Income Tax Assessment Act 1997

Contents

Chapter 1—Introduction and core provisions

Part 1‑1—Preliminary

Division 1—Preliminary

1‑1 Short title

1‑2 Commencement

1‑3 Differences in style not to affect meaning

1‑4 Application

1‑7 Administration of this Act

Part 1‑2—A Guide to this Act

Division 2—How to use this Act

Subdivision 2‑A—How to find your way around

2‑1 The design

Subdivision 2‑B—How the Act is arranged

2‑5 The pyramid

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

2‑10 When defined terms are identified

2‑15 When terms are not identified

2‑20 Identifying the defined term in a definition

Subdivision 2‑D—The numbering system

2‑25 Purposes

2‑30 Gaps in the numbering

Subdivision 2‑E—Status of Guides and other non‑operative material

2‑35 Non‑operative material

2‑40 Guides

2‑45 Other material

Division 3—What this Act is about

3‑5 Annual income tax

3‑10 Your other obligations as a taxpayer

3‑15 Your obligations other than as a taxpayer

Part 1‑3—Core provisions

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

4‑1 Who must pay income tax

4‑5 Meaning of you

4‑10 How to work out how much income tax you must pay

4‑15 How to work out your taxable income

4‑25 Special provisions for working out your basic income tax liability

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

Guide to Division 5 17

5‑1 What this Division is about

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

5‑5 When income tax is payable

5‑10 When shortfall interest charge is payable

5‑15 General interest charge payable on unpaid income tax or shortfall interest charge

Division 6—Assessable income and exempt income

Guide to Division 6 21

6‑1 Diagram showing relationships among concepts in this Division

Operative provisions

6‑5 Income according to ordinary concepts (ordinary income)

6‑10 Other assessable income (statutory income)

6‑15 What is not assessable income

6‑20 Exempt income

6‑23 Non‑assessable non‑exempt income

6‑25 Relationships among various rules about ordinary income

Division 8—Deductions

8‑1 General deductions

8‑5 Specific deductions

8‑10 No double deductions

Part 1‑4—Checklists of what is covered by concepts used in the core provisions

Division 9—Entities that must pay income tax

9‑1A Effect of this Division

9‑1 List of entities

9‑5 Entities that work out their income tax by reference to something other than taxable income

Division 10—Particular kinds of assessable income

10‑1 Effect of this Division

10‑5 List of provisions about assessable income

Division 11—Particular kinds of non‑assessable income

Subdivision 11‑A—Lists of classes of exempt income

11‑1A Effect of this Subdivision

11‑1 Overview

11‑5 Entities that are exempt, no matter what kind of ordinary or statutory income they have

11‑15 Ordinary or statutory income which is exempt

Subdivision 11‑B—Particular kinds of non‑assessable non‑exempt income

11‑50 Effect of this Subdivision

11‑55 List of non‑assessable non‑exempt income provisions

Division 12—Particular kinds of deductions

12‑1 Effect of this Division

12‑5 List of provisions about deductions

Division 13—Tax offsets

13‑1A Effect of this Division

13‑1 List of tax offsets

Chapter 2—Liability rules of general application

Part 2‑1—Assessable income

Division 15—Some items of assessable income

Guide to Division 15 92

15‑1 What this Division is about

Operative provisions

15‑2 Allowances and other things provided in respect of employment or services

15‑3 Return to work payments

15‑5 Accrued leave transfer payments

15‑10 Bounties and subsidies

15‑15 Profit‑making undertaking or plan

15‑20 Royalties

15‑22 Payments made to members of a copyright collecting society

15‑23 Payments of resale royalties by resale royalty collecting society

15‑25 Amount received for lease obligation to repair

15‑30 Insurance or indemnity for loss of assessable income

15‑35 Interest on overpayments and early payments of tax

15‑40 Providing mining, quarrying or prospecting information or geothermal exploration information

15‑45 Amounts paid under forestry agreements

15‑46 Amounts paid under forestry managed investment schemes

15‑50 Work in progress amounts

15‑55 Certain amounts paid under funeral policy

15‑60 Certain amounts paid under scholarship plan

15‑70 Reimbursed car expenses

15‑75 Bonuses

Division 17—Effect of GST etc. on assessable income

Guide to Division 17 101

17‑1 What this Division is about

17‑5 GST and increasing adjustments

17‑10 Certain decreasing adjustments

17‑15 Elements in calculation of amounts

17‑20 GST groups and GST joint ventures

17‑30 Special credits because of indirect tax transition

17‑35 Certain sections not to apply to certain assets or expenditure

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

Guide to Division 20 104

20‑1 What this Division is about

20‑5 Other provisions that reverse the effect of deductions

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

Guide to Subdivision 20‑A

20‑10 What this Subdivision is about

20‑15 How to use this Subdivision

What is an assessable recoupment?

20‑20 Assessable recoupments

20‑25 What is recoupment?

20‑30 Tables of deductions for which recoupments are assessable

How much is included in your assessable income?

20‑35 If the expense is deductible in a single income year

20‑40 If the expense is deductible over 2 or more income years

20‑45 Effect of balancing charge

20‑50 If the expense is only partially deductible

20‑55 Meaning of previous recoupment law

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

20‑60 If you are the only entity that can deduct an amount for the loss or outgoing

20‑65 If 2 or more entities can deduct amounts for the loss or outgoing

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

Guide to Subdivision 20‑B

20‑100 What this Subdivision is about

20‑105 Map of this Subdivision

The usual case

20‑110 Disposal of a leased car for profit

20‑115 Working out the profit on the disposal

20‑120 Meaning of notional depreciation

The associate case

20‑125 Disposal of a leased car for profit

Successive leases

20‑130 Successive leases

Previous disposals of the car

20‑135 No amount included if earlier disposal for market value

20‑140 Reducing the amount to be included if there has been an earlier disposal

Miscellaneous rules

20‑145 No amount included if you inherited the car

20‑150 Reducing the amount to be included if another provision requires you to include an amount for the disposal

20‑155 Exception for particular cars taken on hire

20‑157 Exception for small business entities

Disposals of interests in a car: special rules apply

20‑160 Disposal of an interest in a car

Part 2‑5—Rules about deductibility of particular kinds of amounts

Division 25—Some amounts you can deduct

Guide to Division 25 136

25‑1 What this Division is about

Operative provisions

25‑5 Tax‑related expenses

25‑10 Repairs

25‑15 Amount paid for lease obligation to repair

25‑20 Lease document expenses

25‑25 Borrowing expenses

25‑30 Expenses of discharging a mortgage

25‑35 Bad debts

25‑40 Loss from profit‑making undertaking or plan

25‑45 Loss by theft etc.

25‑47 Misappropriation where a balancing adjustment event occurs

25‑50 Payments of pensions, gratuities or retiring allowances

25‑55 Payments to associations

25‑60 Parliament election expenses

25‑65 Local government election expenses

25‑70 Deduction for election expenses does not extend to entertainment

25‑75 Rates and land taxes on premises used to produce mutual receipts

25‑85 Certain returns in respect of debt interests

25‑90 Deduction relating to foreign non‑assessable non‑exempt income

25‑95 Deduction for work in progress amounts

25‑105 Deductions for United Medical Protection Limited support payments

25‑100 Travel between workplaces

25‑110 Capital expenditure to terminate lease etc.

25‑115 Deduction for payment of rent from land investment by operating entity to asset entity in relation to approved economic infrastructure facility

25‑120 Transitional—deduction for payment of rent from land investment by operating entity to asset entity

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

Guide to Division 26 162

26‑1 What this Division is about

Operative provisions

26‑5 Penalties

26‑10 Leave payments

26‑15 Franchise fees windfall tax

26‑17 Commonwealth places windfall tax

26‑19 Rebatable benefits

26‑20 Assistance to students

26‑22 Political contributions and gifts

26‑25 Interest or royalty

26‑25A Seasonal Labour Mobility Program

26‑26 Non‑share distributions and dividends

26‑30 Relative’s travel expenses

26‑31 Travel related to use of residential premises as residential accommodation

26‑35 Reducing deductions for amounts paid to related entities

26‑40 Maintaining your family

26‑45 Recreational club expenses

26‑47 Non‑business boating activities

26‑50 Expenses for a leisure facility

26‑52 Bribes to foreign public officials

26‑53 Bribes to public officials

26‑54 Expenditure relating to illegal activities

26‑55 Limit on deductions

26‑60 Superannuation contributions surcharge

26‑68 Loss from disposal of eligible venture capital investments

26‑70 Loss from disposal of venture capital equity

26‑74 Excess concessional contributions charge cannot be deducted

26‑75 Excess non‑concessional contributions tax cannot be deducted

26‑80 Financing costs on loans to pay superannuation contribution

26‑85 Borrowing costs on loans to pay life insurance premiums

26‑90 Superannuation supervisory levy

26‑95 Superannuation guarantee charge

26‑97 National Disability Insurance Scheme expenditure

26‑98 Division 293 tax cannot be deducted

26‑99 Excess transfer balance tax cannot be deducted

26‑100 Expenditure attributable to water infrastructure improvement payments

26‑105 Non‑compliant payments for work and services

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

Guide to Division 27 193

27‑1 What this Division is about

Subdivision 27‑A—General

27‑5 Input tax credits and decreasing adjustments

27‑10 Certain increasing adjustments

27‑15 GST payments

27‑20 Elements in calculation of amounts

27‑25 GST groups and GST joint ventures

27‑35 Certain sections not to apply to certain assets or expenditure

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

27‑80 Cost or opening adjustable value of depreciating assets reduced for input tax credits

27‑85 Cost or opening adjustable value of depreciating assets reduced: decreasing adjustments

27‑87 Certain decreasing adjustments included in assessable income

27‑90 Cost or opening adjustable value of depreciating assets increased: increasing adjustments

27‑92 Certain increasing adjustments can be deducted

27‑95 Balancing adjustment events

27‑100 Pooling

27‑105 Other Division 40 expenditure

27‑110 Input tax credit etc. relating to 2 or more things

Division 28—Car expenses

Guide to Division 28 209

28‑1 What this Division is about

28‑5 Map of this Division

Subdivision 28‑A—Deductions for car expenses

28‑10 Application of Division 28

28‑12 Car expenses

28‑13 Meaning of car expense

Subdivision 28‑B—Choosing which method to use

Guide to Subdivision 28‑B

28‑14 What this Subdivision is about

28‑15 Choosing between the 2 methods

Operative provision

28‑20 Rules governing choice of method

Subdivision 28‑C—The “cents per kilometre” method

28‑25 How to calculate your deduction

28‑30 Capital allowances

28‑35 Substantiation

Subdivision 28‑F—The “log book” method

28‑90 How to calculate your deduction

28‑95 Eligibility

28‑100 Substantiation

Subdivision 28‑G—Keeping a log book

Guide to Subdivision 28‑G

28‑105 What this Subdivision is about

28‑110 Steps for keeping a log book

Operative provisions

28‑115 Income years for which you need to keep a log book

28‑120 Choosing the 12 week period for a log book

28‑125 How to keep a log book

28‑130 Replacing one car with another

Subdivision 28‑H—Odometer records for a period

Guide to Subdivision 28‑H

28‑135 What this Subdivision is about

Operative provision

28‑140 How to keep odometer records for a car for a period

Subdivision 28‑I—Retaining the log book and odometer records

28‑150 Retaining the log book for the retention period

28‑155 Retaining odometer records

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

Guide to Subdivision 28‑J

28‑160 What this Subdivision is about

Operative provisions

28‑165 Exception for particular cars taken on hire

28‑170 Exception for particular cars used in particular ways

28‑175 Further miscellaneous exceptions

28‑180 Car expenses related to award transport payments

28‑185 Application of Subdivision 28‑J to recipients and payers of certain withholding payments

Division 30—Gifts or contributions

Guide to Division 30 232

30‑1 What this Division is about

30‑5 How to find your way around this Division

30‑10 Index

Subdivision 30‑A—Deductions for gifts or contributions

30‑15 Table of gifts or contributions that you can deduct

30‑17 Requirements for certain recipients

Subdivision 30‑B—Tables of recipients for deductible gifts

Health

30‑20 Health

Education

30‑25 Education

30‑30 Gifts that must be for certain purposes

30‑35 Rural schools hostel buildings

30‑37 Scholarship etc. funds

Research

30‑40 Research

Welfare and rights

30‑45 Welfare and rights

30‑45A Australian disaster relief funds—declarations by Minister

30‑46 Australian disaster relief funds—declarations under State and Territory law

Defence

30‑50 Defence

Environment

30‑55 The environment

30‑60 Gifts to a National Parks body or conservation body must satisfy certain requirements

Industry, trade and design

30‑65 Industry, trade and design

The family

30‑70 The family

30‑75 Marriage education organisations must be approved

International affairs

30‑80 International affairs

30‑85 Developing country relief funds

30‑86 Developed country disaster relief funds

Sports and recreation

30‑90 Sports and recreation

Philanthropic trusts

30‑95 Philanthropic trusts

Cultural organisations

30‑100 Cultural organisations

Fire and emergency services

30‑102 Fire and emergency services

Other recipients

30‑105 Other recipients

Subdivision 30‑BA—Endorsement of deductible gift recipients

Guide to Subdivision 30‑BA

30‑115 What this Subdivision is about

Endorsement as a deductible gift recipient

30‑120 Endorsement by Commissioner

30‑125 Entitlement to endorsement

30‑130 Maintaining a gift fund

Government entities treated like entities

30‑180 How this Subdivision applies to government entities

Subdivision 30‑C—Rules applying to particular gifts of property

Valuation requirements

30‑200 Getting written valuations

30‑205 Proceeds of the sale would have been assessable

30‑210 Approved valuers

30‑212 Valuations by the Commissioner

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

30‑215 How much you can deduct

30‑220 Reducing the amount you can deduct

Joint ownership of property

30‑225 Gift of property by joint owners

Subdivision 30‑CA—Administrative requirements relating to ABNs

Guide to Subdivision 30‑CA

30‑226 What this Subdivision is about

Requirements

30‑227 Entities to which this Subdivision applies

30‑228 Content of receipt for gift or contribution

30‑229 Australian Business Register must show deductibility of gifts to deductible gift recipient

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

Guide to Subdivision 30‑DA

30‑241 What this Subdivision is about

Operative provisions

30‑242 Deduction for political contributions and gifts

30‑243 Amount of the deduction

30‑244 When an individual is an independent candidate

30‑245 When an individual is an independent member

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

Guide to Subdivision 30‑DB

30‑246 What this Subdivision is about

Operative provisions

30‑247 Gifts and covenants for which elections can be made

30‑248 Making an election

30‑249 Effect of election

30‑249A Requirements—environmental property gifts

30‑249B Requirements—heritage property gifts

30‑249C Requirements—certain cultural property gifts

30‑249D Requirements—conservation covenants

Subdivision 30‑E—Register of environmental organisations

Guide to Subdivision 30‑E

30‑250 What this Subdivision is about

Operative provisions

30‑255 Establishing the register

30‑260 Meaning of environmental organisation

30‑265 Its principal purpose must be protecting the environment

30‑270 Other requirements it must satisfy

30‑275 Further requirement for a body corporate or a co‑operative society

30‑280 What must be on the register

30‑285 Removal from the register

Subdivision 30‑EA—Register of harm prevention charities

Guide to Subdivision 30‑EA

30‑286 What this Subdivision is about

Operative provisions

30‑287 Establishing the register

30‑288 Meaning of harm prevention charity

30‑289 Principal activity—promoting the prevention or control of harm or abuse

30‑289A Other requirements

30‑289B What must be on the register

30‑289C Removal from the register

Subdivision 30‑F—Register of cultural organisations

Guide to Subdivision 30‑F

30‑290 What this Subdivision is about

Operative provisions

30‑295 Establishing the register

30‑300 Meaning of cultural organisation

30‑305 What must be on the register

30‑310 Removal from the register

Subdivision 30‑G—Index to this Division

30‑315 Index

30‑320 Effect of this Subdivision

Division 31—Conservation covenants

Guide to Division 31 339

31‑1 What this Division is about

Operative provisions

31‑5 Deduction for entering into conservation covenant

31‑10 Requirements for fund, authority or institution

31‑15 Valuations by the Commissioner

Division 32—Entertainment expenses

Guide to Division 32 342

32‑1 What this Division is about

Subdivision 32‑A—No deduction for entertainment expenses

32‑5 No deduction for entertainment expenses

32‑10 Meaning of entertainment

32‑15 No deduction for property used for providing entertainment

Subdivision 32‑B—Exceptions

32‑20 The main exception—fringe benefits

32‑25 The tables set out the other exceptions

32‑30 Employer expenses

32‑35 Seminar expenses

32‑40 Entertainment industry expenses

32‑45 Promotion and advertising expenses

32‑50 Other expenses

Subdivision 32‑C—Definitions relevant to the exceptions

32‑55 In‑house dining facility (employer expenses table items 1.1 and 1.2)

32‑60 Dining facility (employer expenses table item 1.3)

32‑65 Seminars (seminar expenses table item 2.1)

Subdivision 32‑D—In‑house dining facilities (employer expenses table item 1.2)

32‑70 $30 is assessable for each meal provided to non‑employee in an in‑house dining facility

Subdivision 32‑E—Anti‑avoidance

32‑75 Commissioner may treat you as having incurred entertainment expense

Subdivision 32‑F—Special rules for companies and partnerships

32‑80 Company directors

32‑85 Directors, employees and property of wholly‑owned group company

32‑90 Partnerships

Division 34—Non‑compulsory uniforms

Guide to Division 34 356

34‑1 What this Division is about

34‑3 What you need to read

Subdivision 34‑A—Application of Division 34

34‑5 This Division applies to employees and others

34‑7 This Division applies to employers and others

Subdivision 34‑B—Deduction for your non‑compulsory uniform

34‑10 What you can deduct

34‑15 What is a non‑compulsory uniform?

34‑20 What are occupation specific clothing and protective clothing?

Subdivision 34‑C—Registering the design of a non‑compulsory uniform

34‑25 Application to register the design

34‑30 Industry Secretary’s decision on application

34‑33 Written notice of decision

34‑35 When uniform becomes registered

Subdivision 34‑D—Appeals from Industry Secretary’s decision

34‑40 Review of decisions by the Administrative Appeals Tribunal

Subdivision 34‑E—The Register of Approved Occupational Clothing

34‑45 Keeping of the Register

34‑50 Changes to the Register

Subdivision 34‑F—Approved occupational clothing guidelines

34‑55 Approved occupational clothing guidelines

Subdivision 34‑G—The Industry Secretary

34‑60 Industry Secretary to give Commissioner information about entries

34‑65 Delegation of powers by Industry Secretary

Division 35—Deferral of losses from non‑commercial business activities

Guide to Division 35 367

35‑1 What this Division is about

Operative provisions

35‑5 Object

35‑10 Deferral of deductions from non‑commercial business activities

35‑15 Modification if you have exempt income

35‑20 Modification if you become bankrupt

35‑25 Application of Division to certain partnerships

35‑30 Assessable income test

35‑35 Profits test

35‑40 Real property test

35‑45 Other assets test

35‑50 Apportionment

35‑55 Commissioner’s discretion

Division 36—Tax losses of earlier income years

Guide to Division 36 379

36‑1 What this Division is about

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

36‑10 How to calculate a tax loss for an income year

36‑15 How to deduct tax losses of entities other than corporate tax entities

36‑17 How to deduct tax losses of corporate tax entities

36‑20 Net exempt income

36‑25 Special rules about tax losses

Subdivision 36‑B—Effect of you becoming bankrupt

Guide to Subdivision 36‑B

36‑30 What this Subdivision is about

Operative provisions

36‑35 No deduction for tax loss incurred before bankruptcy

36‑40 Deduction for amounts paid for debts incurred before bankruptcy

36‑45 Limit on deductions for amounts paid

Subdivision 36‑C—Excess franking offsets

Guide to Subdivision 36‑C

36‑50 What this Subdivision is about

Operative provision

36‑55 Converting excess franking offsets into tax loss

Item	This term:	is defined in:
1.	Australian resident	section 995‑1
2.	Commissioner	section 995‑1
3.	company	section 995‑1
4.	entity	section 960‑100
4A.	foreign resident	section 995‑1
5.	individual	section 995‑1
6.	partnership	section 995‑1
7.	person	section 995‑1
8.	trustee	section 995‑1
9.	you	section 4‑5

Item	This term:	is defined in:
1.	amount	section 995‑1
2.	assessable income	Division 6
3.	assessment	section 995‑1
3A.	Australia	Subdivision 960‑T
4.	deduct, deduction	Division 8
5.	income tax	section 995‑1
6.	income year	section 995‑1
7.	taxable income	section 4‑15
8.	this Act	section 995‑1

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 business continuity test	Subdivision 165‑B
1B.	An entity is a member of a consolidated group at any time in the income year	Part 3‑90
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

6‑1 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 non‑assessable non‑exempt income) in the hands of a particular entity.

Operative provisions

6‑5 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 10‑5 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.

6‑10 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 10‑5.

(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 non‑assessable non‑exempt income under another provision: see sections 6‑20 and 6‑23.

Note 2: Many provisions in the summary list in section 10‑5 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.

6‑15 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:

the amount may be taken into account in working out the amount of a tax loss (see section 36‑10);
you cannot deduct as a general deduction a loss or outgoing incurred in deriving the amount (see Division 8);
capital gains and losses on assets used solely to produce exempt income are disregarded (see section 118‑12).

(3) If an amount is *non‑assessable non‑exempt 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 non‑assessable non‑exempt income (see Division 8).

Note 2: Capital gains and losses on assets used to produce some types of non‑assessable non‑exempt income are disregarded (see section 118‑12).

6‑20 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 11‑5 and 11‑15.

(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 *non‑assessable non‑exempt income, it is not exempt income.

Note: An amount of non‑assessable non‑exempt income is not taken into account in working out the amount of a tax loss.

6‑23 Non‑assessable non‑exempt income

An amount of *ordinary income or *statutory income is non‑assessable non‑exempt 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 non‑assessable non‑exempt income are disregarded (see section 118‑12).

For a summary list of provisions about non‑assessable non‑exempt income, see Subdivision 11‑B.

6‑25 Relationships among various rules about ordinary income

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

the same amount may be *ordinary income and may also be included in your assessable income by one or more provisions about assessable income; or
the same amount may be included in your assessable income by more than one provision about assessable income.

For a summary list of the provisions about assessable income,
see section 10‑5.

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 8—Deductions

Table of sections

8‑1 General deductions

8‑5 Specific deductions

8‑10 No double deductions

8‑1 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 non‑commercial 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

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

For a summary list of provisions about deductions, see section 12‑5.

(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 20‑A.

8‑5 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 20‑A.

For a summary list of provisions about deductions, see section 12‑5.

8‑10 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 1‑4—Checklists of what is covered by concepts used in the core provisions

Division 9—Entities that must pay income tax

Table of sections

9‑1A Effect of this Division

9‑1 List of entities

9‑5 Entities that work out their income tax by reference to something other than taxable income

9‑1A Effect of this Division

This Division is a *Guide.

9‑1 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 4‑1
2	A company, that is:  a body corporate; or  an unincorporated body (except a partnership)	section 4‑1
3	A company that was a member of a wholly‑owned 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 45‑25
4	A superannuation provider in relation to a complying superannuation fund	sections 295‑5 and 295‑605
5	A superannuation provider in relation to a non‑complying superannuation fund	sections 295‑5 and 295‑605
6	A superannuation provider in relation to a complying approved deposit fund	section 295‑5
7	A superannuation provider in relation to a non‑complying approved deposit fund	section 295‑5
8	The trustee of a pooled superannuation trust	section 295‑5
8A	A sovereign entity	section 880‑55
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

9‑5 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 wholly‑owned 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 45‑25
2	A superannuation provider in relation to a complying superannuation fund is to be assessed and is liable to pay income tax on no‑TFN contributions income as well as on taxable income.	sections 295‑5 and 295‑605
3	A superannuation provider in relation to a non‑complying superannuation fund is to be assessed and is liable to pay income tax on no‑TFN contributions income as well as on taxable income.	sections 295‑5 and 295‑605
4	An RSA provider is to be assessed and is liable to pay income tax on no‑TFN contributions income as well as on taxable income.	sections 295‑5, 295‑605 and 320‑155
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 355‑G
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 9‑1 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 re‑insures overseas can elect to pay, as agent for the re‑insurer, income tax worked out by reference to the amount of the re‑insurance 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 10—Particular kinds of assessable income

10‑1 Effect of this Division

This Division is a *Guide.

10‑5 List of provisions about assessable income

The provisions set out in the table:

include in your assessable income amounts that are not *ordinary income; and
vary or replace the rules that would otherwise apply for certain kinds of *ordinary 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.

Accrued leave transfer payments
....................................	15‑5
alienated personal services income
....................................	86‑15
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, 15‑2
beneficiaries
see trusts
benefits
business, non‑cash ...................	21A
consideration, non‑cash ................	21
meals you provide in an in‑house dining facility	32‑70
see also employment and superannuation
bonus shares
see shares
bounties
............................................	15‑10
capital allowances
excess of termination value over adjustable value
generally.........................	40‑285
for some cars......................	40‑370
depreciating asset in low‑value pool........	40‑445(2)
expenditure in software development pool..........	40‑460
recovery of petroleum resource rent tax............	40‑750(3)
capital gains
....................................	102‑5
see also insurance
car expenses
cents per kilometres reimbursement of ............	15‑70
carried interests
carried interests, not ordinary income.............	118‑21
CFCs
see controlled foreign corporations
charters
see shipping
child
non‑trust income of, unearned ............	102AE
trust income of, unearned .....................	102AG
collecting societies
payments of royalties by copyright collecting societies..	15‑22
payments of royalties by resale royalty collecting society	15‑23
company
see controlled foreign corporations, co‑operative company, directors, dividends, liquidation, shareholders and shares
compensation
live stock or trees, recoveries for loss of ...........	385‑130
profits or income, insurance or indemnity for loss of....	15‑30
received by lessor for lessee’s non‑compliance with lease obligation to repair	15‑25
trading stock, insurance or indemnity for loss of ......	70‑115
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.	701‑61(3)
controlled foreign corporations (CFCs)
attributable income of .......................	456 to 459A
see also dividends and taxes
co‑operative company
receipts of ...............................	119
credit union
see co‑operative 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 ....	15‑2
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 .	115‑280
general .................................	44(1)
distribution from a controlled foreign corporation .....	47A(1)
franked dividends, credits on...................	207‑20(1), 207‑35(1), 207‑35(3)
see also liquidation
elections
local government, reimbursement of expenses of......	25‑65
see also recoupment
electricity connections
see recoupment
employees
see shares
employment
allowances and benefits in relation to employment or rendering services	15‑2
employment termination payment ...............	82‑10 82‑65 82‑70
other payments for employment termination .........	83‑295
return to work payments ......................	15‑3
see accrued leave transfer payments, leave payments, superannuation and sections 82‑10A and 82‑10C of the Income Tax (Transitional Provisions) Act 1997
environment
see recoupment
farm management deposits
repayments of ............................	393‑10
films
Australian, proceeds of investment in .............	26AG
financial arrangements
gains from...............................	230‑15(1)
foreign exchange
gains ..................................	775‑15
see also recoupment
forestry agreement
amount where section 82KZMG of the 1936 Act applies.	15‑45
CGT event in relation to forestry interest in agreement..	82KZMGB
forestry managed investment schemes
forestry manager’s receipts under scheme...........	15‑46
CGT event in relation to forestry interest in scheme for initial participant	394‑25(2)
CGT event in relation to forestry interest in scheme for subsequent participant	394‑30(2)
franked dividends
see dividends
funeral policy
benefit under..............................	15‑55
general insurance companies and companies that self insure
gross premiums............................	321‑45
reduction in value of outstanding claims liability......	321‑10 and 321‑80
reduction in value of unearned premium reserve......	321‑50
geothermal energy
providing geothermal exploration information .......	15‑40
grapevines
see recoupment
horticultural plants
see recoupment
improvements
see leases
imputation
see dividends
indemnity
see compensation and recoupment
insurance
bonuses .................................	26AH, 15‑75
company, demutualisation of ...................	121AT
life insurance, transfer of contributions by superannuation fund or approved deposit fund to	295‑260
payments from a non‑resident reinsurer in respect of a loss ..............................	148
premiums in respect of Australian business received by non‑resident insurers	143
premiums paid to a non‑resident for reinsurance	148
premiums paid to mutual insurance association .......	121
premiums payable to a non‑resident for insurance of property in Australia	142(1)
premiums payable to a non‑resident for insuring an event that can only happen in Australia	142(1)
premiums payable to a non‑resident under an insurance contract with a resident	142(2)
rebates and premiums refunded to a superannuation fund trustee	295‑320 (table item 4)
see also compensation, life insurance companies and recoupment
interest
overpaid tax, on ...........................	15‑35
qualifying securities, on ......................	159GQ, 159GW(1)
see also co‑operative companies and leases
investments
prizes from investment‑related 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 non‑compliance with lease obligation to repair	15‑25
interest component of payments under non‑leveraged finance leases	159GK
partnership leasing property under non‑leveraged 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 20‑B
leases of luxury cars
accrual amounts...........................	242‑35
adjustment amounts (lessee)	242‑70
adjustment amounts (lessor)	242‑65
leave payments
accrued leave transfer payment .................	15‑5
unused annual leave payment ........................	83‑10
unused long service leave payment ...............	83‑80
see employment
life insurance companies	Subdivision 320‑B
limited recourse debt
excessive deduction amount (debtor)	243‑40
excessive deduction amount (partner)	243‑65
liquidation
distribution to a shareholder in winding up a company..	47(1)
live stock
death or destruction of .......................	Subdivision 385‑E
departing Australia and ......................	385‑160, 385‑163
insolvency, and ...........................	385‑160, 385‑163
profits on death or disposal of ..................	Subdivision 385‑E, 385‑160
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.................	275‑200(2)
meals
see benefits
Mining
providing mining, quarrying or prospecting information .	15‑40
minors
see child
motor vehicles
see car expenses and leases
mutual insurance
see insurance
non‑cash benefits
see benefits and employment
notional sales and loans
adjustment amounts (lessee)	240‑110(2)
adjustment amounts (lessor)	240‑105(2)
notional interest............................	240‑35(1)
profit on actual sale.........................	240‑35(3)
profit on notional sale........................	240‑35(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 ..................	20‑30(1)
see also capital allowances
premiums
see insurance, leases and superannuation
primary production
see recoupment
prizes
see investments
profits
cross‑border transfer pricing.............	815‑30
profit‑making undertaking or plan..........	15‑15
sale of property acquired before 20 September 1985 for profit‑making by sale	25A
see also avoidance of tax
Project pools
An amount received for the abandonment, sale or other disposal of a project	40‑830, 40‑832
property
see profits and trusts
quarrying
see mining and recoupment
R&D
balancing adjustment ........................	40‑292, 40‑293, 355‑315 and 355‑525
disposal of R&D results ......................	355‑410
feedstock adjustment ........................	355‑465
rates
see recoupment
recoupment
insurance or indemnity for deductible losses or outgoings.............................	Subdivision 20‑A
other recoupment for certain deductible losses or outgoings	Subdivision 20‑A
see also car expenses, compensation, elections and petroleum
registered emissions units
disposal of...............................	420‑25
disposal for a non‑commercial purpose............	420‑40
difference between opening and closing value of......	420‑45
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
............................................	15‑20
schemes
see avoidance of tax
scholarship plan
benefit under..............................	15‑60
scientific research
consideration for disposal or destruction of buildings acquired for scientific research	73A(4)
securities
see investments
services
see co‑operative 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
buy‑backs .........................	159GZZZJ to 159GZZZT
employee share schemes .....................	Subdivisions 83A‑B and 83A‑C
holding company shares held by a subsidiary, cancellation of	159GZZZC to 159GZZZI
see also dividends
shipping
goods shipped in Australia, amounts paid to foreign shipowners and charterers for	129
subsidies
............................................	15‑10
superannuation
associated earnings on non‑concessional contributions	Subdivision 292‑B
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 non‑complying, effect of	295‑320 (table item 2)
contributions to an approved deposit fund ..........	Subdivisions 295‑C and 295‑D
contributions to an RSA ......................	Subdivision 295‑C
contributions to a superannuation fund ............	Subdivisions 295‑C and 295‑D
death benefits .............................	302‑75 302‑85 302‑90 302‑145
excess concessional contributions ................	291‑15(a)
first home super saver scheme ..................	313‑20
foreign superannuation funds and schemes, benefits from	305‑70
member benefits ...........................	301‑20 301‑25 301‑35 301‑40 Subdivision 301‑C
foreign fund becoming Australian, effect of .........	295‑320 (table item 3)
no‑TFN contributions income ............	295‑605
release authorities, payments from ...............	304‑20
returned contributions .......................	290‑100
trustee’s liability to pay tax ....................	295‑5(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 ........................	70‑100
death of trader and .........................	70‑105
difference between opening and closing value of ......	70‑35
disposal not at arm’s length....................	70‑20
disposal of outside ordinary course of business .......	70‑90, 70‑95
see also compensation and tax exempt entities
transfer pricing
arm’s length principle for cross‑border conditions between entities	Subdivision 815‑B
arm’s length principle for permanent establishments....	Subdivision 815‑C
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
non‑resident beneficiaries, liability to tax of ...	98A
non‑resident 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
winding‑up
see insurance and liquidation
wool clips
double wool clips, treatment of .................	385‑135, 385‑155
work in progress
receipt of a work in progress amount .............	15‑50

Division 11—Particular kinds of non‑assessable income

Table of Subdivisions

11‑A Lists of classes of exempt income

11‑B Particular kinds of non‑assessable non‑exempt income

Subdivision 11‑A—Lists of classes of exempt income

Table of sections

11‑1A Effect of this Subdivision

11‑1 Overview

11‑5 Entities that are exempt, no matter what kind of ordinary or statutory income they have

11‑15 Ordinary or statutory income which is exempt

11‑1A Effect of this Subdivision

This Subdivision is a *Guide.

11‑1 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 11‑5);

(b) ordinary or statutory income of a kind that is exempt (see table in section 11‑15).

11‑5 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...................	50‑5
registered charity...........................	50‑5
scientific institution.........................	50‑5
scientific research fund.......................	50‑5
scientific society etc.........................	50‑5
community service
community service society etc...................	50‑10
employees and employers
employee association........................	50‑15
employer association........................	50‑15
trade union...............................	50‑15
government
constitutionally protected fund..................	50‑25
local governing body........................	50‑25
municipal corporation........................	50‑25
public authority............................	50‑25
state/territory bodies.........................	24AK to 24AZ
health
health benefits organisation....................	50‑30
hospital.................................	50‑30
medical benefits organisation...................	50‑30
HIH rescue package
HIH Claims Support Trust ..................	322‑10
mining
British Phosphate Commissioners Banaba Contingency Fund	50‑35
primary or secondary resources, and tourism
agricultural society etc. ......................	50‑40
aviation society etc. .........................	50‑40
Global Infrastructure Hub Ltd ..................	50‑40
horticultural society etc. ......................	50‑40
industrial society etc. ........................	50‑40
manufacturing society etc. ....................	50‑40
pastoral society etc. .........................	50‑40
tourism society etc. .........................	50‑40
viticultural society etc. .......................	50‑40
sports, culture or recreation
animal racing society etc. .....................	50‑45
art society etc. ............................	50‑45
game society etc. ..........................	50‑45
ICC Business Corporation FZ‑LLC.........	50‑45
literature society etc. ........................	50‑45
music society etc. ..........................	50‑45
sport society etc. ...........................	50‑45

11‑15 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....................	53‑10
copyright collecting societies	51‑43
credit unions
interest.................................	23G
defence
Defence Force member, allowances...............	51‑5
Defence Force member, compensation payments for loss of deployment allowance for warlike service	51‑5
Defence Force Ombudsman recommendation, reparation payments and additional payments in relation to	51‑5
F‑111 Deseal/Reseal Ex‑gratia Lump Sum Payments	51‑5
Former Reserve Defence Force member, compensation payments for loss of pay and/or allowances	51‑5
Reserve Defence Force member, pay and allowances...	51‑5
disasters
2018 storms—relief payments..................	51‑125
dividends or shares
pooled development fund company dividend ........	124ZM
pooled development fund company shares, income from sale of	124ZN
education and training
Apprenticeship Wage Top‑Up payment, recipient of	51‑10
bursary, educational allowance etc. ...............	51‑10 and 51‑35
Commonwealth Trade Learning Scholarship, recipient of	51‑10
CRAFT scheme, employer’s income from..........	51‑10
early completion bonuses for apprentices...........	51‑10 and 51‑42
Endeavour Awards, research fellowship under........	51‑10
Endeavour Executive Award...................	51‑10
foreign student, scholarship and bursary to..........	842‑105
full‑time student, income from a scholarship, bursary, other educational allowance or educational assistance	51‑10 and 51‑35
isolated child, income for the provision of education of..	51‑10 and 51‑40
secondary student, income for the provision of education of	51‑10 and 51‑40
Skills for Sustainability for Australian Apprentices payment, recipient of	51‑10
Tools for Your Trade payment (under the program known as the Australian Apprenticeships Incentives Program), recipient of	51‑10
family assistance
additional child care subsidy...................	52‑150
back to school bonus or single income family bonus....	52‑150
child care subsidy ..........................	52‑150
clean energy advance........................	52‑150
economic security strategy payment to families.......	52‑150
ETR payment.............................	52‑150
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	52‑162
families, payments to, under the scheme determined under Schedule 4 to the Social Security and Other Legislation Amendment (Economic Security Strategy) Act 2008	52‑160
family tax benefit ..........................	52‑150
Household Stimulus Package Act (No. 2) 2009, payments under scheme determined under Schedule 4 to the	52‑165
single income family supplement................	52‑150
stillborn baby payment.......................	52‑150
financial arrangements
gains related to exempt income..................	230‑30
financial transactions
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
Australian‑American Education Foundation, grant from	51‑10
Commonwealth of Nations country officer, official salary and foreign income	768‑100
consul and official staff member, official salary and foreign income	768‑100
Defence Force member, foreign resident, pay and allowances of ..........................	842‑105
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	842‑105
diplomat and official staff member, official salary and foreign income	768‑100
educational, scientific, religious or philanthropic society, income of a visiting representative of	842‑105
expert, foreign resident, remuneration of ...........	842‑105
foreign society or association representative, income of .	842‑105
forex realisation gains, certain..................	775‑20
government representative and members of the entourage, foreign resident, income of	842‑105
OBU investment trusts for overseas charitable institutions	121EL(2)
OBU off‑shore 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 .................	768‑105
press representative, foreign, income of ............	842‑105
resistance fighter and victim of wartime persecution, payments to	768‑105
United Nations, income from service with ..........	23AB
United States projects, income from approved overseas projects	23AA
health
Continence Aids Payment Scheme, payments under ....	52‑175
interest
judgement debt, personal injury.................	51‑57
unclaimed money and property..................	51‑120
life insurance companies	Subdivision 320‑B
National Disability Insurance Scheme
NDIS amounts............................	52‑180
non‑cash benefits
business benefit............................	23L(2)
exempt fringe benefit........................	23L(1A)
prizes
Prime Minister’s Literary Awards ...............	51‑60
Prime Minister’s Prize for Australian History ........	51‑60
Prime Minister’s Prize for Science ...............	51‑60
resale royalty collecting societies	51‑45
shipping
income from shipping activities.................	51‑100
social security or like payments
ABSTUDY scheme, payment under..............	Subdivision 52‑E
Australian Victim of Terrorism Overseas Payment.....	52‑10
Better Start for Children with Disability initiative, Outer Regional and Remote payment under	52‑172
carer adjustment payment.....................	53‑10
carers, 2005 one‑off payment to, (carer payment related), 2005 one‑off payment to carers (carer service pension related) or 2005 one‑off payment to carers (carer allowance related)	52‑10
carers, 2006 one‑off payment to, (carer payment related), 2006 one‑off payment to carers (wife pension related), 2006 one‑off payment to carers (partner service pension related), 2006 one‑off payment to carers (carer service pension related) or 2006 one‑off payment to carers (carer allowance related)	52‑10
carers, 2007 one‑off payment to, (carer payment related), 2007 one‑off payment to carers (wife pension related), 2007 one‑off payment to carers (partner service pension related), 2007 one‑off payment to carers (carer service pension related) or 2007 one‑off payment to carers (carer allowance related).	52‑10
carers, 2008 one‑off payment to, (carer payment related), 2008 one‑off payment to carers (wife pension related), 2008 one‑off payment to carers (partner service pension related), 2008 one‑off payment to carers (carer service pension related) or 2008 one‑off payment to carers (carer allowance related)	52‑10
carers, one‑off payment to, (carer allowance related) or one‑off payment to carers (carer payment related)	52‑10
carers, payments to, under the scheme determined under Schedule 3 to the Family Assistance Legislation Amendment (More Help for Families—One‑off Payments) Act 2004	52‑10
carer supplement............................	52‑10
child disability assistance.....................	Subdivision 52‑A
clean energy payment under the Social Security Act 1991	52‑10
clean energy payment under the Veterans’ Entitlements Act 1986	52‑65
clean energy payment under the scheme prepared under Part VII of the Veterans’ Entitlements Act 1986	52‑65
clean energy payment under the Military Rehabilitation and Compensation Act 2004	52‑114
clean energy payment under the scheme determined under section 258 of the Military Rehabilitation and Compensation Act 2004	52‑114
Commonwealth education or training payment.......	Subdivision 52‑F
DFISA bonus and DFISA bonus bereavement payment..	52‑65
disability services payment ....................	53‑10
economic security strategy payment under the Social Security Act 1991	52‑10
education entry payment supplement under the Social Security Act 1991	52‑10
energy assistance payment, one‑off payment under the Social Security Act 1991	52‑10
energy assistance payment, one‑off payment under the Veterans’ Entitlements Act 1986	52‑65
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	52‑162
farm household allowance under the Farm Household Support Act 2014	Subdivision 52‑A
Helping Children with Autism package, Outer Regional and Remote payment under	52‑170
Household Stimulus Package Act (No. 2) 2009, payments under the scheme determined under Schedule 4 to the	52‑165
older Australians, 2006 one‑off payment to, under the Social Security Act 1991	52‑10
older Australians, 2007 one‑off payment to, under the Social Security Act 1991	52‑10
older Australians, 2008 one‑off payment to, under the Social Security Act 1991	52‑10
pension bonus and pension bonus bereavement payment.	52‑10 and 52‑65
persecution victim, payments to .................	768‑105
pharmaceutical supplement for Australian participants in British nuclear tests or in the British Commonwealth Occupation Force	Subdivision 52‑CB
pharmaceutical supplement for Australian surgical‑medical team members	Subdivision 52‑CC
resistance fighter and victim of wartime persecution, payments to	768‑105
Social Security and Other Legislation Amendment (Economic Security Strategy) Act 2008, payments under the scheme determined under Schedule 4 to the	52‑160
Social Security and Veterans’ Affairs Legislation Amendment (One‑off Payments and Other 2007 Budget Measures) Act 2007, payments under a scheme determined under item 1 of Schedule 2 to the	52‑10
Social Security and Veterans’ Affairs Legislation Amendment (One‑off Payments and Other 2007 Budget Measures) Act 2007, payments under the scheme determined under Schedule 4 to the	52‑10
Social Security and Veterans’ Entitlements Legislation Amendment (One‑off Payments and Other Budget Measures) Act 2008, payments under a scheme determined under item 1 of Schedule 2 to the	52‑10
Social Security and Veterans’ Entitlements Legislation Amendment (One‑off Payments and Other Budget Measures) Act 2008, payments under the scheme determined under Schedule 4 to the	52‑10
Social Security and Veterans’ Entitlements Legislation Amendment (One‑off 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	52‑10
Social Security and Veterans’ Entitlements Legislation Amendment (One‑off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006, payments under the scheme determined under Schedule 4 to the	52‑10
Social Security Legislation Amendment (One‑off Payments for Carers) Act 2005, payments under the scheme determined under Schedule 2 to the	52‑10
social security payments ......................	Subdivision 52‑A
training and learning bonus under the Social Security Act 1991	52‑10
travelling expenses for Australian participants in British nuclear tests or in the British Commonwealth Occupation Force	Subdivision 52‑CB
travelling expenses for Australian surgical‑medical team members	Subdivision 52‑CC
veteran, Australian and United Kingdom, payment to ...	53‑20
veteran, payment to .........................	Subdivisions 52‑B and 52‑C
Veterans’ Entitlements Act 1986, lump sum payment under section 198N of the	52‑65
wounds and disability pension ..................	53‑10
see also welfare
structured settlements and structured orders
annuities and lump sums......................	Subdivisions 54‑B, 54‑C and 54‑D
student
see education and training
superannuation and related business
approved deposit fund, continuously complying fixed interest, income from 25 May 1988 deposits	295‑390 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	295‑405 (table item 1)
approved deposit fund, non‑reversionary bonuses on policies of life assurance	295‑335 (table item 1)
benefits from non‑complying funds ........	305‑5
pooled superannuation trust, income from constitutionally protected funds	295‑335 (table item 2)
pooled superannuation trust, income from current pension liabilities of complying superannuation funds	295‑400
pooled superannuation trust, non‑reversionary bonuses on policies of life assurance	295‑335 (table item 1)
superannuation fund, income from other assets used to meet current pension liabilities	295‑390
superannuation fund, income from segregated current pensions assets	295‑385
superannuation fund, non‑reversionary bonuses on policies of life assurance	295‑335 (table item 1)
superannuation fund, regulated, income from a grant of financial assistance under Part 23 of the Superannuation Industry (Supervision) Act 1993	295‑405 (table item 1)
United Nations
United Nations Service, income from .............	23AB
venture capital
eligible venture capital investments, gain or profit from realisation of	51‑54
eligible venture capital investments by ESVCLPs, income derived from	51‑52
venture capital equity, gain or profit from realisation of..	51‑55
welfare
Disaster recovery payments to special category visa (subclass 444) holders	51‑30
maintenance payment........................	51‑30 and 51‑50
thalidomide payment—payment by the Thalidomide Australia Fixed Trust	51‑30
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 11‑B—Particular kinds of non‑assessable non‑exempt income

Table of sections

11‑50 Effect of this Subdivision

11‑55 List of non‑assessable non‑exempt income provisions

11‑50 Effect of this Subdivision

This Subdivision is a *Guide.

11‑55 List of non‑assessable non‑exempt income provisions

The provisions set out in the list make amounts non‑assessable non‑exempt 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, non‑deductible payment or obligation to	85‑20(3)
entitlements to a share of net income that is personal services income already assessable to an individual.............................	86‑35(2)
payments by personal services entity or associate of personal services income already assessable to an individual	86‑35(1)
personal services entity, amounts of personal services income assessable to an individual	86‑30
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 152‑325	152‑310
demutualisation of friendly society health or life insurers
amounts related to issue, or transfer from lost policy holders trust, of demutualisation assets	316‑255
payments received directly, or from lost policy holders trust, in exchange for cancellation or variation of interests under the demutualisation	316‑255
demutualisation of private health insurers
market value of shares and rights at time of issue......	315‑310
payments received in exchange for cancellation or variation of interests under the demutualisation	315‑310
disasters
2019 floods—recovery grants...................	59‑85
2019 floods—on‑farm grant program.......	59‑86
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 ...	83‑170
employment termination payment ...............	82‑10 82‑65 82‑70
foreign termination payment ...................	83‑235 83‑240
genuine redundancy payment, tax free amount of .....	83‑170
unused long service leave payment, pre‑16/8/78 period ...............................	83‑80
see superannuation and sections 82‑10A and 82‑10C of the Income Tax (Transitional Provisions) Act 1997
environment
water infrastructure improvement payments.........	59‑65
farm‑in farm‑out arrangements
rewards for providing exploration benefits..........	40‑1135
financial arrangements
gains related to non‑assessable non‑exempt income	230‑30
firearms surrender arrangements
compensation under.........................	59‑10
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...................	775‑25
branch profits of Australian companies............	23AH
distributions of conduit foreign income............	802‑20
income derived by foreign residents in exclusive economic zone or on or above continental shelf	768‑110
foreign equity distributions on participation interests...	768‑5
income derived by temporary residents.............	768‑910
interest paid by temporary residents...............	768‑980
managed investment trust withholding tax, amount subject to	840‑815
Seasonal Labour Mobility Program withholding tax, amount subject to	840‑915
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................	17‑5(a)
increasing adjustments.......................	17‑5(b) and (c)
investment manager regime
IMR concessions...........................	842‑215
life insurance companies..........................	Subdivision 320‑B
mining
withholding tax, payments to Indigenous persons and distributing bodies subject to	59‑15
mutual receipts
amounts that would be mutual receipts but for prohibition on distributions to members or issue of MCIs	59‑35
National Rental Affordability Scheme
payments made, and non‑cash benefits provided, by a State or Territory governmental body in relation to participation in the National Rental Affordability Scheme..................................................................	380‑35
native title benefits
native title benefits..........................	59‑50
non‑cash benefits
fringe benefits.............................	23L(1)
notional sale and loan
arrangement payments a notional seller receives or is entitled to receive	240‑40
luxury car leases, lease payments that the lessor receives or is entitled to receive	242‑40
deemed loan treatment for financial benefits provided for tax preferred use of asset	250‑160
offshore banking units
assessable OB income other than eligible fraction.....	121EG
related entities
amounts from, where deduction reduced for.........	26‑35(4)
repayable amounts
previously assessable amounts..................	59‑30
rights to acquire shares or units
market value of at time of issue.................	59‑40
small business assets
income arising from CGT event, company or trust owned asset continuously for 15 years	152‑110(2)
sovereign entities ..............................	Subdivision 880‑C
superannuation
benefits generally ..........................	Divisions 301 to 306
commutation of income stream, under 25 years .......	303‑5
death benefits .............................	302‑60 302‑65 302‑70 302‑140
departing Australia superannuation benefits .........	301‑175
foreign superannuation funds, lump sum benefits .....	305‑60 305‑65 305‑70
KiwiSaver schemes, contributions to complying superannuation funds from	312‑10
KiwiSaver schemes, superannuation benefits paid from complying superannuation funds to	312‑15
member benefits ...........................	301‑10 301‑15 301‑30 301‑225
release authorities, payments from ...............	303‑15 303‑20
roll‑over superannuation benefits ..........	306‑5
superannuation lump sum for recipient having terminal medical condition	303‑10
unclaimed money payment ....................	306‑20
tax loss transfers
consideration received by loss company from income company, generally	170‑25(1)
consideration received by loss company from income company, net capital loss	170‑125(1)
temporary residents
see foreign aspects of income taxation
trading stock
disposal outside ordinary course of business, amounts received upon	70‑90(2)
trusts
attributable income, amounts representing..........	99B(2A)
family trust distribution tax, amounts subject to.......	271‑105(3) in Schedule 2F
windfall amounts
business franchise fees, refund of when invalid.......	59‑20
State tax on Commonwealth place, refund of when invalid	59‑25
withholding taxes
see foreign aspects of income taxation and mining

Division 12—Particular kinds of deductions

12‑1 Effect of this Division

This Division is a *Guide.

12‑5 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
....................................	26‑10
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	245‑90
general .................................	25‑35, 63F
companies ...............................	Subdivisions 165‑C, 166‑C and 175‑C
debt/equity swaps ..........................	63E, 63F, 709‑220
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 709‑D and 719‑I
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 .......................	26‑47
borrowing expenses
....................................	25‑25
bribes to foreign public officials ....................	26‑52
bribes to public officials ..........................	26‑53
buildings
income producing buildings, capital allowances ......	Division 43
see also heritage conservation work
capital allowances
generally ................................	Division 40
balancing adjustments .......................	40‑285(2), 40‑370
business related costs ........................	40‑880
electricity and telephone lines ..................	40‑645
environmental protection activities ...............	40‑755
exploration or prospecting ....................	40‑80(1), 40‑730
in‑house software ....................	40‑335, 40‑455
intellectual property ........................	Subdivisions 40‑B and 40‑I
IRUs ..................................	Subdivision 40‑B
landcare operations .........................	40‑630
low‑value and software development pools ...	Subdivision 40‑E
mining and quarrying ........................	Subdivision 40‑H and Subdivision 40‑I
new business investment, additional deduction .......	Division 41
Petroleum Resource Rent Tax ..................	40‑750
project pools .............................	40‑830, 40‑832
reducing deductions ........................	40‑25, 40‑27, 40‑290 and 40‑291
spectrum licences ..........................	Subdivision 40‑B
tax preferred use of asset......................	Division 250
telecommunications site access rights .............	Subdivision 40‑B
trees in carbon sink forests ....................	Subdivision 40‑J
water facilities, horticultural plants, fodder storage assets and fencing assets	Subdivision 40‑F
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 152‑325	152‑310
see also foreign residents
capital loss
net capital loss, no deduction for ................	102‑10
net capital loss, transfer within company group .......	Subdivision 170‑B
car disposal
see capital allowances
car expenses
generally ................................	Division 28
“cents per kilometre” method ..................	Subdivision 28‑C
“log book” method .........................	Subdivisions 28‑F and 28‑G
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................	118‑21
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 ....................	26‑45
see also subscriptions to associations
Commonwealth places windfall tax
....................................	26‑17
companies, co‑operative 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............................	701‑61(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 40‑B and 40‑I
cross staple arrangements
rent from land investment.....................	25‑115, 25‑120
currency exchange gains and losses
see foreign exchange
death of timber owner
see timber
debt interests
certain returns in respect of debt interests...........	25‑85
depreciation
see capital allowances
designs
expenditure in obtaining or extending registration .....	Subdivisions 40‑B and 40‑I
disposal of depreciating assets
see capital allowances
dividends
dividends including LIC capital gain component ......	115‑280
franking credits, companies and foreign residents......	207‑95(2), 207‑95(3), 220‑405(3)
franking credits, pooled development funds (PDFs) ....	124ZM
non‑share equity interests, no deduction for return in respect of	26‑26
unfranked non‑portfolio dividends.........	46FA
education expenses
Higher Education Contribution Scheme, no deduction unless provided as fringe benefit	26‑20
limit on deduction ..........................	82A
see also overseas debtors repayment levy
see also student start‑up loans
see also VET student loans
election expenses
Federal and State Parliament election expenses .......	25‑60, 25‑70
local government election expenses, limited deduction for	25‑65, 25‑70
electricity connections
see capital allowances
embezzlement
see theft
employees
pensions, gratuities or retiring allowances for ex‑employees	25‑50
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	26‑25A
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 non‑concessional contributions tax
no deduction .............................	26‑75
exploration and prospecting
see capital allowances
family
no deduction for maintaining spouse or child.........	26‑40
farm management deposits
see primary production
film licensed investment companies (FLICs)
see shares
financial arrangements
losses from...............................	230‑15(2) and (3)
see also borrowing expenses, interest, leases and securities
foreign exchange
losses ..................................	775‑30
foreign financial entities’ Australian permanent establishments
generally................................	Part IIIB
thin capitalisation..........................	Subdivision 820‑FB
transfer of losses...........................	Subdivisions 170‑A and 170‑B
forestry managed investment schemes
payments under scheme......................	394‑10(1)
franchise fees windfall tax
....................................	26‑15
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...............................	321‑25 and 321‑95
increase in value of outstanding claims liability.......	321‑15 and 321‑85
increase in value of unearned premium reserve.......	321‑55
gifts
general .................................	Division 30
limit on deduction ..........................	26‑55
see also tax avoidance schemes
horticultural plants
see capital allowances
higher education assistance	26‑20
hybrid mismatch rules
disallowing of deductions.....................	Division 832
illegal activities	26‑54
income equalisation deposits
see primary production
industrial property
see intellectual property and R&D
infrastructure
see tax losses
insurance with non‑residents
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 non‑resident	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	26‑25
life assurance premiums, interest etc. on loans to finance, no deduction for	26‑85
superannuation contributions, interest etc. on loans to finance, no deduction for	26‑80
underpayment or late payment of tax, interest for .....	25‑5
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
....................................	25‑20
lease, authority, licence, permit or quota
expenditure to terminate......................	25‑110
leases
finance leases and arrangements, use of property if end‑user 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 non‑resident outside Australia; or
• by a previous owner
....................................	51AD
payment for failure to comply with lease obligation to repair premises	25‑15
leases of luxury cars
accrual amounts...........................	242‑35
adjustment amounts (lessee)	242‑70
adjustment amounts (lessor)	242‑65
lease payments not deductible..................	242‑55
payments to acquire car not deductible.............	242‑85
leave payments
accrued leave transfer payments .................	26‑10
no deduction for leave payments until paid ..........	26‑10
leisure facilities
no deduction for ...........................	26‑50
life insurance companies..........................	Subdivision 320‑C
limited recourse debt
later payments.............................	243‑45
later payments (replacement debt)	243‑50
loans
see borrowing expenses, interest and securities
losses
foreign exchange ..........................	775‑30
profit‑making undertaking or scheme .......	25‑40
property sale .............................	25‑40
traditional securities, loss on disposal or redemption of	70B
see also tax losses
managed investment trusts
losses from carried interests....................	275‑200(4)
management and investment company shares
see shares
membership of associations
see subscriptions to associations
mining
see capital allowances
misappropriation
by employee or agent........................	25‑47
mortgage
expenses of discharging a mortgage ..............	25‑30
motor vehicles
see car expenses and leases
National Disability Insurance Scheme
National Disability Insurance Scheme expenditure.....	26‑97
non‑cash transactions
non‑cash business benefits ..............	51AK
non‑cash consideration, money value deemed to have been paid or given	21
non‑commercial business activities
deferral of non‑commercial losses..........	Division 35
non‑resident 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)	240‑110(1)
adjustment amounts (lessor)	240‑105(3)
arrangement payments, no deduction for...........	240‑55
notional interest............................	240‑50, 250‑155
deemed loan treatment for financial benefits provided for tax preferred use of asset	Subdivision 250‑C
payments to acquire property, no deduction for.......	240‑85
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	26‑20
partnerships
foreign hybrid loss exposure adjustment.........................................	830‑50
losses, partner’s share of partnership loss ...........	90, 92
patents
expenditure relating to grant of patents, etc. .........	Subdivisions 40‑B and 40‑I
penalties
no deduction for penalties .....................	26‑5
personal services income
alienated personal services income...............	Subdivision 86‑B
general.................................	Division 85
political contributions and gifts
denial of certain deductions....................	26‑22
deductions for individuals.....................	Subdivision 30‑DA
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 end‑user 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 non‑resident 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...........	25‑75
rebatable benefits
no deduction for ...........................	26‑19
registered emissions units
expenditure incurred in becoming the holder of.......	420‑15
expenditure incurred in ceasing to hold............	420‑42
excess of opening over closing value of..................	420‑45
reimbursements
expense payment fringe benefits, reduced deduction ...	51AH
reinsurance
see insurance with non‑residents
related entities (including relatives)
reduction of deduction for payment or liability to......	26‑35, 65(1B) and (1C)
repairs
general .................................	25‑10
repair covenants, payment for non‑compliance with covenant to repair under lease	25‑15
roads
see timber
royalties
royalty, no deduction for royalty paid to a foreign resident until the withholding tax payable has been paid	26‑25
scientific research
see R&D
securities
qualifying securities ........................	159GP to 159GZ
substituted securities ........................	23K
traditional securities, loss on disposal or redemption of	70B
shares
buy‑backs .........................	159GZZZJ to 159GZZZT
cancellation of subsidiary’s shares in holding company .	159GZZZC to 159GZZZI
employee share schemes, deduction for provider of ESS interests	Subdivision 83A‑D
see also dividends and securities
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 start‑up loans
limit on deduction ..........................	82A
payment made to reduce a debt to the Commonwealth under Chapter 2AA of the Social Security Act 1991 (student start‑up loans), no deduction unless provided as fringe benefit	26‑20
payment made to reduce a debt to the Commonwealth under Part 2 of the Student Assistance Act 1973 (ABSTUDY student start‑up loans), no deduction unless provided as fringe benefit	26‑20
subscriptions to associations
....................................	25‑55
substantiation
work, travel and car expenses ..................	Division 900
superannuation
see insurance and annuity business and interest
superannuation and related business
generally ................................	Part 3‑30
asset disposals ............................	295‑85
death or disability benefits, deduction for future service element	295‑470
death or disability cover, premiums for ............	295‑465
financial assistance levy ......................	295‑490(1) (table item 3)
superannuation contributions surcharge
no deduction .............................	26‑60
superannuation—deductibility of contributions
generally ......................................	Division 290
contributions for employees etc. .................	Subdivision 290‑B
contributions to non‑complying funds .......	sections 290‑10 and 290‑75
first home super saver scheme re‑contribution .	section 290‑168
limit on deduction ..........................	26‑55
no deduction under any other provision of the Act .....	section 290‑10
personal contributions .......................	Subdivision 290‑C
superannuation guarantee charge
no deduction for ...........................	26‑95
late contribution offset, no deduction for ...........	290‑95
superannuation supervisory levy
late lodgment amount, no deduction for............	26‑90
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....................	207‑150(2), 207‑150(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 .............................	70‑20, 52A
tax exempt entities
treatment of losses and outgoings on becoming taxable ...............................	Schedule 2D
tax losses
bad debts, companies ........................	165‑120
change of ownership or control of a company
generally .........................	Division 165
for earlier income years ...............	Subdivision 165‑A
for income year of the change ...........	Subdivision 165‑B
designated infrastructure project entities ...........	Division 415
earlier income years ........................	Division 36
life insurance companies......................	Subdivision 320‑D
pooled development funds ....................	Subdivision 195‑A
transfer between companies in same wholly‑owned group ................................	Subdivision 170‑A
tax preferred asset financing
generally................................	Division 250
denial of capital allowance deductions in relation to asset being put to tax preferred use	250‑145
reduction in capital allowance deductions in relation to asset being put to tax preferred use	250‑150
tax related expenses
....................................	25‑5
telecommunications site access rights
see capital allowances
telephone lines
see primary production
theft
by employee or agent........................	25‑45
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	70‑120
disposal of land carrying trees, deduction of the part of land cost attributable to trees	70‑120
felling trees, deduction of cost of land attributable to trees felled or of cost of right to fell trees	70‑120
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	26‑20
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 ..........	70‑35(3)
expenditure deemed not to be of a capital nature ......	70‑25
prepayments, when stock becomes trading stock on hand ................................	70‑15
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 cross‑border conditions between entities	Subdivision 815‑B
arm’s length principle for permanent establishments....	Subdivision 815‑C
transport expenses
incurred in travel between workplaces .............	25‑100
travel expenses
accompanying relatives, no deduction for some travel expenses	26‑30
travel related to the use of residential premises as residential accommodation	26‑31
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, non‑resident trust estates and public trading trusts
uniforms
non‑compulsory uniforms ..............	Division 34
United Medical Protection Limited support payments
....................................	25‑105
uranium mining
see mining
VET student loans
limit on deduction ..........................	82A
payment made to reduce a debt to the Commonwealth under Part 3A of the VET Student Loans Act 2016 (VETSL debts), no deduction unless provided as fringe benefit	26‑20
water facilities
improvements.............................	26‑100
see also capital allowances
work expenses
see substantiation
work in progress
payment of a work in progress amount ............	25‑95

Division 13—Tax offsets

13‑1A Effect of this Division

This Division is a *Guide.

13‑1 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
non‑resident beneficiary ................	276‑110
averaging
see primary production
bonuses
see life assurance
child
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 61‑A
dividends
general.................................	207‑20(2), 207‑45, 207‑110(2)(c), 210‑170(1)
early stage venture capital limited partnerships
contributions to ESVCLPs.........................................	Subdivision 61‑P
employment termination
employment termination payments ...............	82‑10 82‑70
see leave payments, superannuation and sections 82‑10A and 82‑10C of the Income Tax (Transitional Provisions) Act 1997
Equine Workers Hardship Wage Supplement Payment
see social security and other benefit payments
exploration for minerals
junior minerals exploration incentive .............	Subdivision 418‑B
film
....................................	Division 376
foreign income tax
foreign income tax paid, tax offset for.............	Division 770
franking deficit tax
liabilities to pay............................	205‑70
franked dividends
see dividends
hardship
see child
housing
National Rental Affordability...................	Division 380
imputation
see dividends and franking deficit tax
innovation companies
certain shares issued to early stage investors.........	Subdivision 360‑A
inter‑corporate 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 ........................	83‑15
unused long service leave payment ...............	83‑85
see employment termination
legal disability
see trusts
life assurance
bonus, receipt of ...........................	160AAB
life insurance company
subsidiary joining consolidated group .............	713‑545(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.................................	Subdivision 61‑D
tax offset for 2021‑22 income year and earlier income years	159N
lump sum income arrears
receipt of ................................	159ZRA, 159ZRB, Subdivision 61‑L
non‑resident beneficiary
see trusts
non‑resident 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 .............	392‑35(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 328‑F
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 non‑concessional contributions	Subdivision 292‑B
spouse contributions ........................	Subdivision 290‑D
death benefits .............................	302‑75 302‑85 302‑145
excess concessional contributions ................	291‑15(b)
first home super saver scheme ..................	313‑25
member benefits ...........................	301‑20 301‑25 301‑35 301‑40 301‑95 301‑100 301‑105 301‑115
TFN quoted to superannuation or RSA provider after no‑TFN contributions tax paid	295‑675
termination payments
see employment termination, leave payments and superannuation
trustee
see dividends, low income earner and trusts
trusts
beneficiary in a foreign trust...................	98B
non‑resident 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
winding‑up of non‑resident trust estates
see trusts
withholding payments
made by companies to Australian seafarers..........	Subdivision 61‑N
zone
residents of isolated areas .....................	79A

Chapter 2—Liability rules of general application

Part 2‑1—Assessable income

Division 15—Some items of assessable income

Guide to Division 15

15‑1 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

15‑2 Allowances and other things provided in respect of employment or services

15‑3 Return to work payments

15‑5 Accrued leave transfer payments

15‑10 Bounties and subsidies

15‑15 Profit‑making undertaking or plan

15‑20 Royalties

15‑22 Payments made to members of a copyright collecting society

15‑23 Payments of resale royalties by resale royalty collecting society

15‑25 Amount received for lease obligation to repair

15‑30 Insurance or indemnity for loss of assessable income

15‑35 Interest on overpayments and early payments of tax

15‑40 Providing mining, quarrying or prospecting information or geothermal exploration information

15‑45 Amounts paid under forestry agreements

15‑46 Amounts paid under forestry managed investment schemes

15‑50 Work in progress amounts

15‑55 Certain amounts paid under funeral policy

15‑60 Certain amounts paid under scholarship plan

15‑70 Reimbursed car expenses

15‑75 Bonuses

Operative provisions

15‑2 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;

(d) an amount that is assessable as *ordinary income under section 6‑5;

(e) *ESS interests to which Subdivision 83A‑B or 83A‑C (about employee share schemes) applies.

Note: Section 23L of the Income Tax Assessment Act 1936 provides that fringe benefits are non‑assessable non‑exempt income.

15‑3 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.

15‑5 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 26‑10.

15‑10 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 6‑5.

15‑15 Profit‑making undertaking or plan

(1) Your assessable income includes profit arising from the carrying on or carrying out of a profit‑making undertaking or plan.

(2) This section does not apply to a profit that:

(a) is assessable as *ordinary income under section 6‑5; 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 profit‑making by sale, your assessable income includes the profit: see section 25A of the Income Tax Assessment Act 1936.

15‑20 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 995‑1(1)) if the amount is not assessable as *ordinary income under section 6‑5.

(2) Subsection (1) does not apply to an amount of a payment to which section 15‑22 or 15‑23 applies.

15‑22 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 51‑43 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 410‑5 of this Act requires a copyright collecting society to give you a notice at the time of payment.

15‑23 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.

Note: Section 410‑50 of this Act requires the resale royalty collecting society to give you a notice at the time of payment.

15‑25 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

(d) the amount is not assessable as *ordinary income under section 6‑5.

Note: The entity can deduct the amount: see section 25‑15.

15‑30 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 6‑5.

15‑35 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.

15‑40 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 6‑5.

(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

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.

15‑45 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.

15‑46 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 394‑10 in relation to the scheme (disregarding subsection 394‑10(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 394‑10(5)).

(2) No part of an amount included under subsection (1) is included in your assessable income for a later income year.

15‑50 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 25‑95.

15‑55 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 320‑15(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 6‑5; or

(b) *statutory income under a section of this Act other than this section.

15‑60 Certain amounts paid under scholarship