Document ID: chunk:federal_register_of_legislation:C2025C00014:section:21a:p1
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 21A (pt 1/2)
Character Range: 80539–83277

21A  Non‑cash business benefits
 (1) For the purposes of this Act, in determining the income derived by a taxpayer, a non‑cash business benefit that is not convertible to cash shall be treated as if it were convertible to cash.
 (2) For the purposes of this Act, if a non‑cash business benefit (whether or not convertible to cash) is income derived by a taxpayer:
 (a) the benefit shall be brought into account at its arm's length value reduced by the recipient's contribution (if any); and
 (b) if the benefit is not convertible to cash—in determining the arm's length value of the benefit, any conditions that would prevent or restrict the conversion of the benefit to cash shall be disregarded.
 (3) Where:
 (a) a non‑cash business benefit is income derived by a taxpayer in a year of income; and
 (b) if the taxpayer had, at the time the benefit was provided, incurred and paid unreimbursed expenditure in respect of the provision of the benefit equal to the amount of the arm's length value of the benefit—a once‑only deduction would, or would but for Subdivisions F, GA and G of Division 3 of this Part, and Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable to the taxpayer in respect of a percentage (in this subsection called the deductible percentage) of the expenditure;
the amount that, apart from this subsection, would be applicable under subsection (2) of this section in respect of the benefit shall be reduced by the deductible percentage.
 (4) Where:
 (a) a non‑cash business benefit is income derived by a taxpayer in a year of income; and
 (b) a percentage (in this subsection called the non‑deductible entertainment percentage) of any expenditure incurred by the provider in respect of the provision of the benefit is non‑deductible entertainment expenditure;
the amount that, apart from this subsection, would be applicable under subsection (2) in respect of the benefit shall be reduced by the non‑deductible entertainment percentage.
 (5) In this section:
arm's length value, in relation to a non‑cash business benefit, means:
 (a) the amount that the recipient could reasonably be expected to have been required to pay to obtain the benefit from the provider under a transaction where the parties to the transaction are dealing with each other at arm's length in relation to the transaction; or
 (b) if such an amount cannot be practically determined—such amount as the Commissioner considers reasonable.
income derived by a taxpayer means income derived by a taxpayer in carrying on a business for the purpose of gaining or producing assessable income.
non‑cash business benefit means property or services provided after 31 August 1988:
 (a) wholly or partly in respect of a business