Contents
Chapter 1—Introduction and core provisions 1
Part 1‑1—Preliminary 1
Division 1—Preliminary 1
1‑1......................... Short title............................................................................ 1
1‑2......................... Commencement.................................................................. 1
1‑3......................... Differences in style not to affect meaning........................... 1
1‑4......................... Application......................................................................... 2
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............................................................................. 7
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................................................................................ 8
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 22
Operative provisions 23
6‑5......................... Income according to ordinary concepts (ordinary income) 23
6‑10....................... Other assessable income (statutory income)..................... 23
6‑15....................... What is not assessable income.......................................... 24
6‑20....................... Exempt income................................................................. 25
6‑23....................... Non‑assessable non‑exempt income................................. 26
6‑25....................... Relationships among various rules about ordinary income 26
Division 8—Deductions 27
8‑1......................... General deductions........................................................... 27
8‑5......................... Specific deductions........................................................... 28
8‑10....................... No double deductions....................................................... 28
Part 1‑4—Checklists of what is covered by concepts used in the core provisions 29
Division 9—Entities that must pay income tax 29
9‑1A...................... Effect of this Division....................................................... 29
9‑1......................... List of entities................................................................... 29
9‑5......................... Entities that work out their income tax by reference to something other than taxable income 30
Division 10—Particular kinds of assessable income 34
10‑1....................... Effect of this Division....................................................... 34
10‑5....................... List of provisions about assessable income...................... 34
Division 11—Particular kinds of non‑assessable income 49
Subdivision 11‑A—Lists of classes of exempt income 49
11‑1A.................... Effect of this Subdivision................................................. 49
11‑1....................... Overview.......................................................................... 49
11‑5....................... Entities that are exempt, no matter what kind of ordinary or statutory income they have 50
11‑15..................... Ordinary or statutory income which is exempt................. 51
Subdivision 11‑B—Particular kinds of non‑assessable non‑exempt income 61
11‑50..................... Effect of this Subdivision................................................. 61
11‑55..................... List of non‑assessable non‑exempt income provisions..... 61
Division 12—Particular kinds of deductions 67
12‑1....................... Effect of this Division....................................................... 67
12‑5....................... List of provisions about deductions.................................. 67
Division 13—Tax offsets 85
13‑1A.................... Effect of this Division....................................................... 85
13‑1....................... List of tax offsets.............................................................. 85
Chapter 2—Liability rules of general application 91
Part 2‑1—Assessable income 91
Division 15—Some items of assessable income 91
Guide to Division 15 91
15‑1....................... What this Division is about............................................... 91
Operative provisions 92
15‑2....................... Allowances and other things provided in respect of employment or services 92
15‑3....................... Return to work payments.................................................. 93
15‑5....................... Accrued leave transfer payments...................................... 93
15‑10..................... Bounties and subsidies..................................................... 93
15‑15..................... Profit‑making undertaking or plan.................................... 93
15‑20..................... Royalties........................................................................... 93
15‑22..................... Payments made to members of a copyright collecting society 94
15‑23..................... Payments of resale royalties by resale royalty collecting society 94
15‑25..................... Amount received for lease obligation to repair.................. 95
15‑30..................... Insurance or indemnity for loss of assessable income...... 95
15‑35..................... Interest on overpayments and early payments of tax......... 95
15‑40..................... Providing mining, quarrying or prospecting information or geothermal exploration information 96
15‑45..................... Amounts paid under forestry agreements......................... 97
15‑46..................... Amounts paid under forestry managed investment schemes 97
15‑50..................... Work in progress amounts................................................ 98
15‑55..................... Certain amounts paid under funeral policy........................ 98
15‑60..................... Certain amounts paid under scholarship plan.................... 98
15‑70..................... Reimbursed car expenses.................................................. 99
15‑75..................... Bonuses............................................................................ 99
Division 17—Effect of GST etc. on assessable income 100
Guide to Division 17 100
17‑1....................... What this Division is about............................................. 100
17‑5....................... GST and increasing adjustments..................................... 100
17‑10..................... Certain decreasing adjustments....................................... 101
17‑15..................... Elements in calculation of amounts................................. 101
17‑20..................... GST groups and GST joint ventures.............................. 101
17‑30..................... Special credits because of indirect tax transition............. 102
17‑35..................... Certain sections not to apply to certain assets or expenditure 102
Division 20—Amounts included to reverse the effect of past deductions 103
Guide to Division 20 103
20‑1....................... What this Division is about............................................. 103
20‑5....................... Other provisions that reverse the effect of deductions.... 103
Subdivision 20‑A—Insurance, indemnity or other recoupment for deductible expenses 106
Guide to Subdivision 20‑A 106
20‑10..................... What this Subdivision is about....................................... 106
20‑15..................... How to use this Subdivision........................................... 107
What is an assessable recoupment? 107
20‑20..................... Assessable recoupments................................................. 107
20‑25..................... What is recoupment?...................................................... 108
20‑30..................... Tables of deductions for which recoupments are assessable 109
How much is included in your assessable income? 114
20‑35..................... If the expense is deductible in a single income year........ 114
20‑40..................... If the expense is deductible over 2 or more income years 115
20‑45..................... Effect of balancing charge............................................... 117
20‑50..................... If the expense is only partially deductible....................... 119
20‑55..................... Meaning of previous recoupment law............................ 119
What if you can deduct a loss or outgoing incurred by another entity? 120
20‑60..................... If you are the only entity that can deduct an amount for the loss or outgoing 120
20‑65..................... If 2 or more entities can deduct amounts for the loss or outgoing 121
Subdivision 20‑B—Disposal of a car for which lease payments have been deducted 122
Guide to Subdivision 20‑B 122
20‑100................... What this Subdivision is about....................................... 122
20‑105................... Map of this Subdivision................................................. 124
The usual case 125
20‑110................... Disposal of a leased car for profit................................... 125
20‑115................... Working out the profit on the disposal............................ 126
20‑120................... Meaning of notional depreciation................................... 127
The associate case 128
20‑125................... Disposal of a leased car for profit................................... 128
Successive leases 131
20‑130................... Successive leases............................................................ 131
Previous disposals of the car 131
20‑135................... No amount included if earlier disposal for market value. 131
20‑140................... Reducing the amount to be included if there has been an earlier disposal 131
Miscellaneous rules 133
20‑145................... No amount included if you inherited the car................... 133
20‑150................... Reducing the amount to be included if another provision requires you to include an amount for the disposal........................................................................................ 133
20‑155................... Exception for particular cars taken on hire...................... 133
20‑157................... Exception for small business entities.............................. 134
Disposals of interests in a car: special rules apply 134
20‑160................... Disposal of an interest in a car........................................ 134
Part 2‑5—Rules about deductibility of particular kinds of amounts 135
Division 25—Some amounts you can deduct 135
Guide to Division 25 135
25‑1....................... What this Division is about............................................. 135
Operative provisions 136
25‑5....................... Tax‑related expenses....................................................... 136
25‑10..................... Repairs............................................................................ 139
25‑15..................... Amount paid for lease obligation to repair...................... 139
25‑20..................... Lease document expenses............................................... 139
25‑25..................... Borrowing expenses....................................................... 140
25‑30..................... Expenses of discharging a mortgage............................... 143
25‑35..................... Bad debts........................................................................ 144
25‑40..................... Loss from profit‑making undertaking or plan................. 146
25‑45..................... Loss by theft etc.............................................................. 147
25‑47..................... Misappropriation where a balancing adjustment event occurs 148
25‑50..................... Payments of pensions, gratuities or retiring allowances.. 149
25‑55..................... Payments to associations................................................ 149
25‑60..................... Parliament election expenses........................................... 150
25‑65..................... Local government election expenses............................... 150
25‑70..................... Deduction for election expenses does not extend to entertainment 152
25‑75..................... Rates and land taxes on premises used to produce mutual receipts 152
25‑85..................... Certain returns in respect of debt interests...................... 153
25‑90..................... Deduction relating to foreign non‑assessable non‑exempt income 154
25‑95..................... Deduction for work in progress amounts....................... 155
25‑105................... Deductions for United Medical Protection Limited support payments 156
25‑100................... Travel between workplaces............................................. 156
25‑110................... Capital expenditure to terminate lease etc........................ 157
Division 26—Some amounts you cannot deduct, or cannot deduct in full 159
Guide to Division 26 159
26‑1....................... What this Division is about............................................. 159
Operative provisions 160
26‑5....................... Penalties.......................................................................... 160
26‑10..................... Leave payments.............................................................. 160
26‑15..................... Franchise fees windfall tax............................................. 161
26‑17..................... Commonwealth places windfall tax................................ 161
26‑19..................... Rebatable benefits........................................................... 162
26‑20..................... Assistance to students..................................................... 162
26‑22..................... Political contributions and gifts....................................... 163
26‑25..................... Interest or royalty............................................................ 164
26‑25A.................. Seasonal Labour Mobility Program................................ 165
26‑26..................... Non‑share distributions and dividends........................... 166
26‑30..................... Relative’s travel expenses............................................... 166
26‑35..................... Reducing deductions for amounts paid to related entities 168
26‑40..................... Maintaining your family................................................. 170
26‑45..................... Recreational club expenses............................................. 170
26‑47..................... Non‑business boating activities...................................... 171
26‑50..................... Expenses for a leisure facility......................................... 174
26‑52..................... Bribes to foreign public officials..................................... 175
26‑53..................... Bribes to public officials................................................. 178
26‑54..................... Expenditure relating to illegal activities........................... 180
26‑55..................... Limit on deductions........................................................ 180
26‑60..................... Superannuation contributions surcharge......................... 181
26‑65..................... Termination payments surcharge.................................... 181
26‑68..................... Loss from disposal of eligible venture capital investments 181
26‑70..................... Loss from disposal of venture capital equity................... 182
26‑74..................... Excess concessional contributions charge cannot be deducted 183
26‑75..................... Excess non‑concessional contributions tax cannot be deducted 183
26‑80..................... Financing costs on loans to pay superannuation contribution 183
26‑85..................... Borrowing costs on loans to pay life insurance premiums 183
26‑90..................... Superannuation supervisory levy.................................... 184
26‑95..................... Superannuation guarantee charge.................................... 184
26‑97..................... National Disability Insurance Scheme expenditure......... 184
26‑98..................... Division 293 tax cannot be deducted.............................. 184
26‑100................... Expenditure attributable to water infrastructure improvement payments 184
Division 27—Effect of input tax credits etc. on deductions 186
Guide to Division 27 186
27‑1....................... What this Division is about............................................. 186
Subdivision 27‑A—General 186
27‑5....................... Input tax credits and decreasing adjustments.................. 186
27‑10..................... Certain increasing adjustments........................................ 187
27‑15..................... GST payments................................................................ 187
27‑20..................... Elements in calculation of amounts................................. 188
27‑25..................... GST groups and GST joint ventures.............................. 188
27‑35..................... Certain sections not to apply to certain assets or expenditure 189
Subdivision 27‑B—Effect of input tax credits etc. on capital allowances 189
27‑80..................... Cost or opening adjustable value of depreciating assets reduced for input tax credits 189
27‑85..................... Cost or opening adjustable value of depreciating assets reduced: decreasing adjustments 191
27‑87..................... Certain decreasing adjustments included in assessable income 192
27‑90..................... Cost or opening adjustable value of depreciating assets increased: increasing adjustments 193
27‑92..................... Certain increasing adjustments can be deducted.............. 194
27‑95..................... Balancing adjustment events........................................... 194
27‑100................... Pooling........................................................................... 195
27‑105................... Other Division 40 expenditure........................................ 200
27‑110................... Input tax credit etc. relating to 2 or more things.............. 201
Division 28—Car expenses 202
Guide to Division 28 202
28‑1....................... What this Division is about............................................. 202
28‑5....................... Map of this Division....................................................... 203
Subdivision 28‑A—Deductions for car expenses 203
28‑10..................... Application of Division 28............................................. 204
28‑12..................... Car expenses................................................................... 204
28‑13..................... Meaning of car expense.................................................. 204
Subdivision 28‑B—Choosing which method to use 205
Guide to Subdivision 28‑B 205
28‑14..................... What this Subdivision is about....................................... 205
28‑15..................... Choosing between the 2 methods................................... 205
Operative provision 207
28‑20..................... Rules governing choice of method.................................. 207
Subdivision 28‑C—The “cents per kilometre” method 207
28‑25..................... How to calculate your deduction..................................... 207
28‑30..................... Capital allowances.......................................................... 208
28‑35..................... Substantiation................................................................. 208
Subdivision 28‑F—The “log book” method 209
28‑90..................... How to calculate your deduction..................................... 209
28‑95..................... Eligibility........................................................................ 211
28‑100................... Substantiation................................................................. 211
Subdivision 28‑G—Keeping a log book 212
Guide to Subdivision 28‑G 212
28‑105................... What this Subdivision is about....................................... 212
28‑110................... Steps for keeping a log book.......................................... 212
Operative provisions 213
28‑115................... Income years for which you need to keep a log book..... 213
28‑120................... Choosing the 12 week period for a log book.................. 213
28‑125................... How to keep a log book.................................................. 214
28‑130................... Replacing one car with another....................................... 215
Subdivision 28‑H—Odometer records for a period 216
Guide to Subdivision 28‑H 216
28‑135................... What this Subdivision is about....................................... 216
Operative provision 216
28‑140................... How to keep odometer records for a car for a period...... 216
Subdivision 28‑I—Retaining the log book and odometer records 217
28‑150................... Retaining the log book for the retention period............... 217
28‑155................... Retaining odometer records............................................ 218
Subdivision 28‑J—Situations where you cannot use, or do not need to use, one of the 2 methods 219
Guide to Subdivision 28‑J 219
28‑160................... What this Subdivision is about....................................... 219
Operative provisions 219
28‑165................... Exception for particular cars taken on hire...................... 219
28‑170................... Exception for particular cars used in particular ways...... 220
28‑175................... Further miscellaneous exceptions................................... 222
28‑180................... Car expenses related to award transport payments.......... 222
28‑185................... Application of Subdivision 28‑J to recipients and payers of certain withholding payments 223
Division 30—Gifts or contributions 225
Guide to Division 30 225
30‑1....................... What this Division is about............................................. 225
30‑5....................... How to find your way around this Division................... 226
30‑10..................... Index............................................................................... 227
Subdivision 30‑A—Deductions for gifts or contributions 227
30‑15..................... Table of gifts or contributions that you can deduct......... 227
30‑17..................... Requirements for certain recipients................................. 243
Subdivision 30‑B—Tables of recipients for deductible gifts 244
Health 246
30‑20..................... Health............................................................................. 246
Education 249
30‑25..................... Education........................................................................ 249
30‑30..................... Gifts that must be for certain purposes........................... 256
30‑35..................... Rural schools hostel buildings........................................ 257
30‑37..................... Scholarship etc. funds..................................................... 258
Research 258
30‑40..................... Research......................................................................... 258
Welfare and rights 260
30‑45..................... Welfare and rights........................................................... 260
30‑45A.................. Australian disaster relief funds—declarations by Minister 266
30‑46..................... Australian disaster relief funds—declarations under State and Territory law 267
Defence 268
30‑50..................... Defence........................................................................... 268
Environment 270
30‑55..................... The environment............................................................. 270
30‑60..................... Gifts to a National Parks body or conservation body must satisfy certain requirements 272
Industry, trade and design 272
30‑65..................... Industry, trade and design............................................... 272
The family 273
30‑70..................... The family....................................................................... 273
30‑75..................... Marriage education organisations must be approved...... 275
International affairs 275
30‑80..................... International affairs......................................................... 275
30‑85..................... Developing country relief funds..................................... 279
30‑86..................... Developed country disaster relief funds.......................... 279
Sports and recreation 280
30‑90..................... Sports and recreation...................................................... 280
Philanthropic trusts 281
30‑95..................... Philanthropic trusts......................................................... 281
Cultural organisations 281
30‑100................... Cultural organisations..................................................... 281
Fire and emergency services 284
30‑102................... Fire and emergency services........................................... 284
Other recipients 286
30‑105................... Other recipients............................................................... 286
Subdivision 30‑BA—Endorsement of deductible gift recipients 288
Guide to Subdivision 30‑BA 288
30‑115................... What this Subdivision is about....................................... 288
Endorsement as a deductible gift recipient 288
30‑120................... Endorsement by Commissioner...................................... 288
30‑125................... Entitlement to endorsement............................................. 289
30‑130................... Maintaining a gift fund................................................... 292
Government entities treated like entities 293
30‑180................... How this Subdivision applies to government entities..... 293
Subdivision 30‑C—Rules applying to particular gifts of property 293
Valuation requirements 294
30‑200................... Getting written valuations............................................... 294
30‑205................... Proceeds of the sale would have been assessable........... 294
30‑210................... Approved valuers........................................................... 295
30‑212................... Valuations by the Commissioner.................................... 295
Working out the amount you can deduct for a gift of property 296
30‑215................... How much you can deduct............................................. 296
30‑220................... Reducing the amount you can deduct.............................. 297
Joint ownership of property 298
30‑225................... Gift of property by joint owners..................................... 298
Subdivision 30‑CA—Administrative requirements relating to ABNs 299
Guide to Subdivision 30‑CA 299
30‑226................... What this Subdivision is about....................................... 299
Requirements 299
30‑227................... Entities to which this Subdivision applies....................... 299
30‑228................... Content of receipt for gift or contribution....................... 300
30‑229................... Australian Business Register must show deductibility of gifts to deductible gift recipient 301
Subdivision 30‑DA—Donations to political parties and independent candidates and members 303
Guide to Subdivision 30‑DA 303
30‑241................... What this Subdivision is about....................................... 303
Operative provisions 303
30‑242................... Deduction for political contributions and gifts................ 303
30‑243................... Amount of the deduction................................................ 305
30‑244................... When an individual is an independent candidate............. 305
30‑245................... When an individual is an independent member............... 306
Subdivision 30‑DB—Spreading certain gift and covenant deductions over up to 5 income years 307
Guide to Subdivision 30‑DB 307
30‑246................... What this Subdivision is about....................................... 307
Operative provisions 307
30‑247................... Gifts and covenants for which elections can be made..... 307
30‑248................... Making an election.......................................................... 308
30‑249................... Effect of election............................................................. 309
30‑249A................ Requirements—environmental property gifts................. 309
30‑249B................ Requirements—heritage property gifts........................... 309
30‑249C................ Requirements—certain cultural property gifts................. 310
30‑249D................ Requirements—conservation covenants......................... 310
Subdivision 30‑E—Register of environmental organisations 311
Guide to Subdivision 30‑E 311
30‑250................... What this Subdivision is about....................................... 311
Operative provisions 311
30‑255................... Establishing the register.................................................. 311
30‑260................... Meaning of environmental organisation........................ 311
30‑265................... Its principal purpose must be protecting the environment 312
30‑270................... Other requirements it must satisfy.................................. 312
30‑275................... Further requirement for a body corporate or a co‑operative society 313
30‑280................... What must be on the register........................................... 313
30‑285................... Removal from the register............................................... 314
Subdivision 30‑EA—Register of harm prevention charities 314
Guide to Subdivision 30‑EA 314
30‑286................... What this Subdivision is about....................................... 314
Operative provisions 315
30‑287................... Establishing the register.................................................. 315
30‑288................... Meaning of harm prevention charity.............................. 315
30‑289................... Principal activity—promoting the prevention or control of harm or abuse 315
30‑289A................ Other requirements......................................................... 316
30‑289B................ What must be on the register........................................... 316
30‑289C................ Removal from the register............................................... 317
Subdivision 30‑F—Register of cultural organisations 317
Guide to Subdivision 30‑F 317
30‑290................... What this Subdivision is about....................................... 317
Operative provisions 318
30‑295................... Establishing the register.................................................. 318
30‑300................... Meaning of cultural organisation................................... 318
30‑305................... What must be on the register........................................... 319
30‑310................... Removal from the register............................................... 319
Subdivision 30‑G—Index to this Division 319
30‑315................... Index............................................................................... 320
30‑320................... Effect of this Subdivision............................................... 331
Division 31—Conservation covenants 332
Guide to Division 31 332
31‑1....................... What this Division is about............................................. 332
Operative provisions 332
31‑5....................... Deduction for entering into conservation covenant......... 332
31‑10..................... Requirements for fund, authority or institution............... 334
31‑15..................... Valuations by the Commissioner.................................... 334
Division 32—Entertainment expenses 335
Guide to Division 32 335
32‑1....................... What this Division is about............................................. 335
Subdivision 32‑A—No deduction for entertainment expenses 335
32‑5....................... No deduction for entertainment expenses....................... 335
32‑10..................... Meaning of entertainment............................................... 336
32‑15..................... No deduction for property used for providing entertainment 336
Subdivision 32‑B—Exceptions 337
32‑20..................... The main exception—fringe benefits.............................. 337
32‑25..................... The tables set out the other exceptions............................ 337
32‑30..................... Employer expenses......................................................... 338
32‑35..................... Seminar expenses........................................................... 340
32‑40..................... Entertainment industry expenses..................................... 340
32‑45..................... Promotion and advertising expenses............................... 341
32‑50..................... Other expenses............................................................... 342
Subdivision 32‑C—Definitions relevant to the exceptions 342
32‑55..................... In‑house dining facility (employer expenses table items 1.1 and 1.2) 342
32‑60..................... Dining facility (employer expenses table item 1.3)......... 343
32‑65..................... Seminars (seminar expenses table item 2.1).................... 343
Subdivision 32‑D—In‑house dining facilities (employer expenses table item 1.2) 344
32‑70..................... $30 is assessable for each meal provided to non‑employee in an in‑house dining facility 344
Subdivision 32‑E—Anti‑avoidance 345
32‑75..................... Commissioner may treat you as having incurred entertainment expense 345
Subdivision 32‑F—Special rules for companies and partnerships 346
32‑80..................... Company directors.......................................................... 346
32‑85..................... Directors, employees and property of wholly‑owned group company 347
32‑90..................... Partnerships.................................................................... 348
Division 34—Non‑compulsory uniforms 349
Guide to Division 34 349
34‑1....................... What this Division is about............................................. 349
34‑3....................... What you need to read.................................................... 349
Subdivision 34‑A—Application of Division 34 350
34‑5....................... This Division applies to employees and others............... 350
34‑7....................... This Division applies to employers and others............... 351
Subdivision 34‑B—Deduction for your non‑compulsory uniform 351
34‑10..................... What you can deduct....................................................... 352
34‑15..................... What is a non‑compulsory uniform?............................... 352
34‑20..................... What are occupation specific clothing and protective clothing? 353
Subdivision 34‑C—Registering the design of a non‑compulsory uniform 354
34‑25..................... Application to register the design.................................... 354
34‑30..................... Industry Secretary’s decision on application................... 355
34‑33..................... Written notice of decision............................................... 355
34‑35..................... When uniform becomes registered.................................. 356
Subdivision 34‑D—Appeals from Industry Secretary’s decision 357
34‑40..................... Review of decisions by the Administrative Appeals Tribunal 357
Subdivision 34‑E—The Register of Approved Occupational Clothing 357
34‑45..................... Keeping of the Register................................................... 357
34‑50..................... Changes to the Register.................................................. 358
Subdivision 34‑F—Approved occupational clothing guidelines 358
34‑55..................... Approved occupational clothing guidelines.................... 358
Subdivision 34‑G—The Industry Secretary 359
34‑60..................... Industry Secretary to give Commissioner information about entries 359
34‑65..................... Delegation of powers by Industry Secretary................... 359
Division 35—Deferral of losses from non‑commercial business activities 360
Guide to Division 35 360
35‑1....................... What this Division is about............................................. 360
Operative provisions 361
35‑5....................... Object............................................................................. 361
35‑10..................... Deferral of deductions from non‑commercial business activities 361
35‑15..................... Modification if you have exempt income........................ 365
35‑20..................... Modification if you become bankrupt............................. 365
35‑25..................... Application of Division to certain partnerships............... 366
35‑30..................... Assessable income test................................................... 366
35‑35..................... Profits test....................................................................... 367
35‑40..................... Real property test............................................................ 367
35‑45..................... Other assets test.............................................................. 368
35‑50..................... Apportionment................................................................ 369
35‑55..................... Commissioner’s discretion............................................. 369
Division 36—Tax losses of earlier income years 372
Guide to Division 36 372
36‑1....................... What this Division is about............................................. 372
Subdivision 36‑A—Deductions for tax losses of earlier income years 372
36‑10..................... How to calculate a tax loss for an income year............... 372
36‑15..................... How to deduct tax losses of entities other than corporate tax entities 373
36‑17..................... How to deduct tax losses of corporate tax entities.......... 374
36‑20..................... Net exempt income......................................................... 378
36‑25..................... Special rules about tax losses.......................................... 378
Subdivision 36‑B—Effect of you becoming bankrupt 383
Guide to Subdivision 36‑B 383
36‑30..................... What this Subdivision is about....................................... 383
Operative provisions 383
36‑35..................... No deduction for tax loss incurred before bankruptcy.... 383
36‑40..................... Deduction for amounts paid for debts incurred before bankruptcy 384
36‑45..................... Limit on deductions for amounts paid............................. 386
Subdivision 36‑C—Excess franking offsets 387
Guide to Subdivision 36‑C 387
36‑50..................... What this Subdivision is about....................................... 387
Operative provision 387
36‑55..................... Converting excess franking offsets into tax loss............. 387
An Act about income tax and related matters
Chapter 1—Introduction and core provisions
Part 1‑1—Preliminary
Division 1—Preliminary
Table of sections
1‑1 Short title
1‑2 Commencement
1‑3 Differences in style not to affect meaning
1–4 Application
1‑7 Administration of this Act
1‑1 Short title
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.
1‑4 Application
This Act extends to every external Territory referred to in the definition of Australia.
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 1‑2—A Guide to this Act
Division 2—How 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‑A—How 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‑B—How 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‑C—How 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 |
| 3A. | Australia | Subdivision 960‑T |
| 4. | deduct, deduction | Division 8 |
| 5. | income tax | section 995‑1 |
| 6. | income year | section 995‑1 |
| 7. | taxable income | section 4‑15 |
| 8. | this Act | section 995‑1 |
2‑20 Identifying the defined term in a definition
Within a definition, the defined term is identified by bold italics.
Subdivision 2‑D—The 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‑E—Status 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 3—What 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 1‑3—Core provisions
Division 4—How 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.
Note 3: Section 4‑11 of the Income Tax (Transitional Provisions) Act 1997 (which is about the temporary budget repair levy) may increase the amount of income tax worked out under this section.
Income tax worked out on another basis
(4) For some entities, some or all of their income tax for the *financial year is worked out by reference to something other than taxable income for the income year.
See section 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 utilise in that or a later income year: see Division 36.
(2) There are cases where taxable income is worked out in a special way:
| Item | For this case ... | See: |
| 1. | A company does not maintain continuity of ownership and control during the income year and does not satisfy the same business test | Subdivision 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 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 5—How 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‑A—How 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.
6‑1 Diagram showing relationships among concepts in this Division
(1) Assessable income consists of ordinary income and statutory income.
(2) Some ordinary income, and some statutory income, is exempt income.
(3) Exempt income is not assessable income.
(4) Some ordinary income, and some statutory income, is neither assessable income nor exempt income.
For the effect of the GST in working out assessable income, see Division 17.
(5) An amount of ordinary income or statutory income can have only one status (that is, assessable income, exempt income or non‑assessable non‑exempt income) in the hands of a particular entity.
Operative provisions
6‑5 Income according to ordinary concepts (ordinary income)
(1) Your assessable income includes income according to ordinary concepts, which is called ordinary income.
Note: Some of the provisions about assessable income listed in section 10‑5 may affect the treatment of ordinary income.
(2) If you are an Australian resident, your assessable income includes the *ordinary income you *derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
(3) If you are a foreign resident, your assessable income includes:
(a) the *ordinary income you *derived directly or indirectly from all *Australian sources during the income year; and
(b) other *ordinary income that a provision includes in your assessable income for the income year on some basis other than having an *Australian source.
(4) In working out whether you have derived an amount of *ordinary income, and (if so) when you derived it, you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct.
6‑10 Other assessable income (statutory income)
(1) Your assessable income also includes some amounts that are not *ordinary income.
Note: These are included by provisions about assessable income.
For a summary list of these provisions, see section 10‑5.
(2) Amounts that are not *ordinary income, but are included in your assessable income by provisions about assessable income, are called statutory income.
Note 1: Although an amount is statutory income because it has been included in assessable income under a provision of this Act, it may be made exempt income or non‑assessable non‑exempt income under another provision: see sections 6‑20 and 6‑23.
Note 2: Many provisions in the summary list in section 10‑5 contain rules about ordinary income. These rules do not change its character as ordinary income.
(3) If an amount would be *statutory income apart from the fact that you have not received it, it becomes statutory income as soon as it is applied or dealt with in any way on your behalf or as you direct.
(4) If you are an Australian resident, your assessable income includes your *statutory income from all sources, whether in or out of Australia.
(5) If you are a foreign resident, your assessable income includes:
(a) your *statutory income from all *Australian sources; and
(b) other *statutory income that a provision includes in your assessable income on some basis other than having an *Australian source.
6‑15 What is not assessable income
(1) If an amount is not *ordinary income, and is not *statutory income, it is not assessable income (so you do not have to pay income tax on it).
(2) If an amount is *exempt income, it is not assessable income.
Note: If an amount is exempt income, there are other consequences besides it being exempt from income tax. For example:
· the amount may be taken into account in working out the amount of a tax loss (see section 36‑10);
· you cannot deduct as a general deduction a loss or outgoing incurred in deriving the amount (see Division 8);
· capital gains and losses on assets used solely to produce exempt income are disregarded (see section 118‑12).
(3) If an amount is *non‑assessable non‑exempt income, it is not assessable income.
Note 1: You cannot deduct as a general deduction a loss or outgoing incurred in deriving an amount of non‑assessable non‑exempt income (see Division 8).
Note 2: Capital gains and losses on assets used to produce some types of non‑assessable non‑exempt income are disregarded (see section 118‑12).
6‑20 Exempt income
(1) An amount of *ordinary income or *statutory income is exempt income if it is made exempt from income tax by a provision of this Act or another *Commonwealth law.
For summary lists of provisions about exempt income,
see sections 11‑5 and 11‑15.
(2) *Ordinary income is also exempt income to the extent that this Act excludes it (expressly or by implication) from being assessable income.
(3) By contrast, an amount of *statutory income is exempt income only if it is made exempt from income tax by a provision of this Act outside this Division or another *Commonwealth law.
(4) If an amount of *ordinary income or *statutory income is *non‑assessable non‑exempt income, it is not exempt income.
Note: An amount of non‑assessable non‑exempt income is not taken into account in working out the amount of a tax loss.
6‑23 Non‑assessable non‑exempt income
An amount of *ordinary income or *statutory income is non‑assessable non‑exempt income if a provision of this Act or of another *Commonwealth law states that it is not assessable income and is not *exempt income.
Note: Capital gains and losses on assets used to produce some types of non‑assessable non‑exempt income are disregarded (see section 118‑12).
For a summary list of provisions about non‑assessable non‑exempt income, see Subdivision 11‑B.
6‑25 Relationships among various rules about ordinary income
(1) Sometimes more than one rule includes an amount in your assessable income:
· the same amount may be *ordinary income and may also be included in your assessable income by one or more provisions about assessable income; or
· the same amount may be included in your assessable income by more than one provision about assessable income.
For a summary list of the provisions about assessable income,
see section 10‑5.
However, the amount is included only once in your assessable income for an income year, and is then not included in your assessable income for any other income year.
(2) Unless the contrary intention appears, the provisions of this Act (outside this Part) prevail over the rules about *ordinary income.
Note: This Act contains some specific provisions about how far the rules about ordinary income prevail over the other provisions of this Act.
Division 8—Deductions
Table of sections
8‑1 General deductions
8‑5 Specific deductions
8‑10 No double deductions
8‑1 General deductions
(1) You can deduct from your assessable income any loss or outgoing to the extent that:
(a) it is incurred in gaining or producing your assessable income; or
(b) it is necessarily incurred in carrying on a *business for the purpose of gaining or producing your assessable income.
Note: Division 35 prevents losses from non‑commercial business activities that may contribute to a tax loss being offset against other assessable income.
(2) However, you cannot deduct a loss or outgoing under this section to the extent that:
(a) it is a loss or outgoing of capital, or of a capital nature; or
(b) it is a loss or outgoing of a private or domestic nature; or
(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 1‑4—Checklists of what is covered by concepts used in the core provisions
Division 9—Entities that must pay income tax
Table of sections
9‑1A Effect of this Division
9‑1 List of entities
9‑5 Entities that work out their income tax by reference to something other than taxable income
9‑1A Effect of this Division
This Division is a *Guide.
9‑1 List of entities
Income tax is payable by the entities listed in the table.
Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.
| Item | Income tax is payable by this kind of entity: | because of this provision: |
| 1 | An individual | section 4‑1 |
| 2 | A company, that is: a body corporate; or an unincorporated body (except a partnership) | section 4‑1 |
| 3 | A company that was a member of a wholly‑owned group if a former subsidiary in the group is treated as having disposed of leased plant and does not pay all of the income tax resulting from that treatment | section 45‑25 |
| 4 | A superannuation provider in relation to a complying superannuation fund | sections 295‑5 and 295‑605 |
| 5 | A superannuation provider in relation to a non‑complying superannuation fund | sections 295‑5 and 295‑605 |
| 6 | A superannuation provider in relation to a complying approved deposit fund | section 295‑5 |
| 7 | A superannuation provider in relation to a non‑complying approved deposit fund | section 295‑5 |
| 8 | The trustee of a pooled superannuation trust | section 295‑5 |
| 9 | A corporate limited partnership | section 94J |
| 10 | A mutual insurance association (as described in section 121) | section 121 |
| 11 | A trustee (except one covered by another item in this table), but only in respect of some kinds of income of the trust | sections 98, 99, 99A and 102 |
| 13 | The trustee of a public trading trust | section 102S |
9‑5 Entities that work out their income tax by reference to something other than taxable income
(1) For some entities, some or all of their income tax for the *financial year is worked out as described in the table.
Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.
| Item | This kind of entity is liable to pay income tax worked out by reference to: | See: |
| 1 | A company that was a member of a wholly‑owned group is jointly and severally liable to pay an amount of income tax if a former subsidiary in the group is treated as having disposed of leased plant and does not pay all of the income tax resulting from that treatment. | section 45‑25 |
| 2 | A superannuation provider in relation to a complying superannuation fund is to be assessed and is liable to pay income tax on no‑TFN contributions income as well as on taxable income. | sections 295‑5 and 295‑605 |
| 3 | A superannuation provider in relation to a non‑complying superannuation fund is to be assessed and is liable to pay income tax on no‑TFN contributions income as well as on taxable income. | sections 295‑5 and 295‑605 |
| 4 | An RSA provider is to be assessed and is liable to pay income tax on no‑TFN contributions income as well as on taxable income. | sections 295‑5, 295‑605 and 320‑155 |
| 4A | An entity is liable to pay extra income tax on government recoupments relating to R&D activities for which entitlements to tax offsets arise under Division 355. | Subdivision 355‑G |
| 5 | An Australian resident individual with: eligible foreign remuneration under section 23AF; or foreign earnings under section 23AG; (from working in a foreign country) is liable to pay income tax worked out by reference to his or her assessable income less some of his or her deductions. | section 23AF or 23AG |
| 6 | A trustee covered by item 11 in the table in section 9‑1 is liable to pay income tax worked out by reference to the net income of the trust for the income year. | sections 98, 99 and 99A |
| 8 | The trustee of a public trading trust is liable to pay income tax worked out by reference to the net income of the trust for the income year. | section 102S |
| 9 | An entity that is liable to pay income tax (worked out by reference to taxable income or otherwise) is also liable to pay income tax worked out by reference to diverted income or diverted trust income for the income year. | section 121H |
| 10 | An Australian insurer that re‑insures overseas can elect to pay, as agent for the re‑insurer, income tax worked out by reference to the amount of the re‑insurance premiums. | section 148 |
(2) For entities covered by an item in the table in subsection (1), the income year is the same as the *financial year, except in these cases:
(a) for a company, or an entity covered by item 2 or 3 in the table, the income year is the previous financial year;
(b) if an entity has an accounting period that is not the same as the financial year, each such accounting period or, for a company, each previous accounting period is an income year.
Note 1: The Commissioner can allow an entity to adopt an accounting period ending on a day other than 30 June. See section 18 of the Income Tax Assessment Act 1936.
Note 2: An accounting period ends, and a new accounting period starts, when a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP. See section 18A of the Income Tax Assessment Act 1936.
Division 10—Particular kinds of assessable income
10‑1 Effect of this Division
This Division is a *Guide.
10‑5 List of provisions about assessable income
The provisions set out in the table:
· include in your assessable income amounts that are not *ordinary income; and
· vary or replace the rules that would otherwise apply for certain kinds of *ordinary income.
Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.
| Accrued leave transfer payments | |
| ................................................................................................... | 15‑5 |
| alienated personal services income | |
| ................................................................................................... | 86‑15 |
| allowances | |
| see employment | |
| annual leave | |
| see leave payments | |
| annuities | |
| ................................................................................................... | 27H |
| approved deposit fund (ADFs) | |
| see superannuation | |
| attributable income | |
| see controlled foreign corporations | |
| avoidance of tax | |
| general ..................................................................................... | 177F |
| diversion of income ................................................................ | 121H |
| see also transfers of income | |
| bad debts | |
| see recoupment | |
| balancing adjustment | |
| see capital allowances, investments, R&D, scientific research and tax exempt entities | |
| banking | |
| offshore banking activities, income from ......................... | 121EG(1) |
| offshore banking unit, deemed interest on payments to by owner ........................................................................... |
121EK
|
| barter transactions | |
| ................................................................................................... | 21, 21A, 15‑2 |
| beneficiaries | |
| see trusts | |
| benefits | |
| business, non‑cash ................................................................. | 21A |
| consideration, non‑cash ....................................................... | 21 |
| meals you provide in an in‑house dining facility ............. | 32‑70 |
| see also employment and superannuation | |
| bonus shares | |
| see shares | |
| bounties | |
| ................................................................................................... | 15‑10 |
| capital allowances | |
| excess of termination value over adjustable value | |
| generally................................................................ | 40‑285 |
| for some cars........................................................ | 40‑370 |
| depreciating asset in low‑value pool................................... | 40‑445(2) |
| expenditure in software development pool....................... | 40‑460 |
| recovery of petroleum resource rent tax............................ | 40‑750(3) |
| capital gains | |
| ................................................................................................... | 102‑5 |
| see also insurance | |
| car expenses | |
| cents per kilometres reimbursement of .............................. | 15‑70 |
| carried interests | |
| carried interests, not ordinary income................................. | 118‑21 |
| CFCs | |
| see controlled foreign corporations | |
| charters | |
| see shipping | |
| child | |
| non‑trust income of, unearned ............................................ | 102AE |
| trust income of, unearned .................................................... | 102AG |
| collecting societies | |
| payments of royalties by copyright collecting societies.. | 15‑22 |
| payments of royalties by resale royalty collecting society................................................................................ |
15‑23
|
| company | |
| see controlled foreign corporations, co‑operative company, directors, dividends, liquidation, shareholders and shares | |
| compensation | |
| live stock or trees, recoveries for loss of ............................ | 385‑130 |
| profits or income, insurance or indemnity for loss of...... | 15‑30 |
| received by lessor for lessee’s non‑compliance with lease obligation to repair................................................. |
15‑25
|
| trading stock, insurance or indemnity for loss of ............. | 70‑115 |
| see also insurance, live stock, recoupment and scientific research | |
| consideration | |
| see benefits | |
| consolidated groups and MEC groups | |
| Assets in relation to Division 230 financial arrangement |
701‑61(3)
|
| controlled foreign corporations (CFCs) | |
| attributable income of .......................................................... | 456 to 459A |
| see also dividends and taxes | |
| co‑operative company | |
| receipts of ................................................................................ | 119 |
| credit union | |
| see co‑operative company | |
| currency gains | |
| see foreign exchange | |
| currency losses | |
| see recoupment | |
| death | |
| see trusts | |
| debt/equity swap | |
| see shares and units | |
| defence forces | |
| allowances and benefits for service as a member of ...... | 15‑2 |
| depreciation | |
| see capital allowances | |
| directors | |
| excessive remuneration or retirement payment from company ........................................................................... |
109
|
| distributions | |
| see dividends | |
| dividends | |
| benefit of LIC capital gain through a trust or partnership ........................................................................ | 115‑280 |
| general ..................................................................................... | 44(1) |
| distribution from a controlled foreign corporation .......... | 47A(1) |
| franked dividends, credits on............................................... | 207‑20(1), 207‑35(1), 207‑35(3) |
| see also liquidation | |
| elections | |
| local government, reimbursement of expenses of............ | 25‑65 |
| see also recoupment | |
| electricity connections | |
| see recoupment | |
| employees | |
| see shares | |
| employment | |
| allowances and benefits in relation to employment or rendering services ............................................................ |
15‑2
|
| employment termination payment .................................... | 82‑10
82‑65
82‑70 |
| other payments for employment termination .................. | 83‑295 |
| return to work payments ...................................................... | 15‑3 |
| see accrued leave transfer payments, leave payments, superannuation and sections 82‑10A and 82‑10C of the Income Tax (Transitional Provisions) Act 1997 | |
| environment | |
| see recoupment | |
| farm management deposits | |
| repayments of ........................................................................ | 393‑10 |
| films | |
| Australian, proceeds of investment in ............................... | 26AG |
| financial arrangements | |
| gains from................................................................................ | 230‑15(1) |
| foreign exchange | |
| gains ......................................................................................... | 775‑15 |
| see also recoupment | |
| forestry agreement | |
| amount where section 82KZMG of the 1936 Act applies................................................................................ | 15‑45 |
| CGT event in relation to forestry interest in agreement... | 82KZMGB |
| forestry managed investment schemes | |
| forestry manager’s receipts under scheme......................... | 15‑46 |
| CGT event in relation to forestry interest in scheme for initial participant.............................................................. |
394‑25(2)
|
| CGT event in relation to forestry interest in scheme for subsequent participant.................................................... |
394‑30(2)
|
| franked dividends | |
| see dividends | |
| funeral policy | |
| benefit under........................................................................... | 15‑55 |
| general insurance companies and companies that self insure | |
| gross premiums....................................................................... | 321‑45 |
| reduction in value of outstanding claims liability............. | 321‑10 and 321‑80 |
| reduction in value of unearned premium reserve............. | 321‑50 |
| geothermal energy | |
| providing geothermal exploration information ................ | 15‑40 |
| grapevines | |
| see recoupment | |
| horticultural plants | |
| see recoupment | |
| improvements | |
| see leases | |
| imputation | |
| see dividends | |
| indemnity | |
| see compensation and recoupment | |
| 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 | |
| prizes from investment‑related lotteries ............................ | 26AJ |
| qualifying securities, payments to partial residents made under ...................................................................... |
159GW(2)
|
| qualifying securities, amount assessable to issuer of ...... | 159GT(1B) |
| qualifying securities, balancing adjustment on the transfer of ......................................................................... |
159GS
|
| securities, variation in terms of ........................................... | 159GV(2) |
| securities lending arrangements .......................................... | 26BC |
| traditional securities, gains on the disposal or redemption of .................................................................. |
26BB
|
| see also films and interest | |
| landcare operations | |
| see recoupment | |
| leased plant ......................................................................................... | Division 45 |
| leases | |
| amounts received by lessor from lessee for non‑compliance with lease obligation to repair.......... |
15‑25
|
| interest component of payments under non‑leveraged finance leases ................................................................... |
159GK
|
| partnership leasing property under non‑leveraged finance lease, new partner or contribution of capital since 14 May 1985 ......................................................... |
159GO
|
| premiums relating to assignment of a lease granted before 20 September 1985............................................. |
26AB
|
| profit on disposal of previously leased motor vehicles ... | Subdivision 20‑B |
| leases of luxury cars | |
| accrual amounts..................................................................... | 242‑35 |
| adjustment amounts (lessee) | 242‑70 |
| adjustment amounts (lessor) | 242‑65 |
| leave payments | |
| accrued leave transfer payment ......................................... | 15‑5 |
| unused annual leave payment ............................................ | 83‑10 |
| unused long service leave payment ................................... | 83‑80 |
| see employment | |
| life insurance companies | Subdivision 320‑B |
| limited recourse debt | |
| excessive deduction amount (debtor) | 243‑40 |
| excessive deduction amount (partner) | 243‑65 |
| liquidation | |
| distribution to a shareholder in winding up a company.. | 47(1) |
| live stock | |
| death or destruction of ......................................................... | Subdivision 385‑E |
| departing Australia and ........................................................ | 385‑160, 385‑163 |
| insolvency, and ...................................................................... | 385‑160, 385‑163 |
| profits on death or disposal of ............................................ | Subdivision 385‑E, 385‑160 |
| see also compensation and trading stock | |
| long service leave | |
| see leave payments | |
| losses | |
| see compensation | |
| lotteries | |
| see investments | |
| managed investment trusts | |
| gains etc. from carried interests............................................ | 275‑200(2) |
| meals | |
| see benefits | |
| Mining | |
| providing mining, quarrying or prospecting information |
15‑40
|
| minors | |
| see child | |
| motor vehicles | |
| see car expenses and leases | |
| mutual insurance | |
| see insurance | |
| non‑cash benefits | |
| see benefits and employment | |
| notional sales and loans | |
| adjustment amounts (lessee) | 240‑110(2) |
| adjustment amounts (lessor) | 240‑105(2) |
| notional interest...................................................................... | 240‑35(1) |
| profit on actual sale............................................................... | 240‑35(3) |
| profit on notional sale............................................................ | 240‑35(2) |
| offshore banking units | |
| see banking | |
| partnerships | |
| net income of, partner’s interest in ..................................... | 92(1) |
| uncontrolled partnership income, effect of ...................... | 94 |
| see also leases | |
| petroleum | |
| resource rent tax, recovery of .............................................. | 20‑30(1) |
| see also capital allowances | |
| premiums | |
| see insurance, leases and superannuation | |
| primary production | |
| see recoupment | |
| prizes | |
| see investments | |
| profits | |
| cross‑border transfer pricing................................................. | 815‑30 |
| profit‑making undertaking or plan...................................... | 15‑15 |
| sale of property acquired before 20 September 1985 for profit‑making by sale...................................................... |
25A
|
| see also avoidance of tax | |
| Project pools | |
| An amount received for the abandonment, sale or other disposal of a project........................................................ |
40‑830, 40‑832
|
| property | |
| see profits and trusts | |
| quarrying | |
| see mining and recoupment | |
| R&D | |
| balancing adjustment ........................................................... | 40‑292, 40‑293, 355‑315 and 355‑525 |
| disposal of R&D results ........................................................ | 355‑410 |
| feedstock adjustment ........................................................... | 355‑465 |
| rates | |
| see recoupment | |
| recoupment | |
| insurance or indemnity for deductible losses or
outgoings............................................................................ |
Subdivision 20‑A
|
| other recoupment for certain deductible losses or outgoings............................................................................ |
Subdivision 20‑A
|
| see also car expenses, compensation, elections and petroleum | |
| registered emissions units | |
| disposal of................................................................................ | 420‑25 |
| disposal for a non‑commercial purpose............................. | 420‑40 |
| difference between opening and closing value of............ | 420‑45 |
| reimbursements | |
| see car expenses, dividends, elections, petroleum and recoupment | |
| reinsurance | |
| see insurance | |
| retirement payments | |
| see directors, leave payments and shareholders | |
| rights to income | |
| see transfers of income | |
| roads | |
| see timber | |
| royalties | |
| ................................................................................................... | 15‑20 |
| schemes | |
| see avoidance of tax | |
| scholarship plan | |
| benefit under........................................................................... | 15‑60 |
| scientific research | |
| consideration for disposal or destruction of buildings acquired for scientific research ..................................... |
73A(4)
|
| securities | |
| see investments | |
| services | |
| see co‑operative companies, employment, loans and trusts | |
| shareholders | |
| excessive remuneration or retirement payment from company ........................................................................... |
109
|
| loans, payments and credits from company .................... | Division 7A of Part III |
| see also dividends | |
| shares | |
| acquired in a debt/equity swap, profit on the disposal cancellation or redemption of ....................................... |
63E(4)
|
| bonus shares, cost of ............................................................. | 6BA |
| buy‑backs ............................................................................... | 159GZZZJ to 159GZZZT |
| employee share schemes ...................................................... | Subdivisions
83A‑B and 83A‑C |
| holding company shares held by a subsidiary, cancellation of ................................................................. |
159GZZZC to 159GZZZI
|
| 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 |
| superannuation | |
| associated earnings on non‑concessional contributions . | Subdivision 292‑B |
| benefits generally ................................................................... | Divisions 301 to 306 |
| benefits in breach of legislative requirements .................. | Division 304 |
| benefits received from older superannuation funds ....... | 26AF, 26AFA |
| complying fund becomes non‑complying, effect of ....... | 295‑320 (table item 2) |
| contributions to an approved deposit fund ...................... | Subdivisions 295‑C and 295‑D |
| contributions to an RSA ....................................................... | Subdivision 295‑C |
| contributions to a superannuation fund ............................ | Subdivisions
295‑C and 295‑D |
| death benefits ......................................................................... | 302‑75
302‑85
302‑90
302‑145 |
| excess concessional contributions ...................................... | 291‑15(a) |
| foreign superannuation funds and schemes, benefits from ................................................................................... |
305‑70
|
| member benefits .................................................................... | 301‑20
301‑25
301‑35
301‑40
Subdivision 301‑C |
| foreign fund becoming Australian, effect of .................... | 295‑320 (table item 3) |
| no‑TFN contributions income ............................................. | 295‑605 |
| release authorities, payments from .................................... | 304‑15(4)
304‑20 |
| returned contributions ........................................................... | 290‑100 |
| trustee’s liability to pay tax ................................................. | 295‑5(2) and (3) |
| see insurance | |
| tax avoidance | |
| see avoidance of tax and transfers of income | |
| tax exempt entities | |
| treatment of income and gains on becoming taxable .... | Schedule 2D |
| taxes | |
| see dividends, foreign investment funds, interest and recoupment | |
| termination of employment | |
| see directors, eligible termination payments, leave payments and shareholders | |
| theft | |
| see recoupment | |
| trading stock | |
| change in interests in ............................................................. | 70‑100 |
| death of trader and ............................................................... | 70‑105 |
| difference between opening and closing value of ........... | 70‑35 |
| disposal not at arm’s length.................................................. | 70‑20 |
| disposal of outside ordinary course of business ............... | 70‑90, 70‑95 |
| see also compensation and tax exempt entities | |
| transfer pricing | |
| arm’s length principle for cross‑border conditions between entities ............................................................... |
Subdivision 815‑B
|
| arm’s length principle for permanent establishments...... | Subdivision 815‑C |
| transfers of income | |
| consideration for transfer of right to income .................... | 102CA |
| payments for transfer or disposal of property ................. | 262 |
| transferee, effect on of transfer of right to income ......... | 102C |
| transferor, effect on of transfer of right to income ......... | 102B |
| travel expenses | |
| see car expenses | |
| trusts | |
| beneficiary under legal disability or with a vested and indefeasible interest in trust income ............................. |
100
|
| deceased estates, income of ................................................ | 101A |
| discretionary trusts ................................................................ | 101 |
| net income of a trust estate, your present entitlement to | 97, 101 |
| non‑resident beneficiaries, liability to tax of .................... | 98A |
| non‑resident trust estates to which you have transferred property or services, income of ..................................... |
102AAZD
|
| property of applied for benefit of beneficiaries ............... | 99B |
| trust estate includes income from another trust estate | 94(5) |
| trustees’ liability to tax ......................................................... | 98, 99, 99A, 102, 102S |
| see also avoidance of tax and superannuation | |
| unearned income | |
| see child | |
| units | |
| acquired in a debt/equity swap, profit on the disposal, cancellation or redemption of ....................................... |
63E(4)
|
| water conservation | |
| see recoupment | |
| winding‑up | |
| see insurance and liquidation | |
| wool clips | |
| double wool clips, treatment of ........................................... | 385‑135, 385‑155 |
| work in progress | |
| receipt of a work in progress amount ................................. | 15‑50 |
Division 11—Particular kinds of non‑assessable income
Table of Subdivisions
11‑A Lists of classes of exempt income
11‑B Particular kinds of non‑assessable non‑exempt income
Subdivision 11‑A—Lists of classes of exempt income
Table of sections
11‑1A Effect of this Subdivision
11‑1 Overview
11‑5 Entities that are exempt, no matter what kind of ordinary or statutory income they have
11‑15 Ordinary or statutory income which is exempt
11‑1A Effect of this Subdivision
This Subdivision is a *Guide.
11‑1 Overview
Ordinary income or statutory income which is exempt from income tax can be divided into 2 main classes:
(a) ordinary or statutory income of entities that are exempt, no matter what kind of ordinary or statutory income they have (see table in section 11‑5);
(b) ordinary or statutory income of a kind that is exempt (see table in section 11‑15).
11‑5 Entities that are exempt, no matter what kind of ordinary or statutory income they have
Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.
Note: Special rules apply to entities that cease to be exempt. See Schedule 2D to the Income Tax Assessment Act 1936.
| charity, education or science | |
| educational institution, public.............................................. | 50‑5 |
| Global Carbon Capture and Storage Institute Ltd........... | 50‑5 |
| registered charity..................................................................... | 50‑5 |
| scientific institution................................................................ | 50‑5 |
| scientific research fund.......................................................... | 50‑5 |
| scientific society etc............................................................... | 50‑5 |
| community service | |
| community service society etc............................................. | 50‑10 |
| employees and employers | |
| employee association............................................................ | 50‑15 |
| employer association............................................................. | 50‑15 |
| trade union............................................................................... | 50‑15 |
| government | |
| constitutionally protected fund............................................ | 50‑25 |
| local governing body.............................................................. | 50‑25 |
| municipal corporation........................................................... | 50‑25 |
| public authority....................................................................... | 50‑25 |
| state/territory bodies.............................................................. | 24AK to 24AZ |
| health | |
| health benefits organisation................................................. | 50‑30 |
| hospital..................................................................................... | 50‑30 |
| medical benefits organisation.............................................. | 50‑30 |
| HIH rescue package | |
| ..... HIH Claims Support Trust ............................................ | 322‑10 |
| mining | |
| British Phosphate Commissioners Banaba Contingency Fund.................................................................................... |
50‑35
|
| primary or secondary resources, and tourism | |
| agricultural society etc. ......................................................... | 50‑40 |
| aviation society etc. .............................................................. | 50‑40 |
| Global Infrastructure Hub Ltd ............................................ | 50‑40 |
| horticultural society etc. ....................................................... | 50‑40 |
| industrial society etc. ............................................................. | 50‑40 |
| manufacturing society etc. .................................................. | 50‑40 |
| pastoral society etc. ............................................................... | 50‑40 |
| tourism society etc. ................................................................ | 50‑40 |
| viticultural society etc. .......................................................... | 50‑40 |
| sports, culture or recreation | |
| animal racing society etc. ..................................................... | 50‑45 |
| art society etc. ........................................................................ | 50‑45 |
| game society etc. ................................................................... | 50‑45 |
| literature society etc. ............................................................. | 50‑45 |
| music society etc. ................................................................... | 50‑45 |
| sport society etc. .................................................................... | 50‑45 |
11‑15 Ordinary or statutory income which is exempt
Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.
| agricultural industry exit grants | |
| tobacco industry exit grants............................................... | 53‑10 |
| copyright collecting societies | 51‑43 |
| credit unions | |
| interest.................................................................................... | 23G |
| defence | |
| Defence Abuse Reparation Scheme, payments under.. | 51‑5 |
| 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 | |
| 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 |
| stillborn baby payment....................................................... | 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 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 |