 8 Dec 2021 (s 2(1) items 3, 4)

s 376-175 — Expenditure to be worked out on an arm’s length basis

For the purposes of this Division, if any 2 or more parties to: (a) an * arrangement under which a company incurs expenditure in relation to a * film; or (b) any act or transaction directly or indirectly connected with expenditure that a company incurs in relation to a film; do not deal with each other at * arm’s length in relation to the arrangement, or in relation to the act or transaction, the expenditure is taken to be only so much (if any) of the expenditure as would have been incurred if they had been dealing with each other at arm’s length in relation to the arrangement, or in relation to the act or transaction.

Amendment history: Inserted 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 376-180 — Expenditure incurred by prior production companies

(1) For the purposes of this Division, if a company (the incoming company ) takes over the * making of a * film from another company (the outgoing company ): (a) expenditure incurred in relation to the film by the outgoing company is taken to have been incurred in relation to the film by the incoming company; and (b) for the purposes of determining the extent to which that expenditure is * qualifying Australian production expenditure of the incoming company, the incoming company is taken: (i) to have been an Australian resident at any time when the outgoing company was an Australian resident; and (ii) to have had a * permanent establishment in Australia at any time when the outgoing company had a permanent establishment in Australia; and (iii) to have had an * ABN at any time when the outgoing company had an ABN; and (c) expenditure that the incoming company incurs in order to be able to take over the making of the film is to be disregarded for the purposes of this Division; and (d) any activities carried out, and arrangements made, by the outgoing company in relation to the film are taken, for the purposes of paragraphs 376 ‑ 20(5)(c), 376 ‑ 45(5)(b) and 376 ‑ 65(1)(a), to have been carried out or made by the incoming company in relation to the film. (2) For the purposes of subsection (1): (a) expenditure incurred on the * film by the outgoing company includes expenditure that the outgoing company is itself taken to have incurred on the film because of the operation of subsection (1); and (b) the outgoing company is taken: (i) to have been an Australian resident at any time when the outgoing company is taken to have been an Australian resident because of the operation of subsection (1); and (ii) to have had a * permanent establishment in Australia at any time when the outgoing company is taken to have had a permanent establishment in Australia because of the operation of subsection (1); and (iii) to have had an * ABN at any time when the outgoing company is taken to have had an ABN because of the operation of subsection (1); and (c) activities carried out by the outgoing company in relation to the film include activities that the outgoing company is taken to have carried out in relation to the film because of the operation of subsection (1); and (d) arrangements made by the outgoing company for the carrying out of activities in relation to the film include arrangements that the outgoing company is taken to have made because of the operation of subsection (1). Example: If Uncle Carty Ltd starts out making a film and then Mr Grouble Ltd takes over the making of the film, Mr Grouble Ltd is taken to have incurred the expenditure that Uncle Carty Ltd incurred on the film. If Lousie Ltd subsequently takes over the making of the film from Mr Grouble Ltd, Lousie Ltd is taken to have incurred the expenditure that Mr Grouble Ltd incurred on the film (including the expenditure of Uncle Carty Ltd that is attributed to Mr Grouble Ltd).

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 61 of 2011, effective s. 4, Schedule 1, Schedule 2 (items 1–8), Schedule 3, Schedule 4 and Schedule 7: Royal Assent

s 376-185 — Expenditure to be worked out excluding GST

In determining an amount of expenditure for the purpose of this Division, the expenditure is taken to exclude * GST.

Amendment history: Inserted by No 147 of 2011, effective s. 4, Schedule 1, Schedule 5 (items 1–9, 16–20), Schedule 6 (items 1, 6) and Schedule 9: Royal Assent Schedule 8 (items 2–9, 37, 38, 41): 1 Jan 2012

s 376-230 — Production company may apply for certificate

(1) A company may apply to the * Arts Minister for the issue of a certificate to the company for a * film under section 376 ‑ 20 (certificate for the location offset) when all of the company’s * qualifying Australian production expenditure for the film has been incurred. Application for PDV offset certificate (2) Once all of a company’s * qualifying Australian production expenditure on a * film, to the extent that it relates to * post, digital and visual effects production for the film, has been incurred, the company may apply to the * Arts Minister for the issue of a certificate to the company for the film under section 376 ‑ 45 (certificate for the PDV offset). Application for producer offset certificate (3) Once a * film is * completed, a company may apply to the * film authority for the issue of a certificate to the company for the film under section 376 ‑ 65 (certificate for the producer offset). Form of application (4) An application under subsection (1) or (2) must be made in accordance with the rules determined by the * Arts Minister under section 376 ‑ 260 so far as they relate to the requirements for applications. (5) An application under subsection (3) must be made in accordance with the rules determined by the * film authority under section 376 ‑ 265 so far as they relate to the requirements for applications.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 88 of 2009, effective s. 4, Schedule 3 (items 1, 5–23), Schedule 4 (items 2–5) and Schedule 5 (items 113–204, 237, 238, 258, 282, 319–341, 344): 18 Sept 2009 Schedule 2 (items 4–15, 25–27, 30, 31): 1 Oct 2009 Schedule 2 (item 23): 1 Jan 2010 | Amended by No 61 of 2011, effective s. 4, Schedule 1, Schedule 2 (items 1–8), Schedule 3, Schedule 4 and Schedule 7: Royal Assent

s 376-235 — Notice of refusal to issue certificate

(1) If the * Arts Minister decides not to issue a certificate under section 376 ‑ 20 (certificate for the location offset) or 376 ‑ 45 (certificate for the PDV offset) for a * film, the Minister must give the applicant written notice of the decision (including reasons for the decision). (2) If the * film authority decides not to issue a certificate under section 376 ‑ 65 (certificate for the producer offset) for a * film, the authority must give the applicant written notice of the decision (including reasons for the decision).

Amendment history: Inserted 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 376-240 — Issue of certificate

(1) A certificate issued to a company under section 376 ‑ 20 (certificate for the location offset), 376 ‑ 45 (certificate for the PDV offset) or 376 ‑ 65 (certificate for the producer offset) must: (a) be in writing; and (b) specify the company’s * ABN; and (c) specify the date of issue of the certificate; and (d) if the certificate is issued under section 376 ‑ 20—specify the total of the company’s * qualifying Australian production expenditure on the * film, as determined by the * Arts Minister under section 376 ‑ 30; and (e) if the certificate is issued under section 376 ‑ 45—specify the total of the company’s qualifying Australian production expenditure on the film, to the extent that it relates to * post, digital and visual effects production for the film, as determined by the Arts Minister under section 376 ‑ 50; and (f) if the certificate is issued under section 376 ‑ 65—specify the total of the company’s qualifying Australian production expenditure on the film, as determined by the * film authority under section 376 ‑ 75. (2) If the certificate is issued under section 376 ‑ 20 (certificate for the location offset) or 376 ‑ 45 (certificate for the PDV offset), the * Arts Minister must give the Commissioner notice of the issue of a certificate for a * film within 30 days after issuing the certificate. (3) The notice under subsection (2) must specify: (a) the company’s name; and (b) the company’s address; and (c) the total of the company’s * qualifying Australian production expenditure on the * film, as determined by the * Arts Minister under section 376 ‑ 30 or 376 ‑ 50, as the case may be; and (d) other matters agreed to between the Arts Minister and the Commissioner. The notice must be accompanied by a copy of the certificate. (4) If the certificate is issued under section 376 ‑ 65 (certificate for the producer offset), the * film authority must give the Commissioner notice of the issue of a certificate for a * film within 30 days after issuing the certificate. (5) The notice under subsection (4) must specify: (a) the company’s name; and (b) the company’s address; and (c) the total of the company’s * qualifying Australian production expenditure on the * film, as determined by the * film authority under section 376 ‑ 75; and (d) other matters agreed to between the film authority and the Commissioner. The notice must be accompanied by a copy of the certificate.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 88 of 2009, effective s. 4, Schedule 3 (items 1, 5–23), Schedule 4 (items 2–5) and Schedule 5 (items 113–204, 237, 238, 258, 282, 319–341, 344): 18 Sept 2009 Schedule 2 (items 4–15, 25–27, 30, 31): 1 Oct 2009 Schedule 2 (item 23): 1 Jan 2010

s 376-245 — Revocation of certificate

(1) The * Arts Minister may revoke a certificate issued to a company for a * film under section 376 ‑ 20 (certificate for the location offset) or 376 ‑ 45 (certificate for the PDV offset) if: (a) the Minister is satisfied that the issue of the certificate was obtained by fraud or serious misrepresentation; or (b) the company does not provide a copy of the film to the Minister within 30 days of when the film is * completed. (2) If the * Arts Minister revokes a certificate under subsection (1), the Minister must give the company to whom the certificate was issued written notice of the revocation (including reasons for the decision to revoke the certificate). (3) The * film authority may revoke a certificate issued to a company for a * film under section 376 ‑ 65 (certificate for the producer offset) if the authority is satisfied that the issue of the certificate was obtained by fraud or serious misrepresentation. (4) If the * film authority revokes a certificate under subsection (3), the authority must give the company to whom the certificate was issued written notice of the revocation (including reasons for the decision to revoke the certificate). (5) If a certificate is revoked under subsection (1) or (3), it is taken, for the purposes of this Division, never to have been issued. Note: This means that if an assessment of a company’s income tax is issued on the basis that the company is entitled to a tax offset for a film and the certificate for the film is then revoked, the assessment will be amended to take account of the fact that the company was never entitled to the tax offset: see section 376 ‑ 270. (6) Subsection (5) does not apply for the purposes of: (a) the operation of this section or section 376 ‑ 250; or (b) a review by a court or the * ART of the decision to revoke the certificate.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 38 of 2024, effective sch 1 (items 31 ‑ 37, 64): 14 Oct 2024 (s 2(1) item 2)

s 376-247 — Delegation by Arts Minister

(1) The * Arts Minister may, in writing, delegate all or any of the Arts Minister’s powers under the provisions mentioned in subsection (2) to: (a) the * Arts Secretary; or (b) an SES employee, or acting SES employee, in the Department administered by the Arts Minister. (2) For the purposes of subsection (1), the provisions are as follows: (a) section 376 ‑ 20 (issue of certificate for location offset); (b) section 376 ‑ 30 (determination of qualifying Australian production expenditure for location offset); (ba) section 376 ‑ 32 (power to require information for the purposes of the location offset); (c) section 376 ‑ 45 (issue of certificate for PDV offset); (d) section 376 ‑ 50 (determination of qualifying Australian production expenditure for PDV offset); (e) section 376 ‑ 235 (notice of refusal to issue certificate for location offset or PDV offset); (f) section 376 ‑ 245 (revocation of certificate for location offset or PDV offset). (3) In exercising powers under a delegation, the delegate must comply with any directions of the Arts Minister.

Amendment history: Inserted by No 141 of 2020, effective Sch 1 (item 1) and Sch 4 (items 82–101): 1 Jan 2021 (s 2(1) items 2, 7) Sch 4 (item 146): 18 Dec 2020 (s 2(1) item 16) | Amended by No 67 of 2024, effective sch 1 (items 4 ‑ 7), sch 3 (items 1 ‑ 7), sch 5 (items 49 ‑ 52), sch 6: 1 Oct 2024 (s 2(1) items 3, 7, 10, 12)

s 376-250 — Notice of decision or determination

(1) This section applies to a notice of a decision given under section 376 ‑ 235 (refusal to issue a certificate) or 376 ‑ 245 (revocation of a certificate), and to a notice of a determination given under section 376 ‑ 30 (determination of qualifying Australian production expenditure for location offset), 376 ‑ 50 (determination of qualifying Australian production expenditure for PDV offset) or 376 ‑ 75 (determination of qualifying Australian production expenditure for producer offset). (2) The notice of the decision or determination is to include the statements set out in subsections (3) and (4). (3) There must be a statement to the effect that, subject to the Administrative Review Tribunal Act 2024 , an application may be made to the * ART, by (or on behalf of) any entity whose interests are affected by the decision or determination, for review of the decision or determination. (4) There must also be a statement to the effect that a request may be made under section 268 of that Act by (or on behalf of) such an entity for a statement of reasons. (5) If the * Arts Minister or the * film authority fails to comply with subsection (3) or (4), that failure does not affect the validity of the decision or determination.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 38 of 2024, effective sch 1 (items 31 ‑ 37, 64): 14 Oct 2024 (s 2(1) item 2)

s 376-255 — Review of decisions by the Administrative Review Tribunal

Applications may be made to the * ART for review of: (a) a decision made by the * Arts Minister to refuse an application for a certificate under section 376 ‑ 20 (certificate for the location offset) or 376 ‑ 45 (certificate for the PDV offset); or (b) a decision made by the Arts Minister under section 376 ‑ 245 to revoke a certificate; or (c) a decision made by the * film authority to refuse an application for a certificate under section 376 ‑ 65 (certificate for the producer offset); or (d) a decision made by the film authority under section 376 ‑ 245 to revoke a certificate; or (e) a determination by the Arts Minister in relation to the total of a company’s * qualifying Australian production expenditure under section 376 ‑ 30 or 376 ‑ 50; or (f) a determination by the film authority in relation to the total of a company’s * qualifying Australian production expenditure under section 376 ‑ 75.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 38 of 2024, effective sch 1 (items 31 ‑ 37, 64): 14 Oct 2024 (s 2(1) item 2)

s 376-260 — Minister may make rules about the location offset and the PDV offset

Rules establishing the Film Certification Advisory Board (1) The * Arts Minister may, by legislative instrument, make rules: (a) establishing a Film Certification Advisory Board to: (i) consider applications under subsection 376 ‑ 230(1) (application for a certificate for the location offset) or (2) (application for a certificate for the PDV offset) and advise the Minister on whether to issue certificates under section 376 ‑ 20 (certificate for the location offset) or 376 ‑ 45 (certificate for the PDV offset); and (ii) perform such other functions in relation to the operation of this Division as are specified in the rules; and (b) specifying the membership of the Board and the terms and conditions of appointment to the Board; and (c) specifying procedures to be followed by the Board in performing its functions. Rules providing for provisional certificates in relation to location offset and the PDV offset (2) The * Arts Minister may, by legislative instrument, make rules providing for the issue of provisional certificates in relation to the location offset or the PDV offset. Rules about applications for certificates in relation to the location offset and the PDV offset (3) The * Arts Minister may, by legislative instrument, make rules specifying how applications for certificates (including provisional certificates) in relation to the location offset or the PDV offset are to be made, including: (a) the form in which applications are to be made; and (b) the information to be provided in applications; and (c) methods for verifying such information; and (d) procedures for providing, at the Minister’s request, additional information in support of an application. (4) Rules under paragraph (3)(c) can include rules requiring reports by auditors or independent line producers.

Amendment history: Inserted 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 376-265 — Film authority may make rules about the producer offset

Rules providing for provisional certificates in relation to the producer offset (1) The * film authority may, by legislative instrument, make rules providing for the issue of provisional certificates in relation to the producer offset. Rules about applications for certificates in relation to the producer offset (2) The * film authority may, by legislative instrument, make rules specifying how applications for certificates (including provisional certificates) in relation to the producer offset are to be made, including: (a) the form in which applications are to be made; and (b) the information to be provided in applications; and (c) methods for verifying such information; and (d) procedures for providing, at the authority’s request, additional information in support of an application. (3) Rules under paragraph (2)(c) can include rules requiring reports by auditors or independent line producers.

Amendment history: Inserted 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 376-270 — Amendment of assessments

Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purposes of giving effect to this Division for an income year if: (a) a certificate issued to a company for a * film is revoked under section 376 ‑ 245 after the time the company lodged its * income tax return for an income year; and (b) the amendment is made at any time during the period of 4 years starting immediately after the revocation of the certificate. Note: Section 170 of that Act specifies the periods within which assessments may be amended.

Amendment history: Inserted 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 376-275 — Review in relation to certain production levels

The Minister must, before the end of 12 months after the commencement of this Division, initiate a review of the effect of this Division in relation to levels of production by the Australian independent production sector compared to levels of production by Australian television broadcasters.

Amendment history: Inserted 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 378-1 — What this Division is about

Companies may be entitled to a refundable tax offset in relation to qualifying Australian development expenditure incurred in completing or porting a digital game, or carrying on ongoing development of digital games in an income year. This offset is designed to support the growth of the digital games industry in Australia by providing concessional tax treatment for Australian expenditure. One of the requirements for entitlement to the digital games tax offset is that the company must be issued with a certificate in respect of the completion, porting or ongoing development of a digital game. The certificate specifies the amount of qualifying Australian development expenditure determined by the Arts Minister in respect of the completion, porting or ongoing development of the digital game. The amount of the refundable tax offset for an income year for a company is up to 30% of the sum of the determined totals of qualifying Australian development expenditure specified in certificates issued to the company for the income year.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-10 — Company entitled to refundable tax offset for Australian expenditure incurred in developing digital games

(1) A company is entitled to a * tax offset under this section (the digital games tax offset ) for an income year if: (a) the * Arts Minister has issued one or more certificates to the company for the income year under section 378 ‑ 25 (certificate for the digital games tax offset); and (b) the company claims the offset in its * income tax return for the income year; and (c) the company: (i) is an Australian resident that has an * ABN; or (ii) is a foreign resident that has a * permanent establishment in Australia and an ABN; when the company lodges the income tax return and when the tax offset is due to be credited to the company. Note: The digital games tax offset is a refundable tax offset: see section 67 ‑ 23. (2) The claim referred to in paragraph (1)(b) may be varied to take account of a variation under subsection 378 ‑ 15(5) of a notice given under subsection 378 ‑ 15(3) by the company in relation to the income year. Otherwise, the claim is irrevocable.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-15 — Amount of digital games tax offset

(1) Subject to subsection (2), the amount of the digital games tax offset for a company for an income year is the lower of: (a) 30% of the sum of all the amounts determined by the * Arts Minister under section 378 ‑ 30 that are specified in certificates issued to the company for the income year under section 378 ‑ 25; and (b) $20,000,000. (2) If the sum of the amounts of the digital games tax offset for an income year worked out under subsection (1) for: (a) the company; and (b) each other company (each of which is a related company ) that is * connected with or is an * affiliate of the company; is greater than $20,000,000, the amount of the digital games tax offset for the company is: (c) if the requirements of subsections (3) and (4) are satisfied—the amount specified in the notice given by the company under subsection (3); or (d) otherwise—nil. (3) The requirements of this subsection are: (a) the company gives the Commissioner a notice in the * approved form specifying an amount that is not more than 30% of the sum of all the amounts determined by the * Arts Minister under section 378 ‑ 25 that are specified in certificates issued to the company for the income year under section 378 ‑ 30; and (b) one or more of the related companies also give the Commissioner a notice in the approved form specifying an amount that is not more than 30% of the sum of all the amounts determined by the Arts Minister under section 378 ‑ 25 that are specified in certificates issued to the related company for the income year under section 378 ‑ 30; and (c) the sum of all the amounts specified in the notices given by the company and those related companies does not exceed $20,000,000. Example: Bilby Co is primarily responsible for developing a digital game. Wombat Co, a company connected with Bilby Co, is also primarily responsible for developing a digital game. The amount worked out under subsection (1) is $15,000,000 for the income year for each company. Since the sum of these amounts exceeds $20,000,000, the companies must coordinate with one another to ensure that the amount collectively claimed stays under the $20,000,000 cap. Bilby Co and Wombat Co agree that for the income year, they will each give the Commissioner a notice specifying $10,000,000 in notices. If they both do so, each will receive an offset of $10,000,000 for the income year. (4) A notice given under subsection (3) by a company in relation to an income year must be given at the same time as the company claims the digital games * tax offset in its * income tax return for the income year. (5) A company may vary the amount specified in a notice given under subsection (3) in relation to an income year if: (a) in specifying the amount in the notice: (i) the company made an inadvertent error in determining whether another company is a related company; and (ii) as a result the company did not take account of the amount of the digital games tax offset for the other company for the income year; and (b) the company gives the Commissioner a notice in the * approved form specifying the varied amount. Otherwise, the notice is irrevocable.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-20 — Meaning of digital game

(1) A digital game is a game in electronic form that is capable of generating a display on: (a) a portable electronic device; or (b) a computer monitor, television screen, liquid crystal display or similar medium; that allows for the playing of an interactive game. (2) A component of a * digital game is taken to be a digital game if: (a) a company that: (i) is a foreign resident that does not have a * permanent establishment in Australia; and (ii) owns or controls the rights to develop the digital game; engages another company (the Australian developer ) to develop the component of the digital game; and (b) the Australian developer: (i) is an Australian resident that has an * ABN, or is a foreign resident that has a * permanent establishment in Australia and an ABN; and (ii) is primarily responsible for undertaking activities necessary for the development of the digital game in Australia.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-25 — Arts Minister must issue certificate for the digital games tax offset

Completion certificate (1) The * Arts Minister must issue a certificate (a completion certificate ) to a company for an income year in relation to a * digital game if: (a) the game is * completed in the income year; and (b) the company has made an application for a completion certificate in relation to the game; and (c) the total of the company’s * qualifying Australian development expenditure on the game incurred in completing the game is at least $500,000; and (d) the Arts Minister is satisfied that the conditions in subsection (7) (about the type of game) are met for the game; and (e) the Arts Minister is satisfied that the company: (i) has developed the game as an original game; and (ii) is primarily responsible for undertaking activities necessary for the development of the game in Australia. Note: The operation of paragraph (e) is affected by paragraph 378 ‑ 45(1)(d) (which deals with the situation where one company takes over the development of a digital game from another company). (2) A * digital game is completed on the earlier of: (a) when the game is first released to the general public (other than for testing purposes); or (b) if the game is developed by a company under a contract entered into at * arm’s length with another entity—when the company first provides a version of the game to the entity in a state where it could reasonably be regarded as ready to be released to the general public. Porting certificate (3) The * Arts Minister must issue a certificate (a porting certificate ) to a company for an income year in relation to a * digital game if: (a) the game is * ported in the income year; and (b) the company has made an application for a porting certificate in relation to the game; and (c) the total of the company’s * qualifying Australian development expenditure on the game incurred in porting the game is at least $500,000; and (d) the Arts Minister is satisfied that the conditions in subsection (7) (about the type of game) are met for the game; and (e) the Arts Minister is satisfied that the company: (i) either owns or controls the rights to develop the game or has been engaged to develop the game by the entity who owns or controls the rights to develop the game; and (ii) is primarily responsible for undertaking activities necessary for the development of the game in Australia. Note: The operation of subparagraph (e)(ii) is affected by paragraph 378 ‑ 45(1)(d) (which deals with the situation where one company takes over the development of a digital game from another company). (4) A * digital game that has been * completed is ported on the earlier of: (a) when the game is first made available to the general public (other than for testing purposes) on a new platform; or (b) if the company developed the game under a contract entered into at * arm’s length with another entity—when the company first provides a version of the game to the entity in a state where it could reasonably be regarded as ready to be made available to the general public on a new platform. Ongoing development certificate (5) The * Arts Minister must issue a certificate (an ongoing development certificate ) to a company for an income year in relation to one or more * digital games if: (a) * ongoing development on the games occurs in the income year; and (b) the company has made an application for the ongoing development certificate; and (c) the total of the company’s * qualifying Australian development expenditure on the games incurred in the income year on the ongoing development of the games in the income year is at least $500,000; and (d) the Arts Minister is satisfied that the conditions in subsection (7) (about the type of game) are met for each of the games; and (e) the Arts Minister is satisfied that the company: (i) either owns or controls the rights to develop each of the games or has been engaged to develop the games by the entities who own or control the rights to develop the games; and (ii) is primarily responsible for undertaking activities necessary for the development of each of the games in Australia. Note: The operation of subparagraph (e)(ii) is affected by paragraph 378 ‑ 45(1)(d) (which deals with the situation where one company takes over the development of a digital game from another company). (6) Ongoing development on a * digital game means activities undertaken to update, improve or maintain the game after it has been * completed. Type of digital game (7) The conditions in this subsection that must be met for a * digital game are: (a) the game is primarily developed to be made available to the general public for entertainment or educational purposes; and (b) any of the following apply to the game: (i) the game is made available for use over the internet; (ii) the game is primarily played through the internet; (iii) the game operates only when a player is connected to the internet; and (c) the game is not any of the following: (i) a game that is a gambling service (within the meaning of the Interactive Gambling Act 2001 ), or is substantially comprised of gambling or gambling ‑ like practices; (ii) a game that contains material likely to lead to the game being refused classification under the Classification (Publications, Films and Computer Games) Act 1995 ; (iii) a game that is primarily developed for industrial, corporate or institutional purposes; (iv) a game that is primarily developed to advertise or promote a product, entity or service. Example 1: A slot machine simulator game would fail to satisfy the condition that the digital game must not be a gambling service or substantially comprise of gambling or gambling ‑ like practices, even if the game did not involve any real money or money equivalent. However, an adventure game in which a player may advance to a higher level by winning a game of poker could still meet this condition. Example 2: An interactive corporate training program would fail to satisfy the condition that the digital game must not be primarily developed for corporate purposes.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-30 — Arts Minister to determine a company’s qualifying Australian development expenditure for the digital games tax offset

(1) The * Arts Minister must, as soon as practicable after deciding to issue a certificate under section 378 ‑ 25 to a company, determine for the purposes of the digital games tax offset: (a) if the certificate is to be issued under subsection 378 ‑ 25(1) (completion certificate) to the company for an income year in relation to a * digital game—the total of the company’s * qualifying Australian development expenditure on the game incurred in * completing the game, whether incurred in that income year or in an earlier income year; or (b) if the certificate is to be issued under subsection 378 ‑ 25(3) (porting certificate) to the company for an income year in relation to a digital game—the total of the company’s qualifying Australian development expenditure on the game incurred in * porting the game, whether incurred in that income year or in an earlier income year; or (c) if the certificate is to be issued under subsection 378 ‑ 25(5) (ongoing development certificate) to the company for an income year in relation to one or more digital games—the total of the company’s qualifying Australian development expenditure on the games incurred in the income year on the * ongoing development of the games in the income year. (2) The determination must be in writing, but is not a legislative instrument. (3) In making the determination, the * Arts Minister must have regard to the matters in Subdivision 378 ‑ B. (4) The * Arts Minister must give the company written notice of the determination (including reasons for the determination).

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-35 — Development expenditure

(1) A company’s development expenditure on a * digital game is expenditure that the company incurs in, or in relation to, the development of the game. Specific inclusions (2) Without limiting subsection (1), the following expenditure of the company in relation to the * digital game is development expenditure on the game: (a) remuneration provided to persons (including independent contractors but excluding persons of a kind referred to in subsection (5)) who perform work or services directly for the company that are attributable to the development of the game, including the following: (i) project managers and artistic, creative and design directors; (ii) game designers; (iii) software developers and programmers; (iv) engineers (including for audio, graphics, physics and software); (v) user experience designers and testers; (vi) behaviour analysts; (vii) quality assurance testers; (viii) writers; (ix) artists, animators and performers (for music, voice and motion capture); (x) songwriters, composers, musicians and sound designers; (xi) persons performing roles that are broadly similar to those described in subparagraphs (i) to (x); (b) expenditure on research for the game; (c) expenditure on prototyping for the game; (d) expenditure on underlying game infrastructure (for example, game engines and anti ‑ cheating controls); (e) expenditure on user testing, debugging and collecting user data for the game; (f) expenditure on updating the game; (g) expenditure on obtaining or maintaining a classification under the Classification (Publications, Films and Computer Games) Act 1995 ; (h) expenditure on adapting the game for use on particular platforms. Specific exclusions (3) Despite subsections (1) and (2), the following expenditure of the company in relation to the * digital game is not development expenditure on the game: (a) the company’s general business overheads including, for example: (i) expenditure incurred in relation to insurance, audit services, accounting services, human resources, recruitment services and legal services; and (ii) expenditure on travel, accommodation, catering, entertaining or hospitality; and (iii) expenditure on visas or work permits; and (iv) expenditure incurred by way of, or in relation to, the financing of the game or company; (b) expenditure on, or in connection with, the following persons: (i) employees and independent contractors whose roles are not related to, or are incidental and not directly attributable to, the development of the game (including for example, administrative employees, social media managers, sales and marketing professionals, community managers and forum administrators and moderators); (ii) employees and independent contractors who were not Australian residents at the time the expenditure was incurred; (c) expenditure on the use of land or premises; (d) expenditure on computer hardware or servers, or the rights to access computer hardware or servers; (e) expenditure on acquiring or licensing software; (f) expenditure on marketing, advertising, publicity or promotion for the game or company; (g) expenditure on activities that are incidental to, but not directly attributable to, the development of the game (including, for example, expenditure on externally provided training, conferences, hiring equipment, release events and trade show demonstrations); (h) expenditure incurred to acquire copyright or a trade mark, or a licence in relation to copyright or a trade mark (other than in relation to acquiring a licence for employees or contractors); (i) expenditure on obtaining permission to use the image, likeness or name of a person or entity, or obtaining an endorsement by a person or entity; (j) expenditure on distributing the game; (k) expenditure on acquiring users for the game; (l) any expenditure claimed for the purposes of another * tax offset, including for the purposes of section 355 ‑ 100 (tax offsets for R&D); (m) expenditure that gives rise to notional deductions for the purposes of section 355 ‑ 205 (deductions for R&D expenditure); (n) expenditure funded directly or indirectly by: (i) a Commonwealth grant or subsidy to which Australian businesses are generally eligible; or (ii) a State or Territory grant or subsidy to which Australian business in that State or Territory are generally eligible. Expenditure incurred in relation to another entity (4) Despite subsections (1) and (2), the following expenditure of the company in relation to the * digital game is not development expenditure on the game: (a) expenditure on contracting another entity (the first contractor ) to perform work or services for the company where the first contractor contracts for another entity (the second contractor ) to perform the work or services and either: (i) the second contractor is not a natural person (including an independent contractor); or (ii) the second contractor contracts for another entity to perform the work or services; (b) expenditure incurred in relation to an entity that is an * associate of the company, other than an associate of a kind referred to in subsection (5); (c) expenditure incurred in connection with a transaction in which the company and another party to the transaction did not deal with each other at * arm’s length. Remuneration of influential employees (5) If a natural person (an influential employee ): (a) is an * associate of the company because of subparagraph 318(2)(d)(i) or (ii) of the Income Tax Assessment Act 1936 ; and (b) performs work or services directly for the company that are attributable to the development of the * digital game in an income year; then, despite subsection (1), only the first $65,000 of remuneration provided by the company to the influential employee for the income year is development expenditure on the digital game. Note: A minor voting interest is not sufficient for a person to be an associate of the company. Decline in value not development expenditure (6) To avoid doubt, the decline in the value of a * depreciating asset is not development expenditure on a * digital game.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-40 — Qualifying Australian development expenditure

(1) A company’s qualifying Australian development expenditure on a * digital game is the company’s * development expenditure on the game to the extent to which the expenditure: (a) satisfies subsection (2); and (b) is incurred for, or is reasonably attributable to, goods and services provided or acquired in Australia. The relevance test (2) An item of a company’s * development expenditure on a * digital game: (a) if the item of expenditure is substantially attributable to developing the game—satisfies this subsection in full; and (b) if the item of expenditure is not substantially attributable to developing the game—satisfies this subsection to the extent that the expenditure is attributable to developing the game. Expenditure that does not qualify (3) For the purposes of a * digital game in respect of which a company applies for a certificate under subsection 378 ‑ 25(1) (completion certificate), an item of the company’s * development expenditure on the game is not qualifying Australian development expenditure to the extent it is incurred after the earliest of the following: (a) the day on which the game is * completed; (b) the day on which the company applies for the certificate; (c) the day on which the game has been available to the general public for the purposes of conducting testing for one year. (4) For the purposes of a * digital game in respect of which a company applies for a certificate under subsection 378 ‑ 25(3) (porting certificate), an item of the company’s * development expenditure on the game is not qualifying Australian development expenditure to the extent it is incurred after the earlier of the following: (a) the day on which the game is * ported; (b) the day on which the company applies for the certificate. (5) You cannot count the same expenditure as * qualifying Australian development expenditure for the purposes of more than one certificate under section 378 ‑ 25. Example: Expenditure on porting a digital game that is claimed as qualifying Australian development expenditure for the purposes of a certificate under subsection 378 ‑ 25(3) (porting certificate) cannot be claimed for the purposes of a certificate under subsection 378 ‑ 25(5) (ongoing development certificate).

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-45 — Expenditure incurred by prior companies in completing or porting a digital game

Expenditure incurred by outgoing company attributed to incoming company (1) For the purposes of this Division, if a company (the incoming company ) takes over the development of a * digital game from another company (the outgoing company ): (a) expenditure incurred by the outgoing company in relation to * completing or * porting the game is taken to have been incurred by the incoming company; and (b) for the purposes of determining the extent to which that expenditure is * qualifying Australian development expenditure of the incoming company, the incoming company is taken: (i) to have been an Australian resident at any time when the outgoing company was an Australian resident; and (ii) to have been a foreign resident at any time when the outgoing company was a foreign resident; and (iii) to have had a * permanent establishment in Australia at any time when the outgoing company had a permanent establishment in Australia; and (iv) to have had an * ABN at any time when the outgoing company had an ABN; and (c) expenditure that the incoming company incurs in order to be able to take over the development of the game is to be disregarded for the purposes of this Division; and (d) any activities carried out by the outgoing company in relation to the game are taken, for the purposes of paragraph 378 ‑ 25(1)(e) and subparagraphs 378 ‑ 25(3)(e)(ii) and (5)(e)(ii), to have been carried out by the incoming company in relation to the game. Expenditure previously attributed to outgoing company attributed to incoming company (2) For the purposes of subsection (1): (a) expenditure incurred by the outgoing company in relation to * completing or * porting the * digital game includes expenditure that the outgoing company is itself taken to have incurred on the digital game because of the operation of subsection (1) or a previous operation of that subsection; and (b) the outgoing company is taken: (i) to have been an Australian resident at any time when the outgoing company is taken to have been an Australian resident because of the operation of subsection (1) or a previous operation of that subsection; and (ii) to have been a foreign resident at any time when the outgoing company was a foreign resident because of the operation of subsection (1) or a previous operation of that subsection; and (iii) to have had a * permanent establishment in Australia at any time when the outgoing company is taken to have had a permanent establishment in Australia because of the operation of subsection (1) or a previous operation of that subsection; and (iv) to have had an * ABN at any time when the outgoing company is taken to have had an ABN because of the operation of subsection (1) or a previous operation of that subsection; and (c) activities carried out by the outgoing company in relation to the digital game include activities that the outgoing company is taken to have carried out in relation to the digital game because of the operation of subsection (1) or a previous operation of that subsection. Example: If Uncle Carty Ltd starts out developing a digital game and then Mr Grouble Ltd takes over the development of the digital game, Mr Grouble Ltd is taken to have incurred the expenditure that Uncle Carty Ltd incurred on the digital game. If Lousie Ltd subsequently takes over the development of the digital game from Mr Grouble Ltd, Lousie Ltd is taken to have incurred the expenditure that Mr Grouble Ltd incurred on the digital game (including the expenditure of Uncle Carty Ltd that is attributed to Mr Grouble Ltd).

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-50 — Expenditure to be worked out excluding GST

In determining an amount of expenditure for the purpose of this Division, the expenditure is taken to exclude * GST.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-55 — Single company or head company may apply for certificate

(1) A company or, if the company is a * member of a * consolidated group or a * MEC group, the * head company of the consolidated group or MEC group may: (a) if all the company’s * qualifying Australian development expenditure on a * digital game has been incurred in * completing the game—apply to the * Arts Minister for the issue of a certificate under subsection 378 ‑ 25(1) (completion certificate) in relation to the game; or (b) if all the company’s qualifying Australian development expenditure on a digital game has been incurred in * porting the game—apply to the Arts Minister for the issue of a certificate under subsection 378 ‑ 25(3) (porting certificate) in relation to the game; or (c) if all the company’s qualifying Australian development expenditure on a digital game or games has been incurred in an income year on the * ongoing development of the games in the income year—apply to the Arts Minister for the issue of a certificate under subsection 378 ‑ 25(5) (ongoing development certificate) in relation to the games for the income year. (2) The application must: (a) specify which certificate is sought; and (b) specify the company’s * ABN; and (c) specify whether the company is an Australian resident or a foreign resident with a * permanent establishment in Australia; and (d) contain sufficient detail to enable the * Arts Minister to determine whether an item of expenditure incurred by the company is * qualifying Australian development expenditure on the game or on the games in the income year; and (e) be made in accordance with the rules made under section 378 ‑ 100 by the Arts Minister, so far as they relate to the requirements for applications.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-60 — Notice of refusal to issue certificate

If: (a) an application is made under subsection 378 ‑ 55(1) for the issue of a certificate; and (b) the * Arts Minister decides under section 378 ‑ 25 not to issue the certificate; the Arts Minister must give the applicant written notice of the decision (including reasons for the decision).

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-65 — Issue of certificate

(1) A certificate issued to a company under section 378 ‑ 25 must: (a) be in writing; and (b) specify the company’s * ABN; and (c) specify the date of issue of the certificate; and (d) specify the total of the company’s * qualifying Australian development expenditure on the relevant * digital game or games, as determined by the * Arts Minister under section 378 ‑ 30; and (e) if the certificate is issued under subsection 378 ‑ 25(1) (completion certificate) or (3) (porting certificate)—specify: (i) the name of the digital game to which the certificate relates; and (ii) the income year in which the digital game was * completed or * ported (as applicable); and (f) if the certificate is issued under subsection 378 ‑ 25(5) (ongoing development certificate)—specify: (i) the name of the digital game, or digital games, to which the certificate relates; and (ii) the income year for which the digital games tax offset is being sought. (2) The * Arts Minister must give the Commissioner notice of the issue of the certificate within 30 days after issuing the certificate. (3) The notice under subsection (2) must specify: (a) the company’s name; and (b) the company’s address; and (c) the amount specified under paragraph (1)(d) in the certificate; and (d) other matters agreed to between the Arts Minister and the Commissioner.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-70 — Revocation of certificate

(1) The * Arts Minister may revoke a certificate issued under section 378 ‑ 25 if the Arts Minister is satisfied that: (a) the issue of the certificate was based on inaccurate information; or (b) the certificate was obtained by fraud or serious misrepresentation; or (c) if the certificate is issued under subsection 378 ‑ 25(1) (completion certificate) to a company for an income year in relation to a * digital game—the total of the company’s * qualifying Australian development expenditure on the game incurred in * completing the game is less than $500,000; or (d) if the certificate is issued under subsection 378 ‑ 25(3) (porting certificate) to a company for an income year in relation to a digital game—the total of the company’s qualifying Australian development expenditure on the game incurred in * porting the game is less than $500,000; or (e) if the certificate is issued under subsection 378 ‑ 25(5) (ongoing development certificate) to a company for an income year in relation to one or more digital games—the total of the company’s qualifying Australian development expenditure on the games incurred in the income year on the * ongoing development of the games in the income year is less than $500,000. (2) If the * Arts Minister revokes a certificate under subsection (1), the Arts Minister must, within 30 days after the date of revocation, give written notice of the revocation to: (a) the company to whom the certificate was issued, including reasons for the decision to revoke the certificate; and (b) the Commissioner. (3) If a certificate is revoked under subsection (1), it is taken, for the purposes of this Division, never to have been issued. Note: This means that if an assessment of a company’s income tax is issued on the basis that the company is entitled to the digital games tax offset and a certificate on which the entitlement is based is then revoked, the assessment will be amended to take account of the fact that the company was never entitled to the offset or was entitled to the offset to a lesser amount: see section 378 ‑ 80. (4) Subsection (3) does not apply for the purposes of: (a) the operation of this section or section 378 ‑ 85; or (b) a review by a court or the * ART of the decision to revoke the certificate.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5) | Amended by No 38 of 2024, effective sch 1 (items 31 ‑ 37, 64): 14 Oct 2024 (s 2(1) item 2)

s 378-75 — Amendment of certificate

(1) The * Arts Minister may amend a certificate issued under section 378 ‑ 25 at any time during the period of 4 years starting immediately after the certificate is issued if: (a) the company to whom the certificate is issued requests, in writing, an amendment to the certificate; or (b) the Arts Minister decides to amend the certificate on the Arts Minister’s own initiative. (2) In deciding whether to amend a certificate under subsection (1), the * Arts Minister: (a) must have regard to the matters prescribed by the regulations; and (b) may have regard to any other matter that the Arts Minister considers relevant. (3) If the * Arts Minister amends a certificate under subsection (1), the Arts Minister must, within 30 days after the date of amendment, give written notice of the amendment (including reasons for the decision) to: (a) the company to whom the certificate was issued; and (b) the Commissioner . (4) If the * Arts Minister refuses to amend a certificate upon a request by a company under paragraph (1)(a), the Arts Minister must give the company written notice of the decision (including reasons for the decision ).

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-80 — 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: (a) after the Commissioner gave notice of the assessment to the company, a certificate issued under section 378 ‑ 25 of this Act to the company is either: (i) amended under section 378 ‑ 75 of this Act; or (ii) revoked under section 378 ‑ 70 of this Act; and (b) the amendment of the assessment is made at any time during the period of 4 years starting immediately after the amendment or revocation of the certificate. Note: Section 170 of the Income Tax Assessment Act 1936 specifies the periods within which assessments may be amended.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-85 — Notice of decision or determination

(1) This section applies to: (a) a notice given under section 378 ‑ 60 (refusal to issue a certificate); and (b) a notice of a determination given under section 378 ‑ 30 (determination of qualifying Australian development expenditure); and (c) a notice given under section 378 ‑ 70 (revocation of a certificate); and (d) a notice given under section 378 ‑ 75 (amendment or refusal to amend a certificate). (2) The notice of the decision or determination is to include the statements set out in subsections (3) and (4). (3) There must be a statement to the effect that, subject to the Administrative Review Tribunal Act 2024 , an application may be made to the * ART, by (or on behalf of) any entity whose interests are affected by the decision or determination, for review of the decision or determination. (4) There must also be a statement to the effect that a request may be made under section 268 of that Act by (or on behalf of) such an entity for a statement of reasons. (5) If the * Arts Minister fails to comply with subsection (3) or (4), that failure does not affect the validity of the decision or determination.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5) | Amended by No 38 of 2024, effective sch 1 (items 31 ‑ 37, 64): 14 Oct 2024 (s 2(1) item 2)

s 378-90 — Review of decisions by the Administrative Review Tribunal

Applications may be made to the * ART for review of: (a) a decision made by the * Arts Minister under section 378 ‑ 25 to refuse an application for a certificate; or (b) a determination made by the Arts Minister under section 378 ‑ 30 (total of a company’s * qualifying Australian development expenditure); or (c) a decision made by the Arts Minister under section 378 ‑ 70 to revoke a certificate; or (d) a decision made by the Arts Minister under section 378 ‑ 75 to amend or refuse to amend a certificate.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5) | Amended by No 38 of 2024, effective sch 1 (items 31 ‑ 37, 64): 14 Oct 2024 (s 2(1) item 2)

s 378-95 — Copy of digital game to be made available to the National Film and Sound Archive of Australia

The company to whom a certificate is issued under section 378 ‑ 25 must make available to the National Film and Sound Archive of Australia: (a) a copy of each * digital game named in the certificate; and (b) a copy of any materials provided to the general public in connection with each of those games.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-100 — Arts Minister may make rules about the digital games tax offset

The * Arts Minister may, by legislative instrument, make rules: (a) specifying how applications for certificates in relation to the digital games tax offset are to be made, including: (i) the form in which applications are to be made; and (ii) the information to be provided in applications; and (iii) methods for verifying such information; and (iv) procedures for providing, at the Arts Minister’s request, additional information in support of an application; and (b) specifying the form and contents of certificates in relation to the digital games tax offset; and (c) specifying how amendments of certificates in relation to the digital games tax offset are to be made, including: (i) the form in which the request for an amendment may be made; and (ii) circumstances in which an amendment may be requested, or made on the Arts Minister’s own initiative; and (iii) the information to be provided in a request for an amendment; and (iv) methods for verifying such information; and (v) procedures for providing, at the Arts Minister’s request, additional information in support of a request for an amendment; and (d) providing for provisional certificates (including in relation to a matter referred to in paragraph (a), (b) or (c)).

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-105 — Arts Minister may make rules establishing a Digital Games Tax Offset Advisory Board

The * Arts Minister may, by legislative instrument, make rules: (a) establishing a Digital Games Tax Offset Advisory Board to: (i) consider applications under subsection 378 ‑ 55(1) for certificates under section 378 ‑ 25; and (ii) advise the Arts Minister on whether to issue certificates under section 378 ‑ 25; and (iii) perform other functions in relation to the operation of this Division (including the operation of rules made under section 378 ‑ 100) as are specified in rules made under this section; and (b) specifying the membership of the Board and the terms and conditions of appointment to the Board; and (c) specifying procedures to be followed by the Board in performing its functions.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-110 — Delegation by Arts Minister

(1) The * Arts Minister may, in writing, delegate all or any of the Arts Minister’s powers under this Division, other than under section 378 ‑ 100 or section 378 ‑ 105, to: (a) the * Arts Secretary; or (b) an SES employee, or acting SES employee, in the Department administered by the Arts Minister. (2) In exercising powers under a delegation, the delegate must comply with any directions of the * Arts Minister.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 378-115 — Review of operation of this Division

(1) The * Arts Minister must cause a review of the operation of this Division to be undertaken as soon as possible after the end of 5 years after the commencement of this Division. (2) The review must include: (a) the effectiveness of this Division in supporting the growth of the digital games industry in Australia; and (b) the fiscal sustainability of the concessional tax treatment provided by this Division. (3) A written report of the review must be given to the * Arts Minister. The report must not include information that is commercially sensitive. (4) The * Arts Minister must cause a copy of the report of the review to be tabled in each House of the Parliament within 15 sitting days of that House after the report is given to the Arts Minister.

Amendment history: Inserted by No 29 of 2023, effective sch 1, sch 2 (items 12, 13, 15): 1 July 2023 (s 2(1) item 2) sch 9 (items 5-7): 24 June 2023 (s 2(1) item 5)

s 380-1 — What this Division is about

This Division provides a tax offset to certain entities as a result of certificates issued under the National Rental Affordability Scheme Act 2008 . It also ensures that payments made, and non ‑ cash benefits provided, by a State or Territory governmental body in relation to the National Rental Affordability Scheme are not assessable income and not exempt income.

Amendment history: Inserted by No 130 of 2008, effective 1 July 2008

s 380-5 — Claims by individuals, corporate tax entities and superannuation funds

Entitlement (1) An entity is entitled to a * tax offset for an income year if: (a) the * Housing Secretary issues an * NRAS certificate in relation to an * NRAS year to the entity (other than in the entity’s capacity (if any) as the * NRAS approved participant of an * NRAS consortium); and (b) the income year begins in the NRAS year; and (c) the entity is an individual, a * corporate tax entity or a * superannuation fund. Amount (2) The amount of the entity’s * tax offset is the amount stated in the * NRAS certificate.

Amendment history: Inserted by No 54 of 1999, effective 5 July 1999 (s 2(1), (2)) | Repealed by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Inserted by No 130 of 2008, effective 1 July 2008 | Repealed and substituted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-10 — Members of NRAS consortiums—individuals, corporate tax entities and superannuation funds

Entitlement (1) A * member of an * NRAS consortium is entitled to a * tax offset for an income year if: (a) the * Housing Secretary issues an * NRAS certificate in relation to an * NRAS year to the * NRAS approved participant of the NRAS consortium; and (b) the income year commences in the NRAS year; and (c) the member is an individual, a * corporate tax entity or a * superannuation fund. Amount (2) The amount of the * tax offset is the total of the amounts worked out using the following formula for each * NRAS dwelling: (a) covered by the * NRAS certificate; and (b) from which the * member * derives * NRAS rent during the * NRAS year: (3) Treat the references in subsection (2) to the * NRAS year as being references to a period that occurs during the NRAS year, if the * NRAS certificate is apportioned for the period.

Amendment history: Inserted by No 54 of 1999, effective 5 July 1999 (s 2(1), (2)) | Repealed by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Inserted by No 130 of 2008, effective 1 July 2008 | Repealed and substituted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-11 — Elections by NRAS approved participants

Scope (1) This section and sections 380 ‑ 12 and 380 ‑ 13 apply if: (a) a * member (the electing member ) of an * NRAS consortium would, apart from subsection 380 ‑ 12(3), be entitled to a * tax offset under section 380 ‑ 10 for an income year because of: (i) an * NRAS certificate in relation to an * NRAS year; and (ii) an * NRAS dwelling covered by the NRAS certificate; and (b) the electing member was the * NRAS approved participant of the NRAS consortium at any time during the NRAS year; and (c) the electing member elects to have this section apply to the NRAS certificate and NRAS dwelling for the income year. Requirements for an election (2) The election must be made: (a) in the * approved form; and (b) within 30 days after the day the * Housing Secretary issues the * NRAS certificate. (3) The Commissioner may require a copy or copies of the election to be given, within the 30 day period mentioned in paragraph (2)(b): (a) to the Commissioner; or (b) to each * member of the * NRAS consortium who may be entitled to a * tax offset under section 380 ‑ 12 as a result of the election; or (c) both to the Commissioner and to each such member. (4) The election may not be revoked.

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-12 — Elections by NRAS approved participants—tax offsets

Entitlement to tax offset (1) A * member of the * NRAS consortium (other than the electing member) is entitled to a * tax offset for the income year if the member is an individual, a * corporate tax entity or a * superannuation fund. Amount of tax offset (2) The amount of the * tax offset is the amount worked out using the following formula: where: member’s rent means: (a) if * NRAS rent was payable for the * NRAS dwelling in relation to the whole of the * NRAS year—the rent * derived by the * member from the NRAS dwelling during the NRAS year; or (b) if NRAS rent was payable for the NRAS dwelling in relation to only part of the NRAS year—the rent derived by the member from the NRAS dwelling during that part of the NRAS year. total rent means: (a) if * NRAS rent was payable for the * NRAS dwelling in relation to the whole of the * NRAS year—the rent * derived from the NRAS dwelling during the NRAS year; or (b) if NRAS rent was payable for the NRAS dwelling in relation to only part of the NRAS year—the rent derived from the NRAS dwelling during that part of the NRAS year. (3) The * tax offset to which the electing member would otherwise be entitled under section 380 ‑ 10 for the income year because of the * NRAS certificate and the * NRAS dwelling is reduced by the same amount. (4) Treat the references in subsection (2) to the * NRAS year as being references to a period that occurs during the NRAS year, if the * NRAS certificate is apportioned for the period. Amount of tax offset—rent that passes through NRAS approved participant (5) For the purposes of the references in the definitions in subsection (2) to rent * derived from the * NRAS dwelling during the * NRAS year, disregard * NRAS rent derived by a * member of the * NRAS consortium from the NRAS dwelling during a period in the NRAS year, to the extent that another member derives rent from the NRAS dwelling during the period because: (a) the first member is the * NRAS approved participant of the NRAS consortium throughout the period; and (b) the first member, in accordance with the contractual * arrangements that established the NRAS consortium, passes the NRAS rent on to the other member. Note: There may be more than one NRAS approved participant during an NRAS year. The electing member may be the NRAS approved participant for only part of the NRAS year. (6) For the purposes of paragraph (5)(b), treat any * NRAS rent retained by the first * member under the * arrangements as management fees or commission as having been passed on to the other member.

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-13 — Elections by NRAS approved participants—special rule for partnerships and trustees

For the purposes of sections 380 ‑ 14 to 380 ‑ 30 (which apply if a partnership or the trustee of a trust derives NRAS rent), for each * NRAS dwelling: (a) from which the electing member * derived * NRAS rent during the * NRAS year; and (b) that is covered by the * NRAS certificate; and (c) from which a partnership, or the trustee of a trust, that is a * member of the * NRAS consortium derived rent during the NRAS year; treat the following proportion of the NRAS rent as being NRAS rent derived during the NRAS year by the member mentioned in paragraph (c): where: member’s rent has the same meaning as in subsection 380 ‑ 12(2). total rent has the same meaning as in subsection 380 ‑ 12(2).

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-14 — Members of NRAS consortiums—partnerships and trustees

(1) This section applies if: (a) the * Housing Secretary issues an * NRAS certificate in relation to an * NRAS year to the * NRAS approved participant of an * NRAS consortium; and (b) the NRAS certificate covers one or more * NRAS dwellings; and (c) a * member of the NRAS consortium, other than the NRAS approved participant, * derives * NRAS rent during the NRAS year from any of those NRAS dwellings; and (d) the member is a partnership or a trustee of a trust. (2) For the purposes of sections 380 ‑ 15 to 380 ‑ 20, assume that: (a) the * member has been issued with an * NRAS certificate in relation to the * NRAS year; and (b) the NRAS certificate covers each * NRAS dwelling: (i) covered by the NRAS certificate mentioned in paragraph (1)(b) of this section; and (ii) from which the member * derives * NRAS rent during the NRAS year; and (c) the amount stated in the NRAS certificate for each of those NRAS dwellings is the amount worked out using the formula in subsection 380 ‑ 10(2) in relation to the NRAS dwelling for the NRAS year for the member.

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4) | Amended by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-15 — Entities to whom NRAS rent flows indirectly

(1) An entity is entitled to a * tax offset for an income year (the offset year ) if: (a) the * Housing Secretary issues an * NRAS certificate in relation to an * NRAS year to a partnership or a trustee of a trust; and (b) * NRAS rent * derived: (i) from any of the * NRAS dwellings covered by the NRAS certificate; and (ii) during the NRAS year; * flows indirectly to the entity in any income year; and (c) the offset year of the partnership or trustee begins in the NRAS year; and (d) the entity is: (i) an individual; or (ii) a * corporate tax entity when the NRAS rent flows indirectly to it; or (iii) the trustee of a trust that is liable to be assessed on a share of, or all or a part of, the trust’s * net income under section 98, 99 or 99A of the Income Tax Assessment Act 1936 for the offset year; or (v) a * superannuation fund, an * approved deposit fund or a * pooled superannuation trust. Note: The entities covered by this section are the ultimate recipients of the NRAS rent because the NRAS rent does not flow indirectly through them to other entities. (2) The amount of the * tax offset is the sum of the amounts worked out using the following formula for each * NRAS dwelling from which there is * NRAS rent covered by paragraph (1)(b): (3) Treat the references in subsection (2) to the * NRAS year as being references to a period that occurs during the NRAS year, if the * NRAS certificate is apportioned for the period.

Amendment history: Inserted by No 54 of 1999, effective 5 July 1999 (s 2(1), (2)) | Repealed by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Inserted by No 130 of 2008, effective 1 July 2008 | Repealed and substituted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4) | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 380-16 — Elections by NRAS approved participants that are partnerships or trustees

Scope (1) This section and sections 380 ‑ 17 and 380 ‑ 18 apply if: (a) an entity (the indirect entity ) is entitled to a * tax offset under section 380 ‑ 15 or 380 ‑ 20 for an income year because * NRAS rent * derived: (i) from any of the * NRAS dwellings covered by an * NRAS certificate issued by the * Housing Secretary in relation to an * NRAS year to a * member (the electing member ) of an * NRAS consortium; and (ii) during the NRAS year; * flows indirectly to the indirect entity in any income year (or would otherwise flow indirectly to the indirect entity, as mentioned in paragraph 380 ‑ 20(1)(d)); and (b) the electing member was the * NRAS approved participant of the NRAS consortium at any time during the NRAS year; and (c) the electing member elects to have this section apply to the NRAS certificate and NRAS dwelling for the income year. Requirements for an election (2) The election must be made: (a) in the * approved form; and (b) within 30 days after the day the * Housing Secretary issues the * NRAS certificate. (3) The Commissioner may require a copy or copies of the election to be given, within the 30 day period mentioned in paragraph (2)(b): (a) to the Commissioner; or (b) to each * member of the * NRAS consortium who may be entitled to a * tax offset under section 380 ‑ 17 as a result of the election; or (c) both to the Commissioner and to each such member. (4) The election may not be revoked.

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-17 — Elections by NRAS approved participants that are partnerships or trustees—tax offsets

Entitlement to tax offset (1) A * member of the * NRAS consortium (other than the electing member) is entitled to a * tax offset for the income year if the member is an individual, a * corporate tax entity or a * superannuation fund. Amount of tax offset (2) The amount of the * tax offset is the amount worked out using the following formula: where: member’s rent means: (a) if * NRAS rent was payable for the * NRAS dwelling in relation to the whole of the * NRAS year—the rent * derived by the * member from the NRAS dwelling during the NRAS year; or (b) if NRAS rent was payable for the NRAS dwelling in relation to only part of the NRAS year—the rent derived by the member from the NRAS dwelling during that part of the NRAS year. total rent means: (a) if * NRAS rent was payable for the * NRAS dwelling in relation to the whole of the * NRAS year—the rent * derived from the NRAS dwelling during the NRAS year; or (b) if NRAS rent was payable for the NRAS dwelling in relation to only part of the NRAS year—the rent derived from the NRAS dwelling during that part of the NRAS year. total tax offsets means the total of the * tax offsets to which entities would be entitled under section 380 ‑ 15 or 380 ‑ 20 because of * NRAS rent * derived: (a) from any of the * NRAS dwellings covered by the * NRAS certificate; and (b) during the * NRAS year; that * flows indirectly to them from the electing member (or would otherwise flow indirectly to them from the electing member, as mentioned in paragraph 380 ‑ 20(1)(d)). (3) The * tax offset to which the indirect entity would otherwise be entitled under section 380 ‑ 15 for the income year because of the * NRAS certificate and the * NRAS dwelling is reduced by the amount worked out using the following formula: where: total tax offsets has the same meaning as in subsection (2). (4) Treat the references in subsection (2) to the * NRAS year as being references to a period that occurs during the NRAS year, if the * NRAS certificate is apportioned for the period. Amount of tax offset—rent that passes through NRAS approved participant (5) For the purposes of the references in the definitions in subsection (2) to rent * derived from the * NRAS dwelling during the * NRAS year, disregard * NRAS rent derived by a * member of the * NRAS consortium from the NRAS dwelling during a period in the NRAS year, to the extent that another member derives rent from the NRAS dwelling during the period because: (a) the first member is the * NRAS approved participant of the NRAS consortium throughout the period; and (b) the first member, in accordance with the contractual * arrangements that established the NRAS consortium, passes the NRAS rent on to the other member. Note: There may be more than one NRAS approved participant during an NRAS year. The electing member may be the NRAS approved participant for only part of the NRAS year. (6) For the purposes of paragraph (5)(b), treat any * NRAS rent retained by the first * member under the * arrangements as management fees or commission as having been passed on to the other member.

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-18 — Elections by NRAS approved participants that are partnerships or trustees—special rule for partnerships and trustees

For the purposes of sections 380 ‑ 15 and 380 ‑ 20 to 380 ‑ 30 (which apply if a partnership or the trustee of a trust derives NRAS rent), for each * NRAS dwelling: (a) from which the electing member * derived * NRAS rent during the * NRAS year; and (b) that is covered by the * NRAS certificate; and (c) from which a partnership or trust that is a * member of the * NRAS consortium derived rent during the NRAS year; treat the following proportion of the NRAS rent as being NRAS rent derived during the NRAS year by the member mentioned in paragraph (c): where: member’s rent has the same meaning as in subsection 380 ‑ 14B(2). total rent has the same meaning as in subsection 380 ‑ 14B(2).

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-20 — Trustee of a trust that does not have net income for an income year

(1) An entity is entitled to a * tax offset for an income year (the offset year ) if: (a) the * Housing Secretary issues an * NRAS certificate in relation to an * NRAS year to a partnership or a trustee of a trust; and (b) the entity is a trustee of a trust; and (c) the trust mentioned in paragraph (b) does not have a * net income for an income year; and (d) * NRAS rent * derived during the NRAS year from an * NRAS dwelling covered by the NRAS certificate would otherwise * flow indirectly to the entity in the income year mentioned in paragraph (c) as if: (i) the trust did have a net income for the income year; and (ii) for the purposes of paragraph 380 ‑ 25(4)(b), the entity has a share amount, being the net income referred to in subparagraph (i) of this paragraph; and (iii) the entity’s * share of the NRAS rent under section 380 ‑ 30 was a positive amount; and (e) the offset year of the partnership or trustee begins in the NRAS year. (2) The amount of the * tax offset is the amount worked out in accordance with subsection 380 ‑ 15(2), as if the reference in the formula to the * NRAS certificate were a reference to the NRAS certificate mentioned in paragraph (1)(a) of this section. (3) For the purposes of working out the entity’s * share of * NRAS rent for an * NRAS dwelling, assume subparagraphs (1)(d)(i), (ii) and (iii) of this section apply. (4) If the trustee of a trust is entitled to a * tax offset under this section: (a) a beneficiary of the trust; or (b) a subsequent entity to whom * NRAS rent for an * NRAS dwelling mentioned in paragraph (1)(d) * flows indirectly; is not entitled to a tax offset under this Subdivision in relation to the NRAS rent * derived during the * NRAS year from for the NRAS dwelling.

Amendment history: Inserted by No 54 of 1999, effective 5 July 1999 (s 2(1), (2)) | Repealed by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Inserted by No 130 of 2008, effective 1 July 2008 | Repealed and substituted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-25 — When NRAS rent flows indirectly to or through an entity

(1) This section sets out the circumstances in which * NRAS rent: (a) flows indirectly to an entity (subsection (2), (3) or (4)); or (b) flows indirectly through an entity (subsection (5)). Partners (2) * NRAS rent flows indirectly to a partner in a partnership in an income year if, and only if: (a) during that income year, the NRAS rent is * derived by the partnership, or * flows indirectly to the partnership as a beneficiary because of a previous application of subsection (3); and (b) the partner has an individual interest: (i) in the partnership’s * net income for that income year that is covered by paragraph 92(1)(a) or (b) of the Income Tax Assessment Act 1936 ; or (ii) in a * partnership loss of the partnership for that income year that is covered by paragraph 92(2)(a) or (b) of that Act; (whether or not that individual interest becomes assessable income in the hands of the partner); and (c) the partner’s * share of the NRAS rent under section 380 ‑ 30 is a positive amount (whether or not the partner actually receives any of that share). Beneficiaries (3) * NRAS rent flows indirectly to a beneficiary of a trust in an income year if, and only if: (a) during that income year, the NRAS rent is * derived by the trustee of the trust, or * flows indirectly to the trustee as a partner or beneficiary because of a previous application of subsection (2) or this subsection; and (b) the beneficiary has this amount for that income year (the share amount ): (i) a share of the trust’s * net income for that income year that is covered by paragraph 97(1)(a) of the Income Tax Assessment Act 1936 ; or (ii) an individual interest in the trust’s net income for that income year that is covered by section 98A or 100 of that Act; (whether or not the share amount becomes assessable income in the hands of the beneficiary); and (c) the beneficiary’s * share of the NRAS rent under section 380 ‑ 30 is a positive amount (whether or not the beneficiary actually receives any of that share). Trustees (4) * NRAS rent flows indirectly to the trustee of a trust in an income year if, and only if: (a) during that income year, the NRAS rent is * derived by the trustee, or * flows indirectly to the trustee as a partner or beneficiary because of a previous application of subsection (2) or (3); and (b) the trustee is liable or, but for another provision in this Act, would be liable, to be assessed in respect of an amount (the share amount ) that is: (i) a share of the trust’s * net income for that income year under section 98 of the Income Tax Assessment Act 1936 ; or (ii) all or a part of the trust’s net income for that income year under section 99 or 99A of that Act; (whether or not the share amount becomes assessable income in the hands of the trustee); and (c) the trustee’s * share of the NRAS rent under section 380 ‑ 30 is a positive amount (whether or not the trustee actually receives any of that share). Note: A trustee to whom NRAS rent flows indirectly under this subsection is entitled to a tax offset under section 380 ‑ 15 and the NRAS rent does not flow indirectly through the trustee to another entity. (5) * NRAS rent flows indirectly through an entity (the first entity ) to another entity if, and only if: (a) the other entity is the focal entity in an item of the table in section 380 ‑ 30 in relation to the NRAS rent; and (b) that focal entity’s * share of the NRAS rent is based on the first entity’s share of the NRAS rent as an intermediary entity in that or another item of the table.

Amendment history: Inserted by No 54 of 1999, effective 5 July 1999 (s 2(1), (2)) | Repealed by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Inserted by No 130 of 2008, effective 1 July 2008

s 380-30 — Share of NRAS rent

Object of section (1) The object of this section is to ensure that: (a) * NRAS rent derived by a partnership or the trustee of a trust is allocated notionally amongst entities who * derive benefits from that NRAS rent; and (b) that allocation corresponds with the way in which those benefits were derived. (2) An entity’s share of * NRAS rent is an amount notionally allocated to the entity as its share of the NRAS rent, whether or not the entity actually receives any of that NRAS rent. (3) That amount is equal to the entity’s share of the * NRAS rent as the focal entity in column 3 of an item of the table. Note: An entity’s share of the NRAS rent is based on the share of the NRAS rent of each preceding intermediary entity through which the NRAS rent flows, starting from the intermediary entity to whom the NRAS rent is paid. This means that in some cases (see items 2 and 4 of the table), more than one item of the table will need to be applied to work out the share of the NRAS rent of an ultimate recipient of the NRAS rent. Share of NRAS rent Item Column 1 For this intermediary entity and this focal entity : Column 2 The intermediary entity’s share of the NRAS rent is: Column 3 The focal entity’s share of the NRAS rent is: 1 a partnership is the intermediary entity and a partner in that partnership is the focal entity if: (a) * NRAS rent is * derived by the partnership; and (b) the partner has, in respect of the partnership, an individual interest mentioned in subsection 380 ‑ 25(2) the NRAS rent so much of the NRAS rent as is taken into account in working out the amount of that individual interest 2 a partnership is the intermediary entity and a partner in that partnership is the focal entity if: (a) * NRAS rent * flows indirectly to the partnership as a beneficiary of a trust; and (b) the partner has, in respect of the partnership, an individual interest mentioned in subsection 380 ‑ 25(2) the amount worked out under column 3 of item 3 or 4 of this table where the partnership, as a beneficiary, is the focal entity in that item so much of the amount worked out under column 2 of this item as is attributable to the partner, having regard to the partnership agreement and any other relevant circumstances 3 the trustee of a trust is the intermediary entity and the trustee or a beneficiary of the trust is the focal entity if: (a) * NRAS rent is * derived by the trustee; and (b) the trustee or beneficiary has, in respect of the trust, a share amount mentioned in subsection 380 ‑ 25(3) or (4) (a) if the trust has a positive amount of * net income for that year—the NRAS rent; or (b) otherwise—nil so much of the amount worked out under column 2 of this item as is taken into account in working out that share amount 4 the trustee of a trust is the intermediary entity and the trustee or a beneficiary of the trust is the focal entity if: (a) * NRAS rent * flows indirectly to the trustee as a partner in a partnership or as a beneficiary of another trust; and (b) the trustee or beneficiary has, in respect of the trust, a share amount mentioned in subsection 380 ‑ 25(3) or (4) the amount worked out under column 3 of: (a) item 1 or 2 of this table where the trustee, as a partner, is the focal entity in that item; or (b) item 3 or a previous application of this item where the trustee, as a beneficiary, is the focal entity in that item so much of the amount worked out under column 2 of this item as is attributable to the focal entity in this item, having regard to the trust deed and any other relevant circumstances Note: In item 3 or 4 of the table, the trustee of a trust can be both the intermediary entity and the focal entity in the same item.

Amendment history: Inserted by No 54 of 1999, effective 5 July 1999 (s 2(1), (2)) | Repealed by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Inserted by No 130 of 2008, effective 1 July 2008

s 380-32 — Amended certificates

A reference in this Subdivision to an * NRAS certificate in relation to an * NRAS year is to be treated as a reference to an amended NRAS certificate in relation to the NRAS year, if the * Housing Secretary issues such an amended certificate.

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 380-35 — Payments made and non ‑ cash benefits provided in relation to the National Rental Affordability Scheme

A payment made to you, or a * non ‑ cash benefit provided to you, (whether directly or indirectly, such as through an * NRAS consortium of which you are a * member) by: (a) a Department of a State or Territory; or (b) a body (whether incorporated or not) established for a public purpose by or under a law of a State or Territory; in relation to your participation in the * National Rental Affordability Scheme is not assessable income and is not * exempt income.

Amendment history: Inserted by No 54 of 1999, effective 5 July 1999 (s 2(1), (2)) | Repealed by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1)) | Inserted by No 130 of 2008, effective 1 July 2008 | Amended by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 385-1 — What this Division is about

This Division contains rules that are specific to primary producers. Table of sections 385 ‑ 5 Where to find some other rules relevant to primary producers

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

s 385-5 — Where to find some other rules relevant to primary producers

Rules relevant to primary producers Item For rules about this topic: See: 1 The rules about assessable income arising from disposals of trading stock apply to live stock, because live stock is trading stock. Subdivision 70 ‑ D 2 The rules about assessable income arising from disposals of trading stock apply to: (a) standing or growing crops; and (b) crop ‑ stools; and (c) trees planted and tended for sale. Subdivision 70 ‑ D 3 There are some capital allowances for primary producers and some other land ‑ holders. Subdivisions 40 ‑ F and 40 ‑ G 4 Long ‑ term averaging of some primary producers’ tax liability (by tax offsets and extra income tax) Division 392

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 54 of 1999, effective 5 July 1999 (s 2(1), (2)) | Amended by No 77 of 2001, effective Sch 2 (items 149–476, 488): 30 June 2001 (s 2(1))

s 385-90 — What this Subdivision is about

You can elect to exclude from your assessable income the profit on a forced disposal or death of live stock that you held as assets of a primary production business you carry on in Australia. The excluded profit is then brought into your assessable income over a 5 year period in one of 2 ways. Table of sections 385 ‑ 95 Basic principles for elections under this Subdivision Operative provisions 385 ‑ 100 Cases where you can make an election 385 ‑ 105 Election to spread tax profit over 5 years 385 ‑ 110 Alternative election to defer tax profit and reduce cost of replacement live stock 385 ‑ 115 Your assessable income includes an amount for replacement live stock you breed 385 ‑ 120 Purchase price of replacement live stock is reduced 385 ‑ 125 Alternative election because of bovine tuberculosis has effect over 10 years not 5

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

s 385-95 — Basic principles for elections under this Subdivision

(1) You can elect:  to spread the profit on the disposal or death over the income year of the disposal or death and the next 4 income years ( election to spread ); or  to defer including the profit in your assessable income, if you will use the proceeds of the disposal or death mainly to replace the live stock ( election to defer ). (2) If you make an election to defer, the profit is “used” over the next 5 income years:  by reducing the amount for which you are taken to have bought replacement stock (as a result, your tax profit on the disposal of the replacement stock is increased); and  by including in your assessable income amounts for replacement stock that you breed. Any unused part of the profit is included in your assessable income for the fifth income year.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 385-100 — Cases where you can make an election

(1) You can make an election if: (a) you dispose of * live stock, or they die, because: (i) land is compulsorily acquired or resumed under an Act; or (ii) a State or Territory leases land for a cattle tick eradication campaign; or (iii) pasture or fodder is destroyed by fire, drought or flood and you will use the * proceeds of the disposal or death mainly to buy replacement stock or to maintain breeding stock for the purpose of replacing the live stock; or (iv) they are compulsorily destroyed under an * Australian law for the control of a * disease or they die of such a * disease; or (v) you receive an official notification under an * Australian law dealing with contamination of property; and (b) you held the live stock as assets of a * primary production business you carry on in Australia; and (c) apart from this Subdivision, your assessable income for any income year would include the * proceeds of the disposal or death. (2) The proceeds of the disposal or death are: (a) if you dispose of the * live stock or their carcases in the ordinary course of * business—the total of: (i) any amount you receive as payment for the live stock or carcases; and (ii) any compensation you receive for the death or destruction, or a reduction in * market value, of the live stock or their carcases from an * Australian government agency; or (b) if you dispose of the * live stock or their carcases outside the ordinary course of * business—the total of: (i) the market value of the live stock or their carcases, at the time of disposal; and (ii) any compensation you receive for the death or destruction, or a reduction in market value, of the live stock or their carcases from an * Australian government agency; or (c) if the * live stock die, and you do not dispose of their carcases to someone else—any compensation you receive for their death or destruction from an * Australian government agency.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 385-105 — Election to spread tax profit over 5 years

(1) You can elect: (a) to include in your assessable income for the * disposal year the * proceeds of the disposal or death, reduced by the * tax profit on the disposal or death; and (b) to include 20% of the tax profit on the disposal or death in your assessable income for the disposal year; and (c) to include 20% of the tax profit on the disposal or death in your assessable income for each of the next 4 income years. For rules about the making and effect of an election, see Subdivision 385 ‑ H. (2) The disposal year is the income year in which you dispose of the * live stock, or they die, as mentioned in subsection 385 ‑ 100(1). (3) The tax profit on the disposal or death is any amount remaining after subtracting from the * proceeds of the disposal or death the sum of: (a) the amount paid or payable for the purchase of as many of the * live stock as you purchased during the income year; and (b) the * value of the rest of the live stock as * trading stock on hand at the start of the income year.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 385-110 — Alternative election to defer tax profit and reduce cost of replacement live stock

(1) Alternatively, you can elect: (a) to include in your assessable income for the * disposal year the * proceeds of the disposal or death, reduced by the * tax profit on the disposal or death; and (b) to reduce the cost of replacement * live stock you buy in the disposal year (or any of the next 5 income years) by amounts totalling not more than the tax profit on the disposal or death; and (c) to include in your assessable income for the last of the 5 income years following the disposal year any * unused tax profit on the disposal or death on the last day of that year. Note: If the election is made because of bovine tuberculosis, it has effect over 10 income years instead of 5: see section 385 ‑ 125. For rules about the making and effect of an election, see Subdivision 385 ‑ H (2) However, you can only make this election if you will use the * proceeds of the disposal or death mainly to buy replacement * live stock, or to maintain breeding stock for the purpose of replacing the live stock that were disposed of or died. (3) The unused tax profit on the disposal or death is the * tax profit on the disposal or death less the total of: (a) the amounts included in your assessable income under section 385 ‑ 115 for replacement animals you breed; and (b) the amounts by which the amount paid or payable for the purchase of replacement animals is reduced under section 385 ‑ 120.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 385-115 — Your assessable income includes an amount for replacement live stock you breed

If you make the election in section 385 ‑ 110, then for the * disposal year and each of the next 5 income years, your assessable income includes any amount you choose for each replacement animal you breed during that income year. (However, you can choose not to include an amount.)

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

s 385-120 — Purchase price of replacement live stock is reduced

(1) If you make the election in section 385 ‑ 110, then the amount paid or payable for the purchase of each replacement animal you buy in the * disposal year, or in the next 5 income years, is treated as if it were reduced by the * reduction amount. Meaning of reduction amount (2) The reduction amount is:  so much of the * tax profit on the disposal or death as is attributable to live stock of the species you are replacing; divided by:  the number of animals of that species that you disposed of or that died. (3) However, if: (a) you purchase a replacement animal of a different species from the * live stock it replaces; and (b) you pay substantially more for it than you could have paid for a replacement animal of the same species; the reduction amount for the animal is any reasonable amount at least equal to the amount worked out under subsection (2). Exception to avoid reducing unused tax profit to less than nil (4) However, if applying subsection (1) to a particular purchase would reduce the * unused tax profit on the disposal or death to less than nil, instead reduce the amount paid or payable for the purchase of each replacement animal in that purchase by:  the * unused tax profit on the disposal or death; divided by:  the number of animals in the purchase.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 385-125 — Alternative election because of bovine tuberculosis has effect over 10 years not 5

If you can make an election under this Subdivision because: (a) * live stock are compulsorily destroyed under an * Australian law for the control of bovine tuberculosis; or (b) * live stock die of that * disease; sections 385 ‑ 110 to 385 ‑ 120 apply as if they referred to 10 income years instead of 5 years.

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

s 385-130 — Insurance for loss of live stock or trees

If your assessable income for an income year would otherwise include an insurance recovery for a loss of * live stock, or for a loss by fire of trees, that you hold as assets of a * primary production business you carry on in Australia, you can elect: (a) to include only 20% of the insurance recovery in your assessable income for that income year; and (b) to include 20% of the insurance recovery in your assessable income for each of the next 4 income years. For rules about the making and effect of an election, see Subdivision 385 ‑ H.

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

s 385-135 — Election to defer including profit on second wool clip

(1) If your assessable income for an income year would otherwise include the * proceeds of the sale of 2 wool clips because fire, drought or flood causes you to shear your sheep earlier than normal, you can elect to include in your assessable income for the next income year the * profit on the sale of the earlier than normal wool clip. For rules about the making and effect of an election, see Subdivision 385 ‑ H. (2) However, at the time the wool was shorn, the sheep must have been assets of a * primary production business you carried on in Australia. Also, the fire, drought or flood must have been in an area of Australia where you carried on that business at that time. (3) The proceeds of the sale of 2 wool clips are: (a) the proceeds of the sale of the earlier than normal wool clip; and (b) an amount covered by one or more of the following: (i) proceeds of the sale of another wool clip in the income year; (ii) proceeds of the sale of wool shorn in the previous income year that you hold at the start of the income year and that you took into account at cost in working out the * value of your * trading stock under Division 60 at the end of the previous income year; (iii) an amount for wool shorn in the previous income year that is included in your assessable income of the income year because of a previous election under this section. (4) The profit on the sale of the earlier than normal wool clip is the proceeds of the sale of the wool clip that would otherwise be included in your assessable income for the income year, less the expenses you incur in the income year that are directly attributable to the earlier shearing and sale.

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

s 385-145 — Partnerships and trusts

If a partnership or trustee carries on a * primary production business, only the partnership or trustee can make an election under Subdivision 385 ‑ E, 385 ‑ F or 385 ‑ G.

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

s 385-150 — Time for making election

You can only make an election under Subdivision 385 ‑ E, 385 ‑ F or 385 ‑ G before you lodge your * income tax return for the last income year for which your assessable income would (apart from the election) include any of: (a) the * proceeds of the disposal or death of * live stock; or (b) the insurance recovery for the loss of * live stock or trees; or (c) the * proceeds of the sale of the 2 wool clips. The Commissioner may allow you further time to make the election.

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

s 385-155 — Amounts are assessable income from carrying on the primary production business

The following are taken to be assessable income from carrying on a * primary production business in Australia: (a) an amount included in your assessable income because of an election under Subdivision 385 ‑ E, 385 ‑ F or 385 ‑ G; or (b) an amount included in your assessable income because of section 385 ‑ 160 (Effect of certain events on election).

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

s 385-160 — Effect of certain events on election

(1) You cannot make an election under Subdivision 385 ‑ E, 385 ‑ F or 385 ‑ G after a * disentitling event happens. (2) If a * disentitling event happens after you make an election under Subdivision 385 ‑ E, 385 ‑ F or 385 ‑ G, your assessable income for the income year in which the event happens includes: (a) the * proceeds of the disposal or death of * live stock; or (b) the insurance recovery for the loss of * live stock or trees; or (c) the * proceeds of the sale of 2 wool clips; reduced by each amount that, because of the election, is included in your assessable income for that or an earlier income year. (3) However, if a * disentitling event happens after you make an election under section 385 ‑ 110 (Alternative election to defer tax profit and reduce cost of replacement live stock), your assessable income for the income year in which the event happens includes any * unused tax profit on the disposal or death on the last day of that income year.

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

s 385-163 — Disentitling events

(1) A disentitling event happens when: (a) you die; or (b) you become bankrupt, insolvent, commence to be wound up, apply to take the benefit of a law for the relief of bankrupt or insolvent debtors, compound with creditors, or make an assignment of any property for the benefit of creditors; or (c) you leave Australia permanently, or it appears to the Commissioner that you are about to do so; or (d) you cease to carry on the * primary production business to which the election relates. (2) In the case of a partnership, a disentitling event happens when: (a) a partner in the partnership becomes bankrupt, insolvent, commences to be wound up, applies to take the benefit of a law for the relief of bankrupt or insolvent debtors, compounds with creditors, or makes an assignment of any property for the benefit of creditors; or (b) a partner leaves Australia permanently, or it appears to the Commissioner that a partner is about to do so; or (c) the partnership ceases to carry on the * primary production business to which the election relates; or (d) there is a variation in the constitution of the partnership or the interests of the partners. (3) In the case of a trust, a disentitling event happens when: (b) an order for the administration of the trust estate is made under a law relating to bankruptcy; or (c) a beneficiary becomes bankrupt, insolvent, commences to be wound up, applies to take the benefit of a law for the relief of bankrupt or insolvent debtors, compounds with creditors, or makes an assignment of any property for the benefit of creditors; or (d) the trustee or a beneficiary leaves Australia permanently, or it appears to the Commissioner that the trustee or a beneficiary is about to do so; or (e) the trustee ceases to carry on the * primary production business to which the election relates. (4) However, in the case of a trust, a disentitling event does not happen if: (a) either: (i) the disentitling event is covered by paragraph 3(c); or (ii) the disentitling event is covered by paragraph 3(d) and a beneficiary leaves Australia permanently, or it appears to the Commissioner that a beneficiary is about to do so; and (b) the Commissioner makes a determination under subsection (5). (5) The Commissioner may make a determination for the purpose of subsection (4) if it is fair and reasonable to do so having regard to: (a) the nature of the * disentitling event to which subsection (3) applies; and (b) any relevant circumstances relating to the beneficiary mentioned in paragraph (3)(c) or (d); and (c) any other relevant circumstances relating to the trust; and (d) any other matters the Commissioner considers relevant. (6) A determination made under subsection (5) must be made in writing. (7) The Commissioner must give the trustee of the trust a copy of the determination.

Amendment history: Inserted by No 121 of 1997, effective s 4: 8 July 1997 (s 2(1)) Sch 1, Sch 2 (items 3–17), Sch 3 (items 3–30), Sch 4 (items 5–62, Sch 5 (items 3–42), Sch 6 (items 3–67), Sch7 (items 2–4), Sch 8 (items 2–31), Sch 9 (items 3–15), Sch 10 (items 2–11), Sch 11 (items 2–36) and Sch 12 (items 1–14): 1 July 1997 (s 2(2), (3), (4) (5)) | Amended by No 136 of 2011, effective s. 4 and Schedule 1: Royal Assent

s 385-165 — New partnership can elect to be treated as same entity as old partnership

(1) Under Subdivision 385 ‑ E, 385 ‑ F or 385 ‑ G a new partnership can elect to be treated as a continuation of an old partnership that would otherwise cease to exist if: (a) it immediately takes over the relevant * primary production business of the old partnership; and (b) partners, together entitled to at least 25% of the income of the new partnership, were also partners in the old partnership. (2) The new partnership must make this election before it lodges its * income tax return for the income year in which it takes over the * business.

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

s 385-170 — New partnership can elect to take advantage of election made by former owner of the business

(1) If an entity (except a partnership): (a) has made an election under Subdivision 385 ‑ E, 385 ‑ F or 385 ‑ G; and (b) transfers the relevant * primary production business to a partnership; and (c) is entitled to at least 25% of the income of that partnership; the partnership may elect to apply the Subdivision under which the entity made the election to all future events as if it were that entity. (2) The partnership must make this election before it lodges its * income tax return for the income year in which the * business is transferred to it.

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

s 392-1 — What this Division is about

If you are a primary producer for 2 or more years in a row, this Division evens out your income tax liability from year to year. (It does so by reducing the effect that fluctuations in your taxable income have on the marginal rates of tax that apply to you from year to year.) Table of sections 392 ‑ 5 Overview of averaging process

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 392-5 — Overview of averaging process

How averaging adjustments work (1) This Division reduces or increases your income tax liability to bring it closer to what it would have been if worked out using a special rate of income tax. That rate (the comparison rate) is based on the income tax that you would pay for the current year on the average of your taxable income for up to the last 5 income years. Example: The graph shows how averaging taxable income reduces the effect of variations in taxable income (giving a fairly steady comparison rate from year to year). Tax offset as averaging adjustment (2) You may be entitled to a tax offset if the income tax you would pay on your basic taxable income for the current year at the comparison rate is less than the income tax you would pay on that income (apart from this Division and certain other provisions). See the examples of years 5, 6, 7 and 9 in the graph in subsection (4). Extra income tax as averaging adjustment (3) You may be liable to extra income tax on some or all of your basic taxable income for the current year if the income tax you would pay on your basic taxable income for the current year at the comparison rate is more than the income tax on that income (apart from this Division and certain other provisions). See the examples of years 8 and 10 in the graph in subsection (4). Example of the effect of averaging (4) The graph shows an example of the effect of averaging, using the same income figures as the graph in the example in subsection (1). Note: The example assumes that all the basic taxable income was from a primary production business. Effect of non ‑ primary production income on averaging adjustment (5) Your income from sources other than your primary production business may affect the adjustment of your income tax. If more than $5,000 of your basic taxable income is attributable to those sources, your averaging adjustment will be reduced to reflect the proportion of your basic taxable income attributable to primary production. (There are special shading ‑ out arrangements if your taxable income from other sources is between $5,000 and $10,000.) No adjustment in certain cases (6) Your income tax will not be adjusted under this Division in certain cases. In particular, you can choose not to have your income tax adjusted under this Division for 10 income years.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 83 of 1999, effective Sch 10 (items 24–54, 68(1), 69): 1 July 2000 (s 2(2)) | Amended by No 94 of 1999, effective 16 July 1999 (s 2(1)–(3)) | 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 392-10 — Individuals who carry on a primary production business

(1) This Division applies to your assessment for the * current year if: (a) you are an individual; and (b) you have carried on a * primary production business in Australia for 2 or more income years in a row (the last of which is the current year); and (c) for at least one of those income years your * basic taxable income is less than or equal to your basic taxable income for the next of those income years. Note 1: It follows that this Division does not apply if your basic taxable income has decreased every income year since you started carrying on a primary production business. Note 2: In working out whether this Division applies to your assessment for an income year, you may need to take account of income years before the 1998 ‑ 99 income year: see section 392 ‑ 1 of the Income Tax (Transitional Provisions) Act 1997 . Continued application of this Division after you stop carrying on a primary production business (2) This Division also applies to your assessment for the * current year if: (a) this Division applied to your assessment for an earlier income year during which you carried on a * primary production business in Australia; and (b) you do not carry on that business during the current year; and (c) at least one of the following conditions is met for each income year (including the current year) after the income year in which you stopped carrying on that business: (i) your assessable income for the income year included assessable income that was * derived from, or resulted from, your having carried on that business; (ii) you carried on a * primary production business in Australia during the income year. Note: In working out whether this Division applies to your assessment for an income year, you may need to take account of income years before the 1998 ‑ 99 income year. See section 392 ‑ 1 of the Income Tax (Transitional Provisions) Act 1997 . (3) This section applies as if you did not carry on a * primary production business during a particular income year if, because you made a choice under section 392 ‑ 25, this Division did not apply to your assessment for that income year. Note: A choice that you make under section 392 ‑ 25 has the effect that this Division does not apply to your assessments for 10 income years. None of these income years can be taken into account in applying this section after the 10 year opt ‑ out period.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 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 392-15 — Meaning of basic taxable income

(1) Work out your basic taxable income for an income year as follows: Method statement Step 1. Work out what would have been your taxable income for the income year if your assessable income for the income year: (a) had not included any amount under section 82 ‑ 65, 82 ‑ 70 or 302 ‑ 145 of the Income Tax Assessment Act 1997 (certain superannuation benefits and employment termination payments); and Note: This means that certain deductions will also be excluded. (b) had not included any * net capital gain for the income year. Step 2. Subtract from the Step 1 amount any * above ‑ average special professional income included in your taxable income for the income year under Division 405. (2) However, your basic taxable income for an income year is nil if: (a) you do not have a taxable income for the income year; or (b) the amount worked out under subsection (1) for the income year is less than nil.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3)

s 392-20 — Trust beneficiaries taken to be carrying on primary production business

(1) You are taken to carry on a * primary production business carried on by a trust during an income year if you satisfy the requirements in subsection (2), (3) or (4). Primary production business carried on by a trust with beneficiary presently entitled to income of the trust (2) You satisfy the requirements in this subsection if: (a) you are a beneficiary of the trust referred to in subsection (1); and (b) you are presently entitled to a share of the income of the trust for the income year; and (c) if you are presently entitled to less than $1,040 of the income of the trust for the income year—the Commissioner is satisfied that your interest in the trust was not acquired or granted wholly or primarily to enable your income tax to be adjusted under this Division. Primary production business carried on by a fixed trust with no income of the trust (3) You satisfy the requirements in this subsection if: (a) you are a beneficiary of the trust referred to in subsection (1); and (b) at all times during the income year, the manner or extent to which each beneficiary of the trust can benefit from the trust is not capable of being significantly affected by the exercise, or non ‑ exercise, of a power; and (c) the trust does not have any income of the trust for the income year to which a beneficiary of the trust could be presently entitled; and (d) if the trust had income of the trust for the income year, you would have been presently entitled to a share of the income of the trust. Primary production business carried on by a non ‑ fixed trust with no income of the trust (4) You satisfy the requirements in this subsection if you do not satisfy the requirements in subsection (3) and you are a chosen beneficiary of the trust referred to in subsection (1) for the purposes of section 392 ‑ 22 for the income year. Public trading trusts (5) You are not taken to carry on a * primary production business carried on by the trustee of a public trading trust (as defined in section 102R of the Income Tax Assessment Act 1936 , which deals with public trading trusts).

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)

s 392-22 — Trustee may choose that a beneficiary is a chosen beneficiary of the trust

(1) The trustee of a trust may choose that a beneficiary of the trust is a chosen beneficiary of the trust for an income year if the trust does not have income of the trust for the income year to which a beneficiary of the trust could be presently entitled. (2) The maximum number of choices that the trustee may make in respect of the trust for an income year is the higher of: (a) the number of individuals that were taken to be carrying on a * primary production business carried on by the trust under subsection 392 ‑ 20(1) in the income year immediately before the current income year; and (b) 12. (3) A choice made under subsection (1) must be: (a) in writing; and (b) signed by the trustee and the person chosen. (4) The trustee can make the choice no later than the time it lodges the trust’s * income tax return for the income year to which the choice relates. However, the Commissioner can allow the trustee to make a choice at a later time. (5) A choice cannot be revoked or varied.

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 392-25 — Choosing not to have your income tax averaged

(1) You can choose that this Division (except this section) not apply to your assessment for an income year. If you make this choice, this Division (except this section) does not apply to your assessment for the income year or any of the next 9 income years. (1A) Your choice must not cover any income year that a previous choice of yours has already covered. (2) You must make your choice in writing and give it to the Commissioner by the time you lodge your * income tax return for the income year to which your choice relates. However, the Commissioner may allow you to give the choice later. (3) Your choice cannot be revoked after it is given to the Commissioner.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 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 392-30 — What this Subdivision is about

This Subdivision explains how to work out whether you are entitled to a tax offset for the current year or whether you must pay extra income tax for the current year. Table of sections Tax offset or extra income tax 392 ‑ 35 Will you get a tax offset or have to pay extra income tax? How to work out the comparison rate 392 ‑ 40 Identify income years for averaging your basic taxable income 392 ‑ 45 Work out your average income for those years 392 ‑ 50 Work out the income tax on your average income at basic rates 392 ‑ 55 Work out the comparison rate

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 392-35 — Will you get a tax offset or have to pay extra income tax?

(1) Compare: (a) the amount (the income tax you would pay at the comparison rate ) worked out using the formula: (b) the amount of income tax that you would pay on your * basic taxable income for the * current year at * basic rates. Note: You must disregard some provisions of this Act in working out amounts of income tax for the purposes of this subsection: see subsection (5). Tax offset (2) You are entitled to a * tax offset equal to the * averaging adjustment worked out under Subdivision 392 ‑ C if the income tax you would pay at the comparison rate is less than the amount of income tax you would pay at * basic rates. Extra income tax (3) You must pay extra income tax on the * averaging component of your * basic taxable income if the income tax you would pay at the comparison rate is more than the amount of income tax you would pay at * basic rates. Note 1: Section 12A of the Income Tax Rates Act 1986 sets the rate at which you must pay extra income tax on the averaging component of your basic taxable income. Note 2: It does so in such a way that, generally, the extra income tax you must pay equals the averaging adjustment worked out under Subdivision 392 ‑ C. Meaning of basic rates (4) The basic rates at which you would pay income tax are: (a) if you are a resident taxpayer as defined in the Income Tax Rates Act 1986 —the rates of income tax in paragraph (1)(b) of Part I of Schedule 7 to that Act, taking into account the way it would apply with any changes to your tax ‑ free threshold under section 20 of that Act; or (b) if you are a non ‑ resident taxpayer as defined in the Income Tax Rates Act 1986 —the rates of income tax in paragraph 1(b) of Part II of Schedule 7 to that Act. Disregard certain provisions in working out amounts (5) Work out the amount of income tax mentioned in paragraph (1)(b) as if: (a) the following provisions did not apply: (i) this Division; (ii) section 94 (Partner not having control and disposal of share in partnership income) of the Income Tax Assessment Act 1936 ; (iii) Division 6AA (Income of certain children) of Part III of the Income Tax Assessment Act 1936 ; (iv) Part VIIB (Medicare levy) of the Income Tax Assessment Act 1936 ; and (b) you were not entitled to any rebate or credit under the Income Tax Assessment Act 1936 or to any * tax offset under this Act. No adjustment (6) This Division does not affect your income tax for the * current year if the income tax you would pay at the * comparison rate equals the amount of income tax you would pay at * basic rates. Note: The 2 amounts will be equal if: your basic taxable income and your average income are both below the tax ‑ free threshold; or your average income equals your basic taxable income for the current year.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 83 of 1999, effective Sch 10 (items 24–54, 68(1), 69): 1 July 2000 (s 2(2))

s 392-40 — Identify income years for averaging your basic taxable income

The income years over which you must average your * basic taxable income are: (a) if this Division has applied to your assessment for at least 4 income years in a row (including the * current year)—the current year and the 4 previous income years; or (b) if this Division has applied to your assessment for less than 4 income years in a row (including the * current year)—those income years and the last income year before them. Note: You may need to average your basic taxable income for one or more income years before the 1998 ‑ 99 income year. See section 392 ‑ 1 of the Income Tax (Transitional Provisions) Act 1997 .

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 392-45 — Work out your average income for those years

(1) Work out your average income in this way: Method statement Step 1. Add up your * basic taxable income for each of the income years over which you must average your basic taxable income. Step 2. Divide the sum by the number of those income years. Step 3. Round the result down to the nearest whole dollar if the result is not already a number of whole dollars. (2) Your basic assessable income for an income year is your assessable income for the income year, less: (a) any amount included in your assessable income under section 82 ‑ 65, 82 ‑ 70 or 302 ‑ 145 (certain employment termination payments and superannuation benefits); and (b) any * net capital gain included in your assessable income under Division 102.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 15 of 2007, effective s 4, Sch 1 (items 150–236, 240, 242–260, 406(1)–(3)), Sch 3 (items 8–44, 66) and Sch 4 (items 1–8): 15 Mar 2007 (s 2(1) items 1, 2, 6, 8, 9) Sch 2: 12 Apr 2007 (s 2(1) item 3) | Amended by No 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 392-50 — Work out the income tax on your average income at basic rates

Work out the amount of income tax that you would pay on your * average income for the * current year at * basic rates.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 392-55 — Work out the comparison rate

Work out the comparison rate using the formula:

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 392-60 — What this Subdivision is about

This Subdivision explains how to work out the amount of the averaging adjustment of your income tax for the current year (whether it is a tax offset or is used by the Income Tax Rates Act 1986 to set the rate at which you must pay extra income tax). Table of sections 392 ‑ 65 What your averaging adjustment reflects Your gross averaging amount 392 ‑ 70 Working out your gross averaging amount Your averaging adjustment 392 ‑ 75 Working out your averaging adjustment How to work out your averaging component 392 ‑ 80 Work out your taxable primary production income 392 ‑ 85 Work out your taxable non ‑ primary production income 392 ‑ 90 Work out your averaging component

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 392-65 — What your averaging adjustment reflects

(1) Your averaging adjustment is a proportion of your gross averaging amount, taking account of: (a) your taxable primary production income (the part of your basic taxable income from your primary production business); and (b) your taxable non ‑ primary production income (the part of your basic taxable income from other sources). Your averaging component is the means of taking into account the different parts of your basic taxable income in working out your averaging adjustment. (2) If your taxable non ‑ primary production income is less than or equal to $5,000, your averaging component equals the whole of your basic taxable income. (In other words, your averaging component includes all of your taxable primary production income and all of your taxable non ‑ primary production income.) (3) If your taxable non ‑ primary production income is between $5,000 and $10,000, a shading ‑ out system applies so that your averaging component includes some of your taxable non ‑ primary production income as well as all of your taxable primary production income. (4) If your taxable non ‑ primary production income is $10,000 or more, your averaging component equals your taxable primary production income. Your averaging component does not include any of your taxable non ‑ primary production income. (5) The following diagram shows examples of these relationships. The second and third columns show that as taxable non ‑ primary production income increases above $5,000 (up to a maximum of $10,000), less of it is counted in the averaging component.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 94 of 1999, effective 16 July 1999 (s 2(1)–(3))

s 392-70 — Working out your gross averaging amount

Your gross averaging amount is the amount of the difference between the following amounts worked out under section 392 ‑ 35: (a) the income tax you would pay at the comparison rate; (b) the amount of income tax that you would pay on your * basic taxable income for the * current year at * basic rates.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 392-75 — Working out your averaging adjustment

Work out your averaging adjustment for the * current year using the formula:

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 392-80 — Work out your taxable primary production income

(1) Work out your taxable primary production income for the * current year in this way: Method statement Step 1. Compare your * assessable primary production income for the * current year with your * primary production deductions for the current year. Step 2. If your assessable primary production income is larger than your primary production deductions, your taxable primary production income is the difference between them. Step 3. If your primary production deductions are larger than (or equal to) your assessable primary production income, your taxable primary production income is nil. Assessable primary production income (2) Your assessable primary production income for the * current year is the sum of: (a) any amount of your * basic assessable income for the current year that was * derived from, or resulted from, your carrying on a * primary production business; and (b) any amount included in your assessable income under section 420 ‑ 25 for the current year because you cease to * hold a * primary producer registered emissions unit; and (c) any amount of your basic assessable income for the current year to the extent that: (i) you are a beneficiary of a trust that is carrying on a primary production business; and (ii) the amount is your share of the trust’s * net income that is attributable to, or resulted from, an amount being included in the trust’s assessable income under section 420 ‑ 25 because the trust ceases to hold an * Australian carbon credit unit; and (iii) the unit would have been a primary producer registered emissions unit if you had started to hold, held and ceased to hold the unit instead of the trust; and (d) any amount of your basic assessable income for the current year to the extent that: (i) you are a partner in a partnership that is carrying on a primary production business; and (ii) the amount is your share of the partnership’s net income that is attributable to, or resulted from, an amount being included in the partnership’s assessable income under section 420 ‑ 25 because a partner (the holding partner ) in the partnership ceases to hold a primary producer registered emissions unit; and (iii) the unit would still have been a primary producer registered emissions unit if each other partner in the partnership had started to hold, held and ceased to hold the unit instead of the holding partner; and (e) any amount of your basic assessable income for the current year that was derived from, or resulted from, an * arrangement with a * carbon service provider to the extent that: (i) the arrangement relates to the provider starting to hold, holding or ceasing to hold an Australian carbon credit unit; and (ii) the unit would have been a primary producer registered emissions unit if you were starting to hold, holding or ceasing to hold the unit (as applicable) instead of the provider; and (iii) the amount does not relate to you giving the provider a * quasi ‑ ownership right over land. Primary production deductions (3) Your primary production deductions for the * current year are: (a) all amounts you can deduct that relate exclusively to the amount referred to in paragraph (2)(a); and (b) so much of any other amounts you can deduct (other than * apportionable deductions) to the extent that they reasonably relate to the amount referred to in paragraph (2)(a); and (c) so much of any other amounts you can deduct for the current year in relation to expenditure you incur in: (i) starting to * hold a * primary producer registered emissions unit; or (ii) holding such a unit; or (iii) ceasing to hold such a unit; and (d) so much of any other amounts you can deduct for the current year in relation to expenditure you incur under an * arrangement with a * carbon service provider to the extent that: (i) the arrangement relates to the provider starting to hold, holding or ceasing to hold an * Australian carbon credit unit; and (ii) the unit would have been a primary producer registered emissions unit if you were starting to hold, holding or ceasing to hold the unit (as applicable) instead of the provider; and (iii) the expenditure does not relate to you giving the provider a * quasi ‑ ownership right over land. Note 1: For the expenditure covered by subparagraph (c)(i), see subsections 420 ‑ 15(1) and (4) and 420 ‑ 65(4). Note 2: For the expenditure covered by subparagraph (c)(iii), see subsection 420 ‑ 42(1).

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 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 392-85 — Work out your taxable non ‑ primary production income

(1) Work out your taxable non ‑ primary production income for the * current year in this way: Method statement Step 1. Compare your * assessable non ‑ primary production income for the * current year with your * non ‑ primary production deductions for the current year. Step 2. If your assessable non ‑ primary production income is larger than your non ‑ primary production deductions, your taxable non ‑ primary production income is the difference between them. Step 3. If your non ‑ primary production deductions are larger than (or equal to) your assessable non ‑ primary production income, your taxable non ‑ primary production income is nil. Assessable non ‑ primary production income (2) Your assessable non ‑ primary production income for the * current year is the difference between: (a) your * basic assessable income for the current year; and (b) your * assessable primary production income for the current year. Non ‑ primary production deductions (3) Your non ‑ primary production deductions for the * current year are the difference between: (a) the sum of your deductions for the current year; and (b) your * primary production deductions for the current year.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 392-90 — Work out your averaging component

(1) Work out your averaging component for the * current year using the following table, taking into account: (a) your * taxable primary production income for the current year; and (b) your * taxable non ‑ primary production income for the current year. Averaging component If * taxable The averaging component equals: Item non ‑ primary production income: for * taxable primary production income > 0 for * taxable primary production income = 0 1 is nil * Basic taxable income Nil 2 is more than nil but does not exceed $5,000 * Basic taxable income * Basic taxable income 3 exceeds $5,000 but does not exceed $10,000 * Taxable primary production income plus * non ‑ primary production shade ‑ out amount * Non ‑ primary production shade ‑ out amount 4 is $10,000 or more * Taxable primary production income Nil Note: Subsections (2) and (3) explain how to work out your non ‑ primary production shade ‑ out amount if your taxable non ‑ primary production income is between $5,000 and $10,000. Non ‑ primary production shade ‑ out amount if your taxable primary production income is more than nil (2) If your * taxable primary production income is more than nil, your non ‑ primary production shade ‑ out amount is the amount worked out using the formula: Non ‑ primary production shade ‑ out amount if your taxable primary production income is nil (3) If your * taxable primary production income is nil, your non ‑ primary production shade ‑ out amount is the amount worked out using the formula: However, if that amount is less than nil, your non ‑ primary production shade ‑ out amount is nil. (4) In this section: Assessable PP income means your * assessable primary production income for the * current year. PP deductions means your * primary production deductions for the * current year. Taxable non ‑ PP income your * taxable non ‑ primary production income for the * current year.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 392-95 — You are treated as if you had not carried on business before

Choosing to discontinue and restart averaging (1) You can choose that this Division not affect your * income tax liability for an income year (the reduction year ) if you show the Commissioner that, because of retirement from your occupation or from any other cause, your * basic taxable income for the reduction year is permanently reduced during that year to less than two thirds of your * average income for that year. (1A) You must make the choice by notifying the Commissioner in writing by the day you lodge your * income tax return for the reduction year. However, the Commissioner can allow you to make it later. (1B) If you make a choice under subsection (1), this Division applies to assessments for later income years as if you had never carried on a * primary production business before the reduction year. Working out the extent of the permanent reduction (2) In working out the extent of the permanent reduction, you must work out your * average income for the reduction year on the basis that your * basic assessable income for an income year taken into account in working out your average income did not include any assessable income from sources from which you do not usually receive assessable income. (3) In working out the extent of the permanent reduction, disregard a reduction in * basic taxable income to the extent that it results from a change of assets from which assessable income was * derived into assets from which you derive income that is not assessable income.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 92 of 2020, effective Sch 1 (items 18–21, 24): 15 Oct 2020 (s 2(1) item 4) Sch 1 (items 25–27): 1 July 2022 (s 2(1) item 5) Sch 2 (items 1–3, 16–35), Sch 3 (items 25–36, 40), Sch 4 (items 1–11, 14), Sch 5 (items 11–38, 56) and Sch 7 (items 5–8, 12–25): 1 Jan 2021 (s 2(1) item 7)

s 393-1 — What this Division is about

You can deduct a farm management deposit you make, if: (a) you are an individual carrying on a primary production business (including a primary production business you carry on as a partner in a partnership or as a beneficiary of a trust); and (b) you hold the deposit for at least 12 months; and (c) you meet some other tests. The amount of the deposit withdrawn is included in your assessable income in the income year in which it is repaid. Special rules apply if the deposit is repaid in the event of a severe drought or an applicable natural disaster. Farm management deposits allow you to carry over income from years of good cash flow and to draw down on that income in years when you need the cash. This enables you to defer the income tax on your taxable primary production income from the income year in which you make the deposit until the income year in which the deposit is repaid. Note: An FMD provider must, every calendar month, give certain information to the Agriculture Secretary about farm management deposits: see section 398 ‑ 5 in Schedule 1 to the Taxation Administration Act 1953 .

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 147 of 2011, effective s. 4, Schedule 1, Schedule 5 (items 1–9, 16–20), Schedule 6 (items 1, 6) and Schedule 9: Royal Assent Schedule 8 (items 2–9, 37, 38, 41): 1 Jan 2012 | Amended by No 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1)

s 393-5 — Deduction for making farm management deposit

Entitlement to deduction (1) You can deduct the amount of a * farm management deposit for an income year if: (a) you are the * owner of the deposit; and (b) the deposit is made at a time during the year when you are an individual carrying on a * primary production business in Australia; and (c) if during the year, at a time after the deposit was made, you stopped carrying on a primary production business in Australia—you started carrying on such a business again within 120 days (whether or not during the year); and (d) your * taxable non ‑ primary production income for the year is not more than $100,000; and (e) you do not die or become bankrupt during the year. Note 1: This section does not apply if a deposit is reinvested, the term of a deposit is extended, or a deposit is transferred at the depositor’s request: see sections 393 ‑ 15 and 393 ‑ 16. Note 2: This Division applies to certain partners and beneficiaries as if they were individuals who carried on a primary production business: see subsections 393 ‑ 25(2), (3), (4), (5) and (6). Sum of deductions not to exceed taxable primary production income (2) The sum of the deductions that you would otherwise be entitled to under this section for * farm management deposits made in the income year must not exceed your * taxable primary production income for the income year. Amounts to be deducted in order of deposits (3) If you are entitled to deduct amounts in respect of 2 or more deposits, deduct the amounts in the order in which the deposits were made (until you reach the limit imposed by subsection (2)).

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4) | Amended by No 34 of 2014, effective Sch 1 (items 3–11, 13(1)): 30 May 2014 (s 2(1) item 2)

s 393-10 — Assessability on repayment of deposit

Amount assessable (1) Your assessable income for an income year includes the amount worked out using the following formula, if: (a) you are the * owner of a * farm management deposit; and (b) the deposit is repaid in full or in part in the year; and (c) the amount worked out using the formula is greater than nil: Note 1: This subsection does not apply if the deposit is reinvested, the term of the deposit is extended, or the deposit is transferred at the depositor’s request: see sections 393 ‑ 15 and 393 ‑ 16. Note 2: In a case where not all of the deposit is deductible under section 393 ‑ 5, repayment of the non ‑ deductible amount can take place without the amount being assessable. Once that amount is repaid, the remainder is assessable when it is repaid, so that the deduction is recouped. Example: Matt makes a farm management deposit of $120,000 on 1 April 2011. His taxable primary production income for the 2010—11 income year is $50,000; therefore, the deposit is only partly deductible in the year because it exceeds his taxable primary production income. Matt makes the following withdrawals from the deposit: $45,000 on 1 May 2013, $40,000 on 1 March 2014 and $35,000 on 1 September 2015. The unrecouped FMD deduction immediately before the first repayment of $45,000 is $50,000. No amount is included in his assessable income for the 2012 ‑ 2013 income year because the difference between the unrecouped FMD deduction ($50,000) and the amount of the deposit remaining after the repayment ($75,000) is less than nil. The unrecouped FMD deduction immediately before the second repayment of $40,000 is $50,000. $15,000 is included in Matt’s assessable income for the 2013 ‑ 2014 income year because the difference between the unrecouped FMD deduction ($50,000) and the amount of the deposit remaining after the second repayment ($35,000) is $15,000, which is greater than nil. The unrecouped FMD deduction immediately before the third repayment of $35,000 is $35,000; that is, $50,000 less $15,000. $35,000 is included in Matt’s assessable income for the 2015 ‑ 2016 income year; that is, the difference between the unrecouped FMD deduction ($35,000) and the amount of the deposit remaining after the third repayment ($0). Unrecouped FMD deduction (2) The unrecouped FMD deduction in respect of a * farm management deposit at a particular time is: (a) if no part of the deposit has been repaid before that time—the amount of the deduction under section 393 ‑ 5 for making the deposit; or (b) if one or more parts of the deposit have been repaid before that time—the unrecouped FMD deduction in respect of the deposit just before the most recent such repayment, reduced by any amount included in the * owner’s assessable income under this section as a result of that repayment. Example: Mia makes a deposit of $3,000, all of which is deductible. The deposit’s unrecouped FMD deduction just before a first repayment of $1,000 is the amount of the deduction (that is, $3,000—see paragraph (2)(a)). The deposit’s unrecouped FMD deduction just before a second repayment is $2,000 (that is, according to paragraph (2)(b), the unrecouped FMD deduction immediately before the first repayment ($3,000) reduced by the $1,000 included in Mia’s assessable income as a result of the first repayment). Note 1: If the deposit was originally an income equalisation deposit, see section 393 ‑ 10 of the Income Tax (Transitional Provisions) Act 1997 . Note 1A: Subsection 393 ‑ 16(3) affects the unrecouped FMD deduction of a consolidated farm management deposit. Note 2: Section 393 ‑ 55 affects the unrecouped FMD deduction of a new deposit linked to an old deposit affected by Division 2AA (Financial claims scheme for account ‑ holders with insolvent ADIs) of Part II of the Banking Act 1959 . Application of Division to transfer, reinvestment or other dealing (3) This Division applies to a transfer, reinvestment or other dealing with a * farm management deposit as if it were a repayment of the deposit, if: (a) you are the depositor; and (b) the transfer, reinvestment or other dealing is on your behalf or at your request. Note: Section 393 ‑ 15 modifies the application of the deduction, assessment and 12 month rules to certain transfers, reinvestments and other dealings. Deemed repayment because of death, bankruptcy etc. (4) This section applies as if a * farm management deposit had been repaid when it became repayable, rather than when it is actually repaid, if the deposit became repayable because of the requirement contained in the relevant agreement as set out in item 11 of the table in section 393 ‑ 35 (death, bankruptcy etc.). Note 1: This means that the amount of the deposit is included in your assessable income for the income year when the death, bankruptcy etc. occurs, rather than for any later year in which the deposit might be repaid. Note 2: This also means that, under subsection 45 ‑ 120(5) in Schedule 1 to the Taxation Administration Act 1953 (about Pay as you go (PAYG) instalments), the amount of the deposit is included in your instalment income for the period in which the death, bankruptcy etc. occurs. However, under section 12 ‑ 140 in that Schedule, an amount may also be required to be withheld from the actual payment if you do not quote your tax file number or ABN to the relevant FMD provider. Note 3: Section 393 ‑ 60 of this Act may limit the operation of subsection (4) if the farm management deposit is with an ADI that becomes a declared ADI under Division 2AA (Financial claims scheme for account ‑ holders with insolvent ADIs) of Part II of the Banking Act 1959 .

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 34 of 2014, effective Sch 1 (items 3–11, 13(1)): 30 May 2014 (s 2(1) item 2)

s 393-15 — Transactions to which the deduction, assessment and 12 month rules have modified application

(1) The provisions mentioned in subsection (2) do not apply in relation to the following transactions: (a) the immediate reinvestment of a * farm management deposit as a farm management deposit with the same * FMD provider; (b) the extension of the term of a farm management deposit (even if other terms such as those relating to interest payable are also varied); (c) the transfer of a farm management deposit in accordance with a requirement of the relevant agreement as set out in item 13 of the table in section 393 ‑ 35 (which allows for transfers of deposits at the request of the depositor). Note: This means that these transactions: (a) will not result in assessable income for the owner; and (b) will not give rise to a deduction; and (c) will not, if the transaction occurs within 12 months after the end of the day the deposit is made, result in the deposit losing its status as a farm management deposit. (2) The provisions are: (a) section 393 ‑ 5 (about deductions for making a farm management deposit); and (b) subsection 393 ‑ 10(1) (about assessability of the repayment of a farm management deposit); and (c) subsections 393 ‑ 40(1) and (2) (about repayment of a farm management deposit within the first 12 months); and (ca) subsection 393 ‑ 40(3) (about repayment of a farm management deposit in the event of severe drought); and (d) subsections 393 ‑ 40(3A) and (4) (about repayment of a farm management deposit in the event of an applicable natural disaster). (3) For the purposes of working out the * unrecouped FMD deduction for a deposit that is subject to a transaction mentioned in subsection (1), the transaction does not cause the deposit to be a different deposit. Note: This ensures that the unrecouped FMD deduction (which affects how much income tax is assessed in the event of a repayment) equals the deduction for the original deposit, less any amount included in your assessable income because of a previous repayment of the deposit.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 147 of 2011, effective s. 4, Schedule 1, Schedule 5 (items 1–9, 16–20), Schedule 6 (items 1, 6) and Schedule 9: Royal Assent Schedule 8 (items 2–9, 37, 38, 41): 1 Jan 2012 | Amended by No 13 of 2014, effective Sch 2 (items 33–56): 1 July 2014 (s 2(1) item 3) Sch 2 (items 143, 144): 26 Feb 2014 (s 2(1) item 8) Sch 2 (items 147–149): 1 Oct 2014 (s 2(1) item 9) | Amended by No 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1)

s 393-16 — Consolidation of farm management deposits

(1) The provisions mentioned in subsection (2) do not apply in relation to the immediate reinvestment of 2 or more * farm management deposits ( original deposits ) if: (a) just before the reinvestment occurs the balance of each of the original deposits is equal to the * unrecouped FMD deduction for the deposit; and (b) the original deposits are immediately reinvested as a single farm management deposit with the same * FMD provider, or with a different FMD provider; and (c) just before the reinvestment occurs the original deposits have each been held for a period of at least 12 months. Note: This means that the reinvestment: (a) will not result in assessable income for the owner; and (b) will not give rise to a deduction. (2) The provisions are: (a) section 393 ‑ 5 (about deductions for making a farm management deposit); and (b) subsection 393 ‑ 10(1) (about assessability of the repayment of a farm management deposit). (3) Despite paragraph 393 ‑ 10(2)(a), the unrecouped FMD deduction in respect of the * farm management deposit at a time before any part of the deposit has been repaid is the sum of the unrecouped FMD deductions in respect of each of the original deposits just before the reinvestment occurred. (4) Section 393 ‑ 40 (about the repayment of farm management deposits within 12 months) applies as if the new * farm management deposit was made on the same day that the most recent of the original deposits was made.

Amendment history: Inserted by No 34 of 2014, effective Sch 1 (items 3–11, 13(1)): 30 May 2014 (s 2(1) item 2)

s 393-17 — Tax consequences of liabilities reducing because of farm management deposits

(1) To avoid doubt, if amounts of interest payable by the * owner of a * farm management deposit, or by a partnership of which the owner is a partner, to the * FMD provider in respect of loans or other debts of the owner or partnership fall short of what they otherwise would be because the owner holds the farm management deposit, then: (a) any income of the owner or partnership comprising the shortfall is neither assessable income nor * exempt income of the owner or partnership; and (b) any amount that any person: (i) is not liable to pay because of the shortfall; and (ii) could have, apart from this section, deducted under this Act; is not deductible. (2) However, this section applies only to the extent that the loans or other debts relate to a * primary production business that the * owner or partnership carries on.

Amendment history: Inserted by No 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1)

s 393-20 — Farm management deposits

Meaning of farm management deposit (1) A deposit with an * FMD provider is a farm management deposit if: (a) the depositor applies to make the deposit in accordance with subsection (2); and (b) the deposit is made under an agreement between the FMD provider and the depositor that: (i) describes the deposit as a farm management deposit; and (ii) at all times while the deposit is with the FMD provider, contains requirements to the effect set out in the table in section 393 ‑ 35. The agreement may also contain additional requirements that are not inconsistent with those set out in that table. Depositor to provide information in application form (2) For the purposes of paragraph (1)(a), the depositor must apply to the * FMD provider to make the deposit by completing and signing a form that: (a) permits the depositor to state the * owner’s * tax file number in the form; and (b) requires the depositor to provide any other information required by regulations for the purposes of this paragraph; and (c) contains any statements, required by regulations for the purposes of this paragraph, that are to be read by the depositor when completing the form. Note 1: A depositor who makes a false or misleading statement in such a form commits an offence against section 8K or 8N of the Taxation Administration Act 1953 . Note 2: If the owner does not quote his or her tax file number or ABN to the FMD provider, the Pay as you go (PAYG) withholding required under section 12 ‑ 140 in Schedule 1 to the Taxation Administration Act 1953 from a repayment of the deposit is at the highest marginal tax rate. Note 3: Division 4A of Part VA of the Income Tax Assessment Act 1936 sets out rules for quoting tax file numbers in connection with farm management deposits. Meaning of FMD provider (3) In this Act: FMD provider means an entity that: (a) is an * ADI; or (b) carries on in Australia the * business of banking, so long as the Commonwealth, a State or a Territory guarantees the repayment of any deposit taken in the course of that business; or (c) carries on in Australia a business that consists of or includes taking money on deposit, so long as the Commonwealth, a State or a Territory guarantees the repayment of any deposit taken in the course of that business.

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

s 393-25 — Owners of farm management deposits

Meaning of owner (1) The owner of a * farm management deposit is: (a) if paragraph (b) does not apply—the individual who made or is making the deposit; or (b) in the case of a deposit made or being made by the trustee of a trust on behalf of a beneficiary who is an individual—the beneficiary. Primary production business carried on by a partnership (2) This Division applies to you as if you were an individual who is carrying on a * primary production business that is actually carried on by a partnership, if you are an individual who is a partner in the partnership. Primary production business carried on by a trust (3) This Division (other than subsection 393 ‑ 17(2) and paragraph 393 ‑ 37(b)), and section 97A of the Income Tax Assessment Act 1936 (about beneficiaries who are owners of farm management deposits), apply to you as if you were an individual who is carrying on a * primary production business that is actually carried on by a trust, if you satisfy the requirements in subsection (4), (5) or (6). Primary production business carried on by a trust with beneficiary presently entitled to income of the trust (4) You satisfy the requirements in this subsection if: (a) you are an individual and a beneficiary of the trust referred to in subsection (3); and (b) you are presently entitled to a share of the income of the trust for the income year. Primary production business carried on by a fixed trust with no income of the trust (5) You satisfy the requirements in this subsection if: (a) you are an individual and a beneficiary of the trust referred to in subsection (3); and (b) at all times during the income year, the manner or extent to which each beneficiary of the trust can benefit from the trust is not capable of being significantly affected by the exercise, or non ‑ exercise, of a power; and (c) the trust does not have any income of the trust for the income year to which a beneficiary of the trust could be presently entitled; and (d) if the trust had income of the trust for the income year, you would have been presently entitled to a share of the income of the trust. Primary production business carried on by a non ‑ fixed trust with no income of the trust (6) You satisfy the requirements in this subsection if you do not satisfy the requirements in subsection (5) and you are an individual and a chosen beneficiary of the trust referred to in subsection (3) for the purposes of section 393 ‑ 27 for the income year.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4) | Amended by No 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1)

s 393-27 — Trustee may choose that a beneficiary is a chosen beneficiary of the trust

(1) The trustee of a trust may choose that a beneficiary of the trust is a chosen beneficiary of the trust for an income year if the trust does not have any income of the trust for the income year to which a beneficiary of the trust could be presently entitled. (2) The maximum number of choices that the trustee may make in respect of the trust for an income year is the higher of: (a) the number of individuals to which subsection 393 ‑ 25(3) applied in the income year immediately before the current income year; and (b) 12. (3) A choice made under subsection (1) must be: (a) in writing; and (b) signed by the trustee and the person chosen. (4) The trustee can make the choice no later than the time it lodges the trust’s * income tax return for the income year to which the choice relates. However, the Commissioner can allow the trustee to make a choice at a later time. (5) A choice cannot be revoked or varied.

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 393-28 — Application of Division to beneficiary no longer under legal disability

If: (a) a * farm management deposit was made by a trustee on behalf of a beneficiary of a trust; and (b) the beneficiary was under a legal disability when the deposit was made; and (c) the beneficiary is no longer under a legal disability; then this Division, and Division 4A of Part VA of the Income Tax Assessment Act 1936 , apply as if the beneficiary had made the deposit. Note: Division 4A of Part VA of the Income Tax Assessment Act 1936 is about quotation of tax file numbers in connection with farm management deposits.

Amendment history: Inserted by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4)

s 393-30 — Effect of contravening requirements

(1) A deposit is not a farm management deposit if, when the deposit was accepted, a requirement contained in the relevant agreement as set out in items 1 to 6 of the table in section 393 ‑ 35 was contravened. (2) A deposit is not, and is taken never to have been, a farm management deposit if a requirement contained in the relevant agreement as set out in items 7 and 9 of the table in section 393 ‑ 35 is contravened at any time in relation to the deposit. (3) So much of a deposit as causes a requirement contained in the relevant agreement as set out in item 10 of the table in section 393 ‑ 35 to be contravened is not a farm management deposit . Note: There is an administrative penalty if a requirement contained in the relevant agreement as set out in item 8 of the table in section 393 ‑ 35 is contravened: see section 288 ‑ 120 in Schedule 1 to the Taxation Administration Act 1953 .

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1)

s 393-35 — Requirements of agreement for a farm management deposit

An agreement mentioned in paragraph 393 ‑ 20(1)(b) must contain requirements to the effect of those set out in the following table: Requirements of agreement for a farm management deposit Item Requirement 1 The * owner must be an individual who is carrying on a * primary production business in Australia when the deposit is made. Note: This Division applies to certain partners and beneficiaries as if they were individuals who carried on a primary production business: see subsections 393 ‑ 25(2), (3), (4), (5) and (6). 2 The deposit: (a) must not be made by 2 or more individuals jointly; and (b) must not be made on behalf of 2 or more individuals. 3 The deposit must not be made by a trustee on behalf of a beneficiary unless the beneficiary is: (a) under a legal disability; and (b) presently entitled to a share of the income of the trust. 4 The deposit must be $1,000 or more when it is made, unless the deposit is: (a) the immediate reinvestment of a * farm management deposit as a farm management deposit with the same * FMD provider; or (b) the extension of the term of a farm management deposit (even if other terms such as those relating to interest payable are also varied). 6 Rights of the depositor in respect of the deposit must not be transferable to another entity. 7 The deposit must not be the subject of a charge or other encumbrance to secure any amount. 8 The fact that the * owner is the owner of the deposit must not be the reason why, or one of the reasons why, amounts of interest that are or will be payable to the * FMD provider in respect of loans or other debts of the owner, or of a partnership of which the owner is a partner, are or will be less than they would otherwise be. 9 Interest or other earnings on the deposit must not be invested as a * farm management deposit with the * FMD provider without having first been paid to the depositor. 10 The deposit must not be more than $800,000, and the sum of the balances from time to time of the deposit and all other * farm management deposits of the * owner with * FMD providers must not be more than $800,000. 11 The deposit must be repaid if: (a) the * owner dies or becomes bankrupt; or (b) the owner ceases to carry on a * primary production business in Australia and does not start carrying on such a business again within 120 days. 12 The amount of any repayment of the deposit must be $1,000 or more, except if the entire amount of the deposit is repaid. 13 The * FMD provider must transfer the deposit by electronic means to another FMD provider that agrees to accept the deposit as a * farm management deposit, if the first FMD provider is: (a) requested in writing by the depositor to do so; and (b) given any information or other assistance from the depositor necessary for the purpose. 14 The * FMD provider must not deduct from the deposit (whether at the time it is made, while it is with the FMD provider or at the time of its repayment) any administration fee or other amount required by the FMD provider to be paid in respect of the deposit or otherwise.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 62 of 2011, effective Sch 1 (items 1–3, 6–12, 14), Sch 2 (items 8–27, 45–51), Sch 3 (items 1–3, 9–19) and Sch 4 (items 33, 34): 29 June 2011 (s 2(1) items 2, 3, 5, 6) Sch 3 (items 4–8): 30 June 2011 (s 2(1) item 4) | Amended by No 147 of 2011, effective s. 4, Schedule 1, Schedule 5 (items 1–9, 16–20), Schedule 6 (items 1, 6) and Schedule 9: Royal Assent Schedule 8 (items 2–9, 37, 38, 41): 1 Jan 2012 | Amended by No 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1)

s 393-37 — Agreements for a farm management deposit may allow for some offsets of a depositor’s liabilities

An agreement mentioned in paragraph 393 ‑ 20(1)(b) does not contravene the requirements of item 8 of the table in section 393 ‑ 35 to the extent that: (a) it provides for amounts of interest to be payable to the * FMD provider in respect of a loan or other debt of the * owner of the * farm management deposit, or of a partnership of which the owner is a partner, to be reduced; and (b) that loan or other debt relates to a * primary production business that the owner or partnership carries on.

Amendment history: Inserted by No 52 of 2016, effective Sch 3 (items 1–13, 15–22): 1 July 2016 (s 2(1) item 1)