Income Tax (Transitional Provisions) Act 1997

s 276-705 — Accounting for unders and overs for base years before becoming an AMIT

(1) This section applies if the trust has an under or over of a character in the discovery year relating to the base year. (2) For the purposes of subsection (1): (a) assume that the trust is an AMIT for the base year and every later year before the starting income year; and (b) if, at a time, the trust sent its members distribution statements for an income year that is prior to the starting income year—assume that the trust sent those members AMMA statements for that income year at that time. (3) For the purposes of Division 276 of the Income Tax Assessment Act 1997 , treat the under or over mentioned in subsection (1) as an under or over of the AMIT, in the discovery year relating to the base year, of the character mentioned in that subsection. (4) If: (a) had the under or over mentioned in subsection (1) been discovered before the starting income year, this Act would have operated to produce a particular effect (the pre ‑ AMIT scheme effect ) for the base year in relation to the amount or amounts reflected in the under or over; and (b) subsection (3) accounts for the pre ‑ AMIT scheme effect; treat this Act as not operating to produce the pre ‑ AMIT scheme effect for the base year. Note: Subsection (3) continues to operate in relation to the under or over.

Amendment history: Inserted by No 53 of 2016, effective sch 8 (items 2, 3): 5 May 2016 (s 2(1) item 4)

s 276-750 — Payment by trustee on or after 1 July 2011—certain CGT provisions etc. apply for the purposes of working out non ‑ assessable part for first income year of AMIT

(1) This section applies if: (a) a trust becomes an AMIT for an income year; and (b) the trustee of the trust made a payment to an entity at a time: (i) on or after 1 July 2011; and (ii) before the start of the income year mentioned in paragraph (a). (2) Subsection (3) applies for the purpose of: (a) working out whether CGT event E4 happens because of the payment; and (b) working out the amount (if any) of the entity’s capital gain under subsection 104 ‑ 70(4) of the Income Tax Assessment Act 1997 . (3) For the purpose of working out the amount of the non ‑ assessable part mentioned in paragraph 104 ‑ 70(1)(b), treat the following provisions as being in operation at the time the payment was made: (a) sections 104 ‑ 107F and 104 ‑ 107G of the Income Tax Assessment Act 1997 ; (b) any other provision of that Act, to the extent that it relates to the operation of the provisions mentioned in paragraph (a). (4) Subsection (3) does not apply to the extent (if any) that the entity, in the income tax return that it lodged for the income year in which the payment was made, included the amount of the payment in its assessable income for that income year. (5) For the purposes of section 118 ‑ 20 of the Income Tax Assessment Act 1997 , treat this section as being in Part 3 ‑ 1 of that Act. Note: Section 118 ‑ 20 deals with reducing capital gains if an amount is otherwise assessable.

Amendment history: Inserted by No 53 of 2016, effective sch 8 (items 2, 3): 5 May 2016 (s 2(1) item 4)

s 276-755 — Payment by trustee before 1 July 2011—limit on amendment of assessment

(1) This section applies if: (a) a trust becomes an AMIT for an income year; and (b) the trustee of the trust made a payment to an entity at a time before 1 July 2011. (2) The Commissioner cannot amend the entity’s assessment for the income year in which the payment was made in a particular way if: (a) the effect of the amendment would be to increase the entity’s assessable income for that income year; and (b) the Commissioner could not amend the assessment in that way if the following provisions were in operation at the time the payment was made: (i) sections 104 ‑ 107F, 104 ‑ 107G and 104 ‑ 107H of the Income Tax Assessment Act 1997 ; (ii) any other provision of that Act, to the extent that it relates to the operation of the provisions mentioned in subparagraph (i); and (c) the entity has not requested the Commissioner to amend the assessment in that way.

Amendment history: Inserted by No 53 of 2016, effective sch 8 (items 2, 3): 5 May 2016 (s 2(1) item 4)

s 290-10 — Directed termination payments not deductible etc.

Division 290 of the Income Tax Assessment Act 1997 does not apply to a contribution that is a directed termination payment (within the meaning of section 82 ‑ 10F).

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (item 25) and Schedule 2 (item 3): Royal Assent

s 290-15 — Early balancers—deduction limits from end of 2006 ‑ 2007 income year to 1 July 2007

(1) This section applies if a person’s 2006 ‑ 2007 income year ends before the end of the 2006 ‑ 2007 financial year. (2) The object of this section is to apply (with modifications) provisions limiting deductibility in respect of certain contributions made during the period that: (a) starts when the person’s 2006 ‑ 2007 income year ends; and (b) ends just before 1 July 2007. (3) The provisions are as follows: (a) Subdivisions AA and AB of Division 3 of Part III of the Income Tax Assessment Act 1936 , as in force just before they were repealed by the Superannuation Legislation Amendment (Simplification) Act 2007 ; (b) any other provision of the Income Tax Assessment Act 1936 , or of any instrument made under that Act, to the extent that it relates to the operation of those Subdivisions; (c) any other provision of any other Act, or of any instrument made under any other Act, to the extent that it relates to the operation of those Subdivisions. (4) Those provisions apply in relation to the period mentioned in subsection (2), and do so as if: (a) that period were the 2007 ‑ 2008 income year; and (b) the deduction limit mentioned in section 82AAC for the 2006 ‑ 2007 income year were the deduction limit for the income year mentioned in paragraph (a); and (c) the deduction limit mentioned in section 82AAT for the 2006 ‑ 2007 income year were the deduction limit for the income year mentioned in paragraph (a); and (d) Division 290 of the Income Tax Assessment Act 1997 did not apply to contributions made during the income year mentioned in paragraph (a).

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 291-10 — Application of Division 291 of the Income Tax Assessment Act 1997

Division 291 of the Income Tax Assessment Act 1997 applies to the 2013 ‑ 14 income year and later income years.

Amendment history: Inserted by No 118 of 2013, effective Sch 1 (items 12, 80, 98, 99, 110, 111): 29 June 2014 (s 2(1) items 2, 7, 8, 11)

s 291-170 — Transitional rules for notional taxed contributions

(1) This section applies despite section 291 ‑ 170 of the Income Tax Assessment Act 1997 . Certain interests held on 5 September 2006 (2) Despite subsection 291 ‑ 170(1) of the Income Tax Assessment Act 1997 , your notional taxed contributions for the financial year in respect of a defined benefit interest are equal to your basic concessional contributions cap for the financial year if: (a) Subdivision 291 ‑ C of that Act applies in relation to you because you have a defined benefit interest in a financial year; and (b) disregarding this subsection and subsection (4), the notional taxed contributions for the financial year in respect of the defined benefit interest exceed your basic concessional contributions cap for the financial year; and (c) either: (i) you held the defined benefit interest in a superannuation fund on 5 September 2006; or (ii) all the requirements in subsection (3) are satisfied; and (d) the conditions (if any) specified in the regulations are satisfied. Note: In some cases, section 291 ‑ 370 of the Income Tax Assessment Act 1997 has the effect of replacing this subsection with a similar rule covering a broader class of contributions and amounts. (3) For the purposes of subparagraph (2)(c)(ii), the requirements are as follows: (a) you held a defined benefit interest (the original interest ) in a superannuation fund (the original fund ) on 5 September 2006; (b) the defined benefit interest mentioned in paragraph (2)(a) (the current interest ) is in a different superannuation fund (the current fund ); (c) the entire value of the original interest: (i) was transferred directly to the current interest after 5 September 2006; or (ii) was transferred to another superannuation interest after 5 September 2006, and was later transferred to the current interest (whether directly or through a series of transfers between superannuation interests); (d) your rights to accrue future benefits under the current interest are equivalent to your rights to accrue future benefits under the original interest; (e) either: (i) the notional taxed contributions mentioned in paragraph (2)(b) do not exceed what they would have been if the transfer mentioned in paragraph (c) had not taken place; or (ii) the conditions (if any) specified in the regulations are satisfied; (f) the conditions (if any) specified in the regulations are satisfied. Certain interests held on 12 May 2009 (4) Despite subsection 291 ‑ 170(1) of the Income Tax Assessment Act 1997 , your notional taxed contributions for the financial year in respect of the defined benefit interest are equal to your basic concessional contributions cap for the financial year if: (a) Subdivision 291 ‑ C of that Act applies in relation to you because you have a defined benefit interest in a financial year; and (b) disregarding this subsection, the notional taxed contributions for the financial year in respect of the defined benefit interest exceed your basic concessional contributions cap for the financial year; and (c) either: (i) you held the defined benefit interest in a superannuation fund on 12 May 2009; or (ii) all the requirements in subsection (5) are satisfied; and (d) the conditions (if any) specified in the regulations are satisfied; and (e) the financial year is the 2009 ‑ 2010 financial year or a later financial year. Note: In some cases, section 291 ‑ 370 of the Income Tax Assessment Act 1997 has the effect of replacing this subsection with a similar rule covering a broader class of contributions and amounts. (5) For the purposes of subparagraph (4)(c)(ii), the requirements are as follows: (a) you held a defined benefit interest (the original interest ) in a superannuation fund (the original fund ) on 12 May 2009; (b) the defined benefit interest mentioned in paragraph (4)(a) (the current interest ) is in a different superannuation fund (the current fund ); (c) the entire value of the original interest: (i) was transferred directly to the current interest after 12 May 2009; or (ii) was transferred to another superannuation interest after 12 May 2009, and was later transferred to the current interest (whether directly or through a series of transfers between superannuation interests); (d) your rights to accrue future benefits under the current interest are equivalent to your rights to accrue future benefits under the original interest; (e) either: (i) the notional taxed contributions mentioned in paragraph (4)(b) do not exceed what they would have been if the transfer mentioned in paragraph (c) had not taken place; or (ii) the conditions (if any) specified in the regulations are satisfied; (f) the conditions (if any) specified in the regulations are satisfied. Constitutionally protected funds (6) This section does not apply in relation to a defined benefit interest in a constitutionally protected fund.

Amendment history: Inserted by No 118 of 2013, effective Sch 1 (items 12, 80, 98, 99, 110, 111): 29 June 2014 (s 2(1) items 2, 7, 8, 11) | Amended by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5) | Amended by No 55 of 2017, effective sch 1 (items 16 ‑ 19, 29 ‑ 32): 1 July 2017 (s 2(1) items 2, 7)

s 292-80 — Application of excess non ‑ concessional contributions tax from 10 May 2006 to 1 July 2007

(1) The object of this section is to apply (with modifications) provisions relating to excess non ‑ concessional contributions tax in respect of certain contributions made during the period that: (a) begins on 10 May 2006; and (b) ends just before 1 July 2007. (2) The provisions are as follows: (a) Subdivision 292 ‑ C of the Income Tax Assessment Act 1997 (excess non ‑ concessional contributions tax); (b) any other provision of that Act, or of any instrument made under that Act, to the extent that it relates to the operation of that Subdivision; (c) any other provision of any other Act, or of any instrument made under any other Act, to the extent that it relates to the operation of that Subdivision. Example: Section 390 ‑ 65 in Schedule 1 to the Taxation Administration Act 1953 . (3) Those provisions apply in relation to that period, and do so as if: (a) that period were the 2006 ‑ 2007 financial year; and (b) the amount of a person’s non ‑ concessional contributions for that financial year: (i) did not include the amount of the person’s excess concessional contributions for that financial year; and (ii) if subsection (6) applies—included the amount mentioned in that subsection; and (iii) included each contribution covered under subsection (7) in respect of the person; and (c) the person’s non ‑ concessional contributions cap for that financial year were $1,000,000; and (d) subsections 292 ‑ 85(3) and (4) of the Income Tax Assessment Act 1997 were omitted; and (e) the person’s CGT cap amount at the start of that financial year were $1,000,000; and (ea) in a case where paragraph 292 ‑ 95(1)(b) of that Act would have allowed the contribution mentioned in that paragraph to be made at a time within that period—that paragraph allowed the contribution to be made on or before 30 June 2007; and (f) paragraph 292 ‑ 95(1)(d) of that Act allowed the notification mentioned in that paragraph to be made on or before 31 July 2007; and (fa) in a case where subsection 292 ‑ 100(2), (4), (7) or (8) of that Act would have allowed the contribution mentioned in that subsection to be made at a time within that period—that subsection allowed the contribution to be made on or before 30 June 2007; and (g) paragraph 292 ‑ 100(9)(b) of that Act allowed the choice mentioned in that paragraph to be given on or before 31 July 2007; and (h) contributions made during that period that are covered under section 292 ‑ 100 of that Act reduce the person’s CGT cap amount for the 2007 ‑ 2008 financial year in accordance with subsection 292 ‑ 105(2) of that Act (and despite subsection (1) of that section); and (i) if the conditions in subsection (4) are satisfied—the person’s excess non ‑ concessional contributions for that financial year were reduced by the amount paid as mentioned in paragraph (4)(d); and (j) the reference in subsection 307 ‑ 220(1) of that Act to 30 June 2007 were a reference to 9 May 2006. (4) For the purposes of paragraph (3)(i), the conditions are: (a) the person gives the Commissioner an application under subsection 292 ‑ 80A(1) before 1 July 2007; and (b) the Commissioner gives the person a transitional release authority under subsection 292 ‑ 80A(2) in response to the application; and (c) the person gives the transitional release authority to a superannuation provider that holds a superannuation interest for the person (other than a defined benefit interest) in accordance with section 292 ‑ 80B within 21 days after the date of the release authority; and (d) the superannuation provider pays the person the amount required under section 292 ‑ 80C in relation to the transitional release authority. (5) Subsection (6) applies if: (a) contributions are made in respect of a person (the first person ) in either or both of the following periods: (i) 10 May 2006 to 30 June 2006; (ii) 1 July 2006 to 30 June 2007; and (b) those contributions are allowable as a deduction for another person under subsection 82AAC(1) of the Income Tax Assessment Act 1936 (apart from subsection 82AAC(2) of that Act). (6) The amount to be included in the first person’s amount of non ‑ concessional contributions under subparagraph (3)(b)(ii) is the sum of: (a) the amount of those contributions made in the period mentioned in subparagraph (5)(a)(i), to the extent that they exceed the first person’s deduction limit (within the meaning of subsection 82AAC(2A) of the Income Tax Assessment Act 1936 ) for the income year of the other person in which the contributions were made; and (b) the amount of those contributions made in the period mentioned in subparagraph (5)(a)(ii), to the extent that they exceed the first person’s deduction limit (within the meaning of subsection 82AAC(2A) of the Income Tax Assessment Act 1936 ) for the income year of the other person in which the contributions were made. (7) A contribution is covered under this subsection if: (a) the contribution is made in respect of the person mentioned in subparagraph (3)(b)(iii) by another entity; and (b) the person is not an employee of the other entity; and (c) under Division 295 of the Income Tax Assessment Act 1997 (as that Division applies for the purposes of subsection (3)), the contribution is included in the assessable income of the superannuation provider in relation to the superannuation plan to which the contribution is made; and (d) the contribution is made after 6 December 2006. (8) For the purposes of paragraph (7)(b), treat the person as an employee of the other entity if the person would be treated as an employee of the other entity under Division 290 of the Income Tax Assessment Act 1997 (as that Division applies for the purposes of subsection (3)).

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (item 25) and Schedule 2 (item 3): Royal Assent | Amended by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10) | Amended by No 79 of 2007, effective Sch 2: 15 Mar 2007 (s 2(1) item 3) Sch 5: 21 June 2007 (s 2(1) item 4)

s 292-80A — Transitional release authority

(1) A person may apply to the Commissioner in the approved form for a transitional release authority under subsection (2). The application can only be made before 1 July 2007. (2) The Commissioner must give the person a transitional release authority if the Commissioner considers that, apart from subparagraph 292 ‑ 80(3)(b)(i), the person would have excess non ‑ concessional contributions for the financial year mentioned in paragraph 292 ‑ 80(3)(a). (3) The transitional release authority must: (a) state the amount of excess non ‑ concessional contributions mentioned in subsection (2); and (b) be dated; and (c) contain any other information that the Commissioner considers relevant. (4) For the purposes of this section, disregard contributions made in respect of the person after 6 December 2006 in working out: (a) whether the person has excess non ‑ concessional contributions as mentioned in subsection (2); and (b) the amount of those excess non ‑ concessional contributions.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (item 25) and Schedule 2 (item 3): Royal Assent

s 292-80B — Giving a transitional release authority to a superannuation provider

The person may give the transitional release authority to a superannuation provider that holds a superannuation interest (other than a defined benefit interest) for the person in a complying superannuation plan within 21 days after the date of the release authority.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (item 25) and Schedule 2 (item 3): Royal Assent | Amended by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 292-80C — Superannuation provider given transitional release authority must pay amount

(1) A superannuation provider that has been given a transitional release authority in accordance with section 292 ‑ 80B must pay to the person within 30 days after receiving the release authority the least of the following amounts: (a) if the person requests the provider in writing to pay a specified amount in relation to the release authority—that amount; (b) the amount of excess non ‑ concessional contributions stated in the release authority; (c) the sum of the values of every superannuation interest (other than a defined benefit interest) held by the superannuation provider for the person in complying superannuation plans. Note 1: Section 288 ‑ 95 in Schedule 1 to the Taxation Administration Act 1953 provides for an administrative penalty for failing to comply with this subsection. Note 2: Section 288 ‑ 100 in Schedule 1 to the Taxation Administration Act 1953 provides that the person giving the release authority to the superannuation provider can be liable to an administrative penalty if excess amounts are paid in relation to the release authority. Note 3: For reporting obligations on the superannuation provider in these circumstances, see section 390 ‑ 65 in Schedule 1 to the Taxation Administration Act 1953 . (2) The payment must be made out of one or more superannuation interests (other than a defined benefits interest) held by the superannuation provider for the person in complying superannuation plans. (3) Section 307 ‑ 125 of the Income Tax Assessment Act 1997 (the proportioning rule) does not apply to a payment made as required under this section.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (item 25) and Schedule 2 (item 3): Royal Assent | Amended by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10) | Amended by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5)

s 292-85 — Non ‑ concessional contributions cap for a financial year

(1) For the purposes of working out your non ‑ concessional contributions cap for the 2017 ‑ 2018 financial year, if: (a) your non ‑ concessional contributions cap for the 2015 ‑ 2016 financial year was worked out under subsection 292 ‑ 85(4) of the Income Tax Assessment Act 1997 ; and (b) that year was a first year within the meaning of subsection 292 ‑ 85(3) of that Act; subsection 292 ‑ 85(7) of that Act as amended by the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 applies after the commencement of this section as if: (c) the amount worked out under subsection 292 ‑ 85(5) of that Act as so amended were $460,000; and (d) subsection 292 ‑ 85(6) of that Act as so amended had been applied (taking into account paragraph (c) of this subsection) for the purposes of working out your non ‑ concessional contributions cap for the 2016 ‑ 2017 financial year. (2) For the purposes of working out your non ‑ concessional contributions caps for the 2017 ‑ 2018 financial year and the 2018 ‑ 2019 financial year, if: (a) your non ‑ concessional contributions cap for the 2016 ‑ 2017 financial year was worked out under subsection 292 ‑ 85(4) of the Income Tax Assessment Act 1997 ; and (b) that year was a first year within the meaning of subsection 292 ‑ 85(3) of that Act; subsections 292 ‑ 85(6) and (7) of that Act as amended by the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 apply after the commencement of this section as if the amount worked out under subsection 292 ‑ 85(5) of that Act as so amended were $380,000. (3) To avoid doubt, this section does not affect your non ‑ concessional contributions cap for any financial year that ended before 1 July 2017.

Amendment history: Inserted by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5)

s 292-90 — Non ‑ concessional contributions for a financial year

The tax free component of a directed termination payment (within the meaning of section 82 ‑ 10F) made in a financial year on behalf of you is not included in your non ‑ concessional contributions (see section 292 ‑ 90 of the Income Tax Assessment Act 1997 ) for the financial year.

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 293-10 — Application of Division 293 of the Income Tax Assessment Act 1997

Division 293 of the Income Tax Assessment Act 1997 applies to the 2012 ‑ 13 income year and later income years.

Amendment history: Inserted by No 82 of 2013, effective Sch 1 (item 2) and Sch 3 (items 38, 39): Royal Assent

s 294-10 — Application of Division 294 of the Income Tax Assessment Act 1997

(1) Division 294 of the Income Tax Assessment Act 1997 applies on and after 1 July 2017. (2) Subject to section 294 ‑ 55, the amendments of Division 294 of the Income Tax Assessment Act 1997 made by Schedule 1 to the Treasury Laws Amendment (2017 Measures No. 2) Act 2017 apply on and after 1 July 2017.

Amendment history: Inserted by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5) | Amended by No 55 of 2017, effective sch 1 (items 16 ‑ 19, 29 ‑ 32): 1 July 2017 (s 2(1) items 2, 7)

s 294-30 — Minor excess transfer balances disregarded if remedied in first 6 months

Despite sections 294 ‑ 30 and 294 ‑ 140 of the Income Tax Assessment Act 1997 (which are about when you have excess transfer balance), you do not have excess transfer balance in your transfer balance account on any day in the period of 6 months beginning on 1 July 2017 if: (a) the only transfer balance credits in the account in that period arose under item 1 of the table in subsection 294 ‑ 25(1) of that Act (which is about superannuation income streams you have just before 1 July 2017); and (b) the sum of those transfer balance credits exceeds your transfer balance cap, but is less than or equal to $1,700,000; and (c) at the end of the period, the sum of all the transfer balance debits arising in your transfer balance account equals or exceeds the amount of the excess from paragraph (b).

Amendment history: Inserted by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5)

s 294-55 — Repayment of limited recourse borrowing arrangements

(1) Despite subsection 294 ‑ 10(2), a transfer balance credit arises under item 4 of the table in subsection 294 ‑ 25(1) of the Income Tax Assessment Act 1997 only in relation to a borrowing that arises under a contract entered into on or after 1 July 2017. (2) For the purposes of subsection (1), a borrowing (the new borrowing ) that arises under a contract entered into on or after 1 July 2017 is treated as if it arose under a contract entered into before 1 July 2017 if: (a) the new borrowing is a refinancing of a borrowing (the old borrowing ) that was made under a contract: (i) entered into before 1 July 2017; and (ii) covered by the exception in subsection 67A(1) of the Superannuation Industry (Supervision) Act 1993 (which is about limited recourse borrowing arrangements); and (b) the new borrowing is secured by the same asset or assets as the old borrowing; and (c) the amount of the new borrowing at the time it is first made equals, or is less than, the outstanding balance on the old borrowing just before the refinancing.

Amendment history: Inserted by No 55 of 2017, effective sch 1 (items 16 ‑ 19, 29 ‑ 32): 1 July 2017 (s 2(1) items 2, 7)

s 294-80 — Structured settlement contributions made before 1 July 2017—debit increased to match credits

(1) This section applies to you if: (a) on 1 July 2017, a transfer balance debit arose in your transfer balance account under item 2 of the table in subsection 294 ‑ 80(1) of the Income Tax Assessment Act 1997 ; and (b) the sum of all the transfer balance credits that arise in your transfer balance account under item 1 of the table in subsection 294 ‑ 25(1) of that Act exceeds the amount that would, apart from this section, be the amount of that debit. (2) Despite column 2 of item 2 of the table in subsection 294 ‑ 80(1) of the Income Tax Assessment Act 1997 , the amount of the transfer balance debit is instead equal to the sum worked out under paragraph (1)(b) of this section.

Amendment history: Inserted by No 55 of 2017, effective sch 1 (items 16 ‑ 19, 29 ‑ 32): 1 July 2017 (s 2(1) items 2, 7)

s 294-100 — Object

The object of this Subdivision is to provide temporary relief from certain capital gains that might arise as a result of individuals complying with the following legislative changes: (a) the introduction of a transfer balance cap (as a result of Schedule 1 to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 ); (b) the exclusion of transition to retirement income streams (and similar income streams) from being superannuation income streams in the retirement phase (as a result of Schedule 8 to that Act).

Amendment history: Inserted by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5)

s 294-105 — Interpretation

In this Subdivision: pre ‑ commencement period means the period: (a) starting on the start of the day on which the Bill that became the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 was introduced into the House of Representatives; and (b) ending just before 1 July 2017.

Amendment history: Inserted by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5)

s 294-110 — Segregated current pension assets

(1) This section applies if: (a) at the start of the pre ‑ commencement period, a CGT asset of a fund is a segregated current pension asset of the fund; and (b) either: (i) at a time (the cessation time ) in the pre ‑ commencement period, the asset ceases to be a segregated current pension asset of the fund; or (ii) at the start of 1 July 2017 (also the cessation time ), the asset ceases to be a segregated current pension asset of the fund because it supports a superannuation income stream covered by subsection 307 ‑ 80(3) of the Income Tax Assessment Act 1997 ; and (c) the fund held the CGT asset throughout the pre ‑ commencement period (disregarding subsection (3)); and (d) the fund is a complying superannuation fund throughout the period: (i) starting at the start of the pre ‑ commencement period; and (ii) ending at the cessation time; and (e) the trustee of the fund makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2). (2) A choice made for the purposes of paragraph (1)(e): (a) is to be in the approved form; and (b) can only be made on or before the day by which the trustee of the fund is required to lodge the fund’s income tax return for the 2016 ‑ 17 income year; and (c) cannot be revoked. (3) For the purposes of Parts 3 ‑ 1 and 3 ‑ 3 of the Income Tax Assessment Act 1997 , the fund is taken: (a) to have sold, immediately before the cessation time, the asset for a consideration equal to its market value; and (b) to have purchased the asset again at the cessation time for a consideration equal to its market value.

Amendment history: Inserted by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5) | Amended by No 55 of 2017, effective sch 1 (items 16 ‑ 19, 29 ‑ 32): 1 July 2017 (s 2(1) items 2, 7)

s 294-115 — Superannuation funds using the proportionate method—deemed sale and purchase of CGT asset

Application (1) This section applies in relation to a CGT asset of a fund if: (a) the fund is a complying superannuation fund throughout the pre ‑ commencement period; and (b) the proportion mentioned in subsection 295 ‑ 390(3) of the Income Tax Assessment Act 1997 in respect of the fund for the 2016 ‑ 17 income year is greater than nil; and (c) the fund held the asset throughout the pre ‑ commencement period; and (d) throughout the pre ‑ commencement period, the asset: (i) was not a segregated current pension asset of the fund; and (ii) was not a segregated non ‑ current asset of the fund; and (e) the trustee of the fund makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2). (2) A choice made for the purposes of paragraph (1)(e): (a) is to be in the approved form; and (b) can only be made on or before the day by which the trustee of the fund is required to lodge the fund’s income tax return for the 2016 ‑ 17 income year; and (c) cannot be revoked. Deemed sale and purchase (3) For the purposes of Parts 3 ‑ 1 and 3 ‑ 3 of the Income Tax Assessment Act 1997 , the fund is taken: (a) to have sold, immediately before 1 July 2017, the asset for a consideration equal to its market value; and (b) to have purchased the asset again just after that sale for a consideration equal to its market value.

Amendment history: Inserted by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5)

s 294-120 — Superannuation funds using the proportionate method—disregard initial capital gain but recognise deferred notional gain

Application (1) This section applies in relation to a CGT asset of a complying superannuation fund if: (a) section 294 ‑ 115 applies in relation to the CGT asset; and (b) as a result of paragraph 294 ‑ 115(3)(a), the fund makes a capital gain in respect of the asset (disregarding this section); and (c) the trustee of the fund makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2). (2) A choice made for the purposes of paragraph (1)(c): (a) is to be in the approved form; and (b) can only be made on or before the day by which the trustee of the fund is required to lodge the fund’s income tax return for the 2016 ‑ 17 income year; and (c) cannot be revoked. Disregard initial capital gain (3) Disregard the capital gain mentioned in paragraph (1)(b). Recognition of deferred notional gain (4) The deferred notional gain is the 2016 ‑ 17 non ‑ exempt proportion of the amount of the fund’s net capital gain for the 2016 ‑ 17 income year determined on the assumptions that: (a) subsection (3) of this section does not apply; and (b) the fund made no capital gains in that income year other than the gain mentioned in paragraph (1)(b); and (c) the fund made no capital losses in that income year; and (d) the fund had no previously unapplied net capital losses from earlier income years. (5) For the purposes of Division 102 of the Income Tax Assessment Act 1997 , if a realisation event happens to the asset in an income year that starts on or after 1 July 2017: (a) treat the fund as having made a capital gain in that income year equal to the deferred notional gain; and (b) disregard section 102 ‑ 20 of that Act in respect of that capital gain; and (c) treat that capital gain as not being a discount capital gain. (6) Subsection 295 ‑ 390(1) of the Income Tax Assessment Act 1997 does not apply to the amount by which a net capital gain is increased (or comes into existence) as a result of subsection (5). (7) In this section: 2016 ‑ 17 non ‑ exempt proportion means 1 minus the proportion mentioned in subsection 295 ‑ 390(3) of the Income Tax Assessment Act 1997 in respect of the fund for the 2016 ‑ 17 income year. deferred notional gain has the meaning given by subsection (4).

Amendment history: Inserted by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5)

s 294-125 — Pooled superannuation trust using proportionate or alternative exemption method—deemed sale and purchase of CGT asset

Application (1) This section applies in relation to a CGT asset of a trust if: (a) the trust is a pooled superannuation trust throughout the pre ‑ commencement period; and (b) either of the following is greater than nil: (i) the proportion mentioned in subsection 295 ‑ 400(1) of the Income Tax Assessment Act 1997 in respect of the trust for the 2016 ‑ 17 income year; (ii) if the trustee has made a choice under subsection 295 ‑ 400(3) of that Act—the percentage mentioned in subsection 295 ‑ 400(4) of that Act in respect of the trust for the 2016 ‑ 17 income year; and (c) the trust held the asset throughout the pre ‑ commencement period; and (d) the trustee of the trust makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2). (2) A choice made for the purposes of paragraph (1)(d): (a) is to be in the approved form; and (b) can only be made on or before the day by which the trustee of the trust is required to lodge the trust’s income tax return for the 2016 ‑ 17 income year; and (c) cannot be revoked. Deemed sale and purchase (3) For the purposes of Parts 3 ‑ 1 and 3 ‑ 3 of the Income Tax Assessment Act 1997 , the trust is taken: (a) to have sold, immediately before 1 July 2017, the asset for a consideration equal to its market value; and (b) to have purchased the asset again just after that sale for a consideration equal to its market value.

Amendment history: Inserted by No 55 of 2017, effective sch 1 (items 16 ‑ 19, 29 ‑ 32): 1 July 2017 (s 2(1) items 2, 7)

s 294-130 — Pooled superannuation trusts using proportionate or alternative exemption method—disregard initial capital gain but recognise deferred notional gain

Application (1) This section applies in relation to a CGT asset of a pooled superannuation trust if: (a) section 294 ‑ 125 applies in relation to the CGT asset; and (b) as a result of paragraph 294 ‑ 125(3)(a), the trust makes a capital gain in respect of the asset (disregarding this section); and (c) the trustee of the trust makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2). (2) A choice made for the purposes of paragraph (1)(c): (a) is to be in the approved form; and (b) can only be made on or before the day by which the trustee of the trust is required to lodge the trust’s income tax return for the 2016 ‑ 17 income year; and (c) cannot be revoked. Disregard initial capital gain (3) Disregard the capital gain mentioned in paragraph (1)(b). Recognition of deferred notional gain (4) The deferred notional gain is the 2016 ‑ 17 non ‑ exempt proportion of the amount of the trust’s net capital gain for the 2016 ‑ 17 income year determined on the assumptions that: (a) subsection (3) of this section does not apply; and (b) the trust made no capital gains in that income year other than the gain mentioned in paragraph (1)(b); and (c) the trust made no capital losses in that income year; and (d) the trust had no previously unapplied net capital losses from earlier income years. (5) For the purposes of Division 102 of the Income Tax Assessment Act 1997 , if a realisation event happens to the asset in an income year that starts on or after 1 July 2017: (a) treat the trust as having made a capital gain in that income year equal to the deferred notional gain; and (b) disregard section 102 ‑ 20 of that Act in respect of that capital gain; and (c) treat that capital gain as not being a discount capital gain. (6) Section 295 ‑ 400 of the Income Tax Assessment Act 1997 does not apply to the amount by which a net capital gain is increased (or comes into existence) as a result of subsection (5). (7) In this section: 2016 ‑ 17 non ‑ exempt proportion means: (a) unless paragraph (b) applies—1 minus the proportion mentioned in subsection 295 ‑ 400(1) of the Income Tax Assessment Act 1997 ; or (b) if the trustee has made a choice under subsection 295 ‑ 400(3) of that Act—the percentage worked out by subtracting the percentage mentioned in subsection 295 ‑ 400(4) of that Act in respect of the trust for the 2016 ‑ 17 income year from 100%. deferred notional gain has the meaning given by subsection (4).

Amendment history: Inserted by No 55 of 2017, effective sch 1 (items 16 ‑ 19, 29 ‑ 32): 1 July 2017 (s 2(1) items 2, 7)

s 295-75 — Application of Subdivision

This Subdivision applies to an entity that is the trustee of a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust.

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 295-80 — Meaning of 30 June 1988 asset

For the purposes of this Subdivision, an asset is a 30 June 1988 asset of a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust if the entity owned it at the end of 30 June 1988. Note: Section 295 ‑ 90 of the Income Tax Assessment Act 1997 treats these assets as having been acquired on 30 June 1988.

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 295-85 — Cost base of 30 June 1988 asset

(1) The first element of the cost base of each 30 June 1988 asset of the entity’s is the greater of the asset’s market value (at the end of 30 June 1988) and its cost base (on that day). (2) The first element of the reduced cost base of each 30 June 1988 asset of the entity’s is the lesser of the asset’s market value (at the end of 30 June 1988) and its cost base (on that day).

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 295-90 — Market value of stock exchange listed assets

(1) If: (a) a 30 June 1988 asset of the entity’s was listed on an Australian stock exchange on 30 June 1988; and (b) on that day, identical assets were: (i) computer traded on a national market; or (ii) traded on a State capital city market; the market value of the asset as at the end of 30 June 1988 is the average of the highest and lowest trade prices for identical assets recorded on 30 June 1988 in whichever of the following markets is applicable: (c) if, on that date, identical assets were computer traded on a national market—that national market; (d) if, on that date, there was a State capital city market (other than the Sydney market) that recorded a higher volume of trading than the Sydney market in identical assets—that State capital city market; (e) in any other case—the Sydney market. (2) For the purposes of this section, an asset is taken to have been listed on an Australian stock exchange on 30 June 1988 if, and only if, on that day the asset had the status of having been granted official quotation by a securities exchange within the meaning of the former Securities Industry Act 1980 or the law of a State or Territory corresponding to that former Act.

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 295-95 — Adjustment of cost base as at 30 June 1988—return of capital

(1) If: (a) 30 June 1988 assets of the entity’s consist of shares in a company; and (b) at any time during the period commencing at the time when the shares were acquired and ending at the end of 30 June 1988, the company paid an amount that was not a dividend to the entity in respect of the shares; the cost base to the entity of the shares as at 30 June 1988 is reduced by that amount. (2) If: (a) a 30 June 1988 asset of the entity’s consists of an interest or unit in a trust; and (b) at any time during the period commencing at the time when the interest or unit was acquired and ending at the end of 30 June 1988, the trustee of the trust paid an amount to the entity in respect of the interest or unit, being: (i) in a case where the entity was exempt from tax for the year of income in which the payment was made—an amount that, if the entity had not been exempt from tax, would not have been the entity’s assessable income; or (ii) in any other case—an amount that would not have been the entity’s assessable income; the cost base to the entity of the interest or unit as at 30 June 1988 is reduced by so much of the amount as is not attributable to a deduction allowed under former Division 10C or 10D of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 295-100 — Exercise of rights

(1) Despite section 130 ‑ 40 of the Income Tax Assessment Act 1997 , the modifications in subsections (2) and (3) of this section apply if an entity exercises rights or options as mentioned in that section to acquire: (a) shares in a company, or options to acquire shares in a company; or (b) units in a unit trust, or options to acquire units in a unit trust; and those rights or options are 30 June 1988 assets of the entity. (2) The first element of the cost base of the shares, units or options is the sum of: (a) the amount paid to exercise the rights or options; and (b) the greater of the market value of the rights or options (at the end of 30 June 1988) and the cost base of the rights or options (on that day). (3) The first element of the reduced cost base of the shares, units or options is the sum of: (a) the amount paid to exercise the rights or options; and (b) the lesser of the market value of the rights or options (at the end of 30 June 1988) and the cost base of the rights or options (on that day). (4) The payment referred to in subsection (2) or (3) can include giving property. To the extent that the payment does, use the market value of the property in working out the amount of the payment. (5) For indexation purposes, the amount referred to in paragraph (2)(b) is taken to have been incurred on 30 June 1988.

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 295-190 — Deductions for personal contributions

(1) A notice given under subsection 82AAT(1A) or (1CB) of the Income Tax Assessment Act 1936 in relation to the 2006 ‑ 07 income year or an earlier year has effect, after 1 July 2007, as if it were a notice under section 290 ‑ 170 of the Income Tax Assessment Act 1997. (2) A notice given under subsection 82AAT(1C) or (1CD) of the Income Tax Assessment Act 1936 in relation to the 2006 ‑ 07 income year or an earlier year has effect, after 1 July 2007, as if it were a notice under section 290 ‑ 180 of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 295-390 — Fixed interest complying ADFs—exemption of income attributable to certain 25 May 1988 deposits

(1) A proportion of the ordinary income and statutory income of a continuously complying fixed interest ADF of an income year that would otherwise be assessable income is exempt from income tax under this section. The proportion is worked out under subsection (3). (2) Subsection (1) does not apply to: (a) non ‑ arm’s length income; or (b) amounts included in assessable income under Subdivision 295 ‑ C of the Income Tax Assessment Act 1997 . (3) The proportion is: where: Aggregate current balance is the total amount deposited with the fund (together with accumulated earnings), as at the reckoning time in relation to the income year. Aggregate of current 25 May balances is the aggregate of the current 25 May balances of eligible depositors, as at the reckoning time in relation to the income year. (4) A choice for the purposes of the definition of reckoning time in subsection (5) must be made on or before the date of lodgment of the income tax return of the ADF for the income year to which the choice relates, or before a later day allowed by the Commissioner. (5) In this section: continuously complying fixed interest ADF , in relation to an income year (the current year ), means a fund that is a fixed interest complying ADF in relation to each of the following years: (a) the current year; (b) the income year in which 1 July 1988 occurred; (c) each income year later than the year mentioned in paragraph (b) and earlier than the current year. current 25 May balance , in relation to an eligible depositor as at the reckoning time, is the balance as at that time determined by varying the original 25 May balance, in accordance with the following rules, during the period from 26 May 1988 to the reckoning time: (a) the balance from time to time is not to exceed the original 25 May balance and is not to be less than nil; (b) subject to paragraph (a), an amount deposited with the ADF by the depositor before 1 September 1989 is to be added to the balance; (c) subject to paragraph (a), an amount repaid to the depositor from the ADF is to be deducted from the balance. eligible depositor , in relation to an ADF, means: (a) a depositor whose 55th birthday occurred on or before 25 May 1988; or (b) a depositor whose 50th birthday occurred on or before 25 May 1988 and who, on or before that day, made a deposit with the ADF that consisted wholly or partly of the roll ‑ over (as defined in Subdivision AA of Division 2 of Part III of the Income Tax Assessment Act 1936 as in force on that day) of an eligible termination payment as so defined, being an eligible termination payment that included a concessional component (as so defined). fixed interest complying ADF , in relation to a year of income, means a complying ADF where both of the following conditions are satisfied: (a) not less than 90% of the amount that, apart from this section, would be the assessable income of the ADF of the income year (other than non ‑ arm’s length income or amounts included in assessable income under Subdivision 295 ‑ C of the Income Tax Assessment Act 1997 ) consists of any one or more of the following: (i) interest or a payment in the nature of interest; (ii) any profit arising on the disposal, redemption, cancellation or maturity of a CGT asset referred to in paragraph 295 ‑ 85(3)(b) of the Income Tax Assessment Act 1997 ; (iii) an amount included in assessable income under Division 16E of Part III of the Income Tax Assessment Act 1936 (or would be so included if Division 230 of the Income Tax Assessment Act 1997 did not apply); (b) at no time during the year of income did the assets of the fund consist of or include any of the following: (i) units in a PST; (ii) virtual PST life insurance policies (as defined in the Income Tax Assessment Act 1997 ) issued by a life insurance company. original 25 May balance , in relation to an eligible depositor, means the amount of the deposits (together with accumulated earnings) standing to the credit of the depositor as at the end of 25 May 1988. reckoning time , in relation to an ADF in relation to an income year, means the beginning of the income year, or such other time during the income year as the ADF chooses in accordance with subsection (4). (6) This section does not apply to an ADF in relation to an income year unless the whole of the benefit that would accrue to the ADF from the application of this section in relation to the income year has been, or can reasonably expected to be, passed on to eligible depositors.

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10) | Amended by No 15 of 2009, effective Schedule 1 (items 98, 99): Royal Assent

s 295-465 — Complying funds—deductions for insurance premiums

An election made by the trustee of a complying superannuation fund under subsection 279(4) of the Income Tax Assessment Act 1936 that had effect for the income year of the fund in which 30 June 2007 occurs continues to have effect as if it had been made under section 295 ‑ 465 of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 295-610 — No ‑ TFN contributions income

Subdivisions 295 ‑ I ( no ‑ TFN contributions) and 295 ‑ J (Tax offset for no ‑ TFN contributions income (TFN quoted within 4 years)) of the Income Tax Assessment Act 1997 apply to an entity whose 2006 ‑ 2007 income year ends on a day (the end day ) after 1 July 2007 as if: (a) the period starting on 1 July 2007 and ending on the end day were part of the entity’s 2007 ‑ 2008 income year; and (b) the entity’s no ‑ TFN contributions income for the entity’s 2007 ‑ 2008 income year included contributions made during that period that would have been income of that kind for the entity’s 2007 ‑ 2008 income year if the contributions concerned had been made in the entity’s 2007 ‑ 2008 income year.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (item 25) and Schedule 2 (item 3): Royal Assent

s 296-1 — Application of Division 296 of the Income Tax Assessment Act 1997

(1) Section 296 ‑ 15 of the Income Tax Assessment Act 1997 applies to the 2026 ‑ 27 income year and later income years. (2) However, Subdivision 296 ‑ B of the Income Tax Assessment Act 1997 applies in relation to the 2026 ‑ 27 income year as if: (a) the reference in paragraph 296 ‑ 40(1)(a) to just before the start of the year were omitted; and (b) the references to your total superannuation balance reference amount in the formula in subsection 296 ‑ 40(2) were references to your total superannuation balance at the end of the year; and (c) the reference in subsection 296 ‑ 45(1) to just before the start of the year were omitted; and (d) the references to your total superannuation balance reference amount in the formula in subsection 296 ‑ 45(2) were references to your total superannuation balance at the end of the year. Note: The effect of this subsection is that, for the 2026 ‑ 27 income year, whether Division 296 tax is payable by you, and the amount of that tax payable, is determined by reference to your total superannuation balance at the end of the year, rather than either just before the start or at the end of the year. (3) You are not liable to pay Division 296 tax for the 2026 ‑ 27 income year if you die on or before the last day of the year.

Amendment history: Inserted by No 8 of 2026, effective sch 1 (item 24): 1 Apr 2026 (s 2(1) item 2)

s 296-50 — CGT adjustment for small superannuation funds

(1) This section applies if: (a) a CGT event happens in relation to a CGT asset of a small superannuation fund at a time during an income year; and (b) the CGT asset is an asset of the fund: (i) at the end of 30 June 2026; and (ii) at all times on and from 1 July 2026 to immediately before that CGT event; and (c) the trustee of the fund has made a choice for the purposes of this paragraph in accordance with subsection (2). (2) A choice for the purposes of paragraph (1)(c): (a) is to be in the approved form; and (b) applies to all CGT assets that are assets of the fund at the end of 30 June 2026; and (c) can only be made during the period: (i) starting on the day this section commences; and (ii) ending on the due day for lodging the fund’s income tax return for the 2026 ‑ 27 income year; and (d) cannot be revoked. (3) For the purposes of working out the Division 296 fund earnings for the fund for the year under the Income Tax Assessment Act 1997 , to the extent it is affected by the cost base or reduced cost base of the CGT asset: (a) the first element of the cost base or reduced cost base is taken to be the asset’s market value as at the end of 30 June 2026; and (b) each other element of the cost base or reduced cost base is taken to have been adjusted to nil at the end of 30 June 2026 (such that any amounts that formed part of the cost base or reduced cost base on or before that day are disregarded); and (c) in relation to the cost base: (i) there is taken to be no indexation included in any of the elements of the cost base; and (ii) paragraph 115 ‑ 20(1)(a) (about using a cost base that has been calculated without reference to indexation) of that Act is taken to be satisfied (if applicable). (4) This section does not affect the amount of a net capital loss for any later income year for the purposes of working out Division 296 fund earnings.

Amendment history: Inserted by No 8 of 2026, effective sch 1 (item 24): 1 Apr 2026 (s 2(1) item 2)

s 296-55 — CGT adjustment for small superannuation funds—requirement to keep records

(1) A trustee of a small superannuation fund who makes a choice for the purposes of paragraph 296 ‑ 50(1)(c) must keep the following records: (a) a record of the choice; (b) for each CGT asset to which the choice applies—records of each element of its cost base and reduced cost base as affected by subsection 296 ‑ 50(3). (2) The records must be in English, or be readily accessible and convertible into English. (3) The trustee must retain a record mentioned in subsection (1) until the end of 5 years after it becomes certain that no CGT event (or no further CGT event) can happen such that the record could reasonably be expected to be relevant to working out the fund’s Division 296 fund earnings for an income year. Note: Section 288 ‑ 25 in Schedule 1 to the Taxation Administration Act 1953 imposes an administrative penalty if a trustee does not keep or retain records as required by this section.

Amendment history: Inserted by No 8 of 2026, effective sch 1 (item 24): 1 Apr 2026 (s 2(1) item 2)

s 296-60 — CGT adjustment for complying superannuation funds (other than small superannuation funds) and pooled superannuation trusts

(1) This section applies for the purposes of working out the Division 296 fund earnings for an income year (the relevant year ) under the Income Tax Assessment Act 1997 for a complying superannuation fund or pooled superannuation trust, to the extent it affects a person’s relevant superannuation earnings for a superannuation interest for: (a) the 2026 ‑ 27 income year; or (b) the 2027 ‑ 28 income year; or (c) the 2028 ‑ 29 income year; or (d) the 2029 ‑ 30 income year. (2) Any net capital gain for the relevant year, that the fund or trust has for the purposes of determining an amount used in working out the Division 296 fund earnings, is taken to be the amount of that gain, apart from this section, multiplied by a factor (which must be less than 1) prescribed by the regulations. Note 1: The net capital gain that a complying superannuation fund has for purposes of working out the earnings is affected by subsection 296 ‑ 60(3) of the Income Tax Assessment Act 1997 (which disregards certain matters). Note 2: Deferred notional gains are disregarded for the purposes of working out Division 296 fund earnings: see Subdivision 296 ‑ C (about deferred notional gains) of this Act. (3) This section does not apply in relation to a complying superannuation fund that is a small superannuation fund.

s 296-65 — Deferred notional gains to be disregarded

(1) For the purposes of working out an entity’s Division 296 fund earnings for an income year under subsection 296 ‑ 60(1) of the Income Tax Assessment Act 1997 , disregard any capital gain that, for the purposes of Division 102 of that Act, the entity is treated as having made because of subsection 294 ‑ 120(5) of this Act. Note: Subsection 294 ‑ 120(5) deals with deferred notional gains for complying superannuation funds. (2) For the purposes of working out a pooled superannuation trust’s Division 296 fund earnings for an income year under subsection 296 ‑ 60(4) of the Income Tax Assessment Act 1997 , disregard any capital gain that, for the purposes of Division 102 of that Act, the trust is treated as having made because of subsection 294 ‑ 130(5) of this Act. Note: Subsection 294 ‑ 130(5) deals with deferred notional gains for pooled superannuation trusts.

Amendment history: Inserted by No 8 of 2026, effective sch 1 (item 24): 1 Apr 2026 (s 2(1) item 2)

s 301-5 — Extended application to certain foreign superannuation funds

(1) A foreign superannuation fund is covered by this section if: (a) the fund has been a complying superannuation fund; and (b) the fund last stopped being a complying superannuation fund after 1 July 1988 and before 1 July 1995. (2) Division 301 of the Income Tax Assessment Act 1997 applies to payments to you from a foreign superannuation fund covered by this section because you are a member of the fund in the same way as it would apply if the payments were superannuation member benefits paid to you from a complying superannuation fund.

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 301-85 — Extended meaning of disability superannuation benefit for superannuation income stream

For the purposes of the Income Tax Assessment Act 1997 , a superannuation income stream benefit is taken to be a disability superannuation benefit if, just before 1 July 2007, the superannuation income stream from which the benefit is paid was covered by paragraph (b) of the definition of death or disability annuity/pension in section 159SJ of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (item 25) and Schedule 2 (item 3): Royal Assent

s 301-90 — Application of Subdivision 301 ‑ F of the Income Tax Assessment Act 1997

Subdivision 301 ‑ F of the Income Tax Assessment Act 1997 applies in relation to income years starting on or after 1 July 2007.

Amendment history: Inserted by No 29 of 2023, effective sch 4, 5: 1 July 2023 (s 2(1) item 2) sch 9 (item 8): 24 June 2023 (s 2(1) item 5)

s 301-95 — Amendment of assessments to give effect to Subdivision 301 ‑ F of the Income Tax Assessment Act 1997 etc.

Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purposes of giving effect to the following in respect of an income year that starts on or before 1 July 2021: (a) Subdivision 301 ‑ F of the Income Tax Assessment Act 1997 ; (b) the amendments of the Income Tax Assessment (1997 Act) Regulations 2021 made by Schedule 9 to the Treasury Laws Amendment (2022 Measures No. 4) Act 2023 . 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 4, 5: 1 July 2023 (s 2(1) item 2) sch 9 (item 8): 24 June 2023 (s 2(1) item 5)

s 301-100 — Amendment of assessments—transitional rule for permanent incapacity benefits, etc.

(1) This section applies if: (a) a superannuation benefit (the trigger benefit ) was paid to a person in the 2020 ‑ 21 income year or an earlier income year; and (b) the Commissioner made an assessment for the income year for the person before 4 December 2020; and (c) the trigger benefit was paid to the person because the person satisfied a condition of release specified in item 103 (permanent incapacity) of the table in Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994 ; and (d) the Commissioner made the assessment on the basis that the trigger benefit was a superannuation lump sum. (2) The Commissioner cannot amend an assessment on the basis that a superannuation benefit paid to the person is a superannuation income stream benefit because of the amendments made by Schedule 9 to the Treasury Laws Amendment (2022 Measures No. 4) Act 2023 if: (a) the superannuation benefit is the trigger benefit; or (b) all of these conditions are satisfied: (i) the assessment is for the 2021 ‑ 22 income year or an earlier income year; (ii) the superannuation benefit was paid to the person after the trigger benefit was paid to the person; (iii) the superannuation benefit was paid to the person because the person satisfied a condition of release specified in item 103 (permanent incapacity) of the table in Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994 ; (iv) the Commissioner made the assessment on the basis that the superannuation benefit was a superannuation lump sum. (3) Subsection (2) applies despite any other provision of this Act (apart from subsection (4) of this section), the Income Tax Assessment Act 1997 and the Income Tax Assessment Act 1936 . (4) Subsection (2) does not apply in any of these cases: (a) if the Commissioner may amend the assessment in accordance with item 5 (fraud or evasion) or 6 (review or appeal) of the table in subsection 170(1) of the Income Tax Assessment Act 1936 ; (b) if the amendment is made for the purpose of giving effect to a provision specified in the regulations for the purposes of this paragraph.

Amendment history: Inserted by No 29 of 2023, effective sch 4, 5: 1 July 2023 (s 2(1) item 2) sch 9 (item 8): 24 June 2023 (s 2(1) item 5)

s 301-105 — Transitional rules for Schedule 9 to the Treasury Laws Amendment (2022 Measures No. 4) Act 2023

(1) The Minister may, by legislative instrument, make rules prescribing matters of a transitional nature (including prescribing any saving or application provisions) that: (a) relate to the amendments or repeals made by Schedule 9 to the Treasury Laws Amendment (2022 Measures No. 4) Act 2023 ; and (b) relate to either or both of the 2022 ‑ 23 and 2023 ‑ 24 income years. (2) Without limiting subsection (1), rules made under this section before the end of the period of 12 months starting on the day that Schedule commences may provide that provisions of that Schedule, or any other Act or instrument, have effect with any modifications prescribed by the rules. Those provisions then have effect as if they were so modified. (3) To avoid doubt, the rules may not do the following: (a) create an offence or civil penalty; (b) provide powers of: (i) arrest or detention; or (ii) entry, search or seizure; (c) impose a tax; (d) set an amount to be appropriated from the Consolidated Revenue Fund under an appropriation in any Act; (e) directly amend the text of an Act. (4) This Schedule (other than subitem (3)) does not limit the rules that may be made for the purposes of subitem (1).

Amendment history: Inserted by No 29 of 2023, effective sch 4, 5: 1 July 2023 (s 2(1) item 2) sch 9 (item 8): 24 June 2023 (s 2(1) item 5)

s 302-5 — Extended application to certain foreign superannuation funds

(1) A foreign superannuation fund is covered by this section if: (a) the fund has been a complying superannuation fund; and (b) the fund last stopped being a complying superannuation fund after 1 July 1988 and before 1 July 1995. (2) Division 302 of the Income Tax Assessment Act 1997 applies to payments to you from a foreign superannuation fund covered by this section after another person’s death, because the other person was a member of that fund, in the same way as it would apply if the payments were superannuation death benefits paid to you from a complying superannuation fund.

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 302-195 — Extended meaning of death benefits dependant for superannuation income stream

For the purposes of Division 302 of the Income Tax Assessment Act 1997 , treat a person who receives a superannuation income stream benefit as a death benefits dependant in relation to the benefit if: (a) the benefit is a superannuation death benefit; and (b) just before 1 July 2007, the superannuation income stream from which the benefit is paid was covered by paragraph (a) of the definition of death or disability annuity/pension in section 159SJ of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (item 25) and Schedule 2 (item 3): Royal Assent

s 302-195A — Meaning of death benefits dependant for 2008 ‑ 2009 income year

(1) This section applies only for the 2008 ‑ 2009 income year. (2) For the purposes of Subdivision 82 ‑ B of Division 82, Division 302 and section 303 ‑ 5 of the Income Tax Assessment Act 1997 , the definition of death benefits dependant in section 302 ‑ 195 of that Act applies as if paragraphs (a) and (b) of the definition were replaced with the following paragraphs: (a) a spouse of the deceased within the meaning of the Superannuation Industry (Supervision) Act 1993 as in force immediately after the commencement of Schedule 4 to the Same ‑ Sex Relationships (Equal Treatment in Commonwealth Laws—Superannuation) Act 2008 or a person who was formerly such a spouse; or (b) a child of the deceased within the meaning of the Superannuation Industry (Supervision) Act 1993 as in force immediately after the commencement of Schedule 4 to the Same ‑ Sex Relationships (Equal Treatment in Commonwealth Laws—Superannuation) Act 2008 , who is aged less than 18.

Amendment history: Inserted by No 134 of 2008, effective Schedule 4 (items 18, 19): 1 July 2008

s 303-10 — Superannuation lump sum member benefit paid to member having a terminal medical condition

(1) This section applies to a superannuation member benefit that you receive during the 2007 ‑ 08 financial year and that: (a) is a superannuation lump sum; and (b) is: (i) paid from a complying superannuation plan; or (ii) a superannuation guarantee payment, a small superannuation account payment, an unclaimed money payment, a superannuation co ‑ contribution benefit payment or a superannuation annuity payment. (2) The lump sum is not assessable income and is not exempt income if a terminal medical condition exists in relation to you at a time in the period: (a) starting when you receive the lump sum; and (b) ending at the later of: (i) 90 days after you receive it; and (ii) 30 June 2008.

Amendment history: Inserted by No 38 of 2008, effective Schedule 7 (items 4, 5): Royal Assent

s 303-15 — Superannuation lump sum member benefit paid to member on compassionate ground relating to the coronavirus

A superannuation member benefit that is a superannuation lump sum is not assessable income and is not exempt income if: (a) it is paid from a complying superannuation plan; and (b) it is paid because you satisfy: (i) a condition of release specified in item 107A or 207AA of the table in Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994 ; or (ii) a condition of release specified in item 109AA of the table in Schedule 2 to the Retirement Savings Accounts Regulations 1997 .

Amendment history: Inserted by No 22 of 2020, effective sch 1 (items 15 ‑ 21), sch 2 (items 7, 8), sch 13 (item 1): 25 Mar 2020 (s 2(1) items 2, 8)

s 304-15 — Excess payments from release authorities

(1) This section applies to a superannuation benefit that you receive, paid in relation to a release authority given in relation to you in accordance with section 292 ‑ 80B. (2) The superannuation benefit is not assessable income and is not exempt income to the extent that it does not exceed the amount mentioned in subsection (3). (3) The amount is the amount of excess non ‑ concessional contributions stated in the release authority in accordance with paragraph 292 ‑ 80A(3)(a), reduced (but not below zero) by the amount of any superannuation benefit that was not assessable income and not exempt income under a previous operation of subsection (2) in relation to the release authority. (4) The superannuation benefit is assessable income to the extent (if any) that it exceeds the amount mentioned in subsection (3). (5) This section applies despite Divisions 301, 302 and 303 of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 305-80 — Lump sums paid into complying superannuation plans post ‑ FIF abolition

(1) You are entitled to a deduction for an income year (the deduction year ) if: (a) you have an interest in a FIF (within the meaning of Part XI of the Income Tax Assessment Act 1936 , as in force just before the commencement of item 37 of Schedule 1 to the Tax Laws Amendment (Foreign Source Income Deferral) Act (No. 1) 2010 ) (the paying fund ); and (b) Subdivision 305 ‑ B of the Income Tax Assessment Act 1997 applies in relation to the paying fund (see section 305 ‑ 55 of that Act); and (c) the paying fund transfers an amount to a complying superannuation fund in respect of you during the deduction year; and (d) you choose under section 305 ‑ 80 of the Income Tax Assessment Act 1997 that the amount, or part of the amount, is to be treated as assessable income of the complying superannuation fund; and (e) immediately before the transfer happens, there is a post ‑ FIF abolition surplus (within the meaning of the Income Tax Assessment Act 1936 ) for the paying fund in relation to you; and (f) the deduction year is the 2010 ‑ 11 income year or a later income year. (2) The amount of the deduction is the lesser of: (a) the post ‑ FIF abolition surplus; and (b) the amount covered by your choice mentioned in paragraph (1)(d).

Amendment history: Inserted by No 12 of 2012, effective Sch 2 (items 24, 25) and Sch 6 (items 21, 32, 149–152): 21 Mar 2012 (s 2(1) items 3, 10, 13, 24, 25)

s 306-10 — Roll ‑ over superannuation benefit—directed termination payment

For the purposes of the definition of specified roll ‑ over amount in the Income Tax Assessment Act 1997 , treat the taxable component of a directed termination payment (within the meaning of section 82 ‑ 10F) as the element untaxed in the fund of a superannuation benefit that is a roll ‑ over superannuation benefit.

Amendment history: Inserted by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10)

s 307-125 — Treatment of tax free component of existing pension payments etc.

(1) This section applies to a superannuation income stream from which at least one superannuation income stream benefit has been paid before 1 July 2007. Note: This section also applies to an income stream replacing an earlier one because of an involuntary roll ‑ over (see section 307 ‑ 127). (2) Despite subsection 307 ‑ 125(2) of the Income Tax Assessment Act 1997 , work out the tax free component of superannuation income stream benefits paid from the superannuation income stream in an income year beginning on or after 1 July 2007 as follows: (a) first, work out the deductible amount in relation to the superannuation income stream for the income year including 30 June 2007 in accordance with section 27H of the Income Tax Assessment Act 1936 (as in force just before 1 July 2007); (b) next, allocate the deductible amount worked out under paragraph (a) to each of those benefits in proportion to the amount of those benefits. The amount allocated to a superannuation income stream benefit under paragraph (b) is the tax free component of the benefit. The taxable component of the benefit is the remainder of the benefit. (3) Subsection (2) does not apply to the payment of a superannuation income stream benefit after at least one of the following events has happened: (a) the superannuation income stream has been wholly or partially commuted; (b) the holder of the superannuation interest has died, if: (i) none of the superannuation income stream benefits paid from the superannuation interest after 30 June 2007 consist of, or include, an element untaxed in the fund; or (ii) where no superannuation income stream benefits have been paid from the superannuation interest after 30 June 2007—all payments from the interest on or before that day would have satisfied the requirement in subparagraph (i) if they had been paid after that day; (ba) the holder of the superannuation interest is aged 60 or above on 1 July 2007, if none of the superannuation income stream benefits paid from the superannuation interest after 30 June 2007 consist of, or include, an element untaxed in the fund; (c) the holder of the superannuation interest turns 60, if: (i) none of the superannuation income stream benefits paid from the superannuation interest after 30 June 2007 consist of, or include, an element untaxed in the fund; or (ii) where no superannuation income stream benefits have been paid from the superannuation interest after 30 June 2007—all payments from the interest on or before that day would have satisfied the requirement in subparagraph (i) if they had been paid after that day. Continuing payments of superannuation income stream after subsection (3) event (4) If subsection (2) does not apply to the payment of a superannuation income stream benefit because of subsection (3): (a) treat the time mentioned in subsection (5) as the applicable time for the purposes of subsection 307 ‑ 125(3) of the Income Tax Assessment Act 1997 in relation to the benefit; and (b) work out the tax free component of the superannuation interest for the purposes of section 307 ‑ 125 of the Income Tax Assessment Act 1997 under subsections (6) and (6A). (5) For the purposes of subsection (4), the time is: (a) the time just before the event mentioned in subsection (3) happens; or (b) if there are 2 or more such events—the time just before the earliest of those events happens. (6) For the purposes of paragraph (4)(b), work out the tax free component of the superannuation interest as follows: (a) first, assume that: (i) an eligible termination payment had been made in respect of the holder of the interest just before the time mentioned in subsection (5); and (ii) the amount of the eligible termination payment had been equal to the value of the superannuation interest at that time; (b) next, work out the unused undeducted purchase price (within the meaning of paragraph (a) of the definition of that term in subsection 27A(1) of the Income Tax Assessment Act 1936 just before the commencement of this section, and disregarding paragraphs (b) and (c) of that definition) of the superannuation income stream, reduced by the tax free components (worked out under subsection (2)) of any benefits paid from the superannuation income stream after 30 June 2007; (c) next, work out the pre ‑ July 83 component (within the meaning of section 27A of the Income Tax Assessment Act 1936 just before the commencement of this section) of the eligible termination payment. The tax free component is equal to the sum of the amounts worked out under paragraphs (b) and (c). (6A) Despite subsection (6), if: (a) at least one superannuation income stream benefit was paid from the superannuation income stream before 1 July 1994; or (b) section 27AAAA of the Income Tax Assessment Act 1936 (as in force just before 1 July 2007) applied to the superannuation income stream just before 1 July 2007; for the purposes of paragraph (4)(b), the tax free component is equal to the amount worked out under paragraph (6)(b). (7) For the purposes of paragraph (6)(c), disregard the value of the interest to the extent that it would consist, apart from this subsection, of the element untaxed in the fund of the taxable component of a superannuation benefit constituted by the eligible termination payment. Commutation of superannuation income stream (8) If the superannuation income stream has been wholly or partially commuted as mentioned in paragraph (3)(a), treat the applicable time for the purposes of subsection 307 ‑ 125(3) of the Income Tax Assessment Act 1997 in relation to a superannuation benefit arising from the commutation as: (a) the time just before the commutation; or (b) if 1 or more other events mentioned in subsection (3) happened before the commutation—the time just before the earliest of those events happens.

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (item 25) and Schedule 2 (item 3): Royal Assent | Amended by No 15 of 2007, effective Sch 1 (items 261–272, 406(1)–(3)), Sch 3 (items 45–50, 66) and Sch 4 (items 9, 11): 15 Mar 2007 (s 2(1) items 2, 6, 8, 9, 11) Sch 4 (item 10): 12 Apr 2007 (s 2(1) item 10) | Amended by No 143 of 2007, effective Schedule 1 (items 5, 195–205, 222, 225, 226), Schedule 5 (items 18–25, 48(1), (2)) and Schedule 7 (items 97, 98): Royal Assent Sch 1 (item 227): 30 June 2014 | Amended by No 21 of 2015, effective sch 4 (items 6, 7, 9): 1 July 2015 (s 2(1) item 5) sch 7 (item 22): 20 Mar 2015 (s 2(1) item 15)

s 307-127 — Extension—income stream replacing an earlier one because of an involuntary roll ‑ over

(1) Section 307 ‑ 125 also applies to a superannuation income stream (the later income stream ) if: (a) the later income stream commenced using only the amount of an involuntary roll ‑ over superannuation benefit: (i) covered by paragraph 306 ‑ 12(a) of the Income Tax Assessment Act 1997 ; and (ii) paid from a superannuation interest (the earlier interest ); and (b) immediately before that benefit was paid: (i) the earlier interest was supporting another superannuation income stream (the earlier income stream ); and (ii) section 307 ‑ 125 of this Act applied to the earlier income stream because of subsection (1) of that section. (2) Section 307 ‑ 125 applies to the later income stream as if: (a) references in that section to the later income stream (in relation to a time, or event happening, before the payment of that involuntary roll ‑ over superannuation benefit) include references to the earlier income stream; and (b) references in that section to the superannuation interest supporting the later income stream (in relation to a time, or event happening, before the payment of that benefit) include references to the earlier interest.

Amendment history: Inserted by No 21 of 2015, effective sch 4 (items 6, 7, 9): 1 July 2015 (s 2(1) item 5) sch 7 (item 22): 20 Mar 2015 (s 2(1) item 15)

s 307-230 — Total superannuation balance—modification for transfer balance just before 1 July 2017

(1) This section applies for the purposes of working out the amount of your total superannuation balance just before 1 July 2017. (2) The transfer balance mentioned in paragraph 307 ‑ 230(1)(b) of the Income Tax Assessment Act 1997 just before 1 July 2017 is taken to be equal to: (a) the sum of the transfer balance credits (if any) in your transfer balance account just after the start of 1 July 2017; less (b) the sum of the transfer balance debits (if any) arising in your transfer balance account on 1 July 2017 under item 4 of the table in subsection 294 ‑ 80(1) of that Act (about payment splits).

Amendment history: Inserted by No 81 of 2016, effective sch 1 (items 34 ‑ 36), sch 2 (items 9 ‑ 13), sch 3 (items 6, 9), sch 9 (items 4, 5), sch 10 (items 81 ‑ 83, 93): 1 Jan 2017 (s 2(1) items 2, 4, 6) sch 10 (items 28, 49 ‑ 54): 1 July 2018 (s 2(1) item 5)

s 307-231 — Total superannuation balance—limited recourse borrowing arrangements

(1) Section 307 ‑ 231 of the Income Tax Assessment Act 1997 applies in relation to borrowings that arise under contracts entered into on or after 1 July 2018. (2) For the purposes of subsection (1), a borrowing (the new borrowing ) that arises under a contract entered into on or after 1 July 2018 is treated as if it arose under a contract entered into before 1 July 2018 if: (a) the new borrowing is a refinancing of a borrowing (the old borrowing ) that was made under a contract: (i) entered into before 1 July 2018; and (ii) covered by the exception in subsection 67A(1) of the Superannuation Industry (Supervision) Act 1993 (which is about limited recourse borrowing arrangements); and (b) the new borrowing is secured by the same asset or assets as the old borrowing; and (c) the amount of the new borrowing at the time it is first made equals, or is less than, the outstanding balance on the old borrowing just before the refinancing.

Amendment history: Inserted by No 78 of 2019, effective sch 3 (item 4): 1 Jan 2020 (s 2(1) item 3)

s 307-290 — Taxed and untaxed elements of death benefit superannuation lump sums

For the purposes of section 307 ‑ 290 of the Income Tax Assessment Act 1997 : (a) treat a deduction made under former section 279 of the Income Tax Assessment Act 1936 as having been made under section 295 ‑ 465 of the Income Tax Assessment Act 1997 instead; and (b) treat a deduction made under former section 279B of the Income Tax Assessment Act 1936 as having been made under section 295 ‑ 470 of the Income Tax Assessment Act 1997 instead.

Amendment history: Inserted by No 143 of 2007, effective Schedule 1 (items 5, 195–205, 222, 225, 226), Schedule 5 (items 18–25, 48(1), (2)) and Schedule 7 (items 97, 98): Royal Assent Sch 1 (item 227): 30 June 2014

s 307-345 — Low rate component—Effect of rebate under the Income Tax Assessment Act 1936

If you have become entitled to a rebate under section 159SA of the Income Tax Assessment Act 1936 , your low rate cap amount for the 2007 ‑ 2008 income year is, despite subsection 307 ‑ 345(1), the total of: (a) your closing balance for the 2006 ‑ 2007 income year (worked out under subsection 159SF(2) of that Act); and (b) the amount by which $140,000 exceeds the upper limit for the 2006 ‑ 2007 income year (worked out under section 159SG of that Act).

Amendment history: Inserted by No 9 of 2007, effective Schedule 1 (item 25) and Schedule 2 (item 3): Royal Assent

s 316-1 — Application of Division 316 of the Income Tax Assessment Act 1997

Division 316 of the Income Tax Assessment Act 1997 applies in relation to demutualisations occurring on or after 1 July 2008.

Amendment history: Inserted by No 88 of 2009, effective Schedule 3 (item 24) and Schedule 5 (items 205–208, 259–282): Royal Assent

s 320-5 — Life insurance companies that are friendly societies

If: (a) any assets held by the benefit funds of a life insurance company that is a friendly society for the purpose of providing superannuation benefits to its members are transferred before 1 July 2001 to a complying superannuation fund; and (b) the persons who had interests in those assets immediately before the transfer had substantially the same interests in the assets after the transfer; the transfer is disregarded for any purposes of the Income Tax Assessment Act 1997 or the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 89 of 2000, effective s 4 and Sch 2 (items 85–88): 30 June 2000 (s 2(1)) | Amended by No 143 of 2007, effective Schedule 1 (items 5, 195–205, 222, 225, 226), Schedule 5 (items 18–25, 48(1), (2)) and Schedule 7 (items 97, 98): Royal Assent Sch 1 (item 227): 30 June 2014

s 320-85 — Deduction for increase in value of liabilities under risk components of life insurance policies

(1) In working out the amount that a life insurance company can deduct, in respect of life insurance policies that are disability policies (other than continuous disability policies) under subsection 320 ‑ 85(1) of the Income Tax Assessment Act 1997 for the income year in which 1 July 2000 occurs, the value of the company’s liabilities under the net risk components of the policies at the end of the previous income year is taken to be the value of the liabilities as at the end of 30 June 2000 relating to those policies that was used by the company for the purposes of its return of income. (2) In working out the amount that a life insurance company can deduct, in respect of life insurance policies (other than policies to which subsection (1) applies) under subsection 320 ‑ 85(1) of the Income Tax Assessment Act 1997 for the income year in which 1 July 2000 occurs, the value of the company’s liabilities under the net risk components of the policies at the end of the previous income year is taken to be the value of the company’s liabilities as at the end of 30 June 2000 under the net risk components relating to those policies as calculated under subsection 320 ‑ 85(4) of that Act.

Amendment history: Inserted by No 89 of 2000, effective s 4 and Sch 2 (items 85–88): 30 June 2000 (s 2(1)) | Amended by No 143 of 2007, effective Schedule 1 (items 5, 195–205, 222, 225, 226), Schedule 5 (items 18–25, 48(1), (2)) and Schedule 7 (items 97, 98): Royal Assent Sch 1 (item 227): 30 June 2014

s 320-100 — Savings—tax losses of previous income years

If: (a) a life insurance company has a tax loss for an income year ending before 1 July 2000; and (b) all or a part of that tax loss is carried forward to the income year that includes that date; so much of that tax loss as is so carried forward has effect as if it were a tax loss of the ordinary class.

Amendment history: Inserted by No 83 of 2004, effective Sch 1 (items 80–83): 30 June 2000 (s 2(1) item 2) Sch 2 (items 1, 19, 34, 75, 76): 25 June 2004 (s 2(1) items 13, 16) Sch 2 (item 9): 24 Oct 2002 (s 2(1) item 15)

s 320-170 — Transfer of part of an asset to a virtual PST

(1) This section applies to an asset (an approved asset ) of a life insurance company if: (a) the asset was acquired by the company before 1 July 2000; and (b) the asset is held in an Australian fund or an Australian/overseas fund of the company; and (c) the market value of the asset at that date exceeds whichever is the lesser of: (i) $50,000,000; or (ii) whichever is the greater of 2% of the value of that fund at that date or $5,000,000. (2) If the life insurance company wishes to include a part of an approved asset in its virtual PST before 1 October 2000, the company must, before that date, certify in writing the part (if any) of the asset to be included in the virtual PST. (3) If the life insurance company so certifies, the part of the asset stated in the certificate is to be treated as a separate asset of the company.

Amendment history: Inserted by No 89 of 2000, effective s 4 and Sch 2 (items 85–88): 30 June 2000 (s 2(1)) | Amended by No 143 of 2007, effective Schedule 1 (items 5, 195–205, 222, 225, 226), Schedule 5 (items 18–25, 48(1), (2)) and Schedule 7 (items 97, 98): Royal Assent Sch 1 (item 227): 30 June 2014

s 320-175 — Transfers of assets to virtual PST

(1) If: (a) a life insurance company had a liability before 1 July 2000 under a life insurance policy; and (b) the liability or a part of the liability is to be discharged out of the company’s virtual PST assets; and (c) there is a transfer of the company’s assets to the virtual PST to meet that liability or that part of the liability; then, to the extent to which the assets are transferred to meet that liability or that part of the liability: (d) if the transfer occurs before 1 October 2000—the transfer is to be disregarded for the purposes of the Income Tax Assessment Act 1997 ; or (e) if the transfer occurs on or after 1 October 2000—the transfer is to be disregarded for the purposes of that Act, except: (i) section 320 ‑ 200 of that Act; and (ii) any other provisions that rely on the operation of that section (for example, paragraph 320 ‑ 15(1)(e) of that Act). Note: This means, amongst other things, that a life insurance company to which this subsection applies will not be able to claim a deduction in respect of the transfer under subsection 320 ‑ 87(2) of that Act. (1A) If subsection (1) has applied to a life insurance company in respect of a transfer of assets to meet a liability or a part of a liability, that subsection does not apply again in respect of another transfer of assets to meet that liability or that part of the liability. (2) If a life insurance company that is a friendly society establishes a virtual PST in the 2000 ‑ 01 income year, the calculation of the transfer values of the company’s virtual PST assets as at the end of that income year is to be made not later than 90 days after the end of that income year.

Amendment history: Inserted by No 89 of 2000, effective s 4 and Sch 2 (items 85–88): 30 June 2000 (s 2(1)) | Amended by No 83 of 2004, effective Sch 1 (items 80–83): 30 June 2000 (s 2(1) item 2) Sch 2 (items 1, 19, 34, 75, 76): 25 June 2004 (s 2(1) items 13, 16) Sch 2 (item 9): 24 Oct 2002 (s 2(1) item 15)

s 320-180 — Deferred annuities purchased before 1 July 2007

(1) Subsection (3) applies for the purposes of subparagraph (b)(i) of the definition of virtual PST life insurance policy in subsection 995 ‑ 1(1) of the Income Tax Assessment Act 1997 , as in force just after the commencement of item 259 of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007 . (2) Subsection (3) also applies for the purposes of subparagraph (b)(i) of the definition of complying superannuation/FHSA life insurance policy in subsection 995 ‑ 1(1) of the Income Tax Assessment Act 1997 , as in force just after the commencement of item 47 of Schedule 7 to the First Home Saver Accounts (Consequential Amendments) Act 2008 . (3) Treat an annuity as having been purchased out of a superannuation lump sum or an employment termination payment, if the annuity was purchased: (a) before 1 July 2007; and (b) out of an eligible termination payment (within the meaning of the Income Tax Assessment Act 1997 , as in force just before the commencement mentioned in subsection (1) of this section).

Amendment history: Inserted by No 12 of 2012, effective Sch 2 (items 24, 25) and Sch 6 (items 21, 32, 149–152): 21 Mar 2012 (s 2(1) items 3, 10, 13, 24, 25) | Amended by No 12 of 2012, effective Sch 2 (items 24, 25) and Sch 6 (items 21, 32, 149–152): 21 Mar 2012 (s 2(1) items 3, 10, 13, 24, 25)

s 320-225 — Transfer of part of an asset to segregated exempt assets

(1) This section applies to an asset (an approved asset ) of a life insurance company if: (a) the asset was acquired by the company before 1 July 2000; and (b) the asset is held in an Australian fund or an Australian/overseas fund of the company; and (c) the market value of the asset at that date exceeds whichever is the lesser of: (i) $50,000,000; or (ii) whichever is the greater of 2% of the value of that fund at that date or $5,000,000. (2) If the life insurance company wishes to include a part of an approved asset in its segregated exempt assets before 1 October 2000, the company must, before that date, certify in writing the part (if any) of the asset to be included in the segregated exempt assets. (3) If the life insurance company so certifies, the part of the asset stated in the certificate is to be treated as a separate asset of the company.

Amendment history: Inserted by No 89 of 2000, effective s 4 and Sch 2 (items 85–88): 30 June 2000 (s 2(1)) | Amended by No 143 of 2007, effective Schedule 1 (items 5, 195–205, 222, 225, 226), Schedule 5 (items 18–25, 48(1), (2)) and Schedule 7 (items 97, 98): Royal Assent Sch 1 (item 227): 30 June 2014

s 320-230 — Transfers of assets to segregated exempt assets

(1) If: (a) a life insurance company had a liability before 1 July 2000 under a life insurance policy where the income of the company attributable to the liability was exempt from tax before that date; and (b) the liability or a part of the liability is to be discharged out of the company’s segregated exempt assets; and (c) there is a transfer of the company’s assets to the segregated exempt assets to meet that liability or that part of the liability; then, to the extent to which the assets are transferred to meet that liability or that part of the liability: (d) if the transfer occurs before 1 October 2000—the transfer is to be disregarded for the purposes of the Income Tax Assessment Act 1997 ; or (e) if the transfer occurs on or after 1 October 2000—the transfer is to be disregarded for the purposes of that Act, except: (i) section 320 ‑ 255 of that Act; and (ii) any other provisions that rely on the operation of that section (for example, paragraph 320 ‑ 15(1)(g) of that Act). Note: This means, amongst other things, that a life insurance company to which this subsection applies will not be able to claim a deduction in respect of the transfer under subsection 320 ‑ 105(1) of that Act. (1A) If subsection (1) has applied to a life insurance company in respect of a transfer of assets to meet a liability or a part of a liability, that subsection does not apply again in respect of another transfer of assets to meet that liability or that part of the liability. (2) If a life insurance company that is a friendly society segregates any of its assets in accordance with section 320 ‑ 225 of the Income Tax Assessment Act 1997 in the 2000 ‑ 01 income year, the calculation of the transfer values of the company’s segregated exempt assets as at the end of that income year is to be made not later than 90 days after the end of that income year.

Amendment history: Inserted by No 89 of 2000, effective s 4 and Sch 2 (items 85–88): 30 June 2000 (s 2(1)) | Amended by No 83 of 2004, effective Sch 1 (items 80–83): 30 June 2000 (s 2(1) item 2) Sch 2 (items 1, 19, 34, 75, 76): 25 June 2004 (s 2(1) items 13, 16) Sch 2 (item 9): 24 Oct 2002 (s 2(1) item 15)

s 322-25 — Application of section 322 ‑ 25 of the Income Tax Assessment Act 1997

Section 322 ‑ 25 of the Income Tax Assessment Act 1997 applies to amounts paid or applied before, on or after the commencement of that section to meet entitlements arising under Part VC of the Insurance Act 1973 after 17 October 2008. Note: Part VC of the Insurance Act 1973 commenced on 18 October 2008.

Amendment history: Inserted by No 42 of 2009, effective Schedule 1 (items 27–29): Royal Assent

s 322-30 — Application of section 322 ‑ 30 of the Income Tax Assessment Act 1997

Section 322 ‑ 30 of the Income Tax Assessment Act 1997 applies to CGT events happening after 17 October 2008.

Amendment history: Inserted by No 42 of 2009, effective Schedule 1 (items 27–29): Royal Assent

s 328-1 — Definitions

In this Division: general STS pool means a general STS pool under old Subdivision 328 ‑ D. long life STS pool means a long life STS pool under old Subdivision 328 ‑ D. new Subdivision 328 ‑ D means Subdivision 328 ‑ D of the Income Tax Assessment Act 1997 , as in force after the commencement of this section. old Subdivision 328 ‑ D means Subdivision 328 ‑ D of the Income Tax Assessment Act 1997 , as in force immediately before the commencement of this section. STS taxpayer means an STS taxpayer within the meaning of Division 328 of the Income Tax Assessment Act 1997 , as in force immediately before the commencement of this section.

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

s 328-110 — Working out whether you are a small business entity for the 2007 ‑ 08 or 2008 ‑ 09 income year—turnover for earlier income years

(1) This section applies for the purpose of working out whether you are a small business entity (other than because of subsection 328 ‑ 110(4) of the Income Tax Assessment Act 1997 ) for the 2007 ‑ 08 or 2008 ‑ 09 income year. (2) You work out your aggregated turnover for the 2005 ‑ 06 or 2006 ‑ 07 income year as if the amendments made by Schedule 1 to the Tax Laws Amendment (Small Business) Act 2007 had been in force in relation to that year. (3) However, your aggregated turnover for the 2005 ‑ 06 income year is taken to be less than $2 million if: (a) your aggregated turnover for the 2005 ‑ 06 income year (worked out in accordance with subsection (2)) is $2 million or more; but (b) your STS group turnover for that year (worked out under Subdivision 328 ‑ F of the Income Tax Assessment Act 1997 , as in force immediately before the commencement of this section) is less than $2 million.

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

s 328-111 — Access to certain small business concessions for former STS taxpayers that are winding up a business

(1) This section applies if: (a) in the 2007 ‑ 08 income year or a later income year you are winding up a business you previously carried on; and (b) you were an STS taxpayer for the income year in which you stopped carrying on that business. (2) The following provisions apply as if you are a small business entity for the income year in which you are winding up the business: (a) Subdivision 328 ‑ D of the Income Tax Assessment Act 1997 (simpler rules for depreciating assets); (b) Subdivision 328 ‑ E of the Income Tax Assessment Act 1997 (simplified trading stock rules); (d) sections 82KZM and 82KZMD of the Income Tax Assessment Act 1936 (deducting certain prepaid expenses immediately); (e) section 170 of the Income Tax Assessment Act 1936 (standard 2 ‑ year period for amending assessments).

Amendment history: Inserted by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Schedule 1 (items 7, 8, 10): Royal Assent Schedule 2 (items 65, 66): 29 Mar 2012

s 328-112 — Working out whether you are a small business entity for certain small business concessions—entities connected with you

(1) For the purpose of working out whether you are a small business entity for the 2007 ‑ 08, 2008 ‑ 09, 2009 ‑ 10 or 2010 ‑ 11 income year (each a relevant income year ) for the purposes of a provision to which subsection (3) applies: (a) subsection 328 ‑ 125(4) of the Income Tax Assessment Act 1997 does not apply; and (b) the following subsection applies instead. (2) An entity (the first entity ) controls a discretionary trust for a relevant income year if, for any of the 4 income years (a previous income year ) before that year: (a) if the previous income year is before the 2007 ‑ 08 income year—the trustee of the trust made a distribution of $100,000 or more to the first entity, any of its affiliates, or the first entity and any of its affiliates; or (b) if the previous income year is the 2007 ‑ 08 income year or a later income year: (i) the trustee of the trust paid to, or applied for the benefit of, the first entity, any of the first entity’s affiliates, or the first entity and any of its affiliates, any of the income or capital of the trust; and (ii) the percentage (the control percentage ) of the income or capital paid or applied is at least 40% of the total amount of income or capital paid or applied by the trustee for that year. (3) This subsection applies to the following provisions: (a) Subdivision 328 ‑ D of the Income Tax Assessment Act 1997 (simpler rules for depreciating assets); (b) Subdivision 328 ‑ E of the Income Tax Assessment Act 1997 (simplified trading stock rules); (d) sections 82KZM and 82KZMD of the Income Tax Assessment Act 1936 (deducting certain prepaid expenses immediately); (e) section 170 of the Income Tax Assessment Act 1936 (standard 2 ‑ year period for amending assessments).

Amendment history: Inserted by No 80 of 2007, effective 21 June 2007 | Amended by No 23 of 2012, effective Schedule 1 (items 7, 8, 10): Royal Assent Schedule 2 (items 65, 66): 29 Mar 2012

s 328-115 — When you stop using the STS accounting method

(1) This section sets out what happens to your ordinary income and general deductions, and deductions under section 25 ‑ 5 or 25 ‑ 10 of the Income Tax Assessment Act 1997 , if: (a) you are a small business entity for an income year and for the following income year (the changeover year ); and (b) you were using the STS accounting method for the income year before the changeover year; and (c) you change to an accruals accounting method for the changeover year. (2) This section also sets out what happens to your ordinary income and general deductions, and deductions under section 25 ‑ 5 or 25 ‑ 10 of the Income Tax Assessment Act 1997 , if: (a) you are not a small business entity for an income year (also the changeover year ); and (b) you were using the STS accounting method for the income year before the changeover year; and (c) you change to an accruals accounting method for the changeover year. (3) Any ordinary income that, apart from paragraph 328 ‑ 105(1)(a) of the Income Tax Assessment Act 1997 (as in force immediately before its repeal by Schedule 2 to the Tax Laws Amendment (2004 Measures No. 7) Act 2005 ), you would have derived before the changeover year (while you were using the STS accounting method) and you have not included in your assessable income because you have not received it is included in your assessable income for the changeover year. (4) Any general deductions, and deductions under section 25 ‑ 5 or 25 ‑ 10 of the Income Tax Assessment Act 1997 , that, apart from paragraph 328 ‑ 105(1)(b) of that Act (as in force immediately before its repeal by Schedule 2 to the Tax Laws Amendment (2004 Measures No. 7) Act 2005 ), you would have incurred before the changeover year (while you were using the STS accounting method) and that you have not deducted because you have not paid them can be deducted for the changeover year.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 2 (items 10, 11), Schedule 6 (items 1, 4, 16, 29–35) and Schedule 10 (items 222, 223, 274): Royal Assent | Amended by No 80 of 2007, effective 21 June 2007

s 328-120 — Continuing to use the STS accounting method

(1) This section applies if: (a) you were an STS taxpayer for the most recent income year that started before 1 July 2005; and (b) you continued to be an STS taxpayer until the end of the 2006 ‑ 07 income year; and (c) you used the STS accounting method for the 2005 ‑ 06 and 2006 ‑ 07 income years; and (d) you are a small business entity for the 2007 ‑ 08 income year. (2) You can continue to use the STS accounting method: (a) for the 2007 ‑ 08 income year; and (b) for any later income year for which you are a small business entity but only if you used the STS accounting method for the income year before that later year. Example: You are a small business entity for the 2007 ‑ 08 and 2008 ‑ 09 income years and you continue to use the STS accounting method for those years. You are not a small business entity for the 2009 ‑ 10 income year so you cannot continue to use the STS accounting method for that year. Because you cannot use the STS accounting method for the 2009 ‑ 10 income year, you will not be able to use it again for a later income year even if you are a small business entity for that later year.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 2 (items 10, 11), Schedule 6 (items 1, 4, 16, 29–35) and Schedule 10 (items 222, 223, 274): Royal Assent | Repealed and substituted by No 80 of 2007, effective 21 June 2007

s 328-125 — Meaning of STS accounting method

In sections 328 ‑ 115 and 328 ‑ 120, STS accounting method means the accounting method that was required by the Income Tax Assessment Act 1997 to be used by STS taxpayers for the 2004 ‑ 05 income year.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 2 (items 10, 11), Schedule 6 (items 1, 4, 16, 29–35) and Schedule 10 (items 222, 223, 274): Royal Assent

s 328-175 — Choices made in relation to depreciating assets used in primary production business

(1) This section applies if: (a) you were an STS taxpayer for an income year; and (b) you made a choice under subsection 328 ‑ 175(3) of old Subdivision 328 ‑ D in relation to a depreciating asset you use to carry on a primary production business and for which you could deduct amounts under Subdivision 40 ‑ F or 40 ‑ G of the Income Tax Assessment Act 1997 . (2) The choice has effect for the purposes of subsection 328 ‑ 175(3) of new Subdivision 328 ‑ D. Note: This means you cannot change the choice: see subsection 328 ‑ 175(4) of new Subdivision 328 ‑ D.

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

s 328-180 — Increased access to accelerated depreciation from 12 May 2015 to 30 June 2026

(1) In this section: 2015 budget time means 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2015. 2019 application time means the start of 29 January 2019. 2019 budget time means 7.30 pm, by legal time in the Australian Capital Territory, on 2 April 2019. 2020 announcement time means the start of 12 March 2020. 2020 budget time means 7.30 pm, by legal time in the Australian Capital Territory, on 6 October 2020. increased access year : an income year is an increased access year if any day in the year occurs: (a) on or after 12 May 2015; and (b) on or before 30 June 2026. Restrictions on making choice (2) In determining whether you can choose to use Subdivision 328 ‑ D of the Income Tax Assessment Act 1997 in an increased access year, disregard subsection 328 ‑ 175(10) of that Act. (3) In applying paragraph 328 ‑ 175(10)(b) of that Act for the purpose of determining whether you can choose to use that Subdivision in any income year after the increased access years, disregard: (a) the increased access years, other than the last of the increased access years; and (b) all earlier income years. Temporary increase to asset cost threshold (4) Paragraph 328 ‑ 180(1)(b) of the Income Tax Assessment Act 1997 applies to a depreciating asset as if a reference in that paragraph to $1,000: (a) were a reference to $20,000, if you first acquired the asset at or after the 2015 budget time, and you: (i) first used the asset, for a taxable purpose, at or after the 2015 budget time and before the 2019 application time; or (ii) first installed the asset ready for use, for a taxable purpose, at or after the 2015 budget time and before the 2019 application time; or (b) were a reference to $25,000, if you first acquired the asset at or after the 2015 budget time, and you: (i) first used the asset, for a taxable purpose, at or after the 2019 application time and before the 2019 budget time; or (ii) first installed the asset ready for use, for a taxable purpose, at or after the 2019 application time and before the 2019 budget time; or (c) were a reference to $30,000, if you first acquired the asset at or after the 2015 budget time, and you: (i) first used the asset, for a taxable purpose, at or after the 2019 budget time and before the 2020 announcement time; or (ii) first installed the asset ready for use, for a taxable purpose, at or after the 2019 budget time and before the 2020 announcement time; or (d) were a reference to $20,000, if you first acquired the asset at or after the 2015 budget time, and you: (i) first used the asset, for a taxable purpose, on or after 1 July 2023 and on or before 30 June 2026; or (ii) first installed the asset ready for use, for a taxable purpose, on or after 1 July 2023 and on or before 30 June 2026. (4A) Paragraph 328 ‑ 180(1)(b) of the Income Tax Assessment Act 1997 applies to a depreciating asset as if: (a) a reference in that paragraph to the end of the income year in which you start to use the asset, or have it installed ready for use, for a taxable purpose were a reference to the earlier of: (i) the end of that year; and (ii) 30 June 2021; and (b) a reference in that paragraph to $1,000 were a reference to $150,000; if: (c) you first acquired the asset at or after the 2015 budget time; and (d) you: (i) first used the asset, for a taxable purpose, at or after the 2020 announcement time and on or before 30 June 2021; or (ii) first installed the asset ready for use, for a taxable purpose, at or after the 2020 announcement time and on or before 30 June 2021. (5) Paragraph 328 ‑ 180(2)(a) or (3)(a) of the Income Tax Assessment Act 1997 applies to an amount included in the second element of the cost of an asset as if a reference in that paragraph to $1,000: (a) were a reference to $20,000, if the amount is so included at any time: (i) at or after the 2015 budget time; and (ii) before the 2019 application time; or (b) were a reference to $25,000, if the amount is so included at any time: (i) at or after the 2019 application time; and (ii) before the 2019 budget time; or (c) were a reference to $30,000, if the amount is so included at any time: (i) at or after the 2019 budget time; and (ii) before the 2020 announcement time; or (d) were a reference to $150,000, if the amount is so included at any time: (i) at or after the 2020 announcement time; and (ii) on or before 31 December 2020; or (e) were a reference to $20,000, if the amount is so included at any time: (i) on or after 1 July 2023; and (ii) on or before 30 June 2026. (5A) For the purposes of determining whether, under subsection 328 ‑ 180(2) of the Income Tax Assessment Act 1997 , you can deduct, for an income year (the current year ), the taxable purpose proportion of an amount included in the second element of the cost of an asset, disregard paragraph (b) of that subsection if: (a) you first acquired the asset at or after the 2015 budget time; and (b) you started to use the asset, or have it installed ready for use, for a taxable purpose: (i) at or after the 2020 announcement time; and (ii) before or during the current year; and (iii) on or before 30 June 2021; and (c) the amount is so included: (i) before or during the current year; and (ii) after 31 December 2020. Low pool value (6) Section 328 ‑ 210 of the Income Tax Assessment Act 1997 applies as if a reference in that section to $1,000: (a) were a reference to $20,000, in relation to a deduction for an income year that ends: (i) on or after 12 May 2015; and (ii) before the 2019 application time; or (b) were a reference to $25,000, in relation to a deduction for an income year that ends: (i) at or after the 2019 application time; and (ii) before the 2019 budget time; or (c) were a reference to $30,000, in relation to a deduction for an income year that ends: (i) at or after the 2019 budget time; and (ii) before the 2020 announcement time; or (d) were a reference to $150,000, in relation to a deduction for an income year that ends: (i) at or after the 2020 announcement time; and (ii) on or before 31 December 2020; or (e) were a reference to $20,000, in relation to a deduction for an income year that ends: (i) on or after 1 July 2023; and (ii) on or before 30 June 2026.

Amendment history: Inserted by No 67 of 2015, effective sch 1 (item 9): 22 June 2015 (s 2(2)) | Amended by No 56 of 2017, effective sch 1 (items 8 ‑ 11): 1 July 2017 (s 2(1) item 2) | Amended by No 109 of 2018, effective sch 1 (items 8 ‑ 11): 1 Oct 2018 (s 2(1) item 2) | Amended by No 51 of 2019, effective sch 1 (items 8 ‑ 11): 1 July 2019 (s 2(1) item 1) | Amended by No 22 of 2020, effective sch 1 (items 15 ‑ 21), sch 2 (items 7, 8), sch 13 (item 1): 25 Mar 2020 (s 2(1) items 2, 8) | Amended by No 61 of 2020, effective sch 4 (items 18 ‑ 26): 20 June 2020 (s 2(1) item 6) | Amended by No 92 of 2020, effective sch 5 (items 41 ‑ 56), sch 7 (items 1 ‑ 4, 9 ‑ 11, 26, 27): 1 Jan 2021 (s 2(1) item 7) | Amended by No 127 of 2021, effective sch 3 (items 40, 41): 8 Dec 2021 (s 2(1) item 4) sch 3 (item 70): 1 Jan 2022 (s 2(1) item 5) | Amended by No 10 of 2022, effective sch 6: 1 Apr 2022 (s 2(1) item 3) | Amended by No 52 of 2024, effective sch 1, 2: 1 July 2024 (s 2(1) item 2) | Amended by No 29 of 2025, effective sch 4: 1 Apr 2025 (s 2(1) item 4) | Amended by No 72 of 2025, effective sch 7: 5 Dec 2025 (s 2(1) item 9)

s 328-181 — Full expensing—2020 budget time to 30 June 2023

(1) In this section: 2020 budget time has the same meaning as in section 328 ‑ 180. Year asset first used etc. for a taxable purpose (2) For the purposes of determining whether subsection 328 ‑ 180(1) of the Income Tax Assessment Act 1997 allows you to deduct an amount in relation to a depreciating asset, disregard paragraph (b) of that subsection (which sets a limit of $1,000 on the cost of the asset) if, in the period beginning at the 2020 budget time and ending on 30 June 2023, you: (a) start to hold the asset; and (b) start to use it, or have it installed ready for use, for a taxable purpose. Years later than the year asset first used etc. for a taxable purpose (3) For the purposes of determining whether subsection 328 ‑ 180(2) of the Income Tax Assessment Act 1997 allows you to deduct an amount in relation to a depreciating asset, disregard paragraph (a) of that subsection (which sets a limit of $1,000 on the amount) if the amount is included in the second element of the cost of the asset at any time in the period beginning at the 2020 budget time and ending on 30 June 2023. (4) In applying paragraph 328 ‑ 180(3)(a) of the Income Tax Assessment Act 1997 to an asset, disregard an amount included in the second element of the cost of the asset if the amount is deducted under subsection 328 ‑ 180(2) of that Act, as modified by subsection (3) of this section. Low pool value (5) Section 328 ‑ 210 of the Income Tax Assessment Act 1997 applies as if the words “less than $1,000 but” in subsection (1) were disregarded, in relation to a deduction for an income year that ends: (a) at or after the 2020 budget time; and (b) on or before 30 June 2023.

Amendment history: Inserted by No 92 of 2020, effective sch 5 (items 41 ‑ 56), sch 7 (items 1 ‑ 4, 9 ‑ 11, 26, 27): 1 Jan 2021 (s 2(1) item 7) | Amended by No 141 of 2020, effective sch 1 (items 2 ‑ 16): 1 Jan 2021 (s 2(1) item 2) | Amended by No 10 of 2022, effective sch 6: 1 Apr 2022 (s 2(1) item 3)

s 328-182 — Backing business investment

Subsection 328 ‑ 190(2) of the Income Tax Assessment Act 1997 applies to a depreciating asset as if a reference in that subsection to 15% were a reference to 57.5% if you are covered by section 40 ‑ 125 for the asset (which is about backing business investment).

Amendment history: Inserted by No 22 of 2020, effective sch 1 (items 15 ‑ 21), sch 2 (items 7, 8), sch 13 (item 1): 25 Mar 2020 (s 2(1) items 2, 8)

s 328-185 — Depreciating assets allocated to STS pools

Assets allocated to general STS pool (1) A depreciating asset of yours that had been allocated to your general STS pool is treated as being allocated to your general small business pool. Assets allocated to long life STS pool (2) A depreciating asset of yours that had been allocated to your long life STS pool is treated as being allocated to your long life small business pool. Choice not to allocate assets to long life STS pool (3) If you made a choice, under subsection 328 ‑ 185(5) of old Subdivision 328 ‑ D, not to have a depreciating asset allocated to your long life STS pool, the choice has effect for the purposes of subsection 328 ‑ 185(5) of new Subdivision 328 ‑ D. Note: This means you cannot change the choice: see subsection 328 ‑ 185(6) of new Subdivision 328 ‑ D.

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

s 328-195 — Opening pool balances for 2007 ‑ 08 income year

(1) This section applies if a depreciating asset of yours is treated as being allocated to your general small business pool or long life small business pool under section 328 ‑ 185. (2) The opening pool balance of your general small business pool or long life small business pool for the 2007 ‑ 08 income year is taken to be the closing pool balance of your general STS pool or long life STS pool, as the case requires, for the 2006 ‑ 07 income year, reduced or increased by any adjustment required under section 328 ‑ 225 of new Subdivision 328 ‑ D (about change in the business use of an asset). (3) However, if: (a) you were not an STS taxpayer for the 2006 ‑ 07 income year (because you stopped being an STS taxpayer before that time); but (b) you are a small business entity for the 2007 ‑ 08 income year or a later income year and you choose to use new Subdivision 328 ‑ D to deduct amounts for your depreciating assets for that income year; the opening pool balance of your general small business pool or long life small business pool includes the sum of the taxable purpose proportions of the adjustable values of depreciating assets allocated to the pool under subsection 328 ‑ 185(3) of new Subdivision 328 ‑ D for that year.

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

s 328-200 — General small business pool for the 2012 ‑ 13 income year

(1) This section applies for the purposes of applying Subdivision 328 ‑ D of the Income Tax Assessment Act 1997 for the 2012 ‑ 13 income year and later income years. (2) A depreciating asset that had been allocated to your long life small business pool is treated as being allocated to your general small business pool. (3) The opening pool balance of your general small business pool for the 2012 ‑ 13 income year is taken to be the sum of: (a) the closing pool balance of your general small business pool for the 2011 ‑ 12 income year, reduced or increased by any adjustment required under section 328 ‑ 225 of that Act; and (b) the closing pool balance of your long life small business pool for the 2011 ‑ 12 income year, reduced or increased by any adjustment required under that section.

Amendment history: Inserted by No 23 of 2012, effective Schedule 1 (items 7, 8, 10): Royal Assent Schedule 2 (items 65, 66): 29 Mar 2012

s 328-440 — Taxpayers who left the STS on or after 1 July 2005

(1) This section applies if you chose to stop being an STS taxpayer for the 2005 ‑ 06 income year or the 2006 ‑ 07 income year. (2) You cannot choose to use new Subdivision 328 ‑ D to deduct amounts for your depreciating assets until at least 5 years after the income year for which you chose to stop being an STS taxpayer. Note: Subdivision 328 ‑ D of the Income Tax Assessment Act 1997 continues to apply to depreciating assets that have been allocated to your small business pools even if you are not a small business entity, or do not choose to use that Subdivision, for an income year: see section 328 ‑ 220 of that Subdivision.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 2 (items 10, 11), Schedule 6 (items 1, 4, 16, 29–35) and Schedule 10 (items 222, 223, 274): Royal Assent | Repealed and substituted by No 80 of 2007, effective 21 June 2007

s 328-445 — Bonus deduction for upskilling employees of small business entities etc.

Initial bonus deduction—2022 ‑ 23 income year for normal or late balancers (1) You can deduct 20% of particular expenditure for the 2022 ‑ 23 income year if: (a) you are a small business entity, or an entity covered by subsection (4), for the income year in which you incur the expenditure; and (b) you incur the expenditure in the period: (i) starting at 7.30 pm, by legal time in the Australian Capital Territory, on 29 March 2022; and (ii) ending at the end of the 2022 ‑ 23 income year; and (c) you can deduct 100% of the expenditure under another provision of a taxation law (whether or not in, or wholly in, the income year in which the expenditure is incurred); and (d) section 328 ‑ 450 applies to the expenditure. Initial bonus deduction—2023 ‑ 24 income year for early balancers (2) Subsection (1) does not apply if your 2022 ‑ 23 income year starts before 1 July 2022. Instead, you can deduct 20% of particular expenditure for your 2023 ‑ 24 income year if: (a) you are a small business entity, or an entity covered by subsection (4), for the income year in which you incur the expenditure; and (b) you incur the expenditure in the period: (i) starting at 7.30 pm, by legal time in the Australian Capital Territory, on 29 March 2022; and (ii) ending at the end of your 2023 ‑ 24 income year; and (c) you can deduct 100% of the expenditure under another provision of a taxation law (whether or not in, or wholly in, the income year in which the expenditure is incurred); and (d) section 328 ‑ 450 applies to the expenditure. Later bonus deductions (3) You can deduct 20% of particular expenditure for an income year (the current year ) if: (a) the current year is after: (i) if your 2022 ‑ 23 income year starts on or after 1 July 2022—your 2022 ‑ 23 income year; or (ii) if your 2022 ‑ 23 income year starts before 1 July 2022—your 2023 ‑ 24 income year; and (b) you are a small business entity, or an entity covered by subsection (4), for the current year; and (c) you incur the expenditure in the current year and before the end of 30 June 2024; and (d) you can deduct 100% of the expenditure under another provision of a taxation law (whether or not in, or wholly in, the income year in which the expenditure is incurred); and (e) section 328 ‑ 450 applies to the expenditure. Businesses with turnover under $50 million (4) An entity is covered by this subsection for an income year if: (a) the entity is not a small business entity for the income year; and (b) the entity would be a small business entity for the income year if: (i) each reference in Subdivision 328 ‑ C (about what is a small business entity) of the Income Tax Assessment Act 1997 to $10 million were instead a reference to $50 million; and (ii) the reference in paragraph 328 ‑ 110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this subsection. These are bonus deductions under the Income Tax Assessment Act 1997 (5) The Income Tax Assessment Act 1997 has effect as if this section and section 328 ‑ 450 of this Act were provisions of Division 25 of the Income Tax Assessment Act 1997 . (6) Sections 8 ‑ 10 and 355 ‑ 715 of the Income Tax Assessment Act 1997 do not apply in relation to a deduction under this section.

Amendment history: Inserted by No 29 of 2023, effective sch 4, 5: 1 July 2023 (s 2(1) item 2) sch 9 (item 8): 24 June 2023 (s 2(1) item 5)

s 328-450 — Expenditure eligible for the bonus deduction for upskilling employees of small business entities etc.

(1) This section applies to expenditure if: (a) you incur the expenditure for the provision of: (i) in ‑ person training for one or more of your employees located in Australia; or (ii) online training for one or more of your employees; and (b) at each time you incur any of the expenditure for any of the training provided by a particular provider: (i) the provider is a registered body of a kind listed in subsection (2); and (ii) if the provider is a registered body of a kind listed in paragraph (2)(b), (c) or (d)—the training is within the provider’s scope of registration for that kind of registered body; and (c) none of the providers of the training is you or an associate of you; and (d) each enrolment, or arrangement, for the provision of the training is made or entered into at or after 7.30 pm, by legal time in the Australian Capital Territory, on 29 March 2022; and (e) the expenditure is charged, directly or indirectly, to you by the providers of the training. Note: Paragraphs (b) and (c) mean this section will not apply to expenditure for on ‑ the ‑ job training or training provided by you in house. (2) For the purposes of paragraph (1)(b), the kinds of registered bodies are as follows: (a) a registered higher education provider (within the meaning of the Tertiary Education Quality and Standards Agency Act 2011 ); (b) a NVR registered training organisation (within the meaning of the National Vocational Education and Training Regulator Act 2011 ); (c) a registered education and training organisation (within the meaning of the Education and Training Reform Act 2006 (Vic.)); (d) a registered training provider (within the meaning of the Vocational Education and Training Act 1996 (WA)).

Amendment history: Inserted by No 29 of 2023, effective sch 4, 5: 1 July 2023 (s 2(1) item 2) sch 9 (item 8): 24 June 2023 (s 2(1) item 5)

s 328-455 — Technology investment boost deduction

Normal or late balancers—deduction for 2022 ‑ 23 income year (1) You can deduct for the 2022 ‑ 23 income year an amount that is equal to the sum of: (a) the lower of $20,000 and 20% of the total amount (which may be nil) of your expenditure to which subsection 328 ‑ 460(1) applies; and (b) the lower of $20,000 and 20% of the total amount (which may be nil) of your expenditure to which subsection 328 ‑ 460(2) applies. Early balancers—deduction for 2023 ‑ 24 income year (2) Subsection (1) does not apply if your 2022 ‑ 23 income year starts before 1 July 2022. Instead, you can deduct for your 2023 ‑ 24 income year an amount that is equal to the sum of: (a) the lower of $20,000 and 20% of the total amount (which may be nil) of your expenditure to which subsection 328 ‑ 460(1) applies; and (b) the lower of $20,000 and 20% of the total amount (which may be nil) of your expenditure to which subsection 328 ‑ 460(2) applies. These are bonus deductions under the Income Tax Assessment Act 1997 (3) The Income Tax Assessment Act 1997 has effect as if this section and section 328 ‑ 460 of this Act were provisions of Division 25 of the Income Tax Assessment Act 1997 . (4) Sections 8 ‑ 10 and 355 ‑ 715 of the Income Tax Assessment Act 1997 do not apply in relation to a deduction under this section.

Amendment history: Inserted by No 29 of 2023, effective sch 4, 5: 1 July 2023 (s 2(1) item 2) sch 9 (item 8): 24 June 2023 (s 2(1) item 5)

s 328-460 — What expenditure qualifies for the technology investment boost

(1) This subsection applies to an amount of expenditure if: (a) you are a small business entity, or an entity covered by subsection (3), for the income year in which you incur the expenditure; and (b) you incur the expenditure in the period starting at 7.30 pm, by legal time in the Australian Capital Territory, on 29 March 2022 and ending at the end of: (i) if your 2022 ‑ 23 income year starts on or after 1 July 2022—your 2021 ‑ 22 income year; or (ii) if your 2022 ‑ 23 income year starts before 1 July 2022—your 2022 ‑ 23 income year; and (c) you can deduct the amount of the expenditure under a provision of a taxation law (other than section 328 ‑ 455 of this Act) whether or not in, or wholly in, the income year in which the expenditure was incurred; and (d) you incur the expenditure wholly or substantially for the purposes of your digital operations or digitising your operations; and (e) the expenditure is not of a kind excluded by subsection (5); and (f) if the expenditure is on a depreciating asset—the only balancing a djustment events that occur for the asset at a time during the period referred to in paragraph (b) when you hold the asset occur because you stop holding the asset because of an event or circumstance referred to in subsection 40 ‑ 365(2) ( about involuntary disposals) of the Income Tax Assessment Act 1997 ; and (g) if: (i) the expenditure is on a depreciating asset; and (ii) the asset is not in ‑ house software allocated to a software development pool for the income year in which you incur the expenditure; you start to use the asset, or have it installed ready for use for a taxable purpose, before 1 July 2023. (2) This subsection applies to an amount of expenditure if: (a) you are a small business entity, or an entity covered by subsection (3), for the income year in which you incur the expenditure; and (b) you incur the expenditure in the period starting at the start of: (i) if your 2022 ‑ 23 income year starts on or after 1 July 2022—your 2022 ‑ 23 income year; or (ii) if your 2022 ‑ 23 income year starts before 1 July 2022—your 2023 ‑ 24 income year; and ending at the end of 30 June 2023; and (c) you can deduct the amount of the expenditure under a provision of a taxation law (other than section 328 ‑ 455 of this Act) whether or not in, or wholly in, the income year in which the expenditure was incurred; and (d) you incur the expenditure wholly or substantially for the purposes of your digital operations or digitising your operations; and (e) the expenditure is not of a kind excluded by subsection (5); and (f) if the expenditure is on a depreciating asset—the only balancing adjustment events that occur for the asset at a time during the period referred to in paragraph (b) when you hold the asset occur because you stop holding the asset because of an event or circumstance referred to in subsection 40 ‑ 365(2) (about involuntary disposals) of the Income Tax Assessment Act 1997 ; and (g) if: (i) the expenditure is on a depreciating asset; and (ii) the asset is not in ‑ house software allocated to a software development pool for the income year in which you incur the expenditure; you start to use the asset, or have it installed ready for use for a taxable purpose, before 1 July 2023. Businesses with turnover under $50 million (3) An entity is covered by this subsection for an income year if: (a) the entity is not a small business entity for the income year; and (b) the entity would be a small business entity for the income year if: (i) each reference in Subdivision 328 ‑ C of the Income Tax Assessment Act 1997 (about what is a small business entity) to $10 million were instead a reference to $50 million; and (ii) the reference in paragraph 328 ‑ 110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this subsection. Working out whether you can deduct an amount of expenditure on a depreciating asset (4) For the purposes of paragraphs (1)(c) and (2)(c), in working out whether you can deduct an amount of expenditure on a depreciating asset, assume that: (a) you will continue to hold the asset throughout its effective life; and (b) throughout that effective life, you will use the asset for a taxable purpose to the same extent as you use it, or have it installed ready for use, for a taxable purpose in the income year in which you start to use it, or have it installed ready for use, for a taxable purpose. Excluded expenditure (5) The following kinds of expenditure are excluded by this subsection: (a) salary or wage costs; (b) capital works costs for which you can deduct an amount under Division 43 of the Income Tax Assessment Act 1997 ; (c) financing costs, including interest, payments in the nature of interest and expenses of borrowing; (d) training or education costs; (e) expenditure that you incur that forms part of, or is included in, the cost of your trading stock. Note: For deductions relating to training or education costs, see section 328 ‑ 445.

Amendment history: Inserted by No 29 of 2023, effective sch 4, 5: 1 July 2023 (s 2(1) item 2) sch 9 (item 8): 24 June 2023 (s 2(1) item 5)

s 328-465 — Energy incentive

(1) You can deduct for an income year an amount that is equal to the lower of: (a) 20% of the total amount (which may be nil) of your expenditure to which subsection 328 ‑ 470(1) or (3) applies in relation to the income year; and (b) $20,000 less any amount deducted under paragraph (a) for a previous income year. Note: The deduction relates to the period of 1 July 2023 to 30 June 2024. An entity may have deducted an amount under paragraph (a) for a previous income year if the entity has a substituted accounting period. These are bonus deductions under the Income Tax Assessment Act 1997 (2) The Income Tax Assessment Act 1997 has effect as if this section and section 328 ‑ 470 of this Act were provisions of Division 25 of the Income Tax Assessment Act 1997 . (3) Sections 8 ‑ 10, 40 ‑ 215 and 355 ‑ 715 of the Income Tax Assessment Act 1997 do not apply in relation to a deduction under this section.

Amendment history: Inserted by No 52 of 2024, effective sch 1, 2: 1 July 2024 (s 2(1) item 2)

s 328-470 — What expenditure qualifies for the energy incentive

Expenditure included in the first element of cost of a depreciating asset (1) This subsection applies to an amount of expenditure in relation to an income year if: (a) the expenditure is included in the first element of cost of a depreciating asset; and (b) you can deduct the expenditure under a provision of a taxation law (other than section 328 ‑ 465 of this Act) whether or not in, or wholly in, the income year in which the expenditure is incurred; and (c) you start to use the asset, or have it installed ready for use, for any purpose after 30 June 2023 but before 1 July 2024; and (d) you start to use the asset, or have it installed ready for use, for a taxable purpose at a time (the start time ) that is: (i) in the income year; and (ii) after 30 June 2023 but before 1 July 2024; and (e) you are a small business entity, or an entity covered by subsection (4), for the income year that includes the start time; and (f) subsection (2) (about eligible energy assets) applies to the asset; and (g) neither the expenditure nor the asset is excluded under subsection (6); and (h) the only balancing adjustment events that occur for the asset at a time during the period starting on 1 July 2023 and ending on 30 June 2024 occur because you stop holding the asset because of an event or circumstance referred to in subsection 40 ‑ 365(2) (about involuntary disposals) of the Income Tax Assessment Act 1997 . (2) This subsection applies to an asset if: (a) the asset uses electricity and one or more of the following apply: (i) a new reasonably comparable depreciating asset that uses a fossil fuel (other than a use of which that is merely incidental) is available in the market at the start time; (ii) if the asset is being acquired by way of replacement of or substitution for another depreciating asset—the asset is more energy efficient than the other asset; (iii) if the asset is not being acquired by way of replacement of or substitution for another depreciating asset—the asset is more energy efficient than a new reasonably comparable depreciating asset that is available in the market at the start time; or (b) the asset enables one or more of the following: (i) a depreciating asset (other than an asset excluded under subsection (6)) that uses electricity, or energy that is generated from a renewable source, to be more energy efficient; (ii) electricity, or energy that is generated from a renewable source, to be stored; (iii) electricity, or energy that is generated from a renewable source, to be used at a different time; (iv) the use of electricity, or energy that is generated from a renewable source, by another depreciating asset to be monitored. Certain expenditure that is included in the second element of cost of a depreciating asset (3) This subsection applies to an amount of expenditure in relation to an income year if: (a) the amount is included in the second element of a depreciating asset’s cost under paragraph 40 ‑ 190(2)(a) of the Income Tax Assessment Act 1997 ; and (b) you can deduct the expenditure under a provision of a taxation law (other than section 328 ‑ 465 of this Act) whether or not in, or wholly in, the income year in which the expenditure is incurred; and (c) the expenditure is incurred: (i) in the income year; and (ii) after 30 June 2023 but before 1 July 2024; and (d) you are a small business entity, or an entity covered by subsection (4), for the income year in which the expenditure is incurred; and (e) the expenditure enables one or more of the following: (i) if the asset could use a fossil fuel (other than a use of which that is merely incidental)—the asset to only use electricity, or energy that is generated from a renewable source; (ii) if the asset uses electricity, or energy that is generated from a renewable source—the asset to be more energy efficient; (iii) the asset to store electricity, or energy that is generated from a renewable source; (iv) the asset to use electricity, or energy that is generated from a renewable source, at a different time; (v) the asset to monitor its use of electricity, or energy that is generated from a renewable source; and (f) neither the expenditure nor the asset is excluded under subsection (6); and (g) the only balancing adjustment events that occur for the asset at a time during the period starting on 1 July 2023 and ending on 30 June 2024 occur because you stop holding the asset because of an event or circumstance referred to in subsection 40 ‑ 365(2) (about involuntary disposals) of the Income Tax Assessment Act 1997 . Businesses with turnover under $50 million (4) An entity is covered by this subsection for an income year if: (a) the entity is not a small business entity for the income year; and (b) the entity would be a small business entity for the income year if: (i) each reference in Subdivision 328 ‑ C of the Income Tax Assessment Act 1997 (about what is a small business entity) to $10 million were instead a reference to $50 million; and (ii) the reference in paragraph 328 ‑ 110(5)(b) of that Act to a small business entity were instead a reference to an entity covered by this subsection. Working out whether you can deduct expenditure (5) For the purposes of paragraph (1)(b) or (3)(b), in working out whether you can deduct an amount of expenditure assume that: (a) you will continue to hold the asset throughout its effective life; and (b) throughout that effective life, you will use it for a taxable purpose: (i) for the purposes of paragraph (1)(b)—to the same extent as you use it, or have it installed ready for use, for a taxable purpose in the income year in which you start to use it, or have it installed ready for use, for a taxable purpose; or (ii) for the purposes of paragraph (3)(b)—to the same extent as you use it for a taxable purpose in the income year in which the expenditure is incurred. Excluded assets and expenditure (6) The following kinds of assets and expenditure are excluded by this subsection: (a) an asset that can use a fossil fuel (other than a use of which that is merely incidental); (b) expenditure (other than expenditure referred to in subparagraph (3)(e)(i)) on an asset that can use a fossil fuel (other than a use of which that is merely incidental); (c) an asset that solely or predominantly generates electricity from a renewable source (for example, photovoltaic cells) or expenditure on such an asset; (d) an asset, or expenditure, being capital works for which you can deduct an amount under Division 43 of the Income Tax Assessment Act 1997 ; (e) a motor vehicle or expenditure on a motor vehicle; (f) an asset, or expenditure on an asset, where expenditure on the asset is allocated to a software development pool; (g) financing costs, including interest, payments in the nature of interest and expenses of borrowing. Note: Subsections (1) and (3) also do not apply to an item of trading stock because such an asset is not a depreciating asset: see section 40 ‑ 30 of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 52 of 2024, effective sch 1, 2: 1 July 2024 (s 2(1) item 2)

s 355-200 — Registration for activities before 2011 ‑ 12 income year

A reference in each of the following provisions of the Income Tax Assessment Act 1997 to a registration under section 27A of the Industry Research and Development Act 1986 includes a reference to a registration under former section 39J of that Act: (a) paragraph 43 ‑ 35(a); (b) subparagraph 355 ‑ 205(1)(a)(i); (c) subparagraph 355 ‑ 215(b)(ii); (d) subparagraph 355 ‑ 220(1)(b)(ii); (e) subparagraph 355 ‑ 480(1)(a)(i); (f) paragraph 355 ‑ 580(1)(b).

Amendment history: Inserted by No 93 of 2011, effective Schedule 3 (item 108) and Schedule 4 (items 1–6, 10–15): Royal Assent

s 355-320 — Balancing adjustment—assets only used for R&D activities

R&D entity has old law R&D decline in value deductions (1) This section applies to an R&D entity if: (a) a balancing adjustment event happens in an income year (the event year ) commencing on or after 1 July 2011 for an asset held by the R&D entity; and (b) the R&D entity cannot deduct an amount under section 40 ‑ 25 of the Income Tax Assessment Act 1997 (the new Act ), as that section applies apart from: (i) Division 355 of that Act; and (ii) former section 73BC of the Income Tax Assessment Act 1936 (the old Act ); for the asset for an income year; and (c) either or both of the following subparagraphs apply: (i) the R&D entity can deduct (the old law deductions ) under former section 73BA or 73BH of the old Act an amount for one or more income years for the asset; (ii) the R&D entity chooses tax offsets under former section 73I of the old Act instead of deductions (also the old law deductions ) under those former sections for one or more income years for the asset; and (d) the R&D entity is registered under section 27A of the Industry Research and Development Act 1986 for one or more R&D activities for the event year; and (e) if Division 40 of the new Act applied as described in subsection (2) of this section: (i) the R&D entity could deduct for the event year an amount under subsection 40 ‑ 285(2) of that Act for the asset and the balancing adjustment event; or (ii) an amount would be included in the R&D entity’s assessable income for the event year under subsection 40 ‑ 285(1) of that Act for the asset and the balancing adjustment event. Note 1: This section applies even if the R&D entity is entitled under section 355 ‑ 100 of the new Act to tax offsets for one or more income years for deductions under section 355 ‑ 305 of that Act for the asset. Note 2: Section 40 ‑ 292 of this Act may apply if paragraph (c), but not paragraph (b), of this subsection is satisfied. Changed application of Division 40 (2) For the purposes of paragraph (1)(e), assume that Division 40 of the new Act applied with the changes described in section 355 ‑ 310 of that Act, but with these changes to that section: Changes to be made to section 355 ‑ 310 of the new Act Item For a reference in section 355 ‑ 310 to... substitute a reference to... 1 section 355 ‑ 315 this section 2 the purpose of conducting one or more of the R&D activities to which the R&D deductions (within the meaning of that section) relate both: (a) the purpose of conducting one or more of the research and development activities (within the meaning of former section 73B of the old Act) to which the old law deductions relate; and (b) the purpose of conducting one or more of the R&D activities to which the new law deductions (if any) relate Deduction (3) If the R&D entity could deduct for the event year an amount under subsection 40 ‑ 285(2) of the new Act for: (a) the asset; and (b) the event; if Division 40 of that Act applied as described in subsection (2) of this section, the R&D entity is taken to be able to deduct under subsection 355 ‑ 315(2) of the new Act that amount for the event year. Amount to be included in assessable income (4) If an amount (the section 40 ‑ 285 amount ) would be included in the R&D entity’s assessable income for the event year under subsection 40 ‑ 285(1) of the new Act for the asset and the event if Division 40 of that Act applied as described in subsection (2) of this section, the sum of: (a) that amount; and (b) the following amount; is taken to be included in the R&D entity’s assessable income for the event year under subsection 355 ‑ 315(3) of the new Act: where: adjusted section 40 ‑ 285 amount means so much of the section 40 ‑ 285 amount as does not exceed the total decline in value. old law 1.25 rate deductions means the sum of the R&D entity’s notional Division 40 deductions, and notional Division 42 deductions, (if any) for the asset that were multiplied by 1.25 in working out the old law deductions. total decline in value means the asset’s cost, less its adjustable value, worked out under Division 40 of the new Act as it applies as described in subsection (2). Application of Division 355 (4A) In applying Division 355 of the new Act in relation to the asset for the income year, if the R&D entity is entitled under section 355 ‑ 100 of the new Act to tax offsets for one or more income years for deductions (the new law deductions ) under section 355 ‑ 305 for the asset, the R&D entity is taken to have: (a) if an amount is taken to be included in the R&D entity’s assessable income for the event year as mentioned in subsection (4) of this section—a clawback amount under section 355 ‑ 446 of the new Act for the income year equal to the amount mentioned in subsection (4B) of this section; or (b) if the R&D entity is taken to be able to deduct an amount as mentioned in subsection (3) of this section—a catch up amount under section 355 ‑ 465 of the new Act for the income year equal to the amount of that deduction. (4B) The amount is the following: where: adjusted section 40 ‑ 285 amount means so much of the section 40 ‑ 285 amount as does not exceed the total decline in value. total decline in value means the asset’s cost, less its adjustable value, worked out under Division 40 of the new Act as it applies as described in subsection (2) of this section. Normal rules do not apply for the asset and the event (5) Neither of the following sections: (a) section 355 ‑ 315 of the new Act; (b) former section 73BF of the old Act (as that section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 2011 ); to the extent that they would otherwise apply apart from this section to the R&D entity for the event, do so apply to the R&D entity for the event. Note 1: Section 355 ‑ 315 of the new Act would otherwise apply for the event in a case where the R&D entity had new law deductions. Note 2: Former section 73BF of the old Act would otherwise apply for the event in respect of the old law deductions.

Amendment history: Inserted by No 93 of 2011, effective Schedule 3 (item 108) and Schedule 4 (items 1–6, 10–15): Royal Assent | Amended by No 92 of 2020, effective sch 5 (items 41 ‑ 56), sch 7 (items 1 ‑ 4, 9 ‑ 11, 26, 27): 1 Jan 2021 (s 2(1) item 7)

s 355-325 — Balancing adjustment—R&D partnership assets only used for R&D activities

Partner has old law R&D decline in value deductions (1) This section applies to an R&D entity (the partner ) if: (a) a balancing adjustment event happens in an income year (the event year ) commencing on or after 1 July 2011 for an asset held by an R&D partnership; and (b) the R&D partnership cannot deduct an amount under section 40 ‑ 25, as that section applies apart from: (i) Division 355 of the Income Tax Assessment Act 1997 (the new Act ); and (ii) former section 73BC of the Income Tax Assessment Act 1936 (the old Act ); for the asset for an income year; and (c) either or both of the following subparagraphs apply: (i) the partner can deduct (the old law deductions ) under former section 73BA or 73BH of the old Act an amount for one or more income years for the asset; (ii) the partner chooses tax offsets under former section 73I of the old Act instead of deductions (also the old law deductions ) under those former sections for one or more income years for the asset; and (d) the partner is registered under section 27A of the Industry Research and Development Act 1986 for one or more R&D activities for the event year; and (e) if Division 40 of the new Act applied as described in subsection (2) of this section: (i) the R&D partnership could deduct for the event year an amount under subsection 40 ‑ 285(2) of that Act for the asset and the balancing adjustment event; or (ii) an amount would be included in the R&D partnership’s assessable income for the event year under subsection 40 ‑ 285(1) of that Act for the asset and the balancing adjustment event. Note 1: This section applies even if the partner is entitled under section 355 ‑ 100 of the new Act to tax offsets for one or more income years for deductions under section 355 ‑ 520 of that Act for the asset. Note 2: Section 40 ‑ 293 of this Act may apply if paragraph (c), but not paragraph (b), of this subsection is satisfied. Changed application of Division 40 (2) For the purposes of paragraph (1)(e), assume that Division 40 of the new Act applied with the changes described in section 355 ‑ 310 of that Act, but with these changes to that section: Changes to be made to section 355 ‑ 310 of the new Act Item For a reference in section 355 ‑ 310 to... substitute a reference to... 1 section 355 ‑ 315 this section 2 the purpose of conducting one or more of the R&D activities to which the R&D deductions (within the meaning of that section) relate both: (a) the purpose of conducting one or more of the research and development activities (within the meaning of former section 73B of the old Act) to which the old law deductions relate; and (b) the purpose of conducting one or more of the R&D activities to which the new law deductions (if any) relate 3 R&D entity R&D partnership Deduction (3) If the R&D partnership could deduct for the event year an amount under subsection 40 ‑ 285(2) of the new Act for: (a) the asset; and (b) the event; if Division 40 of that Act applied as described in subsection (2) of this section, the partner is taken to be able to deduct under subsection 355 ‑ 525(2) of the new Act the partner’s proportion of that amount for the event year. Amount to be included in assessable income (4) If an amount (the section 40 ‑ 285 amount ) would be included in the R&D partnership’s assessable income for the event year under subsection 40 ‑ 285(1) of the new Act for the asset and the event if Division 40 of that Act applied as described in subsection (2) of this section, the sum of: (a) the partner’s proportion of that amount; and (b) the following amount; is taken to be included in the partner’s assessable income for the event year under subsection 355 ‑ 525(3) of the new Act: where: adjusted section 40 ‑ 285 amount means so much of the section 40 ‑ 285 amount as does not exceed the total decline in value. old law 1.25 rate deductions means the sum of the partner’s notional Division 40 deductions, and notional Division 42 deductions, (if any) for the asset that were multiplied by 1.25 in working out the old law deductions. total decline in value means the asset’s cost, less its adjustable value, worked out under Division 40 of the new Act as it applies as described in subsection (2). Application of Division 355 (4A) In applying Division 355 of the new Act in relation to the asset for the income year, if one or more partners (including the partner) in the R&D partnership is entitled under section 355 ‑ 100 of the new Act to tax offsets for one or more income years for deductions under section 355 ‑ 520 of that Act for the asset, the partner is taken to have: (a) if an amount is taken to be included in the R&D entity’s assessable income for the event year as mentioned in subsection (4) of this section—a clawback amount under section 355 ‑ 448 of the new Act for the income year equal to the amount mentioned in subsection (4B) of this section; or (b) if the partner is taken to be able to deduct an amount as mentioned in subsection (3) of this section—a catch up amount under section 355 ‑ 467 of the new Act for the income year equal to the amount of that deduction. (4B) The amount is an amount equal to the partner’s proportion of the following: where: adjusted section 40 ‑ 285 amount means so much of the section 40 ‑ 285 amount as does not exceed the total decline in value. sum of new law deductions means the sum of each partner’s deductions under section 355 ‑ 520 of the new Act mentioned in subsection (4A) of this section. total decline in value means the asset’s cost, less its adjustable value, worked out under Division 40 of the new Act as it applies as described in subsection (2) of this section. Normal rules do not apply for the asset and the event (5) Neither of the following sections: (a) section 355 ‑ 525 of the new Act; (b) former section 73BF of the old Act (as that section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 2011 ); to the extent that they would otherwise apply apart from this section to the partner for the event, do so apply to the partner for the event. Note 1: Section 355 ‑ 525 of the new Act would otherwise apply for the event in a case where the partner had new law deductions. Note 2: Former section 73BF of the old Act may otherwise apply for the event in respect of the old law deductions.

Amendment history: Inserted by No 93 of 2011, effective Schedule 3 (item 108) and Schedule 4 (items 1–6, 10–15): Royal Assent | Amended by No 13 of 2015, effective sch 1 (items 7–9): 5 Mar 2015 (s 2(1) item 2) sch 1 (items 15 ‑ 17): repealed before commencing (s 2(1) item 3) | Amended by No 92 of 2020, effective sch 5 (items 41 ‑ 56), sch 7 (items 1 ‑ 4, 9 ‑ 11, 26, 27): 1 Jan 2021 (s 2(1) item 7)

s 355-340 — Balancing adjustment—tax exempt entities that become taxable

Item 7 of the table in subsection 57 ‑ 110(2) in Schedule 2D to the Income Tax Assessment Act 1936 applies as if the deduction rules set out in the final column of that item also included former sections 73BA and 73BH of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 93 of 2011, effective Schedule 3 (item 108) and Schedule 4 (items 1–6, 10–15): Royal Assent

s 355-415 — Expenditure reduced to reflect group mark ‑ ups

For the purposes of step 1 of the method statement in subsection 355 ‑ 415(2) of the Income Tax Assessment Act 1997 , also disregard amounts that have already been taken into account under former subsection 73B(14AA) of the Income Tax Assessment Act 1936 for the R&D entity, the grouped entity and the R&D activities for an earlier income year.

Amendment history: Inserted by No 93 of 2011, effective Schedule 3 (item 108) and Schedule 4 (items 1–6, 10–15): Royal Assent

s 355-550 — Prepayments of R&D expenditure extending into the 2011 ‑ 12 income year

Advance R and D expenditure (1) This section applies if, apart from former paragraph 73B(10)(a) of the Income Tax Assessment Act 1936 , an eligible company could deduct advance R and D expenditure in one or more income years commencing on or after 1 July 2011. Note: That deduction would be under former section 73B of that Act as that former section applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 2011 . Other prepayments of R&D expenditure (2) This section also applies if: (a) apart from Subdivision H (prepaid expenditure) of Division 3 of Part III of the Income Tax Assessment Act 1936 , an eligible company can deduct an amount under former section 73B, 73BA, 73BH, 73QA, 73QB or 73Y of that Act for an income year commencing before 1 July 2011; and (b) that Subdivision applies to the calculation of that amount; and (c) apart from former paragraph 73B(10)(a) of that Act, the eligible company could deduct an amount, as a result of that application of that Subdivision, for an income year commencing on or after 1 July 2011. Note: That deduction would be under that Act as it applies because of Part 2 of Schedule 4 to the Tax Laws Amendment (Research and Development) Act 2011 . Changed registration requirement (3) Former paragraph 73B(10)(a) of that Act is taken to apply to those income years commencing on or after 1 July 2011 as if the reference in that former paragraph to section 39J of the Industry Research and Development Act 1986 were a reference to section 27A of that Act. Meaning of expressions (4) An expression used in this section that is also used in former section 73B of the Income Tax Assessment Act 1936 has the same meaning in this section as it has in that former section.

Amendment history: Inserted by No 93 of 2011, effective Schedule 3 (item 108) and Schedule 4 (items 1–6, 10–15): Royal Assent

s 355-600 — Scope

This Subdivision applies to core technology (within the meaning of former section 73B of the Income Tax Assessment Act 1936 ) if: (a) you incurred core technology expenditure (within the meaning of that former section) in an income year commencing before 1 July 2011 in relation to the core technology under one or more contracts entered into at or after the time referred to in former subsection 73B(12) of that Act; and (b) that expenditure (the undeducted expenditure ) cannot be deducted for the last income year commencing before 1 July 2011.

Amendment history: Inserted by No 93 of 2011, effective Schedule 3 (item 108) and Schedule 4 (items 1–6, 10–15): Royal Assent

s 355-605 — Core technology that is a depreciating asset

This section only applies for deductions under Division 40 (1) This section applies for the purposes of Division 40 of the Income Tax Assessment Act 1997 , other than sections 40 ‑ 292 and 40 ‑ 293 of that Act, if the core technology (the asset ) is a depreciating asset. (2) Disregard this section, including its effect on the amount you can deduct under section 40 ‑ 25 of that Act for the asset, for the purposes of working out: (a) a deduction under any other Division of that Act for any income year; and (b) a tax offset under any other Division of that Act for any income year. Changes made by this section (3) The asset’s opening adjustable value for the first income year that commences on or after 1 July 2011 (the first new income year ) is equal to the amount of the undeducted expenditure. (4) Subsection 40 ‑ 75(2) of the Income Tax Assessment Act 1997 applies to the asset as if the first new income year were a change year (within the meaning of that subsection).

Amendment history: Inserted by No 93 of 2011, effective Schedule 3 (item 108) and Schedule 4 (items 1–6, 10–15): Royal Assent

s 355-610 — Core technology that is not a depreciating asset

If the core technology is not a depreciating asset, you can deduct the undeducted expenditure in equal proportions over a period of 5 income years starting in the first income year commencing on or after 1 July 2011.

Amendment history: Inserted by No 93 of 2011, effective Schedule 3 (item 108) and Schedule 4 (items 1–6, 10–15): Royal Assent

s 375-100 — Film component of tax loss for 1997 ‑ 98 or later income year

To work out the film component (if any) of your tax loss for the 1997 ‑ 98 income year or a later income year, apply former section 375 ‑ 805 of the Income Tax Assessment Act 1997 .

Amendment history: Amended by No 164 of 2007, effective Schedule 7 (items 4, 13, 14): Royal Assent Schedule 10 (items 89, 90): 1 July 2010

s 375-105 — Film component of tax loss for 1989 ‑ 90 to 1996 ‑ 97 income years

If you incurred a film loss for the purposes of former section 79F (Film losses of 1989 ‑ 90 to 1996 ‑ 97 years of income) of the Income Tax Assessment Act 1936 in any of the 1989 ‑ 90 to 1996 ‑ 97 income years, that film loss is the film component of your tax loss for that income year.

Amendment history: Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 375-110 — Film loss for 1989 ‑ 90 or later income year

(1) To work out your film loss (if any) for the purposes of the Income Tax Assessment Act 1997 for the 1989 ‑ 90 or a later income year, apply former section 375 ‑ 810 of that Act. (2) You can deduct in the 1997 ‑ 98 or a later income year your film loss for any of the 1989 ‑ 90 to 1996 ‑ 97 income years only to the extent that it has not already been deducted.

Amendment history: Amended by No 164 of 2007, effective Schedule 7 (items 4, 13, 14): Royal Assent Schedule 10 (items 89, 90): 1 July 2010

s 392-1 — Application of Division 392 of the Income Tax Assessment Act 1997

(1) Division 392 of the Income Tax Assessment Act 1997 applies to assessments for the 1998 ‑ 99 income year and later income years. (2) It applies to your assessment as if: (a) it had applied to your assessment for each income year before the 1998 ‑ 99 income year for which Division 16 of Part III of the Income Tax Assessment Act 1936 applied in relation to your income; and (b) you had carried on a primary production business during each income year before the 1998 ‑ 99 income year when you carried on a business of primary production; and (c) for each income year before the 1998 ‑ 99 income year you had a basic taxable income equal to your taxable income for the income year for the purposes of Division 16 of Part III of the Income Tax Assessment Act 1936 . Note: Section 149A of the Income Tax Assessment Act 1936 identifies what your taxable income for an income year is for the purposes of Division 16 of Part III of that Act.

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

s 392-25 — Transitional provision—election under section 158A of the Income Tax Assessment Act 1936

Division 392 of the Income Tax Assessment Act 1997 does not apply to your assessment for the 1998 ‑ 99 income year or a later income year if you made an election under section 158A (Election that Division not apply) of the Income Tax Assessment Act 1936 relating to an income year before the 1998 ‑ 99 income year.

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

s 393-1 — Application of Division 393 of the Income Tax Assessment Act 1997

Division 393 of the Income Tax Assessment Act 1997 (about farm management deposits) applies to assessments for: (a) the 2010 ‑ 11 income year; and (b) later income years.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 33, 54, 55), Sch 2 (item 9), Sch 3 (item 60) and Sch 4 (item 50): 1 July 2010 (s 2(1) items 2–4)

s 393-5 — Unrecouped FMD deduction

A reference in Division 393 of the Income Tax Assessment Act 1997 to a deduction under section 393 ‑ 5 of that Act for making a farm management deposit is taken to include a reference to a deduction under section 393 ‑ 10 in Schedule 2G to the Income Tax Assessment Act 1936 , as in force just before the commencement of this section, if the deposit was made before the 2010 ‑ 11 income year.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 33, 54, 55), Sch 2 (item 9), Sch 3 (item 60) and Sch 4 (item 50): 1 July 2010 (s 2(1) items 2–4)

s 393-10 — Unrecouped FMD deduction for deposits made as a result of section 25B of the Loan (Income Equalization Deposits) Act 1976

Despite subsection 393 ‑ 10(2) of the Income Tax Assessment Act 1997 , if: (a) no part of a farm management deposit has been repaid before a particular time; and (b) the deposit was made with an FMD provider as a result of a request to which section 25B of the Loan (Income Equalization Deposits) Act 1976 , as in force on 21 February 2005, applied; the unrecouped FMD deduction in respect of the deposit at that time is equal to the amount of the unrecouped deduction (within the meaning of the former subsection 159GA(3) of the Income Tax Assessment Act 1936 ) in respect of the deposit immediately before it ceased to be a deposit under the Loan (Income Equalization Deposits) Act 1976 . Note: This means that the unrecouped deduction relating to the deposit under the Loan (Income Equalization Deposits) Act 1976 continues to apply (by becoming an unrecouped FMD deduction) when the deposit is transferred to an FMD provider as a farm management deposit. The Loan (Income Equalization Deposits) Act 1976 was repealed on 22 February 2005.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 33, 54, 55), Sch 2 (item 9), Sch 3 (item 60) and Sch 4 (item 50): 1 July 2010 (s 2(1) items 2–4)

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

If a beneficiary of a trust was covered by paragraph (c) of the definition of primary producer in section 393 ‑ 25 in Schedule 2G to the Income Tax Assessment Act 1936 in the 2009 ‑ 10 income year, treat subsection 393 ‑ 25(3) of the Income Tax Assessment Act 1997 as having applied to the beneficiary for the purpose of determining the maximum number of choices that the trustee may make under subsection 393 ‑ 27(2) of that Act for the 2010 ‑ 11 income year.

Amendment history: Inserted by No 62 of 2011, effective Schedule 1 (items 13, 14): Royal Assent

s 393-30 — Unclaimed moneys

(1) Subsection (2) applies if: (a) a farm management deposit of an owner was unclaimed moneys for the purposes of section 69 of the Banking Act 1959 ; and (b) the unclaimed moneys were paid to the Commonwealth under that section; and (c) the unclaimed moneys were repaid as a result of subsection 69(7) of that Act. (2) For the purpose of subsection 393 ‑ 10(1) of the Income Tax Assessment Act , treat the repaid unclaimed moneys as a repayment of the deposit of the owner. (3) To avoid doubt, the payment of unclaimed moneys to the Commonwealth under section 69 of the Banking Act 1959 is not a repayment of the deposit of the owner for the purposes of Division 393 of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 34 of 2014, effective Sch 1 (items 12, 13(2)): 30 May 2014

s 393-40 — The day the deposit was made for deposits made as a result of section 25B of the Loan (Income Equalization Deposits) Act 1976

If a farm management deposit was made with an FMD provider as a result of a request under section 25B of the Loan (Income Equalization Deposits) Act 1976 , as in force on 21 February 2005, then: (a) subsections 393 ‑ 40(1) to (4) of the Income Tax Assessment Act 1997 apply as if the day the deposit was made was the day on which the deposit was originally made under the Loan (Income Equalization Deposits) Act 1976 ; and (b) subsection 393 ‑ 40(6) does not apply to the deposit. Note: The Loan (Income Equalization Deposits) Act 1976 was repealed on 22 February 2005.

Amendment history: Inserted by No 79 of 2010, effective Sch 1 (items 33, 54, 55), Sch 2 (item 9), Sch 3 (item 60) and Sch 4 (item 50): 1 July 2010 (s 2(1) items 2–4)

s 410-1 — Application of section 51 ‑ 43 of the Income Tax Assessment Act 1997

(1) A copyright collecting society to which section 51 ‑ 43 of the Income Tax Assessment Act 1997 applies, may elect that, from 1 July 2004, the section apply to all ordinary income, and statutory income, collected or derived by the society on or after 1 July 2004. (2) A society makes a valid election if: (a) the election is in writing; and (b) the election is given to the Commissioner within 28 days after the day on which this section commences.

Amendment history: Inserted by No 23 of 2005, effective Schedule 1 (items 1, 9, 10, 12, 20, 25, 28), Schedule 2 (item 12) and Schedule 12 (item 11): Royal Assent Schedule 12 (items 7, 8, 10): 1 July 2000 Schedule 12 (item 9): 1 July 2001 | Amended by No 126 of 2009, effective Schedule 1 (items 18, 20): 9 June 2010 (s. 2(1))

s 415-10 — Application of Subdivision 415 ‑ B of the Income Tax Assessment Act 1997

Subdivision 415 ‑ B of the Income Tax Assessment Act 1997 applies to: (a) a tax loss for the 2012 ‑ 13 income year or a later income year; or (b) a debt incurred in the 2012 ‑ 13 income year or a later income year.

Amendment history: Inserted by No 124 of 2013, effective Sch 2 (item 47): 11 July 2013 ( see F2013L01359) Sch 11 (item 4): 3 Dec 2014 (s 2(1) item 15) Sch 11 (items 7–9): 28 June 2013 (s 2(1) item 16)

s 420-1 — Application of Division 420 of the Income Tax Assessment Act 1997

Division 420 of the Income Tax Assessment Act 1997 does not apply to a registered emissions unit held by you unless you became the holder of the unit after the commencement of that Division.

Amendment history: Inserted by No 132 of 2011, effective Sch 2 (items 72, 72A): 2 Apr 2012 (s 2(1))

s 615-5 — Roll ‑ overs between the 2011 and 2012 Budget times

Subdivision 615 ‑ C of the Income Tax Assessment Act 1997 applies to you with the modifications set out in this Subdivision if you chose to obtain a roll ‑ over involving * shares or units that: (a) were disposed of, redeemed or cancelled during the period: (i) starting at 7.30 pm, by legal time in the Australian Capital Territory, on 10 May 2011; and (ii) ending immediately before 7.30 pm, by legal time in the Australian Capital Territory, on 8 May 2012; and (b) were your trading stock, or revenue assets, at the time immediately before that disposal, redemption or cancellation.

Amendment history: Inserted by No 133 of 2014, effective sch 1 (item 41): 12 Dec 2014 (s 2(1) item 2)

s 615-10 — Modifications—when additional consequences can apply

(1) Disregard subparagraph 615 ‑ 45(a)(ii), and paragraph 615 ‑ 45(b), of the Income Tax Assessment Act 1997 if the roll ‑ over relates to * shares that were disposed of, redeemed or cancelled. (2) Disregard paragraph 615 ‑ 45(d) of that Act.

Amendment history: Inserted by No 133 of 2014, effective sch 1 (item 41): 12 Dec 2014 (s 2(1) item 2)

s 615-15 — Modifications—trading stock

Substitute the following for subsection 615 ‑ 50(2) of that Act: (2) For each of the * shares in the interposed company that you acquired in return for those of your shares or units in the original entity that were your * trading stock at the time mentioned in paragraph 615 ‑ 45(c), you are taken to have paid:

Amendment history: Inserted by No 133 of 2014, effective sch 1 (item 41): 12 Dec 2014 (s 2(1) item 2)

s 615-20 — Modifications—revenue assets

Substitute the following for subsection 615 ‑ 55(2) of that Act: (2) For the purpose of calculating any profit or loss on a future disposal, cessation of ownership, or other realisation of a * share in the interposed company that you acquired in return for those of your shares or units in the original entity that were * revenue assets at the time mentioned in paragraph 615 ‑ 45(c), you are taken to have paid:

Amendment history: Inserted by No 133 of 2014, effective sch 1 (item 41): 12 Dec 2014 (s 2(1) item 2)

s 620-10 — Application of Subdivision 620 ‑ A of the Income Tax Assessment Act 1997

Subdivision 620 ‑ A of the Income Tax Assessment Act 1997 applies in relation to the cessation of existence of bodies corporate occurring after 7.30 pm (by legal time in the Australian Capital Territory) on 11 May 2010.

Amendment history: Inserted by No 12 of 2012, effective Sch 2 (items 24, 25) and Sch 6 (items 21, 32, 149–152): 21 Mar 2012 (s 2(1) items 3, 10, 13, 24, 25)

s 700-1 — Application of Part 3 ‑ 90 of Income Tax Assessment Act 1997

(1) Part 3 ‑ 90 of the Income Tax Assessment Act 1997 , as inserted by the New Business Tax System (Consolidation) Act (No. 1) 2002 and amended by: (a) the New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 ; and (b) the New Business Tax System (Consolidation and Other Measures) Act (No. 1) 2002 ; and (c) the New Business Tax System (Consolidation and Other Measures) Act 2003 ; and (d) the Taxation Laws Amendment Act (No. 6) 2003 ; applies on and after 1 July 2002. (2) Section 713 ‑ 50 of the Income Tax Assessment Act 1997 (about factors to consider in determining destination of distribution by non ‑ fixed trust) applies for the purposes of this Part in the same way as it applies for the purposes of Part 3 ‑ 90 of that Act.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Repealed and substituted by No 90 of 2002, effective s 4, Sch 7–9, Sch 14 (items 16, 19) and Sch 15 (item 2): 24 Oct 2002 (s 2(1) items 1, 2, 4) | Repealed and substituted by No 117 of 2002, effective Sch 3 (item 8), Sch 5 (items 13, 14), Sch 9, Sch 10, Sch 12 (items 24–28), Sch 13 (items 15, 16) and Sch 15 (item 1): 24 Oct 2002 (s 2(1) items 4, 7–9) Sch 18: 29 June 2002 (s 2(1) item 11) | Amended by No 117 of 2002, effective Sch 3 (item 8), Sch 5 (items 13, 14), Sch 9, Sch 10, Sch 12 (items 24–28), Sch 13 (items 15, 16) and Sch 15 (item 1): 24 Oct 2002 (s 2(1) items 4, 7–9) Sch 18: 29 June 2002 (s 2(1) item 11) | Amended by No 16 of 2003, effective Sch 1 (items 7, 8, 27–36), Sch 6 (item 10), Sch 11 (item 4), Sch 15, Sch 16 (items 4, 5), Sch 17 and Sch 19 (items 4, 5): 24 Oct 2002 (s 2(1) items 1A ‑ 1C, 2, 4, 7, 10) Sch 25 (items 11, 12), Sch 26 (items 5–8), Sch 27 (item 20) and Sch 28 (item 13): 29 June 2002 (s 2(1) items 15, 17) | Amended by No 67 of 2003, effective Sch 5 (items 4–10), Sch 6 and 7: 24 Oct 2002 (s 2(1) item 3) Sch 10 (item 24): 30 June 2003 (s 2(1) item 10)

s 701-1 — Transitional group and transitional entity

Group formed on 1 July 2002 (1) If a consolidated group came into existence on 1 July 2002: (a) the group is a transitional group ; and (b) each entity that became a subsidiary member of the group on the day it came into existence is a transitional entity . Group formed after 1 July 2002 but before 1 July 2003 (2) If a consolidated group came into existence after 1 July 2002 but before 1 July 2003: (a) the group is a transitional group if at least one entity that became a subsidiary member of the group on the day the group came into existence is a transitional entity ; and (b) an entity is a transitional entity if: (i) at no time after 1 July 2002 and before the group came into existence was the entity a wholly ‑ owned subsidiary of the entity (the future head company ) that became the head company of the group; or (ii) at some time during that period, the entity was a wholly ‑ owned subsidiary of the future head company and it remained such from the earliest time after 1 July 2002 when it was a wholly ‑ owned subsidiary of the future head company until the group came into existence. Group formed during financial year starting on 1 July 2003 (3) If a consolidated group came into existence during the financial year starting on 1 July 2003: (a) the group is a transitional group if at least one entity that became a subsidiary member of the group on the day the group came into existence is a transitional entity; and (b) an entity is a transitional entity if: (i) just before 1 July 2003, it was a wholly ‑ owned subsidiary of the future head company; and (ii) it remained such from the earliest time after 1 July 2002 when it was a wholly ‑ owned subsidiary of the future head company until the group came into existence.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 7–9, Sch 14 (items 16, 19) and Sch 15 (item 2): 24 Oct 2002 (s 2(1) items 1, 2, 4)

s 701-5 — Chosen transitional entity

(1) If a group is a transitional group, its head company may, subject to subsection (3), choose that the group’s transitional entity is a chosen transitional entity , or one or more of the group’s transitional entities are chosen transitional entities . Period for making choice (2) The choice must be made by the later of: (a) the day on which the head company must give the notice under section 703 ‑ 58 of the Income Tax Assessment Act 1997 (notice of choice to consolidate); and (b) the end of 31 December 2005. Agreement of other entities required in certain cases (3) If the choice is to be made after the end of the period mentioned in paragraph (2)(a) and before the end of the day mentioned in paragraph (2)(b), it cannot be made unless each entity in relation to which the conditions in subsection (5) are satisfied has agreed to it being made. Choice is irrevocable in certain circumstances (4) The choice cannot be revoked unless: (a) the revocation takes place before the end of 31 December 2005; and (b) each entity in relation to which the conditions in subsection (5) are satisfied has agreed to the revocation. (5) For the purposes of subsections (3) and (4), the conditions are that: (a) the entity (the leaving entity ) ceased to be a subsidiary member of the group before the choice was made (in a subsection (3) case) or before the revocation took place (in a subsection (4) case); and (b) an asset became that of the leaving entity because section 701 ‑ 1 (the single entity rule) of the Income Tax Assessment Act 1997 ceased to apply when the leaving entity ceased to be a subsidiary member; and (c) the asset had become that of the head company because that section applied when a chosen transitional entity (whether or not the same entity as the leaving entity) became a subsidiary member.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 7–9, Sch 14 (items 16, 19) and Sch 15 (item 2): 24 Oct 2002 (s 2(1) items 1, 2, 4) | Amended by No 16 of 2003, effective Sch 1 (items 7, 8, 27–36), Sch 6 (item 10), Sch 11 (item 4), Sch 15, Sch 16 (items 4, 5), Sch 17 and Sch 19 (items 4, 5): 24 Oct 2002 (s 2(1) items 1A ‑ 1C, 2, 4, 7, 10) Sch 25 (items 11, 12), Sch 26 (items 5–8), Sch 27 (item 20) and Sch 28 (item 13): 29 June 2002 (s 2(1) items 15, 17) | Amended by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 162 of 2005, effective Schedule 3 (items 20–33) and Schedule 4: Royal Assent | Amended by No 56 of 2010, effective s 4(2), Sch 3 (items 8, 10(1)), Sch 5 (items 54, 55, 73–78, 130, 131, 137–140, 189, 190, 193) and Sch 6 (items 156–158): 3 June 2010 (s 2(1) items 1, 7, 8, 10, 11, 23)

s 701-7 — Working out the cost base or reduced cost base of a pre ‑ CGT asset after certain roll ‑ overs

Section 716 ‑ 855 applies for the purposes of this Division in the same way as that section applies for the purposes of Part 3 ‑ 90 of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 107 of 2003, effective Schedule 2 (items 6, 13, 14, 35–37, 40) and Schedule 7 (item 10): Royal Assent

s 701-10 — Interpretation

A reference in this Division to: (a) a provision of the Income Tax Assessment Act 1997 ; or (b) a consolidated group’s allocable cost amount for an entity; is a reference to that provision as it applies to the group, or to the allocable cost amount as it is worked out for the entity, in accordance with Subdivision 705 ‑ B of that Act and with this Division.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 7–9, Sch 14 (items 16, 19) and Sch 15 (item 2): 24 Oct 2002 (s 2(1) items 1, 2, 4)

s 701-15 — Tax cost and trading stock value not set for assets of chosen transitional entities

Section 701 ‑ 10 (cost to head company of assets of joining entity) and subsection 701 ‑ 35(4) (setting value of trading stock at tax ‑ neutral amount) of the Income Tax Assessment Act 1997 do not apply to the assets of a chosen transitional entity. Note: The fact that the head company inherits the entity’s history under section 701 ‑ 5 of that Act when the entity becomes a subsidiary member of the group means that the entity’s assets would be treated as having the same cost as they would for the entity at that time.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 7–9, Sch 14 (items 16, 19) and Sch 15 (item 2): 24 Oct 2002 (s 2(1) items 1, 2, 4) | Amended by No 16 of 2003, effective Sch 1 (items 7, 8, 27–36), Sch 6 (item 10), Sch 11 (item 4), Sch 15, Sch 16 (items 4, 5), Sch 17 and Sch 19 (items 4, 5): 24 Oct 2002 (s 2(1) items 1A ‑ 1C, 2, 4, 7, 10) Sch 25 (items 11, 12), Sch 26 (items 5–8), Sch 27 (item 20) and Sch 28 (item 13): 29 June 2002 (s 2(1) items 15, 17) | Amended by No 83 of 2004, effective Sch 1 (items 80–83): 30 June 2000 (s 2(1) item 2) Sch 2 (items 1, 19, 34, 75, 76): 25 June 2004 (s 2(1) items 13, 16) Sch 2 (item 9): 24 Oct 2002 (s 2(1) item 15)

s 701-20 — Working out allocable cost amount on formation for subsidiary members other than chosen transitional entities

When section applies (1) This section applies if any of the transitional entities in the transitional group is a chosen transitional entity. Allocable cost amount to be worked out in special way (2) If this section applies, the group’s allocable cost amount for each of the entities, other than a chosen transitional entity, that become subsidiary members when the group comes into existence (each of which is a non ‑ chosen subsidiary ) is worked out in a special way. How to work out allocable cost amount (3) The allocable cost amount for each non ‑ chosen subsidiary is the sum of: (a) the head company adjusted allocable amount for the non ‑ chosen subsidiary (see subsection (4)); and (b) for each sub ‑ group (see subsection (6)) that exists in relation to the non ‑ chosen subsidiary—the sub ‑ group’s notional allocable cost amount (see subsection(5)) for the non ‑ chosen subsidiary. Head company adjusted allocable amount (4) The head company adjusted allocable amount for the non ‑ chosen subsidiary is the amount that would be the transitional group’s allocable cost amount for that entity if; (a) the holding of all sub ‑ group membership interests were disregarded; and (b) only the following proportion of each of the step 2 to step 7 amounts in the table in section 705 ‑ 60 of the Income Tax Assessment Act 1997 was taken into account: where: market value of all membership interests in non ‑ chosen subsidiary means the market value, at the time the group comes into existence, of all membership interests in the non ‑ chosen subsidiary that are held by entities that become members of the group at that time. market value of head company’s direct and indirect membership interests in non ‑ chosen subsidiary means the market value, at the time the group comes into existence, of all membership interests in the non ‑ chosen subsidiary that the head company holds directly or indirectly through interposed entities that become subsidiary members of the group at that time and are not included in any sub ‑ group in relation to the non ‑ chosen subsidiary. Sub ‑ group’s notional allocable cost amount (5) For each sub ‑ group that exists in relation to the non ‑ chosen subsidiary, there is a sub ‑ group’s notional allocable cost amount . That amount is the amount that would be a consolidated group’s allocable cost amount for the non ‑ chosen subsidiary if: (a) the consolidated group came into existence at the same time as the transitional group and consisted only of the non ‑ chosen subsidiary and the entities comprising the sub ‑ group; and (b) the chosen transitional entity in the sub ‑ group were the head company of the consolidated group; and (c) the only membership interests that any entity held at or before that time in any other entity that became a member of the consolidated group were the sub ‑ group membership interests (see subsection (6)) in relation to the sub ‑ group, and any such entity held those membership interests during the period when it actually held them; and (d) only the following proportion of each of the step 2 to step 7 amounts in the table in section 705 ‑ 60 of the Income Tax Assessment Act 1997 was taken into account: where: market value of all membership interests in non ‑ chosen subsidiary means the market value, at the time the group comes into existence, of all membership interests in the non ‑ chosen subsidiary that are held by entities that become members of the group at that time. market value of chosen transitional entity’s direct and indirect membership interests in non ‑ chosen subsidiary means the market value, at the time the group comes into existence, of all membership interests in the non ‑ chosen subsidiary that the chosen transitional entity holds directly or indirectly through interposed entities that are included in the sub ‑ group. Sub ‑ group and sub ‑ group membership interests (6) If a chosen transitional entity holds membership interests in a non ‑ chosen subsidiary, either directly or indirectly through one or more other entities, each of which is a non ‑ chosen subsidiary: (a) the chosen transitional entity and each interposed non ‑ chosen subsidiary comprise a sub ‑ group in relation to the non ‑ chosen subsidiary (unless the non ‑ chosen subsidiary is included in a sub ‑ group in relation to another non ‑ chosen subsidiary); and (b) the following membership interests are the sub ‑ group membership interests in relation to the sub ‑ group: (i) the membership interests that the chosen transitional entity holds directly in the non ‑ chosen subsidiary or in any of the interposed non ‑ chosen subsidiaries; (ii) the membership interests that each interposed non ‑ chosen subsidiary holds directly in the non ‑ chosen subsidiary or in any of the other interposed non ‑ chosen subsidiaries.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 7–9, Sch 14 (items 16, 19) and Sch 15 (item 2): 24 Oct 2002 (s 2(1) items 1, 2, 4) | Amended by No 16 of 2003, effective Sch 1 (items 7, 8, 27–36), Sch 6 (item 10), Sch 11 (item 4), Sch 15, Sch 16 (items 4, 5), Sch 17 and Sch 19 (items 4, 5): 24 Oct 2002 (s 2(1) items 1A ‑ 1C, 2, 4, 7, 10) Sch 25 (items 11, 12), Sch 26 (items 5–8), Sch 27 (item 20) and Sch 28 (item 13): 29 June 2002 (s 2(1) items 15, 17)

s 701-25 — No operation of value shifting and loss transfer provisions to membership interests in chosen transitional entities

If any provision of the Income Tax Assessment Act 1997 would, because of events that happened before the time the transitional group came into existence, apply to a CGT event that happens after that time to change the cost base or reduced cost base of the members’ membership interests in a chosen transitional entity, the provision does not so apply. Note: For example, such a provision could otherwise apply where a loss transfer or value shift involving the entity has occurred.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 7–9, Sch 14 (items 16, 19) and Sch 15 (item 2): 24 Oct 2002 (s 2(1) items 1, 2, 4) | Amended by No 16 of 2003, effective Sch 1 (items 7, 8, 27–36), Sch 6 (item 10), Sch 11 (item 4), Sch 15, Sch 16 (items 4, 5), Sch 17 and Sch 19 (items 4, 5): 24 Oct 2002 (s 2(1) items 1A ‑ 1C, 2, 4, 7, 10) Sch 25 (items 11, 12), Sch 26 (items 5–8), Sch 27 (item 20) and Sch 28 (item 13): 29 June 2002 (s 2(1) items 15, 17)

s 701-32 — No adjustment of amount of liabilities required in working out allocable cost amount

(1) This section has effect for the purposes of applying section 705 ‑ 70 (step 2 of allocable cost amount) of the Income Tax Assessment Act 1997 in relation to a transitional entity. (2) In spite of subsection 705 ‑ 70(1A) of that Act, if the amount of an accounting liability of the transitional entity would be different when it becomes an accounting liability of the transitional group, that difference is not taken into account in working out the amount of the liability.

Amendment history: Inserted by No 23 of 2005, effective Schedule 1 (items 1, 9, 10, 12, 20, 25, 28), Schedule 2 (item 12) and Schedule 12 (item 11): Royal Assent Schedule 12 (items 7, 8, 10): 1 July 2000 Schedule 12 (item 9): 1 July 2001

s 701-35 — Act, transaction or event giving rise to CGT event for pre ‑ formation roll ‑ over after 16 May 2002 to be disregarded if cost base etc. would be different

(1) If: (a) after 16 May 2002 and before the transitional group came into existence, a CGT event happened in relation to an asset (the roll ‑ over asset ) for which there was: (i) a roll ‑ over under Subdivision 126 ‑ B of the Income Tax Assessment Act 1997 ; or (ii) roll ‑ over relief under section 40 ‑ 340 of that Act in a case covered by item 4 of the table in subsection (1) of that section; and (b) the cost base or reduced cost base of the roll ‑ over asset or any other asset that: (i) became an asset of the head company when the transitional group came into existence because subsection 701 ‑ 1(1) (the single entity rule) of that Act applies; or (ii) was otherwise an asset of the head company at that time; differs at that time from what it would have been if the act, transaction or event that gave rise to the CGT event had not occurred in relation to the roll ‑ over asset; then the provisions mentioned in subsection (2) apply as if the act, transaction or event had not occurred in relation to the roll ‑ over asset. (2) The provisions are: (a) Division 705 of the Income Tax Assessment Act 1997 ; and (b) provisions of this Act modifying the effect of that Division. (2A) Subsection (1) does not apply if: (a) the act, transaction or event mentioned in subsection (1) happened before a demerger and in connection with the demerger; and (b) before the transitional group came into existence, at least one of the following entities ceased to be a member of the demerger group because of the demerger: (i) the originating company in relation to the roll ‑ over, or the transferor in relation to the roll ‑ over relief; (ii) the recipient company, or the transferee in relation to the roll ‑ over relief; and (c) when the transitional group came into existence, at least one of those entities was not a member of that group. (3) Subsection (1) does not apply if: (a) the roll ‑ over asset is a membership interest in an entity (the test entity ); and (b) when the CGT event happened: (i) the originating company in relation to the roll ‑ over, or the transferor in relation to the roll ‑ over relief, was a foreign resident; and (ii) the recipient company, or the transferee in relation to the roll ‑ over relief, was an Australian resident; and (c) when the transitional group came into existence, the test entity was a subsidiary member of the group, other than as a transitional foreign ‑ held subsidiary of the group.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 7–9, Sch 14 (items 16, 19) and Sch 15 (item 2): 24 Oct 2002 (s 2(1) items 1, 2, 4) | Amended by No 16 of 2003, effective Sch 1 (items 7, 8, 27–36), Sch 6 (item 10), Sch 11 (item 4), Sch 15, Sch 16 (items 4, 5), Sch 17 and Sch 19 (items 4, 5): 24 Oct 2002 (s 2(1) items 1A ‑ 1C, 2, 4, 7, 10) Sch 25 (items 11, 12), Sch 26 (items 5–8), Sch 27 (item 20) and Sch 28 (item 13): 29 June 2002 (s 2(1) items 15, 17) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent

s 701-40 — When entity leaves transitional group, head company may choose, for purposes of transitional group’s allocable cost amount, to increase terminating values of over ‑ depreciated assets

(1) This section applies if an entity ceases to be a subsidiary member of the transitional group and the requirements of subsections (2) to (4) are satisfied. Asset held at leaving time (2) Just before the entity ceases to be a subsidiary member, it must, disregarding subsection 701 ‑ 1(1) (the single entity rule) of the Income Tax Assessment Act 1997 , hold an asset. Reduction of asset’s tax cost setting amount for over ‑ depreciation (3) When the transitional group came into existence: (a) the asset must have become that of the head company of the transitional group because subsection 701 ‑ 1(1) of that Act applied in relation to a transitional entity; and (b) former section 705 ‑ 50 of that Act must have reduced by an amount (the reduction amount ) the tax cost setting amount for the asset. Asset held continuously within group (4) The asset must, disregarding subsection 701 ‑ 1(1) of that Act, have been held at all times by the head company or a subsidiary member of the transitional group from when the transitional group came into existence until the entity ceases to be a subsidiary member of the transitional group. Head company’s choice (6) If this section applies, the head company may, in relation to the entity’s ceasing to be a subsidiary member, choose that the terminating value for the asset, that is to be used in applying step 1 of the table in section 711 ‑ 20 of the Income Tax Assessment Act 1997 , is increased by so much of the reduction amount as the head company chooses.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 7–9, Sch 14 (items 16, 19) and Sch 15 (item 2): 24 Oct 2002 (s 2(1) items 1, 2, 4) | Amended by No 56 of 2010, effective s 4(2), Sch 3 (items 8, 10(1)), Sch 5 (items 54, 55, 73–78, 130, 131, 137–140, 189, 190, 193) and Sch 6 (items 156–158): 3 June 2010 (s 2(1) items 1, 7, 8, 10, 11, 23)

s 701-45 — When entity leaves transitional group, head company may choose, for purposes of transitional group’s allocable cost amount, to use formation time market values, instead of terminating values, for certain pre ‑ CGT assets

(1) This section applies if: (a) an entity ceases to be a subsidiary member of the transitional group; and (b) just before the transitional group came into existence, the entity that became the head company held a pre ‑ CGT asset; and (c) that holding of the asset did not occur as a result of a CGT event: (i) for which there was a roll ‑ over under Subdivision 126 ‑ B of the Income Tax Assessment Act 1997 ; and (ii) that occurred after 11.45 am by legal time in the Australian Capital Territory on 21 September 1999; and (d) just before the entity ceases to be a subsidiary member of the group, the asset is still a pre ‑ CGT asset and is held by the head company only because the entity is taken by subsection 701 ‑ 1(1) (the single entity rule) of the Income Tax Assessment Act 1997 to be a part of the head company. (2) If this section applies, the head company may, in relation to the entity’s ceasing to be a subsidiary member, choose that the terminating value for the asset, that is to be used in applying step 1 of the table in section 711 ‑ 20 of the Income Tax Assessment Act 1997 , is equal to its market value just before the transitional group came into existence.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 7–9, Sch 14 (items 16, 19) and Sch 15 (item 2): 24 Oct 2002 (s 2(1) items 1, 2, 4)