Income Tax Assessment Act 1997

No. 38, 1997

Compilation No. 174

Compilation date:   12 October 2017

Includes amendments up to: Act No. 108, 2017

Registered:    12 October 2017

This compilation is in 11 volumes

Volume 1: sections 11 to 3655

Volume 2: sections 401 to 5510

Volume 3: sections 581 to 122205

Volume 4: sections 1241 to 152430

Volume 5: sections 1641 to 220800

Volume 6: sections 2301 to 31215

Volume 7: sections 3151 to 42070

Volume 8: sections 6151 to 727910

Volume 9: sections 7681 to 9951

Volume 10: Endnotes 1 to 3

Volume 11: Endnote 4

Each volume has its own contents

 

About this compilation

This compilation

This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 12 October 2017 (the compilation date).

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Legislation Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on the Legislation Register for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Editorial changes

For more information about any editorial changes made in this compilation, see the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on the Legislation Register for the compiled law.

Selfrepealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

 

 

 

Contents

Chapter 1—Introduction and core provisions

Part 11—Preliminary

Division 1—Preliminary

11 Short title

12 Commencement

13 Differences in style not to affect meaning

14 Application

17 Administration of this Act

Part 12—A Guide to this Act

Division 2—How to use this Act

Subdivision 2A—How to find your way around

21 The design

Subdivision 2B—How the Act is arranged

25 The pyramid

Subdivision 2C—How to identify defined terms and find the definitions

210 When defined terms are identified

215 When terms are not identified

220 Identifying the defined term in a definition

Subdivision 2D—The numbering system

225 Purposes

230 Gaps in the numbering

Subdivision 2E—Status of Guides and other nonoperative material

235 Nonoperative material

240 Guides

245 Other material

Division 3—What this Act is about

35 Annual income tax

310 Your other obligations as a taxpayer

315 Your obligations other than as a taxpayer

Part 13—Core provisions

Division 4—How to work out the income tax payable on your taxable income

41 Who must pay income tax

45 Meaning of you

410 How to work out how much income tax you must pay

415 How to work out your taxable income

425 Special provisions for working out your basic income tax liability

Division 5—How to work out when to pay your income tax

Guide to Division 5 17

51 What this Division is about

Subdivision 5A—How to work out when to pay your income tax

55 When income tax is payable

510 When shortfall interest charge is payable

515 General interest charge payable on unpaid income tax or shortfall interest charge

Division 6—Assessable income and exempt income

Guide to Division 6 21

61 Diagram showing relationships among concepts in this Division

Operative provisions

65 Income according to ordinary concepts (ordinary income)

610 Other assessable income (statutory income)

615 What is not assessable income

620 Exempt income

623 Nonassessable nonexempt income

625 Relationships among various rules about ordinary income

Division 8—Deductions

81 General deductions

85 Specific deductions

810 No double deductions

Part 14—Checklists of what is covered by concepts used in the core provisions

Division 9—Entities that must pay income tax

91A Effect of this Division

91 List of entities

95 Entities that work out their income tax by reference to something other than taxable income

Division 10—Particular kinds of assessable income

101 Effect of this Division

105 List of provisions about assessable income

Division 11—Particular kinds of nonassessable income

Subdivision 11A—Lists of classes of exempt income

111A Effect of this Subdivision

111 Overview

115 Entities that are exempt, no matter what kind of ordinary or statutory income they have

1115 Ordinary or statutory income which is exempt

Subdivision 11B—Particular kinds of nonassessable nonexempt income

1150 Effect of this Subdivision

1155 List of nonassessable nonexempt income provisions

Division 12—Particular kinds of deductions

121 Effect of this Division

125 List of provisions about deductions

Division 13—Tax offsets

131A Effect of this Division

131 List of tax offsets

Chapter 2—Liability rules of general application

Part 21—Assessable income

Division 15—Some items of assessable income

Guide to Division 15 92

151 What this Division is about

Operative provisions

152 Allowances and other things provided in respect of employment or services

153 Return to work payments

155 Accrued leave transfer payments

1510 Bounties and subsidies

1515 Profitmaking undertaking or plan

1520 Royalties

1522 Payments made to members of a copyright collecting society

1523 Payments of resale royalties by resale royalty collecting society

1525 Amount received for lease obligation to repair

1530 Insurance or indemnity for loss of assessable income

1535 Interest on overpayments and early payments of tax

1540 Providing mining, quarrying or prospecting information or geothermal exploration information

1545 Amounts paid under forestry agreements

1546 Amounts paid under forestry managed investment schemes

1550 Work in progress amounts

1555 Certain amounts paid under funeral policy

1560 Certain amounts paid under scholarship plan

1570 Reimbursed car expenses

1575 Bonuses

Division 17—Effect of GST etc. on assessable income

Guide to Division 17 101

171 What this Division is about

175 GST and increasing adjustments

1710 Certain decreasing adjustments

1715 Elements in calculation of amounts

1720 GST groups and GST joint ventures

1730 Special credits because of indirect tax transition

1735 Certain sections not to apply to certain assets or expenditure

Division 20—Amounts included to reverse the effect of past deductions

Guide to Division 20 104

201 What this Division is about

205 Other provisions that reverse the effect of deductions

Subdivision 20A—Insurance, indemnity or other recoupment for deductible expenses

Guide to Subdivision 20A

2010 What this Subdivision is about

2015 How to use this Subdivision

What is an assessable recoupment?

2020 Assessable recoupments

2025 What is recoupment?

2030 Tables of deductions for which recoupments are assessable

How much is included in your assessable income?

2035 If the expense is deductible in a single income year

2040 If the expense is deductible over 2 or more income years

2045 Effect of balancing charge

2050 If the expense is only partially deductible

2055 Meaning of previous recoupment law

What if you can deduct a loss or outgoing incurred by another entity?

2060 If you are the only entity that can deduct an amount for the loss or outgoing

2065 If 2 or more entities can deduct amounts for the loss or outgoing

Subdivision 20B—Disposal of a car for which lease payments have been deducted

Guide to Subdivision 20B

20100 What this Subdivision is about

20105 Map of this Subdivision

The usual case 

20110 Disposal of a leased car for profit

20115 Working out the profit on the disposal

20120 Meaning of notional depreciation

The associate case

20125 Disposal of a leased car for profit

Successive leases

20130 Successive leases

Previous disposals of the car

20135 No amount included if earlier disposal for market value

20140 Reducing the amount to be included if there has been an earlier disposal

Miscellaneous rules

20145 No amount included if you inherited the car

20150 Reducing the amount to be included if another provision requires you to include an amount for the disposal

20155 Exception for particular cars taken on hire

20157 Exception for small business entities

Disposals of interests in a car: special rules apply

20160 Disposal of an interest in a car

Part 25—Rules about deductibility of particular kinds of amounts

Division 25—Some amounts you can deduct

Guide to Division 25 136

251 What this Division is about

Operative provisions

255 Taxrelated expenses

2510 Repairs

2515 Amount paid for lease obligation to repair

2520 Lease document expenses

2525 Borrowing expenses

2530 Expenses of discharging a mortgage

2535 Bad debts

2540 Loss from profitmaking undertaking or plan

2545 Loss by theft etc.

2547 Misappropriation where a balancing adjustment event occurs

2550 Payments of pensions, gratuities or retiring allowances

2555 Payments to associations

2560 Parliament election expenses

2565 Local government election expenses

2570 Deduction for election expenses does not extend to entertainment

2575 Rates and land taxes on premises used to produce mutual receipts

2585 Certain returns in respect of debt interests

2590 Deduction relating to foreign nonassessable nonexempt income

2595 Deduction for work in progress amounts

25105 Deductions for United Medical Protection Limited support payments

25100 Travel between workplaces

25110 Capital expenditure to terminate lease etc.

Division 26—Some amounts you cannot deduct, or cannot deduct in full

Guide to Division 26 160

261 What this Division is about

Operative provisions

265 Penalties

2610 Leave payments

2615 Franchise fees windfall tax

2617 Commonwealth places windfall tax

2619 Rebatable benefits

2620 Assistance to students

2622 Political contributions and gifts

2625 Interest or royalty

2625A Seasonal Labour Mobility Program

2626 Nonshare distributions and dividends

2630 Relative’s travel expenses

2635 Reducing deductions for amounts paid to related entities

2640 Maintaining your family

2645 Recreational club expenses

2647 Nonbusiness boating activities

2650 Expenses for a leisure facility

2652 Bribes to foreign public officials

2653 Bribes to public officials

2654 Expenditure relating to illegal activities

2655 Limit on deductions

2660 Superannuation contributions surcharge

2665 Termination payments surcharge

2668 Loss from disposal of eligible venture capital investments

2670 Loss from disposal of venture capital equity

2674 Excess concessional contributions charge cannot be deducted

2675 Excess nonconcessional contributions tax cannot be deducted

2680 Financing costs on loans to pay superannuation contribution

2685 Borrowing costs on loans to pay life insurance premiums

2690 Superannuation supervisory levy

2695 Superannuation guarantee charge

2697 National Disability Insurance Scheme expenditure

2698 Division 293 tax cannot be deducted

2699 Excess transfer balance tax cannot be deducted

26100 Expenditure attributable to water infrastructure improvement payments

Division 27—Effect of input tax credits etc. on deductions

Guide to Division 27 187

271 What this Division is about

Subdivision 27A—General

275 Input tax credits and decreasing adjustments

2710 Certain increasing adjustments

2715 GST payments

2720 Elements in calculation of amounts

2725 GST groups and GST joint ventures

2735 Certain sections not to apply to certain assets or expenditure

Subdivision 27B—Effect of input tax credits etc. on capital allowances

2780 Cost or opening adjustable value of depreciating assets reduced for input tax credits

2785 Cost or opening adjustable value of depreciating assets reduced: decreasing adjustments

2787 Certain decreasing adjustments included in assessable income

2790 Cost or opening adjustable value of depreciating assets increased: increasing adjustments

2792 Certain increasing adjustments can be deducted

2795 Balancing adjustment events

27100 Pooling

27105 Other Division 40 expenditure

27110 Input tax credit etc. relating to 2 or more things

Division 28—Car expenses

Guide to Division 28 203

281 What this Division is about

285 Map of this Division

Subdivision 28A—Deductions for car expenses

2810 Application of Division 28

2812 Car expenses

2813 Meaning of car expense

Subdivision 28B—Choosing which method to use

Guide to Subdivision 28B

2814 What this Subdivision is about

2815 Choosing between the 2 methods

Operative provision

2820 Rules governing choice of method

Subdivision 28C—The “cents per kilometre” method

2825 How to calculate your deduction

2830 Capital allowances

2835 Substantiation

Subdivision 28F—The “log book” method

2890 How to calculate your deduction

2895 Eligibility

28100 Substantiation

Subdivision 28G—Keeping a log book

Guide to Subdivision 28G

28105 What this Subdivision is about

28110 Steps for keeping a log book

Operative provisions

28115 Income years for which you need to keep a log book

28120 Choosing the 12 week period for a log book

28125 How to keep a log book

28130 Replacing one car with another

Subdivision 28H—Odometer records for a period

Guide to Subdivision 28H

28135 What this Subdivision is about

Operative provision

28140 How to keep odometer records for a car for a period

Subdivision 28I—Retaining the log book and odometer records

28150 Retaining the log book for the retention period

28155 Retaining odometer records

Subdivision 28J—Situations where you cannot use, or do not need to use, one of the 2 methods

Guide to Subdivision 28J

28160 What this Subdivision is about

Operative provisions

28165 Exception for particular cars taken on hire

28170 Exception for particular cars used in particular ways

28175 Further miscellaneous exceptions

28180 Car expenses related to award transport payments

28185 Application of Subdivision 28J to recipients and payers of certain withholding payments

Division 30—Gifts or contributions

Guide to Division 30 226

301 What this Division is about

305 How to find your way around this Division

3010 Index

Subdivision 30A—Deductions for gifts or contributions

3015 Table of gifts or contributions that you can deduct

3017 Requirements for certain recipients

Subdivision 30B—Tables of recipients for deductible gifts

Health 

3020 Health

Education 

3025 Education

3030 Gifts that must be for certain purposes

3035 Rural schools hostel buildings

3037 Scholarship etc. funds

Research 

3040 Research

Welfare and rights

3045 Welfare and rights

3045A Australian disaster relief funds—declarations by Minister

3046 Australian disaster relief funds—declarations under State and Territory law

Defence 

3050 Defence

Environment 

3055 The environment

3060 Gifts to a National Parks body or conservation body must satisfy certain requirements

Industry, trade and design

3065 Industry, trade and design

The family 

3070 The family

3075 Marriage education organisations must be approved

International affairs

3080 International affairs

3085 Developing country relief funds

3086 Developed country disaster relief funds

Sports and recreation

3090 Sports and recreation

Philanthropic trusts

3095 Philanthropic trusts

Cultural organisations

30100 Cultural organisations

Fire and emergency services

30102 Fire and emergency services

Other recipients

30105 Other recipients

Subdivision 30BA—Endorsement of deductible gift recipients

Guide to Subdivision 30BA

30115 What this Subdivision is about

Endorsement as a deductible gift recipient

30120 Endorsement by Commissioner

30125 Entitlement to endorsement

30130 Maintaining a gift fund

Government entities treated like entities

30180 How this Subdivision applies to government entities

Subdivision 30C—Rules applying to particular gifts of property

Valuation requirements

30200 Getting written valuations

30205 Proceeds of the sale would have been assessable

30210 Approved valuers

30212 Valuations by the Commissioner

Working out the amount you can deduct for a gift of property

30215 How much you can deduct

30220 Reducing the amount you can deduct

Joint ownership of property

30225 Gift of property by joint owners

Subdivision 30CA—Administrative requirements relating to ABNs

Guide to Subdivision 30CA

30226 What this Subdivision is about

Requirements 

30227 Entities to which this Subdivision applies

30228 Content of receipt for gift or contribution

30229 Australian Business Register must show deductibility of gifts to deductible gift recipient

Subdivision 30DA—Donations to political parties and independent candidates and members

Guide to Subdivision 30DA

30241 What this Subdivision is about

Operative provisions

30242 Deduction for political contributions and gifts

30243 Amount of the deduction

30244 When an individual is an independent candidate

30245 When an individual is an independent member

Subdivision 30DB—Spreading certain gift and covenant deductions over up to 5 income years

Guide to Subdivision 30DB

30246 What this Subdivision is about

Operative provisions

30247 Gifts and covenants for which elections can be made

30248 Making an election

30249 Effect of election

30249A Requirements—environmental property gifts

30249B Requirements—heritage property gifts

30249C Requirements—certain cultural property gifts

30249D Requirements—conservation covenants

Subdivision 30E—Register of environmental organisations

Guide to Subdivision 30E

30250 What this Subdivision is about

Operative provisions

30255 Establishing the register

30260 Meaning of environmental organisation

30265 Its principal purpose must be protecting the environment

30270 Other requirements it must satisfy

30275 Further requirement for a body corporate or a cooperative society

30280 What must be on the register

30285 Removal from the register

Subdivision 30EA—Register of harm prevention charities

Guide to Subdivision 30EA

30286 What this Subdivision is about

Operative provisions

30287 Establishing the register

30288 Meaning of harm prevention charity

30289 Principal activity—promoting the prevention or control of harm or abuse

30289A Other requirements

30289B What must be on the register

30289C Removal from the register

Subdivision 30F—Register of cultural organisations

Guide to Subdivision 30F

30290 What this Subdivision is about

Operative provisions

30295 Establishing the register

30300 Meaning of cultural organisation

30305 What must be on the register

30310 Removal from the register

Subdivision 30G—Index to this Division

30315 Index

30320 Effect of this Subdivision

Division 31—Conservation covenants

Guide to Division 31 333

311 What this Division is about

Operative provisions

315 Deduction for entering into conservation covenant

3110 Requirements for fund, authority or institution

3115 Valuations by the Commissioner

Division 32—Entertainment expenses

Guide to Division 32 336

321 What this Division is about

Subdivision 32A—No deduction for entertainment expenses

325 No deduction for entertainment expenses

3210 Meaning of entertainment

3215 No deduction for property used for providing entertainment

Subdivision 32B—Exceptions

3220 The main exception—fringe benefits

3225 The tables set out the other exceptions

3230 Employer expenses

3235 Seminar expenses

3240 Entertainment industry expenses

3245 Promotion and advertising expenses

3250 Other expenses

Subdivision 32C—Definitions relevant to the exceptions

3255 Inhouse dining facility (employer expenses table items 1.1 and 1.2)

3260 Dining facility (employer expenses table item 1.3)

3265 Seminars (seminar expenses table item 2.1)

Subdivision 32D—Inhouse dining facilities (employer expenses table item 1.2)

3270 $30 is assessable for each meal provided to nonemployee in an inhouse dining facility

Subdivision 32E—Antiavoidance

3275 Commissioner may treat you as having incurred entertainment expense

Subdivision 32F—Special rules for companies and partnerships

3280 Company directors

3285 Directors, employees and property of whollyowned group company

3290 Partnerships

Division 34—Noncompulsory uniforms

Guide to Division 34 350

341 What this Division is about

343 What you need to read

Subdivision 34A—Application of Division 34

345 This Division applies to employees and others

347 This Division applies to employers and others

Subdivision 34B—Deduction for your noncompulsory uniform

3410 What you can deduct

3415 What is a noncompulsory uniform?

3420 What are occupation specific clothing and protective clothing?

Subdivision 34C—Registering the design of a noncompulsory uniform

3425 Application to register the design

3430 Industry Secretary’s decision on application

3433 Written notice of decision

3435 When uniform becomes registered

Subdivision 34D—Appeals from Industry Secretary’s decision

3440 Review of decisions by the Administrative Appeals Tribunal

Subdivision 34E—The Register of Approved Occupational Clothing

3445 Keeping of the Register

3450 Changes to the Register

Subdivision 34F—Approved occupational clothing guidelines

3455 Approved occupational clothing guidelines

Subdivision 34G—The Industry Secretary

3460 Industry Secretary to give Commissioner information about entries

3465 Delegation of powers by Industry Secretary

Division 35—Deferral of losses from noncommercial business activities

Guide to Division 35 361

351 What this Division is about

Operative provisions

355 Object

3510 Deferral of deductions from noncommercial business activities

3515 Modification if you have exempt income

3520 Modification if you become bankrupt

3525 Application of Division to certain partnerships

3530 Assessable income test

3535 Profits test

3540 Real property test

3545 Other assets test

3550 Apportionment

3555 Commissioner’s discretion

Division 36—Tax losses of earlier income years

Guide to Division 36 373

361 What this Division is about

Subdivision 36A—Deductions for tax losses of earlier income years

3610 How to calculate a tax loss for an income year

3615 How to deduct tax losses of entities other than corporate tax entities

3617 How to deduct tax losses of corporate tax entities

3620 Net exempt income

3625 Special rules about tax losses

Subdivision 36B—Effect of you becoming bankrupt

Guide to Subdivision 36B

3630 What this Subdivision is about

Operative provisions

3635 No deduction for tax loss incurred before bankruptcy

3640 Deduction for amounts paid for debts incurred before bankruptcy

3645 Limit on deductions for amounts paid

Subdivision 36C—Excess franking offsets

Guide to Subdivision 36C

3650 What this Subdivision is about

Operative provision

3655 Converting excess franking offsets into tax loss

An Act about income tax and related matters

Chapter 1Introduction and core provisions

Part 11Preliminary

Division 1Preliminary

Table of sections

11 Short title

12 Commencement

13 Differences in style not to affect meaning

1–4 Application

17 Administration of this Act

11  Short title

  This Act may be cited as the Income Tax Assessment Act 1997.

12  Commencement

  This Act commences on 1 July 1997.

13  Differences in style not to affect meaning

 (1) This Act contains provisions of the Income Tax Assessment Act 1936 in a rewritten form.

 (2) If:

 (a) that Act expressed an idea in a particular form of words; and

 (b) this Act appears to have expressed the same idea in a different form of words in order to use a clearer or simpler style;

the ideas are not to be taken to be different just because different forms of words were used.

Note: A public or private ruling about a provision of the Income Tax Assessment Act 1936 is taken also to be a ruling about the corresponding provision of this Act, so far as the 2 provisions express the same ideas: see section 35785 in Schedule 1 to the Taxation Administration Act 1953.

14  Application

  This Act extends to every external Territory referred to in the definition of Australia.

17  Administration of this Act

  The Commissioner has the general administration of this Act.

Note: An effect of this provision is that people who acquire information under this Act are subject to the confidentiality obligations and exceptions in Division 355 in Schedule 1 to the Taxation Administration Act 1953.

Part 12A Guide to this Act

Division 2How to use this Act

Table of Subdivisions

2A How to find your way around

2B How the Act is arranged

2C How to identify defined terms and find the definitions

2D The numbering system

2E Status of Guides and other nonoperative material

Subdivision 2AHow to find your way around

21  The design

  This Act is designed to help you identify accurately and quickly the provisions that are relevant to your purpose in reading the income tax law.

  The Act contains tables, diagrams and signposts to help you navigate your way.

  You can start at Division 3 (What this Act is about) and follow the signposts as far into the Act as you need to go. You may also encounter signposts to several areas of the law that are relevant to you. Each one should be followed.

  Sometimes they will lead down through several levels of detail. At each successive level, the rules are structured in a similar way. They will often be preceded by a Guide to the rules at that level. The rules themselves will usually deal first with the general or most common case and then with the more particular or special cases.

Subdivision 2BHow the Act is arranged

25  The pyramid

  This Act is arranged in a way that reflects the principle of moving from the general case to the particular.

  In this respect, the conceptual structure of the Act is something like a pyramid. The pyramid shape illustrates the way the income tax law is organised, moving down from the central or core provisions at the top of the pyramid, to general rules of wide application and then to the more specialised topics.

 

 

Note: The Taxation Administration Act 1953 contains the provisions on collection and recovery of tax and provisions on administration.

Subdivision 2CHow to identify defined terms and find the definitions

Table of sections

210 When defined terms are identified

215 When terms are not identified

220 Identifying the defined term in a definition

210  When defined terms are identified

 (1) Many of the terms used in the income tax law are defined.

 (2) Most defined terms in this Act are identified by an asterisk appearing at the start of the term: as in “*business”. The footnote that goes with the asterisk contains a signpost to the Dictionary definitions starting at section 9951.

215  When terms are not identified

 (1) Once a defined term has been identified by an asterisk, later occurrences of the term in the same subsection are not usually asterisked.

 (2) Terms are not asterisked in the nonoperative material contained in this Act.

Note: The nonoperative material is described in Subdivision 2E.

 (3) The following basic terms used throughout the Act are not identified with an asterisk. They fall into 2 groups:

Key participants in the income tax system

 

Item

This term:

is defined in:

1.

Australian resident

section 9951

2.

Commissioner

section 9951

3.

company

section 9951

4.

entity

section 960100

4A.

foreign resident

section 9951

5.

individual

section 9951

6.

partnership

section 9951

7.

person

section 9951

8.

trustee

section 9951

9.

you

section 45

Core concepts

 

Item

This term:

is defined in:

1.

amount

section 9951

2.

assessable income

Division 6

3.

assessment

section 9951

3A.

Australia

Subdivision 960T

4.

deduct, deduction

Division 8

5.

income tax

section 9951

6.

income year

section 9951

7.

taxable income

section 415

8.

this Act

section 9951

220  Identifying the defined term in a definition

  Within a definition, the defined term is identified by bold italics.

Subdivision 2DThe numbering system

Table of sections

225 Purposes

230 Gaps in the numbering

225  Purposes

  Two main purposes of the numbering system in this Act are:

 For example, the number of Part 215 indicates that the Part is in Chapter 2. Similarly, the number of section 16570 indicates that the section is in Division 165.

230  Gaps in the numbering

  There are gaps in the numbering system to allow for the insertion of new Divisions and sections.

Subdivision 2EStatus of Guides and other nonoperative material

Table of sections

235 Nonoperative material

240 Guides

245 Other material

235  Nonoperative material

  In addition to the operative provisions themselves, this Act contains other material to help you identify accurately and quickly the provisions that are relevant to you and to help you understand them.

  This other material falls into 2 main categories.

240  Guides

  The first is the “Guides”. A Guide consists of sections under a heading indicating that what follows is a Guide to a particular Subdivision, Division etc.

  Guides form part of this Act but are kept separate from the operative provisions. In interpreting an operative provision, a Guide may only be considered for limited purposes. These are set out in section 950150.

245  Other material

  The other category consists of material such as notes and examples. These also form part of the Act. They are distinguished by type size from the operative provisions, but are not kept separate from them.

Division 3What this Act is about

Table of sections

35 Annual income tax

310 Your other obligations as a taxpayer

315 Your obligations other than as a taxpayer

35  Annual income tax

 (1) Income tax is payable for each year by each individual and company, and by some other entities.

Note 1: Individuals who are Australian residents, and some trustees, are also liable to pay Medicare levy for each year. See the Medicare Levy Act 1986 and Part VIIB of the Income Tax Assessment Act 1936.

Note 2: Income tax is imposed by the Income Tax Act 1986 and the other Acts referred to in the definition of income tax in section 9951.

 (2) Most entities have to pay instalments of income tax before the income tax they actually have to pay can be worked out.

 (3) This Act answers these questions:

 1. What instalments of income tax do you have to pay? When and how do you pay them?

See Schedule 1 to the Taxation Administration Act 1953.

 2. How do you work out how much income tax you must pay?

See Division 4, starting at section 41.

 3. What happens if your income tax is more than the instalments you have paid? When and how must you pay the rest?

 See Division 5 of this Act and Part 415 in Schedule 1 to the Taxation Administration Act 1953.

 4. What happens if your income tax is less than the instalments you have paid? How do you get a refund?

See Division 3A of Part IIB of the Taxation Administration Act 1953.

 5. What are your other obligations as a taxpayer, besides paying instalments and the rest of your income tax?

 See section 310.

 6. Do you have any other obligations under the income tax law?

 See section 315.

 7. If a dispute between you and the Commissioner of Taxation cannot be settled by agreement, what procedures for objection, review and appeal are available?

 See Part IVC (sections 14ZL to 14ZZS) of the Taxation Administration Act 1953.

310  Your other obligations as a taxpayer

 (1) Besides paying instalments and the rest of your income tax, your main obligations as a taxpayer are:

 (a) to keep records and provide information as required by:

 (b) to lodge income tax returns as required by:

Tax file numbers

 (2) Under Part VA of the Income Tax Assessment Act 1936, a tax file number can be issued to you. You are not obliged to apply for a tax file number. However, if you do not quote one in certain situations:

315  Your obligations other than as a taxpayer

  Your main obligations under the income tax law, other than as a taxpayer are:

See Part 45 (Collection of income tax instalments),
starting at section 7501.

Part 13Core provisions

Division 4How to work out the income tax payable on your taxable income

Table of sections

41 Who must pay income tax

45 Meaning of you

410 How to work out how much income tax you must pay

415 How to work out your taxable income

425 Special provisions for working out your basic income tax liability

41  Who must pay income tax

  Income tax is payable by each individual and company, and by some other entities.

Note: The actual amount of income tax payable may be nil.

For a list of the entities that must pay income tax,
see Division 9, starting at section 91.

45  Meaning of you

  If a provision of this Act uses the expression you, it applies to entities generally, unless its application is expressly limited.

Note 1: The expression you is not used in provisions that apply only to entities that are not individuals.

Note 2: For circumstances in which the identity of an entity that is a managed investment scheme for the purposes of the Corporations Act 2001 is not affected by changes to the scheme, see Subdivision 960E of the Income Tax (Transitional Provisions) Act 1997.

410  How to work out how much income tax you must pay

 (1) You must pay income tax for each *financial year.

 (2) Your income tax is worked out by reference to your taxable income for the income year. The income year is the same as the *financial year, except in these cases:

 (a) for a company, the income year is the previous financial year;

 (b) if you have an accounting period that is not the same as the financial year, each such accounting period or, for a company, each previous accounting period is an income year.

Note 1: The Commissioner can allow you to adopt an accounting period ending on a day other than 30 June. See section 18 of the Income Tax Assessment Act 1936.

Note 2: An accounting period ends, and a new accounting period starts, when a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP. See section 18A of the Income Tax Assessment Act 1936.

 (3) Work out your income tax for the *financial year as follows:

  

Method statement

Step 1. Work out your taxable income for the income year.

To do this, see section 415.

Step 2. Work out your basic income tax liability on your taxable income using:

 (a) the income tax rate or rates that apply to you for the income year; and

 (b) any special provisions that apply to working out that liability.

See the Income Tax Rates Act 1986 and section 425.

Step 3. Work out your tax offsets for the income year. A tax offset reduces the amount of income tax you have to pay.

For the list of tax offsets, see section 131.

Step 4. Subtract your *tax offsets from your basic income tax liability. The result is how much income tax you owe for the *financial year.

Note 1: Division 63 explains what happens if your tax offsets exceed your basic income tax liability. How the excess is treated depends on the type of tax offset.

Note 2: Section 411 of the Income Tax (Transitional Provisions) Act 1997 (which is about the temporary budget repair levy) may increase the amount of income tax worked out under this section.

Income tax worked out on another basis

 (4) For some entities, some or all of their income tax for the *financial year is worked out by reference to something other than taxable income for the income year.

See section 95.

415  How to work out your taxable income

 (1) Work out your taxable income for the income year like this:

  

Method statement

Step 1. Add up all your assessable income for the income year.

To find out about your assessable income, see Division 6.

Step 2. Add up your deductions for the income year.

To find out what you can deduct, see Division 8.

Step 3. Subtract your deductions from your assessable income (unless they exceed it). The result is your taxable income. (If the deductions equal or exceed the assessable income, you don’t have a taxable income.)

Note: If the deductions exceed the assessable income, you may have a tax loss which you may be able to utilise in that or a later income year: see Division 36.

 (2) There are cases where taxable income is worked out in a special way:

 

Item

For this case ...

See:

1.

A company does not maintain continuity of ownership and control during the income year and does not satisfy the same business test

Subdivision 165B

1B.

An entity is a *member of a *consolidated group at any time in the income year

Part 390

2.

A company becomes a PDF (pooled development fund) during the income year, and the PDF component for the income year is a nil amount

section 124ZTA of the Income Tax Assessment Act 1936

3.

A shipowner or charterer:

 has its principal place of business outside Australia; and

 carries passengers, freight or mail shipped in Australia

section 129 of the Income Tax Assessment Act 1936

4.

An insurer who is a foreign resident enters into insurance contracts connected with Australia

sections 142 and 143 of the Income Tax Assessment Act 1936

5.

The Commissioner makes a default or special assessment of taxable income

sections 167 and 168 of the Income Tax Assessment Act 1936

6.

The Commissioner makes a determination of the amount of taxable income to prevent double taxation in certain treaty cases

section 24 of the International Tax Agreements Act 1953

Note: A life insurance company can have a taxable income of the complying superannuation class and/or a taxable income of the ordinary class for the purposes of working out its income tax for an income year: see Subdivision 320D.

425  Special provisions for working out your basic income tax liability

  The following provisions may increase your basic income tax liability beyond the liability worked out simply by applying the income tax rates to your taxable income:

 (a) Subdivision 355G;

 (b) subsection 39235(3).

Note 1: Subdivision 355G increases some entities’ tax liability by requiring them to pay extra income tax on government recoupments relating to R&D activities for which entitlements to tax offsets arise under Division 355.

Note 2: Subsection 39235(3) increases some primary producers’ tax liability by requiring them to pay extra income tax on their averaging components worked out under Subdivision 392C.

Division 5How to work out when to pay your income tax

Table of Subdivisions

 Guide to Division 5

5A How to work out when to pay your income tax

Guide to Division 5

51  What this Division is about

If your assessed income tax liability exceeds the credits available to you under the PAYG system, this Division explains when you must pay the excess to the Commissioner.

If your assessment is amended so that you must pay income tax, or pay more income tax than under the previous assessment, this Division explains:

 (a) when you must pay the additional tax; and

 (b) when any associated interest charges must be paid.

 Note: For provisions about the collection and recovery of income tax and other taxrelated liabilities, see Part 415 in Schedule 1 to the Taxation Administration Act 1953.

Subdivision 5AHow to work out when to pay your income tax

Table of sections

55 When income tax is payable

510 When shortfall interest charge is payable

515 General interest charge payable on unpaid income tax or shortfall interest charge

55  When income tax is payable

Scope

 (1) This section tells you when income tax you must pay for a *financial year is due and payable.

Note: The Commissioner may defer the time at which the income tax is due and payable: see section 25510 in Schedule 1 to the Taxation Administration Act 1953.

 (2) The income tax is only due and payable if the Commissioner makes an *assessment of your income tax for the year.

 (3) However, if the Commissioner does make an *assessment of your income tax for the year, the tax may be taken to have been due and payable at a time before your assessment was made.

Note: This is to ensure that general interest charge begins to accrue from the same date for all like entities. General interest charge on unpaid income tax is calculated from when the tax is due and payable, not from when the assessment is made: see section 515.

Original assessments—selfassessment entities

 (4) If you are a *selfassessment entity, the income tax is due and payable on the first day of the sixth month after the end of the income year.

Example: If your income year is the same as the financial year, your income tax would be due and payable on 1 December.

Original assessments—other entities

 (5) If you are not a *selfassessment entity, the income tax is due and payable 21 days after the day (the return day) on or before which you are required to lodge your *income tax return with the Commissioner.

Note: For rules about income tax returns and when they are due, see Part IV of the Income Tax Assessment Act 1936.

 (6) However, if you lodge your return on or before the return day and the Commissioner gives you a notice of *assessment (other than an amended assessment) after the return day, the income tax is due and payable 21 days after the Commissioner gives you the notice.

Amended assessments

 (7) If the Commissioner amends your *assessment, any extra income tax resulting from the amendment is due and payable 21 days after the day on which the Commissioner gives you notice of the amended assessment.

Note: Shortfall interest charge may be payable, on any amount of extra income tax payable as a result of the amended assessment, for each day in the period that:

(a) starts at the time income tax was due and payable on your original assessment; and

(b) ends the day before the day on which the Commissioner gives you notice of the amended assessment.

510  When shortfall interest charge is payable

  An amount of *shortfall interest charge that you are liable to pay is due and payable 21 days after the day on which the Commissioner gives you notice of the charge.

Note: Shortfall interest charge is imposed if the Commissioner amends an assessment and the amended assessment results in an increase in some tax payable. For provisions about liability for shortfall interest charge, see Division 280 in Schedule 1 to the Taxation Administration Act 1953.

515  General interest charge payable on unpaid income tax or shortfall interest charge

  If an amount of income tax or *shortfall interest charge that you are liable to pay remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:

 (a) starts at the beginning of the day on which the amount was due to be paid; and

 (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:

 (i) the income tax or shortfall interest charge;

 (ii) general interest charge on any of the income tax or shortfall interest charge.

Note 1: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953.

Note 2: Shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act.

Division 6Assessable income and exempt income

Guide to Division 6

Table of sections

61 Diagram showing relationships among concepts in this Division

Operative provisions

65 Income according to ordinary concepts (ordinary income)

610 Other assessable income (statutory income)

615 What is not assessable income

620 Exempt income

623 Nonassessable nonexempt income

625 Relationships among various rules about ordinary income

61  Diagram showing relationships among concepts in this Division

 (1) Assessable income consists of ordinary income and statutory income.

 (2) Some ordinary income, and some statutory income, is exempt income.

 (3) Exempt income is not assessable income.

 (4) Some ordinary income, and some statutory income, is neither assessable income nor exempt income.

For the effect of the GST in working out assessable income, see Division 17.

 (5) An amount of ordinary income or statutory income can have only one status (that is, assessable income, exempt income or nonassessable nonexempt income) in the hands of a particular entity.

Operative provisions

65  Income according to ordinary concepts (ordinary income)

 (1) Your assessable income includes income according to ordinary concepts, which is called ordinary income.

Note: Some of the provisions about assessable income listed in section 105 may affect the treatment of ordinary income.

 (2) If you are an Australian resident, your assessable income includes the *ordinary income you *derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

 (3) If you are a foreign resident, your assessable income includes:

 (a) the *ordinary income you *derived directly or indirectly from all *Australian sources during the income year; and

 (b) other *ordinary income that a provision includes in your assessable income for the income year on some basis other than having an *Australian source.

 (4) In working out whether you have derived an amount of *ordinary income, and (if so) when you derived it, you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct.

610  Other assessable income (statutory income)

 (1) Your assessable income also includes some amounts that are not *ordinary income.

Note: These are included by provisions about assessable income.
For a summary list of these provisions, see section 105.

 (2) Amounts that are not *ordinary income, but are included in your assessable income by provisions about assessable income, are called statutory income.

Note 1: Although an amount is statutory income because it has been included in assessable income under a provision of this Act, it may be made exempt income or nonassessable nonexempt income under another provision: see sections 620 and 623.

Note 2: Many provisions in the summary list in section 105 contain rules about ordinary income. These rules do not change its character as ordinary income.

 (3) If an amount would be *statutory income apart from the fact that you have not received it, it becomes statutory income as soon as it is applied or dealt with in any way on your behalf or as you direct.

 (4) If you are an Australian resident, your assessable income includes your *statutory income from all sources, whether in or out of Australia.

 (5) If you are a foreign resident, your assessable income includes:

 (a) your *statutory income from all *Australian sources; and

 (b) other *statutory income that a provision includes in your assessable income on some basis other than having an *Australian source.

615  What is not assessable income

 (1) If an amount is not *ordinary income, and is not *statutory income, it is not assessable income (so you do not have to pay income tax on it).

 (2) If an amount is *exempt income, it is not assessable income.

Note: If an amount is exempt income, there are other consequences besides it being exempt from income tax. For example:

 (3) If an amount is *nonassessable nonexempt income, it is not assessable income.

Note 1: You cannot deduct as a general deduction a loss or outgoing incurred in deriving an amount of nonassessable nonexempt income (see Division 8).

Note 2: Capital gains and losses on assets used to produce some types of nonassessable nonexempt income are disregarded (see section 11812).

620  Exempt income

 (1) An amount of *ordinary income or *statutory income is exempt income if it is made exempt from income tax by a provision of this Act or another *Commonwealth law.

For summary lists of provisions about exempt income,
see sections 115 and 1115.

 (2) *Ordinary income is also exempt income to the extent that this Act excludes it (expressly or by implication) from being assessable income.

 (3) By contrast, an amount of *statutory income is exempt income only if it is made exempt from income tax by a provision of this Act outside this Division or another *Commonwealth law.

 (4) If an amount of *ordinary income or *statutory income is *nonassessable nonexempt income, it is not exempt income.

Note: An amount of nonassessable nonexempt income is not taken into account in working out the amount of a tax loss.

623  Nonassessable nonexempt income

  An amount of *ordinary income or *statutory income is nonassessable nonexempt income if a provision of this Act or of another *Commonwealth law states that it is not assessable income and is not *exempt income.

Note: Capital gains and losses on assets used to produce some types of nonassessable nonexempt income are disregarded (see section 11812).

For a summary list of provisions about nonassessable nonexempt income, see Subdivision 11B.

625  Relationships among various rules about ordinary income

 (1) Sometimes more than one rule includes an amount in your assessable income:

For a summary list of the provisions about assessable income,
see section 105.

However, the amount is included only once in your assessable income for an income year, and is then not included in your assessable income for any other income year.

 (2) Unless the contrary intention appears, the provisions of this Act (outside this Part) prevail over the rules about *ordinary income.

Note: This Act contains some specific provisions about how far the rules about ordinary income prevail over the other provisions of this Act.

Division 8Deductions

Table of sections

81 General deductions

85 Specific deductions

810 No double deductions

81  General deductions

 (1) You can deduct from your assessable income any loss or outgoing to the extent that:

 (a) it is incurred in gaining or producing your assessable income; or

 (b) it is necessarily incurred in carrying on a *business for the purpose of gaining or producing your assessable income.

Note: Division 35 prevents losses from noncommercial business activities that may contribute to a tax loss being offset against other assessable income.

 (2) However, you cannot deduct a loss or outgoing under this section to the extent that:

 (a) it is a loss or outgoing of capital, or of a capital nature; or

 (b) it is a loss or outgoing of a private or domestic nature; or

 (c) it is incurred in relation to gaining or producing your *exempt income or your *nonassessable nonexempt income; or

 (d) a provision of this Act prevents you from deducting it.

For a summary list of provisions about deductions, see section 125.

 (3) A loss or outgoing that you can deduct under this section is called a general deduction.

For the effect of the GST in working out deductions, see Division 27.

Note If you receive an amount as insurance, indemnity or other recoupment of a loss or outgoing that you can deduct under this section, the amount may be included in your assessable income: see Subdivision 20A.

85  Specific deductions

 (1) You can also deduct from your assessable income an amount that a provision of this Act (outside this Division) allows you to deduct.

 (2) Some provisions of this Act prevent you from deducting an amount that you could otherwise deduct, or limit the amount you can deduct.

 (3) An amount that you can deduct under a provision of this Act (outside this Division) is called a specific deduction.

Note: If you receive an amount as insurance, indemnity or other recoupment of a deductible expense, the amount may be included in your assessable income: see Subdivision 20A.

For a summary list of provisions about deductions, see section 125.

810  No double deductions

  If 2 or more provisions of this Act allow you deductions in respect of the same amount (whether for the same income year or different income years), you can deduct only under the provision that is most appropriate.

Part 14Checklists of what is covered by concepts used in the core provisions

Division 9Entities that must pay income tax

Table of sections

91A Effect of this Division

91 List of entities

95 Entities that work out their income tax by reference to something other than taxable income

91A  Effect of this Division

  This Division is a *Guide.

91  List of entities

  Income tax is payable by the entities listed in the table.

Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.

 

Item

Income tax is payable by this kind of entity:

because of this provision:

1

An individual

section 41

2

A company, that is:

 a body corporate; or

 an unincorporated body (except a partnership)

section 41

3

A company that was a member of a whollyowned group if a former subsidiary in the group is treated as having disposed of leased plant and does not pay all of the income tax resulting from that treatment

section 4525

4

A superannuation provider in relation to a complying superannuation fund

sections 2955 and 295605

5

A superannuation provider in relation to a noncomplying superannuation fund

sections 2955 and 295605

6

A superannuation provider in relation to a complying approved deposit fund

section 2955

7

A superannuation provider in relation to a noncomplying approved deposit fund

section 2955

8

The trustee of a pooled superannuation trust

section 2955

9

A corporate limited partnership

section 94J

10

A mutual insurance association (as described in section 121)

section 121

11

A trustee (except one covered by another item in this table), but only in respect of some kinds of income of the trust

sections 98, 99, 99A and 102

13

The trustee of a public trading trust

section 102S

95  Entities that work out their income tax by reference to something other than taxable income

 (1) For some entities, some or all of their income tax for the *financial year is worked out as described in the table.

Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.

 

Item

This kind of entity is liable to pay income tax worked out by reference to:

See:

1

A company that was a member of a whollyowned group is jointly and severally liable to pay an amount of income tax if a former subsidiary in the group is treated as having disposed of leased plant and does not pay all of the income tax resulting from that treatment.

section 4525

2

A superannuation provider in relation to a complying superannuation fund is to be assessed and is liable to pay income tax on noTFN contributions income as well as on taxable income.

sections 2955 and 295605

3

A superannuation provider in relation to a noncomplying superannuation fund is to be assessed and is liable to pay income tax on noTFN contributions income as well as on taxable income.

sections 2955 and 295605

4

An RSA provider is to be assessed and is liable to pay income tax on noTFN contributions income as well as on taxable income.

sections 2955, 295605 and 320155

4A

An entity is liable to pay extra income tax on government recoupments relating to R&D activities for which entitlements to tax offsets arise under Division 355.

Subdivision 355G

5

An Australian resident individual with:

 eligible foreign remuneration under section 23AF; or

 foreign earnings under section 23AG;

(from working in a foreign country) is liable to pay income tax worked out by reference to his or her assessable income less some of his or her deductions.

section 23AF or 23AG

6

A trustee covered by item 11 in the table in section 91 is liable to pay income tax worked out by reference to the net income of the trust for the income year.

sections 98, 99 and 99A

8

The trustee of a public trading trust is liable to pay income tax worked out by reference to the net income of the trust for the income year.

section 102S

9

An entity that is liable to pay income tax (worked out by reference to taxable income or otherwise) is also liable to pay income tax worked out by reference to diverted income or diverted trust income for the income year.

section 121H

10

An Australian insurer that reinsures overseas can elect to pay, as agent for the reinsurer, income tax worked out by reference to the amount of the reinsurance premiums.

section 148

 (2) For entities covered by an item in the table in subsection (1), the income year is the same as the *financial year, except in these cases:

 (a) for a company, or an entity covered by item 2 or 3 in the table, the income year is the previous financial year;

 (b) if an entity has an accounting period that is not the same as the financial year, each such accounting period or, for a company, each previous accounting period is an income year.

Note 1: The Commissioner can allow an entity to adopt an accounting period ending on a day other than 30 June. See section 18 of the Income Tax Assessment Act 1936.

Note 2: An accounting period ends, and a new accounting period starts, when a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP. See section 18A of the Income Tax Assessment Act 1936.

Division 10Particular kinds of assessable income

101  Effect of this Division

  This Division is a *Guide.

105  List of provisions about assessable income

  The provisions set out in the table:

Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.

 

Accrued leave transfer payments

 

 ....................................

155

alienated personal services income

 

 ....................................

8615

allowances

 

see employment

 

annual leave

 

see leave payments

 

annuities

 

 ....................................

27H

approved deposit fund (ADFs)

 

see superannuation

 

attributable income

 

see controlled foreign corporations

 

avoidance of tax

 

general .................................

177F

diversion of income .........................

121H

see also transfers of income

 

bad debts

 

see recoupment

 

balancing adjustment

 

see capital allowances, investments, R&D, scientific research and tax exempt entities

 

banking

 

offshore banking activities, income from ...........

121EG(1)

offshore banking unit, deemed interest on payments to by owner  


121EK

barter transactions

 

............................................

21, 21A, 152

beneficiaries

 

see trusts

 

benefits

 

business, noncash ...................

21A

consideration, noncash ................

21

meals you provide in an inhouse dining facility  

3270

see also employment and superannuation

 

bonus shares

 

see shares

 

bounties

 

............................................

1510

capital allowances

 

excess of termination value over adjustable value

 

generally.........................

40285

for some cars......................

40370

depreciating asset in lowvalue pool........

40445(2)

expenditure in software development pool..........

40460

recovery of petroleum resource rent tax............

40750(3)

capital gains

 

 ....................................

1025

see also insurance

 

car expenses

 

cents per kilometres reimbursement of ............

1570

carried interests

 

carried interests, not ordinary income.............

11821

CFCs

 

see controlled foreign corporations

 

charters

 

see shipping

 

child

 

nontrust income of, unearned ............

102AE

trust income of, unearned .....................

102AG

collecting societies

 

payments of royalties by copyright collecting societies..

1522

payments of royalties by resale royalty collecting society 


1523

company

 

see controlled foreign corporations, cooperative company, directors, dividends, liquidation, shareholders and shares

 

compensation

 

live stock or trees, recoveries for loss of ...........

385130

profits or income, insurance or indemnity for loss of....

1530

received by lessor for lessee’s noncompliance with lease obligation to repair             


1525

trading stock, insurance or indemnity for loss of ......

70115

see also insurance, live stock, recoupment and scientific research

 

consideration

 

see benefits

 

consolidated groups and MEC groups

 

Assets in relation to Division 230 financial arrangement.


70161(3)

controlled foreign corporations (CFCs)

 

attributable income of .......................

456 to 459A

see also dividends and taxes

 

cooperative company

 

receipts of ...............................

119

credit union

 

see cooperative company

 

currency gains

 

see foreign exchange

 

currency losses

 

see recoupment

 

death

 

see trusts

 

debt/equity swap

 

see shares and units

 

defence forces

 

allowances and benefits for service as a member of ....

152

depreciation

 

see capital allowances

 

directors

 

excessive remuneration or retirement payment from company  


109

distributions

 

see dividends

 

dividends

 

benefit of LIC capital gain through a trust or partnership .

115280

general .................................

44(1)

distribution from a controlled foreign corporation .....

47A(1)

franked dividends, credits on...................

20720(1), 20735(1), 20735(3)

see also liquidation

 

elections

 

local government, reimbursement of expenses of......

2565

see also recoupment

 

electricity connections

 

see recoupment

 

employees

 

see shares

 

employment

 

allowances and benefits in relation to employment or rendering services  


152

employment termination payment ...............

8210
8265
8270

other payments for employment termination .........

83295

return to work payments ......................

153

see accrued leave transfer payments, leave payments, superannuation and sections 8210A and 8210C of the Income Tax (Transitional Provisions) Act 1997

 

environment

 

see recoupment

 

farm management deposits

 

repayments of ............................

39310

films

 

Australian, proceeds of investment in .............

26AG

financial arrangements

 

gains from...............................

23015(1)

foreign exchange

 

gains ..................................

77515

see also recoupment

 

forestry agreement

 

amount where section 82KZMG of the 1936 Act applies.

1545

CGT event in relation to forestry interest in agreement..

82KZMGB

forestry managed investment schemes

 

forestry manager’s receipts under scheme...........

1546

CGT event in relation to forestry interest in scheme for initial participant 


39425(2)

CGT event in relation to forestry interest in scheme for subsequent participant             


39430(2)

franked dividends

 

see dividends

 

funeral policy

 

benefit under..............................

1555

general insurance companies and companies that self insure

 

gross premiums............................

32145

reduction in value of outstanding claims liability......

32110 and 32180

reduction in value of unearned premium reserve......

32150

geothermal energy

 

providing geothermal exploration information .......

1540

grapevines

 

see recoupment

 

horticultural plants

 

see recoupment

 

improvements

 

see leases

 

imputation

 

see dividends

 

indemnity

 

see compensation and recoupment

 

infrastructure borrowings

 

see interest

 

insurance

 

bonuses .................................

26AH, 1575

company, demutualisation of ...................

121AT

life insurance, transfer of contributions by superannuation fund or approved deposit fund to              


295260

payments from a nonresident reinsurer in respect
of a loss ..............................


148

premiums in respect of Australian business received by nonresident insurers              


143

premiums paid to a nonresident for reinsurance  

148

premiums paid to mutual insurance association .......

121

premiums payable to a nonresident for insurance of property in Australia              


142(1)

premiums payable to a nonresident for insuring an event that can only happen in Australia              


142(1)

premiums payable to a nonresident under an insurance contract with a resident              


142(2)

rebates and premiums refunded to a superannuation fund trustee  


295320 (table item 4)

see also compensation, life insurance companies and recoupment

 

interest

 

infrastructure borrowings, on ...................

159GZZZZG

loans raised in Australia by foreign governments, on ...

27

overpaid tax, on ...........................

1535

qualifying securities, on ......................

159GQ, 159GW(1)

see also cooperative companies and leases

 

investments

 

prizes from investmentrelated lotteries ......

26AJ

qualifying securities, payments to partial residents made under  


159GW(2)

qualifying securities, amount assessable to issuer of ....

159GT(1B)

qualifying securities, balancing adjustment on the transfer of  


159GS

securities, variation in terms of .................

159GV(2)

securities lending arrangements .................

26BC

traditional securities, gains on the disposal or redemption of  


26BB

see also films and interest

 

landcare operations

 

see recoupment

 

leased plant ..................................

Division 45

leases

 

amounts received by lessor from lessee for noncompliance with lease obligation to repair             


1525

interest component of payments under nonleveraged finance leases              


159GK

partnership leasing property under nonleveraged finance lease, new partner or contribution of capital since 14 May 1985              



159GO

premiums relating to assignment of a lease granted before 20 September 1985             


26AB

profit on disposal of previously leased motor vehicles ..

Subdivision 20B

leases of luxury cars

 

accrual amounts...........................

24235

adjustment amounts (lessee)

24270

adjustment amounts (lessor)

24265

leave payments

 

accrued leave transfer payment .................

155

unused annual leave payment ........................

8310

unused long service leave payment ...............

8380

see employment

 

life insurance companies

Subdivision 320B

limited recourse debt

 

excessive deduction amount (debtor)

24340

excessive deduction amount (partner)

24365

liquidation

 

distribution to a shareholder in winding up a company..

47(1)

live stock

 

death or destruction of .......................

Subdivision 385E

departing Australia and ......................

385160, 385163

insolvency, and ...........................

385160, 385163

profits on death or disposal of ..................

Subdivision 385E, 385160

see also compensation and trading stock

 

long service leave

 

see leave payments

 

losses

 

see compensation

 

lotteries

 

see investments

 

managed investment trusts

 

gains etc. from carried interests.................

275200(2)

meals

 

see benefits

 

Mining

 

providing mining, quarrying or prospecting information .


1540

minors

 

see child

 

motor vehicles

 

see car expenses and leases

 

mutual insurance

 

see insurance

 

noncash benefits

 

see benefits and employment

 

notional sales and loans

 

adjustment amounts (lessee)

240110(2)

adjustment amounts (lessor)

240105(2)

notional interest............................

24035(1)

profit on actual sale.........................

24035(3)

profit on notional sale........................

24035(2)

offshore banking units

 

see banking

 

partnerships

 

net income of, partner’s interest in ...............

92(1)

uncontrolled partnership income, effect of ..........

94

see also leases

 

petroleum

 

resource rent tax, recovery of ..................

2030(1)

see also capital allowances

 

premiums

 

see insurance, leases and superannuation

 

primary production

 

see recoupment

 

prizes

 

see investments

 

profits

 

crossborder transfer pricing.............

81530

profitmaking undertaking or plan..........

1515

sale of property acquired before 20 September 1985 for profitmaking by sale             


25A

see also avoidance of tax

 

Project pools

 

An amount received for the abandonment, sale or other disposal of a project             


40830, 40832

property

 

see profits and trusts

 

quarrying

 

see mining and recoupment

 

R&D

 

balancing adjustment ........................

40292, 40293, 355315 and 355525

disposal of R&D results ......................

355410

feedstock adjustment ........................

355465

rates

 

see recoupment

 

recoupment

 

insurance or indemnity for deductible losses or
outgoings.............................


Subdivision 20A

other recoupment for certain deductible losses or outgoings 


Subdivision 20A

see also car expenses, compensation, elections and petroleum

 

registered emissions units

 

disposal of...............................

42025

disposal for a noncommercial purpose............

42040

difference between opening and closing value of......

42045

reimbursements

 

see car expenses, dividends, elections, petroleum and recoupment

 

reinsurance

 

see insurance

 

retirement payments

 

see directors, leave payments and shareholders

 

rights to income

 

see transfers of income

 

roads

 

see timber

 

royalties

 

............................................

1520

schemes

 

see avoidance of tax

 

scholarship plan

 

benefit under..............................

1560

scientific research

 

consideration for disposal or destruction of buildings acquired for scientific research              


73A(4)

securities

 

see investments

 

services

 

see cooperative companies, employment, loans and trusts

 

shareholders

 

excessive remuneration or retirement payment from company  


109

loans, payments and credits from company .........

Division 7A of Part III

see also dividends

 

shares

 

acquired in a debt/equity swap, profit on the disposal cancellation or redemption of              


63E(4)

bonus shares, cost of ........................

6BA

buybacks .........................

159GZZZJ to 159GZZZT

employee share schemes .....................

Subdivisions
83AB and 83AC

holding company shares held by a subsidiary, cancellation of  


159GZZZC to 159GZZZI

smallmedium enterprise, profit on disposal of shares in  

128TG to 128TL

see also dividends

 

shipping

 

goods shipped in Australia, amounts paid to foreign shipowners and charterers for              


129

smallmedium enterprises (SMEs)

 

see shares

 

subsidies

 

............................................

1510

superannuation

 

associated earnings on nonconcessional contributions  

Subdivision 292B

benefits generally ..........................

Divisions 301 to 306

benefits in breach of legislative requirements ........

Division 304

benefits received from older superannuation funds ....

26AF, 26AFA

complying fund becomes noncomplying, effect of  

295320 (table item 2)

contributions to an approved deposit fund ..........

Subdivisions 295C and 295D

contributions to an RSA ......................

Subdivision 295C

contributions to a superannuation fund ............

Subdivisions
295C and 295D

death benefits .............................

30275
30285
30290
302145

excess concessional contributions ................

29115(a)

foreign superannuation funds and schemes, benefits from  


30570

member benefits ...........................

30120
30125
30135
30140
Subdivision 301C

foreign fund becoming Australian, effect of .........

295320 (table item 3)

noTFN contributions income ............

295605

release authorities, payments from ...............

30415(4)
30420

returned contributions .......................

290100

trustee’s liability to pay tax ....................

2955(2) and (3)

see insurance

 

tax avoidance

 

see avoidance of tax and transfers of income

 

tax exempt entities

 

treatment of income and gains on becoming taxable ....

Schedule 2D

taxes

 

see dividends, foreign investment funds, interest and recoupment

 

termination of employment

 

see directors, eligible termination payments, leave payments and shareholders

 

theft

 

see recoupment

 

trading stock

 

change in interests in ........................

70100

death of trader and .........................

70105

difference between opening and closing value of ......

7035

disposal not at arm’s length....................

7020

disposal of outside ordinary course of business .......

7090, 7095

see also compensation and tax exempt entities

 

transfer pricing

 

arm’s length principle for crossborder conditions between entities              


Subdivision 815B

arm’s length principle for permanent establishments....

Subdivision 815C

transfers of income

 

consideration for transfer of right to income .........

102CA

payments for transfer or disposal of property ........

262

transferee, effect on of transfer of right to income .....

102C

transferor, effect on of transfer of right to income .....

102B

travel expenses

 

see car expenses

 

trusts

 

beneficiary under legal disability or with a vested and indefeasible interest in trust income              


100

deceased estates, income of ....................

101A

discretionary trusts .........................

101

net income of a trust estate, your present entitlement to

97, 101

nonresident beneficiaries, liability to tax of ...

98A

nonresident trust estates to which you have transferred property or services, income of              


102AAZD

property of applied for benefit of beneficiaries .......

99B

trust estate includes income from another trust estate

94(5)

trustees’ liability to tax .......................

98, 99, 99A, 102, 102S

see also avoidance of tax and superannuation

 

unearned income

 

see child

 

units

 

acquired in a debt/equity swap, profit on the disposal, cancellation or redemption of              


63E(4)

water conservation

 

see recoupment

 

windingup

 

see insurance and liquidation

 

wool clips

 

double wool clips, treatment of .................

385135, 385155

work in progress

 

receipt of a work in progress amount .............

1550

Division 11Particular kinds of nonassessable income

Table of Subdivisions

11A Lists of classes of exempt income

11B Particular kinds of nonassessable nonexempt income

Subdivision 11ALists of classes of exempt income

Table of sections

111A Effect of this Subdivision

111 Overview

115 Entities that are exempt, no matter what kind of ordinary or statutory income they have

1115 Ordinary or statutory income which is exempt

111A  Effect of this Subdivision

  This Subdivision is a *Guide.

111  Overview

  Ordinary income or statutory income which is exempt from income tax can be divided into 2 main classes:

 (a) ordinary or statutory income of entities that are exempt, no matter what kind of ordinary or statutory income they have (see table in section 115);

 (b) ordinary or statutory income of a kind that is exempt (see table in section 1115).

115  Entities that are exempt, no matter what kind of ordinary or statutory income they have

  Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.

Note: Special rules apply to entities that cease to be exempt. See Schedule 2D to the Income Tax Assessment Act 1936.

 

charity, education or science

 

educational institution, public...................

505

Global Carbon Capture and Storage Institute Ltd......

505

registered charity...........................

505

scientific institution.........................

505

scientific research fund.......................

505

scientific society etc.........................

505

community service

 

community service society etc...................

5010

employees and employers

 

employee association........................

5015

employer association........................

5015

trade union...............................

5015

government

 

constitutionally protected fund..................

5025

local governing body........................

5025

municipal corporation........................

5025

public authority............................

5025

state/territory bodies.........................

24AK to 24AZ

health

 

health benefits organisation....................

5030

hospital.................................

5030

medical benefits organisation...................

5030

HIH rescue package

 

 HIH Claims Support Trust ..................

32210

mining

 

British Phosphate Commissioners Banaba Contingency Fund 


5035

primary or secondary resources, and tourism

 

agricultural society etc. ......................

5040

aviation society etc. .........................

5040

Global Infrastructure Hub Ltd ..................

5040

horticultural society etc. ......................

5040

industrial society etc. ........................

5040

manufacturing society etc. ....................

5040

pastoral society etc. .........................

5040

tourism society etc. .........................

5040

viticultural society etc. .......................

5040

sports, culture or recreation

 

animal racing society etc. .....................

5045

art society etc. ............................

5045

game society etc. ..........................

5045

literature society etc. ........................

5045

music society etc. ..........................

5045

sport society etc. ...........................

5045

1115  Ordinary or statutory income which is exempt

  Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.

 

agricultural industry exit grants

 

tobacco industry exit grants....................

5310

copyright collecting societies

5143

credit unions

 

interest.................................

23G

defence

 

Defence Abuse Reparation Scheme, payments under...

515

Defence Force member, allowances...............

515

Defence Force member, compensation payments for loss of deployment allowance for warlike service             


515

F111 Deseal/Reseal Exgratia Lump Sum Payments 

515

Former Reserve Defence Force member, compensation payments for loss of pay and/or allowances             


515

Reserve Defence Force member, pay and allowances...

515

dividends or shares

 

pooled development fund company dividend ........

124ZM

pooled development fund company shares, income from sale of  


124ZN

education and training

 

Apprenticeship Wage TopUp payment, recipient of 

5110

bursary, educational allowance etc. ...............

5110 and 5135

Commonwealth Trade Learning Scholarship, recipient of 


5110

CRAFT scheme, employer’s income from..........

5110

early completion bonuses for apprentices...........

5110 and 5142

Endeavour Awards, research fellowship under........

5110

Endeavour Executive Award...................

5110

foreign student, scholarship and bursary to..........

842105

fulltime student, income from a scholarship, bursary, other educational allowance or educational assistance             



5110 and 5135

isolated child, income for the provision of education of..

5110 and 5140

secondary student, income for the provision of education of  


5110 and 5140

Skills for Sustainability for Australian Apprentices payment, recipient of 


5110

Tools for Your Trade payment (under the program known as the Australian Apprenticeships Incentives Program), recipient of             



5110

family assistance

 

back to school bonus or single income family bonus....

52150

child care benefit ..........................

52150

child care rebate...........................

52150

clean energy advance........................

52150

economic security strategy payment to families.......

52150

ETR payment.............................

52150

ETR payment, payments under the scheme determined under Part 2 of Schedule 1 to the Family Assistance and Other Legislation Amendment (Schoolkids Bonus Budget Measures) Act 2012             




52162

families, payments to, under the scheme determined under Schedule 4 to the Social Security and Other Legislation Amendment (Economic Security Strategy) Act 2008             

52160

family tax benefit ..........................

52150

Household Stimulus Package Act (No. 2) 2009, payments under scheme determined under Schedule 4 to the             

52165

single income family supplement................

52150

stillborn baby payment.......................

52150

financial arrangements

 

gains related to exempt income..................

23030

financial transactions

 

infrastructure borrowings, income in relation to ......

159GZZZZE

pooled development fund company dividends........

124ZM

pooled development fund company shares, income from sale of  


124ZN

foreign aspects of income taxation

 

approved overseas project, income from ...........

23AF

AustralianAmerican Education Foundation, grant from 


5110

Commonwealth of Nations country officer, official salary and foreign income              


768100

consul and official staff member, official salary and foreign income  


768100

Defence Force member, foreign resident, pay and
allowances of ..........................


842105

Defence Force member, pay and allowances from being on eligible duty  


23AD

defence of Australia, overseas person’s income from assisting in Australia’s defence             


842105

diplomat and official staff member, official salary and foreign income  


768100

educational, scientific, religious or philanthropic society, income of a visiting representative of              


842105

expert, foreign resident, remuneration of ...........

842105

foreign society or association representative, income of .


842105

forex realisation gains, certain..................

77520

government representative and members of the entourage, foreign resident, income of              


842105

OBU investment trusts for overseas charitable institutions 


121EL(2)

OBU offshore investment trusts, income to which subsection 121D(6) applies              


121EL

overseas charitable institutions, income from OBUs....

121ELA(1)

overseas employment income, resident, income of .....

23AG

persecution victim, payments to .................

768105

press representative, foreign, income of ............

842105

resistance fighter and victim of wartime persecution, payments to  


768105

United Nations, income from service with ..........

23AB

United States projects, income from approved overseas projects  


23AA

health

 

Continence Aids Payment Scheme, payments under ....

52175

interest

 

judgement debt, personal injury.................

5157

unclaimed money and property..................

51120

life insurance companies

Subdivision 320B

National Disability Insurance Scheme

 

NDIS amounts............................

52180

noncash benefits

 

business benefit............................

23L(2)

exempt fringe benefit........................

23L(1A)

prizes

 

Prime Minister’s Literary Awards ...............

5160

Prime Minister’s Prize for Australian History ........

5160

Prime Minister’s Prize for Science ...............

5160

resale royalty collecting societies

5145

shipping

 

income from shipping activities.................

51100

social security or like payments

 

ABSTUDY scheme, payment under..............

Subdivision 52E

Australian Victim of Terrorism Overseas Payment.....

5210

Better Start for Children with Disability initiative, Outer Regional and Remote payment under              


52172

carer adjustment payment.....................

5310

carers, 2005 oneoff payment to, (carer payment related), 2005 oneoff payment to carers (carer service pension related) or 2005 oneoff payment to carers (carer allowance related)




5210

carers, 2006 oneoff payment to, (carer payment related), 2006 oneoff payment to carers (wife pension related), 2006 oneoff payment to carers (partner service pension related), 2006 oneoff payment to carers (carer service pension related) or 2006 oneoff payment to carers (carer allowance related)              







5210

carers, 2007 oneoff payment to, (carer payment related), 2007 oneoff payment to carers (wife pension related), 2007 oneoff payment to carers (partner service pension related), 2007 oneoff payment to carers (carer service pension related) or 2007 oneoff payment to carers (carer allowance related).             







5210

carers, 2008 oneoff payment to, (carer payment related), 2008 oneoff payment to carers (wife pension related), 2008 oneoff payment to carers (partner service pension related), 2008 oneoff payment to carers (carer service pension related) or 2008 oneoff payment to carers (carer allowance related)







5210

carers, oneoff payment to, (carer allowance related) or oneoff payment to carers (carer payment related)              


5210

carers, payments to, under the scheme determined under Schedule 3 to the Family Assistance Legislation Amendment (More Help for Families—Oneoff Payments) Act 2004             




5210

carer supplement............................

5210

child disability assistance.....................

Subdivision 52A

clean energy payment under the Social Security Act 1991 


5210

clean energy payment under the Veterans’ Entitlements Act 1986 


5265

clean energy payment under the scheme prepared under Part VII of the Veterans’ Entitlements Act 1986             



5265

clean energy payment under the Military Rehabilitation and Compensation Act 2004             


52114

clean energy payment under the scheme determined under section 258 of the Military Rehabilitation and Compensation Act 2004             



52114

Commonwealth education or training payment.......

Subdivision 52F

DFISA bonus and DFISA bonus bereavement payment..

5265

disability services payment ....................

5310

economic security strategy payment under the Social Security Act 1991 


5210

economic security strategy payment under the Veterans’ Entitlements Act 1986             


5265

education entry payment supplement under the Social Security Act 1991 


5210

energy assistance payment, oneoff payment under the Social Security Act 1991             


5210

energy assistance payment, oneoff payment under the Veterans’ Entitlements Act 1986             


5265

ETR payment under the Veterans’ Entitlements Act 1986 


5265

ETR payment, payments under the scheme determined under Part 2 of Schedule 1 to the Family Assistance and Other Legislation Amendment (Schoolkids Bonus Budget Measures) Act 2012             




52162

farm household allowance under the Farm Household Support Act 2014 

Subdivision 52A

Helping Children with Autism package, Outer Regional and Remote payment under              


52170

Household Stimulus Package Act (No. 2) 2009, payments under the scheme determined under Schedule 4 to the             



52165

older Australians, 2006 oneoff payment to, under the Social Security Act 1991             


5210

older Australians, 2007 oneoff payment to, under the Social Security Act 1991             


5210

older Australians, 2008 oneoff payment to, under the Social Security Act 1991             


5210

pension bonus and pension bonus bereavement payment.


5210 and 5265

persecution victim, payments to .................

768105

pharmaceutical supplement for Australian participants in British nuclear tests or in the British Commonwealth Occupation Force             



Subdivision 52CB

resistance fighter and victim of wartime persecution, payments to  


768105

Social Security and Other Legislation Amendment (Economic Security Strategy) Act 2008, payments under the scheme determined under Schedule 4 to the             




52160

Social Security and Veterans’ Affairs Legislation Amendment (Oneoff Payments and Other 2007 Budget Measures) Act 2007, payments under a scheme determined under item 1 of Schedule 2 to the             





5210

Social Security and Veterans’ Affairs Legislation Amendment (Oneoff Payments and Other 2007 Budget Measures) Act 2007, payments under the scheme determined under Schedule 4 to the             




5210

Social Security and Veterans’ Entitlements Legislation Amendment (Oneoff Payments and Other Budget Measures) Act 2008, payments under a scheme determined under item 1 of Schedule 2 to the             




5210

Social Security and Veterans’ Entitlements Legislation Amendment (Oneoff Payments and Other Budget Measures) Act 2008, payments under the scheme determined under Schedule 4 to the             




5210

Social Security and Veterans’ Entitlements Legislation Amendment (Oneoff Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006, payments under the scheme determined under item 1 of Schedule 2 to the             






5210

Social Security and Veterans’ Entitlements Legislation Amendment (Oneoff Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006, payments under the scheme determined under Schedule 4 to the             





5210

Social Security Legislation Amendment (Oneoff Payments for Carers) Act 2005, payments under the scheme determined under Schedule 2 to the             



5210

social security payments ......................

Subdivision 52A

training and learning bonus under the Social Security Act 1991 


5210

travelling expenses for Australian participants in British nuclear tests or in the British Commonwealth Occupation Force             



Subdivision 52CB

veteran, Australian and United Kingdom, payment to ...

5320

veteran, payment to .........................

Subdivisions 52B and 52C

Veterans’ Entitlements Act 1986, lump sum payment under section 198N of the             


5265

wounds and disability pension ..................

5310

see also welfare

 

structured settlements and structured orders

 

annuities and lump sums......................

Subdivisions 54B, 54C and 54D

student

 

see education and training

 

superannuation and related business

 

approved deposit fund, continuously complying fixed interest, income from 25 May 1988 deposits              

295390 of the Income Tax (Transitional Provisions) Act 1997

approved deposit fund, income from a grant of financial assistance under Part 23 of the Superannuation Industry (Supervision) Act 1993              


295405 (table item 1)

approved deposit fund, nonreversionary bonuses on policies of life assurance              

295335 (table item 1)

benefits from noncomplying funds ........

3055

pooled superannuation trust, income from constitutionally protected funds              

295335 (table item 2)

pooled superannuation trust, income from current pension liabilities of complying superannuation funds              



295400

pooled superannuation trust, nonreversionary bonuses on policies of life assurance              

295335 (table item 1)

superannuation fund, income from other assets used to meet current pension liabilities              


295390

superannuation fund, income from segregated current pensions assets  


295385

superannuation fund, nonreversionary bonuses on policies of life assurance              

295335 (table item 1)

superannuation fund, regulated, income from a grant of financial assistance under Part 23 of the Superannuation Industry (Supervision) Act 1993              


295405 (table item 1)

United Nations

 

United Nations Service, income from .............

23AB

venture capital

 

eligible venture capital investments, gain or profit from realisation of 

5154

eligible venture capital investments by ESVCLPs, income derived from 

5152

venture capital equity, gain or profit from realisation of..

5155

welfare

 

Disaster recovery payments to special category visa (subclass 444) holders             


5130

maintenance payment........................

5130 and 5150

thalidomide payment—payment by the Thalidomide Australia Fixed Trust             


5130

see also social security or like payments

 

Note: The following provisions of the Income Tax Assessment Act 1936 give rise to notional exempt income and not exempt income. For this reason the provisions do not appear in the lists of kinds of exempt income.

 The provisions are: paragraphs 384(1)(b) and 385(1)(b), subsection 402(2) and section 403.

Subdivision 11BParticular kinds of nonassessable nonexempt income

Table of sections

1150 Effect of this Subdivision

1155 List of nonassessable nonexempt income provisions

1150  Effect of this Subdivision

  This Subdivision is a *Guide.

1155  List of nonassessable nonexempt income provisions

  The provisions set out in the list make amounts nonassessable nonexempt income.

  Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.

 

alienated personal services income

 

associate, nondeductible payment or obligation to 

8520(3)

entitlements to a share of net income that is personal services income already assessable to an
individual.............................



8635(2)

payments by personal services entity or associate of personal services income already assessable to an individual             



8635(1)

personal services entity, amounts of personal services income assessable to an individual             


8630

bonds

 

see securities

 

capital gains tax

 

small business retirement exemption, payments made directly or indirectly to CGT concession stakeholder so company or trust complies with section 152325             




152310

demutualisation of friendly society health or life insurers

 

amounts related to issue, or transfer from lost policy holders trust, of demutualisation assets             


316255

payments received directly, or from lost policy holders trust, in exchange for cancellation or variation of interests under the demutualisation             



316255

demutualisation of private health insurers

 

market value of shares and rights at time of issue......

315310

payments received in exchange for cancellation or variation of interests under the demutualisation             


315310

dividends

 

demerger dividends.........................

44(4)

later dividend set off against amount taken to be dividend 

109ZC(3), 109ZCA(4)

employment

 

early retirement scheme payment, tax free amount of ...

83170

employment termination payment ...............

8210
8265
8270

foreign termination payment ...................

83235
83240

genuine redundancy payment, tax free amount of .....

83170

unused long service leave payment, pre16/8/78
period ...............................


8380

see superannuation and sections 8210A and 8210C of the Income Tax (Transitional Provisions) Act 1997

 

environment

 

water infrastructure improvement payments.........

5965

farmin farmout arrangements

 

rewards for providing exploration benefits..........

401135

financial arrangements

 

gains related to nonassessable nonexempt income 

23030

firearms surrender arrangements

 

compensation under.........................

5910

foreign aspects of income taxation

 

attributed controlled foreign company income, amounts paid out of  


23AI

attributed foreign investment fund income, amounts paid out of  


23AK

certain forex realisation gains...................

77525

branch profits of Australian companies............

23AH

distributions of conduit foreign income............

80220

income derived by foreign residents in exclusive economic zone or on or above continental shelf             

768110

foreign equity distributions on participation interests...

7685

income derived by temporary residents.............

768910

interest paid by temporary residents...............

768980

managed investment trust withholding tax, amount subject to  


840815

Seasonal Labour Mobility Program withholding tax, amount subject to  


840915

superannuation fund, foreign, interest and dividend income of  


128B(3)(jb)

withholding tax, dividend royalty or interest subject to..

128D

GST

 

GST payable on a taxable supply................

175(a)

increasing adjustments.......................

175(b) and (c)

investment manager regime

 

IMR concessions...........................

842215

life insurance companies..........................

Subdivision 320B

mining

 

withholding tax, payments to Indigenous persons and distributing bodies subject to             


5915

mutual receipts

 

amounts that would be mutual receipts but for prohibition on distributions to members             


5935

National Rental Affordability Scheme

 

payments made, and noncash benefits provided, by a State or Territory governmental body in relation to participation in the National Rental Affordability Scheme..................................................................             




38035

native title benefits

 

native title benefits..........................

5950

noncash benefits

 

fringe benefits.............................

23L(1)

notional sale and loan

 

arrangement payments a notional seller receives or is entitled to receive 


24040

luxury car leases, lease payments that the lessor receives or is entitled to receive             


24240

deemed loan treatment for financial benefits provided for tax preferred use of asset             


250160

offshore banking units

 

assessable OB income other than eligible fraction.....

121EG

related entities

 

amounts from, where deduction reduced for.........

2635(4)

repayable amounts

 

previously assessable amounts..................

5930

rights to acquire shares or units

 

market value of at time of issue.................

5940

small business assets

 

income arising from CGT event, company or trust owned asset continuously for 15 years             


152110(2)

superannuation

 

benefits generally ..........................

Divisions 301 to 306

commutation of income stream, under 25 years .......

3035

death benefits .............................

30260
30265
30270
302140

departing Australia superannuation benefits .........

301175

foreign superannuation funds, lump sum benefits .....

30560
30565
30570

KiwiSaver schemes, contributions to complying superannuation funds from              


31210

KiwiSaver schemes, superannuation benefits paid from complying superannuation funds to              


31215

member benefits ...........................

30110
30115
30130
301225

release authorities, payments from ...............

30315

30317

30320

30415

rollover superannuation benefits ..........

3065

superannuation lump sum for recipient having terminal medical condition              


30310

unclaimed money payment ....................

30620

tax loss transfers

 

consideration received by loss company from income company, generally 


17025(1)

consideration received by loss company from income company, net capital loss             


170125(1)

temporary residents

 

see foreign aspects of income taxation

 

trading stock

 

disposal outside ordinary course of business, amounts received upon 


7090(2)

trusts

 

attributable income, amounts representing..........

99B(2A)

family trust distribution tax, amounts subject to.......

271105(3) in Schedule 2F

windfall amounts

 

business franchise fees, refund of when invalid.......

5920

State tax on Commonwealth place, refund of when invalid 


5925

withholding taxes

 

see foreign aspects of income taxation and mining

 

Division 12Particular kinds of deductions

121  Effect of this Division

  This Division is a *Guide.

125  List of provisions about deductions

  The provisions set out in the table contain rules about specific types of deduction.

  Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.

 

accrued leave transfer payments

 

 ....................................

2610

advance expenditure

 

generally ................................

82KZL to 82KZO

avoidance arrangements ......................

82KJ

when deductible ...........................

82KZM to 82KZN

bad debts

 

deduction reduced because of forgiveness of debt if debtor and creditor are companies under common ownership and agree on the reduction             



24590

general .................................

2535, 63F

companies ...............................

Subdivisions 165C, 166C and 175C

debt/equity swaps ..........................

63E, 63F, 709220

deduction of a debt that used to be owed to a member of a consolidated group or MEC group by an entity that used to be a member of the group              


Subdivisions
709D and 719I

money lenders, listed country branches, no deduction
for  


63D

see also losses

 

balancing adjustment

 

see buildings, capital allowances, industrial property, R&D and tax exempt entities

 

banks

 

foreign banks, Australian branches of .............

160ZZVA to 160ZZZJ

boats

 

deferral of deductions .......................

2647

borrowing expenses

 

 ....................................

2525

bribes to foreign public officials ....................

2652

bribes to public officials ..........................

2653

buildings

 

income producing buildings, capital allowances ......

Division 43

see also heritage conservation work

 

capital allowances

 

generally ................................

Division 40

balancing adjustments .......................

40285(2), 40370

business related costs ........................

40880

electricity and telephone lines ..................

40645

environmental protection activities ...............

40755

exploration or prospecting ....................

4080(1), 40730

inhouse software ....................

40335, 40455

intellectual property ........................

Subdivisions 40B and 40I

IRUs ..................................

Subdivision 40B

landcare operations .........................

40630

lowvalue and software development pools ...

Subdivision 40E

mining and quarrying ........................

Subdivision 40H and Subdivision 40I

new business investment, additional deduction .......

Division 41

Petroleum Resource Rent Tax ..................

40750

project pools .............................

40830, 40832

reducing deductions ........................

4025, 40290

spectrum licences ..........................

Subdivision 40B

tax preferred use of asset......................

Division 250

telecommunications site access rights .............

Subdivision 40B

trees in carbon sink forests ....................

Subdivision 40J

water facilities, horticultural plants, fodder storage assets and fencing assets              


Subdivision 40F

capital gains

 

no deduction for an amount that would otherwise be deductible only because a net capital gain is included in assessable income             



51AAA

small business retirement exemption, no deduction for payments made directly or indirectly to CGT concession stakeholder so company or trust complies with section 152325             




152310

see also foreign residents

 

capital loss

 

net capital loss, no deduction for ................

10210

net capital loss, transfer within company group .......

Subdivision 170B

car disposal

 

see capital allowances

 

car expenses

 

generally ................................

Division 28

“cents per kilometre” method ..................

Subdivision 28C

“log book” method .........................

Subdivisions 28F and 28G

substantiation of car expenses ..................

Division 900

see also transport expenses

 

car expenses of employee

 

employee’s car expenses where car provided by employer can be used for private purposes, no deduction for .             



51AF

carried interests

 

carried interests, no deduction for................

11821

car parking

 

employee’s car parking expenses, no deduction for ....

51AGA

children’s income

 

generally ................................

102AA to 102AH

taxable income of a child, deductions taken into consideration in calculating              


102AD

club fees

 

club fees, no deduction for ....................

2645

see also subscriptions to associations

 

Commonwealth places windfall tax

 

 ....................................

2617

companies, cooperative and mutual

 

generally ................................

117 to 121

distributions of assessable income ...............

120

companies, private

 

excessive payments to shareholders directors and associates, reduced deduction              


109

conservation covenants

 

 ....................................

Division 31

consolidated groups and MEC groups

 

assets in relation to Division 230 financial
arrangement............................


70161(4)

controlled foreign companies

 

generally ................................

316 to 468

bad debts ................................

399A

decline in value of depreciating assets .............

398

finance share dividends ......................

394

taxes paid ...............................

393

convertible notes

 

see interest

 

copyrights

 

expenditure in obtaining registration ..............

Subdivisions 40B and 40I

currency exchange gains and losses

 

see foreign exchange

 

death of timber owner

 

see timber

 

debt interests

 

certain returns in respect of debt interests...........

2585

depreciation

 

see capital allowances

 

designs

 

expenditure in obtaining or extending registration .....

Subdivisions 40B and 40I

disposal of depreciating assets

 

see capital allowances

 

dividends

 

dividends including LIC capital gain component ......

115280

franking credits, companies and foreign residents......

20795(2), 20795(3), 220405(3)

franking credits, pooled development funds (PDFs) ....

124ZM

nonshare equity interests, no deduction for return in respect of  


2626

unfranked nonportfolio dividends.........

46FA

education expenses

 

Higher Education Contribution Scheme, no deduction unless provided as fringe benefit              


2620

limit on deduction ..........................

82A

see also overseas debtors repayment levy

 

see also student startup loans

 

election expenses

 

Federal and State Parliament election expenses .......

2560, 2570

local government election expenses, limited deduction
for 


2565, 2570

electricity connections

 

see capital allowances

 

embezzlement

 

see theft

 

employees

 

pensions, gratuities or retiring allowances for exemployees  


2550

Seasonal Labour Mobility Program, delayed deduction for salary, wages etc. paid to employees under program until Seasonal Labour Mobility Program withholding tax payable has been paid              




2625A

see also shares

 

entertainment

 

expenditure, no deduction for some ..............

Division 32

meal entertainment, calculation of deductible amount ...

51AEA to 51AEC

environment

 

see capital allowances

 

excess nonconcessional contributions tax

 

no deduction .............................

2675

exploration and prospecting

 

see capital allowances

 

family

 

no deduction for maintaining spouse or child.........

2640

farm management deposits

 

see primary production

 

film licensed investment companies (FLICs)

 

see shares

 

financial arrangements

 

losses from...............................

23015(2) and (3)

see also borrowing expenses, infrastructure, interest, leases and securities

 

foreign exchange

 

losses ..................................

77530

foreign financial entities’ Australian permanent establishments

 

generally................................

Part IIIB

thin capitalisation..........................

Subdivision 820FB

transfer of losses...........................

Subdivisions 170A and 170B

forestry managed investment schemes

 

payments under scheme......................

39410(1)

franchise fees windfall tax

 

 ....................................

2615

freight

 

freight for shipped goods .....................

135A

fringe benefits

 

contributions for private component, no deduction for ..

51AJ

employee’s car expenses where car provided by employer can be used for private purposes, no deduction for              


51AF

employee’s car parking expenses, no deduction for ....

51AGA

expense payment fringe benefits, reduced deduction ...

51AH

general insurance companies and companies that self insure

 

claims paid...............................

32125 and 32195

increase in value of outstanding claims liability.......

32115 and 32185

increase in value of unearned premium reserve.......

32155

gifts

 

general .................................

Division 30

limit on deduction ..........................

2655

see also tax avoidance schemes

 

horticultural plants

 

see capital allowances

 

higher education assistance

2620

illegal activities

2654

income equalisation deposits

 

see primary production

 

industrial property

 

see intellectual property and R&D

 

infrastructure

 

infrastructure borrowings .....................

159GZZZZD to 159GZZZZH

see also tax losses

 

insurance with nonresidents

 

generally ................................

141 to 148

insurance premiums, no deduction unless arrangement to pay tax  


145

reinsurance, no deduction for resident carrying on insurance business in Australia for reinsurance premiums paid to a nonresident              



148

intellectual property

 

see capital allowances

 

interest

 

convertible notes, interest on, generally ............

82L to 82T

foreign residents, debt creation involving, generally ....

159GZY to 159GZZF

foreign residents, delayed deduction for interest paid to until withholding tax payable has been paid              


2625

life assurance premiums, interest etc. on loans to finance, no deduction for              


2685

superannuation contributions, interest etc. on loans to finance, no deduction for              


2680

underpayment or late payment of tax, interest for .....

255

see also infrastructure

 

international agreements

 

see transfer pricing

 

international profit shifting

 

see transfer pricing

 

investment company

 

see shares

 

IRUs

 

see capital allowances

 

land degradation

 

see primary production

 

lease document expenses

 

 ....................................

2520

lease, authority, licence, permit or quota

 

expenditure to terminate......................

25110

leases

 

finance leases and arrangements, use of property if enduser an exempt public body or use outside Australia to produce exempt income              



159GE to 159GO

leases of assets being put to tax preferred use........

Division 250

leveraged arrangements, property used:

 

  other than to produce assessable income; or

 

  by a nonresident outside Australia; or

 

  by a previous owner

 

 ....................................

51AD

payment for failure to comply with lease obligation to repair premises 


2515

leases of luxury cars

 

accrual amounts...........................

24235

adjustment amounts (lessee)

24270

adjustment amounts (lessor)

24265

lease payments not deductible..................

24255

payments to acquire car not deductible.............

24285

leave payments

 

accrued leave transfer payments .................

2610

no deduction for leave payments until paid ..........

2610

leisure facilities

 

no deduction for ...........................

2650

life insurance companies..........................

Subdivision 320C

limited recourse debt

 

later payments.............................

24345

later payments (replacement debt)

24350

loans

 

see borrowing expenses, interest and securities

 

losses

 

foreign exchange ..........................

77530

profitmaking undertaking or scheme .......

2540

property sale .............................

2540

traditional securities, loss on disposal or redemption
of  


70B

see also tax losses

 

managed investment trusts

 

losses from carried interests....................

275200(4)

management and investment company shares

 

see shares

 

membership of associations

 

see subscriptions to associations

 

mining

 

see capital allowances

 

misappropriation

 

by employee or agent........................

2547

mortgage

 

expenses of discharging a mortgage ..............

2530

motor vehicles

 

see car expenses and leases

 

National Disability Insurance Scheme

 

National Disability Insurance Scheme expenditure.....

2697

noncash transactions

 

noncash business benefits ..............

51AK

noncash consideration, money value deemed to have been paid or given              


21

noncommercial business activities

 

deferral of noncommercial losses..........

Division 35

nonresident trust estates

 

generally ................................

102AAA to 102AAZG

modified application of depreciation provisions .......

102AAY

modified application of trading stock provisions ......

102AAZ

no deductions allowable under Division 36 .........

102AAZC

notional sales and loans

 

adjustment amounts (lessee)

240110(1)

adjustment amounts (lessor)

240105(3)

arrangement payments, no deduction for...........

24055

notional interest............................

24050, 250155

deemed loan treatment for financial benefits provided for tax preferred use of asset             


Subdivision 250C

payments to acquire property, no deduction for.......

24085

offshore banking units

 

generally ................................

121A to 121EL

deductions for ............................

121EG

overseas debtors repayment levy

 

limit on deduction..........................

82A

payment made to reduce a liability to overseas debtors repayment levy under the Student Loans (Overseas Debtors Repayment Levy) Act 2015, no deduction unless provided as fringe benefit             

2620

partnerships

 

foreign hybrid loss exposure adjustment.........................................

83050

losses, partner’s share of partnership loss ...........

90, 92

patents

 

expenditure relating to grant of patents, etc. .........

Subdivisions 40B and 40I

penalties

 

no deduction for penalties .....................

265

personal services income

 

alienated personal services income...............

Subdivision 86B

general.................................

Division 85

political contributions and gifts

 

denial of certain deductions....................

2622

deductions for individuals.....................

Subdivision 30DA

pooled development funds (PDFs)

 

 ....................................

124ZM to 124ZZD

prepaid expenditure

 

see advance expenditure

 

primary production

 

farm management deposits....................

Division 393

see also capital allowances and timber

 

property

 

arrangements relating to assets being put to tax preferred use 


Division 250

arrangements relating to use of property if enduser an exempt public body or use outside Australia to produce exempt income              



159GE to 159GO

leveraged arrangements, property used:

 

  other than to produce assessable income; or

 

  by a nonresident outside Australia; or

 

  by a previous owner

 

 ....................................

51AD

sale of property, profit or loss ..................

82(2)

see also capital allowances and losses

 

public trading trusts

 

generally ................................

102M to 102T

qualifying securities

 

see securities

 

R&D

Division 355

rates and land taxes

 

premises used to produce mutual receipts...........

2575

rebatable benefits

 

no deduction for ...........................

2619

registered emissions units

 

expenditure incurred in becoming the holder of.......

42015

expenditure incurred in ceasing to hold............

42042

excess of opening over closing value of..................

42045

reimbursements

 

expense payment fringe benefits, reduced deduction ...

51AH

reinsurance

 

see insurance with nonresidents

 

related entities (including relatives)

 

reduction of deduction for payment or liability to......

2635,
65(1B) and (1C)

repairs

 

general .................................

2510

repair covenants, payment for noncompliance with covenant to repair under lease              


2515

roads

 

see timber

 

royalties

 

royalty, no deduction for royalty paid to a foreign resident until the withholding tax payable has been paid             



2625

scientific research

 

see R&D

 

securities

 

qualifying securities ........................

159GP to 159GZ

substituted securities ........................

23K

traditional securities, loss on disposal or redemption
of  


70B

shares

 

buybacks .........................

159GZZZJ to 159GZZZT

cancellation of subsidiary’s shares in holding company .

159GZZZC to 159GZZZI

employee share schemes, deduction for provider of ESS interests  


Subdivision 83AD

smallmedium enterprise, loss on disposal of shares in  

128TG to 128TL

see also dividends and securities

 

smallmedium enterprises (SMEs)

 

see shares

 

Software

 

see capital allowances

 

spectrum licences

 

see capital allowances

 

State or Territory bodies (STBs)

 

body ceasing to be STB, some deductions not allowed ..

24AW to 24AYA

student startup loans

 

limit on deduction ..........................

82A

payment made to reduce a debt to the Commonwealth under Chapter 2AA of the Social Security Act 1991 (student startup loans), no deduction unless provided as fringe benefit              

2620

payment made to reduce a debt to the Commonwealth under Part 2 of the Student Assistance Act 1973 (ABSTUDY student startup loans), no deduction unless provided as fringe benefit             

2620

subscriptions to associations

 

 ....................................

2555

substantiation

 

work, travel and car expenses ..................

Division 900

superannuation

 

see insurance and annuity business and interest

 

superannuation and related business

 

generally ................................

Part 330

asset disposals ............................

29585

death or disability benefits, deduction for future service element  


295470

death or disability cover, premiums for ............

295465

financial assistance levy ......................

295490(1) (table item 3)

superannuation contributions surcharge

 

no deduction .............................

2660

superannuation—deductibility of contributions

 

generally ......................................

Division 290

contributions for employees etc. .................

Subdivision 290B

contributions to noncomplying funds .......

sections 29010 and 29075

limit on deduction ..........................

2655

no deduction under any other provision of the Act .....

section 29010

personal contributions .......................

Subdivision 290C

superannuation guarantee charge

 

no deduction for ...........................

2695

late contribution offset, no deduction for ...........

29095

superannuation supervisory levy

 

late lodgment amount, no deduction for............

2690

tax agent’s fees

 

see tax related expenses

 

tax avoidance schemes

 

companies, use of tax losses or deductions to avoid tax .

Division 175

diverted assessable income ....................

121F to 121L

dividend stripping..........................

177E

gifts ...................................

78A

imputation, manipulation of....................

207150(2), 207150(3)

prepaid outgoings to avoid tax ..................

82KJ

recouped expenditure ........................

82KH to 82KL

tax avoidance scheme, no deduction allowable where deduction the result of              


177A to 177G

trading stock .............................

7020, 52A

tax exempt entities

 

treatment of losses and outgoings on becoming
taxable ...............................


Schedule 2D

tax losses

 

bad debts, companies ........................

165120

change of ownership or control of a company

 

generally .........................

Division 165

for earlier income years ...............

Subdivision 165A

for income year of the change ...........

Subdivision 165B

designated infrastructure project entities ...........

Division 415

earlier income years ........................

Division 36

life insurance companies......................

Subdivision 320D

pooled development funds ....................

Subdivision 195A

transfer between companies in same whollyowned
group ................................


Subdivision 170A

tax preferred asset financing

 

generally................................

Division 250

denial of capital allowance deductions in relation to asset being put to tax preferred use             


250145

reduction in capital allowance deductions in relation to asset being put to tax preferred use             


250150

tax related expenses

 

 ....................................

255

telecommunications site access rights

 

see capital allowances

 

telephone lines

 

see primary production

 

termination payments surcharge

 

no deduction .............................

2665

theft

 

by employee or agent........................

2545

thin capitalisation

 

disallowing of deductions.....................

Division 820

timber

 

death of owner of land carrying trees, deduction of the part of land cost attributable to trees             


70120

disposal of land carrying trees, deduction of the part of land cost attributable to trees             


70120

felling trees, deduction of cost of land attributable to trees felled or of cost of right to fell trees             


70120

see also capital allowances

 

trade support loan

 

limit on deduction ..........................

82A

payment made to reduce a debt to the Commonwealth under the Trade Support Loans Act 2014, no deduction unless provided as fringe benefit              

 

 

 

2620

trading ships

 

see capital allowances

 

trading stock

 

Commissioner may determine whether consideration paid for chose in action is reasonable              


52A

excess of opening stock over closing value ..........

7035(3)

expenditure deemed not to be of a capital nature ......

7025

prepayments, when stock becomes trading stock on
hand ................................


7015

see also tax avoidance schemes and timber

 

traditional securities

 

see securities

 

training guarantee

 

training guarantee charge, no deduction for .........

51(7)

transfer pricing

 

arm’s length principle for crossborder conditions between entities              


Subdivision 815B

arm’s length principle for permanent establishments....

Subdivision 815C

transport expenses

 

incurred in travel between workplaces .............

25100

travel expenses

 

accompanying relatives, no deduction for some travel expenses  


2630

see also substantiation

 

trees in carbon sink forests

 

see capital allowances

 

trusts

 

trust income, deductions considered in calculating .....

95 to 102

see also foreign residents, nonresident trust estates and public trading trusts

 

uniforms

 

noncompulsory uniforms ..............

Division 34

United Medical Protection Limited support payments

 

 ....................................

25105

uranium mining

 

see mining

 

water facilities

 

improvements.............................

26100

see also capital allowances

 

work expenses

 

see substantiation

 

work in progress

 

payment of a work in progress amount ............

2595

Division 13Tax offsets

131A  Effect of this Division

  This Division is a *Guide.

131  List of tax offsets

  The provisions set out in the list allow you a tax offset.

  Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.

 

Aboriginal study assistance

 

see social security and other benefit payments

 

annual leave

 

see leave payments

 

annuity

 

see superannuation

 

approved deposit funds (ADFs)

 

see dividends

 

attribution managed investment trusts

 

nonresident beneficiary ................

276110

averaging

 

see primary production

 

bonuses

 

see life assurance

 

child

 

child care ...............................

Subdivision 61IA

first child................................

Subdivision 61I

increased tax payable under Part III Division 6AA, unreasonable  


102AH

trust income ..............................

100(2)

corporate unit trusts

 

see dividends

 

Cyclone Larry or Cyclone Monica income support payment

 

see social security and other benefit payments

 

defence force

 

members serving overseas ....................

79B

dependants

 

invalid relative, invalid spouse or carer in receipt of carer benefit 

Subdivision 61A

see also medical expenses

 

dividends

 

general.................................

20720(2), 20745, 207110(2)(c), 210170(1)

early stage venture capital limited partnerships

 

contributions to ESVCLPs.........................................

Subdivision 61P

employment termination

 

employment termination payments ...............

8210
8270

see leave payments, superannuation and sections 8210A and 8210C of the Income Tax (Transitional Provisions) Act 1997

 

Equine Workers Hardship Wage Supplement Payment

 

see social security and other benefit payments

 

exploration for minerals

 

exploration development incentive ...............

Subdivision 418B

film

 

 ....................................

Division 376

foreign income tax

 

foreign income tax paid, tax offset for.............

Division 770

franking deficit tax

 

liabilities to pay............................

20570

franked dividends

 

see dividends

 

hardship

 

see child

 

housing

 

National Rental Affordability...................

Division 380

imputation

 

see dividends and franking deficit tax

 

infrastructure

 

borrowings...............................

159GZZZZG

innovation companies

 

certain shares issued to early stage investors.........

Subdivision 360A

intercorporate dividends

 

see dividends

 

interest

 

tax paid on by company ......................

127

interim income support payment

 

see social security and other benefit payments

 

invalid relative

 

see dependants

 

leave payments

 

unused annual leave payment ........................

8315

unused long service leave payment ...............

8385

see employment termination

 

legal disability

 

see trusts

 

life assurance

 

bonus, receipt of ...........................

160AAB

life insurance company

 

subsidiary joining consolidated group .............

713545(5)

long service leave

 

see leave payments

 

low income earner

 

aged or pensioner beneficiary, trustee liable to be assessed for beneficiary’s share of net income of trust estate              


160AAAB

aged person or pensioner......................

160AAAA

general .................................

159N

lump sum income arrears

 

receipt of ................................

159ZRA, 159ZRB, Subdivision 61L

medical expenses

 

payment of ..............................

159P

nonresident beneficiary

 

see trusts

 

nonresident trust estate

 

see trusts

 

overseas defence force service

 

see defence force

 

partnerships

 

see dividends, housing and small business entities

 

pension

 

see social security and other benefit payments

 

pooled superannuation trusts (PSTs)

 

see dividends

 

primary production

 

averaging of income, trustees ..................

156

averaging of tax liability, individuals .............

39235(2)

farm household allowance see social security and other benefit payments


 

interim income support payments see social security and other benefit payments

 

private health insurance

 

......................................

Subdivision 61–G

public trading trust

 

see dividends

 

public unit trust

 

see dividends

 

R&D

Division 355

residents of isolated areas

 

see zone

 

sickness benefits

 

see social security and other benefit payments

 

small business

 

small business income.......................

Subdivision 328F

social security and other benefit payments

 

Aboriginal study assistance scheme ..............

160AAA(3)

children, assistance for isolated .................

160AAA(3)

Cyclone Larry or Cyclone Monica income support payment  


160AAA(3)

Disaster income support allowance for special category visa (subclass 444) holders             


160AAA(3)

Equine Workers Hardship Wage Supplement Payment ..

160AAA(3)

farm household allowance under the Farm Household Support Act 2014 see unemployment, sickness and other benefit payments under the Social Security Act 1991


 

interim income support payment.................

160AAA(3)

pension, social security pension and veteran’s pension ..

160AAAA

textile, clothing and footwear allowance............

160AAA(3)

unemployment, sickness and other benefit payments under the Social Security Act 1991             


160AAA(3)

superannuation

 

generally ................................

Divisions 301 and 302

associated earnings on nonconcessional contributions  

Subdivision 292B

spouse contributions ........................

Subdivision 290D

death benefits .............................

30275
30285
302145

excess concessional contributions ................

29115(b)

member benefits ...........................

30120
30125
30135
30140
30195
301100
301105
301115

TFN quoted to superannuation or RSA provider after noTFN contributions tax paid              


295675

termination payments

 

see employment termination, leave payments and superannuation

 

trustee

 

see dividends, low income earner and trusts

 

trusts

 

beneficiary in a foreign trust...................

98B

nonresident beneficiary................

98A(2)(a)

trust income of beneficiary with legal disability.......

100(2)

trust income (modifications for special disability trusts).


95AB(5)

see also dividends, housing and small business entities

 

United Nations forces

 

salary, wages and allowances from service as a member of 


23AB(7)

unemployment benefits

 

see social security and other benefit payments

 

unit trusts

 

see dividends

 

windingup of nonresident trust estates

 

see trusts

 

withholding payments

 

made by companies to Australian seafarers..........

Subdivision 61N

zone

 

residents of isolated areas .....................

79A

Chapter 2Liability rules of general application

Part 21Assessable income

Division 15Some items of assessable income

Guide to Division 15

151  What this Division is about

This Division sets out some items that are included in your assessable income. Remember that the general rules about assessable income in Division 6 apply to these items.

Table of sections

Operative provisions

152 Allowances and other things provided in respect of employment or services

153 Return to work payments

155 Accrued leave transfer payments

1510 Bounties and subsidies

1515 Profitmaking undertaking or plan

1520 Royalties

1522 Payments made to members of a copyright collecting society

1523 Payments of resale royalties by resale royalty collecting society

1525 Amount received for lease obligation to repair

1530 Insurance or indemnity for loss of assessable income

1535 Interest on overpayments and early payments of tax

1540 Providing mining, quarrying or prospecting information or geothermal exploration information

1545 Amounts paid under forestry agreements

1546 Amounts paid under forestry managed investment schemes

1550 Work in progress amounts

1555 Certain amounts paid under funeral policy

1560 Certain amounts paid under scholarship plan

1570 Reimbursed car expenses

1575 Bonuses

Operative provisions

152  Allowances and other things provided in respect of employment or services

 (1) Your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums *provided to you in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by you (including any service as a member of the Defence Force).

 (2) This is so whether the things were *provided in money or in any other form.

 (3) However, the value of the following are not included in your assessable income under this section:

 (a) a *superannuation lump sum or an *employment termination payment;

 (b) an *unused annual leave payment or an *unused long service leave payment;

 (c) a *dividend or *nonshare dividend;

 (d) an amount that is assessable as *ordinary income under section 65;

 (e) *ESS interests to which Subdivision 83AB or 83AC (about employee share schemes) applies.

Note: Section 23L of the Income Tax Assessment Act 1936 provides that fringe benefits are nonassessable nonexempt income.

153  Return to work payments

  Your assessable income includes an amount you receive under an *arrangement that an entity enters into for a purpose of inducing you to resume working for, or providing services to, any entity.

155  Accrued leave transfer payments

  Your assessable income includes an *accrued leave transfer payment that you receive.

To find out if the payment is deductible to the payer, see section 2610.

1510  Bounties and subsidies

  Your assessable income includes a bounty or subsidy that:

 (a) you receive in relation to carrying on a *business; and

 (b) is not assessable as *ordinary income under section 65.

1515  Profitmaking undertaking or plan

 (1) Your assessable income includes profit arising from the carrying on or carrying out of a profitmaking undertaking or plan.

 (2) This section does not apply to a profit that:

 (a) is assessable as *ordinary income under section 65; or

 (b) arises in respect of the sale of property acquired on or after 20 September 1985.

Note: If you sell property you acquired before 20 September 1985 for profitmaking by sale, your assessable income includes the profit: see section 25A of the Income Tax Assessment Act 1936.

1520  Royalties

 (1) Your assessable income includes an amount that you receive as or by way of royalty within the ordinary meaning of “royalty” (disregarding the definition of royalty in subsection 9951(1)) if the amount is not assessable as *ordinary income under section 65.

 (2) Subsection (1) does not apply to an amount of a payment to which section 1522 or 1523 applies.

1522  Payments made to members of a copyright collecting society

 (1) This section, instead of Division 6 of Part III of the Income Tax Assessment Act 1936, applies to a payment that a *copyright collecting society, to which section 5143 applies, makes to you as a *member of the society.

 (2) Your assessable income includes the amount of the payment, except to the extent that the payment represents an amount on which the directors of the society are or have been assessed, and are liable to pay *tax, under section 98, 99 or 99A of the Income Tax Assessment Act 1936.

Note: Section 4105 of this Act requires a copyright collecting society to give you a notice at the time of payment.

1523  Payments of resale royalties by resale royalty collecting society

 (1) This section, instead of Division 6 of Part III of the Income Tax Assessment Act 1936, applies to a payment that the *resale royalty collecting society makes to you under section 26 of the Resale Royalty Right for Visual Artists Act 2009.

 (2) Your assessable income includes the amount of the payment, except to the extent that the payment represents an amount on which the directors of the society are or have been assessed, and are liable to pay *tax, under section 98, 99 or 99A of the Income Tax Assessment Act 1936.

Note: Section 41050 of this Act requires the resale royalty collecting society to give you a notice at the time of payment.

1525  Amount received for lease obligation to repair

  Your assessable income includes an amount you receive from an entity if:

 (a) you receive it as a lessor or former lessor of premises; and

 (b) the entity pays you the amount for failing to comply with a lease obligation to make repairs to the premises; and

 (c) the entity uses or has used the premises for the *purpose of producing assessable income; and

 (d) the amount is not assessable as *ordinary income under section 65.

Note: The entity can deduct the amount: see section 2515.

1530  Insurance or indemnity for loss of assessable income

  Your assessable income includes an amount you receive by way of insurance or indemnity for the loss of an amount (the lost amount) if:

 (a) the lost amount would have been included in your assessable income; and

 (b) the amount you receive is not assessable as *ordinary income under section 65.

1535  Interest on overpayments and early payments of tax

  Your assessable income includes interest payable to you under the Taxation (Interest on Overpayments and Early Payments) Act 1983. The interest becomes assessable when it is paid to you or applied to discharge a liability you have to the Commonwealth.

1540  Providing mining, quarrying or prospecting information or geothermal exploration information

 (1) Your assessable income includes an amount you receive for providing *mining, quarrying or prospecting information to another entity if:

 (a) you continue to *hold the information; and

 (b) the amount you receive is not assessable as *ordinary income under section 65.

 (2) Your assessable income includes an amount you receive for providing *geothermal exploration information you have to another entity if:

 (a) you continue to have the information; and

 (b) the information is, and continues to be, relevant to:

 (i) *geothermal energy extraction that you carry on or propose to carry on; or

 (ii) a *business that you carry on that includes *exploration or prospecting for *geothermal energy resources from which energy can be extracted by geothermal energy extraction; and

 (c) the amount you receive is not assessable as *ordinary income under section 65.

It does not matter whether the information is generally available or not.

 (3) Geothermal exploration information is geological, geophysical or technical information that:

 (a) relates to the presence, absence or extent of *geothermal energy resources in an area; or

 (b) is likely to help in determining the presence, absence or extent of such resources in an area.

 (4) Geothermal energy extraction means operations that are for:

 (a) the extraction of energy from *geothermal energy resources; and

 (b) the *purpose of producing assessable income.

1545  Amounts paid under forestry agreements

 (1) Your assessable income includes an amount you receive under an agreement for the planting and tending of trees for felling if:

 (a) you are the manager of the agreement as mentioned in section 82KZMG of the Income Tax Assessment Act 1936; and

 (b) the amount satisfies, for the entity that paid it, the requirements of that section.

The amount is included for the income year in which the entity can claim a deduction for the amount.

 (2) No part of an amount included under subsection (1) is included in your assessable income for a later income year.

1546  Amounts paid under forestry managed investment schemes

 (1) Your assessable income includes an amount you receive under a *forestry managed investment scheme if:

 (a) you are the *forestry manager of the scheme, or an *associate of the forestry manager; and

 (b) the entity that paid the amount can deduct or has deducted the amount under section 39410 in relation to the scheme (disregarding subsection 39410(5)).

The amount is included for the income year for which the entity that paid the amount can or has claimed a deduction for it (disregarding subsection 39410(5)).

 (2) No part of an amount included under subsection (1) is included in your assessable income for a later income year.

1550  Work in progress amounts

  Your assessable income includes a *work in progress amount that you receive.

Note: To find out whether the amount is deductible to the payer, see section 2595.

1555  Certain amounts paid under funeral policy

 (1) Your assessable income includes the amount of a benefit provided to you by a *life insurance company under a *funeral policy issued after 31 December 2002 to pay for the funeral of the insured person, reduced by:

 (a) the amount of the premium or premiums of the policy that is reasonably related to the benefit; and

 (b) the amount of the fees and charges included in the company’s assessable income for any income year under paragraph 32015(1)(k) that is reasonably related to the benefit.

 (2) This section does not apply if the benefit is included in your assessable income as:

 (a) *ordinary income under section 65; or