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Income Tax Assessment Act 1997

Authoritative Version
  • - C2012C00750
  • In force - Superseded Version
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Act No. 38 of 1997 as amended, taking into account amendments up to Statute Law Revision Act 2012
An Act about income tax and related matters
Administered by: Treasury
General Comments: This compilation is affected by retrospective amendments. Please see the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012 (Act No. 158, 2012), the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Act 2013 (Act No. 85, 2013), the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Act 2013 (Act No. 88, 2013), the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013 (Act No. 101, 2013) and the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 (Act No. 70, 2015) for details.
Registered 29 Oct 2012
Start Date 01 Oct 2012
End Date 27 Nov 2012

Income Tax Assessment Act 1997

Act No. 38 of 1997 as amended

This compilation was prepared on 1 October 2012
taking into account amendments up to Act No. 136 of 2012

Volume 1 includes:       Table of Contents
                                      Sections 1‑1 to 36‑55

The text of any of those amendments not in force
on that date is appended in the Notes section

The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section

Volume 2 includes:        Table of Contents
                                      Sections 40
1 to 5510

Volume 3 includes:        Table of Contents
                                      Sections 58
1 to 122‑205

Volume 4 includes:        Table of Contents
                                      Sections 124
1 to 152‑430

Volume 5 includes:        Table of Contents
                                      Sections 164
1 to 220‑800

Volume 6 includes:        Table of Contents
                                      Sections 230
1 to 42070

Volume 7 includes:        Table of Contents
                                      Sections 620
5 to 727910

Volume 8 includes:        Table of Contents
                                      Sections 768
‑100 to 9951

Volume 9 includes:        Note 1
                                      Table of Acts
                                      Act Notes

Volume 10 includes:      Table of Amendments

Volume 11 includes:      Notes 2 – 22
                                      Table A

Prepared by the Office of Parliamentary Counsel, Canberra

  

  

  


Contents

Chapter 1—Introduction and core provisions                                                     1

Part 1‑1—Preliminary                                                                                                         1

Division 1—Preliminary                                                                                              1

1‑1......... Short title [see Note 1]........................................................................ 1

1‑2......... Commencement................................................................................... 1

1‑3......... Differences in style not to affect meaning........................................... 1

1‑7......... Administration of this Act................................................................... 2

Part 1‑2—A Guide to this Act                                                                                        3

Division 2—How to use this Act                                                                             3

Subdivision 2‑A—How to find your way around                                               3

2‑1......... The design........................................................................................... 3

Subdivision 2‑B—How the Act is arranged                                                         4

2‑5......... The pyramid........................................................................................ 4

Subdivision 2‑C—How to identify defined terms and find the definitions   5

2‑10....... When defined terms are identified....................................................... 5

2‑15....... When terms are not identified.............................................................. 5

2‑20....... Identifying the defined term in a definition.......................................... 6

Subdivision 2‑D—The numbering system                                                            6

2‑25....... Purposes............................................................................................. 6

2‑30....... Gaps in the numbering........................................................................ 7

Subdivision 2‑E—Status of Guides and other non‑operative material         7

2‑35....... Non‑operative material........................................................................ 7

2‑40....... Guides................................................................................................. 7

2‑45....... Other material...................................................................................... 8

Division 3—What this Act is about                                                                       9

3‑5......... Annual income tax.............................................................................. 9

3‑10....... Your other obligations as a taxpayer................................................. 10

3‑15....... Your obligations other than as a taxpayer......................................... 11

Part 1‑3—Core provisions                                                                                              12

Division 4—How to work out the income tax payable on your taxable income 12

4‑1......... Who must pay income tax................................................................. 12

4‑5......... Meaning of you................................................................................. 12

4‑10....... How to work out how much income tax you must pay..................... 12

4‑15....... How to work out your taxable income.............................................. 14

4‑25....... Special provisions for working out your basic income tax liability... 16

Division 5—How to work out when to pay your income tax                17

Guide to Division 5                                                                                                   17

5‑1......... What this Division is about............................................................... 17

Subdivision 5‑A—How to work out when to pay your income tax               17

5‑5......... When income tax is payable.............................................................. 18

5‑10....... When shortfall interest charge is payable.......................................... 19

5‑15....... General interest charge payable on unpaid income tax or shortfall interest charge     19

Division 6—Assessable income and exempt income                                   21

Guide to Division 6                                                                                                   21

6‑1......... Diagram showing relationships among concepts in this Division..... 21

Operative provisions                                                                                               22

6‑5......... Income according to ordinary concepts (ordinary income)............... 22

6‑10....... Other assessable income (statutory income)..................................... 23

6‑15....... What is not assessable income.......................................................... 23

6‑20....... Exempt income.................................................................................. 24

6‑23....... Non‑assessable non‑exempt income................................................. 25

6‑25....... Relationships among various rules about ordinary income............... 25

Division 8—Deductions                                                                                              26

8‑1......... General deductions............................................................................ 26

8‑5......... Specific deductions........................................................................... 27

8‑10....... No double deductions....................................................................... 27

Part 1‑4—Checklists of what is covered by concepts used in the core provisions                         28

Division 9—Entities that must pay income tax                                             28

9‑1A...... Effect of this Division....................................................................... 28

9‑1......... List of entities.................................................................................... 28

9‑5......... Entities that work out their income tax by reference to something other than taxable income              29

Division 10—Particular kinds of assessable income                                  33

10‑1....... Effect of this Division....................................................................... 33

10‑5....... List of provisions about assessable income....................................... 33

Division 11—Particular kinds of non‑assessable income                         47

Subdivision 11‑A—Lists of classes of exempt income                                    47

11‑1A.... Effect of this Subdivision.................................................................. 47

11‑1....... Overview.......................................................................................... 47

11‑5....... Entities that are exempt, no matter what kind of ordinary or statutory income they have                    47

11‑15..... Ordinary or statutory income which is exempt [see Note 17]........... 49

Subdivision 11‑B—Particular kinds of non‑assessable non‑exempt income 58

11‑50..... Effect of this Subdivision.................................................................. 58

11‑55..... List of non‑assessable non‑exempt income provisions..................... 58

Division 12—Particular kinds of deductions                                                  63

12‑1....... Effect of this Division....................................................................... 63

12‑5....... List of provisions about deductions.................................................. 63

Division 13—Tax offsets                                                                                           79

13‑1A.... Effect of this Division....................................................................... 79

13‑1....... List of tax offsets.............................................................................. 79

Chapter 2—Liability rules of general application                                            85

Part 2‑1—Assessable income                                                                                         85

Division 15—Some items of assessable income                                             85

Guide to Division 15                                                                                                85

15‑1....... What this Division is about............................................................... 85

Operative provisions                                                                                               86

15‑2....... Allowances and other things provided in respect of employment or services            86

15‑3....... Return to work payments.................................................................. 86

15‑5....... Accrued leave transfer payments....................................................... 87

15‑10..... Bounties and subsidies...................................................................... 87

15‑15..... Profit‑making undertaking or plan.................................................... 87

15‑20..... Royalties........................................................................................... 87

15‑22..... Payments made to members of a copyright collecting society........... 87

15‑23..... Payments of resale royalties by resale royalty collecting society....... 88

15‑25..... Amount received for lease obligation to repair.................................. 88

15‑30..... Insurance or indemnity for loss of assessable income....................... 89

15‑35..... Interest on overpayments and early payments of tax......................... 89

15‑40..... Providing mining, quarrying or prospecting information.................. 89

15‑45..... Amounts paid under forestry agreements.......................................... 89

15‑46..... Amounts paid under forestry managed investment schemes............. 90

15‑50..... Work in progress amounts................................................................ 90

15‑55..... Certain amounts paid under funeral policy........................................ 90

15‑60..... Certain amounts paid under scholarship plan.................................... 91

15‑65..... Sugar industry exit grants................................................................. 91

15‑70..... Reimbursed car expenses.................................................................. 92

15‑75..... Bonuses............................................................................................ 92

15‑80..... Employer FHSA contributions etc.................................................... 93

15‑85..... Refunded excess rehabilitation tax offset.......................................... 93

Division 17—Effect of GST etc. on assessable income                             94

Guide to Division 17                                                                                                94

17‑1....... What this Division is about............................................................... 94

17‑5....... GST and increasing adjustments....................................................... 94

17‑10..... Certain decreasing adjustments......................................................... 94

17‑15..... Elements in calculation of amounts................................................... 95

17‑20..... GST groups and GST joint ventures................................................. 95

17‑30..... Special credits because of indirect tax transition................................ 95

17‑35..... Certain sections not to apply to certain assets or expenditure............ 96

Division 20—Amounts included to reverse the effect of past deductions               97

Guide to Division 20                                                                                                97

20‑1....... What this Division is about............................................................... 97

20‑5....... Other provisions that reverse the effect of deductions....................... 97

Subdivision 20‑A—Insurance, indemnity or other recoupment for deductible expenses                       99

Guide to Subdivision 20‑A                                                                                      99

20‑10..... What this Subdivision is about.......................................................... 99

20‑15..... How to use this Subdivision........................................................... 100

What is an assessable recoupment?                                                                    101

20‑20..... Assessable recoupments................................................................. 101

20‑25..... What is recoupment?....................................................................... 102

20‑30..... Tables of deductions for which recoupments are assessable........... 103

How much is included in your assessable income?                                        107

20‑35..... If the expense is deductible in a single income year........................ 107

20‑40..... If the expense is deductible over 2 or more income years............... 108

20‑45..... Effect of balancing charge............................................................... 110

20‑50..... If the expense is only partially deductible........................................ 111

20‑55..... Meaning of previous recoupment law............................................. 112

What if you can deduct a loss or outgoing incurred by another entity?  113

20‑60..... If you are the only entity that can deduct an amount for the loss or outgoing            113

20‑65..... If 2 or more entities can deduct amounts for the loss or outgoing... 114

Subdivision 20‑B—Disposal of a car for which lease payments have been deducted     115

Guide to Subdivision 20‑B                                                                                    115

20‑100... What this Subdivision is about........................................................ 115

20‑105... Map of this Subdivision.................................................................. 117

The usual case                                                                                                         118

20‑110... Disposal of a leased car for profit................................................... 118

20‑115... Working out the profit on the disposal............................................ 119

20‑120... Meaning of notional depreciation................................................... 120

The associate case                                                                                                  121

20‑125... Disposal of a leased car for profit................................................... 121

Successive leases                                                                                                     123

20‑130... Successive leases............................................................................ 123

Previous disposals of the car                                                                               123

20‑135... No amount included if earlier disposal for market value................. 123

20‑140... Reducing the amount to be included if there has been an earlier disposal                  124

Miscellaneous rules                                                                                                125

20‑145... No amount included if you inherited the car.................................... 125

20‑150... Reducing the amount to be included if another provision requires you to include an amount for the disposal             125

20‑155... Exception for particular cars taken on hire...................................... 125

20‑157... Exception for small business entities............................................... 126

Disposals of interests in a car: special rules apply                                         126

20‑160... Disposal of an interest in a car........................................................ 126

Part 2‑5—Rules about deductibility of particular kinds of amounts 127

Division 25—Some amounts you can deduct                                                127

Guide to Division 25                                                                                              127

25‑1....... What this Division is about............................................................. 127

Operative provisions                                                                                             128

25‑5....... Tax‑related expenses....................................................................... 128

25‑10..... Repairs............................................................................................ 130

25‑15..... Amount paid for lease obligation to repair...................................... 131

25‑20..... Lease document expenses............................................................... 131

25‑25..... Borrowing expenses....................................................................... 131

25‑30..... Expenses of discharging a mortgage............................................... 134

25‑35..... Bad debts........................................................................................ 135

25‑40..... Loss from profit‑making undertaking or plan................................. 137

25‑45..... Loss by theft etc.............................................................................. 138

25‑47..... Misappropriation where a balancing adjustment event occurs......... 139

25‑50..... Payments of pensions, gratuities or retiring allowances.................. 140

25‑55..... Payments to associations................................................................. 140

25‑60..... Parliament election expenses........................................................... 141

25‑65..... Local government election expenses............................................... 141

25‑70..... Deduction for election expenses does not extend to entertainment.. 142

25‑75..... Rates and land taxes on premises used to produce mutual receipts. 143

25‑85..... Certain returns in respect of debt interests....................................... 144

25‑90..... Deduction relating to foreign non‑assessable non‑exempt income.. 145

25‑95..... Deduction for work in progress amounts........................................ 145

25‑105... Deductions for United Medical Protection Limited support payments 146

25‑100... Travel between workplaces............................................................. 146

25‑110... Capital expenditure to terminate lease etc........................................ 147

Division 26—Some amounts you cannot deduct, or cannot deduct in full             149

Guide to Division 26                                                                                              149

26‑1....... What this Division is about............................................................. 149

Operative provisions                                                                                             150

26‑5....... Penalties.......................................................................................... 150

26‑10..... Leave payments............................................................................... 150

26‑15..... Franchise fees windfall tax.............................................................. 151

26‑17..... Commonwealth places windfall tax................................................. 151

26‑18..... Unit shortfall charge—clean energy................................................ 151

26‑19..... Rebatable benefits........................................................................... 151

26‑20..... Assistance to students..................................................................... 152

26‑22..... Political contributions and gifts....................................................... 152

26‑25..... Interest or royalty............................................................................ 154

26‑25A.. Seasonal Labour Mobility Program................................................ 154

26‑26..... Non‑share distributions and dividends............................................ 155

26‑30..... Relative’s travel expenses............................................................... 155

26‑35..... Reducing deductions for amounts paid to related entities................ 157

26‑40..... Maintaining your family.................................................................. 158

26‑45..... Recreational club expenses.............................................................. 159

26‑47..... Non‑business boating activities....................................................... 159

26‑50..... Expenses for a leisure facility.......................................................... 162

26‑52..... Bribes to foreign public officials..................................................... 163

26‑53..... Bribes to public officials................................................................. 166

26‑54..... Expenditure relating to illegal activities........................................... 168

26‑55..... Limit on deductions......................................................................... 168

26‑60..... Superannuation contributions surcharge......................................... 169

26‑65..... Termination payments surcharge..................................................... 169

26‑68..... Loss from disposal of eligible venture capital investments.............. 169

26‑70..... Loss from disposal of venture capital equity................................... 170

26‑75..... Excess contributions tax cannot be deducted................................... 170

26‑80..... Financing costs on loans to pay superannuation contribution......... 170

26‑85..... Borrowing costs on loans to pay life insurance premiums.............. 171

26‑90..... Superannuation supervisory levy.................................................... 171

26‑95..... Superannuation guarantee charge.................................................... 171

Division 27—Effect of input tax credits etc. on deductions                  172

Guide to Division 27                                                                                              172

27‑1....... What this Division is about............................................................. 172

Subdivision 27‑A—General                                                                                 172

27‑5....... Input tax credits and decreasing adjustments................................... 172

27‑10..... Certain increasing adjustments........................................................ 173

27‑15..... GST payments................................................................................ 173

27‑20..... Elements in calculation of amounts................................................. 174

27‑25..... GST groups and GST joint ventures............................................... 174

27‑35..... Certain sections not to apply to certain assets or expenditure.......... 174

Subdivision 27‑B—Effect of input tax credits etc. on capital allowances 175

27‑80..... Cost or opening adjustable value of depreciating assets reduced for input tax credits                         175

27‑85..... Cost or opening adjustable value of depreciating assets reduced: decreasing adjustments                  177

27‑87..... Certain decreasing adjustments included in assessable income....... 178

27‑90..... Cost or opening adjustable value of depreciating assets increased: increasing adjustments                 178

27‑92..... Certain increasing adjustments can be deducted.............................. 179

27‑95..... Balancing adjustment events........................................................... 179

27‑100... Pooling............................................................................................ 180

27‑105... Other Division 40 expenditure........................................................ 185

27‑110... Input tax credit etc. relating to 2 or more things.............................. 185

Division 28—Car expenses                                                                                    186

Guide to Division 28                                                                                              186

28‑1....... What this Division is about............................................................. 186

28‑5....... Map of this Division....................................................................... 187

Subdivision 28‑A—Deductions for car expenses                                            187

28‑10..... Application of Division 28.............................................................. 188

28‑12..... Car expenses................................................................................... 188

28‑13..... Meaning of car expense.................................................................. 188

Subdivision 28‑B—Choosing which method to use                                        189

Guide to Subdivision 28‑B                                                                                    189

28‑14..... What this Subdivision is about........................................................ 189

28‑15..... Choosing among the 4 methods...................................................... 189

Operative provision                                                                                               191

28‑20..... Rules governing choice of method.................................................. 191

Subdivision 28‑C—The “cents per kilometre” method                                191

28‑25..... How to calculate your deduction..................................................... 191

28‑30..... Capital allowances........................................................................... 192

28‑35..... Substantiation.................................................................................. 192

Subdivision 28‑D—The “12% of original value” method                           192

28‑45..... How to calculate your deduction..................................................... 192

28‑50..... Eligibility......................................................................................... 193

28‑55..... Capital allowances........................................................................... 193

28‑60..... Substantiation.................................................................................. 194

Subdivision 28‑E—The “one‑third of actual expenses” method                194

28‑70..... How to calculate your deduction..................................................... 194

28‑75..... Eligibility......................................................................................... 194

28‑80..... Substantiation.................................................................................. 195

Subdivision 28‑F—The “log book” method                                                    195

28‑90..... How to calculate your deduction..................................................... 195

28‑95..... Eligibility......................................................................................... 197

28‑100... Substantiation.................................................................................. 197

Subdivision 28‑G—Keeping a log book                                                            198

Guide to Subdivision 28‑G                                                                                   198

28‑105... What this Subdivision is about........................................................ 198

28‑110... Steps for keeping a log book........................................................... 198

Operative provisions                                                                                             198

28‑115... Income years for which you need to keep a log book..................... 198

28‑120... Choosing the 12 week period for a log book.................................. 199

28‑125... How to keep a log book.................................................................. 200

28‑130... Replacing one car with another....................................................... 201

Subdivision 28‑H—Odometer records for a period                                      201

Guide to Subdivision 28‑H                                                                                   201

28‑135... What this Subdivision is about........................................................ 201

Operative provision                                                                                               202

28‑140... How to keep odometer records for a car for a period...................... 202

Subdivision 28‑I—Retaining the log book and odometer records             202

28‑150... Retaining the log book for the retention period............................... 203

28‑155... Retaining odometer records............................................................. 204

Subdivision 28‑J—Situations where you cannot use, or don’t need to use, one of the 4 methods          204

Guide to Subdivision 28‑J                                                                                    204

28‑160... What this Subdivision is about........................................................ 204

Operative provisions                                                                                             205

28‑165... Exception for particular cars taken on hire...................................... 205

28‑170... Exception for particular cars used in particular ways...................... 205

28‑175... Further miscellaneous exceptions.................................................... 207

28‑180... Car expenses related to award transport payments.......................... 208

28‑185... Application of Subdivision 28‑J to recipients and payers of certain withholding payments                208

Division 30—Gifts or contributions                                                                  210

Guide to Division 30                                                                                              210

30‑1....... What this Division is about............................................................. 210

30‑5....... How to find your way around this Division................................... 211

30‑10..... Index............................................................................................... 212

Subdivision 30‑A—Deductions for gifts or contributions                            212

30‑15..... Table of gifts or contributions that you can deduct.......................... 212

30‑17..... Requirements for certain recipients................................................. 227

Subdivision 30‑B—Tables of recipients for deductible gifts                       228

Health                                                                                                                        230

30‑20..... Health.............................................................................................. 230

Education                                                                                                                 232

30‑25..... Education........................................................................................ 232

30‑30..... Gifts that must be for certain purposes............................................ 236

30‑35..... Gifts to a public fund established to benefit a rural school hostel building must satisfy certain requirements              237

30‑37..... Scholarship etc. funds..................................................................... 237

Research                                                                                                                   238

30‑40..... Research.......................................................................................... 238

Welfare and rights                                                                                                 239

30‑45..... Welfare and rights........................................................................... 239

30‑45A.. Australian disaster relief funds—declarations by Minister.............. 243

30‑46..... Australian disaster relief funds—declarations under State and Territory law             244

Defence                                                                                                                      245

30‑50..... Defence........................................................................................... 245

Environment                                                                                                            247

30‑55..... The environment............................................................................. 247

30‑60..... Gifts to a National Parks body or conservation body must satisfy certain requirements                     248

Industry, trade and design                                                                                    249

30‑65..... Industry, trade and design............................................................... 249

The family                                                                                                                249

30‑70..... The family....................................................................................... 249

30‑75..... Marriage education organisations must be approved....................... 251

International affairs                                                                                              251

30‑80..... International affairs......................................................................... 251

30‑85..... Developing country relief funds...................................................... 253

30‑86..... Developed country disaster relief funds.......................................... 254

Sports and recreation                                                                                            254

30‑90..... Sports and recreation....................................................................... 254

Philanthropic trusts                                                                                               255

30‑95..... Philanthropic trusts......................................................................... 255

Cultural organisations                                                                                          256

30‑100... Cultural organisations..................................................................... 256

Fire and emergency services                                                                               256

30‑102... Fire and emergency services........................................................... 256

Other recipients                                                                                                      258

30‑105... Other recipients............................................................................... 258

Subdivision 30‑BA—Endorsement of deductible gift recipients                259

Guide to Subdivision 30‑BA                                                                                 259

30‑115... What this Subdivision is about........................................................ 259

Endorsement as a deductible gift recipient                                                      260

30‑120... Endorsement by Commissioner...................................................... 260

30‑125... Entitlement to endorsement............................................................. 260

30‑130... Maintaining a gift fund.................................................................... 263

Government entities treated like entities                                                          264

30‑180... How this Subdivision applies to government entities...................... 264

Subdivision 30‑C—Rules applying to particular gifts of property           264

Valuation requirements                                                                                        264

30‑200... Getting written valuations............................................................... 264

30‑205... Proceeds of the sale would have been assessable............................ 265

30‑210... Approved valuers............................................................................ 265

30‑212... Valuations by the Commissioner.................................................... 266

Working out the amount you can deduct for a gift of property                 266

30‑215... How much you can deduct.............................................................. 266

30‑220... Reducing the amount you can deduct.............................................. 268

Joint ownership of property                                                                                268

30‑225... Gift of property by joint owners..................................................... 268

Subdivision 30‑CA—Administrative requirements relating to ABNs       269

Guide to Subdivision 30‑CA                                                                                 269

30‑226... What this Subdivision is about........................................................ 269

Requirements                                                                                                           269

30‑227... Entities to which this Subdivision applies....................................... 269

30‑228... Content of receipt for gift or contribution........................................ 270

30‑229... Australian Business Register must show deductibility of gifts to deductible gift recipient                  271

Subdivision 30‑DA—Donations to political parties and independent candidates and members           272

Guide to Subdivision 30‑DA                                                                                 272

30‑241... What this Subdivision is about........................................................ 272

Operative provisions                                                                                             273

30‑242... Deduction for political contributions and gifts................................ 273

30‑243... Amount of the deduction................................................................. 274

30‑244... When an individual is an independent candidate............................. 275

30‑245... When an individual is an independent member............................... 275

Subdivision 30‑DB—Spreading certain gift and covenant deductions over up to 5 income years       276

Guide to Subdivision 30‑DB                                                                                 276

30‑246... What this Subdivision is about........................................................ 276

Operative provisions                                                                                             277

30‑247... Gifts and covenants for which elections can be made..................... 277

30‑248... Making an election.......................................................................... 277

30‑249... Effect of election............................................................................. 278

30‑249A Requirements—environmental property gifts.................................. 278

30‑249B Requirements—heritage property gifts............................................ 278

30‑249C Requirements—certain cultural property gifts................................. 279

30‑249D Requirements—conservation covenants.......................................... 279

Subdivision 30‑E—Register of environmental organisations                    280

Guide to Subdivision 30‑E                                                                                    280

30‑250... What this Subdivision is about........................................................ 280

Operative provisions                                                                                             280

30‑255... Establishing the register.................................................................. 280

30‑260... Meaning of environmental organisation......................................... 280

30‑265... Its principal purpose must be protecting the environment............... 281

30‑270... Other requirements it must satisfy................................................... 281

30‑275... Further requirement for a body corporate or a co‑operative society 282

30‑280... What must be on the register........................................................... 282

30‑285... Removal from the register............................................................... 283

Subdivision 30‑EA—Register of harm prevention charities                       283

Guide to Subdivision 30‑EA                                                                                 283

30‑286... What this Subdivision is about........................................................ 283

Operative provisions                                                                                             283

30‑287... Establishing the register.................................................................. 283

30‑288... Meaning of harm prevention charity.............................................. 284

30‑289... Principal activity—promoting the prevention or control of harm or abuse                 284

30‑289A Other requirements.......................................................................... 284

30‑289B What must be on the register........................................................... 285

30‑289C Removal from the register............................................................... 285

Subdivision 30‑F—Register of cultural organisations                                 286

Guide to Subdivision 30‑F                                                                                    286

30‑290... What this Subdivision is about........................................................ 286

Operative provisions                                                                                             286

30‑295... Establishing the register.................................................................. 286

30‑300... Meaning of cultural organisation................................................... 286

30‑305... What must be on the register........................................................... 287

30‑310... Removal from the register............................................................... 287

Subdivision 30‑G—Index to this Division                                                        288

30‑315... Index............................................................................................... 288

30‑320... Effect of this Subdivision................................................................ 297

Division 31—Conservation covenants                                                             298

Guide to Division 31                                                                                              298

31‑1....... What this Division is about............................................................. 298

Operative provisions                                                                                             298

31‑5....... Deduction for entering into conservation covenant......................... 298

31‑10..... Requirements for fund, authority or institution............................... 300

31‑15..... Valuations by the Commissioner.................................................... 300

Division 32—Entertainment expenses                                                             301

Guide to Division 32                                                                                              301

32‑1....... What this Division is about............................................................. 301

Subdivision 32‑A—No deduction for entertainment expenses                    301

32‑5....... No deduction for entertainment expenses........................................ 301

32‑10..... Meaning of entertainment............................................................... 302

32‑15..... No deduction for property used for providing entertainment.......... 302

Subdivision 32‑B—Exceptions                                                                            302

32‑20..... The main exception—fringe benefits............................................... 303

32‑25..... The tables set out the other exceptions............................................ 303

32‑30..... Employer expenses......................................................................... 303

32‑35..... Seminar expenses............................................................................ 306

32‑40..... Entertainment industry expenses..................................................... 306

32‑45..... Promotion and advertising expenses............................................... 307

32‑50..... Other expenses................................................................................ 307

Subdivision 32‑C—Definitions relevant to the exceptions                           308

32‑55..... In‑house dining facility (employer expenses table items 1.1 and 1.2) 308

32‑60..... Dining facility (employer expenses table item 1.3).......................... 308

32‑65..... Seminars (seminar expenses table item 2.1).................................... 309

Subdivision 32‑D—In‑house dining facilities (employer expenses table item 1.2)          310

32‑70..... $30 is assessable for each meal provided to non‑employee in an in‑house dining facility                   310

Subdivision 32‑E—Anti‑avoidance                                                                    311

32‑75..... Commissioner may treat you as having incurred entertainment expense                    311

Subdivision 32‑F—Special rules for companies and partnerships            311

32‑80..... Company directors.......................................................................... 312

32‑85..... Directors, employees and property of wholly‑owned group company 312

32‑90..... Partnerships.................................................................................... 313

Division 34—Non‑compulsory uniforms                                                        314

Guide to Division 34                                                                                              314

34‑1....... What this Division is about............................................................. 314

34‑3....... What you need to read..................................................................... 314

Subdivision 34‑A—Application of Division 34                                               315

34‑5....... This Division applies to employees and others............................... 315

34‑7....... This Division applies to employers and others................................ 316

Subdivision 34‑B—Deduction for your non‑compulsory uniform            316

34‑10..... What you can deduct....................................................................... 316

34‑15..... What is a non‑compulsory uniform?............................................... 317

34‑20..... What are occupation specific clothing and protective clothing?....... 317

Subdivision 34‑C—Registering the design of a non‑compulsory uniform 318

34‑25..... Application to register the design.................................................... 318

34‑30..... Industry Secretary’s decision on application................................... 319

34‑33..... Written notice of decision................................................................ 320

34‑35..... When uniform becomes registered.................................................. 321

Subdivision 34‑D—Appeals from Industry Secretary’s decision               321

34‑40..... Review of decisions by the Administrative Appeals Tribunal......... 321

Subdivision 34‑E—The Register of Approved Occupational Clothing    321

34‑45..... Keeping of the Register................................................................... 321

34‑50..... Changes to the Register................................................................... 322

Subdivision 34‑F—Approved occupational clothing guidelines                322

34‑55..... Approved occupational clothing guidelines..................................... 322

Subdivision 34‑G—The Industry Secretary                                                    323

34‑60..... Industry Secretary to give Commissioner information about entries 323

34‑65..... Delegation of powers by Industry Secretary................................... 323

Division 35—Deferral of losses from non‑commercial business activities             324

Guide to Division 35                                                                                              324

35‑1....... What this Division is about............................................................. 324

Operative provisions                                                                                             325

35‑5....... Object.............................................................................................. 325

35‑10..... Deferral of deductions from non‑commercial business activities.... 325

35‑15..... Modification if you have exempt income........................................ 328

35‑20..... Modification if you become bankrupt............................................. 329

35‑25..... Application of Division to certain partnerships............................... 329

35‑30..... Assessable income test.................................................................... 330

35‑35..... Profits test....................................................................................... 330

35‑40..... Real property test............................................................................ 331

35‑45..... Other assets test.............................................................................. 331

35‑50..... Apportionment................................................................................ 332

35‑55..... Commissioner’s discretion.............................................................. 333

Division 36—Tax losses of earlier income years                                       335

Guide to Division 36                                                                                              335

36‑1....... What this Division is about............................................................. 335

Subdivision 36‑A—Deductions for tax losses of earlier income years     335

36‑10..... How to calculate a tax loss for an income year................................ 335

36‑15..... How to deduct tax losses of entities other than corporate tax entities 336

36‑17..... How to deduct tax losses of corporate tax entities........................... 337

36‑20..... Net exempt income.......................................................................... 340

36‑25..... Special rules about tax losses.......................................................... 341

Subdivision 36‑B—Effect of you becoming bankrupt                                  345

Guide to Subdivision 36‑B                                                                                    345

36‑30..... What this Subdivision is about........................................................ 345

Operative provisions                                                                                             345

36‑35..... No deduction for tax loss incurred before bankruptcy.................... 345

36‑40..... Deduction for amounts paid for debts incurred before bankruptcy. 346

36‑45..... Limit on deductions for amounts paid............................................. 348

Subdivision 36‑C—Excess franking offsets                                                     348

Guide to Subdivision 36‑C                                                                                    348

36‑50..... What this Subdivision is about........................................................ 348

Operative provision                                                                                               349

36‑55..... Converting excess franking offsets into tax loss............................. 349


An Act about income tax and related matters

Chapter 1Introduction and core provisions

Part 1‑1Preliminary

Division 1Preliminary

Table of sections

1‑1            Short title

1‑2            Commencement

1‑3            Differences in style not to affect meaning

1‑7            Administration of this Act

1‑1  Short title [see Note 1]

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

1‑2  Commencement

                   This Act commences on 1 July 1997.

1‑3  Differences in style not to affect meaning

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

             (2)  If:

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

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

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

Note:          A public or private ruling about a provision of the Income Tax Assessment Act 1936 is taken also to be a ruling about the corresponding provision of this Act, so far as the 2 provisions express the same ideas: see section 357‑85 in Schedule 1 to the Taxation Administration Act 1953.

1‑7  Administration of this Act

                   The Commissioner has the general administration of this Act.

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


 

Part 1‑2A Guide to this Act

Division 2How to use this Act

Table of Subdivisions

2‑A       How to find your way around

2‑B        How the Act is arranged

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

2‑D       The numbering system

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

Subdivision 2‑AHow to find your way around

2‑1  The design

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

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

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

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

Subdivision 2‑BHow the Act is arranged

2‑5  The pyramid

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

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

 

 

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

Subdivision 2‑CHow to identify defined terms and find the definitions

Table of sections

2‑10          When defined terms are identified

2‑15          When terms are not identified

2‑20          Identifying the defined term in a definition

2‑10  When defined terms are identified

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

             (2)  Most defined terms in this Act are identified by an asterisk appearing at the start of the term: as in “*business”. The footnote that goes with the asterisk contains a signpost to the Dictionary definitions starting at section 995‑1.

2‑15  When terms are not identified

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

             (2)  Terms are not asterisked in the non‑operative material contained in this Act.

Note:          The non‑operative material is described in Subdivision 2‑E.

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

Key participants in the income tax system

 

Item

This term:

is defined in:

1.

Australian resident

section 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

Core concepts

 

Item

This term:

is defined in:

1.

amount

section 995‑1

2.

assessable income

Division 6

3.

assessment

section 995‑1

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

2‑20  Identifying the defined term in a definition

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

Subdivision 2‑DThe numbering system

Table of sections

2‑25          Purposes

2‑30          Gaps in the numbering

2‑25  Purposes

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

·         To indicate the relationship between units at different levels.

                   For example, the number of Part 2‑15 indicates that the Part is in Chapter 2. Similarly, the number of section 165‑70 indicates that the section is in Division 165.

·         To allow for future expansion of the Act. The main technique here is leaving gaps between numbers.

2‑30  Gaps in the numbering

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

Subdivision 2‑EStatus of Guides and other non‑operative material

Table of sections

2‑35          Non‑operative material

2‑40          Guides

2‑45          Other material

2‑35  Non‑operative material

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

                   This other material falls into 2 main categories.

2‑40  Guides

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

                   Guides form part of this Act but are kept separate from the operative provisions. In interpreting an operative provision, a Guide may only be considered for limited purposes. These are set out in section 950‑150.

2‑45  Other material

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


 

Division 3What this Act is about

Table of sections

3‑5            Annual income tax

3‑10          Your other obligations as a taxpayer

3‑15          Your obligations other than as a taxpayer

3‑5  Annual income tax

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

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

Note 2:       Income tax is imposed by the Income Tax Act 1986 and the other Acts referred to in the definition of income tax in section 995‑1.

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

             (3)  This Act answers these questions:

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

See Schedule 1 to the Taxation Administration Act 1953.

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

See Division 4, starting at section 4‑1.

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

                   See Division 5 of this Act and Part 4‑15 in Schedule 1 to the Taxation Administration Act 1953.

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

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

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

                   See section 3‑10.

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

                   See section 3‑15.

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

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

3‑10  Your other obligations as a taxpayer

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

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

·         the Income Tax Assessment Act 1936; and

·         Division 900 (which sets out substantiation rules) of this Act; and

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

·           the Income Tax Assessment Act 1936.

Tax file numbers

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

·         you may become liable for instalments of income tax that would not otherwise have been payable;

·         the amount of certain of your instalments of income tax may be increased.

3‑15  Your obligations other than as a taxpayer

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

·         in certain situations, to deduct from money you owe to another person, and to remit to the Commissioner, instalments of income tax payable by that person.

See Part 4‑5 (Collection of income tax instalments),
starting at section 750‑1.


 

Part 1‑3Core provisions

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

Table of sections

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

4‑1  Who must pay income tax

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

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

For a list of the entities that must pay income tax,
see Division 9, starting at section 9‑1.

4‑5  Meaning of you

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

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

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

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

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

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

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

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

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

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

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

Method statement

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

To do this, see section 4‑15.

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

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

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

See the Income Tax Rates Act 1986 and section 4‑25.

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

For the list of tax offsets, see section 13‑1.

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

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

Note 2:       In addition to the income tax worked out under this section, you may also have to pay additional income tax (known as temporary flood and cyclone reconstruction levy) for the 2011‑12 financial year. See section 4‑10 of the Income Tax (Transitional Provisions) Act 1997.

Income tax worked out on another basis

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

See section 9‑5.

4‑15  How to work out your taxable income

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

Method statement

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

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

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

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

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

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

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

 

Item

For this case ...

See:

1.

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

Subdivision 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

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

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

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

                     (a)  Subdivision 355‑G;

                     (b)  subsection 392‑35(3).

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

Note 2:       Subsection 392‑35(3) increases some primary producers’ tax liability by requiring them to pay extra income tax on their averaging components worked out under Subdivision 392‑C.


 

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

Table of Subdivisions

             Guide to Division 5

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

Guide to Division 5

5‑1  What this Division is about

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

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

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

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

                   Note:             For provisions about the collection and recovery of income tax and other tax‑related liabilities, see Part 4‑15 in Schedule 1 to the Taxation Administration Act 1953.

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

Table of sections

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

5‑5  When income tax is payable

Scope

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

Note:          The Commissioner may defer the time at which the income tax is due and payable: see section 255‑10 in Schedule 1 to the Taxation Administration Act 1953.

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

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

Note:          This is to ensure that general interest charge begins to accrue from the same date for all like entities. General interest charge on unpaid income tax is calculated from when the tax is due and payable, not from when the assessment is made: see section 5‑15.

Original assessments—self‑assessment entities

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

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

Original assessments—other entities

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

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

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

Amended assessments

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

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

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

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

5‑10  When shortfall interest charge is payable

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

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

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

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

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

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

                              (i)  the income tax or shortfall interest charge;

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

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

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


 

Division 6Assessable income and exempt income

Guide to Division 6

Table of sections

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

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 8Deductions

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

                     (c)  it is incurred in relation to gaining or producing your *exempt income or your *non‑assessable non‑exempt income; 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 1‑4Checklists of what is covered by concepts used in the core provisions

Division 9Entities 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

An FHSA provider in relation to an FHSA trust

section 345‑5

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

 

12

The trustee of a corporate unit trust

section 102K

 

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

7

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

section 102K

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 10Particular 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

profits shifted out of Australia ............................................

136AD, 136AE

see also transfers of income

 

bad debts

 

see recoupment

 

balancing adjustment

 

see capital allowances, industrial property, 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)

first home saver accounts

 

employer FHSA contributions etc.......................................

15‑80

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

grapevines

 

see recoupment

 

horticultural plants

 

see recoupment

 

improvements

 

see leases

 

imputation

 

see dividends

 

indemnity

 

see compensation and recoupment

 

industrial property

 

see intellectual property and R&D

 

infrastructure borrowings

 

see interest

 

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

 

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

159GZZZZG

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

27

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

15‑35

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

159GQ, 159GW(1)

see also co‑operative companies and leases

 

investments

 

non‑interest bearing Commonwealth securities, gains on disposal or redemption of ..............................................


26C

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

 

minerals resource rent tax

 

refund of excess rehabilitation tax offsets

15‑85

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, first home saver accounts, petroleum and recoupment

 

reinsurance

 

see insurance

 

residual value

 

see industrial property

 

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

small‑medium enterprise, profit on disposal of shares in .............................................................................................

128TG to 128TL

see also dividends

 

shipping

 

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


129

small‑medium enterprises (SMEs)

 

see shares

 

subsidies

 

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

15‑10

sugar industry exit grants

 

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

15‑65

superannuation

 

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

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

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

292‑467(2)(a)

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

 

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, 102K, 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 11Particular kinds of non‑assessable income

Table of Subdivisions

11‑A     Lists of classes of exempt income

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

Subdivision 11‑ALists 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, science or religion

 

charitable fund, public...........................................................

50‑5

charitable institution..............................................................

50‑5

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

50‑5

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

50‑5

religious institution..................................................................

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

funds established by will or trust

 

contributions to other funds.................................................

50‑20

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

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

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

50‑45

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

50‑45

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

50‑45

11‑15  Ordinary or statutory income which is exempt [see Note 17]

                   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

 

sugar industry exit grants....................................................

53‑10

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

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

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

HECS‑HELP benefit, recipient of......................................

51‑10

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

 

baby bonus............................................................................

52‑150

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

52‑150

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

52‑150

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

52‑150

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

52‑150

schoolkids bonus..................................................................

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

financial arrangements

 

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

230‑30

financial transactions

 

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

159GZZZZE

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

124ZM

pooled development fund company shares, income from sale of ....................................................................


124ZN

foreign aspects of income taxation

 

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

23AF

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 Force member, pay and allowances from performing duties in operational areas ......................


23AC

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

Territory resident company or trust, income from sources outside Australia .............................................


24F

Territory resident, income from sources in a prescribed Territory ..........................................................................


24G

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

life insurance companies

Subdivision 320‑B

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

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 advance under the Farm Household Support Act 1992...........................................................


53‑10

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

economic security strategy payment under the Veterans’ Entitlements Act 1986.................................


52‑65

education entry payment supplement under the Social Security Act 1991...........................................................


52‑10

ETR 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

exceptional circumstances relief, payment for ..............

53‑10 and 53‑15

farmers hardship bonus under the Social Security Act 1991..................................................................................


52‑10

farm help income support...................................................

53‑10 and 53‑15

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

matched savings scheme (income management) payment under the Social Security Act 1991...........


52‑10

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

private health insurance......................................................

52‑125

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

transitional farm family payment.....................................

53‑10

travelling expenses for Australian participants in British nuclear tests .......................................................


Subdivision 52‑CB

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

voluntary income management incentive payment under the Social Security Act 1991............................


52‑10

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