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Income Tax Assessment Act 1997
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Administered by
Department of the Treasury
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C2016C00916 (C159)
01 October 2016
-
19 October 2016
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Volume 1
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Chapter 1—Introduction and core provisions
Part 1 1—Preliminary
Division 1—Preliminary
1 1 Short title
1 2 Commencement
1 3 Differences in style not to affect meaning
1 4 Application
1 7 Administration of this Act
Part 1 2—A Guide to this Act
Division 2—How to use this Act
Subdivision 2 A—How to find your way around
2 1 The design
Subdivision 2 B—How the Act is arranged
2 5 The pyramid
Subdivision 2 C—How to identify defined terms and find the definitions
2 10 When defined terms are identified
2 15 When terms are not identified
2 20 Identifying the defined term in a definition
Subdivision 2 D—The numbering system
2 25 Purposes
2 30 Gaps in the numbering
Subdivision 2 E—Status of Guides and other non operative material
2 35 Non operative material
2 40 Guides
2 45 Other material
Division 3—What this Act is about
3 5 Annual income tax
3 10 Your other obligations as a taxpayer
3 15 Your obligations other than as a taxpayer
Part 1 3—Core provisions
Division 4—How to work out the income tax payable on your taxable income
4 1 Who must pay income tax
4 5 Meaning of you
4 10 How to work out how much income tax you must pay
4 15 How to work out your taxable income
4 25 Special provisions for working out your basic income tax liability
Division 5—How to work out when to pay your income tax
5 1 What this Division is about
Subdivision 5 A—How to work out when to pay your income tax
5 5 When income tax is payable
5 10 When shortfall interest charge is payable
5 15 General interest charge payable on unpaid income tax or shortfall interest charge
Division 6—Assessable income and exempt income
6 1 Diagram showing relationships among concepts in this Division
Operative provisions
6 5 Income according to ordinary concepts (ordinary income)
6 10 Other assessable income (statutory income)
6 15 What is not assessable income
6 20 Exempt income
6 23 Non assessable non exempt income
6 25 Relationships among various rules about ordinary income
Division 8—Deductions
8 1 General deductions
8 5 Specific deductions
8 10 No double deductions
Part 1 4—Checklists of what is covered by concepts used in the core provisions
Division 9—Entities that must pay income tax
9 1A Effect of this Division
9 1 List of entities
9 5 Entities that work out their income tax by reference to something other than taxable income
Division 10—Particular kinds of assessable income
10 1 Effect of this Division
10 5 List of provisions about assessable income
Division 11—Particular kinds of non assessable income
Subdivision 11 A—Lists of classes of exempt income
11 1A Effect of this Subdivision
11 1 Overview
11 5 Entities that are exempt, no matter what kind of ordinary or statutory income they have
11 15 Ordinary or statutory income which is exempt
Subdivision 11 B—Particular kinds of non assessable non exempt income
11 50 Effect of this Subdivision
11 55 List of non assessable non exempt income provisions
Division 12—Particular kinds of deductions
12 1 Effect of this Division
12 5 List of provisions about deductions
Division 13—Tax offsets
13 1A Effect of this Division
13 1 List of tax offsets
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Chapter 2—Liability rules of general application
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Part 2 1—Assessable income
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Division 15—Some items of assessable income
15 1 What this Division is about
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Operative provisions
15 2 Allowances and other things provided in respect of employment or services
15 3 Return to work payments
15 5 Accrued leave transfer payments
15 10 Bounties and subsidies
15 15 Profit making undertaking or plan
15 20 Royalties
15 22 Payments made to members of a copyright collecting society
15 23 Payments of resale royalties by resale royalty collecting society
15 25 Amount received for lease obligation to repair
15 30 Insurance or indemnity for loss of assessable income
15 35 Interest on overpayments and early payments of tax
15 40 Providing mining, quarrying or prospecting information or geothermal exploration information
15 45 Amounts paid under forestry agreements
15 46 Amounts paid under forestry managed investment schemes
15 50 Work in progress amounts
15 55 Certain amounts paid under funeral policy
15 60 Certain amounts paid under scholarship plan
15 70 Reimbursed car expenses
15 75 Bonuses
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Division 17—Effect of GST etc. on assessable income
17 1 What this Division is about
17 5 GST and increasing adjustments
17 10 Certain decreasing adjustments
17 15 Elements in calculation of amounts
17 20 GST groups and GST joint ventures
17 30 Special credits because of indirect tax transition
17 35 Certain sections not to apply to certain assets or expenditure
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Division 20—Amounts included to reverse the effect of past deductions
20 1 What this Division is about
20 5 Other provisions that reverse the effect of deductions
Subdivision 20 A—Insurance, indemnity or other recoupment for deductible expenses
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Guide to Subdivision 20 A
20 10 What this Subdivision is about
20 15 How to use this Subdivision
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What is an assessable recoupment?
20 20 Assessable recoupments
20 25 What is recoupment?
20 30 Tables of deductions for which recoupments are assessable
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How much is included in your assessable income?
20 35 If the expense is deductible in a single income year
20 40 If the expense is deductible over 2 or more income years
20 45 Effect of balancing charge
20 50 If the expense is only partially deductible
20 55 Meaning of previous recoupment law
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What if you can deduct a loss or outgoing incurred by another entity?
20 60 If you are the only entity that can deduct an amount for the loss or outgoing
20 65 If 2 or more entities can deduct amounts for the loss or outgoing
Subdivision 20 B—Disposal of a car for which lease payments have been deducted
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Guide to Subdivision 20 B
20 100 What this Subdivision is about
20 105 Map of this Subdivision
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The usual case
20 110 Disposal of a leased car for profit
20 115 Working out the profit on the disposal
20 120 Meaning of notional depreciation
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The associate case
20 125 Disposal of a leased car for profit
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Successive leases
20 130 Successive leases
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Previous disposals of the car
20 135 No amount included if earlier disposal for market value
20 140 Reducing the amount to be included if there has been an earlier disposal
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Miscellaneous rules
20 145 No amount included if you inherited the car
20 150 Reducing the amount to be included if another provision requires you to include an amount for the disposal
20 155 Exception for particular cars taken on hire
20 157 Exception for small business entities
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Disposals of interests in a car: special rules apply
20 160 Disposal of an interest in a car
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Part 2 5—Rules about deductibility of particular kinds of amounts
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Division 25—Some amounts you can deduct
25 1 What this Division is about
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Operative provisions
25 5 Tax related expenses
25 10 Repairs
25 15 Amount paid for lease obligation to repair
25 20 Lease document expenses
25 25 Borrowing expenses
25 30 Expenses of discharging a mortgage
25 35 Bad debts
25 40 Loss from profit making undertaking or plan
25 45 Loss by theft etc.
25 47 Misappropriation where a balancing adjustment event occurs
25 50 Payments of pensions, gratuities or retiring allowances
25 55 Payments to associations
25 60 Parliament election expenses
25 65 Local government election expenses
25 70 Deduction for election expenses does not extend to entertainment
25 75 Rates and land taxes on premises used to produce mutual receipts
25 85 Certain returns in respect of debt interests
25 90 Deduction relating to foreign non assessable non exempt income
25 95 Deduction for work in progress amounts
25 105 Deductions for United Medical Protection Limited support payments
25 100 Travel between workplaces
25 110 Capital expenditure to terminate lease etc.
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Division 26—Some amounts you cannot deduct, or cannot deduct in full
26 1 What this Division is about
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Operative provisions
26 5 Penalties
26 10 Leave payments
26 15 Franchise fees windfall tax
26 17 Commonwealth places windfall tax
26 19 Rebatable benefits
26 20 Assistance to students
26 22 Political contributions and gifts
26 25 Interest or royalty
26 25A Seasonal Labour Mobility Program
26 26 Non share distributions and dividends
26 30 Relative’s travel expenses
26 35 Reducing deductions for amounts paid to related entities
26 40 Maintaining your family
26 45 Recreational club expenses
26 47 Non business boating activities
26 50 Expenses for a leisure facility
26 52 Bribes to foreign public officials
26 53 Bribes to public officials
26 54 Expenditure relating to illegal activities
26 55 Limit on deductions
26 60 Superannuation contributions surcharge
26 65 Termination payments surcharge
26 68 Loss from disposal of eligible venture capital investments
26 70 Loss from disposal of venture capital equity
26 74 Excess concessional contributions charge cannot be deducted
26 75 Excess non concessional contributions tax cannot be deducted
26 80 Financing costs on loans to pay superannuation contribution
26 85 Borrowing costs on loans to pay life insurance premiums
26 90 Superannuation supervisory levy
26 95 Superannuation guarantee charge
26 97 National Disability Insurance Scheme expenditure
26 98 Division 293 tax cannot be deducted
26 100 Expenditure attributable to water infrastructure improvement payments
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Division 27—Effect of input tax credits etc. on deductions
27 1 What this Division is about
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Subdivision 27 A—General
27 5 Input tax credits and decreasing adjustments
27 10 Certain increasing adjustments
27 15 GST payments
27 20 Elements in calculation of amounts
27 25 GST groups and GST joint ventures
27 35 Certain sections not to apply to certain assets or expenditure
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Subdivision 27 B—Effect of input tax credits etc. on capital allowances
27 80 Cost or opening adjustable value of depreciating assets reduced for input tax credits
27 85 Cost or opening adjustable value of depreciating assets reduced: decreasing adjustments
27 87 Certain decreasing adjustments included in assessable income
27 90 Cost or opening adjustable value of depreciating assets increased: increasing adjustments
27 92 Certain increasing adjustments can be deducted
27 95 Balancing adjustment events
27 100 Pooling
27 105 Other Division 40 expenditure
27 110 Input tax credit etc. relating to 2 or more things
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Division 28—Car expenses
28 1 What this Division is about
28 5 Map of this Division
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Subdivision 28 A—Deductions for car expenses
28 10 Application of Division 28
28 12 Car expenses
28 13 Meaning of car expense
Subdivision 28 B—Choosing which method to use
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Guide to Subdivision 28 B
28 14 What this Subdivision is about
28 15 Choosing between the 2 methods
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Operative provision
28 20 Rules governing choice of method
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Subdivision 28 C—The “cents per kilometre” method
28 25 How to calculate your deduction
28 30 Capital allowances
28 35 Substantiation
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Subdivision 28 F—The “log book” method
28 90 How to calculate your deduction
28 95 Eligibility
28 100 Substantiation
Subdivision 28 G—Keeping a log book
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Guide to Subdivision 28 G
28 105 What this Subdivision is about
28 110 Steps for keeping a log book
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Operative provisions
28 115 Income years for which you need to keep a log book
28 120 Choosing the 12 week period for a log book
28 125 How to keep a log book
28 130 Replacing one car with another
Subdivision 28 H—Odometer records for a period
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Guide to Subdivision 28 H
28 135 What this Subdivision is about
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Operative provision
28 140 How to keep odometer records for a car for a period
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Subdivision 28 I—Retaining the log book and odometer records
28 150 Retaining the log book for the retention period
28 155 Retaining odometer records
Subdivision 28 J—Situations where you cannot use, or do not need to use, one of the 2 methods
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Guide to Subdivision 28 J
28 160 What this Subdivision is about
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Operative provisions
28 165 Exception for particular cars taken on hire
28 170 Exception for particular cars used in particular ways
28 175 Further miscellaneous exceptions
28 180 Car expenses related to award transport payments
28 185 Application of Subdivision 28 J to recipients and payers of certain withholding payments
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Division 30—Gifts or contributions
30 1 What this Division is about
30 5 How to find your way around this Division
30 10 Index
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Subdivision 30 A—Deductions for gifts or contributions
30 15 Table of gifts or contributions that you can deduct
30 17 Requirements for certain recipients
Subdivision 30 B—Tables of recipients for deductible gifts
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Health
30 20 Health
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Education
30 25 Education
30 30 Gifts that must be for certain purposes
30 35 Rural schools hostel buildings
30 37 Scholarship etc. funds
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Research
30 40 Research
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Welfare and rights
30 45 Welfare and rights
30 45A Australian disaster relief funds—declarations by Minister
30 46 Australian disaster relief funds—declarations under State and Territory law
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Defence
30 50 Defence
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Environment
30 55 The environment
30 60 Gifts to a National Parks body or conservation body must satisfy certain requirements
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Industry, trade and design
30 65 Industry, trade and design
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The family
30 70 The family
30 75 Marriage education organisations must be approved
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International affairs
30 80 International affairs
30 85 Developing country relief funds
30 86 Developed country disaster relief funds
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Sports and recreation
30 90 Sports and recreation
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Philanthropic trusts
30 95 Philanthropic trusts
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Cultural organisations
30 100 Cultural organisations
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Fire and emergency services
30 102 Fire and emergency services
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Other recipients
30 105 Other recipients
Subdivision 30 BA—Endorsement of deductible gift recipients
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Guide to Subdivision 30 BA
30 115 What this Subdivision is about
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Endorsement as a deductible gift recipient
30 120 Endorsement by Commissioner
30 125 Entitlement to endorsement
30 130 Maintaining a gift fund
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Government entities treated like entities
30 180 How this Subdivision applies to government entities
Subdivision 30 C—Rules applying to particular gifts of property
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Valuation requirements
30 200 Getting written valuations
30 205 Proceeds of the sale would have been assessable
30 210 Approved valuers
30 212 Valuations by the Commissioner
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Working out the amount you can deduct for a gift of property
30 215 How much you can deduct
30 220 Reducing the amount you can deduct
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Joint ownership of property
30 225 Gift of property by joint owners
Subdivision 30 CA—Administrative requirements relating to ABNs
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Guide to Subdivision 30 CA
30 226 What this Subdivision is about
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Requirements
30 227 Entities to which this Subdivision applies
30 228 Content of receipt for gift or contribution
30 229 Australian Business Register must show deductibility of gifts to deductible gift recipient
Subdivision 30 DA—Donations to political parties and independent candidates and members
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Guide to Subdivision 30 DA
30 241 What this Subdivision is about
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Operative provisions
30 242 Deduction for political contributions and gifts
30 243 Amount of the deduction
30 244 When an individual is an independent candidate
30 245 When an individual is an independent member
Subdivision 30 DB—Spreading certain gift and covenant deductions over up to 5 income years
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Guide to Subdivision 30 DB
30 246 What this Subdivision is about
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Operative provisions
30 247 Gifts and covenants for which elections can be made
30 248 Making an election
30 249 Effect of election
30 249A Requirements—environmental property gifts
30 249B Requirements—heritage property gifts
30 249C Requirements—certain cultural property gifts
30 249D Requirements—conservation covenants
Subdivision 30 E—Register of environmental organisations
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Guide to Subdivision 30 E
30 250 What this Subdivision is about
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Operative provisions
30 255 Establishing the register
30 260 Meaning of environmental organisation
30 265 Its principal purpose must be protecting the environment
30 270 Other requirements it must satisfy
30 275 Further requirement for a body corporate or a co operative society
30 280 What must be on the register
30 285 Removal from the register
Subdivision 30 EA—Register of harm prevention charities
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Guide to Subdivision 30 EA
30 286 What this Subdivision is about
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Operative provisions
30 287 Establishing the register
30 288 Meaning of harm prevention charity
30 289 Principal activity—promoting the prevention or control of harm or abuse
30 289A Other requirements
30 289B What must be on the register
30 289C Removal from the register
Subdivision 30 F—Register of cultural organisations
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Guide to Subdivision 30 F
30 290 What this Subdivision is about
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Operative provisions
30 295 Establishing the register
30 300 Meaning of cultural organisation
30 305 What must be on the register
30 310 Removal from the register
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Subdivision 30 G—Index to this Division
30 315 Index
30 320 Effect of this Subdivision
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Division 31—Conservation covenants
31 1 What this Division is about
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Operative provisions
31 5 Deduction for entering into conservation covenant
31 10 Requirements for fund, authority or institution
31 15 Valuations by the Commissioner
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Division 32—Entertainment expenses
32 1 What this Division is about
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Subdivision 32 A—No deduction for entertainment expenses
32 5 No deduction for entertainment expenses
32 10 Meaning of entertainment
32 15 No deduction for property used for providing entertainment
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Subdivision 32 B—Exceptions
32 20 The main exception—fringe benefits
32 25 The tables set out the other exceptions
32 30 Employer expenses
32 35 Seminar expenses
32 40 Entertainment industry expenses
32 45 Promotion and advertising expenses
32 50 Other expenses
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Subdivision 32 C—Definitions relevant to the exceptions
32 55 In house dining facility (employer expenses table items 1.1 and 1.2)
32 60 Dining facility (employer expenses table item 1.3)
32 65 Seminars (seminar expenses table item 2.1)
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Subdivision 32 D—In house dining facilities (employer expenses table item 1.2)
32 70 $30 is assessable for each meal provided to non employee in an in house dining facility
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Subdivision 32 E—Anti avoidance
32 75 Commissioner may treat you as having incurred entertainment expense
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Subdivision 32 F—Special rules for companies and partnerships
32 80 Company directors
32 85 Directors, employees and property of wholly owned group company
32 90 Partnerships
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Division 34—Non compulsory uniforms
34 1 What this Division is about
34 3 What you need to read
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Subdivision 34 A—Application of Division 34
34 5 This Division applies to employees and others
34 7 This Division applies to employers and others
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Subdivision 34 B—Deduction for your non compulsory uniform
34 10 What you can deduct
34 15 What is a non compulsory uniform?
34 20 What are occupation specific clothing and protective clothing?
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Subdivision 34 C—Registering the design of a non compulsory uniform
34 25 Application to register the design
34 30 Industry Secretary’s decision on application
34 33 Written notice of decision
34 35 When uniform becomes registered
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Subdivision 34 D—Appeals from Industry Secretary’s decision
34 40 Review of decisions by the Administrative Appeals Tribunal
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Subdivision 34 E—The Register of Approved Occupational Clothing
34 45 Keeping of the Register
34 50 Changes to the Register
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Subdivision 34 F—Approved occupational clothing guidelines
34 55 Approved occupational clothing guidelines
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Subdivision 34 G—The Industry Secretary
34 60 Industry Secretary to give Commissioner information about entries
34 65 Delegation of powers by Industry Secretary
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Division 35—Deferral of losses from non commercial business activities
35 1 What this Division is about
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Operative provisions
35 5 Object
35 10 Deferral of deductions from non commercial business activities
35 15 Modification if you have exempt income
35 20 Modification if you become bankrupt
35 25 Application of Division to certain partnerships
35 30 Assessable income test
35 35 Profits test
35 40 Real property test
35 45 Other assets test
35 50 Apportionment
35 55 Commissioner’s discretion
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Division 36—Tax losses of earlier income years
36 1 What this Division is about
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Subdivision 36 A—Deductions for tax losses of earlier income years
36 10 How to calculate a tax loss for an income year
36 15 How to deduct tax losses of entities other than corporate tax entities
36 17 How to deduct tax losses of corporate tax entities
36 20 Net exempt income
36 25 Special rules about tax losses
Subdivision 36 B—Effect of you becoming bankrupt
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Guide to Subdivision 36 B
36 30 What this Subdivision is about
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Operative provisions
36 35 No deduction for tax loss incurred before bankruptcy
36 40 Deduction for amounts paid for debts incurred before bankruptcy
36 45 Limit on deductions for amounts paid
Subdivision 36 C—Excess franking offsets
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Guide to Subdivision 36 C
36 50 What this Subdivision is about
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Operative provision
36 55 Converting excess franking offsets into tax loss
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Volume 2
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Chapter 2—Liability rules of general application
Part 2 10—Capital allowances: rules about deductibility of capital expenditure
Division 40—Capital allowances
40 1 What this Division is about
40 10 Simplified outline of this Division
Subdivision 40 A—Objects of Division
40 15 Objects of Division
Subdivision 40 B—Core provisions
Guide to Subdivision 40 B
40 20 What this Subdivision is about
Operative provisions
40 25 Deducting amounts for depreciating assets
40 30 What a depreciating asset is
40 35 Jointly held depreciating assets
40 40 Meaning of hold a depreciating asset
40 45 Assets to which this Division does not apply
40 50 Assets for which you deduct under another Subdivision
40 53 Alterations etc. to certain depreciating assets
40 55 Use of the “cents per kilometre” car expense deduction method
40 60 When a depreciating asset starts to decline in value
40 65 Choice of methods to work out the decline in value
40 70 Diminishing value method
40 72 Diminishing value method for post 9 May 2006 assets
40 75 Prime cost method
40 80 When you can deduct the asset’s cost
40 85 Meaning of adjustable value and opening adjustable value of a depreciating asset
40 90 Debt forgiveness
40 95 Choice of determining effective life
40 100 Commissioner’s determination of effective life
40 102 Capped life of certain depreciating assets
40 103 Effective life and remaining effective life of certain vessels
40 105 Self assessing effective life
40 110 Recalculating effective life
40 115 Splitting a depreciating asset
40 120 Replacement spectrum licences
40 125 Merging depreciating assets
40 130 Choices
40 135 Certain anti avoidance provisions
40 140 Getting tax information from associates
Subdivision 40 C—Cost
Guide to Subdivision 40 C
40 170 What this Subdivision is about
Operative provisions
40 175 Cost
40 180 First element of cost
40 185 Amount you are taken to have paid to hold a depreciating asset or to receive a benefit
40 190 Second element of cost
40 195 Apportionment of cost
40 200 Exclusion from cost
40 205 Cost of a split depreciating asset
40 210 Cost of merged depreciating assets
40 215 Adjustment: double deduction
40 220 Cost reduced by amounts not of a capital nature
40 222 Cost reduced by water infrastructure improvement expenditure
40 225 Adjustment: acquiring a car at a discount
40 230 Adjustment: car limit
40 235 Adjustment: National Disability Insurance Scheme costs
Subdivision 40 D—Balancing adjustments
Guide to Subdivision 40 D
40 280 What this Subdivision is about
Operative provisions
40 285 Balancing adjustments
40 290 Reduction for non taxable use
40 292 Adjustments—assets used for both general tax purposes and R&D activities
40 293 Adjustments—partnership assets used for both general tax purposes and R&D activities
40 295 Meaning of balancing adjustment event
40 300 Meaning of termination value
40 305 Amount you are taken to have received under a balancing adjustment event
40 310 Apportionment of termination value
40 320 Car to which section 40 225 applies
40 325 Adjustment: car limit
40 335 Deduction for in house software where you will never use it
40 340 Roll over relief
40 345 What the roll over relief is
40 350 Additional consequences
40 360 Notice to allow transferee to work out how this Division applies
40 362 Roll over relief for holders of vessels covered by certificates under the Shipping Reform (Tax Incentives) Act 2012
40 363 Roll over relief for interest realignment arrangements
40 364 Interest realignment adjustments
40 365 Involuntary disposals
40 370 Balancing adjustments where there has been use of different car expense methods
Subdivision 40 E—Low value and software development pools
Guide to Subdivision 40 E
40 420 What this Subdivision is about
Operative provisions
40 425 Allocating assets to a low value pool
40 430 Rules for assets in low value pools
40 435 Private or exempt use of assets
40 440 How you work out the decline in value of assets in low value pools
40 445 Balancing adjustment events
40 450 Software development pools
40 455 How to work out your deduction
40 460 Your assessable income includes consideration for pooled software
Subdivision 40 F—Primary production depreciating assets
Guide to Subdivision 40 F
40 510 What this Subdivision is about
Operative provisions
40 515 Water facilities, horticultural plants, fodder storage assets and fencing assets
40 520 Meaning of water facility, horticultural plant, fodder storage asset and fencing asset
40 525 Conditions
40 530 When declines in value start
40 535 Meaning of horticulture and commercial horticulture
40 540 How you work out the decline in value for water facilities
40 545 How you work out the decline in value for horticultural plants
40 548 How you work out the decline in value for fodder storage assets
40 551 How you work out the decline in value for fencing assets
40 555 Amounts you cannot deduct
40 560 Non arm’s length transactions
40 565 Extra deduction for destruction of a horticultural plant
40 570 How this Subdivision applies to partners and partnerships
40 575 Getting tax information if you acquire a horticultural plant
Subdivision 40 G—Capital expenditure of primary producers and other landholders
Guide to Subdivision 40 G
40 625 What this Subdivision is about
Operative provisions
40 630 Landcare operations
40 635 Meaning of landcare operation
40 640 Meaning of approved management plan
40 645 Electricity and telephone lines
40 650 Amounts you cannot deduct under this Subdivision
40 655 Meaning of connecting power to land or upgrading the connection and metering point
40 660 Non arm’s length transactions
40 665 How this Subdivision applies to partners and partnerships
40 670 Approval of persons as farm consultants
40 675 Review of decisions relating to approvals
Subdivision 40 H—Capital expenditure that is immediately deductible
Guide to Subdivision 40 H
40 725 What this Subdivision is about
Operative provisions
40 730 Deduction for expenditure on exploration or prospecting
40 735 Deduction for expenditure on mining site rehabilitation
40 740 Meaning of ancillary mining activities and mining building site
40 745 No deduction for certain expenditure
40 750 Deduction for payments of petroleum resource rent tax
40 755 Environmental protection activities
40 760 Limits on deductions from environmental protection activities
40 765 Non arm’s length transactions
Subdivision 40 I—Capital expenditure that is deductible over time
Guide to Subdivision 40 I
40 825 What this Subdivision is about
Operative provisions
40 830 Project pools
40 832 Project pools for post 9 May 2006 projects
40 835 Reduction of deduction
40 840 Meaning of project amount
40 845 Project life
40 855 When you start to deduct amounts for a project pool
40 860 Meaning of mining capital expenditure
40 865 Meaning of transport capital expenditure
40 870 Meaning of transport facility
40 875 Meaning of processed minerals and minerals treatment
40 880 Business related costs
40 885 Non arm’s length transactions
Subdivision 40 J—Capital expenditure for the establishment of trees in carbon sink forests
Guide to Subdivision 40 J
40 1000 What this Subdivision is about
Operative provisions
40 1005 Deduction for expenditure for establishing trees in carbon sink forests
40 1010 Expenditure for establishing trees in carbon sink forests
40 1015 Carbon sequestration by trees
40 1020 Certain expenditure disregarded
40 1025 Non arm’s length transactions
40 1030 Extra deduction for destruction of trees in carbon sink forest
40 1035 Getting information if you acquire a carbon sink forest
Subdivision 40 K—Farm in farm out arrangements
Guide to Subdivision 40 K
40 1095 What this Subdivision is about
Farm in farm out arrangements and exploration benefits
40 1100 Meaning of farm in farm out arrangement and exploration benefit
Consequences for transferors
40 1105 Treatment of certain exploration benefits received under farm in farm out arrangements
40 1110 Cost of split interests resulting from farm in farm out arrangements
40 1115 Deductions relating to receipt of exploration benefits
40 1120 Cost base and reduced cost base of exploration benefits etc.
40 1125 Effect of exploration benefits on the cost of mining, quarrying or prospecting information
Consequences for transferees
40 1130 Consequences of certain exploration benefits provided under farm in farm out arrangements
Division 41—Additional deduction for certain new business investment
41 1 What this Division is about
Operative provisions
41 5 Object of Division
41 10 Entitlement to deduction for investment
41 15 Amount of deduction
41 20 Recognised new investment amount
41 25 Investment commitment time
41 30 First use time
41 35 New investment threshold
Division 43—Deductions for capital works
43 1 What this Division is about
43 2 Key concepts used in this Division
Subdivision 43 A—Key operative provisions
Guide to Subdivision 43 A
43 5 What this Subdivision is about
Operative provisions
43 10 Deductions for capital works
43 15 Amount you can deduct
43 20 Capital works to which this Division applies
43 25 Rate of deduction
43 30 No deduction until construction is complete
43 35 Requirement for registration under the Industry Research and Development Act
43 40 Deduction for destruction of capital works
43 45 Certain anti avoidance provisions
43 50 Links and signposts to other parts of the Act
43 55 Anti avoidance—arrangement etc. with tax exempt entity
Subdivision 43 B—Establishing the deduction base
Guide to Subdivision 43 B
43 60 What this Subdivision is about
43 65 Explanatory material
Operative provisions
43 70 What is construction expenditure?
43 72 Meaning of forestry road, timber operation and timber mill building
43 75 Construction expenditure area
43 80 When capital works begin
43 85 Pools of construction expenditure
43 90 Table of intended use at time of completion of construction
43 95 Meaning of hotel building and apartment building
43 100 Certificates by Innovation Australia
Subdivision 43 C—Your area and your construction expenditure
Guide to Subdivision 43 C
43 105 What this Subdivision is about
43 110 Explanatory material
Operative provisions
43 115 Your area and your construction expenditure—owners
43 120 Your area and your construction expenditure—lessees and quasi ownership right holders
43 125 Lessees’ or right holders’ pools can revert to owner
43 130 Identifying your area on acquisition or disposal
Subdivision 43 D—Deductible uses of capital works
Guide to Subdivision 43 D
43 135 What this Subdivision is about
Operative provisions
43 140 Using your area in a deductible way
43 145 Using your area in the 4% manner
43 150 Meaning of industrial activities
Subdivision 43 E—Special rules about uses
Guide to Subdivision 43 E
43 155 What this Subdivision is about
Operative provisions
43 160 Your area is used for a purpose if it is maintained ready for use for the purpose
43 165 Temporary cessation of use
43 170 Own use—capital works other than hotel and apartment buildings
43 175 Own use—hotel and apartment buildings
43 180 Special rules for hotel and apartment buildings
43 185 Residential or display use
43 190 Use of facilities not commonly provided, and of certain buildings used to operate a hotel, motel or guest house
43 195 Use for R&D activities must be in connection with a business
Subdivision 43 F—Calculation of deduction
Guide to Subdivision 43 F
43 200 What this Subdivision is about
43 205 Explanatory material
Operative provisions
43 210 Deduction for capital works begun after 26 February 1992
43 215 Deduction for capital works begun before 27 February 1992
43 220 Capital works taken to have begun earlier for certain purposes
Subdivision 43 G—Undeducted construction expenditure
Guide to Subdivision 43 G
43 225 What this Subdivision is about
Operative provisions
43 230 Calculating undeducted construction expenditure—common step
43 235 Post 26 February 1992 undeducted construction expenditure
43 240 Pre 27 February 1992 undeducted construction expenditure
Subdivision 43 H—Balancing deduction on destruction of capital works
Guide to Subdivision 43 H
43 245 What this Subdivision is about
Operative provisions
43 250 The amount of the balancing deduction
43 255 Amounts received or receivable
43 260 Apportioning amounts received for destruction
Division 45—Disposal of leases and leased plant
45 1 What this Division is about
Operative provisions
45 5 Disposal of leased plant or lease
45 10 Disposal of interest in partnership
45 15 Disposal of shares in 100% subsidiary that leases plant
45 20 Disposal of shares in 100% subsidiary that leases plant in partnership
45 25 Group members liable to pay outstanding tax
45 30 Reduction for certain plant acquired before 21.9.99
45 35 Limit on amount included for plant for which there is a CGT exemption
45 40 Meaning of plant and written down value
Part 2 15—Non assessable income
Division 50—Exempt entities
Subdivision 50 A—Various exempt entities
50 1 Entities whose ordinary income and statutory income is exempt
50 5 Charity, education and science
50 10 Community service
50 15 Employees and employers
50 25 Government
50 30 Health
50 35 Mining
50 40 Primary and secondary resources, and tourism
50 45 Sports, culture and recreation
50 47 Special condition for all items
50 50 Special conditions for item 1.1
50 52 Special condition for item 1.1
50 55 Special conditions for items 1.3, 1.4, 6.1 and 6.2
50 65 Special conditions for item 1.6
50 70 Special conditions for items 1.7, 2.1, 9.1 and 9.2
50 72 Special condition for item 4.1
50 75 Certain distributions may be made overseas
Subdivision 50 B—Endorsing charitable entities as exempt from income tax
Guide to Subdivision 50 B
50 100 What this Subdivision is about
Endorsing charitable entities as exempt from income tax
50 105 Endorsement by Commissioner
50 110 Entitlement to endorsement
Division 51—Exempt amounts
51 1 Amounts of ordinary income and statutory income that are exempt
51 5 Defence
51 10 Education and training
51 30 Welfare
51 32 Compensation payments for loss of tax exempt payments
51 33 Compensation payments for loss of pay and/or allowances as a Defence reservist
51 35 Payments to a full time student at a school, college or university
51 40 Payments to a secondary student
51 42 Bonuses for early completion of an apprenticeship
51 43 Income collected or derived by copyright collecting society
51 45 Income collected or derived by resale royalty collecting society
51 50 Maintenance payments to a spouse or child
51 52 Income derived from eligible venture capital investments by ESVCLPs
51 54 Gain or profit from disposal of eligible venture capital investments
51 55 Gain or profit from disposal of venture capital equity
51 57 Interest on judgment debt relating to personal injury
51 60 Prime Minister’s Prizes
51 100 Shipping
51 105 Shipping activities
51 110 Core shipping activities
51 115 Incidental shipping activities
51 120 Interest on unclaimed money and property
Division 52—Certain pensions, benefits and allowances are exempt from income tax
52 1 What this Division is about
Subdivision 52 A—Exempt payments under the Social Security Act 1991
Guide to Subdivision 52 A
52 5 What this Subdivision is about
Operative provisions
52 10 How much of a social security payment is exempt?
52 15 Supplementary amounts of payments
52 20 Tax free amount of an ordinary payment after the death of your partner
52 25 Tax free amount of certain bereavement lump sum payments
52 30 Tax free amount of certain other bereavement lump sum payments
52 35 Tax free amount of a lump sum payment made because of the death of a person you are caring for
52 40 Provisions of the Social Security Act 1991 under which payments are made
Subdivision 52 B—Exempt payments under the Veterans’ Entitlements Act 1986
Guide to Subdivision 52 B
52 60 What this Subdivision is about
Operative provisions
52 65 How much of a veterans’ affairs payment is exempt?
52 70 Supplementary amounts of payments
Subdivision 52 C—Exempt payments made because of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986
Guide to Subdivision 52 C
52 100 What this Subdivision is about
Operative provisions
52 105 Supplementary amount of a payment made under the Repatriation Act 1920 is exempt
52 110 Other exempt payments
Subdivision 52 CA—Exempt payments under the Military Rehabilitation and Compensation Act 2004
Guide to Subdivision 52 CA
52 112 What this Subdivision is about
Operative provisions
52 114 How much of a payment under the Military Rehabilitation and Compensation Act is exempt?
Subdivision 52 CB—Exempt payments under the Australian Participants in British Nuclear Tests (Treatment) Act 2006
52 117 Payments of travelling expenses are exempt
Subdivision 52 E—Exempt payments under the ABSTUDY scheme
Guide to Subdivision 52 E
52 130 What this Subdivision is about
Operative provisions
52 131 Payments under ABSTUDY scheme
52 132 Supplementary amount of payment
52 133 Tax free amount of ordinary payment on death of partner if no bereavement payment payable
52 134 Tax free amount if you receive a bereavement lump sum payment
Subdivision 52 F—Exemption of Commonwealth education or training payments
52 140 Supplementary amount of a Commonwealth education or training payment is exempt
52 145 Meaning of Commonwealth education or training payment
Subdivision 52 G—Exempt payments under the A New Tax System (Family Assistance) (Administration) Act 1999
52 150 Family assistance payments are exempt
Subdivision 52 H—Other exempt payments
52 160 Economic security strategy payments are exempt
52 162 ETR payments are exempt
52 165 Household stimulus payments are exempt
52 170 Outer Regional and Remote payments under the Helping Children with Autism package are exempt
52 172 Outer Regional and Remote payments under the Better Start for Children with Disability initiative are exempt
52 175 Continence aids payments are exempt
52 180 National Disability Insurance Scheme amounts are exempt
Division 53—Various exempt payments
53 1 What this Division is about
Operative provisions
53 10 Exemption of various types of payments
53 20 Exemption of similar Australian and United Kingdom veterans’ payments
Division 54—Exemption for certain payments made under structured settlements and structured orders
54 1 What this Division is about
Subdivision 54 A—Definitions
Operative provisions
54 5 Definitions
54 10 Meaning of structured settlement and structured order
Subdivision 54 B—Tax exemption for personal injury annuities
Operative provisions
54 15 Personal injury annuity exemption for injured person
54 20 Lump sum compensation etc. would not have been assessable
54 25 Requirements of the annuity instrument
54 30 Requirements for payments of the annuity
54 35 Payments during the guarantee period on the death of the injured person
54 40 Requirement for minimum monthly level of support
Subdivision 54 C—Tax exemption for personal injury lump sums
Operative provisions
54 45 Personal injury lump sum exemption for injured person
54 50 Lump sum compensation would not have been assessable
54 55 Requirements of the instrument under which the lump sum is paid
54 60 Requirements for payments of the lump sum
Subdivision 54 D—Miscellaneous
Operative provisions
54 65 Exemption for certain payments to reversionary beneficiaries
54 70 Special provisions about trusts
54 75 Minister to arrange for review and report
Division 55—Payments that are not exempt from income tax
55 1 What this Division is about
Operative provisions
55 5 Occupational superannuation payments
55 10 Education entry payments
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Volume 3
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Chapter 2—Liability rules of general application
Part 2 15—Non assessable income
Division 58—Capital allowances for depreciating assets previously owned by an exempt entity
58 1 What this Division is about
Subdivision 58 A—Application
58 5 Application of Division
58 10 When an asset is acquired in connection with the acquisition of a business
Subdivision 58 B—Calculating decline in value of privatised assets under Division 40
58 60 Purpose of rules in this Subdivision
58 65 Choice of method to work out cost of privatised asset
58 70 Application of Division 40
58 75 Meaning of notional written down value
58 80 Meaning of undeducted pre existing audited book value
58 85 Pre existing audited book value of depreciating asset
58 90 Method and effective life for transition entity
Division 59—Particular amounts of non assessable non exempt income
59 1 What this Division is about
Operative provisions
59 10 Compensation under firearms surrender arrangements
59 15 Mining payments
59 20 Taxable amounts relating to franchise fees windfall tax
59 25 Taxable amounts relating to Commonwealth places windfall tax
59 30 Amounts you must repay
59 35 Amounts that would be mutual receipts but for prohibition on distributions to members
59 40 Issue of rights
59 50 Native title benefits
59 65 Water infrastructure improvement payments
59 67 Meaning of SRWUIP program, SRWUIP payment, direct SRWUIP payment and indirect SRWUIP payment
59 70 List of SRWUIP programs
59 75 Commissioner to be kept informed
59 80 Amending assessments
Part 2 20—Tax offsets
Division 61—Generally applicable tax offsets
Subdivision 61 A—Dependant (invalid and carer) tax offset
Guide to Subdivision 61 A
61 1 What this Subdivision is about
Object of this Subdivision
61 5 Object of this Subdivision
Entitlement to the dependant (invalid and carer) tax offset
61 10 Who is entitled to the tax offset
61 15 Cases involving more than one spouse
61 20 Exceeding the income limit for family tax benefit (Part B)
61 25 Eligibility for family tax benefit (Part B) without shared care
Amount of the dependant (invalid and carer) tax offset
61 30 Amount of the dependant (invalid and carer) tax offset
61 35 Families with shared care percentages
61 40 Reduced amounts of dependant (invalid and carer) tax offset
61 45 Reductions to take account of the other individual’s income
Subdivision 61 G—Private health insurance offset complementary to Part 2 2 of the Private Health Insurance Act 2007
Guide to Subdivision 61 G
61 200 What this Subdivision is about
Operative provisions
61 205 Entitlement to the private health insurance tax offset
61 210 Amount of the private health insurance tax offset
61 215 Reallocation of the private health insurance tax offset between spouses
Subdivision 61 I—First child tax offset (baby bonus)
Guide to Subdivision 61 I
61 350 What this Subdivision is about
Entitlement to a first child tax offset
61 355 Who is entitled to a tax offset under this section
61 360 What is a child event?
61 365 First child only
61 370 Another carer with entitlement for another child
61 375 Selection rules
61 380 Special rules for death of first child
Transferring an entitlement
61 385 You may transfer your entitlement to a tax offset
61 390 Transfer is irrevocable
61 395 Transferor is not entitled to tax offset
61 400 Transferee is entitled to tax offset
Claiming a first child tax offset
61 405 How to claim a tax offset for a child
61 410 Claim is irrevocable
Amount of a first child tax offset
61 415 Formula for working out amount of tax offset
61 420 Component of formula—entitlement amount
61 425 Component of formula—total of the entitlement days
61 430 What is your base year?
Additional tax offset if a child is in your care before you legally adopt the child
61 440 Additional tax offset if a child is in your care before you legally adopt the child
61 445 When a child is first in your care
61 450 What is your base year if a child is in your care before you legally adopt the child?
61 455 Old Subdivision applies if you would be worse off
Subdivision 61 IA—Child care tax offset
Guide to Subdivision 61 IA
61 460 What this Subdivision is about
Operative provisions
61 465 Object of this Subdivision
Entitlement to the child care tax offset
61 470 Who is entitled to the tax offset
61 475 Meaning of approved child care
61 480 Meaning of entitled to child care benefit and entitlement to child care benefit
Amount of the child care tax offset
61 485 Amount of the child care tax offset
61 490 Component of formula—approved child care fees
61 495 Component of formula—child care offset limit
Transfer of entitlement to unused balance of child care tax offset
61 496 Entitlement to transfer
61 497 Form of transfer
Subdivision 61 L—Tax offset for Medicare levy surcharge (lump sum payments in arrears)
Guide to Subdivision 61 L
61 575 What this Subdivision is about
Operative provisions
61 580 Entitlement to a tax offset
61 585 The amount of a tax offset
61 590 Definition of MLS lump sums
Subdivision 61 N—Seafarer tax offset
Guide to Subdivision 61 N
61 695 What this Subdivision is about
Operative provisions
61 700 Object of this Subdivision
61 705 Who is entitled to the seafarer tax offset
61 710 Amount of the seafarer tax offset
Subdivision 61 P—ESVCLP tax offset
Guide to Subdivision 61 P
61 750 What this Subdivision is about
Operative provisions
61 755 Object of this Subdivision
61 760 Who is entitled to the ESVCLP tax offset
61 765 Amount of the ESVCLP tax offset—general case
61 770 Amount of the ESVCLP tax offset—members of trusts or partnerships
61 775 Amount of the ESVCLP tax offset—trustees
Division 63—Common rules for tax offsets
63 1 What this Division is about
63 10 Priority rules
Division 65—Tax offset carry forward rules
65 10 What this Division is about
Operative provisions
65 30 Amount carried forward
65 35 How to apply carried forward tax offsets
65 40 When a company cannot apply a tax offset
65 50 Effect of bankruptcy
65 55 Deduction for amounts paid for debts incurred before bankruptcy
Division 67—Refundable tax offset rules
67 10 What this Division is about
Operative provisions
67 20 Which tax offsets this Division applies to
67 23 Refundable tax offsets
67 25 Refundable tax offsets—franked distributions
67 30 Refundable tax offsets—R&D
Part 2 25—Trading stock
Division 70—Trading stock
70 1 What this Division is about
70 5 The 3 key features of tax accounting for trading stock
Subdivision 70 A—What is trading stock
70 10 Meaning of trading stock
70 12 Registered emissions units
Subdivision 70 B—Acquiring trading stock
70 15 In which income year do you deduct an outgoing for trading stock?
70 20 Non arm’s length transactions
70 25 Cost of trading stock is not a capital outgoing
70 30 Starting to hold as trading stock an item you already own
Subdivision 70 C—Accounting for trading stock you hold at the start or end of the income year
General rules
70 35 You include the value of your trading stock in working out your assessable income and deductions
70 40 Value of trading stock at start of income year
70 45 Value of trading stock at end of income year
Special valuation rules
70 50 Valuation if trading stock obsolete etc.
70 55 Working out the cost of natural increase of live stock
70 60 Valuation of horse breeding stock
70 65 Working out the horse opening value and the horse reduction amount
Subdivision 70 D—Assessable income arising from disposals of trading stock and certain other assets
Guide to Subdivision 70 D
70 75 What this Subdivision is about
70 80 Why the rules in this Subdivision are necessary
Operative provisions
70 85 Application of this Subdivision to certain other assets
70 90 Assessable income on disposal of trading stock outside the ordinary course of business
70 95 Purchase price is taken to be market value
70 100 Notional disposal when you stop holding an item as trading stock
70 105 Death of owner
70 110 You stop holding an item as trading stock but still own it
70 115 Compensation for lost trading stock
Subdivision 70 E—Miscellaneous
70 120 Deducting capital costs of acquiring trees
Part 2 40—Rules affecting employees and other taxpayers receiving PAYG withholding payments
Division 80—General rules
80 1 What this Division is about
Operative provisions
80 5 Holding of an office
80 10 Application to the termination of employment
80 15 Transfer of property
80 20 Payments for your benefit or at your direction or request
Division 82—Employment termination payments
82 1 What this Division is about
Subdivision 82 A—Employment termination payments: life benefits
Guide to Subdivision 82 A
82 5 What this Subdivision is about
Operative provisions
82 10 Taxation of life benefit termination payments
Subdivision 82 B—Employment termination payments: death benefits
Guide to Subdivision 82 B
82 60 What this Subdivision is about
Operative provisions
82 65 Death benefits for dependants
82 70 Death benefits for non dependants
82 75 Death benefits paid to trustee of deceased estate
Subdivision 82 C—Key concepts
Guide to Subdivision 82 C
82 125 What this Subdivision is about
Operative provisions
82 130 What is an employment termination payment?
82 135 Payments that are not employment termination payments
82 140 Tax free component of an employment termination payment
82 145 Taxable component of an employment termination payment
82 150 What is an invalidity segment of an employment termination payment?
82 155 What is a pre July 83 segment of an employment termination payment?
82 160 What is the ETP cap amount?
Division 83—Other payments on termination of employment
83 1 What this Division is about
Subdivision 83 A—Unused annual leave payments
Guide to Subdivision 83 A
83 5 What this Subdivision is about
Operative provisions
83 10 Unused annual leave payment is assessable
83 15 Entitlement to tax offset
Subdivision 83 B—Unused long service leave payments
Guide to Subdivision 83 B
83 65 What this Subdivision is about
General
83 70 Application—long service leave
83 75 Meaning of unused long service leave payment
83 80 Taxation of unused long service leave payments
83 85 Entitlement to tax offset
83 90 Meaning of pre 16/8/78 period, pre 18/8/93 period, post 17/8/93 period and long service leave employment period
Employment wholly full time or wholly part time
83 95 How to work out amount of payment attributable to each period
83 100 How to work out unused days of long service leave for each period
83 105 How to work out long service leave accrued in each period
Employment partly full time and partly part time
83 110 Leave accrued in pre 16/8/78, pre 18/8/93 and post 17/8/93 periods—employment full time and part time
Long service leave taken at less than full pay
83 115 Working out used days of long service leave if leave taken at less than full pay
Subdivision 83 C—Genuine redundancy payments and early retirement scheme payments
Guide to Subdivision 83 C
83 165 What this Subdivision is about
Operative provisions
83 170 Tax free treatment of genuine redundancy payments and early retirement scheme payments
83 175 What is a genuine redundancy payment?
83 180 What is an early retirement scheme payment?
Subdivision 83 D—Foreign termination payments
Guide to Subdivision 83 D
83 230 What this Subdivision is about
Operative provisions
83 235 Termination payments tax free—foreign resident period
83 240 Termination payments tax free—Australian resident period
Subdivision 83 E—Other payments
Guide to Subdivision 83 E
83 290 What this Subdivision is about
Operative provisions
83 295 Termination payments made more than 12 months after termination etc.
Division 83A—Employee share schemes
Guide to Division 83A
83A 1 What this Division is about
Subdivision 83A A—Objects of Division and key concepts
83A 5 Objects of Division
83A 10 Meaning of ESS interest and employee share scheme
Subdivision 83A B—Immediate inclusion of discount in assessable income
Guide to Subdivision 83A B
83A 15 What this Subdivision is about
Operative provisions
83A 20 Application of Subdivision
83A 25 Discount to be included in assessable income
83A 30 Amount for which discounted ESS interest acquired
83A 33 Reducing amounts included in assessable income—start ups
83A 35 Reducing amounts included in assessable income—other cases
83A 45 Further conditions for reducing amounts included in assessable income
Subdivision 83A C—Deferred inclusion of gain in assessable income
Guide to Subdivision 83A C
83A 100 What this Subdivision is about
Main provisions
83A 105 Application of Subdivision
83A 110 Amount to be included in assessable income
83A 115 ESS deferred taxing point—shares
83A 120 ESS deferred taxing point—rights to acquire shares
83A 125 Tax treatment of ESS interests held after ESS deferred taxing points
Takeovers and restructures
83A 130 Takeovers and restructures
Subdivision 83A D—Deduction for employer
Guide to Subdivision 83A D
83A 200 What this Subdivision is about
Operative provisions
83A 205 Deduction for employer
83A 210 Timing of general deductions
Subdivision 83A E—Miscellaneous
83A 305 Acquisition by associates
83A 310 Forfeiture etc. of ESS interest
83A 315 Market value of ESS interest
83A 320 Interests in a trust
83A 325 Application of Division to relationships similar to employment
83A 330 Application of Division to ceasing employment
83A 335 Application of Division to stapled securities
83A 340 Application of Division to indeterminate rights
Part 2 42—Personal services income
Division 84—Introduction
84 1 What this Part is about
Operative provisions
84 5 Meaning of personal services income
84 10 This Part does not imply that individuals are employees
Division 85—Deductions relating to personal services income
85 1 What this Division is about
Operative provisions
85 5 Object of this Division
85 10 Deductions for non employees relating to personal services income
85 15 Deductions for rent, mortgage interest, rates and land tax
85 20 Deductions for payments to associates etc.
85 25 Deductions for superannuation for associates
85 30 Exception: personal services businesses
85 35 Exception: employees, office holders and religious practitioners
85 40 Application of Subdivision 900 B to individuals who are not employees
Division 86—Alienation of personal services income
86 1 What this Division is about
86 5 A simple description of what this Division does
Subdivision 86 A—General
86 10 Object of this Division
86 15 Effect of obtaining personal services income through a personal services entity
86 20 Offsetting the personal services entity’s deductions against personal services income
86 25 Apportionment of entity maintenance deductions among several individuals
86 27 Deduction for net personal services income loss
86 30 Assessable income etc. of the personal services entity
86 35 Later payments of, or entitlements to, personal services income to be disregarded for income tax purposes
86 40 Salary payments shortly after an income year
Subdivision 86 B—Entitlement to deductions
86 60 General rule for deduction entitlements of personal services entities
86 65 Entity maintenance deductions
86 70 Car expenses
86 75 Superannuation
86 80 Salary or wages promptly paid
86 85 Deduction entitlements of personal services entities for amounts included in an individual’s assessable income
86 87 Personal services entity cannot deduct net personal services income loss
86 90 Application of Divisions 28 and 900 to personal services entities
Division 87—Personal services businesses
87 1 What this Division is about
87 5 Diagram showing the operation of this Division
Subdivision 87 A—General
87 10 Object of this Division
87 15 What is a personal services business?
87 18 The results test for a personal services business
87 20 The unrelated clients test for a personal services business
87 25 The employment test for a personal services business
87 30 The business premises test for a personal services business
87 35 Personal services income from Australian government agencies
87 40 Application of this Division to certain agents
Subdivision 87 B—Personal services business determinations
87 60 Personal services business determinations for individuals
87 65 Personal services business determinations for personal services entities
87 70 Applying etc. for personal services business determinations
87 75 When personal services business determinations have effect
87 80 Revoking personal services business determinations
87 85 Review of decisions
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Chapter 3—Specialist liability rules
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Part 3 1—Capital gains and losses: general topics
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Division 100—A Guide to capital gains and losses
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General overview
100 1 What this Division is about
100 5 Effect of this Division
100 10 Fundamentals of CGT
100 15 Overview of Steps 1 and 2
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Step 1—Have you made a capital gain or a capital loss?
100 20 What events attract CGT?
100 25 What are CGT assets?
100 30 Does an exception or exemption apply?
100 33 Can there be a roll over?
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Step 2—Work out the amount of the capital gain or loss
100 35 What is a capital gain or loss?
100 40 What factors come into calculating a capital gain or loss?
100 45 How to calculate the capital gain or loss for most CGT events
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Step 3—Work out your net capital gain or loss for the income year
100 50 How to work out your net capital gain or loss
100 55 How do you comply with CGT?
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Keeping records for CGT purposes
100 60 Why keep records?
100 65 What records?
100 70 How long you need to keep records
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Division 102—Assessable income includes net capital gain
102 1 What this Division is about
102 3 Concessions in working out your net capital gain
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Operative provisions
102 5 Assessable income includes net capital gain
102 10 How to work out your net capital loss
102 15 How to apply net capital losses
102 20 Ways you can make a capital gain or a capital loss
102 22 Amounts of capital gains and losses
102 23 CGT event still happens even if gain or loss disregarded
102 25 Order of application of CGT events
102 30 Exceptions and modifications
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Division 103—General rules
103 1 What this Division is about
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Operative provisions
103 5 Giving property as part of a transaction
103 10 Entitlement to receive money or property
103 15 Requirement to pay money or give property
103 25 Choices
103 30 Reduction of cost base etc. by net input tax credits
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Division 104—CGT events
104 1 What this Division is about
104 5 Summary of the CGT events
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Subdivision 104 A—Disposals
104 10 Disposal of a CGT asset: CGT event A1
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Subdivision 104 B—Use and enjoyment before title passes
104 15 Use and enjoyment before title passes: CGT event B1
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Subdivision 104 C—End of a CGT asset
104 20 Loss or destruction of a CGT asset: CGT event C1
104 25 Cancellation, surrender and similar endings: CGT event C2
104 30 End of option to acquire shares etc.: CGT event C3
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Subdivision 104 D—Bringing into existence a CGT asset
104 35 Creating contractual or other rights: CGT event D1
104 40 Granting an option: CGT event D2
104 45 Granting a right to income from mining: CGT event D3
104 47 Conservation covenants: CGT event D4
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Subdivision 104 E—Trusts
104 55 Creating a trust over a CGT asset: CGT event E1
104 60 Transferring a CGT asset to a trust: CGT event E2
104 65 Converting a trust to a unit trust: CGT event E3
104 70 Capital payment for trust interest: CGT event E4
104 71 Adjustment of non assessable part
104 72 Reducing your capital gain under CGT event E4 if you are a trustee
104 75 Beneficiary becoming entitled to a trust asset: CGT event E5
104 80 Disposal to beneficiary to end income right: CGT event E6
104 85 Disposal to beneficiary to end capital interest: CGT event E7
104 90 Disposal by beneficiary of capital interest: CGT event E8
104 95 Making a capital gain
104 100 Making a capital loss
104 105 Creating a trust over future property: CGT event E9
104 107A AMIT—cost base reduction exceeds cost base: CGT event E10
104 107B Annual cost base adjustment for member’s unit or interest in AMIT
104 107C AMIT cost base net amount
104 107D AMIT cost base reduction amount
104 107E AMIT cost base increase amount
104 107F Receipt of money etc. increasing AMIT cost base reduction amount not to be treated as income
104 107G Effect of AMIT cost base net amount on cost of AMIT membership interest or unit that is a revenue asset—adjustment of cost of asset
104 107H Effect of AMIT cost base net amount on cost of AMIT membership interest or unit that is a revenue asset—amount included in assessable income
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Subdivision 104 F—Leases
104 110 Granting a lease: CGT event F1
104 115 Granting a long term lease: CGT event F2
104 120 Lessor pays lessee to get lease changed: CGT event F3
104 125 Lessee receives payment for changing lease: CGT event F4
104 130 Lessor receives payment for changing lease: CGT event F5
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Subdivision 104 G—Shares
104 135 Capital payment for shares: CGT event G1
104 145 Liquidator or administrator declares shares or financial instruments worthless: CGT event G3
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Subdivision 104 H—Special capital receipts
104 150 Forfeiture of deposit: CGT event H1
104 155 Receipt for event relating to a CGT asset: CGT event H2
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Subdivision 104 I—Australian residency ends
104 160 Individual or company stops being an Australian resident: CGT event I1
104 165 Exception for individuals
104 170 Trust stops being a resident trust: CGT event I2
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Subdivision 104 J—CGT events relating to roll overs
104 175 Company ceasing to be member of wholly owned group after roll over: CGT event J1
104 180 Sub group break up
104 182 Consolidated group break up
104 185 Change in relation to replacement asset or improved asset after a roll over under Subdivision 152 E: CGT event J2
104 190 Replacement asset period
104 195 Trust failing to cease to exist after roll over under Subdivision 124 N: CGT event J4
104 197 Failure to acquire replacement asset and to incur fourth element expenditure after a roll over under Subdivision 152 E: CGT event J5
104 198 Cost of acquisition of replacement asset or amount of fourth element expenditure, or both, not sufficient to cover disregarded capital gain: CGT event J6
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Subdivision 104 K—Other CGT events
104 205 Incoming international transfer of emissions unit: CGT event K1
104 210 Bankrupt pays amount in relation to debt: CGT event K2
104 215 Asset passing to tax advantaged entity: CGT event K3
104 220 CGT asset starts being trading stock: CGT event K4
104 225 Special collectable losses: CGT event K5
104 230 Pre CGT shares or trust interest: CGT event K6
104 235 Balancing adjustment events for depreciating assets and certain assets used for R&D: CGT event K7
104 240 Working out capital gain or loss for CGT event K7: general case
104 245 Working out capital gain or loss for CGT event K7: pooled assets
104 250 Direct value shifts: CGT event K8
104 255 Carried interests: CGT event K9
104 260 Certain short term forex realisation gains: CGT event K10
104 265 Certain short term forex realisation losses: CGT event K11
104 270 Foreign hybrids: CGT event K12
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Subdivision 104 L—Consolidated groups and MEC groups
104 500 Loss of pre CGT status of membership interests in entity becoming subsidiary member: CGT event L1
104 505 Where pre formation intra group roll over reduction results in negative allocable cost amount: CGT event L2
104 510 Where tax cost setting amounts for retained cost base assets exceeds joining allocable cost amount: CGT event L3
104 515 Where no reset cost base assets and excess of net allocable cost amount on joining: CGT event L4
104 520 Where amount remaining after step 4 of leaving allocable cost amount is negative: CGT event L5
104 525 Error in calculation of tax cost setting amount for joining entity’s assets: CGT event L6
104 535 Where reduction in tax cost setting amounts for reset cost base assets cannot be allocated: CGT event L8
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Division 106—Entity making the gain or loss
106 1 What this Division is about
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Subdivision 106 A—Partnerships
106 5 Partnerships
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Subdivision 106 B—Bankruptcy and liquidation
106 30 Effect of bankruptcy
106 35 Effect of liquidation
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Subdivision 106 C—Absolutely entitled beneficiaries
106 50 Absolutely entitled beneficiaries
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Subdivision 106 D—Securities, charges and encumbrances
106 60 Securities, charges and encumbrances
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Division 108—CGT assets
108 1 What this Division is about
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Subdivision 108 A—What a CGT asset is
108 5 CGT assets
108 7 Interest in CGT assets as joint tenants
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Subdivision 108 B—Collectables
108 10 Losses from collectables to be offset only against gains from collectables
108 15 Sets of collectables
108 17 Cost base of a collectable
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Subdivision 108 C—Personal use assets
108 20 Losses from personal use assets must be disregarded
108 25 Sets of personal use assets
108 30 Cost base of a personal use asset
Subdivision 108 D—Separate CGT assets
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Guide to Subdivision 108 D
108 50 What this Subdivision is about
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Operative provisions
108 55 When is a building a separate asset from land?
108 60 Depreciating asset that is part of a building is a separate asset
108 65 Land adjacent to land acquired before 20 September 1985
108 70 When is a capital improvement a separate asset?
108 75 Capital improvements to CGT assets for which a roll over may be available
108 80 Deciding if capital improvements are related to each other
108 85 Meaning of improvement threshold
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Division 109—Acquisition of CGT assets
109 1 What this Division is about
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Subdivision 109 A—Operative rules
109 5 General acquisition rules
109 10 When you acquire a CGT asset without a CGT event
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Subdivision 109 B—Signposts to other acquisition rules
109 50 Effect of this Subdivision
109 55 Other acquisition rules
109 60 Acquisition rules outside this Part and Part 3 3
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Division 110—Cost base and reduced cost base
110 1 What this Division is about
110 5 Modifications to general rules
110 10 Rules about cost base not relevant for some CGT events
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Subdivision 110 A—Cost base
110 25 General rules about cost base
110 35 Incidental costs
110 36 Indexation
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What does not form part of the cost base
110 37 Expenditure forming part of cost base or element
110 38 Exclusions
110 40 Assets acquired before 7.30 pm on 13 May 1997
110 43 Partnership interests acquired before 7.30 pm on 13 May 1997
110 45 Assets acquired after 7.30 pm on 13 May 1997
110 50 Partnership interests acquired after 7.30 pm on 13 May 1997
110 53 Exceptions to application of sections 110 45 and 110 50
110 54 Debt deductions disallowed by thin capitalisation rules
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Subdivision 110 B—Reduced cost base
110 55 General rules about reduced cost base
110 60 Reduced cost base for partnership assets
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Division 112—Modifications to cost base and reduced cost base
112 1 What this Division is about
112 5 Discussion of modifications
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Subdivision 112 A—General modifications
112 15 General rule for replacement modifications
112 20 Market value substitution rule
112 25 Split, changed or merged assets
112 30 Apportionment rules
112 35 Assumption of liability rule
112 36 Acquisitions of assets involving look through earnout rights
112 37 Put options
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Subdivision 112 B—Finding tables for special rules
112 40 Effect of this Subdivision
112 45 CGT events
112 46 Annual cost base adjustment for member’s unit or interest in AMIT
112 48 Gifts acquired by associates
112 50 Main residence
112 53 Scrip for scrip roll over
112 53AA Statutory licences
112 53AB Change of incorporation
112 53A MDO roll over
112 53B Exchange of stapled ownership interests for units in a unit trust
112 53C Water entitlement roll overs
112 54 Demergers
112 54A Transfer of assets between certain trusts
112 55 Effect of you dying
112 60 Bonus shares or units
112 65 Rights
112 70 Convertible interests
112 77 Exchangeable interests
112 80 Leases
112 85 Options
112 87 Residency
112 90 An asset stops being a pre CGT asset
112 92 Demutualisation of certain entities
112 95 Transfer of tax losses and net capital losses within wholly owned groups of companies
112 97 Modifications outside this Part and Part 3 3
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Subdivision 112 C—Replacement asset roll overs
112 100 Effect of this Subdivision
112 105 What is a replacement asset roll over?
112 110 How is the cost base of the replacement asset modified?
112 115 Table of replacement asset roll overs
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Subdivision 112 D—Same asset roll overs
112 135 Effect of this Subdivision
112 140 What is a same asset roll over?
112 145 How is the cost base of the asset modified?
112 150 Table of same asset roll overs
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Division 114—Indexation of cost base
114 1 Indexing elements of cost base
114 5 When indexation relevant
114 10 Requirement for 12 months ownership
114 15 Cost base modifications
114 20 When expenditure is incurred for roll overs
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Division 115—Discount capital gains and trusts’ net capital gains
115 1 What this Division is about
Subdivision 115 A—Discount capital gains
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What is a discount capital gain?
115 5 What is a discount capital gain?
115 10 Who can make a discount capital gain?
115 15 Discount capital gain must be made after 21 September 1999
115 20 Discount capital gain must not have indexed cost base
115 25 Discount capital gain must be on asset acquired at least 12 months before
115 30 Special rules about time of acquisition
115 32 Special rule about time of acquisition for certain replacement asset roll overs
115 34 Further special rule about time of acquisition for certain replacement asset roll overs
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What are not discount capital gains?
115 40 Capital gain resulting from agreement made within a year of acquisition
115 45 Capital gain from equity in an entity with newly acquired assets
115 50 Discount capital gain from equity in certain entities
115 55 Capital gains involving money received from demutualisation of friendly society health or life insurer
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Subdivision 115 B—Discount percentage
115 100 What is the discount percentage for a discount capital gain
115 105 Foreign or temporary residents—individuals with direct gains
115 110 Foreign or temporary residents—individuals with trust gains
115 115 Foreign or temporary residents—percentage for individuals
115 120 Foreign or temporary residents—trusts with certain gains
Subdivision 115 C—Rules about trusts with net capital gains
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Guide to Subdivision 115 C
115 200 What this Division is about
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Operative provisions
115 210 When this Subdivision applies
115 215 Assessing presently entitled beneficiaries
115 220 Assessing trustees under section 98 of the Income Tax Assessment Act 1936
115 222 Assessing trustees under section 99 or 99A of the Income Tax Assessment Act 1936
115 225 Attributable gain
115 227 Share of a capital gain
115 228 Specifically entitled to an amount of a capital gain
115 230 Choice for resident trustee to be specifically entitled to capital gain
Subdivision 115 D—Tax relief for shareholders in listed investment companies
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Guide to Subdivision 115 D
115 275 What this Subdivision is about
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Operative provisions
115 280 Deduction for certain dividends
115 285 Meaning of LIC capital gain
115 290 Meaning of listed investment company
115 295 Maintaining records
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Division 116—Capital proceeds
116 1 What this Division is about
116 5 General rules
116 10 Modifications to general rules
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General rules
116 20 General rules about capital proceeds
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Modifications to general rules
116 25 Table of modifications to the general rules
116 30 Market value substitution rule: modification 1
116 35 Companies and trusts that are not widely held
116 40 Apportionment rule: modification 2
116 45 Non receipt rule: modification 3
116 50 Repaid rule: modification 4
116 55 Assumption of liability rule: modification 5
116 60 Misappropriation rule: modification 6
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Special rules
116 65 Disposal etc. of a CGT asset the subject of an option
116 70 Option requiring both acquisition and disposal etc.
116 75 Special rule for CGT event happening to a lease
116 80 Special rule if CGT asset is shares or an interest in a trust
116 85 Section 47A of 1936 Act applying to rolled over asset
116 95 Company changes residence from an unlisted country
116 100 Gifts of property
116 105 Conservation covenants
116 110 Roll overs for merging superannuation funds
116 115 Farm in farm out arrangements
116 120 Disposals of assets involving look through earnout rights
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Division 118—Exemptions
118 1 What this Division is about
Subdivision 118 A—General exemptions
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Exempt assets
118 5 Cars, motor cycles and valour decorations
118 10 Collectables and personal use assets
118 12 Assets used to produce exempt income etc.
118 13 Shares in a PDF
118 15 Registered emissions units
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Anti overlap provisions
118 20 Reducing capital gains if amount otherwise assessable
118 21 Carried interests
118 22 Superannuation lump sums and employment termination payments
118 24 Depreciating assets
118 25 Trading stock
118 27 Division 230 financial arrangements and financial arrangements to which Subdivision 250 E applies
118 30 Film copyright
118 35 R&D
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Exempt or loss denying transactions
118 37 Compensation, damages etc.
118 40 Expiry of a lease
118 42 Transfer of stratum units
118 45 Sale of rights to mine
118 55 Foreign currency hedging gains and losses
118 60 Certain gifts
118 65 Later distributions of personal services income
118 70 Transactions by exempt entities
118 75 Marriage or relationship breakdown settlements
118 77 Native title and rights to native title benefits
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Boat capital gains
118 80 Reduction of boat capital gain
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Special disability trusts
118 85 Special disability trusts
Subdivision 118 B—Main residence
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Guide to Subdivision 118 B
118 100 What this Subdivision is about
118 105 Map of this Subdivision
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Basic case and concepts
118 110 Basic case
118 115 Meaning of dwelling
118 120 Extension to adjacent land etc.
118 125 Meaning of ownership period
118 130 Meaning of ownership interest in land or a dwelling
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Rules that may extend the exemption
118 135 Moving into a dwelling
118 140 Changing main residences
118 145 Absences
118 147 Absence from dwelling replacing main residence that was compulsorily acquired, destroyed etc.
118 150 If you build, repair or renovate a dwelling
118 155 Where individual referred to in section 118 150 dies
118 160 Destruction of dwelling and sale of land
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Rules that may limit the exemption
118 165 Separate CGT event for adjacent land or other structures
118 170 Spouse having different main residence
118 175 Dependent child having different main residence
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Roll overs under Subdivision 126 A
118 178 Previous roll over under Subdivision 126 A
118 180 Acquisition of dwelling from company or trust on marriage or relationship breakdown—roll over provision applying
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Partial exemption rules
118 185 Partial exemption where dwelling was your main residence during part only of ownership period
118 190 Use of dwelling for producing assessable income
118 192 Special rule for first use to produce income
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Dwellings acquired from deceased estates
118 195 Dwelling acquired from a deceased estate
118 197 Special rule for surviving joint tenant
118 200 Partial exemption for deceased estate dwellings
118 205 Adjustment if dwelling inherited from deceased individual
118 210 Trustee acquiring dwelling under will
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Special disability trusts
118 215 What the following provisions are about
118 218 Exemption available to trustee—main case
118 220 Exemption available to trustee—after the principal beneficiary’s death
118 222 Exemption available to other beneficiary who acquires the CGT asset after the principal beneficiary’s death
118 225 Amount of exemption available after the principal beneficiary’s death—general
118 227 Amount of exemption available after the principal beneficiary’s death—cost base and reduced cost base
118 230 Application of CGT events E5 and E7 in relation to main residence exemption and special disability trusts
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Compulsory acquisitions of adjacent land only
118 240 What the following provisions are about
118 245 CGT events happening only to adjacent land
118 250 Compulsory acquisitions of adjacent land
118 255 Maximum exempt area
118 260 Partial exemption rules
118 265 Extension to adjacent structures
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Subdivision 118 D—Insurance and superannuation
118 300 Insurance policies
118 305 Superannuation
118 310 RSA’s
118 313 Superannuation agreements under the Family Law Act
118 315 Segregated exempt assets of life insurance companies
118 320 Segregated current pension assets of a complying superannuation entity
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Subdivision 118 E—Units in pooled superannuation trusts
118 350 Units in pooled superannuation trusts
Subdivision 118 F—Venture capital investment
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Guide to Subdivision 118 F
118 400 What this Subdivision is about
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Operative provisions
118 405 Exemption for certain foreign venture capital investments through venture capital limited partnerships
118 407 Exemption for certain venture capital investments through early stage venture capital limited partnerships
118 408 Partial exemption for some capital gains otherwise fully exempt under section 118 407
118 410 Exemption for certain foreign venture capital investments through Australian venture capital funds of funds
118 415 Exemption for certain venture capital investments by foreign residents
118 420 Meaning of eligible venture capital partner etc.
118 425 Meaning of eligible venture capital investment—investments in companies
118 427 Meaning of eligible venture capital investment—investments in unit trusts
118 428 Additional investment requirements for ESVCLPs
118 430 Meaning of at risk
118 435 Special rule relating to investment in foreign resident holding companies
118 440 Meaning of permitted entity value
118 445 Meaning of committed capital
118 450 Values of assets and investments of entities without auditors
Subdivision 118 G—Venture capital: investment by superannuation funds for foreign residents
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Guide to Subdivision 118 G
118 500 What this Subdivision is about
118 505 Exemption for certain foreign venture capital
118 510 Meaning of resident investment vehicle
118 515 Meaning of venture capital entity
118 520 Meaning of superannuation fund for foreign residents
118 525 Meaning of venture capital equity
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Subdivision 118 H—Demutualisation of Tower Corporation
118 550 Demutualisation of Tower Corporation
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Subdivision 118 I—Look through earnout rights
118 560 Object
118 565 Look through earnout rights
118 570 Extra ways a CGT asset can be an active asset
118 575 Creating and ending look through earnout rights
118 580 Temporarily disregard capital losses affected by look through earnout rights
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Division 121—Record keeping
121 10 What this Division is about
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Operative provisions
121 20 What records you must keep
121 25 How long you must retain the records
121 30 Exceptions
121 35 Asset register entries
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Part 3 3—Capital gains and losses: special topics
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Division 122—Roll over for the disposal of assets to, or the creation of assets in, a wholly owned company
122 1 What this Division is about
Subdivision 122 A—Disposal or creation of assets by an individual or trustee to a wholly owned company
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Guide to Subdivision 122 A
122 5 What this Subdivision is about
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When is a roll over available
122 15 Disposal or creation of assets—wholly owned company
122 20 What you receive for the trigger event
122 25 Other requirements to be satisfied
122 35 What if the company undertakes to discharge a liability (disposal case)
122 37 Rules for working out what a liability in respect of an asset is
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Replacement asset roll over if you dispose of a CGT asset
122 40 Disposal of a CGT asset
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Replacement asset roll over if you dispose of all the assets of a business
122 45 Disposal of all the assets of a business
122 50 All assets acquired on or after 20 September 1985
122 55 All assets acquired before 20 September 1985
122 60 Assets acquired before and after 20 September 1985
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Replacement asset roll over for a creation case
122 65 Creation of asset
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Same asset roll over consequences for the company (disposal case)
122 70 Consequences for the company (disposal case)
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Same asset roll over consequences for the company (creation case)
122 75 Consequences for the company (creation case)
Subdivision 122 B—Disposal or creation of assets by partners to a wholly owned company
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Guide to Subdivision 122 B
122 120 What this Subdivision is about
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When is a roll over available
122 125 Disposal or creation of assets—wholly owned company
122 130 What the partners receive for the trigger event
122 135 Other requirements to be satisfied
122 140 What if the company undertakes to discharge a liability (disposal case)
122 145 Rules for working out what a liability in respect of an interest in an asset is
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Replacement asset roll over if partners dispose of a CGT asset
122 150 Capital gain or loss disregarded
122 155 Disposal of post CGT or pre CGT interests
122 160 Disposal of both post CGT and pre CGT interests
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Replacement asset roll over if the partners dispose of all the assets of a business
122 170 Capital gain or loss disregarded
122 175 Other consequences
122 180 All interests acquired on or after 20 September 1985
122 185 All interests acquired before 20 September 1985
122 190 Interests acquired before and after 20 September 1985
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Replacement asset roll over for a creation case
122 195 Creation of asset
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Same asset roll over consequences for the company (disposal case)
122 200 Consequences for the company (disposal case)
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Same asset roll over consequences for the company (creation case)
122 205 Consequences for the company (creation case)
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Volume 4
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Chapter 3—Specialist liability rules
Part 3 3—Capital gains and losses: special topics
Division 124—Replacement asset roll overs
124 1 What this Division is about
124 5 How to find your way around this Division
Subdivision 124 A—General rules
124 10 Your ownership of one CGT asset ends
124 15 Your ownership of more than one CGT asset ends
124 20 Share and interest sale facilities
Subdivision 124 B—Asset compulsorily acquired, lost or destroyed
When a roll over is available
124 70 Events giving rise to a roll over
124 75 Other requirements if you receive money
124 80 Other requirements if you receive an asset
The consequences of a roll over being available
124 85 Consequences for receiving money
124 90 Consequences for receiving an asset
124 95 You receive both money and an asset
Subdivision 124 C—Statutory licences
124 140 New statutory licences
124 145 Rollover consequences—capital gain or loss disregarded
124 150 Rollover consequences—partial roll over
124 155 Roll over consequences—all original licences were post CGT
124 160 Roll over consequences—all original licences were pre CGT
124 165 Roll over consequences—some original licences were pre CGT, others were post CGT
Subdivision 124 D—Strata title conversion
124 190 Strata title conversion
Subdivision 124 E—Exchange of shares or units
124 240 Exchange of shares in the same company
124 245 Exchange of units in the same unit trust
Subdivision 124 F—Exchange of rights or options
124 295 Exchange of rights or option to acquire shares in a company
124 300 Exchange of rights or option to acquire units in a unit trust
Subdivision 124 I—Change of incorporation
Guide to Subdivision 124 I
124 510 What this Subdivision is about
Object of this Subdivision
124 515 Object of this Subdivision
Change of incorporation without change of entity
124 520 Change of incorporation without change of entity
Old corporation wound up
124 525 Old corporation wound up
Special consequences of some roll overs
124 530 Shares in company replacing pre CGT and post CGT mix of interest and rights in body
124 535 Rights as member of Indigenous corporation replacing pre CGT and post CGT mix of interest and rights in body
Subdivision 124 J—Crown leases
Guide to Subdivision 124 J
124 570 What this Subdivision is about
Operative provisions
124 575 Extension or renewal of Crown lease
124 580 Meaning of Crown lease
124 585 Original right differs in area from new right
124 590 Part of original right excised
124 595 Treating parts of new right as separate assets
124 600 What is the roll over?
124 605 Change of lessor
Subdivision 124 K—Depreciating assets
124 655 Roll over for depreciating assets
124 660 Right granted to associate
Subdivision 124 L—Prospecting and mining entitlements
Guide to Subdivision 124 L
124 700 What this Subdivision is about
Operative provisions
124 705 Extension or renewal of prospecting or mining entitlement
124 710 Meaning of prospecting entitlement and mining entitlement
124 715 Original entitlement differs in area from new entitlement
124 720 Part of original entitlement excised
124 725 Treating parts of new entitlement as separate assets
124 730 What is the roll over?
Subdivision 124 M—Scrip for scrip roll over
Guide to Subdivision 124 M
124 775 What this Subdivision is about
Operative provisions
124 780 Replacement of shares
124 781 Replacement of trust interests
124 782 Transfer or allocation of cost base of shares acquired by acquiring entity etc.
124 783 Meaning of significant stakeholder, common stakeholder, significant stake and common stake
124 783A Rights that affect stakes
124 784 Cost base of equity or debt given within acquiring group
124 784A When arrangement is a restructure
124 784B What is the cost base and reduced cost base when arrangement is a restructure?
124 784C Cost base of equity or debt given within acquiring group
124 785 What is the roll over?
124 790 Partial roll over
124 795 Exceptions
124 800 Interest received for pre CGT interest
124 810 Certain companies and trusts not regarded as having 300 members or beneficiaries
Subdivision 124 N—Disposal of assets by a trust to a company
Guide to Subdivision 124 N
124 850 What this Subdivision is about
Operative provisions
124 855 What this Subdivision deals with
124 860 Requirements for roll over
124 865 Entities both choose the roll over
124 870 Roll over for owner of units or interests in a trust
124 875 Effect on the transferor and transferee
Subdivision 124 P—Exchange of a membership interest in an MDO for a membership interest in another MDO
Guide to Subdivision 124 P
124 975 What this Subdivision is about
Operative provisions
124 980 Exchange of membership interests in an MDO
124 985 What the roll over is for post CGT interests
124 990 Partial roll over
124 995 Pre CGT interests
Subdivision 124 Q—Exchange of stapled ownership interests for ownership interests in a unit trust
Guide to Subdivision 124 Q
124 1040 What this Subdivision is about
Operative provisions
124 1045 Exchange of stapled securities
124 1050 Conditions
124 1055 Consequences of the roll over for exchanging members
124 1060 Consequences of the roll over for interposed trust
Subdivision 124 R—Water entitlements
Guide to Subdivision 124 R
124 1100 What this Subdivision is about
Replacement case
124 1105 Replacement water entitlements roll over
124 1110 Roll over consequences—capital gain or loss disregarded
124 1115 Roll over consequences—partial roll over
124 1120 Roll over consequences—all original entitlements post CGT
124 1125 Roll over consequences—all original entitlements pre CGT
124 1130 Roll over consequences—some original entitlements pre CGT, others post CGT
Reduction case
124 1135 Reduction in water entitlements roll over
124 1140 Roll over consequences—capital gain or loss disregarded
124 1145 Roll over consequences—all original entitlements post CGT
124 1150 Roll over consequences—some original entitlements pre CGT, others post CGT
Variation to CGT asset case
124 1155 Roll over for variation to CGT asset
124 1160 Roll over consequences
124 1165 Roll over consequences—partial roll over
Subdivision 124 S—Interest realignment arrangements
Guide to Subdivision 124 S
124 1220 What this Subdivision is about
Operative provisions
124 1225 Disposals of interests under interest realignment arrangements
124 1230 Roll over consequences—partial roll over
124 1235 Roll over consequences—all original interests were post CGT and pre UCA
124 1240 Roll over consequences—all original interests were pre CGT
124 1245 Roll over consequences—original interests were of mixed CGT status, all were pre UCA
124 1250 Roll over consequences—some original interests were pre UCA
Division 125—Demerger relief
125 1 What this Division is about
Subdivision 125 A—Object of this Division
125 5 Object of this Division
Subdivision 125 B—Consequences for owners of interests
Guide to Subdivision 125 B
125 50 Guide to Subdivision 125 B
Operative provisions
125 55 When a roll over is available for a demerger
125 60 Meaning of ownership interest and related terms
125 65 Meanings of demerger group, head entity and demerger subsidiary
125 70 Meanings of demerger, demerged entity and demerging entity
125 75 Exceptions to subsection 125 70(2)
125 80 What is the roll over?
125 85 Cost base adjustments where CGT event happens but no roll over chosen
125 90 Cost base adjustments where no CGT event
125 95 No other cost base adjustment after demerger
125 100 No further demerger relief in some cases
Subdivision 125 C—Consequences for members of demerger group
Guide to Subdivision 125 C
125 150 Guide to Subdivision 125 C
Operative provisions
125 155 Certain capital gains or losses disregarded for demerging entity
125 160 No CGT event J1
125 165 Adjusted capital loss for value shift under a demerger
125 170 Reduced cost base reduction if demerger asset subject to roll over
Subdivision 125 D—Public trading trusts
Guide to Subdivision 125 D
125 225 Guide to Subdivision 125 D
Operative provisions
125 230 Application of Division to public trading trusts
Subdivision 125 E—Miscellaneous
125 235 Share and interest sale facilities
Division 126—Same asset roll overs
126 1 What this Division is about
Subdivision 126 A—Marriage or relationship breakdowns
126 5 CGT event involving spouses
126 15 CGT event involving company or trustee
126 20 Subsequent CGT event happening to roll over asset where transferor was a CFC or a non resident trust
126 25 Conditions for the purposes of subsections 126 5(3A) and 126 15(5)
Subdivision 126 B—Companies in the same wholly owned group
Guide to Subdivision 126 B
126 40 What this Subdivision is about
Operative provisions
126 45 Roll over for members of wholly owned group
126 50 Requirements for roll over
126 55 When there is a roll over
126 60 Consequences of roll over
126 75 Originating company is a CFC
126 85 Effect of roll over on certain liquidations
Subdivision 126 C—Changes to trust deeds
Guide to Subdivision 126 C
126 125 What this Subdivision is about
126 130 Changes to trust deeds
126 135 Consequences of roll over
Subdivision 126 D—Small superannuation funds
126 140 CGT event involving small superannuation funds
Subdivision 126 E—Entitlement to shares after demutualisation and scrip for scrip roll over
Guide to Subdivision 126 E
126 185 What this Subdivision is about
Operative provisions
126 190 When there is a roll over
126 195 Consequences of roll over
Subdivision 126 G—Transfer of assets between certain trusts
Guide to Subdivision 126 G
126 215 What this Subdivision is about
Operative provisions
126 220 Object of this Subdivision
126 225 When a roll over may be chosen
126 230 Beneficiaries’ entitlements not be discretionary etc.
126 235 Exceptions for roll over
126 240 Consequences for the trusts
126 245 Consequences for beneficiaries—general approach for working out cost base etc.
126 250 Consequences for beneficiaries—other approach for working out cost base etc.
126 255 No other cost base etc. adjustment for beneficiaries
126 260 Giving information to beneficiaries
126 265 Interest sale facilities
Division 128—Effect of death
128 1 What this Division is about
General rules
128 10 Capital gain or loss when you die is disregarded
128 15 Effect on the legal personal representative or beneficiary
128 20 When does an asset pass to a beneficiary?
128 25 The beneficiary is a trustee of a superannuation fund etc.
Special rules for joint tenants
128 50 Joint tenants
Division 130—Investments
130 1 What this Division is about
Subdivision 130 A—Bonus shares and units
Guide to Subdivision 130 A
130 15 Acquisition time and cost base of bonus equities
Operative provisions
130 20 Issue of bonus shares or units
Subdivision 130 B—Rights
130 40 Exercise of rights
130 45 Timing rules
130 50 Application to options
Subdivision 130 C—Convertible interests
130 60 Shares or units acquired by converting a convertible interest
Subdivision 130 D—Employee share schemes
130 75 Objects of Subdivision
130 80 ESS interests acquired under employee share schemes
130 85 Interests in employee share trusts
130 90 Shares held by employee share trusts
130 95 Shares and rights in relation to ESS interests
130 97 Application of certain provisions of Division 83A
Subdivision 130 E—Exchangeable interests
130 100 Exchangeable interest
130 105 Shares acquired in exchange for the disposal or redemption of an exchangeable interest
Division 132—Leases
132 1 Lessee incurs expenditure to get lease term varied or waived
132 5 Lessor pays lessee for improvements
132 10 Grant of a long term lease
132 15 Lessee of land acquires reversionary interest of lessor
Division 134—Options
134 1 Exercise of options
Division 149—When an asset stops being a pre CGT asset
Subdivision 149 A—Key concepts
149 10 What is a pre CGT asset?
149 15 Majority underlying interests in a CGT asset
Subdivision 149 B—When asset of non public entity stops being a pre CGT asset
149 25 Which entities are affected
149 30 Effects if asset no longer has same majority underlying ownership
149 35 Cost base elements of asset that stops being a pre CGT asset
Subdivision 149 C—When asset of public entity stops being a pre CGT asset
149 50 Which entities are affected
149 55 Entity to give the Commissioner evidence periodically as to whether asset still has same majority underlying ownership
149 60 What the evidence must show
149 70 Effects if asset no longer has same majority underlying ownership
149 75 Cost base elements of asset that stops being a pre CGT asset
149 80 No more evidence needed after asset stops being a pre CGT asset
Subdivision 149 F—How to treat a “demutualised” public entity
149 162 Subdivision applies only if entity gives sufficient evidence
149 165 Members treated as having underlying interests in assets until demutualisation
149 170 Effect of demutualisation of interposed company
Division 152—Small business relief
152 1 What this Division is about
Subdivision 152 A—Basic conditions for relief under this Division
Guide to Subdivision 152 A
152 5 What this Subdivision is about
Basic conditions for relief
152 10 Basic conditions for relief
152 12 Special conditions for CGT event D1
Maximum net asset value test
152 15 Maximum net asset value test
152 20 Meaning of net value of the CGT assets
Active asset test
152 35 Active asset test
152 40 Meaning of active asset
152 45 Continuing time periods for involuntary disposals
Treatment of passively held CGT assets
152 47 Spouses or children taken to be affiliates for certain passively held CGT assets
152 48 Working out an entity’s aggregated turnover for passively held CGT assets
152 49 Businesses that are winding up
Significant individual test
152 50 Significant individual test
152 55 Meaning of significant individual
CGT concession stakeholder
152 60 Meaning of CGT concession stakeholder
Small business participation percentage
152 65 Small business participation percentage
152 70 Direct small business participation percentage
152 75 Indirect small business participation percentage
Nomination of controllers of discretionary trust
152 78 Trustee of discretionary trust may nominate beneficiaries to be controllers of trust
CGT event happens to asset or interest within 2 years of an individual’s death
152 80 CGT event happens to an asset or interest within 2 years of individual’s death
Subdivision 152 B—Small business 15 year exemption
Guide to Subdivision 152 B
152 100 What this Subdivision is about
152 105 15 year exemption for individuals
152 110 15 year exemption for companies and trusts
152 115 Continuing time periods for involuntary disposals
152 125 Payments to company’s or trust’s CGT concession stakeholders are exempt
Subdivision 152 C—Small business 50% reduction
Guide to Subdivision 152 C
152 200 What this Subdivision is about
152 205 You get the small business 50% reduction
152 210 You may also get the small business retirement exemption and small business roll over relief
152 215 15 year rule has priority
152 220 You may choose not to apply this Subdivision
Subdivision 152 D—Small business retirement exemption
Guide to Subdivision 152 D
152 300 What this Subdivision is about
152 305 Choosing the exemption
152 310 Consequences of choice
152 315 Choosing the amount to disregard
152 320 Meaning of CGT retirement exemption limit
152 325 Company or trust conditions
152 330 15 year rule has priority
Subdivision 152 E—Small business roll over
Guide to Subdivision 152 E
152 400 What this Subdivision is about
Operative provisions
152 410 When you can obtain the roll over
152 415 What the roll over consists of
152 420 Rules where an individual who has obtained a roll over dies
152 430 15 year rule has priority
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Volume 5
Collapse
Chapter 3—Specialist liability rules
Part 3 5—Corporate taxpayers and corporate distributions
Division 164—Non share capital accounts for companies
164 1 What this Division is about
Operative provisions
164 5 Object
164 10 Non share capital account
164 15 Credits to non share capital account
164 20 Debits to non share capital account
Division 165—Income tax consequences of changing ownership or control of a company
165 1 What this Division is about
Subdivision 165 A—Deducting tax losses of earlier income years
Guide to Subdivision 165 A
165 5 What this Subdivision is about
Operative provisions
165 10 To deduct a tax loss
165 12 Company must maintain the same owners
165 13 Alternatively, the company must satisfy the same business test
165 15 The same people must control the voting power, or the company must satisfy the same business test
165 20 When company can deduct part of a tax loss
Subdivision 165 B—Working out the taxable income and tax loss for the income year of the change
Guide to Subdivision 165 B
165 23 What this Subdivision is about
165 25 Summary of this Subdivision
165 30 Flow chart showing the application of this Subdivision
When a company must work out its taxable income and tax loss under this Subdivision
165 35 On a change of ownership, unless the company satisfies the same business test
165 37 Who has more than a 50% stake in the company during a period
165 40 On a change of control of the voting power in the company, unless the company satisfies the same business test
Working out the company’s taxable income
165 45 First, divide the income year into periods
165 50 Next, calculate the notional loss or notional taxable income for each period
165 55 How to attribute deductions to periods
165 60 How to attribute assessable income to periods
165 65 How to calculate the company’s taxable income for the income year
Working out the company’s tax loss
165 70 How to calculate the company’s tax loss for the income year
Special rules that apply if the company is in partnership
165 75 How to calculate the company’s notional loss or notional taxable income for a period when the company was a partner
165 80 How to calculate the company’s share of a partnership’s notional loss or notional net income for a period if both entities have the same income year
165 85 How to calculate the company’s share of a partnership’s notional loss or notional net income for a period if the entities have different income years
165 90 Company’s full year deductions include a share of partnership’s full year deductions
Subdivision 165 CA—Applying net capital losses of earlier income years
Guide to Subdivision 165 CA
165 93 What this Subdivision is about
Operative provisions
165 96 When a company cannot apply a net capital loss
Subdivision 165 CB—Working out the net capital gain and the net capital loss for the income year of the change
Guide to Subdivision 165 CB
165 99 What this Subdivision is about
When a company must work out its net capital gain and net capital loss under this Subdivision
165 102 On a change of ownership, or of control of voting power, unless the company satisfies the same business test
Working out the company’s net capital gain and net capital loss
165 105 First, divide the income year into periods
165 108 Next, calculate the notional net capital gain or notional net capital loss for each period
165 111 How to work out the company’s net capital gain
165 114 How to work out the company’s net capital loss
Subdivision 165 CC—Change of ownership or control of company that has an unrealised net loss
Guide to Subdivision 165 CC
165 115 What this Subdivision is about
165 115AA Special rules to save compliance costs
Operative provisions
165 115A Application of Subdivision
165 115B What happens when the company makes a capital loss or becomes entitled to a deduction in respect of a CGT asset after a changeover time
165 115BA What happens when a CGT event happens after a changeover time to a CGT asset of the company that is trading stock
165 115BB Order of application of assets: residual unrealised net loss
165 115C Changeover time—change in ownership of company
165 115D Changeover time—change in control of company
165 115E What is an unrealised net loss
165 115F Notional gains and losses
Subdivision 165 CD—Reductions after alterations in ownership or control of loss company
Guide to Subdivision 165 CD
165 115GA What this Subdivision is about
165 115GB When adjustments must be made
165 115GC How adjustments are calculated
165 115H How this Subdivision applies
Operative provisions
165 115J Object of Subdivision
165 115K Application and interpretation
165 115L Alteration time—alteration in ownership of company
165 115M Alteration time—alteration in control of company
165 115N Alteration time—declaration by liquidator or administrator
165 115P Notional alteration time—disposal of interests in company within 12 months before alteration time
165 115Q Notional alteration time—disposal of interests in company earlier than 12 months before alteration time
165 115R When company is a loss company at first or only alteration time in income year
165 115S When company is a loss company at second or later alteration time in income year
165 115T Reduction of certain amounts included in company’s overall loss at alteration time
165 115U Adjusted unrealised loss
165 115V Notional losses
165 115W Calculation of trading stock decrease
165 115X Relevant equity interest
165 115Y Relevant debt interest
165 115Z What constitutes a controlling stake in a company
165 115ZA Reductions and other consequences if entity has relevant equity interest or relevant debt interest in loss company immediately before alteration time
165 115ZB Adjustment amounts for the purposes of section 165 115ZA
165 115ZC Notices to be given
165 115ZD Adjustment (or further adjustment) for interest realised at a loss after global method has been used
Subdivision 165 C—Deducting bad debts
Guide to Subdivision 165 C
165 117 What this Subdivision is about
Operative provisions
165 119 Application of Subdivision
165 120 To deduct a bad debt
165 123 Company must maintain the same owners
165 126 Alternatively, the company must satisfy the same business test
165 129 Same people must control the voting power, or the company must satisfy the same business test
165 132 When tax losses resulting from bad debts cannot be deducted
Subdivision 165 D—Tests for finding out whether the company has maintained the same owners
The primary and alternative tests
165 150 Who has more than 50% of the voting power in the company
165 155 Who has rights to more than 50% of the company’s dividends
165 160 Who has rights to more than 50% of the company’s capital distributions
165 165 Rules about tests for a condition or occurrence of a circumstance
165 175 Tests can be satisfied by a single person
Rules affecting the operation of the tests
165 180 Arrangements affecting beneficial ownership of shares
165 185 Shares treated as not having carried rights
165 190 Shares treated as always having carried rights
165 200 Rules do not affect totals of shares, units in unit trusts or rights carried by shares and units
165 202 Shares held by government entities and charities etc.
165 203 Companies where no shares have been issued
165 205 Death of share owner
165 207 Trustees of family trusts
165 208 Companies in liquidation etc.
165 209 Dual listed companies
Subdivision 165 E—The same business test
165 210 The test
165 212D Restructure of MDOs etc.
165 212E Entry history rule does not apply for the purposes of section 165 210
Subdivision 165 F—Special provisions relating to ownership by non fixed trusts
165 215 Special alternative to change of ownership test for Subdivision 165 A
165 220 Special alternative to change of ownership test for Subdivision 165 B
165 225 Special way of dividing the income year under Subdivision 165 B
165 230 Special alternative to change of ownership test for Subdivision 165 C
165 235 Information about non fixed trusts with interests in company
165 240 Notices where requirements of section 165 235 are met
165 245 When an entity has a fixed entitlement to income or capital of a company
Subdivision 165 G—Other special provisions
165 250 Control of companies in liquidation etc.
165 255 Incomplete periods
Division 166—Income tax consequences of changing ownership or control of a widely held or eligible Division 166 company
166 1 What this Division is about
Subdivision 166 AA—The object of this Division
166 3 The object of this Division
Subdivision 166 A—Deducting tax losses of earlier income years
166 5 How Subdivision 165 A applies to a widely held or eligible Division 166 company
166 15 Companies can choose that this Subdivision is not to apply to them
Subdivision 166 B—Working out the taxable income, tax loss, net capital gain and net capital loss for the income year of the change
166 20 How Subdivisions 165 B and 165 CB apply to a widely held or eligible Division 166 company
166 25 How to work out the taxable income, tax loss, net capital gain and net capital loss
166 35 Companies can choose that this Subdivision is not to apply to them
Subdivision 166 C—Deducting bad debts
166 40 How Subdivision 165 C applies to a widely held or eligible Division 166 company
166 50 Companies can choose that this Subdivision is not to apply to them
Subdivision 166 CA—Changeover times and alteration times
166 80 How Subdivision 165 CC or 165 CD applies to a widely held or eligible Division 166 company
166 90 Companies can choose that this Subdivision is not to apply to them
Subdivision 166 D—Tests for finding out whether the widely held or eligible Division 166 company has maintained the same owners
Guide to Subdivision 166 D
166 135 What this Subdivision is about
The ownership tests: substantial continuity of ownership
166 145 The ownership tests: substantial continuity of ownership
166 165 Relationship with rules in Division 165
Corporate change in a company
166 175 Corporate change in a company
Subdivision 166 E—Concessional tracing rules
Guide to Subdivision 166 E
166 215 What this Subdivision is about
Application of this Subdivision
166 220 Application of this Subdivision
Stakes of less than 10% in the tested company
166 225 Direct stakes of less than 10% in the tested company
166 230 Indirect stakes of less than 10% in the tested company
166 235 Voting, dividend and capital stakes
Stakes held directly and/or indirectly by widely held companies
166 240 Stakes held directly and/or indirectly by widely held companies
166 245 Stakes held by other entities
When identity of foreign stakeholders is not known
166 255 Bearer shares in foreign listed companies
166 260 Depository entities holding stakes in foreign listed companies
Other rules relating to voting power and rights
166 265 Persons who actually control voting power or have rights are taken not to control power or have rights
166 270 Single notional entity stakeholders taken to have minimum voting control, dividend rights and capital rights
166 272 Same shares or interests to be held
When the rules in this Subdivision do not apply
166 275 Rules in this Subdivision intended to be concessional
166 280 Controlled test companies
Division 167—Companies whose shares carry unequal rights to dividends, capital distributions or voting power
167 1 What this Division is about
Subdivision 167 A—Rights to dividends or capital distributions
Guide to Subdivision 167 A
167 5 What this Subdivision is about
167 7 Simplified outline of this Subdivision
Operative provisions
167 10 When this Subdivision applies
167 15 First way—disregard debt interests
167 20 Second way—also disregard secondary share classes
167 25 Third way—treat remaining shares as having fixed rights to dividends and capital distributions
167 30 Fixing rights if practicable to work out market values
167 35 Fixing rights if impracticable to work out market values etc.
167 40 The valuing times for conditions listed in subsection 167 10(1)
Subdivision 167 B—Voting power
Guide to Subdivision 167 B
167 75 What this Subdivision is about
Operative provisions
167 80 When this Subdivision applies
167 85 Different method for working out voting power
167 90 Dual listed companies
Division 170—Treatment of certain company groups for income tax purposes
Subdivision 170 A—Transfer of tax losses within certain wholly owned groups of companies
Guide to Subdivision 170 A
170 1 What this Subdivision is about
170 5 Basic principles for transferring tax losses
Effect of transferring a tax loss
170 10 When a company can transfer a tax loss
170 15 Income company is taken to have incurred transferred loss
170 20 Who can deduct transferred loss
170 25 Tax treatment of consideration for transferred tax loss
Conditions for transfer
170 30 Companies must be in existence and members of the same wholly owned group etc.
170 32 Tax loss incurred by the loss company because of a transfer under Subdivision 707 A
170 33 Alternative test of relations between the loss company and other companies
170 35 The loss company
170 40 The income company
170 42 If the income company has become the head company of a consolidated group or MEC group
170 45 Maximum amount that can be transferred
170 50 Transfer by written agreement
170 55 Losses must be transferred in order they are incurred
170 60 Income company cannot transfer transferred tax loss
Effect of agreement to transfer more than can be transferred
170 65 Agreement transfers as much as can be transferred
170 70 Amendment of assessments
Australian permanent establishments of foreign financial entities
170 75 Treatment like Australian branches of foreign banks
Subdivision 170 B—Transfer of net capital losses within certain wholly owned groups of companies
Guide to Subdivision 170 B
170 101 What this Subdivision is about
170 105 Basic principles for transferring a net capital loss
Effect of transferring a net capital loss
170 110 When a company can transfer a net capital loss
170 115 Who can apply transferred loss
170 120 Gain company is taken to have made transferred loss
170 125 Tax treatment of consideration for transferred tax loss
Conditions for transfer
170 130 Companies must be in existence and members of the same wholly owned group etc.
170 132 Net capital loss made by the loss company because of a transfer under Subdivision 707 A
170 133 Alternative test of relations between the loss company and other companies
170 135 The loss company
170 140 The gain company
170 142 If the gain company has become the head company of a consolidated group or MEC group
170 145 Maximum amount that can be transferred
170 150 Transfer by written agreement
170 155 Losses must be transferred in order they are made
170 160 Gain company cannot transfer transferred net capital loss
Effect of agreement to transfer more than can be transferred
170 165 Agreement transfers as much as can be transferred
170 170 Amendment of assessments
Australian permanent establishments of foreign financial entities
170 174 Treatment like Australian branches of foreign banks
Subdivision 170 C—Provisions applying to both transfers of tax losses and transfers of net capital losses within wholly owned groups of companies
Guide to Subdivision 170 C
170 201 What this Subdivision is about
Operative provisions
170 205 Object of Subdivision
170 210 Transfer of tax loss: direct and indirect interests in the loss company
170 215 Transfer of tax loss: direct and indirect interests in the income company
170 220 Transfer of net capital loss: direct and indirect interests in the loss company
170 225 Transfer of net capital loss: direct and indirect interests in the gain company
Subdivision 170 D—Transactions by a company that is a member of a linked group
Guide to Subdivision 170 D
170 250 What this Subdivision is about
Operative provisions
170 255 Application of Subdivision
170 260 Linked group
170 265 Connected entity
170 270 Immediate consequences for originating company
170 275 Subsequent consequences for originating company
170 280 What happens if certain events happen in respect of the asset
Division 175—Use of a company’s tax losses or deductions to avoid income tax
175 1 What this Division is about
Subdivision 175 A—Tax benefits from unused tax losses
175 5 When Commissioner can disallow deduction for tax loss
175 10 First case: income or capital gain injected into company because of available tax loss
175 15 Second case: someone else obtains a tax benefit because of tax loss available to company
Subdivision 175 B—Tax benefits from unused deductions
175 20 Income or capital gain injected into company because of available deductions
175 25 Deduction injected into company because of available income or capital gain
175 30 Someone else obtains a tax benefit because of a deduction, income or capital gain available to company
175 35 Tax loss resulting from disallowed deductions
Subdivision 175 CA—Tax benefits from unused net capital losses of earlier income years
175 40 When Commissioner can disallow net capital loss of earlier income year
175 45 First case: capital gain injected into company because of available net capital loss
175 50 Second case: someone else obtains a tax benefit because of net capital loss available to company
Subdivision 175 CB—Tax benefits from unused capital losses of the current year
175 55 When Commissioner can disallow capital loss of current year
175 60 Capital gain injected into company because of available capital loss
175 65 Capital loss injected into company because of available capital gain
175 70 Someone else obtains a tax benefit because of capital loss or gain available to company
175 75 Net capital loss resulting from disallowed capital losses
Subdivision 175 C—Tax benefits from unused bad debt deductions
175 80 When Commissioner can disallow deduction for bad debt
175 85 First case: income or capital gain injected into company because of available bad debt
175 90 Second case: someone else obtains a tax benefit because of bad debt deduction available to company
Subdivision 175 D—Common rules
175 95 When a person has a shareholding interest in the company
175 100 Commissioner may disallow excluded losses etc. of insolvent companies
Division 180—Information about family trusts with interests in companies
180 1 What this Division is about
Subdivision 180 A—Information relevant to Division 165
180 5 Information about family trusts with interests in companies
180 10 Notice where requirements of section 180 5 are met
Subdivision 180 B—Information relevant to Division 175
180 15 Information about family trusts with interests in companies
180 20 Notice where requirements of section 180 15 are met
Division 195—Special types of company
Subdivision 195 A—Pooled development funds (PDFs)
Guide to Subdivision 195 A
195 1 What this Subdivision is about
Working out a PDF’s taxable income and tax loss
195 5 Deductibility of PDF tax losses
195 10 PDF cannot transfer tax loss
195 15 Tax loss for year in which company becomes a PDF
Working out a PDF’s net capital gain and net capital loss
195 25 Applying a PDF’s net capital losses
195 30 PDF cannot transfer net capital loss
195 35 Net capital loss for year in which company becomes a PDF
Subdivision 195 B—Limited partnerships
Guide to Subdivision 195 B
195 60 What this Subdivision is about
Operative provisions
195 65 Tax losses cannot be transferred to a VCLP, an ESVCLP, an AFOF or a VCMP
195 70 Previous tax losses can be deducted after ceasing to be a VCLP, an ESVCLP, an AFOF or a VCMP
195 75 Determinations to take account of income years of less than 12 months
Division 197—Tainted share capital accounts
197 1 What this Division is about
Subdivision 197 A—What transfers into a company’s share capital account does this Division apply to?
197 5 Division generally applies to an amount transferred to share capital account from another account
197 10 Exclusion for amounts that could be identified as share capital
197 15 Exclusion for amounts transferred under debt/equity swaps
197 20 Exclusion for amounts transferred leading to there being no shares with a par value—non Corporations Act companies
197 25 Exclusion for transfers from option premium reserves
197 30 Exclusion for transfers made in connection with demutualisations of non insurance etc. companies
197 35 Exclusion for transfers made in connection with demutualisations of insurance etc. companies
197 37 Exclusion for transfers made in connection with demutualisations of private health insurers
197 38 Exclusion for transfers connected with demutualisations of friendly society health or life insurers
197 40 Exclusion for post demutualisation transfers relating to life insurance companies
197 42 Exclusion for exploration credits
Subdivision 197 B—Consequence of transfer: franking debit arises
197 45 A franking debit arises in relation to the transfer
Subdivision 197 C—Consequence of transfer: tainting of share capital account
197 50 The share capital account becomes tainted (if it is not already tainted)
197 55 Choosing to untaint a tainted share capital account
197 60 Choosing to untaint—liability to untainting tax
197 65 Choosing to untaint—further franking debits may arise
197 70 Due date for payment of untainting tax
197 75 General interest charge for late payment of untainting tax
197 80 Notice of liability to pay untainting tax
197 85 Evidentiary effect of notice of liability to pay untainting tax
Part 3 6—The imputation system
Division 200—Guide to Part 3 6
200 1 What this Division is about
200 5 The imputation system
200 10 Franking a distribution
200 15 The franking account
200 20 How a distribution is franked
200 25 A corporate tax entity must not give its members credit for more tax than the entity has paid
200 30 Benchmark rule
200 35 Effect of receiving a franked distribution
200 40 An Australian corporate tax entity can pass the benefit of having received a franked distribution on to its members
200 45 Special rules for franking by some entities
Division 201—Objects and application of Part 3 6
201 1 Objects
201 5 Application of this Part
Division 202—Franking a distribution
Subdivision 202 A—Franking a distribution
Guide to Subdivision 202 A
202 1 What this Subdivision is about
Operative provisions
202 5 Franking a distribution
Subdivision 202 B—Who can frank a distribution?
Guide to Subdivision 202 B
202 10 What this Subdivision is about
Operative provisions
202 15 Franking entities
202 20 Residency requirement when making a distribution
Subdivision 202 C—Which distributions can be franked?
Guide to Subdivision 202 C
202 25 What this Subdivision is about
202 30 Frankable distributions
Operative provisions
202 35 Object
202 40 Frankable distributions
202 45 Unfrankable distributions
202 47 Distributions of certain ADI profits following restructure
Subdivision 202 D—Amount of the franking credit on a distribution
Guide to Subdivision 202 D
202 50 What this Subdivision is about
202 55 What is the maximum franking credit for a frankable distribution?
Operative provisions
202 60 Amount of the franking credit on a distribution
202 65 Where the franking credit stated in the distribution statement exceeds the maximum franking credit for the distribution
Subdivision 202 E—Distribution statements
Guide to Subdivision 202 E
202 70 What this Subdivision is about
Operative provisions
202 75 Obligation to give a distribution statement
202 80 Distribution statement
202 85 Changing the franking credit on a distribution by amending the distribution statement
Division 203—Benchmark rule
203 1 What this Division is about
203 5 Benchmark rule
203 10 Benchmark franking percentage
Operative provisions
203 15 Object
203 20 Application of the benchmark rule
203 25 Benchmark rule
203 30 Setting a benchmark franking percentage
203 35 Franking percentage
203 40 Franking periods—where the entity is not a private company
203 45 Franking period—private companies
203 50 Consequences of breaching the benchmark rule
203 55 Commissioner’s powers to permit a departure from the benchmark rule
Division 204—Anti streaming rules
Subdivision 204 A—Objects and application
204 1 Objects
204 5 Application
Subdivision 204 B—Linked distributions
Guide to Subdivision 204 B
204 10 What this Subdivision is about
Operative provisions
204 15 Linked distributions
Subdivision 204 C—Substituting tax exempt bonus share for franked distributions
Guide to Subdivision 204 C
204 20 What this Subdivision is about
Operative provisions
204 25 Substituting tax exempt bonus shares for franked distributions
Subdivision 204 D—Streaming distributions
Guide to Subdivision 204 D
204 26 What this Subdivision is about
Operative provisions
204 30 Streaming distributions
204 35 When does a franking debit arise if the Commissioner makes a determination under paragraph 204 30(3)(a)
204 40 Amount of the franking debit
204 41 Amount of the exempting debit
204 45 Effect of a determination about distributions to favoured members
204 50 Assessment and notice of determination
204 55 Right to review where a determination made
Subdivision 204 E—Disclosure requirements
Guide to Subdivision 204 E
204 65 What this Subdivision is about
Operative provisions
204 70 Application of this Subdivision
204 75 Notice to the Commissioner
204 80 Commissioner may require information where the Commissioner suspects streaming
Division 205—Franking accounts, franking deficit tax liabilities and the related tax offset
205 1 What this Division is about
205 5 Franking accounts, franking deficit tax liabilities and the related tax offset
Operative provisions
205 10 Each entity that is or has been a corporate tax entity has a franking account
205 15 Franking credits
205 20 Paying a PAYG instalment or income tax
205 25 Residency requirement for an event giving rise to a franking credit or franking debit
205 30 Franking debits
205 35 Refund of income tax
205 40 Franking surplus and deficit
205 45 Franking deficit tax
205 50 Deferring franking deficit
205 70 Tax offset arising from franking deficit tax liabilities
Division 207—Effect of receiving a franked distribution
207 5 Overview
Subdivision 207 A—Effect of receiving a franked distribution generally
Guide to Subdivision 207 A
207 10 What this Subdivision is about
Operative provisions
207 15 Applying the general rule
207 20 General rule—gross up and tax offset
Subdivision 207 B—Franked distribution received through certain partnerships and trustees
Guide to Subdivision 207 B
207 25 What this Subdivision is about
Gross up and tax offset
207 30 Applying this Subdivision
207 35 Gross up—distribution made to, or flows indirectly through, a partnership or trustee
207 37 Attributable franked distribution—trusts
207 45 Tax offset—distribution flows indirectly to an entity
Key concepts
207 50 When a franked distribution flows indirectly to or through an entity
207 55 Share of a franked distribution
207 57 Share of the franking credit on a franked distribution
207 58 Specifically entitled to an amount of a franked distribution
207 59 Franked distributions within class treated as single franked distribution
Subdivision 207 C—Residency requirements for the general rule
Guide to Subdivision 207 C
207 60 What this Subdivision is about
207 65 Satisfying the residency requirement
Operative provisions
207 70 Gross up and tax offset under section 207 20
207 75 Residency requirement
Subdivision 207 D—No gross up or tax offset where distribution would not be taxed
Guide to Subdivision 207 D
207 80 What this Subdivision is about
Operative provisions
207 85 Applying this Subdivision
207 90 Distribution that is made to an entity
207 95 Distribution that flows indirectly to an entity
Subdivision 207 E—Exceptions to the rules in Subdivision 207 D
Guide to Subdivision 207 E
207 105 What this Subdivision is about
Operative provisions
207 110 Effect of non assessable income on gross up and tax offset
Exempt institutions
207 115 Which exempt institutions are eligible for a refund?
207 117 Residency requirement
207 119 Entity not treated as exempt institution eligible for refund in certain circumstances
207 120 Entity may be ineligible because of a distribution event
207 122 Entity may be ineligible if distribution is in the form of property other than money
207 124 Entity may be ineligible if other money or property also acquired
207 126 Entity may be ineligible if distributions do not match trust share amounts
207 128 Reinvestment choice
207 130 Controller’s liability
207 132 Treatment of benefits provided by an entity to a controller
207 134 Entity’s present entitlement disregarded in certain circumstances
207 136 Review of certain decisions
Subdivision 207 F—No gross up or tax offset where the imputation system has been manipulated
Guide to Subdivision 207 F
207 140 What this Subdivision is about
Operative provisions
207 145 Distribution that is made to an entity
207 150 Distribution that flows indirectly to an entity
207 155 When is a distribution made as part of a dividend stripping operation?
207 157 Distribution washing
207 160 Distribution that is treated as an interest payment
Division 208—Exempting entities and former exempting entities
208 5 What is an exempting entity?
208 10 Former exempting entities
208 15 Distributions by exempting entities and former exempting entities
Subdivision 208 A—What are exempting entities and former exempting entities?
208 20 Exempting entities
208 25 Effective ownership of entity by prescribed persons
208 30 Accountable membership interests
208 35 Accountable partial interests
208 40 Prescribed persons
208 45 Persons who are taken to be prescribed persons
208 50 Former exempting companies
Subdivision 208 B—Franking with an exempting credit
Guide to Subdivision 208 B
208 55 What this Subdivision is about
Operative provisions
208 60 Franking with an exempting credit
Subdivision 208 C—Amount of the exempting credit on a distribution
Guide to Subdivision 208 C
208 65 What this Subdivision is about
Operative provisions
208 70 Amount of the exempting credit on a distribution
Subdivision 208 D—Distribution statements
Guide to Subdivision 208 D
208 75 Guide to Subdivision 208 D
Operative provisions
208 80 Additional information to be included by a former exempting entity or exempting entity
Subdivision 208 E—Distributions to be franked with exempting credits to the same extent
Guide to Subdivision 208 E
208 85 What this Subdivision is about
Operative provisions
208 90 All frankable distributions made within a franking period must be franked to the same extent with an exempting credit
208 95 Exempting percentage
208 100 Consequences of breaching the rule in section 208 90
Subdivision 208 F—Exempting accounts and franking accounts of exempting entities and former exempting entities
Guide to Subdivision 208 F
208 105 What this Subdivision is about
Operative provisions
208 110 Exempting account
208 115 Exempting credits
208 120 Exempting debits
208 125 Exempting surplus and deficit
208 130 Franking credits arising because of status as exempting entity or former exempting entity
208 135 Relationships that will give rise to a franking credit under item 5 of the table in section 208 130
208 140 Membership of the same effectively wholly owned group
208 145 Franking debits arising because of status as exempting entity or former exempting entity
208 150 Residency requirement
208 155 Eligible continuing substantial member
208 160 Distributions that are affected by a manipulation of the imputation system
208 165 Amount of the exempting credit or franking credit arising because of a distribution franked with an exempting credit
208 170 Where a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 affects part of the distribution
208 175 When does a distribution franked with an exempting credit flow indirectly to an entity?
208 180 What is an entity’s share of the exempting credit on a distribution?
208 185 Minister may convert exempting surplus to franking credit of former exempting entity previously owned by the Commonwealth
Subdivision 208 G—Tax effects of distributions by exempting entities
Guide to Subdivision 208 G
208 190 What this Subdivision is about
Operative provisions
208 195 Division 207 does not generally apply
208 200 Distributions to exempting entities
208 205 Distributions to employees acquiring shares under eligible employee share schemes
208 215 Eligible employee share schemes
Subdivision 208 H—Tax effect of a distribution franked with an exempting credit
Guide to Subdivision 208 H
208 220 What this Subdivision is about
Operative provisions
208 225 Division 207 does not generally apply
208 230 Distributions to exempting entities and former exempting entities
208 235 Distributions to employees acquiring shares under eligible employee share schemes
208 240 Distributions to certain individuals
Division 210—Venture capital franking
210 1 Purpose of venture capital franking
210 5 How is this achieved?
210 10 What is a venture capital credit?
210 15 What does the PDF have to do to distribute the credits?
210 20 Limits on venture capital franking
Subdivision 210 A—Franking a distribution with a venture capital credit
Guide to Subdivision 210 A
210 25 What this Subdivision is about
Operative provisions
210 30 Franking a distribution with a venture capital credit
Subdivision 210 B—Participating PDFs
Guide to Subdivision 210 B
210 35 What this Subdivision is about
Operative provisions
210 40 What is a participating PDF
Subdivision 210 C—Distributions that are frankable with a venture capital credit
Guide to Subdivision 210 C
210 45 What this Subdivision is about
Operative provisions
210 50 Which distributions can be franked with a venture capital credit?
Subdivision 210 D—Amount of the venture capital credit on a distribution
Guide to Subdivision 210 D
210 55 What this Subdivision is about
Operative provisions
210 60 Amount of the venture capital credit on a distribution
Subdivision 210 E—Distribution statements
Guide to Subdivision 210 E
210 65 What this Subdivision is about
Operative provisions
210 70 Additional information to be included when a distribution is franked with a venture capital credit
Subdivision 210 F—Rules affecting the allocation of venture capital credits
Guide to Subdivision 210 F
210 75 What this Subdivision is about
Operative provisions
210 80 Draining the venture capital surplus when a distribution frankable with venture capital credits is made
210 81 Distributions to be franked with venture capital credits to the same extent
210 82 Consequences of breaching the rule in section 210 81
Subdivision 210 G—Venture capital sub account
Guide to Subdivision 210 G
210 85 What this Subdivision is about
210 90 The venture capital sub account
210 95 Venture capital deficit tax
Operative provisions
210 100 Venture capital sub account
210 105 Venture capital credits
210 110 Determining the extent to which a franking credit is reasonably attributable to a particular payment of tax
210 115 Participating PDF may elect to have venture capital credits arise on its assessment day
210 120 Venture capital debits
210 125 Venture capital debit where CGT limit is exceeded
210 130 Venture capital surplus and deficit
210 135 Venture capital deficit tax
210 140 Effect of a liability to pay venture capital deficit tax on franking deficit tax
210 145 Effect of a liability to pay venture capital deficit tax on the franking account
210 150 Deferring venture capital deficit
Subdivision 210 H—Effect of receiving a distribution franked with a venture capital credit
Guide to Subdivision 210 H
210 155 What this Subdivision is about
210 160 The significance of a venture capital credit
210 165 Recipients for whom the venture capital credit is not significant
Operative provisions
210 170 Tax offset for certain recipients of distributions franked with venture capital credits
210 175 Amount of the tax offset
210 180 Application of Division 207 where the recipient is entitled to a tax offset under section 210 170
Division 214—Administering the imputation system
214 1 Purpose of the system
214 5 Key features
Subdivision 214 A—Franking returns
Guide to Subdivision 214 A
214 10 What this Subdivision is about
Operative provisions
214 15 Notice to give a franking return—general notice
214 20 Notice to a specific corporate tax entity
214 25 Content and form of a franking return
214 30 Franking account balance
214 35 Venture capital sub account balance
214 40 Meaning of franking tax
214 45 Effect of a refund on franking returns
Subdivision 214 B—Franking assessments
Guide to Subdivision 214 B
214 55 What this Subdivision is about
Operative provisions
214 60 Commissioner may make a franking assessment
214 65 Commissioner taken to have made a franking assessment on first return
214 70 Part year assessment
214 75 Validity of assessment
214 80 Objections
Subdivision 214 C—Amending franking assessments
Guide to Subdivision 214 C
214 90 What this Subdivision is about
Operative provisions
214 95 Amendments within 3 years of the original assessment
214 100 Amended assessments are treated as franking assessments
214 105 Further return as a result of a refund affecting a franking deficit tax liability
214 110 Later amendments—on request
214 115 Later amendments—failure to make proper disclosure
214 120 Later amendments—fraud or evasion
214 125 Further amendment of an amended particular
214 135 Amendment on review etc.
214 140 Notice of amendments
Subdivision 214 D—Collection and recovery
Guide to Subdivision 214 D
214 145 What this Subdivision is about
Operative provisions
214 150 Due date for payment of franking tax
214 155 General interest charge
214 160 Refunds of amounts overpaid
Subdivision 214 E—Records
Guide to Subdivision 214 E
214 170 What this Subdivision is about
Operative provisions
214 175 Record keeping
Division 215—Consequences of the debt/equity rules
Subdivision 215 A—Application of the imputation system to non share equity interests
215 1 Application of the imputation system to non share equity interests
Subdivision 215 B—Non share dividends that are unfrankable to some extent
Guide to Subdivision 215 B
215 5 What this Subdivision is about
215 10 Certain non share dividends by ADIs unfrankable
215 15 Non share dividends are unfrankable if profits are unavailable
215 20 Working out the available frankable profits
215 25 Anticipating available frankable profits
Division 216—Cum dividend sales and securities lending arrangements
Subdivision 216 A—Circumstances where a distribution to a member of a corporate tax entity is treated as having been made to someone else
216 1 When a distribution made to a member of a corporate tax entity is treated as having been made to someone else
216 5 First situation (cum dividend sales)
216 10 Second situation (securities lending arrangements)
216 15 Distribution closing time
Subdivision 216 B—Statements to be made where there is a cum dividend sale or securities lending arrangement
216 20 Cum dividend sale—statement by securities dealer
216 25 Cum dividend sale—statement by party
216 30 Securities lending arrangements—statement by borrower
Division 218—Application of imputation rules to co operative companies
218 5 Application of imputation rules to co operative companies
Division 219—Imputation for life insurance companies
219 1 What this Division is about
Subdivision 219 A—Application of imputation rules to life insurance companies
219 10 Application of imputation rules to life insurance companies
Subdivision 219 B—Franking accounts of life insurance companies
219 15 Franking credits
219 30 Franking debits
219 40 Residency requirement
219 45 Assessment day
219 50 Amount attributable to shareholders’ share of income tax liability
219 55 Adjustment resulting from an amended assessment
219 70 Tax offset under section 205 70
219 75 Working out franking credits and franking debits where a tax offset under section 205 70 is applied
Division 220—Imputation for NZ resident companies and related companies
220 1 What this Division is about
Subdivision 220 A—Objects of this Division
220 15 Objects
220 20 What is an NZ resident?
Subdivision 220 B—NZ company treated as Australian resident for imputation system if company chooses
220 25 Application of provisions of Part 3 6 outside this Division
220 30 What is an NZ franking company?
220 35 Making an NZ franking choice
220 40 When is an NZ franking choice in force?
220 45 Revoking an NZ franking choice
220 50 Cancelling an NZ franking choice
Subdivision 220 C—Modifications of other Divisions of this Part
Franking NZ franking companies’ distributions
220 100 Residency requirement for franking
220 105 Unfrankable distributions by NZ franking companies
220 110 Maximum franking credit under section 202 60
NZ franking companies’ franking accounts etc.
220 205 Franking credit for payment of NZ franking company’s withholding tax liability
220 210 Effect of franked distribution to NZ franking company or flowing indirectly to NZ franking company
220 215 Effect on franking account if NZ franking choice ceases to be in force
Franking accounts of NZ franking company and some of its 100% subsidiaries
220 300 NZ franking company’s franking account affected by franking accounts of some of its 100% subsidiaries
Effect of NZ franking company making distribution that is non assessable and non exempt
220 350 Providing for a franking credit to arise
Effects of supplementary dividend from NZ franking company
220 400 Gross up and tax offset for distribution from NZ franking company reduced by supplementary dividend
220 405 Franked distribution and supplementary dividend flowing indirectly
220 410 Franking credit reduced if tax offset reduced
Rules about exempting entities
220 500 Publicly listed post choice NZ franking company and its 100% subsidiaries are not exempting entities
220 505 Post choice NZ franking company is not automatically prescribed person
220 510 Parent company’s status as prescribed person sets status of all other members of same wholly owned group
NZ franking companies’ exempting accounts
220 605 Effect on exempting account if NZ franking choice ceases to be in force
Tax effect of distribution franked by NZ franking company with an exempting credit
220 700 Tax effect of distribution franked by NZ franking company with an exempting credit
Joint and several liability for NZ resident company’s unmet franking liabilities
220 800 Joint and several liability for NZ resident company’s franking tax etc.
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Volume 6
Collapse
Chapter 3—Specialist liability rules
Part 3 10—Financial transactions
Division 230—Taxation of financial arrangements
230 1 What this Division is about
230 5 Scope of this Division
Subdivision 230 A—Core rules
Objects
230 10 Objects of this Division
Tax treatment of gains and losses from financial arrangements
230 15 Gains are assessable and losses deductible
230 20 Gain or loss to be taken into account only once under this Act
230 25 Associated financial benefits to be taken into account only once under this Act
230 30 Treatment of gains and losses related to exempt income and non assessable non exempt income
230 35 Treatment of gains and losses of private or domestic nature
Method to be applied to take account of gain or loss
230 40 Methods for taking gain or loss into account
Financial arrangement concept
230 45 Financial arrangement
230 50 Financial arrangement (equity interest or right or obligation in relation to equity interest)
230 55 Rights, obligations and arrangements (grouping and disaggregation rules)
General rules
230 60 When financial benefit provided or received under financial arrangement
230 65 Amount of financial benefit relating to more than one financial arrangement etc.
230 70 Apportionment when financial benefit received or right ceases
230 75 Apportionment when financial benefit provided or obligation ceases
230 80 Consistency in working out gains or losses (integrity measure)
230 85 Rights and obligations include contingent rights and obligations
Subdivision 230 B—The accruals/realisation methods
Guide to Subdivision 230 B
230 90 What this Subdivision is about
Objects of Subdivision
230 95 Objects of this Subdivision
When accruals method or realisation method applies
230 100 When accruals method or realisation method applies
230 105 Sufficiently certain overall gain or loss
230 110 Sufficiently certain gain or loss from particular event
230 115 Sufficiently certain financial benefits
230 120 Financial arrangements with notional principal
The accruals method
230 125 Overview of the accruals method
230 130 Applying accruals method to work out period over which gain or loss is to be spread
230 135 How gain or loss is spread
230 140 Method of spreading gain or loss—effective interest method
230 145 Application of effective interest method where differing income and accounting years
230 150 Election for portfolio treatment of fees
230 155 Election for portfolio treatment of fees where differing income and accounting years
230 160 Portfolio treatment of fees
230 165 Portfolio treatment of premiums and discounts for acquiring portfolio
230 170 Allocating gain or loss to income years
230 172 Applying accruals method to loss resulting from impairment
230 175 Running balancing adjustments
Realisation method
230 180 Realisation method
Reassessment and re estimation
230 185 Reassessment
230 190 Re estimation
230 192 Re estimation—impairments and reversals
230 195 Balancing adjustment if rate of return maintained on re estimation
230 200 Re estimation if balancing adjustment on partial disposal
Subdivision 230 C—Fair value method
230 205 Objects of this Subdivision
230 210 Fair value election
230 215 Fair value election where differing income and accounting years
230 220 Financial arrangements to which fair value election applies
230 225 Financial arrangements to which election does not apply
230 230 Applying fair value method to gains and losses
230 235 Splitting financial arrangements into 2 financial arrangements
230 240 When election ceases to apply
230 245 Balancing adjustment if election ceases to apply
Subdivision 230 D—Foreign exchange retranslation method
230 250 Objects of this Subdivision
230 255 Foreign exchange retranslation election
230 260 Foreign exchange retranslation election where differing income and accounting years
230 265 Financial arrangements to which general election applies
230 270 Financial arrangements to which general election does not apply
230 275 Balancing adjustment for election in relation to qualifying forex accounts
230 280 Applying foreign exchange retranslation method to gains and losses
230 285 When election ceases to apply
230 290 Balancing adjustment if election ceases to apply
Subdivision 230 E—Hedging financial arrangements method
230 295 Objects of this Subdivision
230 300 Applying hedging financial arrangement method to gains and losses
230 305 Table of events and allocation rules
230 310 Aligning tax classification of gain or loss from hedging financial arrangement with tax classification of hedged item
230 315 Hedging financial arrangement election
230 320 Hedging financial arrangement election where differing income and accounting years
230 325 Hedging financial arrangements to which election applies
230 330 Hedging financial arrangements to which election does not apply
230 335 Hedging financial arrangement and hedged item
230 340 Generally whole arrangement must be hedging financial arrangement
230 345 Requirements not satisfied because of honest mistake or inadvertence
230 350 Derivative financial arrangement and foreign currency hedge
230 355 Recording requirements
230 360 Determining basis for allocating gain or loss
230 365 Effectiveness of the hedge
230 370 When election ceases to apply
230 375 Balancing adjustment if election ceases to apply
230 380 Commissioner may determine that requirement met
230 385 Consequences of failure to meet requirements
Subdivision 230 F—Reliance on financial reports
230 390 Objects of this Subdivision
230 395 Election to rely on financial reports
230 400 Financial reports election where differing income and accounting years
230 405 Commissioner discretion to waive requirements in paragraphs 230 395(2)(c) and (e)
230 410 Financial arrangements to which the election applies
230 415 Financial arrangements not covered by election
230 420 Effect of election to rely on financial reports
230 425 When election ceases to apply
230 430 Balancing adjustment if election ceases to apply
Subdivision 230 G—Balancing adjustment on ceasing to have a financial arrangement
230 435 When balancing adjustment made
230 440 Exceptions
230 445 Balancing adjustment
Subdivision 230 H—Exceptions
230 450 Short term arrangements where non money amount involved
230 455 Certain taxpayers where no significant deferral
230 460 Various rights and/or obligations
230 465 Ceasing to have a financial arrangement in certain circumstances
230 470 Forgiveness of commercial debts
230 475 Clarifying exceptions
230 480 Treatment of gains in form of franked distribution etc.
230 481 Registered emissions units
Subdivision 230 I—Other provisions
230 485 Effect of change of residence—rules for particular methods
230 490 Effect of change of residence—disposal and reacquisition etc. after ceasing to be Australian resident where no further recognised gains or losses from arrangement
230 495 Effect of change of accounting principles or standards
230 500 Comparable foreign accounting and auditing standards
230 505 Financial arrangement as consideration for provision or acquisition of a thing
230 510 Non arm’s length dealings in relation to financial arrangement
230 515 Arm’s length dealings in relation to financial arrangement—adjustment to gain or loss in certain situations
230 520 Disregard gains or losses covered by value shifting regime
230 525 Consolidated financial reports
230 527 Elections—reporting documents of foreign ADIs
Subdivision 230 J—Additional operation of Division
230 530 Additional operation of Division
Division 235—Particular financial transactions
235 1 What this Division is about
Subdivision 235 I—Instalment trusts
Guide to Subdivision 235 I
235 805 What this Subdivision is about
Operative provisions
235 810 Object of this Subdivision
235 815 Application of Subdivision
235 820 Look through treatment for instalment trusts
235 825 Meaning of instalment trust and instalment trust asset
235 830 What trusts are covered—instalment trust arrangements
235 835 Requirement for underlying investments to be listed or widely held
235 840 What trusts are covered—limited recourse borrowings by regulated superannuation funds
235 845 Interactions with other provisions
Division 240—Arrangements treated as a sale and loan
240 1 What this Division is about
240 3 How the recharacterisation affects the notional seller
240 7 How the recharacterisation affects the notional buyer
Subdivision 240 A—Application and scope of Division
Operative provisions
240 10 Application of this Division
240 15 Scope of Division
Subdivision 240 B—The notional sale and notional loan
Operative provisions
240 17 Who is the notional seller and the notional buyer?
240 20 Notional sale of property by notional seller and notional acquisition of property by notional buyer
240 25 Notional loan by notional seller to notional buyer
Subdivision 240 C—Amounts to be included in notional seller’s assessable income
Guide to Subdivision 240 C
240 30 What this Subdivision is about
Operative provisions
240 35 Amounts to be included in notional seller’s assessable income
240 40 Arrangement payments not to be included in notional seller’s assessable income
Subdivision 240 D—Deductions allowable to notional buyer
Guide to Subdivision 240 D
240 45 What this Subdivision is about
Operative provisions
240 50 Extent to which deductions are allowable to notional buyer
240 55 Arrangement payments not to be deductions
Subdivision 240 E—Notional interest and arrangement payments
Operative provisions
240 60 Notional interest
240 65 Arrangement payments
240 70 Arrangement payment periods
Subdivision 240 F—The end of the arrangement
Operative provisions
240 75 When is the end of the arrangement?
240 80 What happens if the arrangement is extended or renewed
240 85 What happens if an amount is paid by or on behalf of the notional buyer to acquire the property
240 90 What happens if the notional buyer ceases to have the right to use the property
Subdivision 240 G—Adjustments if total amount assessed to notional seller differs from amount of interest
Guide to Subdivision 240 G
240 100 What this Subdivision is about
Operative provisions
240 105 Adjustments for notional seller
240 110 Adjustments for notional buyer
Subdivision 240 H—Application of Division 16E to certain arrangements
240 112 Division 16E applies to certain arrangements
Subdivision 240 I—Provisions applying to hire purchase agreements
Operative provisions
240 115 Another person, or no person taken to own property in certain cases
Division 242—Leases of luxury cars
242 1 What this Division is about
Subdivision 242 A—Notional sale and loan
Guide to Subdivision 242 A
242 5 What this Subdivision is about
Operative provisions
242 10 Application
242 15 Notional sale and acquisition
242 20 Consideration for notional sale, and cost, of car
242 25 Notional loan by lessor to lessee
Subdivision 242 B—Amount to be included in lessor’s assessable income
Guide to Subdivision 242 B
242 30 What this Subdivision is about
Operative provisions
242 35 Amount to be included in lessor’s assessable income
242 40 Treatment of lease payments
Subdivision 242 C—Deductions allowable to lessee
Guide to Subdivision 242 C
242 45 What this Subdivision is about
Operative provisions
242 50 Extent to which deductions are allowable to lessee
242 55 Lease payments not deductible
Subdivision 242 D—Adjustments if total amount assessed to lessor differs from amount of interest
Guide to Subdivision 242 D
242 60 What this Subdivision is about
Operative provisions
242 65 Adjustments for lessor
242 70 Adjustments for lessee
Subdivision 242 E—Extension, renewal and final ending of the lease
Guide to Subdivision 242 E
242 75 What this Subdivision is about
Operative provisions
242 80 What happens if the term of the lease is extended or the lease is renewed
242 85 What happens if an amount is paid by the lessee to acquire the car
242 90 What happens if the lessee stops having the right to use the car
Division 243—Limited recourse debt
243 10 What this Division is about
Subdivision 243 A—Circumstances in which Division operates
Operative provisions
243 15 When does this Division apply?
243 20 What is limited recourse debt?
243 25 When is a debt arrangement terminated?
243 30 What is the financed property and the debt property?
Subdivision 243 B—Working out the excessive deductions
Operative provisions
243 35 Working out the excessive deductions
Subdivision 243 C—Amounts included in assessable income and deductions
Operative provisions
243 40 Amount included in debtor’s assessable income
243 45 Deduction for later payments in respect of debt
243 50 Deduction for payments for replacement debt
243 55 Effect of Division on later capital allowance deductions
243 57 Effect of Division on later capital allowance balancing adjustments
243 58 Adjustment where debt only partially used for expenditure
Subdivision 243 D—Special provisions
Operative provisions
243 60 Application of Division to partnerships
243 65 Application where partner reduces liability
243 70 Application of Division to companies ceasing to be 100% subsidiary
243 75 Application of Division where debt forgiveness rules also apply
Division 245—Forgiveness of commercial debts
245 1 What this Division is about
245 2 Simplified outline of this Division
Subdivision 245 A—Debts to which operative rules apply
Guide to Subdivision 245 A
245 5 What this Subdivision is about
Application of Division
245 10 Commercial debts
245 15 Non equity shares
245 20 Parts of debts
Subdivision 245 B—What constitutes forgiveness of a debt
Guide to Subdivision 245 B
245 30 What this Subdivision is about
Operative provisions
245 35 What constitutes forgiveness of a debt
245 36 What constitutes forgiveness of a debt if the debt is assigned
245 37 What constitutes forgiveness of a debt if a subscription for shares enables payment of the debt
245 40 Forgivenesses to which operative rules do not apply
245 45 Application of operative rules if forgiveness involves an arrangement
Subdivision 245 C—Calculation of gross forgiven amount of a debt
Guide to Subdivision 245 C
245 48 What this Subdivision is about
Working out the value of a debt
245 50 Extent of forgiveness if consideration is given
245 55 General rule for working out the value of a debt
245 60 Special rule for working out the value of a non recourse debt
245 61 Special rule for working out the value of a previously assigned debt
Working out if an amount is offset against the value of the debt
245 65 Amount offset against amount of debt
Working out the gross forgiven amount
245 75 Gross forgiven amount of a debt
245 77 Gross forgiven amount shared between debtors
Subdivision 245 D—Calculation of net forgiven amount of a debt
Guide to Subdivision 245 D
245 80 What this Subdivision is about
Operative provisions
245 85 Reduction of gross forgiven amount
245 90 Agreement between companies under common ownership for creditor to forgo capital loss or deduction
Subdivision 245 E—Application of net forgiven amounts
Guide to Subdivision 245 E
245 95 What this Subdivision is about
General operative provisions
245 100 Subdivision not to apply to calculation of attributable income
245 105 How total net forgiven amount is applied
Reduction of tax losses
245 115 Total net forgiven amount is applied in reduction of tax losses
245 120 Allocation of total net forgiven amount in respect of tax losses
Reduction of net capital losses
245 130 Remaining total net forgiven amount is applied in reduction of net capital losses
245 135 Allocation of remaining total net forgiven amount in respect of net capital losses
Reduction of expenditure
245 145 Remaining total net forgiven amount is applied in reduction of expenditure
245 150 Allocation of remaining total net forgiven amount in respect of expenditures
245 155 How expenditure is reduced—straight line deductions
245 157 How expenditure is reduced—diminishing balance deductions
245 160 Amount applied in reduction of expenditure included in assessable income in certain circumstances
Reduction of cost bases of assets
245 175 Remaining total net forgiven amount is applied in reduction of cost bases of CGT assets
245 180 Allocation of remaining total net forgiven amount among relevant cost bases of CGT assets
245 185 Relevant cost bases of investments in associated entities are reduced last
245 190 Reduction of the relevant cost bases of a CGT asset
Unapplied total net forgiven amount
245 195 No further consequences if there is any remaining unapplied total net forgiven amount
Subdivision 245 F—Special rules relating to partnerships
Guide to Subdivision 245 F
245 200 What this Subdivision is about
Operative provisions
245 215 Unapplied total net forgiven amount of a partnership is transferred to partners
Subdivision 245 G—Record keeping
245 265 Keeping and retaining records
Division 247—Capital protected borrowings
247 1 What this Division is about
Operative provisions
247 5 Object of Division
247 10 What capital protected borrowing and capital protection are
247 15 Application of this Division
247 20 Treating capital protection as a put option
247 25 Number of put options
247 30 Exercise or expiry of option
Division 250—Assets put to tax preferred use
250 1 What this Division is about
Subdivision 250 A—Objects
250 5 Main objects
Subdivision 250 B—When this Division applies to you and an asset
Overall test
250 10 When this Division applies to you and an asset
250 15 General test
250 20 First exclusion—small business entities
250 25 Second exclusion—financial benefits under minimum value limit
250 30 Third exclusion—certain short term or low value arrangements
250 35 Exceptions to section 250 30
250 40 Fourth exclusion—sum of present values of financial benefits less than amount otherwise assessable
250 45 Fifth exclusion—Commissioner determination
Tax preferred use of asset
250 50 End user of an asset
250 55 Tax preferred end user
250 60 Tax preferred use of an asset
250 65 Arrangement period for tax preferred use
250 70 New tax preferred use at end of arrangement period if tax preferred use continues
250 75 What constitutes a separate asset for the purposes of this Division
250 80 Treatment of particular arrangements in the same way as leases
Financial benefits in relation to tax preferred use
250 85 Financial benefits in relation to tax preferred use of an asset
250 90 Financial benefit provided directly or indirectly
250 95 Expected financial benefits in relation to an asset put to tax preferred use
250 100 Present value of financial benefit that has already been provided
Discount rate to be used in working out present values
250 105 Discount rate to be used in working out present values
Predominant economic interest
250 110 Predominant economic interest
250 115 Limited recourse debt test
250 120 Right to acquire asset test
250 125 Effectively non cancellable, long term arrangement test
250 130 Meaning of effectively non cancellable arrangement
250 135 Level of expected financial benefits test
250 140 When to retest predominant economic interest under section 250 135
Subdivision 250 C—Denial of, or reduction in, capital allowance deductions
250 145 Denial of capital allowance deductions
250 150 Apportionment rule
Subdivision 250 D—Deemed loan treatment of financial benefits provided for tax preferred use
250 155 Arrangement treated as loan
250 160 Financial benefits that are subject to deemed loan treatment
250 180 End value of asset
250 185 Financial benefits subject to deemed loan treatment not assessed
Subdivision 250 E—Taxation of deemed loan
Guide to Subdivision 250 E
250 190 What this Subdivision is about
Application and objects of Subdivision
250 195 Application of Subdivision
250 200 Objects of this Subdivision
Tax treatment of gains and losses from financial arrangements
250 205 Gains are assessable and losses deductible
250 210 Gain or loss to be taken into account only once under this Act
Method to be applied to take account of gain or loss
250 215 Methods for taking gain or loss into account
General rules
250 220 Consistency in working out gains or losses (integrity measure)
250 225 Rights and obligations include contingent rights and obligations
The accruals method
250 230 Application of accruals method
250 235 Overview of the accruals method
250 240 Applying accruals method to work out period over which gain or loss is to be spread
250 245 How gain or loss is spread
250 250 Allocating gain or loss to income years
250 255 When to re estimate
250 260 Re estimation if balancing adjustment on partial disposal
Balancing adjustment
250 265 When balancing adjustment made
250 270 Exception for subsidiary member leaving consolidated group
250 275 Balancing adjustment
Other provisions
250 280 Financial arrangement received or provided as consideration
Subdivision 250 F—Treatment of asset when Division ceases to apply to the asset
250 285 Treatment of asset after Division ceases to apply to the asset
250 290 Balancing adjustment under Subdivision 40 D in some circumstances
Subdivision 250 G—Objections against determinations and decisions by the Commissioner
250 295 Objections against determinations and decisions by the Commissioner
Division 253—Financial claims scheme for account holders with insolvent ADIs
Subdivision 253 A—Tax treatment of entitlements under financial claims scheme
Guide to Subdivision 253 A
253 1 What this Subdivision is about
Operative provisions
253 5 Payment of entitlement under financial claims scheme treated as payment from ADI
253 10 Disposal of rights against ADI to APRA and meeting of financial claims scheme entitlement have no CGT effects
253 15 Cost base of financial claims scheme entitlement and any remaining part of account that gave rise to entitlement
Part 3 25—Particular kinds of trusts
Division 275—Australian managed investment trusts: general
275 1 What this Division is about
Subdivision 275 A—Meaning of managed investment trust
Guide to Subdivision 275 A
275 5 What this Subdivision is about
Operative provisions
275 10 Meaning of managed investment trust
275 15 Trusts with wholesale membership
275 20 Widely held requirements—ordinary case
275 25 Widely held requirements for registered MIT—special case for entities covered by subsection 275 20(4)
275 30 Closely held restrictions
275 35 Licensing requirements for unregistered MIS
275 40 MIT participation interest
275 45 Meaning of managed investment trust—every member of trust is a managed investment trust etc.
275 50 Extended definition of managed investment trust—no fund payment made in relation to the income year
275 55 Extended definition of managed investment trust—temporary circumstances outside the control of the trustee
Subdivision 275 B—Choice for capital treatment of managed investment trust gains and losses
275 100 Consequences of making choice—CGT to be primary code for calculating MIT gains or losses
275 105 Covered assets
275 110 MIT not to be trading trust
275 115 MIT CGT choices
275 120 Consequences of not making choice—revenue account treatment
Subdivision 275 C—Carried interests in managed investment trusts
275 200 Gains and losses etc. from carried interests in managed investment trusts reflected in assessable income or deduction
Subdivision 275 L—Modification for non arm’s length income
Guide to Subdivision 275 L
275 600 What this Subdivision is about
Operative provisions
275 605 Trustee taxed on amount of non arm’s length income of managed investment trust
275 610 Non arm’s length income
275 615 Commissioner’s determination in relation to amount of non arm’s length income
Division 276—Australian managed investment trusts: attribution managed investment trusts
276 1 What this Division is about
Subdivision 276 A—What is an attribution managed investment trust?
Guide to Subdivision 276 A
276 5 What this Subdivision is about
Operative provisions
276 10 Meaning of attribution managed investment trust (or AMIT)
276 15 Clearly defined interests
276 20 Trust with classes of membership interests—each class treated as separate AMIT
Subdivision 276 B—Member’s vested and indefeasible interest in share of income and capital of AMIT
Guide to Subdivision 276 B
276 50 What this Subdivision is about
Operative provisions
276 55 AMIT taken to be fixed trust and member taken to have vested and indefeasible interest in income and capital
Subdivision 276 C—Taxation etc. of member components
Guide to Subdivision 276 C
276 75 What this Subdivision is about
Taxation etc. of member on determined member components
276 80 Member’s assessable income or tax offsets for determined member components—general rules
276 85 Member’s assessable income or tax offsets for determined member components—specific rules
276 90 Commissioner’s determination as to status of member as qualified person
276 95 Relationship between section 276 80 and withholding rules
276 100 Relationship between section 276 80 and other charging provisions in this Act
Foreign resident members—taxation of trustee and corresponding tax offset for members
276 105 Trustee taxed on foreign resident’s determined member components
276 110 Refundable tax offset for foreign resident member—member that is not a trustee
Special rule for interposed custodian
276 115 Custodian interposed between AMIT and member
Subdivision 276 D—Member components
Guide to Subdivision 276 D
276 200 What this Subdivision is about
Member level concepts
276 205 Meaning of determined member component
276 210 Meaning of member component
Subdivision 276 E—Trust components
Guide to Subdivision 276 E
276 250 What this Subdivision is about
Trust level concepts
276 255 Meaning of determined trust component
276 260 Meaning of trust component
276 265 Rules for working out trust components—general rules
276 270 Rules for working out trust components—allocation of deductions
Subdivision 276 F—Unders and overs
Guide to Subdivision 276 F
276 300 What this Subdivision is about
Adjustment of trust component for unders and overs etc.
276 305 Adjustment of trust component for unders and overs
276 310 Rounding adjustment deficit increases trust component
276 315 Rounding adjustment surplus decreases trust component
276 320 Meaning of trust component deficit
276 325 Trust component of character relating to assessable income—adjustment for cross character allocation amount, carry forward trust component deficit and FITO allocation amount
276 330 Meaning of cross character allocation amount and carry forward trust component deficit
276 335 Meaning of FITO allocation amount
276 340 Trust component character relating to tax offset—taxation of trust component deficit
Unders and overs
276 345 Meaning of under and over of a character
276 350 Limited discovery period for unders and overs
Subdivision 276 G—Shortfall and excess taxation
Guide to Subdivision 276 G
276 400 What this Subdivision is about
Ensuring determined trust components are properly taxed
276 405 Trustee taxed on shortfall in determined member component (character relating to assessable income)
276 410 Trustee taxed on excess in determined member component (character relating to tax offset)
276 415 Trustee taxed on amounts of determined trust component that are not reflected in determined member components
Ensuring unders and overs are properly taxed
276 420 Trustee taxed on amounts of under of character relating to assessable income not properly carried forward
276 425 Trustee taxed on amounts of over of character relating to tax offset not properly carried forward
Commissioner may remit tax under this Subdivision
276 430 Commissioner may remit tax under this Subdivision
Subdivision 276 H—AMMA statements
Guide to Subdivision 276 H
276 450 What this Subdivision is about
Operative provisions
276 455 Obligation to give an AMMA statement
276 460 AMIT member annual statement (or AMMA statement)
Subdivision 276 J—Debt like trust instruments
Guide to Subdivision 276 J
276 500 What this Subdivision is about
Operative provisions
276 505 Meaning of debt like trust instrument
276 510 Debt like trust instruments treated as debt interests etc.
276 515 Distribution on debt like trust instrument could be deductible in working out trust components
Subdivision 276 K—Ceasing to be an AMIT
Guide to Subdivision 276 K
276 800 What this Subdivision is about
Operative provisions
276 805 Application of Subdivision to former AMIT
276 810 Continue to work out trust components, unders, overs etc.
276 815 Effect of increase
276 820 Effect of decrease
Part 3 30—Superannuation
Division 280—Guide to the superannuation provisions
280 1 Effect of this Division
280 5 Overview
Contributions phase
280 10 Contributions phase—deductibility
280 15 Contributions phase—limits on superannuation tax concessions
Investment phase
280 20 Investment phase
Benefits phase
280 25 Benefits phase—different types of superannuation benefit
280 30 Benefits phase—taxation varies with age of recipient and type of benefit
280 35 Benefits phase—roll overs
The regulatory scheme outside this Act
280 40 Other relevant legislative schemes
Division 285—General concepts relating to superannuation
285 5 Transfers of property
Division 290—Contributions to superannuation funds
290 1 What this Division is about
Subdivision 290 A—General rules
290 5 Non application to roll over superannuation benefits etc.
290 10 No deductions other than under this Division
Subdivision 290 B—Deduction of employer contributions and other employment connected contributions
Deducting employer contributions
290 60 Employer contributions deductible
290 65 Application to employees etc.
Conditions for deducting an employer contribution
290 70 Employment activity conditions
290 75 Complying fund conditions
290 80 Age related conditions
Other employment connected deductions
290 85 Contributions for former employees etc.
290 90 Controlling interest deductions
290 95 Amounts offset against superannuation guarantee charge
Returned contributions
290 100 Returned contributions assessable
Subdivision 290 C—Deducting personal contributions
290 150 Personal contributions deductible
Conditions for deducting a personal contribution
290 155 Complying superannuation fund condition
290 160 Maximum earnings as employee condition
290 165 Age related conditions
290 170 Notice of intent to deduct conditions
290 175 Deduction limited by amount specified in notice
290 180 Notice may be varied but not revoked or withdrawn
Subdivision 290 D—Tax offsets for spouse contributions
290 230 Offset for spouse contribution
290 235 Limit on amount of tax offsets
290 240 Tax file number
Division 291—Excess concessional contributions
291 1 What this Division is about
Subdivision 291 A—Object of this Division
291 5 Object of this Division
Subdivision 291 B—Excess concessional contributions
Guide to Subdivision 291 B
291 10 What this Subdivision is about
Operative provisions
291 15 Excess concessional contributions—assessable income, 15% tax offset
291 20 Your excess concessional contributions for a financial year
291 25 Your concessional contributions for a financial year
Subdivision 291 C—Modifications for defined benefit interests
Guide to Subdivision 291 C
291 155 What this Subdivision is about
Operative provisions
291 160 Application
291 165 Concessional contributions—special rules for defined benefit interests
291 170 Notional taxed contributions
291 175 Defined benefit interest
Subdivision 291 D—Other provisions
Guide to Subdivision 291 D
291 460 What this Subdivision is about
Operative provisions
291 465 Commissioner’s discretion to disregard contributions etc. in relation to a financial year
Division 292—Excess non concessional contributions
292 1 What this Division is about
Subdivision 292 A—Object of this Division
292 5 Object of this Division
Subdivision 292 B—Assessable income and tax offset
292 15 What this Subdivision is about
292 20 Amount in assessable income, and tax offset, relating to your non concessional contributions
292 25 Amount included in assessable income
292 30 Amount of the tax offset
Subdivision 292 C—Excess non concessional contributions tax
292 75 What this Subdivision is about
Operative provisions
292 80 Liability for excess non concessional contributions tax
292 85 Your excess non concessional contributions for a financial year
292 90 Your non concessional contributions for a financial year
292 95 Contributions arising from structured settlements or orders for personal injuries
292 100 Contribution relating to some CGT small business concessions
292 105 CGT cap amount
Subdivision 292 E—Excess non concessional contributions tax assessments
Guide to Subdivision 292 E
292 225 What this Subdivision is about
Operative provisions
292 230 Commissioner must make an excess non concessional contributions tax assessment
292 240 Validity of assessment
292 245 Objections
Subdivision 292 F—Amending excess non concessional contributions tax assessments
Guide to Subdivision 292 F
292 300 What this Subdivision is about
Operative provisions
292 305 Amendments within 4 years of the original assessment
292 310 Amended assessments are treated as excess non concessional contributions tax assessments
292 315 Later amendments—on request
292 320 Later amendments—fraud or evasion
292 325 Further amendment of an amended particular
292 330 Amendment on review etc.
Subdivision 292 G—Collection and recovery
Guide to Subdivision 292 G
292 380 What this Subdivision is about
Operative provisions
292 385 Due date for payment of excess non concessional contributions tax
292 390 General interest charge
292 395 Refunds of amounts overpaid
292 405 Release authority
292 410 Giving a release authority to a superannuation provider
292 415 Superannuation provider given release authority must pay amount
Subdivision 292 H—Other provisions
292 465 Commissioner’s discretion to disregard contributions etc. in relation to a financial year
292 467 Direction that the value of superannuation interests is nil
Division 293—Sustaining the superannuation contribution concession
293 1 What this Division is about
Subdivision 293 A—Object of this Division
Operative provisions
293 5 Object of this Division
Subdivision 293 B—Sustaining the superannuation contribution concession
Guide to Subdivision 293 B
293 10 What this Subdivision is about
Liability for tax
293 15 Liability for tax
293 20 Your taxable contributions
Low tax contributions
293 25 Your low tax contributions
293 30 Low tax contributed amounts
Subdivision 293 C—When tax is payable
Guide to Subdivision 293 C
293 60 What this Subdivision is about
Operative provisions
293 65 When tax is payable—original assessments
293 70 When tax is payable—amended assessments
293 75 General interest charge
Subdivision 293 D—Modifications for defined benefit interests
Guide to Subdivision 293 D
293 100 What this Subdivision is about
Operative provisions
293 105 Low tax contributions—modification for defined benefit interests
293 115 Defined benefit contributions
Subdivision 293 E—Modifications for constitutionally protected State higher level office holders
Guide to Subdivision 293 E
293 140 What this Subdivision is about
Operative provisions
293 145 Who this Subdivision applies to
293 150 Low tax contributions—modification for CPFs
293 155 High income threshold—effect of modification
293 160 Salary packaged contributions
Subdivision 293 F—Modifications for Commonwealth justices
Guide to Subdivision 293 F
293 185 What this Subdivision is about
Operative provisions
293 190 Who this Subdivision applies to
293 195 Defined benefit contributions—modified treatment of contributions under the Judges’ Pensions Act 1968
293 200 High income threshold—effect of modification
Subdivision 293 G—Modifications for temporary residents who depart Australia
Guide to Subdivision 293 G
293 225 What this Subdivision is about
Operative provisions
293 230 Who is entitled to a refund
293 235 Amount of the refund
293 240 Entitlement to refund stops all Division 293 tax liabilities
Division 295—Taxation of superannuation entities
295 1 What this Division is about
Subdivision 295 A—Provisions of general operation
295 5 Entities to which Division applies
295 10 How to work out the tax payable by superannuation entities
295 15 Division does not impose a tax on property of a State
295 20 Exempting laws ineffective
295 25 Assessments on basis of anticipated SIS Act notice
295 30 Effect of revocation etc. of SIS Act notices
295 35 Acronyms used in tables
Subdivision 295 B—Modifications of provisions of this Act
295 85 CGT to be primary code for calculating gains or losses
295 90 CGT rules for pre 30 June 1988 assets
295 95 Deductions related to contributions
295 100 Deductions for investing in PSTs and life policies
295 105 Distributions to PST unitholders
Subdivision 295 C—Contributions included
Guide to Subdivision 295 C
295 155 What this Subdivision is about
Contributions and payments
295 160 Contributions and payments
295 165 Exception—spouse contributions
295 170 Exception—Government co contributions and contributions for a child
295 173 Exception—trustee contributions
295 175 Exception—payments by a member spouse
295 180 Exception—choice to exclude certain contributions
295 185 Exception—temporary residents
Personal contributions and roll over amounts
295 190 Personal contributions and roll over amounts
295 195 Exclusion of personal contributions—contributions
295 197 Exclusion of personal contributions—successor funds
Transfers from foreign funds
295 200 Transfers from foreign superannuation funds
Application of tables to RSA providers
295 205 Application of tables to RSA providers
Former constitutionally protected funds
295 210 Former constitutionally protected funds
Subdivision 295 D—Contributions excluded
295 260 Transfer of liability to investment vehicle
295 265 Application of pre 1 July 88 funding credits
295 270 Anticipated funding credits
Subdivision 295 E—Other income amounts
Amounts included
295 320 Other amounts included in assessable income
295 325 Previously complying funds
295 330 Previously foreign funds
Amounts excluded
295 335 Amounts excluded from assessable income
Subdivision 295 F—Exempt income
295 385 Income from assets set aside to meet current pension liabilities
295 390 Income from other assets used to meet current pension liabilities
295 395 Meaning of segregated non current assets
295 400 Income of a PST attributable to current pension liabilities
295 405 Other exempt income
295 410 Amount credited to RSA
Subdivision 295 G—Deductions
Death or disability benefits
295 460 Benefits for which deductions are available
295 465 Complying funds—deductions for insurance premiums
295 470 Complying funds—deductions for future liability to pay benefits
295 475 RSA providers—deductions for insurance premiums
295 480 Meaning of whole of life policy and endowment policy
Increased amount of superannuation lump sum death benefits
295 485 Deductions for increased amount of superannuation lump sum death benefit
Other deductions
295 490 Other deductions
Certain amounts cannot be deducted
295 495 Amounts that cannot be deducted
Subdivision 295 H—Components of taxable income
295 545 Components of taxable income—complying superannuation funds, complying ADFs and PSTs
295 550 Meaning of non arm’s length income
295 555 Components of taxable income—RSA providers
Subdivision 295 I—No TFN contributions
295 605 Liability for tax on no TFN contributions income
295 610 No TFN contributions income
295 615 Meaning of quoted (for superannuation purposes)
295 620 No reduction under Subdivision 295 D
295 625 Assessments
Subdivision 295 J—Tax offset for no TFN contributions income (TFN quoted within 4 years)
295 675 Entitlement to a tax offset
295 680 Amount of the tax offset
Division 301—Superannuation member benefits paid from complying plans etc.
301 1 What this Division is about
Subdivision 301 A—Application
301 5 Division applies to superannuation member benefits paid from complying plans etc.
Subdivision 301 B—Member benefits: general rules
Member benefits—recipient aged 60 or above
301 10 All superannuation benefits are tax free
Member benefits—recipient aged over preservation age and under 60
301 15 Tax free status of tax free component
301 20 Superannuation lump sum—taxable component taxed at 0% up to low rate cap amount, 15% on remainder
301 25 Superannuation income stream—taxable component attracts 15% offset
Member benefits—recipient aged under preservation age
301 30 Tax free status of tax free component
301 35 Superannuation lump sum—taxable component taxed at 20%
301 40 Superannuation income stream—taxable component is assessable income, 15% offset for disability benefit
Subdivision 301 C—Member benefits: elements untaxed in fund
301 90 Tax free component and element taxed in fund dealt with under Subdivision 301 B, but element untaxed in the fund dealt with under this Subdivision
Member benefits (element untaxed in fund)—recipient aged 60 or above
301 95 Superannuation lump sum—element untaxed in fund taxed at 15% up to untaxed plan cap amount, top rate on remainder
301 100 Superannuation income stream—element untaxed in fund attracts 10% offset
Member benefits (element untaxed in fund)—recipient aged over preservation age and under 60
301 105 Superannuation lump sum—element untaxed in fund taxed at 15% up to low rate cap amount, 30% up to untaxed plan cap amount, top rate on remainder
301 110 Superannuation income stream—element untaxed in fund is assessable income
Member benefits (element untaxed in fund)—recipient aged under preservation age
301 115 Superannuation lump sum—element untaxed in fund taxed at 30% up to untaxed plan cap amount, top rate on remainder
301 120 Superannuation income stream—element untaxed in fund is assessable income
Miscellaneous
301 125 Unclaimed money payments by the Commissioner
Subdivision 301 D—Departing Australia superannuation payments
301 170 Departing Australia superannuation payments
301 175 Treatment of departing Australia superannuation benefits
Subdivision 301 E—Superannuation lump sum member benefits less than $200
301 225 Superannuation lump sum member benefits less than $200 are tax free
Division 302—Superannuation death benefits paid from complying plans etc.
302 1 What this Division is about
Subdivision 302 A—Application
302 5 Division applies to superannuation death benefits paid from complying plans etc.
302 10 Superannuation death benefits paid to trustee of deceased estate
Subdivision 302 B—Death benefits to dependant
Lump sum death benefits to dependants are tax free
302 60 All of superannuation lump sum is tax free
Superannuation income stream—either deceased died aged 60 or above or dependant aged 60 or above
302 65 Superannuation income stream benefits are tax free
Superannuation income stream—deceased died aged under 60 and dependant aged under 60
302 70 Superannuation income stream—tax free status of tax free component
302 75 Superannuation income stream—taxable component attracts 15% offset
Death benefits to dependant—elements untaxed in fund
302 80 Treatment of element untaxed in the fund of superannuation income stream death benefit to dependant
302 85 Deceased died aged 60 or above or dependant aged 60 years or above—superannuation income stream: element untaxed in fund attracts 10% offset
302 90 Deceased died aged under 60 and dependant aged under 60—superannuation income stream: element untaxed in fund is assessable income
Subdivision 302 C—Death benefits to non dependant
Superannuation lump sum
302 140 Superannuation lump sum—tax free status of tax free component
302 145 Superannuation lump sum—element taxed in the fund taxed at 15%, element untaxed in the fund taxed at 30%
Subdivision 302 D—Definitions relating to dependants
302 195 Meaning of death benefits dependant
302 200 What is an interdependency relationship?
Division 303—Superannuation benefits paid in special circumstances
303 5 Commutation of income stream if you are under 25 etc.
303 10 Superannuation lump sum member benefit paid to member having a terminal medical condition
303 15 Payments from release authorities—excess concessional contributions
303 17 Payments from release authorities etc.—released non concessional contributions and associated earnings
303 20 Payments from release authorities—Division 293 tax
Division 304—Superannuation benefits in breach of legislative requirements etc.
304 1 What this Division is about
Operative provisions
304 5 Application
304 10 Superannuation benefits in breach of legislative requirements etc.
304 15 Excess payments from release authorities
304 20 Excess payments from release authorities—Division 293 tax
Division 305—Superannuation benefits paid from non complying superannuation plans
305 1 What this Division is about
Subdivision 305 A—Superannuation benefits from Australian non complying superannuation funds
305 5 Tax treatment of superannuation benefits from certain Australian non complying superannuation funds
Subdivision 305 B—Superannuation benefits from foreign superannuation funds
Application of Subdivision
305 55 Restriction to lump sums received from certain foreign superannuation funds
Lump sums received within 6 months after Australian residency or termination of foreign employment etc.
305 60 Lump sums tax free—foreign resident period
305 65 Lump sums tax free—Australian resident period
Lump sums to which sections 305 60 and 305 65 do not apply
305 70 Lump sums received more than 6 months after Australian residency or termination of foreign employment etc.
305 75 Lump sums—applicable fund earnings
305 80 Lump sums paid into complying superannuation plans—choice
Division 306—Roll overs etc.
306 1 What this Division is about
Operative provisions
306 5 Effect of a roll over superannuation benefit
306 10 Roll over superannuation benefit
306 12 Involuntary roll over superannuation benefit
306 15 Tax on excess untaxed roll over amounts
306 20 Effect of payment to government of unclaimed superannuation money
306 25 Payments connected with financial claims scheme to RSAs
Division 307—Key concepts relating to superannuation benefits
307 1 What this Division is about
Subdivision 307 A—Superannuation benefits generally
307 5 What is a superannuation benefit?
307 10 Payments that are not superannuation benefits
307 15 Payments for your benefit or at your direction or request
Subdivision 307 B—Superannuation lump sums and superannuation income stream benefits
307 65 Meaning of superannuation lump sum
307 70 Meaning of superannuation income stream and superannuation income stream benefit
Subdivision 307 C—Components of a superannuation benefit
307 120 Components of superannuation benefit
307 125 Proportioning rule
307 130 Superannuation guarantee payment consists entirely of taxable component
307 135 Superannuation co contribution benefit payment consists entirely of tax free component
307 140 Contributions splitting superannuation benefit consists entirely of taxable component
307 142 Components of certain unclaimed money payments
307 145 Modification for disability benefits
307 150 Modification in respect of superannuation lump sum with element untaxed in fund
Subdivision 307 D—Superannuation interests
307 200 Regulations relating to meaning of superannuation interests
307 205 Value of superannuation interest
307 210 Tax free component of superannuation interest
307 215 Taxable component of superannuation interest
307 220 What is the contributions segment?
307 225 What is the crystallised segment?
Subdivision 307 E—Elements taxed and untaxed in the fund of the taxable component of superannuation benefit
307 275 Element taxed in the fund and element untaxed in the fund of superannuation benefits
307 280 Superannuation benefits from constitutionally protected funds etc.
307 285 Trustee can choose to convert element taxed in the fund to element untaxed in the fund
307 290 Taxed and untaxed elements of death benefit superannuation lump sums
307 295 Superannuation benefits from public sector superannuation schemes may include untaxed element
307 297 Public sector superannuation schemes—elements set by regulations
307 300 Certain unclaimed money payments
Subdivision 307 F—Low rate cap and untaxed plan cap amounts
307 345 Low rate cap amount
307 350 Untaxed plan cap amount
Subdivision 307 G—Other concepts
307 400 Meaning of service period for a superannuation lump sum
Division 310—Loss relief for merging superannuation funds
310 1 What this Division is about
Operative provisions
Subdivision 310 A—Object of this Division
310 5 Object
Subdivision 310 B—Choice to transfer losses
310 10 Original fund’s assets extend beyond life insurance policies and units in pooled superannuation trusts
310 15 Original fund’s assets include a complying superannuation life insurance policy
310 20 Original fund’s assets include units in a pooled superannuation trust
Subdivision 310 C—Consequences of choosing to transfer losses
310 25 Who losses can be transferred to
310 30 Losses that can be transferred
310 35 Effect of transferring a net capital loss
310 40 Effect of transferring a tax loss
Subdivision 310 D—Choice for assets roll over
310 45 Choosing the assets roll over
310 50 Choosing the form of the assets roll over
Subdivision 310 E—Consequences of choosing assets roll over
310 55 CGT assets—if global asset approach chosen
310 60 CGT assets—individual asset approach
310 65 Revenue assets—if global asset approach chosen
310 70 Revenue assets—individual asset approach
310 75 Further consequences for roll overs involving life insurance companies
Subdivision 310 F—Choices
310 85 Choices
Division 311—Loss relief and asset roll over for transfer of amounts to a MySuper product
311 1 What this Division is about
Operative provisions
Subdivision 311 A—Object of this Division
311 5 Object
Subdivision 311 B—Choosing loss transfers and asset roll overs
311 10 Certain entities can choose transfer of losses, asset roll overs, or both
Subdivision 311 C—Consequences of choosing to transfer losses
311 15 Who losses can be transferred to
311 20 Losses that can be transferred
311 25 Effect of transferring a net capital loss
311 30 Effect of transferring a tax loss
311 35 Realisation of certain assets after completion time
Subdivision 311 D—Consequences of choosing asset roll over
311 40 Assets roll over
311 45 CGT assets
311 50 Revenue assets
311 55 Further consequences for roll overs involving life insurance companies
Subdivision 311 E—Choices
311 60 Choices
Division 312—Trans Tasman portability of retirement savings
312 1 What this Division is about
Subdivision 312 A—Preliminary
312 5 Division implements Arrangement with New Zealand
Subdivision 312 B—Amounts contributed to complying superannuation funds from KiwiSaver schemes
312 10 Amounts contributed to complying superannuation funds from KiwiSaver schemes
Subdivision 312 C—Superannuation benefits paid to KiwiSaver scheme providers
312 15 Superannuation benefits paid to KiwiSaver schemes
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Volume 7
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Chapter 3—Specialist liability rules
Part 3 32—Co operatives and mutual entities
Division 315—Demutualisation of private health insurers
315 1 What this Division is about
Subdivision 315 A—Capital gains and losses connected with a demutualisation of a private health insurer to be disregarded
Rules for policy holders
315 5 Policy holders to disregard capital gains and losses related to demutualisation of private health insurer
315 10 Effect on the legal personal representative or beneficiary
315 15 Demutualisations to which this Division applies
315 20 What assets are covered
Rules for demutualising health insurer
315 25 Demutualising health insurers to disregard capital gains and losses related to demutualisation
Rules for other entities
315 30 Other entities to disregard capital gains and losses related to demutualisation
Subdivision 315 B—Cost base of certain shares and rights in private health insurers
315 80 Cost base and acquisition time of demutualisation assets
315 85 Demutualisation asset
315 90 Participating policy holders
Subdivision 315 C—Lost policy holders trust
315 140 Lost policy holders trust
315 145 CGT treatment of demutualisation assets in lost policy holders trust
315 150 Roll over where assets transferred to lost policy holder
315 155 Trustee assessed if assets dealt with not for benefit of lost policy holder
315 160 Subdivision 126 E does not apply to lost policy holders trust
Subdivision 315 D—Special cost base rules for certain shares and rights in holding companies
315 210 Cost base for shares and rights in certain holding companies
Subdivision 315 E—Special CGT rule for legal personal representatives and beneficiaries
315 260 Special CGT rule for legal personal representatives and beneficiaries
Subdivision 315 F—Non CGT consequences of demutualisation
315 310 General taxation consequences of issue of demutualisation assets etc.
Division 316—Demutualisation of friendly society health or life insurers
316 1 What this Division is about
Subdivision 316 A—Application
316 5 Application of this Division
Subdivision 316 B—Capital gains and losses connected with the demutualisation
Guide to Subdivision 316 B
316 50 What this Subdivision is about
Gains and losses of members, insured entities and successors
316 55 Disregarding capital gains and losses, except some involving receipt of money
316 60 Taking account of some capital gains and losses involving receipt of money
316 65 Valuation factor for sections 316 60, 316 105 and 316 165
316 70 Value of the friendly society
Friendly society’s gains and losses
316 75 Disregarding friendly society’s capital gains and losses
Other entities’ gains and losses
316 80 Disregarding other entities’ capital gains and losses
Subdivision 316 C—Cost base of shares and rights issued under the demutualisation
Guide to Subdivision 316 C
316 100 What this Subdivision is about
316 105 Cost base and time of acquisition of shares and certain rights issued under demutualisation
316 110 Demutualisation assets
316 115 Entities to which section 316 105 applies
Subdivision 316 D—Lost policy holders trust
Guide to Subdivision 316 D
316 150 What this Subdivision is about
Application
316 155 Lost policy holders trust
Effects of CGT events happening to interests and assets in trust
316 160 Disregarding beneficiaries’ capital gains and losses, except some involving receipt of money
316 165 Taking account of some capital gains and losses involving receipt of money by beneficiaries
316 170 Roll over where shares or rights to acquire shares transferred to beneficiary of lost policy holders trust
316 175 Trustee assessed if shares or rights dealt with not for benefit of beneficiary of lost policy holders trust
316 180 Subdivision 126 E does not apply
Subdivision 316 E—Special CGT rules for legal personal representatives and beneficiaries
316 200 Demutualisation assets not owned by deceased but passing to beneficiary in deceased estate
316 205 Interest in lost policy holders trust not owned by deceased but passing to beneficiary in deceased estate
Subdivision 316 F—Non CGT consequences of the demutualisation
Guide to Subdivision 316 F
316 250 What this Subdivision is about
316 255 General taxation consequences of issue of demutualisation assets etc.
316 260 Franking debits to stop the friendly society and its subsidiaries having franking surpluses
316 265 Franking debits to negate franking credits from some distributions to friendly society and subsidiaries
316 270 Franking debits to negate franking credits from post demutualisation payments of pre demutualisation tax
316 275 Franking credits to negate franking debits from refunds of tax paid before demutualisation
Part 3 35—Insurance business
Division 320—Life insurance companies
320 1 What this Division is about
Operative provisions
Subdivision 320 A—Preliminary
320 5 Object of Division
Subdivision 320 B—What is included in a life insurance company’s assessable income
Guide to Subdivision 320 B
320 10 What this Subdivision is about
Operative provisions
320 15 Assessable income—various amounts
320 30 Assessable income—special provision for certain income years
320 35 Exempt income
320 37 Non assessable non exempt income
320 45 Tax treatment of gains or losses from CGT events in relation to complying superannuation assets
Subdivision 320 C—Deductions and capital losses
Guide to Subdivision 320 C
320 50 What this Subdivision is about
Operative provisions
320 55 Deduction for life insurance premiums where liabilities under life insurance policies are to be discharged from complying superannuation assets
320 60 Deduction for life insurance premiums where liabilities under life insurance policies are to be discharged from segregated exempt assets
320 65 Deduction for life insurance premiums in respect of life insurance policies that provide for participating or discretionary benefits
320 70 No deduction for life insurance premiums in respect of certain life insurance policies payable only on death or disability
320 75 Deduction for ordinary investment policies
320 80 Deduction for certain claims paid under life insurance policies
320 85 Deduction for increase in value of liabilities under net risk components of life insurance policies
320 87 Deduction for assets transferred from or to complying superannuation asset pool
320 100 Deduction for life insurance premiums paid under certain contracts of reinsurance
320 105 Deduction for assets transferred to segregated exempt assets
320 107 Deductions for increased amount of lump sum death benefit
320 110 Deduction for interest credited to income bonds
320 111 Deduction for funeral policy payout
320 112 Deduction for scholarship plan payout
320 115 No deduction for amounts credited to RSAs
320 120 Capital losses from assets other than complying superannuation assets or segregated exempt assets
320 125 Capital losses from complying superannuation assets
Subdivision 320 D—Income tax, taxable income and tax loss of life insurance companies
Guide to Subdivision 320 D
320 130 What this Subdivision is about
320 131 Overview of Subdivision
General rules
320 133 Object of Subdivision
320 134 Income tax of a life insurance company
320 135 Taxable income and tax loss of each of the 2 classes
Taxable income and tax loss of life insurance companies
320 137 Taxable income—complying superannuation class
320 139 Taxable income—ordinary class
320 141 Tax loss—complying superannuation class
320 143 Tax loss—ordinary class
320 149 Provisions that apply only in relation to the ordinary class
Subdivision 320 E—No TFN contributions of life insurance companies that are RSA providers
Guide to Subdivision 320 E
320 150 What this Subdivision is about
Operative provisions
320 155 Subdivisions 295 I and 295 J apply to companies that are RSA providers
Subdivision 320 F—Complying superannuation asset pool
Guide to Subdivision 320 F
320 165 What this Subdivision is about
Operative provisions
320 170 Establishment of complying superannuation asset pool
320 175 Valuations of complying superannuation assets and complying superannuation liabilities for each valuation time
320 180 Consequences of a valuation under section 320 175
320 185 Transfer of assets to complying superannuation asset pool otherwise than as a result of a valuation under section 320 175
320 190 Complying superannuation liabilities
320 195 Transfer of assets and payment of amounts from a complying superannuation asset pool otherwise than as a result of a valuation under section 320 175
320 200 Consequences of transfer of assets to or from complying superannuation asset pool
Subdivision 320 H—Segregation of assets to discharge exempt life insurance policy liabilities
Guide to Subdivision 320 H
320 220 What this Subdivision is about
Operative provisions
320 225 Segregation of assets for purpose of discharging exempt life insurance policy liabilities
320 230 Valuations of segregated exempt assets and exempt life insurance policy liabilities for each valuation time
320 235 Consequences of a valuation under section 320 230
320 240 Transfer of assets to segregated exempt assets otherwise than as a result of a valuation under section 320 230
320 245 Exempt life insurance policy liabilities
320 246 Exempt life insurance policy
320 247 Policy split into an exempt life insurance policy and another life insurance policy
320 250 Transfer of assets and payment of amounts from segregated exempt assets otherwise than as a result of a valuation under section 320 230
320 255 Consequences of transfer of assets to or from segregated exempt assets
Subdivision 320 I—Transfers of business
Guide to Subdivision 320 I
320 300 What this Subdivision is about
Operative provisions
320 305 When this Subdivision applies
320 310 Special deductions and amounts of assessable income
320 315 Complying superannuation asset pool and segregated exempt assets
320 320 Certain amounts treated as life insurance premiums
320 325 Friendly societies
320 330 Immediate annuities
320 335 Parts of assets treated as separate assets
320 340 Continuous disability policies
320 345 Exemption of management fees
Division 321—General insurance companies and companies that self insure in respect of workers’ compensation liabilities
Subdivision 321 A—Provision for, and payment of, claims by general insurance companies
321 10 Assessable income to include amount for reduction in outstanding claims liability
321 15 Deduction for increase in outstanding claims liability
321 20 How value of outstanding claims liability is worked out
321 25 Deduction for claims paid during current year
Subdivision 321 B—Premium income of general insurance companies
321 45 Assessable income to include gross premiums
321 50 Assessable income to include amount for reduction in value of unearned premium reserve
321 55 Deduction for increase in value of unearned premium reserve
321 60 How value of unearned premium reserve is worked out
Subdivision 321 C—Companies that self insure in respect of workers’ compensation liabilities
321 80 Assessable income to include amount for reduction in outstanding claims liability
321 85 Deduction for outstanding claims liability
321 90 How value of outstanding claims liability is worked out
321 95 Deductions for claims paid during current year
Division 322—Assistance for policyholders with insolvent general insurers
322 1 What this Division is about
Subdivision 322 A—HIH rescue package
322 5 Rescue payments treated as insurance payments by HIH
322 10 HIH Trust exempt from tax
322 15 Certain capital gains and capital losses disregarded
Subdivision 322 B—Tax treatment of entitlements under financial claims scheme
Guide to Subdivision 322 B
322 20 What this Subdivision is about
Operative provisions
322 25 Payment of entitlement under financial claims scheme treated as payment from insurer
322 30 Disposal of rights against insurer to APRA and meeting of financial claims scheme entitlement have no CGT effects
Part 3 45—Rules for particular industries and occupations
Division 328—Small business entities
328 5 What this Division is about
328 10 Concessions available to small business entities
Subdivision 328 B—Objects of this Division
328 50 Objects of this Division
Subdivision 328 C—What is a small business entity
Guide to Subdivision 328 C
328 105 What this Subdivision is about
Operative provisions
328 110 Meaning of small business entity
328 115 Meaning of aggregated turnover
328 120 Meaning of annual turnover
328 125 Meaning of connected with an entity
328 130 Meaning of affiliate
Subdivision 328 D—Capital allowances for small business entities
Guide to Subdivision 328 D
328 170 What this Subdivision is about
Operative provisions
328 175 Calculations for depreciating assets
328 180 Assets costing less than $1,000
328 185 Pooling
328 190 Calculation
328 195 Opening pool balance
328 200 Closing pool balance
328 205 Estimate of taxable use
328 210 Low pool value
328 215 Disposal etc. of depreciating assets
328 220 What happens if you are not a small business entity or do not choose to use this Subdivision for an income year
328 225 Change in business use
328 230 Estimate where deduction denied
328 235 Interaction with Divisions 85 and 86
Special rules about roll overs
328 243 Roll over relief
328 245 Consequences of roll over
328 247 Pool deductions
328 250 Deductions for assets first used in BAE year
328 253 Deductions for cost addition amounts
328 255 Closing pool balance etc. below zero
328 257 Taxable use
Subdivision 328 E—Trading stock for small business entities
Guide to Subdivision 328 E
328 280 What this Subdivision is about
Operative provisions
328 285 Trading stock for small business entities
328 295 Value of trading stock on hand
Subdivision 328 F—Small business income tax offset
Guide to Subdivision 328 F
328 350 What this Subdivision is about
Operative provisions
328 355 Entitlement to the small business income tax offset
328 360 Amount of your tax offset
328 365 Net small business income
328 370 Relevant attributable deductions
328 375 Modification if you are under 18 years old
Subdivision 328 G—Restructures of small businesses
Guide to Subdivision 328 G
328 420 What this Subdivision is about
Object of this Subdivision
328 425 Object of this Subdivision
Requirements for a roll over under this Subdivision
328 430 When a roll over is available
328 435 Genuine restructures—safe harbour rule
328 440 Ultimate economic ownership—discretionary trusts
328 445 Residency requirement
Consequences of a roll over under this Subdivision
328 450 Small business transfers not to affect income tax positions
328 455 Effect of small business restructures on transferred cost of assets
328 460 Effect of small business restructures on acquisition times of pre CGT assets
328 465 New membership interests as consideration for transfer of assets
328 470 Membership interests affected by transfers of assets
328 475 Small business restructures involving assets already subject to small business roll over
Division 355—Research and Development
355 1 What this Division is about
Subdivision 355 A—Object
355 5 Object
Subdivision 355 B—Meaning of R&D activities and other terms
355 20 R&D activities
355 25 Core R&D activities
355 30 Supporting R&D activities
355 35 R&D entities
Subdivision 355 C—Entitlement to tax offset
355 100 Entitlement to tax offset
355 105 Deductions under this Division are notional only
355 110 Notional deductions include prepaid expenditure
Subdivision 355 D—Notional deductions for R&D expenditure
355 200 What this Subdivision is about
355 205 When notional deductions for R&D expenditure arise
355 210 Conditions for R&D activities
355 215 R&D activities conducted by a permanent establishment for other parts of the body corporate
355 220 R&D activities conducted for a foreign entity
355 225 Expenditure that cannot be notionally deducted
Subdivision 355 E—Notional deductions for decline in value of depreciating assets used for R&D activities
355 300 What this Subdivision is about
355 305 When notional deductions for decline in value arise
355 310 Notional application of Division 40
355 315 Balancing adjustments—assets only used for R&D activities
Subdivision 355 F—Integrity Rules
355 400 Expenditure incurred while not at arm’s length
355 405 Expenditure not at risk
355 410 Disposal of R&D results
355 415 Reducing deductions to reflect mark ups within groups
Subdivision 355 G—Clawback of R&D recoupments
355 430 What this Subdivision is about
355 435 When extra income tax is payable
355 440 Entity receives government recoupment
355 445 Recoupment could relate to R&D activities
355 450 Amount on which extra income tax is payable
Subdivision 355 H—Feedstock adjustments
355 460 What this Subdivision is about
355 465 Feedstock adjustment to assessable income
355 470 Feedstock revenue
355 475 Application to connected entities and affiliates
Subdivision 355 I—Application to earlier income year R&D expenditure incurred to associates
355 480 Notional deductions for expenditure incurred to associate in earlier income years
Subdivision 355 J—Application to R&D partnerships
355 500 What this Subdivision is about
355 505 Meaning of R&D partnership and partner’s proportion
355 510 R&D partnership expenditure on R&D activities
355 515 R&D activities conducted by or for an R&D partnership
355 520 When notional deductions arise for decline in value of depreciating assets of R&D partnerships
355 525 Balancing adjustments for R&D partnership assets only used for R&D activities
355 530 Implications for partner’s aggregated turnover
355 535 Disposal of R&D results for R&D partnerships
355 540 Application of recoupment rules
355 545 Relevance for net income, and losses, of the R&D partnership
Subdivision 355 K—Application to Cooperative Research Centres
355 580 When notional deductions for CRC contributions arise
Subdivision 355 W—Other matters
355 705 Effect of findings by Innovation Australia
355 710 Amendment of assessments
355 715 Implications for other deductions and tax offsets
355 720 Certain related amounts may be reduced if notional deductions exceeded $100 million
355 750 Review of rate when notional deductions exceed $100 million
Division 360—Early stage investors in innovation companies
Subdivision 360 A—Tax incentives for early stage investors in innovation companies
Guide to Subdivision 360 A
360 5 What this Subdivision is about
Operative provisions
360 10 Object of this Subdivision
360 15 Entitlement to the tax offset
360 20 Limited entitlement for certain kinds of investors
360 25 Amount of the tax offset—general case
360 30 Amount of the tax offset—members of trusts or partnerships
360 35 Amount of the tax offset—trustees
360 40 Early stage innovation companies
360 45 100 point innovation test
360 50 Modified CGT treatment
360 55 Modified CGT treatment—partnerships
360 60 Modified CGT treatment—not affected by certain roll overs
360 65 Separate modified CGT treatment for roll overs about wholly owned companies or scrip for scrip roll overs
Division 376—Films generally (tax offsets for Australian production expenditure)
Subdivision 376 A—Guide to Division 376
376 1 What this Division is about
376 2 Key features of the tax offsets for Australian production expenditure on films
376 5 Structure of this Division
Subdivision 376 B—Tax offsets for Australian expenditure in making a film
Refundable tax offset for Australian expenditure in making a film (location offset)
376 10 Film production company entitled to refundable tax offset for Australian expenditure in making a film (location offset)
376 15 Amount of the location offset
376 20 Minister must issue certificate for a film for the location offset
376 25 Meaning of documentary
376 30 Minister to determine a company’s qualifying Australian production expenditure for the location offset
Refundable tax offset for post, digital and visual effects production for a film (PDV offset)
376 35 Film production company entitled to refundable tax offset for post, digital and visual effects production for a film (PDV offset)
376 40 Amount of the PDV offset
376 45 Minister must issue certificate for a film for the PDV offset
376 50 Minister to determine a company’s qualifying Australian production expenditure for the PDV offset
Refundable tax offset for Australian expenditure in making an Australian film (producer offset)
376 55 Film production company entitled to refundable tax offset for Australian expenditure in making an Australian film (producer offset)
376 60 Amount of the producer offset
376 65 Film authority must issue certificate for an Australian film for the producer offset
376 70 Determination of content of film
376 75 Film authority to determine a company’s qualifying Australian production expenditure for the producer offset
Subdivision 376 C—Production expenditure and qualifying Australian production expenditure
Production expenditure—common rules
376 125 Production expenditure—general test
376 130 Production expenditure—special qualifying Australian production expenditure
376 135 Production expenditure—specific exclusions
Production expenditure—special rules for the location offset
376 140 Production expenditure—special rules for the location offset
Qualifying Australian production expenditure—common rules
376 145 Qualifying Australian production expenditure—general test
376 150 Qualifying Australian production expenditure—specific inclusions
376 155 Qualifying Australian production expenditure—specific exclusions
376 160 Qualifying Australian production expenditure—treatment of services embodied in goods
Qualifying Australian production expenditure—special rules for the location offset and the PDV offset
376 165 Qualifying Australian production expenditure—special rules for the location offset and the PDV offset
Qualifying Australian production expenditure—special rules for the producer offset
376 170 Qualifying Australian production expenditure—special rules for the producer offset
Expenditure generally—common rules
376 175 Expenditure to be worked out on an arm’s length basis
376 180 Expenditure incurred by prior production companies
376 185 Expenditure to be worked out excluding GST
Subdivision 376 D—Certificates for films and other matters
376 230 Production company may apply for certificate
376 235 Notice of refusal to issue certificate
376 240 Issue of certificate
376 245 Revocation of certificate
376 250 Notice of decision or determination
376 255 Review of decisions by the Administrative Appeals Tribunal
376 260 Minister may make rules about the location offset and the PDV offset
376 265 Film authority may make rules about the producer offset
376 270 Amendment of assessments
376 275 Review in relation to certain production levels
Division 380—National Rental Affordability Scheme
380 1 What this Division is about
Subdivision 380 A—National Rental Affordability Scheme Tax Offset
NRAS certificates issued to individuals, corporate tax entities and superannuation funds
380 5 Claims by individuals, corporate tax entities and superannuation funds
NRAS certificates issued to NRAS approved participants
380 10 Members of NRAS consortiums—individuals, corporate tax entities and superannuation funds
380 11 Elections by NRAS approved participants
380 12 Elections by NRAS approved participants—tax offsets
380 13 Elections by NRAS approved participants—special rule for partnerships and trustees
380 14 Members of NRAS consortiums—partnerships and trustees
NRAS certificates issued to partnerships and trustees
380 15 Entities to whom NRAS rent flows indirectly
380 16 Elections by NRAS approved participants that are partnerships or trustees
380 17 Elections by NRAS approved participants that are partnerships or trustees—tax offsets
380 18 Elections by NRAS approved participants that are partnerships or trustees—special rule for partnerships and trustees
380 20 Trustee of a trust that does not have net income for an income year
380 25 When NRAS rent flows indirectly to or through an entity
380 30 Share of NRAS rent
Miscellaneous
380 32 Amended certificates
Subdivision 380 B—Payments made in relation to the National Rental Affordability Scheme etc.
380 35 Payments made and non cash benefits provided in relation to the National Rental Affordability Scheme
Division 385—Primary production
385 1 What this Division is about
385 5 Where to find some other rules relevant to primary producers
Subdivision 385 E—Primary producer can elect to spread or defer tax on profit from forced disposal or death of live stock
Guide to Subdivision 385 E
385 90 What this Subdivision is about
385 95 Basic principles for elections under this Subdivision
Operative provisions
385 100 Cases where you can make an election
385 105 Election to spread tax profit over 5 years
385 110 Alternative election to defer tax profit and reduce cost of replacement live stock
385 115 Your assessable income includes an amount for replacement live stock you breed
385 120 Purchase price of replacement live stock is reduced
385 125 Alternative election because of bovine tuberculosis has effect over 10 years not 5
Subdivision 385 F—Insurance for loss of live stock or trees
385 130 Insurance for loss of live stock or trees
Subdivision 385 G—Double wool clips
385 135 Election to defer including profit on second wool clip
Subdivision 385 H—Rules that apply to all elections made under Subdivisions 385 E, 385 F and 385 G
385 145 Partnerships and trusts
385 150 Time for making election
385 155 Amounts are assessable income from carrying on the primary production business
385 160 Effect of certain events on election
385 163 Disentitling events
385 165 New partnership can elect to be treated as same entity as old partnership
385 170 New partnership can elect to take advantage of election made by former owner of the business
Division 392—Long term averaging of primary producers’ tax liability
392 1 What this Division is about
392 5 Overview of averaging process
Subdivision 392 A—Is your income tax affected by averaging?
392 10 Individuals who carry on a primary production business
392 15 Meaning of basic taxable income
392 20 Trust beneficiaries taken to be carrying on primary production business
392 22 Trustee may choose that a beneficiary is a chosen beneficiary of the trust
392 25 Choosing not to have your income tax averaged
Subdivision 392 B—What kind of averaging adjustment must you make?
Guide to Subdivision 392 B
392 30 What this Subdivision is about
Tax offset or extra income tax
392 35 Will you get a tax offset or have to pay extra income tax?
How to work out the comparison rate
392 40 Identify income years for averaging your basic taxable income
392 45 Work out your average income for those years
392 50 Work out the income tax on your average income at basic rates
392 55 Work out the comparison rate
Subdivision 392 C—How big is your averaging adjustment?
Guide to Subdivision 392 C
392 60 What this Subdivision is about
392 65 What your averaging adjustment reflects
Your gross averaging amount
392 70 Working out your gross averaging amount
Your averaging adjustment
392 75 Working out your averaging adjustment
How to work out your averaging component
392 80 Work out your taxable primary production income
392 85 Work out your taxable non primary production income
392 90 Work out your averaging component
Subdivision 392 D—Effect of permanent reduction of your basic taxable income
392 95 You are treated as if you had not carried on business before
Division 393—Farm management deposits
393 1 What this Division is about
Subdivision 393 A—Tax consequences of farm management deposits
393 5 Deduction for making farm management deposit
393 10 Assessability on repayment of deposit
393 15 Transactions to which the deduction, assessment and 12 month rules have modified application
393 16 Consolidation of farm management deposits
393 17 Tax consequences of liabilities reducing because of farm management deposits
Subdivision 393 B—Meaning of farm management deposit and owner
393 20 Farm management deposits
393 25 Owners of farm management deposits
393 27 Trustee may choose that a beneficiary is a chosen beneficiary of the trust
393 28 Application of Division to beneficiary no longer under legal disability
393 30 Effect of contravening requirements
393 35 Requirements of agreement for a farm management deposit
393 37 Agreements for a farm management deposit may allow for some offsets of a depositor’s liabilities
393 40 Repayment of deposit within first 12 months
393 45 Partly repaid farm management deposits
Subdivision 393 C—Special rules relating to financial claims scheme for account holders with insolvent ADIs
Guide to Subdivision 393 C
393 50 What this Subdivision is about
Operative provisions
393 55 Farm management deposits arising from farm management deposits with ADIs subject to financial claims scheme
393 60 Repayment if owner of farm management deposit with insolvent ADI dies, is bankrupt or ceases to be a primary producer
Division 394—Forestry managed investment schemes
394 1 What this Division is about
394 5 Object of this Division
394 10 Deduction for amounts paid under forestry managed investment schemes
394 15 Forestry managed investment schemes and related concepts
394 20 Payments on behalf of participant in forestry managed investment scheme
394 25 CGT event in relation to forestry interest in forestry managed investment scheme—initial participant
394 30 CGT event in relation to forestry interest in forestry managed investment scheme—subsequent participant
394 35 70% DFE rule
394 40 Payments under forestry managed investment scheme
394 45 Direct forestry expenditure
Division 405—Above average special professional income of authors, inventors, performing artists, production associates and sportspersons
405 1 What this Division is about
405 5 Special rate of income tax on your above average special professional income
405 10 Overview of the Division
Subdivision 405 A—Above average special professional income
405 15 When do you have above average special professional income?
Subdivision 405 B—Assessable professional income
405 20 What you count as assessable professional income
405 25 Meaning of special professional, performing artist, production associate, sportsperson and sporting competition
405 30 What you cannot count as assessable professional income
405 35 Limits on counting amounts as assessable professional income
405 40 Joint author or inventor treated as sole author or inventor
Subdivision 405 C—Taxable professional income and average taxable professional income
405 45 Working out your taxable professional income
405 50 Working out your average taxable professional income
Division 410—Copyright and resale royalty collecting societies
410 1 What this Division is about
Subdivision 410 A—Notice of payments
410 5 Copyright collecting society must give notice to member of society
410 50 Resale royalty collecting society must give notice to holder of resale royalty right
Division 415—Designated infrastructure projects
415 1 What this Division is about
Subdivision 415 A—Object of this Division
415 5 Object of this Division
Subdivision 415 B—Tax losses and bad debts
Guide to Subdivision 415 B
415 10 What this Subdivision is about
Uplift of tax losses
415 15 Uplift of tax losses of designated infrastructure project entities
415 20 Designated infrastructure project entity
Change of ownership of trusts and companies
415 25 Tax losses of trusts
415 30 Bad debts written off etc. by trusts
415 35 Tax losses of companies
415 40 Bad debts written off by companies
Consolidated groups
415 45 Losses transferred to head companies of consolidated groups
Subdivision 415 C—Designating infrastructure projects
Guide to Subdivision 415 C
415 50 What this Subdivision is about
Designating infrastructure projects
415 55 Applications for designation
415 60 Dealing with applications
415 65 Provisional designation
415 70 Designation
Infrastructure project capital expenditure cap
415 75 Infrastructure project capital expenditure cap
415 80 Acceptance of estimates of infrastructure project capital expenditure
Miscellaneous
415 85 Review of decisions
415 90 Information to be made public
415 95 Delegation
415 100 Infrastructure project designation rules
Division 418—Exploration for minerals
418 1 What this Division is about
Subdivision 418 A—Object of this Division
418 5 Object of this Division
Subdivision 418 B—Exploration development incentive tax offset
Entitlement to exploration development incentive tax offset
418 10 Who is entitled to the tax offset—ordinary case
418 15 Who is entitled to the tax offset—life insurance company
418 20 Entitlement of member of a trust or partnership to a share of exploration credits
Amount of exploration development incentive tax offset
418 25 The amount of the tax offset
418 30 Reduced amount of the tax offset for certain trusts
Subdivision 418 C—Exploration development incentive franking credit
418 50 Exploration development incentive franking credit—ordinary case
418 55 Exploration development incentive franking credit—life insurance company
Subdivision 418 D—Creating exploration credits
418 70 Entities that may create exploration credits
418 75 Meaning of greenfields minerals explorer
418 80 Meaning of greenfields minerals expenditure
418 85 Exploration credits must not exceed maximum exploration credit amount
418 90 Modulation factors
418 95 Effect on tax losses of creating exploration credits
Subdivision 418 E—Issuing exploration credits
418 110 Issuing exploration credits
418 115 Restricting exploration credits to post 1 July 2014 shares
418 120 Exploration credits to be issued on a proportionate basis
418 125 Expiry of exploration credits
418 130 Notifying the Commissioner of issuing or expiry of exploration credits
Subdivision 418 F—Excess exploration credits
418 150 Excess exploration credit tax
418 155 Due date for payment of excess exploration credit tax
418 160 Returns
418 165 When shortfall interest charge is payable
418 170 General interest charge
418 175 Refunds of amounts overpaid
418 180 Record keeping
418 185 Determining an entity not to be a greenfields minerals explorer
Part 3 50—Climate change
Division 420—Registered emissions units
420 1 What this Division is about
420 5 The 4 key features of tax accounting for registered emissions units
Subdivision 420 A—Registered emissions units
420 10 Meaning of registered emissions unit
420 12 Meaning of hold a registered emissions unit
Subdivision 420 B—Acquiring registered emissions units
420 15 What you can deduct
420 20 Non arm’s length transactions and transactions with associates
420 21 Incoming international transfers of emissions units
420 22 Becoming taxable in Australia on the proceeds of sale of registered emissions units
Subdivision 420 C—Disposing of registered emissions units etc.
420 25 Assessable income on disposal of registered emissions units
420 30 Non arm’s length transactions and transactions with associates
420 35 Outgoing international transfers of emissions units
420 40 Disposal of registered emissions units for a purpose other than gaining assessable income
420 41 Ceasing to be taxable in Australia on the proceeds of sale of registered emissions units
420 42 Deduction for expenses incurred in ceasing to hold a registered emissions unit
Subdivision 420 D—Accounting for registered emissions units you hold at the start or end of the income year
420 45 You include the value of your registered emissions units in working out your assessable income and deductions
420 50 Value of registered emissions units at start of income year
420 51 Valuation methods
420 52 FIFO cost method of working out the value of units
420 53 Actual cost method of working out the value of units
420 54 Market value method of working out the value of units
420 55 Valuation method for first income year at the end of which you held registered emissions units
420 57 Valuation method for later income years at the end of which you held registered emissions units
420 60 Cost of registered emissions units
Subdivision 420 E—Exclusivity of Division
420 65 Exclusivity of deductions etc.
420 70 Exclusivity of assessable income etc.
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Volume 8
Collapse
Chapter 3—Specialist liability rules
Part 3 80—Roll overs applying to assets generally
Division 615—Roll overs for business restructures
615 1 What this Division is about
Subdivision 615 A—Choosing to obtain roll overs
615 5 Disposing of interests in one entity for shares in a company
615 10 Redeeming or cancelling interests in one entity for shares in a company
Subdivision 615 B—Further requirements for choosing to obtain roll overs
615 15 Interposed company must own all the original interests
615 20 Requirements relating to your interests in the original entity
615 25 Requirements relating to the interposed company
615 30 Interposed company must make a particular choice
615 35 ADI restructures—disregard certain preference shares
Subdivision 615 C—Consequences of roll overs
615 40 CGT consequences
615 45 Additional consequences—deferral of profit or loss
615 50 Trading stock
615 55 Revenue assets
615 60 Disregard CGT exemption for trading stock
Subdivision 615 D—Consequences for the interposed company
615 65 Consequences for the interposed company
Division 620—Assets of wound up corporation passing to corporation with not significantly different ownership
Subdivision 620 A—Corporations covered by Subdivision 124 I
Guide to Subdivision 620 A
620 5 What this Subdivision is about
Application and object of this Subdivision
620 10 Application
620 15 Object
CGT consequences
620 20 Disregard body’s capital gains and losses from CGT assets
620 25 Cost base and pre CGT status of CGT asset for company
Consequences for depreciating assets
620 30 Roll over relief for balancing adjustment events
Consequences for trading stock
620 40 Body taken to have sold trading stock to company
Consequences for revenue assets
620 50 Body taken to have sold revenue assets to company
Part 3 90—Consolidated groups
Division 700—Guide and objects
Guide
700 1 What this Part is about
700 5 Overview of this Part
Objects
700 10 Objects of this Part
Division 701—Core rules
Common rule
701 1 Single entity rule
Head company rules
701 5 Entry history rule
701 10 Cost to head company of assets of joining entity
701 15 Cost to head company of membership interests in entity that leaves group
701 20 Cost to head company of assets consisting of certain liabilities owed by entity that leaves group
701 25 Tax neutral consequence for head company of ceasing to hold assets when entity leaves group
Entity rules
701 30 Where entity not subsidiary member for whole of income year
701 35 Tax neutral consequence for entity of ceasing to hold assets when it joins group
701 40 Exit history rule
701 45 Cost of assets consisting of liabilities owed to entity by members of the group
701 50 Cost of certain membership interests of which entity becomes holder on leaving group
Supporting provisions
701 55 Setting the tax cost of an asset
701 56 Application of subsection 701 55(6)
701 58 Effect of setting the tax cost of an asset that the head company does not hold under the single entity rule
701 60 Tax cost setting amount
701 61 Assets in relation to Division 230 financial arrangement—head company’s assessable income or deduction
701 63 Right to future income and WIP amount asset
701 65 Net income and losses for trusts and partnerships
701 67 Assets in this Part are CGT assets, etc.
Exceptions
701 70 Adjustments to taxable income where identities of parties to arrangement merge on joining group
701 75 Adjustments to taxable income where identities of parties to arrangement re emerge on leaving group
701 80 Accelerated depreciation
701 85 Other exceptions etc. to the rules
Division 703—Consolidated groups and their members
703 1 What this Division is about
Basic concepts
703 5 What is a consolidated group?
703 10 What is a consolidatable group?
703 15 Members of a consolidated group or consolidatable group
703 20 Certain entities that cannot be members of a consolidated group or consolidatable group
703 25 Australian residence requirements for trusts
703 30 When is one entity a wholly owned subsidiary of another?
703 33 Transfer time for sale of shares in company
703 35 Treating entities as wholly owned subsidiaries by disregarding employee shares
703 37 Disregarding certain preference shares following an ADI restructure
703 40 Treating entities held through non fixed trusts as wholly owned subsidiaries
703 45 Subsidiary members or nominees interposed between the head company and a subsidiary member of a consolidated group or a consolidatable group
Choice to consolidate a consolidatable group
703 50 Choice to consolidate a consolidatable group
Consolidated group created when MEC group ceases to exist
703 55 Creating consolidated groups from certain MEC groups
Notice of events affecting consolidated group
703 58 Notice of choice to consolidate
703 60 Notice of events affecting consolidated group
Effects of choice to continue group after shelf company becomes new head company
703 65 Application
703 70 Consolidated group continues in existence with interposed company as head company and original entity as a subsidiary member
703 75 Interposed company treated as substituted for original entity at all times before the completion time
703 80 Effects on the original entity’s tax position
Division 705—Tax cost setting amount for assets where entities become subsidiary members of consolidated groups
705 1 What this Division is about
Subdivision 705 A—Basic case: a single entity joining an existing consolidated group
Guide to Subdivision 705 A
705 5 What this Subdivision is about
Application and object
705 10 Application and object of this Subdivision
705 15 Cases where this Subdivision does not have effect
Tax cost setting amount for assets that joining entity brings into joined group
705 20 Tax cost setting amount worked out under this Subdivision
705 25 Tax cost setting amount for retained cost base assets
705 27 Reduction in tax cost setting amount that exceeds market value of certain retained cost base assets
705 30 What is the joining entity’s terminating value for an asset?
705 35 Tax cost setting amount for reset cost base assets
705 40 Tax cost setting amount for reset cost base assets held on revenue account etc.
705 45 Reduction in tax cost setting amount for accelerated depreciation assets
705 47 Reduction in tax cost setting amount for some privatised assets
705 55 Order of application of sections 705 40, 705 45 and 705 47
705 56 Modification for tax cost setting in relation to finance leases
705 57 Adjustment to tax cost setting amount where loss of pre CGT status of membership interests in joining entity
705 58 Assets and liabilities not set off against each other
705 59 Exception: treatment of linked assets and liabilities
How to work out the allocable cost amount
705 60 What is the joined group’s allocable cost amount for the joining entity?
705 62 No double counting of amounts in allocable cost amount
705 65 Cost of membership interests in the joining entity—step 1 in working out allocable cost amount
705 70 Liabilities of the joining entity—step 2 in working out allocable cost amount
705 75 Liabilities of the joining entity—reductions for purposes of step 2 in working out allocable cost amount
705 80 Liabilities of the joining entity—reductions/increases for purposes of step 2 in working out allocable cost amount
705 85 Liabilities of the joining entity—increases for purposes of step 2 in working out allocable cost amount
705 90 Undistributed, taxed profits accruing to joined group before joining time—step 3 in working out allocable cost amount
705 93 If pre joining time roll over from foreign resident company or head company—step 3A in working out allocable cost amount
705 95 Pre joining time distributions out of certain profits—step 4 in working out allocable cost amount
705 100 Losses accruing to joined group before joining time—step 5 in working out allocable cost amount
705 105 Continuity of holding membership interests—steps 3 to 5 in working out allocable cost amount
705 110 If joining entity transfers a loss to the head company—step 6 in working out allocable cost amount
705 115 If head company becomes entitled to certain deductions—step 7 in working out allocable cost amount
How to work out a pre CGT factor for assets of joining entity
705 125 Pre CGT proportion for joining entity
Subdivision 705 B—Case of group formation
Guide to Subdivision 705 B
705 130 What this Subdivision is about
Application and object
705 135 Application and object of this Subdivision
Modified application of Subdivision 705 A
705 140 Subdivision 705 A has effect with modifications
705 145 Order in which tax cost setting amounts are to be worked out where subsidiary members have membership interests in other subsidiary members
705 147 Adjustment in working out step 3A of allocable cost amount to take account of membership interests held by subsidiary members in other such members
705 155 Adjustments to restrict step 4 reduction of allocable cost amount to effective distributions to head company in respect of direct membership interests
705 160 Adjustment to allocation of allocable cost amount to take account of owned profits or losses of certain entities that become subsidiary members
705 163 Modified application of section 705 57
Subdivision 705 C—Case where a consolidated group is acquired by another
Guide to Subdivision 705 C
705 170 What this Subdivision is about
Application and object
705 175 Application and object of this Subdivision
Modified application of Division 701 in relation to acquired group etc.
705 180 Modifications of Division 701
Modified application of Subdivision 705 A in relation to acquiring group
705 185 Subdivision 705 A has effect with modifications
Modifications of Subdivision 705 A for the purposes of this Subdivision
705 195 Modified application of subsection 705 65(6)
705 200 Modified application of section 705 85
Subdivision 705 D—Where multiple entities are linked by membership interests
Guide to Subdivision 705 D
705 210 What this Subdivision is about
Application and object
705 215 Application and object of this Subdivision
Modified application of Subdivision 705 A
705 220 Subdivision 705 A has effect with modifications
705 225 Order in which tax cost setting amounts are to be worked out where linked entities have membership interests in other linked entities
705 227 Adjustment in working out step 3A of allocable cost amount to take account of membership interests held by linked entities in other linked entities
705 230 Adjustments to restrict step 4 reduction of allocable cost amount to effective distributions to head company in respect of direct membership interests
705 235 Adjustment to allocation of allocable cost amount to take account of owned profits or losses of certain linked entities
705 240 Modified application of section 705 57
Subdivision 705 E—Adjustments for errors etc.
Guide to Subdivision 705 E
705 300 What this Subdivision is about
Operative provisions
705 305 Object of this Subdivision
705 310 Operation of Part IVA of the Income Tax Assessment Act 1936
705 315 Errors that attract special adjustment action
705 320 Tax cost setting amounts taken to be correct
Division 707—Losses for head companies when entities become members etc.
Subdivision 707 A—Transfer of losses to head company
Guide to Subdivision 707 A
707 100 What this Subdivision is about
707 105 Who can utilise the loss?
Objects
707 110 Objects of this Subdivision
Application
707 115 What losses this Subdivision applies to
Transfer of loss from joining entity to head company
707 120 Transfer of loss from joining entity to head company
707 125 Modified same business test for companies’ post 1999 losses
707 130 Modified pattern of distributions test
707 135 Transferring loss transferred to joining entity because same business test was passed
Effect of transfer of loss
707 140 Effect of transfer of loss
Cancelling the transfer of the loss
707 145 Cancelling the transfer of the loss
What happens if the loss is not transferred?
707 150 Loss cannot be utilised for income year ending after the joining time
Subdivision 707 B—Can a transferred loss be utilised?
Guide to Subdivision 707 B
707 200 What this Subdivision is about
Operative provisions
707 205 Modified period for test for maintaining same ownership
707 210 Utilisation of certain losses transferred from a company depends on company that made the losses earlier
Subdivision 707 C—Amount of transferred losses that can be utilised
Guide to Subdivision 707 C
707 300 What this Subdivision is about
Object
707 305 Object of this Subdivision
How much of a transferred loss can be utilised?
707 310 How much of a transferred loss can be utilised?
707 315 What is a bundle of losses?
707 320 What is the available fraction for a bundle of losses?
707 325 Modified market value of an entity becoming a member of a consolidated group
707 330 Losses transferred from former head company
707 335 Limit on utilising transferred losses if circumstances change during income year
707 340 Utilising transferred losses while exempt income remains
707 345 Other provisions are subject to this Subdivision
Subdivision 707 D—Special rules about losses
707 400 Head company’s business before and after consolidation not compared
707 410 Exit history rule does not treat entity as having made a loss
707 415 Application of losses with nil available fraction for certain purposes
Division 709—Other rules applying when entities become subsidiary members etc.
Subdivision 709 A—Franking accounts
Guide to Subdivision 709 A
709 50 What this Subdivision is about
Object
709 55 Object of this Subdivision
Treatment of franking accounts at joining time
709 60 Nil balance franking account for joining entity
Treatment of subsidiary member’s franking account
709 65 Subsidiary member’s franking account does not operate
Treatment of head company’s franking account
709 70 Credits arising in head company’s franking account
709 75 Debits arising in head company’s franking account
Franking distributions by subsidiary member
709 80 Subsidiary member’s distributions on employee shares and certain preference shares taken to be distributions by the head company
709 85 Non share distributions by subsidiary members taken to be distributions by head company
709 90 Subsidiary member’s distributions to foreign resident taken to be distributions by head company
Payment of group liability by former subsidiary member
709 95 Payment of group liability by former subsidiary member
709 100 Refund of income tax to former subsidiary member
Subdivision 709 B—Imputation issues
Guide to Subdivision 709 B
709 150 What this Subdivision is about
Operative provisions
709 155 Testing consolidated groups
709 160 Subsidiary member is exempting entity
709 165 Subsidiary member is former exempting entity
709 170 Head company and subsidiary are exempting entities
709 175 Head company is former exempting entity
Subdivision 709 C—Treatment of excess franking deficit tax offsets when entity becomes a subsidiary member of a consolidated group
Guide to Subdivision 709 C
709 180 What this Subdivision is about
709 185 Joining entity’s excess franking deficit tax offsets transferred to head company
709 190 Exit history rule not to treat leaving entity as having a franking deficit tax offset excess
Subdivision 709 D—Deducting bad debts
Guide to Subdivision 709 D
709 200 What this Subdivision is about
Application and object
709 205 Application of this Subdivision
709 210 Object of this Subdivision
Limit on deduction of bad debt
709 215 Limit on deduction of bad debt
Extension of Subdivision to debt/equity swap loss
709 220 Limit on deduction of swap loss
Division 711—Tax cost setting amount for membership interests where entities cease to be subsidiary members of consolidated groups
711 1 What this Division is about
Application and object of this Division
711 5 Application and object of this Division
Tax cost setting amount for membership interests etc.
711 10 Tax cost setting amount worked out under this Division
711 15 Tax cost setting amount where no multiple exit
711 20 What is the old group’s allocable cost amount for the leaving entity?
711 25 Terminating values of the leaving entity’s assets—step 1 in working out allocable cost amount
711 30 What is the head company’s terminating value for an asset?
711 35 If head company becomes entitled to certain deductions—step 2 in working out allocable cost amount
711 40 Liabilities owed to the leaving entity by members of the old group—step 3 in working out allocable cost amount
711 45 Liabilities etc. owed by the leaving entity—step 4 in working out allocable cost amount
711 55 Tax cost setting amount for membership interests where multiple exit
711 65 Membership interests treated as having been acquired before 20 September 1985
711 70 Additional integrity rule if membership interests treated as having been acquired before 20 September 1985 under section 711 65—application of Division 149 to head company
711 75 Additional integrity rule if membership interests treated as having been acquired before 20 September 1985 under section 711 65—application of CGT event K6
Division 713—Rules for particular kinds of entities
Subdivision 713 A—Trusts
Working out a joined group’s allocable cost amount for a joining trust
713 20 Increasing the step 1 amount for settled capital that could be distributed tax free in respect of discretionary interests
713 25 Undistributed, realised profits that accrue to joined group before joining time and could be distributed tax free—step 3 in working out allocable cost amount
Determining destination of distribution by non fixed trust
713 50 Factors to consider
Subdivision 713 C—Some unit trusts treated like head companies of consolidated groups
Guide to Subdivision 713 C
713 120 What this Subdivision is about
Object of this Subdivision
713 125 Object of this Subdivision
Choice to form a consolidated group
713 130 Choosing to form a consolidated group
Effects of choice
713 135 Effects of choice
713 140 Modifications of the applied law
Subdivision 713 E—Partnerships
Guide to Subdivision 713 E
713 200 What this Subdivision is about
Objects
713 205 Objects of this Subdivision
Partnership cost setting interests etc.
713 210 Partnership cost setting interests
713 215 Terminating value for partnership cost setting interest
Setting tax cost of partnership cost setting interests
713 220 Set tax cost of partnership cost setting interests if partner joins consolidated group
713 225 Tax cost setting amount for partnership cost setting interest
Special rules where partnership joins consolidated group
713 235 Partnership joins group—set tax cost of partnership assets
713 240 Partnership joins group—tax cost setting amount for partnership asset
Special rules where partnership leaves consolidated group
713 250 Partnership leaves group—standard provisions modified
713 255 Partnership leaves group—tax cost setting amount for partnership cost setting interests
713 260 Partnership leaves group—tax cost setting amount for assets consisting of being owed certain liabilities
713 265 Partnership leaves group—adjustments to allocable cost amount of partner who also leaves group
Subdivision 713 L—Life insurance companies
Guide to Subdivision 713 L
713 500 What this Subdivision is about
General modifications for life insurance companies
713 505 Head company treated as a life insurance company
713 510 Certain subsidiaries of life insurance companies cannot be members of consolidated group
713 510A Disregard single entity rule in working out certain amounts in respect of life insurance company
Life insurance companies’ liabilities on joining consolidated group
713 511 Treatment of certain liabilities for income year when life insurance company joins consolidated group
Tax cost setting rules for life insurance companies joining consolidated group
713 515 Certain assets taken to be retained cost base assets where life insurance company joins group
713 520 Valuing certain liabilities where life insurance company joins group
713 525 Obligation to value certain assets and liabilities at joining time
Losses of life insurance companies joining consolidated group
713 530 Treatment of certain losses of life insurance company
Losses of life insurance companies’ subsidiaries joining consolidated group
713 535 Losses of entities whose membership interests are complying superannuation assets of life insurance company
713 540 Losses of entities whose membership interests are segregated exempt assets of life insurance company
Imputation rules for life insurance companies joining consolidated group
713 545 Treatment of franking surplus in franking account of life insurance subsidiary joining group
713 550 Treatment of head company’s franking account after joining
Liabilities for life insurance companies leaving consolidated group
713 565 Treatment of certain liabilities for income year when life insurance company leaves consolidated group
Losses for life insurance companies leaving consolidated group
713 570 Certain losses transferred to leaving company
Tax cost setting rules for life insurance companies leaving consolidated group
713 575 Terminating value of certain assets where life insurance company leaves group
713 580 Valuing certain liabilities where life insurance company leaves group
713 585 Obligation to value certain assets and liabilities at leaving time
Subdivision 713 M—General insurance companies
Guide to Subdivision 713 M
713 700 What this Subdivision is about
Tax cost setting rules for general insurance companies joining consolidated group
713 705 Certain assets taken to be retained cost base assets where general insurance company joins group
Liabilities and reserves of general insurance companies joining and leaving consolidated groups
713 710 Treatment of liabilities and reserves for income year when general insurance company joins or leaves group
713 715 If general insurance company joins consolidated group
713 720 If general insurance company leaves consolidated group
713 725 Treatment of certain assets and liabilities of general insurance companies
Division 715—Interactions between this Part and other areas of the income tax law
Subdivision 715 A—Treatment of unrealised losses existing when ownership or control of a company changes before or during consolidation
Object
715 15 Object of this Subdivision
Effect on Subdivision 165 CC of a company becoming a member of a consolidated group
715 25 Subdivision 165 CC stops applying to earlier changeover time
715 30 Meaning of 165 CC tagged asset
715 35 Meaning of final RUNL
165 CC tagged assets that affect tax cost setting amounts
715 50 Step 1 amount is reduced if membership interest in subsidiary member is 165 CC tagged asset and same business test is failed
715 55 Step 2 amount is affected if liability of subsidiary member is 165 CC tagged asset of another group member and same business test is failed
165 CC tagged assets that form loss denial pools of head company when consolidated group is formed
715 60 Assets that the head company already owns
715 70 Assets of subsidiary member that become those of head company
How Subdivision 165 CC applies to consolidated groups
715 75 Extension of single entity rule and entry history rule
Effect on Subdivision 165 CC of entity leaving consolidated group
715 80 Application of sections 715 85 to 715 110
715 85 First changeover time for leaving company at or after leaving time
715 90 How same business test applies if leaving time is changeover time for leaving company
715 95 If ownership and control of leaving entity have not changed since head company’s last changeover time
715 100 First choice: adjustable values of leaving assets reduced to nil
715 105 Second choice: head company’s final RUNL applied in reducing adjustable values of leaving assets that are loss assets
715 110 Third choice: loss denial pool of leaving entity created
Effect of assets in loss denial pool of head company becoming assets of leaving entity
715 120 What happens
715 125 First choice: adjustable values of leaving assets reduced to nil
715 130 Second choice: pool’s loss denial balance applied in reducing adjustable values of leaving assets that are loss assets
715 135 Third choice: loss denial pool of leaving entity created
Effect of first and second choices on various kinds of assets
715 145 Effect of choice on adjustable value of leaving asset
General provisions about loss denial pools
715 155 When asset leaves pool
715 160 How loss denial balance is applied to losses realised on assets in pool
715 165 When pool ceases to exist
Choices under this Subdivision
715 175 When choice must be made
715 180 Head company to notify leaving entity of choice
715 185 Leaving entity may choose to cancel loss denial pool by reducing adjustable values of assets in the pool
Subdivision 715 B—How Subdivision 165 CD applies to consolidated groups and leaving entities
How Subdivision 165 CD applies to consolidated groups
715 215 Extension of single entity rule and entry history rule
715 225 Working out adjusted unrealised loss using individual asset method
715 230 No reductions or other consequences for interests subject to loss cancellation under Subdivision 715 H
How Subdivision 165 CD applies to leaving entity that is a company
715 240 Application of sections 715 245 to 715 260
715 245 If ownership or control of leaving entity has altered since head company’s last alteration time or formation of group
715 250 If head company has had an alteration time but ownership and control of leaving entity have not altered since
715 255 Consequences if leaving entity is a loss company at the leaving time
715 260 If neither of sections 715 245 and 715 250 applies
715 265 Head company does not have relevant equity or debt interest in a loss company if widely held top company does not have such an interest
How Subdivision 165 CD applies to leaving entity that is a trust
715 270 Subdivision 165 CD applies
Subdivision 715 C—Common rules for the purposes of Subdivisions 715 A and 715 B
715 290 Additional assumptions to be made when using reference time
Subdivision 715 D—Treatment of company’s deferred losses under Subdivision 170 D on joining a consolidated group
Key terminology
715 310 What is a 170 D deferred loss, and when it revives
Deferred loss on 165 CC tagged asset
715 355 Head company’s own deferred losses at formation time
715 360 Deferred losses brought in by subsidiary member
715 365 How loss denial balance is applied when 170 D deferred loss revives
Subdivision 715 E—Interactions with Division 775 (Foreign currency gains and losses)
715 370 Cost setting—reference time for determining currency exchange rate effect
Subdivision 715 F—Interactions with Division 230 (financial arrangements)
715 375 Cost setting—amount of liability that is Division 230 financial arrangement
715 378 Cost setting—head company’s right to receive or obligation to provide payment
715 380 Exit history rule not to affect certain matters related to Division 230 financial arrangements
715 385 Exit history rule and elective methods applying to Division 230 financial arrangements
Subdivision 715 G—How value shifting rules apply to a consolidated group
715 410 Extension of single entity rule and entry history rule
715 450 No reductions or other consequences for interests subject to loss cancellation under Subdivision 715 H
Subdivision 715 H—Cancelling loss on realisation event for direct or indirect interest in a member of a consolidated group
715 610 Cancellation of loss
715 615 Exception for interests in entity leaving consolidated group
715 620 Exception if loss attributable to certain matters
Subdivision 715 J—Entry history rule and choices
Head company’s choice overriding entry history rule
715 660 Head company’s choice overriding entry history rule
Choices head company can make ignoring entry history rule to override inconsistencies
715 665 Head company’s choice to override inconsistency
Choices with ongoing effect
715 670 Ongoing effect of choices made by entities before joining group
715 675 Head company adopting choice with ongoing effect
Subdivision 715 K—Exit history rule and choices
Choices leaving entity can make ignoring exit history rule
715 700 Choices leaving entity can make ignoring exit history rule
Choices leaving entity can make ignoring exit history rule to overcome inconsistencies
715 705 Choices leaving entity can make ignoring exit history rule to overcome inconsistencies
Subdivision 715 U—Effect on conduit foreign income
715 875 Extension of single entity rule and entry history rule
715 880 No CFI for leaving entity
Subdivision 715 V—Entity ceasing to be exempt from income tax on becoming subsidiary member of consolidated group
715 900 Transition time taken to be just before joining time
Subdivision 715 W—Effect on arrangements where CGT roll overs are obtained
715 910 Effect on restructures—original entity becomes a subsidiary member
715 915 Effect on restructures—original entity is a head company
715 920 Effect on restructures—original entity is a head company that becomes a subsidiary member of another group
715 925 Effect on restructures—original entity ceases being a subsidiary member
Division 716—Miscellaneous special rules
Subdivision 716 A—Assessable income and deductions spread over several membership or non membership periods
Guide to Subdivision 716 A
716 1 What this Division is about
Operative provisions
716 15 Assessable income spread over 2 or more income years
716 25 Deductions spread over 2 or more income years
716 70 Capital expenditure that is fully deductible in one income year
Assessable income and deductions arising from share of net income of a partnership or trust, or from share of partnership loss
716 75 Application
716 80 Head company’s assessable income and deductions
716 85 Entity’s assessable income and deductions for a non membership period
716 90 Entity’s share of assessable income or deductions of partnership or trust
716 95 Special rule if not all partnership or trust’s assessable income or deductions taken into account in working out amount
716 100 Spreading period
Subdivision 716 E—Tax cost setting for exploration and prospecting assets
716 300 Prime cost method of working out decline in value
Subdivision 716 G—Low value and software development pools
Assets in joining entity’s low value pool
716 330 Head company’s deductions for decline in value of assets in joining entity’s low value pool
Entity leaving group with asset allocated to head company’s low value pool
716 335 Entity leaving group with asset allocated to head company’s low value pool
Depreciating assets arising from expenditure in joining entity’s software development pool
716 340 Depreciating assets arising from expenditure in joining entity’s software development pool
Software development pools if entity leaves consolidated group
716 345 Head company taken not to have incurred expenditure
Subdivision 716 S—Miscellenous consequences of tax cost setting
716 400 Tax cost setting and bad debts
Subdivision 716 V—Research and Development
716 500 Head company bound by agreements binding on subsidiary members
716 505 History for entitlement to tax offset: joining entity
716 510 History for entitlement to tax offset: leaving entity
Subdivision 716 Z—Other
716 800 Allocating amounts to periods if head company and subsidiary member have different income years
716 850 Grossing up threshold amounts for periods of less than 365 days
716 855 Working out the cost base or reduced cost base of a pre CGT asset after certain roll overs
716 860 CGT event straddling joining or leaving time
Division 717—International tax rules
Subdivision 717 A—Foreign income tax offsets
717 1 What this Subdivision is about
Object
717 5 Object of this Subdivision
Foreign income tax on amounts in head company’s assessable income
717 10 Head company taken to be liable for subsidiary member’s foreign income tax
Subdivision 717 D—Transfer of certain surpluses under CFC provisions and former FIF and FLP provisions: entry rules
Guide to Subdivision 717 D
717 200 What this Subdivision is about
Object
717 205 Object of this Subdivision
Transfers
717 210 Attribution surpluses
717 220 FIF surpluses
717 227 Deferred attribution credits
Subdivision 717 E—Transfer of certain surpluses under CFC provisions and former FIF and FLP provisions: exit rules
Guide to Subdivision 717 E
717 235 What this Subdivision is about
Object
717 240 Object of this Subdivision
Transfers
717 245 Attribution surpluses
717 255 FIF surpluses
717 262 Deferred attribution credits
Subdivision 717 O—Offshore banking units
Guide to Subdivision 717 O
717 700 What this Subdivision is about
717 705 Object of this Subdivision
717 710 Head company treated as OBU
Division 719—MEC groups
Subdivision 719 A—Modified application of Part 3 90 to MEC groups
719 2 Modified application of Part 3 90 to MEC groups
Subdivision 719 B—MEC groups and their members
719 4 What this Subdivision is about
Basic concepts
719 5 What is a MEC group?
719 10 What is a potential MEC group?
719 15 What is an eligible tier 1 company?
719 20 What is a top company and a tier 1 company?
719 25 Head company, subsidiary members and members of a MEC group
719 30 Treating entities as wholly owned subsidiaries by disregarding employee shares
719 35 Treating entities held through non fixed trusts as wholly owned subsidiaries
719 40 Special conversion event—potential MEC group
719 45 Application of sections 703 20 and 703 25
Choice to consolidate a potential MEC group
719 50 Eligible tier 1 companies may choose to consolidate a potential MEC group
719 55 When choice starts to have effect
Provisional head company
719 60 Appointment of provisional head company
719 65 Qualifications for the provisional head company of a MEC group
719 70 Income year of new provisional head company to be the same as that of former provisional head company
Head company
719 75 Head company
Notice of events affecting group
719 76 Notice of choice to consolidate
719 77 Notice in relation to new eligible tier 1 members etc.
719 78 Notice of special conversion event
719 79 Notice of appointment of provisional head company after formation of group
719 80 Notice of events affecting MEC group
Effects of change of head company
719 85 Application
719 90 New head company treated as substituted for old head company at all times before the transition time
719 95 No consequences of old head company becoming, and new head company ceasing to be, subsidiary member of the group
Subdivision 719 BA—Group conversions involving MEC groups
719 120 Application
719 125 Head company of new group retains history of head company of old group
719 130 Provisions of this Part not to apply to conversion
719 135 Provisions of this Part applying to conversion despite section 719 130
719 140 Other provisions of this Part not applying to conversion
Subdivision 719 C—MEC group cost setting rules: joining cases
Guide to Subdivision 719 C
719 150 What this Subdivision is about
Application and object
719 155 Object of this Subdivision
Modified application of tax cost setting rules for joining
719 160 Tax cost setting rules for joining have effect with modifications
719 165 Trading stock value and registered emissions unit value not set for assets of eligible tier 1 companies
719 170 Modified effect of subsections 705 175(1) and 705 185(1)
Subdivision 719 F—Losses
Guide to Subdivision 719 F
719 250 What this Subdivision is about
Maintaining the same ownership to be able to utilise loss
719 255 Special rules
719 260 Special test for utilising a loss because a company maintains the same owners
719 265 What is the test company?
719 270 Assumptions about the test company having made the loss for an income year
719 275 Assumptions about nothing happening to affect direct and indirect ownership of the test company
719 280 Assumptions about the test company failing to meet the conditions in section 165 12
Same business test and change of head company
719 285 Same business test and change of head company
Bundles of losses and their available fractions
719 300 Application
719 305 Subdivision 707 C affects utilisation of losses made by ongoing head company while it was head company
719 310 Adjustment of available fractions for bundles of losses previously transferred to ongoing head company
719 315 Further adjustment of available fractions for all bundles
719 320 Limit on utilising losses other than the prior group losses
719 325 Cancellation of all losses in a bundle
Subdivision 719 H—Imputation issues
719 425 Guide to Subdivision 719 H
Operative provisions
719 430 Transfer of franking account balance on cessation event
719 435 Distributions by subsidiary members of MEC group taken to be distributions by head company
Subdivision 719 I—Bad debts
Guide to Subdivision 719 I
719 450 What this Subdivision is about
Maintaining the same ownership to be able to deduct bad debt
719 455 Special test for deducting a bad debt because a company maintains the same owners
719 460 Assumptions about nothing happening to affect direct and indirect ownership of the test company
719 465 Assumptions about the test company failing to meet the conditions in section 165 123
Subdivision 719 J—MEC group cost setting rules: leaving cases
Guide to Subdivision 719 J
719 500 What this Subdivision is about
719 505 Application and object of this Subdivision
719 510 Modified operation of paragraphs 711 15(1)(b) and (c)
Subdivision 719 K—MEC group cost setting rules: pooling cases
Guide to Subdivision 719 K
719 550 What this Subdivision is about
719 555 Application and object of this Subdivision
719 560 Pooled interests
719 565 Setting cost of reset interests
719 570 Cost setting amount
Subdivision 719 T—Interactions between this Part and other areas of the income tax law: special rules for MEC groups
How Subdivision 165 CC applies to MEC groups
719 700 Changeover times under section 165 115C or 165 115D
719 705 Additional changeover times for head company of MEC group
How Subdivision 165 CD applies to MEC groups
719 720 Alteration times under section 165 115L or 165 115M
719 725 Additional alteration times for head company of MEC group
719 730 Some alteration times only affect interests in top company
719 735 Some alteration times affect only pooled interests
719 740 Head company does not have relevant equity or debt interest in a loss company if widely held top company does not have such an interest
How indirect value shifting rules apply to a MEC group
719 755 Effect on MEC group cost setting rules if head company is losing entity or gaining entity for indirect value shift
Cancelling loss on realisation event for direct or indirect interest in a subsidiary member of a MEC group
719 775 Cancellation of loss
719 780 Exception for pooled interests in eligible tier 1 companies
719 785 Exception for interests in top company
719 790 Exception for interests in entity leaving MEC group
719 795 Exception if loss attributable to certain matters
Division 721—Liability for payment of tax where head company fails to pay on time
721 1 What this Division is about
Object
721 5 Object of this Division
When this Division operates
721 10 When this Division operates
Joint and several liability of contributing member
721 15 Head company and contributing members jointly and severally liable to pay group liability
721 17 Notice of joint and several liability for general interest charge
721 20 Limit on liability where group first comes into existence
Tax sharing agreements
721 25 When a group liability is covered by a tax sharing agreement
721 30 TSA contributing members liable for contribution amounts
721 32 Notice of general interest charge liability under TSA
721 35 When a TSA contributing member has left the group clear of the group liability
721 40 TSA liability and group liability are linked
Part 3 95—Value shifting
Division 723—Direct value shifting by creating right over non depreciating asset
Subdivision 723 A—Reduction in loss from realising non depreciating asset
723 1 Object
723 10 Reduction in loss from realising non depreciating asset over which right has been created
723 15 Reduction in loss from realising non depreciating asset at the same time as right is created over it
723 20 Exceptions
723 25 Realisation event that is only a partial realisation
723 35 Multiple rights created to take advantage of the $50,000 threshold
723 40 Application to CGT asset that is also trading stock or revenue asset
723 50 Effects if right created over underlying asset is also trading stock or a revenue asset
Subdivision 723 B—Reducing reduced cost base of interests in entity that acquires non depreciating asset under roll over
723 105 Reduced cost base of interest reduced when interest realised at a loss
723 110 Direct and indirect roll over replacement for underlying asset
Division 725—Direct value shifting affecting interests in companies and trusts
725 1 What this Division is about
Subdivision 725 A—Scope of the direct value shifting rules
725 45 Main object
725 50 When a direct value shift has consequences under this Division
725 55 Controlling entity test
725 65 Cause of the value shift
725 70 Consequences for down interest only if there is a material decrease in its market value
725 80 Who is an affected owner of a down interest?
725 85 Who is an affected owner of an up interest?
725 90 Direct value shift that will be reversed
725 95 Direct value shift resulting from reversal
Subdivision 725 B—What is a direct value shift
725 145 When there is a direct value shift
725 150 Issue of equity or loan interests at a discount
725 155 Meaning of down interests, decrease time, up interests and increase time
725 160 What is the nature of a direct value shift?
725 165 If market value decrease or increase is only partly attributable to the scheme
Subdivision 725 C—Consequences of a direct value shift
General
725 205 Consequences depend on character of down interests and up interests
725 210 Consequences for down interests depend on pre shift gains and losses
Special cases
725 220 Neutral direct value shifts
725 225 Issue of bonus shares or units
725 230 Off market buy backs
Subdivision 725 D—Consequences for down interest or up interest as CGT asset
725 240 CGT consequences; meaning of adjustable value
725 245 Table of taxing events generating a gain for interests as CGT assets
725 250 Table of consequences for adjustable values of interests as CGT assets
725 255 Multiple CGT consequences for the same down interest or up interest
Subdivision 725 E—Consequences for down interest or up interest as trading stock or a revenue asset
725 310 Consequences for down interest or up interest as trading stock
725 315 Adjustable value of trading stock
725 320 Consequences for down interest or up interest as a revenue asset
725 325 Adjustable value of revenue asset
725 335 How to work out those consequences
725 340 Multiple trading stock or revenue asset consequences for the same down interest or up interest
Subdivision 725 F—Value adjustments and taxed gains
725 365 Decreases in adjustable values of down interests (with pre shift gains), and taxing events generating a gain
725 370 Uplifts in adjustable values of up interests under certain table items
725 375 Uplifts in adjustable values of up interests under other table items
725 380 Decreases in adjustable value of down interests (with pre shift losses)
Division 727—Indirect value shifting affecting interests in companies and trusts, and arising from non arm’s length dealings
727 1 What this Division is about
727 5 What is an indirect value shift?
727 10 How does this Division deal with indirect value shifts?
727 15 When does an indirect value shift have consequences under this Division?
727 25 Effect of this Division on realisations at a loss that occur before the nature or extent of an indirect value shift can be fully determined
Subdivision 727 A—Scope of the indirect value shifting rules
727 95 Main object
727 100 When an indirect value shift has consequences under this Division
727 105 Ultimate controller test
727 110 Common ownership nexus test (if both losing and gaining entities are closely held)
727 125 No consequences if losing entity is a superannuation entity
Subdivision 727 B—What is an indirect value shift
727 150 How to determine whether a scheme results in an indirect value shift
727 155 Providing economic benefits
727 160 When an economic benefit is provided in connection with a scheme
727 165 Preventing double counting of economic benefits
Subdivision 727 C—Exclusions
Guide to Subdivision 727 C
727 200 What this Subdivision is about
General
727 215 Amount does not exceed $50,000
727 220 Disposal of asset at cost, or at undervalue if full value is not reflected in adjustable values of equity or loan interests in the losing entity
Indirect value shifts involving services
727 230 Services provided by losing entity to gaining entity for at least their direct cost
727 235 Services provided by gaining entity to losing entity for no more than a commercially realistic price
727 240 What services certain provisions apply to
727 245 How to work out certain amounts for the purposes of sections 727 230 and 727 235
Anti overlap provisions
727 250 Distribution by an entity to a member or beneficiary
Miscellaneous
727 260 Shift down a wholly owned chain of entities
Subdivision 727 D—Working out the market value of economic benefits
727 300 What the rules in this Subdivision are for
727 315 Transfer, for its adjustable value, of depreciating asset acquired for less than $1,500,000
Subdivision 727 E—Key concepts
Ultimate controller
727 350 Ultimate controller
727 355 Control (for value shifting purposes) of a company
727 360 Control (for value shifting purposes) of a fixed trust
727 365 Control (for value shifting purposes) of a non fixed trust
727 370 Preventing double counting for percentage stake tests
727 375 Tests in this Subdivision are exhaustive
Common ownership nexus and ultimate stake of a particular percentage
727 400 When 2 entities have a common ownership nexus within a period
727 405 Ultimate stake of a particular percentage in a company
727 410 Ultimate stake of a particular percentage in a fixed trust
727 415 Rules for tracing
Subdivision 727 F—Consequences of an indirect value shift
Guide to Subdivision 727 F
727 450 What this Subdivision is about
Operative provisions
727 455 Consequences of the indirect value shift
Affected interests
727 460 Affected interests in the losing entity
727 465 Affected interests in the gaining entity
727 470 Exceptions
727 520 Equity or loan interest and related terms
727 525 Indirect equity or loan interest
Affected owners
727 530 Who are the affected owners
Choices about method to be used
727 550 Choosing the adjustable value method
727 555 Giving other affected owners information about the choice
Subdivision 727 G—The realisation time method
727 600 What this Subdivision is about
Operative provisions
727 610 Consequences of indirect value shift
727 615 Reduction of loss on realisation event for affected interest in losing entity
727 620 Reduction of gain on realisation event for affected interest in gaining entity
727 625 Total gain reductions not to exceed total loss reductions
727 630 How cap in section 727 625 applies if affected interest is also trading stock or a revenue asset
727 635 Splitting an equity or loan interest
727 640 Merging equity or loan interests
727 645 Effect of CGT roll over
Further exclusion for certain 95% services indirect value shifts if realisation time method must be used
727 700 When 95% services indirect value shift is excluded
95% services indirect value shifts that are not excluded
727 705 Another provision of the income tax law affects amount related to services by at least $100,000
727 710 Ongoing or recent service arrangement reduces value of losing entity by at least $100,000
727 715 Service arrangements reduce value of losing entity that is a group service provider by at least $500,000
727 720 Abnormal service arrangement reduces value of losing entity that is not a group service provider by at least $500,000
727 725 Meaning of predominantly services indirect value shift
Subdivision 727 H—The adjustable value method
Guide to Subdivision 727 H
727 750 What this Subdivision is about
727 755 Consequences of indirect value shift
Reductions of adjustable value
727 770 Reduction under the adjustable value method
727 775 Has there been a disaggregated attributable decrease?
727 780 Working out the reduction on a loss focussed basis
Uplifts of adjustable value
727 800 Uplift under the attributable increase method
727 805 Has there been a disaggregated attributable increase?
727 810 Scaling down formula
Consequences of the method for various kinds of assets
727 830 CGT assets
727 835 Trading stock
727 840 Revenue assets
Subdivision 727 K—Reduction of loss on equity or loan interests realised before the IVS time
727 850 Consequences of scheme under this Subdivision
727 855 Presumed indirect value shift
727 860 Conditions about the prospective gaining entity
727 865 How other provisions of this Division apply to support this Subdivision
727 870 Effect of CGT roll over
727 875 Application to CGT asset that is also trading stock or revenue asset
Subdivision 727 L—Indirect value shift resulting from a direct value shift
727 905 How this Subdivision affects the rest of this Division
727 910 Treatment of value shifted under the direct value shift
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Volume 9
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Chapter 4—International aspects of income tax
Part 4 5—General
Division 768—Foreign non assessable income and gains
Subdivision 768 A—Returns on foreign investment
Guide to Subdivision 768 A
768 1 What this Subdivision is about
Foreign equity distributions on participation interests
768 5 Foreign equity distributions on participation interests
768 10 Meaning of foreign equity distribution
768 15 Participation test—minimum 10% participation
Subdivision 768 B—Some items of income that are exempt from income tax
768 100 Foreign government officials in Australia
768 105 Compensation arising out of Second World War
768 110 Foreign residents deriving income from certain activities in Australia’s exclusive economic zone or on or above Australia’s continental shelf
Subdivision 768 G—Reduction in capital gains and losses arising from CGT events in relation to certain voting interests in active foreign companies
Guide to Subdivision 768 G
768 500 What this Subdivision is about
Operative provisions
768 505 Reducing a capital gain or loss from certain CGT events in relation to certain voting interests
Active foreign business asset percentage
768 510 Active foreign business asset percentage
768 515 Choices to apply market value method or book value method
768 520 Market value method—choice made under subsection 768 515(1)
768 525 Book value method—choice made under subsection 768 515(2)
768 530 Active foreign business asset percentage—modifications for foreign life insurance companies and foreign general insurance companies
768 533 Foreign company that is a FIF using CFC calculation method—treatment as AFI subsidiary under this Subdivision
768 535 Modified rules for foreign wholly owned groups
Types of assets of a foreign company
768 540 Active foreign business assets of a foreign company
768 545 Assets included in the total assets of a foreign company
Voting percentages in a company
768 550 Direct voting percentage in a company
768 555 Indirect voting percentage in a company
768 560 Total voting percentage in a company
Subdivision 768 R—Temporary residents
Guide to Subdivision 768 R
768 900 What this Subdivision is about
Operative provisions
768 905 Objects
768 910 Income derived by temporary resident
768 915 Certain capital gains and capital losses of temporary resident to be disregarded
768 950 Individual becoming an Australian resident
768 955 Temporary resident who ceases to be temporary resident but remains an Australian resident
768 960 Temporary resident not attributable taxpayer for purposes of controlled foreign companies rules
768 970 Modification of rules for accruals system of taxation of certain non resident trust estates
768 980 Interest paid by temporary resident
Division 770—Foreign income tax offsets
770 1 What this Division is about
770 5 Object
Subdivision 770 A—Entitlement rules for foreign income tax offsets
Basic entitlement rule for foreign income tax offset
770 10 Entitlement to foreign income tax offset
770 15 Meaning of foreign income tax, credit absorption tax and unitary tax
Subdivision 770 B—Amount of foreign income tax offset
Guide to Subdivision 770 B
770 65 What this Subdivision is about
Operative provisions
770 70 Amount of foreign income tax offset
770 75 Foreign income tax offset limit
770 80 Increase in offset limit for tax paid on amounts to which section 23AI or 23AK of the Income Tax Assessment Act 1936 apply
Subdivision 770 C—Rules about payment of foreign income tax
Rules about when foreign tax is paid
770 130 When foreign income tax is considered paid—taxes paid by someone else
770 135 Foreign income tax paid by CFCs on attributed amounts
Rules about when foreign tax is considered not paid
770 140 When foreign income tax is considered not paid—anti avoidance rule
Subdivision 770 D—Administration
770 190 Amendment of assessments
Division 775—Foreign currency gains and losses
775 5 What this Division is about
Subdivision 775 A—Objects of this Division
775 10 Objects of this Division
Subdivision 775 B—Realisation of forex gains or losses
775 15 Forex realisation gains are assessable
775 20 Certain forex realisation gains are exempt income
775 25 Certain forex realisation gains are non assessable non exempt income
775 27 Certain forex realisation gains are non assessable non exempt income
775 30 Forex realisation losses are deductible
775 35 Certain forex realisation losses are disregarded
775 40 Disposal of foreign currency or right to receive foreign currency—forex realisation event 1
775 45 Ceasing to have a right to receive foreign currency—forex realisation event 2
775 50 Ceasing to have an obligation to receive foreign currency—forex realisation event 3
775 55 Ceasing to have an obligation to pay foreign currency—forex realisation event 4
775 60 Ceasing to have a right to pay foreign currency—forex realisation event 5
775 65 Only one forex realisation event to be counted
775 70 Tax consequences of certain short term forex realisation gains
775 75 Tax consequences of certain short term forex realisation losses
775 80 You may choose not to have sections 775 70 and 775 75 apply to you
775 85 Forex cost base of a right to receive foreign currency
775 90 Forex entitlement base of a right to pay foreign currency
775 95 Proceeds of assuming an obligation to pay foreign currency
775 100 Net costs of assuming an obligation to receive foreign currency
775 105 Currency exchange rate effect
775 110 Constructive receipts and payments
775 115 Economic set off to be treated as legal set off
775 120 Non arm’s length transactions
775 125 CGT consequences of the acquisition of foreign currency as a result of forex realisation event 2 or 3
775 130 Certain deductions not allowable
775 135 Right to receive or pay foreign currency
775 140 Obligation to pay or receive foreign currency
775 145 Application of forex realisation events to currency and fungible rights and obligations
775 150 Transitional election
775 155 Applicable commencement date
775 160 Exception—event happens before the applicable commencement date
775 165 Exception—currency or right acquired, or obligation incurred, before the applicable commencement date
775 168 Exception—disposal or redemption of traditional securities
775 175 Application to things happening before commencement
Subdivision 775 C—Roll over relief for facility agreements
Guide to Subdivision 775 C
775 180 What this Subdivision is about
Operative provisions
775 185 What is a facility agreement?
775 190 What is an eligible security?
775 195 You may choose roll over relief for a facility agreement
775 200 Forex realisation event 4 does not apply
775 205 What is a roll over?
775 210 Notional loan
775 215 Discharge of obligation to pay the principal amount of a notional loan under a facility agreement—forex realisation event 6
775 220 Material variation of a facility agreement—forex realisation event 7
Subdivision 775 D—Qualifying forex accounts that pass the limited balance test
Guide to Subdivision 775 D
775 225 What this Subdivision is about
Operative provisions
775 230 Election to have this Subdivision apply to one or more qualifying forex accounts
775 235 Variation of election
775 240 Withdrawal of election
775 245 When does a qualifying forex account pass the limited balance test?
775 250 Tax consequences of passing the limited balance test
775 255 Notional realisation when qualifying forex account starts to pass the limited balance test
775 260 Modification of tax recognition time
Subdivision 775 E—Retranslation for qualifying forex accounts
Guide to Subdivision 775 E
775 265 What this Subdivision is about
Operative provisions
775 270 You may choose retranslation for a qualifying forex account
775 275 Withdrawal of choice
775 280 Tax consequences of choosing retranslation for an account
775 285 Retranslation of gains and losses relating to a qualifying forex account—forex realisation event 8
Subdivision 775 F—Retranslation under foreign exchange retranslation election under Subdivision 230 D
Guide to Subdivision 775 F
775 290 What this Subdivision is about
775 295 When this Subdivision applies
775 300 Tax consequences of choosing retranslation for arrangement
775 305 Retranslation of gains and losses relating to arrangement to which foreign exchange retranslation election applies—forex realisation event 9
775 310 When election ceases to apply to arrangement
775 315 Balancing adjustment when election ceases to apply to arrangement
Division 802—Foreign residents’ income with an underlying foreign source
Subdivision 802 A—Conduit foreign income
Guide to Subdivision 802 A
802 5 What this Subdivision is about
Operative provisions
802 10 Objects
802 15 Foreign residents—exempting CFI from Australian tax
802 17 Trust estates and foreign resident beneficiaries—exempting CFI from Australian tax
802 20 Distributions between Australian corporate tax entities—non assessable non exempt income
802 25 Conduit foreign income of an Australian corporate tax entity
802 30 Foreign source income amounts
802 35 Capital gains and losses
802 40 Effect of foreign income tax offset on conduit foreign income
802 45 Previous declarations of conduit foreign income
802 50 Receipt of an unfranked distribution from another Australian corporate tax entity
802 55 No double benefits
802 60 No streaming of distributions
Division 815—Cross border transfer pricing
Subdivision 815 A—Treaty equivalent cross border transfer pricing rules
Guide to Subdivision 815 A
815 1 What this Subdivision is about
Operative provisions
815 5 Object
815 10 Transfer pricing benefit may be negated
815 15 When an entity gets a transfer pricing benefit
815 20 Cross border transfer pricing guidance
815 25 Modified transfer pricing benefit for thin capitalisation
815 30 Determinations negating transfer pricing benefit
815 35 Consequential adjustments
815 40 No double taxation
Subdivision 815 B—Arm’s length principle for cross border conditions between entities
Guide to Subdivision 815 B
815 101 What this Subdivision is about
Operative provisions
815 105 Object
815 110 Operation of Subdivision
815 115 Substitution of arm’s length conditions
815 120 When an entity gets a transfer pricing benefit
815 125 Meaning of arm’s length conditions
815 130 Relevance of actual commercial or financial relations
815 135 Guidance
815 140 Modification for thin capitalisation
815 145 Consequential adjustments
815 150 Amendment of assessments
Subdivision 815 C—Arm’s length principle for permanent establishments
Guide to Subdivision 815 C
815 201 What this Subdivision is about
Operative provisions
815 205 Object
815 210 Operation of Subdivision
815 215 Substitution of arm’s length profits
815 220 When an entity gets a transfer pricing benefit
815 225 Meaning of arm’s length profits
815 230 Source rules for certain arm’s length profits
815 235 Guidance
815 240 Amendment of assessments
Subdivision 815 D—Special rules for trusts and partnerships
Guide to Subdivision 815 D
815 301 What this Subdivision is about
Operative provisions
815 305 Special rule for trusts
815 310 Special rules for partnerships
Subdivision 815 E—Reporting obligations for significant global entities
Guide to Subdivision 815 E
815 350 What this Subdivision is about
Operative provisions
815 355 Requirement to give statements
815 360 Replacement reporting periods
815 365 Exemptions
Division 820—Thin capitalisation rules
820 1 What this Division is about
820 5 Does this Division apply to an entity?
820 10 Map of Division
Subdivision 820 A—Preliminary
820 30 Object of Division
820 32 Exemption for private or domestic assets and non debt liabilities
820 35 Application—$2 million threshold
820 37 Application—assets threshold
820 39 Exemption of certain special purpose entities
820 40 Meaning of debt deduction
Subdivision 820 B—Thin capitalisation rules for outward investing entities (non ADI)
Guide to Subdivision 820 B
820 65 What this Subdivision is about
Operative provisions
820 85 Thin capitalisation rule for outward investing entities (non ADI)
820 90 Maximum allowable debt
820 95 Safe harbour debt amount—outward investor (general)
820 100 Safe harbour debt amount—outward investor (financial)
820 105 Arm’s length debt amount
820 110 Worldwide gearing debt amount—outward investor that is not also an inward investment vehicle
820 111 Worldwide gearing debt amount—outward investor that is also an inward investment vehicle
820 115 Amount of debt deduction disallowed
820 120 Application to part year periods
Subdivision 820 C—Thin capitalisation rules for inward investing entities (non ADI)
Guide to Subdivision 820 C
820 180 What this Subdivision is about
Operative provisions
820 185 Thin capitalisation rule for inward investing entities (non ADI)
820 190 Maximum allowable debt
820 195 Safe harbour debt amount—inward investment vehicle (general)
820 200 Safe harbour debt amount—inward investment vehicle (financial)
820 205 Safe harbour debt amount—inward investor (general)
820 210 Safe harbour debt amount—inward investor (financial)
820 215 Arm’s length debt amount
820 216 Worldwide gearing debt amount—inward investment vehicle (general)
820 217 Worldwide gearing debt amount—inward investment vehicle (financial)
820 218 Worldwide gearing debt amount—inward investor (general)
820 219 Worldwide gearing debt amount—inward investor (financial)
820 220 Amount of debt deduction disallowed
820 225 Application to part year periods
Subdivision 820 D—Thin capitalisation rules for outward investing entities (ADI)
Guide to Subdivision 820 D
820 295 What this Subdivision is about
Operative provisions
820 300 Thin capitalisation rule for outward investing entities (ADI)
820 305 Minimum capital amount
820 310 Safe harbour capital amount
820 315 Arm’s length capital amount
820 320 Worldwide capital amount
820 325 Amount of debt deduction disallowed
820 330 Application to part year periods
Subdivision 820 E—Thin capitalisation rules for inward investing entities (ADI)
Guide to Subdivision 820 E
820 390 What this Subdivision is about
Operative provisions
820 395 Thin capitalisation rule for inward investing entities (ADI)
820 400 Minimum capital amount
820 405 Safe harbour capital amount
820 410 Arm’s length capital amount
820 415 Amount of debt deduction disallowed
820 420 Application to part year periods
Subdivision 820 EA—Some financial entities may choose to be treated as ADIs
820 430 When choice can be made, and what effect it has
820 435 Conditions
820 440 Revocation of choice
820 445 How this Subdivision interacts with Subdivision 820 FA
Subdivision 820 FA—How the thin capitalisation rules apply to consolidated groups and MEC groups
Guide to Subdivision 820 FA
820 579 What this Subdivision is about
Operative provisions
820 581 How this Division applies to head company for income year in which group comes into existence or ceases to exist
820 583 Classification of head company
820 584 Exempt special purpose entities treated as not being member of group
820 585 Exemption for consolidated group headed by foreign controlled Australian ADI or its holding company
820 587 Additional application of Subdivision 820 D to MEC group that includes foreign controlled Australian ADI
820 588 Choice to treat specialist credit card institutions as being financial entities and not ADIs
820 589 How Subdivision 820 D applies to a MEC group
Subdivision 820 FB—Grouping branches of foreign banks and foreign financial entities with a consolidated group, MEC group or single Australian resident company
Guide to Subdivision 820 FB
820 595 What this Subdivision is about
Choice to group with branches of foreign banks and foreign financial entities
820 597 Choice by head company of consolidated group or MEC group
820 599 Choice by Australian resident company outside consolidatable group and MEC group
Effect of choice
820 601 Application
820 603 General
820 605 Effect on establishment entity if certain debt deductions disallowed
820 607 Effect on test periods under this Division
820 609 Effect on classification of head company or single company
820 610 Choice not to be outward investing entity (ADI) or inward investing entity (ADI)
820 611 Values to be based on what would be in consolidated accounts for group
820 613 How Subdivision 820 D applies
820 615 How Subdivision 820 E applies
Subdivision 820 G—Calculating the average values
Guide to Subdivision 820 G
820 625 What this Subdivision is about
How to calculate the average values
820 630 Methods of calculating average values
820 635 The opening and closing balances method
820 640 The 3 measurement days method
820 645 The frequent measurement method
Special rules about values and valuation
820 675 Amount to be expressed in Australian currency
820 680 Valuation of assets, liabilities and equity capital
820 682 Recognition of assets and liabilities—modifying application of accounting standards
820 683 Recognition of internally generated intangible items—modifying application of accounting standards
820 684 Valuation of intangible assets if no active market—modifying application of accounting standards
820 685 Valuation of debt capital
820 690 Commissioner’s power
Subdivision 820 H—Control of entities
Guide to Subdivision 820 H
820 740 What this Subdivision is about
Australian controller of a foreign entity
820 745 What is an Australian controlled foreign entity?
820 750 What is an Australian controller of a controlled foreign company?
820 755 What is an Australian controller of a controlled foreign trust?
820 760 What is an Australian controller of a controlled foreign corporate limited partnership?
Foreign controlled Australian entity
820 780 What is a foreign controlled Australian entity?
820 785 What is a foreign controlled Australian company?
820 790 What is a foreign controlled Australian trust?
820 795 What is a foreign controlled Australian partnership?
Thin capitalisation control interest
820 815 General rule about thin capitalisation control interest in a company, trust or partnership
820 820 Special rules about calculating TC control interest held by an entity
820 825 Special rules about calculating TC control interests held by a group of entities
820 830 Special rules about determining percentage of TC control interest
820 835 Commissioner’s power
TC direct control interest, TC indirect control interest and TC control tracing interest
820 855 TC direct control interest in a company
820 860 TC direct control interest in a trust
820 865 TC direct control interest in a partnership
820 870 TC indirect control interest in a company, trust or partnership
820 875 TC control tracing interest in a company, trust or partnership
Subdivision 820 HA—Controlled foreign entity debt and controlled foreign entity equity
Guide to Subdivision 820 HA
820 880 What this Subdivision is about
820 881 Application
820 885 What is controlled foreign entity debt?
820 890 What is controlled foreign entity equity?
Subdivision 820 I—Associate entities
Guide to Subdivision 820 I
820 900 What this Subdivision is about
820 905 Associate entity
820 910 Associate entity debt
820 915 Associate entity equity
820 920 Associate entity excess amount
Subdivision 820 J—Equity interest in a trust or partnership
Guide to Subdivision 820 J
820 925 What this Subdivision is about
820 930 Equity interest in a trust or partnership
Subdivision 820 JA—Worldwide debt and equity concepts
Guide to Subdivision 820 JA
820 931 What this Subdivision is about
Operative provisions
820 932 Worldwide debt and worldwide equity
820 933 Statement worldwide debt, statement worldwide equity and statement worldwide assets
820 935 Meaning of audited consolidated financial statements
Subdivision 820 K—Zero capital amount
Guide to Subdivision 820 K
820 940 What this Subdivision is about
820 942 How to work out the zero capital amount
Subdivision 820 KA—Cost free debt capital and excluded equity interests
Guide to Subdivision 820 KA
820 945 What this Subdivision is about
820 946 Cost free debt capital and excluded equity interest
Subdivision 820 L—Record keeping requirements
Guide to Subdivision 820 L
820 950 What this Subdivision is about
Records about Australian permanent establishments
820 960 Records about Australian permanent establishments
820 965 Review of Commissioner’s decision
Records about arm’s length amounts
820 980 Records about arm’s length debt amount and arm’s length capital amount
Records about asset revaluations
820 985 Methodology of revaluation and independence of valuer
Offences committed by certain entities
820 990 Offences—treatment of partnerships
820 995 Offences—treatment of unincorporated companies
Division 830—Foreign hybrids
830 1 What this Division is about
Subdivision 830 A—Meaning of “foreign hybrid”
830 5 Foreign hybrid
830 10 Foreign hybrid limited partnership
830 15 Foreign hybrid company
Subdivision 830 B—Extension of normal partnership provisions to foreign hybrid companies
830 20 Treatment of company as a partnership
830 25 Partners are the shareholders in the company
830 30 Individual interest of a partner in net income etc. equals percentage of notional distribution of company’s profits
830 35 Partner’s interest in assets
830 40 Control and disposal of share in partnership income
Subdivision 830 C—Special rules applicable while an entity is a foreign hybrid
830 45 Partner’s revenue and net capital losses from foreign hybrid not to exceed partner’s loss exposure amount
830 50 Deduction etc. where partner’s foreign hybrid revenue loss amount and foreign hybrid net capital loss amount are less than partner’s loss exposure amount
830 55 Meaning of foreign hybrid net capital loss amount
830 60 Meaning of loss exposure amount
830 65 Meaning of outstanding foreign hybrid revenue loss amount
830 70 Meaning of outstanding foreign hybrid net capital loss amount
830 75 Extended meaning of subject to foreign tax
Subdivision 830 D—Special rules applicable when an entity becomes or ceases to be a foreign hybrid
830 80 Setting the tax cost of partners’ interests in the assets of an entity that becomes a foreign hybrid
830 85 Setting the tax cost of assets of an entity when it ceases to be a foreign hybrid
830 90 What the expression tax cost is set means
830 95 What the expression tax cost setting amount means
830 100 What the expression tax cost means
830 105 What the expression asset based income tax regime means
830 110 No disposal of assets etc. on entity becoming or ceasing to be a foreign hybrid
830 115 Tax losses cannot be transferred to a foreign hybrid
830 120 End of CFC’s last statutory accounting period
830 125 How long interest in asset, or asset, held
Division 840—Withholding taxes
840 1 What this Division is about
Subdivision 840 M—Managed investment trust withholding tax
Guide to Subdivision 840 M
840 800 What this Subdivision is about
Operative provisions
840 805 Liability for managed investment trust withholding tax
840 810 When managed investment trust withholding tax is payable
840 815 Certain income is non assessable non exempt income
840 820 Agency rules
Subdivision 840 S—Seasonal Labour Mobility Program withholding tax
Guide to Subdivision 840 S
840 900 What this Subdivision is about
Operative provisions
840 905 Liability for Seasonal Labour Mobility Program withholding tax
840 910 When Seasonal Labour Mobility Program withholding tax is payable
840 915 Certain income is non assessable non exempt income
840 920 Overpayment of Seasonal Labour Mobility Program withholding tax
Division 842—Exempt Australian source income and gains of foreign residents
Subdivision 842 B—Some items of Australian source income of foreign residents that are exempt from income tax
Guide to Subdivision 842 B
842 100 What this Subdivision is about
842 105 Amounts of Australian source ordinary income and statutory income that are exempt
Subdivision 842 I—Investment manager regime
Guide to Subdivision 842 I
842 200 What this Subdivision is about
Object of this Subdivision
842 205 Object of this Subdivision
IMR concessions
842 210 IMR concessions apply only to foreign residents etc.
842 215 IMR concessions
842 220 Meaning of IMR entity
842 225 Meaning of IMR financial arrangement
IMR widely held entities
842 230 Meaning of IMR widely held entity
842 235 Rules for determining total participation interests for the purposes of the widely held test
842 240 Extended meaning of IMR widely held entity—temporary circumstances outside entity’s control
Independent Australian fund managers
842 245 Meaning of independent Australian fund manager
842 250 Reductions in IMR concessions if independent Australian fund manager entitled to substantial share of IMR entity’s income
Division 855—Capital gains and foreign residents
855 1 What this Division is about
Subdivision 855 A—Disregarding a capital gain or loss by foreign residents
855 5 Objects of this Subdivision
855 10 Disregarding a capital gain or loss from CGT events
855 15 When an asset is taxable Australian property
855 16 Meaning of permanent establishment article
855 20 Taxable Australian real property
855 25 Indirect Australian real property interests
855 30 Principal asset test
855 32 Disregard market value of duplicated non TARP assets
855 35 Reducing a capital gain or loss from a business asset—Australian permanent establishments
855 40 Capital gains and losses of foreign residents through fixed trusts
Subdivision 855 B—Becoming an Australian resident
855 45 Individual or company becomes an Australian resident
855 50 Trust becomes a resident trust
855 55 CFC becomes an Australian resident
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Chapter 5—Administration
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Part 5 30—Record keeping and other obligations
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Division 900—Substantiation rules
900 1 What this Division is about
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Subdivision 900 A—Application of Division
900 5 Application of the requirements of Division 900
900 10 Substantiation requirement
900 12 Application to recipients and payers of certain withholding payments
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Subdivision 900 B—Substantiating work expenses
900 15 Getting written evidence
900 20 Keeping travel records
900 25 Retaining the written evidence and travel records
900 30 Meaning of work expense
900 35 Exception for small total of expenses
900 40 Exception for laundry expenses below a certain limit
900 45 Exception for work expense related to award transport payment
900 50 Exception for domestic travel allowance expenses
900 55 Exception for overseas travel allowance expenses
900 60 Exception for reasonable overtime meal allowance
900 65 Crew members on international flights need not keep travel records
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Subdivision 900 C—Substantiating car expenses
900 70 Getting written evidence
900 75 Retaining the written evidence and odometer records
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Subdivision 900 D—Substantiating business travel expenses
900 80 Getting written evidence
900 85 Keeping travel records
900 90 Retaining the written evidence and travel records
900 95 Meaning of business travel expense
Subdivision 900 E—Written evidence
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Guide to Subdivision 900 E
900 100 What this Subdivision is about
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Operative provisions
900 105 Ways of getting written evidence
900 110 Time limits
900 115 Written evidence from supplier
900 120 Written evidence of depreciating asset expense
900 125 Evidence of small expenses
900 130 Evidence of expenses considered otherwise too hard to substantiate
900 135 Evidence on a payment summary
Subdivision 900 F—Travel records
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Guide to Subdivision 900 F
900 140 What this Subdivision is about
900 145 Purpose of a travel record
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Operative provisions
900 150 Recording activities in travel records
900 155 Showing which of your activities were income producing activities
Subdivision 900 G—Retaining and producing records
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Guide to Subdivision 900 G
900 160 What this Subdivision is about
900 165 The retention period
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Operative provisions
900 170 Extending the retention period if an expense is disputed
900 175 Commissioner may tell you to produce your records
900 180 How to comply with a notice
900 185 What happens if you don’t comply
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Subdivision 900 H—Relief from effects of failing to substantiate
900 195 Commissioner’s discretion to review failure to substantiate
900 200 Reasonable expectation that substantiation would not be required
900 205 What if your documents are lost or destroyed?
Subdivision 900 I—Award transport payments
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Guide to Subdivision 900 I
900 210 What this Subdivision is about
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Operative provisions
900 215 Deducting an expense related to an award transport payment
900 220 Definition of award transport payment
900 225 Substituted industrial instruments
900 230 Changes to industrial instruments applied for before 29 October 1986
900 235 Changes to industrial instruments solely referable to matters in the instrument
900 240 Deducting in anticipation of receiving award transport payment
900 245 Effect of exception in this Subdivision on exception for small total of expenses
900 250 Effect of exception in this Subdivision on methods of calculating car expense deductions
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Part 5 35—Miscellaneous
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Division 905—Offences
905 5 Application of the Criminal Code
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Division 909—Regulations
909 1 Regulations
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Chapter 6—The Dictionary
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Part 6 1—Concepts and topics
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Division 950—Rules for interpreting this Act
950 100 What forms part of this Act
950 105 What does not form part of this Act
950 150 Guides, and their role in interpreting this Act
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Division 960—General
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Subdivision 960 B—Utilisation of tax attributes
960 20 Utilisation
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Subdivision 960 C—Foreign currency
960 49 Objects of this Subdivision
960 50 Translation of amounts into Australian currency
960 55 Application of translation rules
Subdivision 960 D—Functional currency
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Guide to Subdivision 960 D
960 56 What this Subdivision is about
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Operative provisions
960 59 Object of this Subdivision
960 60 You may choose a functional currency
960 61 Functional currency for calculating capital gains and losses on indirect Australian real property interests
960 65 Backdated startup choice
960 70 What is the applicable functional currency?
960 75 What is a transferor trust?
960 80 Translation rules
960 85 Special rule about translation—events that happened before the current choice took effect
960 90 Withdrawal of choice
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Subdivision 960 E—Entities
960 100 Entities
960 105 Certain entities treated as agents
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Subdivision 960 F—Distribution by corporate tax entities
960 115 Meaning of corporate tax entity
960 120 Meaning of distribution
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Subdivision 960 G—Membership of entities
960 130 Members of entities
960 135 Membership interest in an entity
960 140 Ordinary membership interest
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Subdivision 960 GP—Participation interests in entities
960 180 Total participation interest
960 185 Indirect participation interest
960 190 Direct participation interest
960 195 Non portfolio interest test
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Subdivision 960 H—Abnormal trading in shares or units
960 220 Meaning of trading
960 225 Abnormal trading
960 230 Abnormal trading—5% of shares or units in one transaction
960 235 Abnormal trading—suspected 5% of shares or units in a series of transactions
960 240 Abnormal trading—suspected acquisition or merger
960 245 Abnormal trading—20% of shares or units traded over 60 day period
Subdivision 960 J—Family relationships
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Guide to Subdivision 960 J
960 250 What this Subdivision is about
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Operative provisions
960 252 Object of this Subdivision
960 255 Family relationships
Subdivision 960 M—Indexation
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Guide to Subdivision 960 M
960 260 What this Subdivision is about
960 265 The provisions for which indexation is relevant
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Operative provisions
960 270 Indexing amounts
960 275 Indexation factor
960 280 Index number
960 285 Indexation—superannuation and employment termination
Subdivision 960 S—Market value
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Guide to Subdivision 960 S
960 400 What this Subdivision is about
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Operative provisions
960 405 Effect of GST on market value of an asset
960 410 Market value of non cash benefits
960 412 Working out market value using an approved method
960 415 Amounts that depend on market value
Subdivision 960 T—Meaning of Australia
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Guide to Subdivision 960 T
960 500 What this Subdivision is about
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Operative provisions
960 505 Meaning of Australia
Subdivision 960 U—Significant global entities
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Guide to Subdivision 960 U
960 550 What this Subdivision is about
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Operative provisions
960 555 Meaning of significant global entity
960 560 Meaning of global parent entity
960 565 Meaning of annual global income
960 570 Meaning of global financial statements
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Division 961—Notional tax offsets
Subdivision 961 A—Dependant (non student child under 21 or student) notional tax offset
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Guide to Subdivision 961 A
961 1 What this Subdivision is about
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Entitlement to the notional tax offset
961 5 Who is entitled to the notional tax offset
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Amount of the notional tax offset
961 10 Amount of the dependant (non student child under 21 or student) notional tax offset
961 15 Reduced amounts of the dependant (non student child under 21 or student) notional tax offset
961 20 Reductions to take account of the dependant’s income
Subdivision 961 B—Dependant (sole parent of a non student child under 21 or student) notional tax offset
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Guide to Subdivision 961 B
961 50 What this Subdivision is about
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Operative provisions
961 55 Who is entitled to the notional tax offset
961 60 Amount of the dependant (sole parent of a non student child under 21 or student) notional tax offset
961 65 Reductions to take account of change in circumstances
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Division 974—Debt and equity interests
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Subdivision 974 A—General
974 1 What this Division is about
974 5 Overview of Division
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Operative provisions
974 10 Object
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Subdivision 974 B—Debt interests
974 15 Meaning of debt interest
974 20 The test for a debt interest
974 25 Exceptions to the debt test
974 30 Providing a financial benefit
974 35 Valuation of financial benefits—general rules
974 40 Valuation of financial benefits—rights and options to terminate early
974 45 Valuation of financial benefits—convertible interests
974 50 Valuation of financial benefits—value in present value terms
974 55 The debt interest and its issue
974 60 Debt interest arising out of obligations owed by a number of entities
974 65 Commissioner’s power
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Subdivision 974 C—Equity interests in companies
974 70 Meaning of equity interest in a company
974 75 The test for an equity interest
974 80 Equity interest arising from arrangement funding return through connected entities
974 85 Right or return contingent on aspects of economic performance
974 90 Right or return at discretion of company or connected entity
974 95 The equity interest
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Subdivision 974 D—Common provisions
974 100 Treatment of convertible and converting interests
974 105 Effect of action taken in relation to interest arising from related schemes
974 110 Effect of material change
974 112 Determinations by Commissioner
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Subdivision 974 E—Non share distributions by a company
974 115 Meaning of non share distribution
974 120 Meaning of non share dividend
974 125 Meaning of non share capital return
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Subdivision 974 F—Related concepts
974 130 Financing arrangement
974 135 Effectively non contingent obligation
974 140 Ordinary debt interest
974 145 Benchmark rate of return
974 150 Schemes
974 155 Related schemes
974 160 Financial benefit
974 165 Convertible and converting interests
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Division 975—Concepts about companies
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Subdivision 975 A—General
975 150 Position to affect rights in relation to a company
975 155 When is an entity a controller (for CGT purposes) of a company?
975 160 When an entity has an associate inclusive control interest
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Subdivision 975 G—What is a company’s share capital account?
975 300 Meaning of share capital account
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Subdivision 975 W—Wholly owned groups of companies
975 500 Wholly owned groups
975 505 What is a 100% subsidiary?
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Division 976—Imputation
976 1 Franked part of a distribution
976 5 Unfranked part of a distribution
976 10 The part of a distribution that is franked with an exempting credit
976 15 The part of a distribution that is franked with a venture capital credit
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Division 977—Realisation events, and the gains and losses they realise for income tax purposes
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CGT assets
977 5 Realisation event
977 10 Loss realised for income tax purposes
977 15 Gain realised for income tax purposes
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Trading stock
977 20 Realisation event
977 25 Disposal of trading stock: loss realised for income tax purposes
977 30 Ending of an income year: loss realised for income tax purposes
977 35 Disposal of trading stock: gain realised for income tax purposes
977 40 Ending of an income year: gain realised for income tax purposes
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Revenue assets
977 50 Meaning of revenue asset
977 55 Loss or gain realised for income tax purposes
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Part 6 5—Dictionary definitions
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Division 995—Definitions
995 1 Definitions
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Volume 10
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Endnotes
Endnote 1—About the endnotes
Endnote 2—Abbreviation key
Endnote 3—Legislation history
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Volume 11
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Endnotes
Endnote 4—Amendment history
