Document ID: chunk:federal_register_of_legislation:C2025C00014:schedule:2d:p1
Version: federal_register_of_legislation:C2025C00014
Segment Type: schedule
Provision Reference: sch 2D (pt 1/4)
Character Range: 2160206–2163116

Schedule 2D—Tax exempt entities that become taxable

Division 57—Tax exempt entities that become taxable

Table of Subdivisions

Guide to Division 57
57‑A Key concepts
57‑B Predecessors of the transition taxpayer
57‑C Time when income derived
57‑D Time when losses and outgoings incurred
57‑E Assets and liabilities
57‑F Superannuation deductions
57‑G Denial of certain deductions
57‑H Domestic losses
57‑J Capital allowances and certain other deductions
57‑K Balancing adjustments
57‑L Trading stock
57‑M Imputation
57‑N Division not applicable in respect of certain plant

Guide to Division 57

57‑1  What this Division is about
      This Division is about the income tax treatment of a taxpayer whose income ceases to be wholly exempt. Broadly, income, outgoings, gains and losses are attributed to the periods before and after the loss of full exemption.

Subdivision 57‑A—Key concepts

57‑5  Entities to which this Division applies
  If:
 (a) at a particular time, all of the income of a taxpayer is wholly exempt from income tax; and
 (b) immediately after that time, the taxpayer's income becomes to any extent assessable income;
then:
 (c) the taxpayer is a transition taxpayer; and
 (d) the time when the taxpayer's income becomes to that extent assessable is the transition time; and
 (e) the year of income in which the transition time occurs is the transition year for the taxpayer.

Subdivision 57‑B—Predecessors of the transition taxpayer

57‑10  Activities of transition taxpayer's predecessor attributed to transition taxpayer
 (1) If:
 (a) at the transition time, the transition taxpayer performs particular functions or carries on particular activities; and
 (b) during any period before the transition taxpayer first began to perform the functions or carry on the activities, an exempt government entity performed those same functions or carried on those same activities; and
 (c) at the end of the period, responsibility for performing the functions or carrying on the activities was transferred, either directly or through one or more other exempt government entities, to the transition taxpayer;
this Division applies as if, during that period, anything done by or to the exempt government entity in performing those functions or carrying on those activities had instead been done by or to the transition taxpayer.
Note: As a result of this provision, the transition taxpayer may for example be able to deduct after the transition time, under Division 40 of the Income Tax Assessment Act 1997 as modified by Subdivision 57‑J of this Schedule, a portion of allowable capital expenditure incurred before the transition time by an exempt government entity whose functions were transferred to the transition taxpayer.
 (2) An exempt government entity is:
 (a) the Commonwealth, a State or a Territory; or
 (b) an STB, within the meaning of Division 1AB of Part III, that is exempt from tax