(a) a notice given under section 197 - 80; or
(b) a document that is signed by the Commissioner and appears to be a copy of such a notice;
(c) the notice was duly given; and
(d) the amount of * untainting tax specified in the notice became due and payable by the company to which it was given on the day specified in the notice.
(2) Subsection (1) does not apply in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the review.
This Subdivision allows you to choose a roll - over where post - CGT shares or trust interests you own are replaced with other shares or trust interests, for example, where there is a company takeover.
You can only choose the roll - over if you would have made a capital gain from the exchange.
Method statement
Step 1. Add up the * market value just after the * arrangement was completed (the completion time ) of all of the replacement interests issued by the replacement entity under the arrangement in exchange for the following interests (the qualifying interests ):
(a) original interests in the original entity;
(b) any interests issued by the original entity to an acquiring entity under the arrangement in respect of other original interests in the original entity cancelled under the arrangement.
Step 2. Add to the result of step 1 the * market value at the completion time of all of the replacement interests issued by the replacement entity under any earlier arrangement for which this section applied in exchange for qualifying interests in the original entity.
Step 3. Add up the * market value at the completion time of all of the:
(a) if the replacement entity is a company-- * shares * on issue by the replacement entity; and
(b) if the replacement entity is a company--options, rights and similar interests issued by the replacement entity that give the holder an entitlement to acquire a share in the replacement entity at or after the completion time; and
(c) if the replacement entity is a trust--units or other interests in the replacement entity; and
(d) if the replacement entity is a trust--options, rights or similar interests issued by the replacement entity that gives the holder an entitlement to acquire a unit or other interest in the replacement entity at or after the completion time.
Method statement
Step 1. Add up:
(a) the * market value, at the completion time, of the original entity's * pre - CGT assets (except * trading stock); and
(b) the * cost bases, at the completion time, of the original entity's * post - CGT assets (except trading stock); and
(c) for the original entity's * CGT assets (except trading stock) that had no cost base--the maximum amount of consideration the original entity would need to receive if it were to dispose, at the completion time, of those assets without an amount being assessable income of, or deductible to, the original entity; and
(d) the amount worked out under steps 2 and 3.
Step 2. For the original entity's * trading stock, add up:
(a) the * value of the trading stock at the start of the income year containing the completion time; and
(b) for * live stock acquired by natural increase during that income year but before the completion time--the * cost of that live stock; and
(c) the amount of any outgoing incurred in connection with acquiring an item of trading stock during that income year but before the completion time (except live stock acquired by natural increase); and
(d) the amount of any outgoings forming part of the cost of the trading stock incurred by the entity during its current holding of the trading stock but before the completion time.
Step 3. For any asset of the original entity not covered by steps 1 and 2, work out the amount that would be the asset's * cost base at the completion time if it were a * CGT asset.
Step 4. Subtract from the result of step 1 the original entity's liabilities (if any) at the completion time in respect of those assets.
Step 5. If there is one class of * membership interests in the original entity, divide the result of step 4 by the total number of those membership interests at the completion time.
If there are 2 or more classes of membership interests in the original entity, allocate a portion of the result of step 4 to each class in proportion to the * market value of all the membership interests in that class and divide that result by the total number of membership interests in that class at the completion time.
(a) a trust disposes of all of its assets to a company; and
(b) units and interests in the trust are replaced by shares in the company.
You can choose a roll - over if you exchange your interest as a member of an MDO for an interest as a member of another MDO.
You can only choose the roll - over if you would have made a capital gain from the exchange.
Entities can obtain CGT relief for a demerger.
Owners of ownership interests in the head entity of a demerger group can obtain a roll - over to defer CGT consequences for the CGT events that happen to their interests under the demerger (see Subdivision 125 - B).
Capital gains and capital losses made by members of the demerger group from certain CGT events that happen under the demerger are disregarded (see Subdivision 125 - C).
You can choose to obtain a roll - over if a CGT event happens to your interests in a company or trust because of a demerger of an entity from the group of which the company or trust is the head entity.
There are cost base adjustments if you receive new interests under a demerger and no CGT event happens to your original interests.
Certain capital gains and capital losses that members of a demerger group make under a demerger are disregarded.
Certain capital losses made under a demerger are reduced where the demerger results in a value shift.
(a) both companies are members of the same wholly - owned group; and
(b) at least one of the companies is a foreign resident.
Method statement
Step 1. Work out (disregarding this section) the sum of the * capital gains and the sum of the * capital losses the holding company would make on the cancellation of its shares in the subsidiary.
Step 2. Work out (disregarding this Subdivision):
(a) the sum of the * capital gains the subsidiary would make on the * disposal of its CGT roll - over assets to the holding company; and
(b) the sum of the * capital losses it would make except for Subdivision 170 - D on the disposal of its * CGT assets to the holding company;
in the course of the liquidation assuming the * capital proceeds were the assets' * market values at the time of the disposal.
Step 3. If, after subtracting the sum of the * capital losses from the sum of the * capital gains, there is an overall capital gain from step 1 and an overall capital gain from step 2, then continue. Otherwise there is no adjustment.
Step 4. Express the number of post - CGT shares as a fraction of the total number of shares the holding company owned in the subsidiary.
Step 5. Multiply the overall * capital gain from Step 2 by the fraction from Step 4.
Step 6. Reduce the overall * capital gain from Step 1 by the amount from Step 5. The result is the * capital gain the holding company makes from the cancellation of its shares in the subsidiary.
This Division sets out what happens when you die and a CGT asset you owned just before dying devolves to your legal personal representative or passes to a beneficiary in your estate.
It also contains rules about what happens when a joint tenant dies.
This Division sets out the rules for these kinds of investments:
• bonus shares and units; and
• rights; and
• convertible interests; and
• shares acquired under an employee share scheme; and
• exploration investments.
Most are about modifying the cost base and reduced cost base of a CGT asset.
To help small business, if the basic conditions for relief are satisfied, capital gains can be reduced by the various concessions in this Division. Those basic conditions are in Subdivision 152 - A. Some of the concessions have additional, specific conditions that must also be satisfied.
The 4 available small business concessions are:
(a) the 15 - year exemption (in Subdivision 152 - B);
(b) the 50% reduction (in Subdivision 152 - C);
(c) the retirement concession (in Subdivision 152 - D);
(d) the roll - over (in Subdivision 152 - E).
This Subdivision sets out some basic conditions for relief. If the basic conditions are satisfied, an entity may be able to reduce its capital gains using the small business concessions in this Division.
The 2 major basic conditions are:
(a) the entity must be a CGT small business entity or a partner in a partnership that is a CGT small business entity, or the net value of assets that the entity and related entities own must not exceed $6,000,000; and
(b) the CGT asset must be an active asset.
Additional basic conditions must be satisfied in the following circumstances:
(a) the CGT asset is a share in a company or an interest in a trust;
(b) the CGT event involves certain rights or interests in relation to the income or capital of a partnership.
Some of the concessions have additional, specific conditions that also must be satisfied. For example, the 15 - year exemption applies only if you have held the CGT asset for at least 15 years and you retire.
There are limitations on the availability of the small business concessions for CGT events J2, J5 and J6.
You do not need to satisfy the basic conditions for the retirement exemption in relation to CGT events J5 and J6.
A CGT small business entity can disregard a capital gain arising from a CGT asset that it has owned for at least 15 years if certain conditions are met. Capital losses are not affected.
Also, any amount of income a company or trust derives from a CGT event covered by this Subdivision is neither assessable income nor exempt income. If the company or trust makes payments to its CGT concession stakeholders that are attributable to the exempt amount, the payments will not be taken into account in determining the taxable income of the company, trust or recipient.
The main conditions are that:
• the basic conditions for relief in Subdivision 152 - A are satisfied;
• the entity continuously owned the asset for the 15 - year period leading up to the CGT event;
• if the entity is an individual, the individual retires or is permanently incapacitated;
• if the entity is a company or trust, the entity had a significant individual for a total of at least 15 years during which the entity owned the asset and the individual who was the significant individual just before the CGT event retires or is permanently incapacitated.
The Subdivision also allows time periods to continue to run if there has been a roll - over because of marriage or relationship breakdown or compulsory acquisition.
This Subdivision tells you how to apply the small business CGT concessions mentioned in step 4 of the method statement in subsection 102 - 5(1).
A capital gain is reduced by 50% if the basic conditions in Subdivision 152 - A are satisfied.
If the capital gain has already been reduced by the discount percentage, the 50% reduction under this Subdivision applies to that reduced gain.
The capital gain may be further reduced by the small business retirement exemption or a small business rollover, or both.
Alternatively, you may choose not to apply the 50% reduction and instead apply the small business retirement exemption or small business rollover.
None of these rules apply if the 15 - year exemption already applies to the capital gain, since such a gain is disregarded anyway.
You can choose to disregard a capital gain from a CGT event happening to a CGT asset of your small business if the capital proceeds from the event are used in connection with your retirement.
There is a lifetime limit of $500,000 for all choices that can be made in respect of an individual under this Subdivision.
You may choose not to apply the concession in section 152 - 205 (small business 50% reduction) before this one. For an additional concession, see also Subdivision 152 - E (small business roll - over).
You do not need to satisfy the basic conditions for this exemption in relation to CGT events J5 and J6.
A small business roll - over allows you to defer the making of a capital gain from a CGT event happening in relation to one or more small business assets if the basic conditions in Subdivision 152 - A are satisfied for the gain.
You may choose not to apply the concession in section 152 - 205 (small business 50% reduction) before this one. For an additional exemption, see also Subdivision 152 - D (small business retirement exemption).
A corporate tax entity can choose to "carry back" a tax loss it had for 2019 - 20, 2020 - 21, 2021 - 22 or 2022 - 23 against the income tax liability it had for 2018 - 19, 2019 - 20, 2020 - 21 or 2021 - 22.
The entity gets a refundable tax offset for 2020 - 21, 2021 - 22 or 2022 - 23 that is a proxy for the tax the entity would save if it deducted the loss in the income year to which the loss is "carried back".
The refundable tax offset:
(a) is capped at the entity's franking account balance; and
(b) is only available for losses for years for which the entity's turnover was less than $5 billion.
Method statement
Step 1. Start with the amount of the * tax loss the entity * carries back to the income year.
Step 2. Reduce the step 1 amount by the entity's * net exempt income for the income year.
Note: Do not reduce the step 1 amount by the entity's net exempt income to the extent the net exempt income has already been utilised: see section 960 - 20.
Step 3. Multiply the step 2 amount by the * corporate tax rate for the * loss year.
A company that issues non - share equity interests will have a notional account called a non - share capital account . This account records contributions to the company in relation to those non - share equity interests and returns made by the company of those contributions.
A non - share distribution that represents a return of contributions is not taxed as a dividend (subject to the anti - avoidance provisions dealing with dividend substitution). In certain circumstances a company may use its share capital account as the source for such distributions.
A change in the ownership or control of a company can affect:
• whether it can deduct its tax losses of earlier income years; and
• how it calculates its taxable income and tax loss for the income year of the change; and
• whether it can deduct debts owed to it that are written off as bad.
A company cannot deduct a tax loss unless:
(a) it has the same owners and the same control throughout the period from the start of the loss year to the end of the income year; or
(b) it satisfies the business continuity test by carrying on the same business (including entering into no new kinds of transactions and conducting no new kinds of business), or by carrying on a similar business (on or after 1 July 2015).
Note: The exceptions mentioned in this section apply differently in relation to designated infrastructure project entities: see section 415 - 35.
Method statement
Step 1. Divide the income year into periods: each change in ownership or control is a dividing point between periods.
Step 2. Treat each period as if it were an income year and work out the notional loss or notional taxable income for that period.
Step 3. Work out the taxable income for the year of the change by adding up:
ï· each notional taxable income; and
ï· any full year amounts (amounts of assessable income not taken into account at Step 2);
and then subtracting any full year deductions (deductions not taken into account at Step 2).
Note: Do not take into account any notional loss.
In working out its net capital gain for an income year, a company cannot apply a net capital loss for an earlier income year unless:
(a) it has the same owners and the same control from the start of the loss year to the end of the income year; or
(b) it satisfies the business continuity test by carrying on the same business (including entering into no new kinds of transactions and conducting no new kinds of business), or by carrying on a similar business (on or after 1 July 2015).
Working out the company's net capital gain
Step 1. Add up the * notional net capital gains (if any) worked out under section 165 - 108.
Note: A notional net capital loss for a period is not taken into account, but counts towards the company's net capital loss for the income year.
Step 2. Add to the Step 1 amount so much of each amount included in the company's assessable income for the income year under:
(a) section 97 (Beneficiary of a trust estate who is not under a legal disability) of the Income Tax Assessment Act 1936 ; or
(b) section 98A (Non - resident beneficiaries assessable in respect of certain income) of that Act;
as is attributable to a * capital gain that the trust made outside the income year.
Note: This is relevant only if the trust has an income year that starts and ends at a different time from when the company's income year starts and ends.
Step 3. If the Step 2 amount is more than zero, reduce it by applying any unapplied * net capital losses from previous income years. (If this reduces it to zero, the company has no net capital gain for the income year.)
Note: To apply net capital losses: see section 102 - 15.
Step 4. If the Step 3 amount is more than zero, it is the company's net capital gain .
Working out the company's net capital loss
Step 1. Add up the * notional net capital losses (if any) worked out under section 165 - 108.
Step 2. If the Step 1 amount is more than zero, it is the company's net capital loss .
Method statement
Step 1. Work out under section 165 - 115F in respect of each * CGT asset that the company owned at the relevant time any notional capital gain or notional revenue gain or any notional capital loss or notional revenue loss that the company has at that time in respect of the asset.
The sum of the notional capital gains is the company's unrealised capital gain at the relevant time.
The sum of the notional capital losses is the company's unrealised capital loss at the relevant time.
The sum of the notional revenue gains is the company's unrealised revenue gain at the relevant time.
The sum of the notional revenue losses is the company's unrealised revenue loss at the relevant time.
Step 2. Add up the unrealised capital gain and the unrealised revenue gain at the relevant time. The total is the unrealised gross gain at that time.
Step 3. Add up the unrealised capital loss and the unrealised revenue loss at the relevant time. The total is the unrealised gross loss at that time.
Step 4. If the unrealised gross loss at the relevant time exceeds the unrealised gross gain at that time, the excess is the company's preliminary unrealised net loss at that time.
Step 5. Add up the company's preliminary unrealised net loss and any * capital loss, deduction or share of a deduction disregarded under section 170 - 270 in relation to an asset referred to in paragraph 165 - 115A(1A)(b). The total is the company's unrealised net loss at the relevant time.
Method statement
Step 1. Work out the total * market value of all * CGT assets that the company owned at the relevant time (including those it * acquired for less than $10,000), using a valuation method that would generally be regarded as appropriate in the circumstances.
Step 2. Work out the total of the * cost bases of those * CGT assets at the relevant time.
Note: If a CGT asset that the company owned at the relevant time was also trading stock or a revenue asset at that time, see subsection (3) of this section.
Step 3. If the step 2 amount exceeds the step 1 amount, the excess is the company's preliminary unrealised net loss at the relevant time.
Step 4. Add up the company's preliminary unrealised net loss and any * capital loss, deduction or share of a deduction disregarded under section 170 - 270 in relation to an asset referred to in paragraph 165 - 115A(1A)(b). The total is the company's unrealised net loss at the relevant time.
Method statement
Step 1. Work out under section 165 - 115V or 165 - 115W in respect of each * CGT asset that the company owned at the relevant alteration time any notional capital loss, notional revenue loss or trading stock decrease that the company has at that time in respect of the asset.
To the extent that a notional capital loss or a notional revenue loss in respect of an asset at the relevant alteration time reflected an amount that was counted at an earlier alteration time, do not count it again at the relevant alteration time.
Step 2. Add up the notional capital losses and the notional revenue losses that the company had at the relevant alteration time. The total is the company's nominal unrealised loss at that time.
Step 3. Add up the trading stock decreases that the company had at the relevant alteration time. The total is the company's overall trading stock decrease at that time.
Step 4. The sum of the company's nominal unrealised loss and overall trading stock decrease at the relevant time is the company's adjusted unrealised loss at that time.
Method statement
Step 1. Work out the total * market value of all * CGT assets that the company owned at the relevant alteration time (including those it * acquired for less than $10,000), using a valuation method that would generally be regarded as appropriate in the circumstances.
Step 2. Work out the total of the * cost bases of those * CGT assets at the relevant time.
Note: If a CGT asset that the company owned at the relevant time was also trading stock or a revenue asset at that time, see subsection (1C) of this section.
Step 3. If the step 2 amount exceeds the step 1 amount, the excess is the company's adjusted unrealised loss at the relevant time.
Method statement
Step 1. Work out whether the item's * market value immediately before the alteration time was less than:
(a) if there was no earlier alteration time in the income year in which that alteration time occurred--the item's value under subsection 70 - 40(1) at the start of that income year or its cost if subsection 70 - 40(2) applies; or
(b) if there was an earlier alteration time or there were earlier alteration times in that income year--the item's market value immediately before that earlier alteration time or the later or latest of those earlier alteration times, as the case may be, or its cost if the company did not own it at that time.
Step 2. If the item's * market value immediately before the alteration time was less than:
(a) the item's value or cost referred to in paragraph (a) in step 1; or
(b) its market value or cost (as applicable) in paragraph (b) in step 1;
as the case requires, the difference is the trading stock decrease for the item.
To the extent (if any) to which the difference reflects an amount counted at an earlier alteration time, do not count that amount again.
Method statement
Step 1. Add up the amount or value of each thing covered by subsection (5). (If the total exceeds the realised loss, reduce the total by the excess.)
Step 2. Reduce the step 1 amount by so much of the realised loss as it is reasonable to conclude is attributable to none of these:
(a) a notional capital loss, or a notional revenue loss, that the company has at that last alteration time in respect of a * CGT asset;
(b) a trading stock decrease in relation to that time for a CGT asset that was * trading stock of the company at that time.
(a) if the debt was incurred in an earlier income year--the company had the same owners and the same control throughout the period from the day on which the debt was incurred to the end of the income year in which it writes off the debt as bad; or
(b) if the debt was incurred in the current year--the company had the same owners and the same control during the income year both before and after the debt was incurred;
or, if there has been a change of ownership or control, the company satisfies the business continuity test by carrying on the same business (including entering into no new kinds of transactions and conducting no new kinds of business), or by carrying on a similar business (on or after 1 July 2015).
Note: The exceptions mentioned in this section apply differently in relation to designated infrastructure project entities: see section 415 - 40.
This Division modifies the way the rules in Division 165 apply to a widely held or eligible Division 166 company by making it easier for the company to apply the rules.
If the company has maintained the same owners as between certain points of time, it does not need to prove it has maintained the same owners throughout the periods in between.
In certain cases, special concessional tracing rules deem entities to hold voting, dividend or capital stakes in the company so that the company does not have to trace through to the ultimate beneficial owners of the stakes.
This Subdivision has the tests to work out whether a widely held or eligible Division 166 company has maintained the same owners as between different times. (Subdivision 166 - E has rules which make it easier for the company to satisfy these tests.)
This Subdivision also defines when there has been a corporate change in the company.
This Subdivision has rules which make it easier for a widely held or eligible Division 166 company to satisfy the ownership tests in Subdivision 166 - D.
Special concessional tracing rules deem entities to hold the following stakes in the company so that the company does not have to trace through to the beneficial owners of the stakes:
(a) stakes of less than 10% in the company;
(b) stakes of between 10% and 50% that are held by widely held companies;
(c) stakes that are held by complying superannuation funds, complying approved deposit funds, special companies and managed investment schemes;
(d) stakes in interposed foreign listed companies that are held as bearer shares;
(e) stakes in interposed foreign listed companies that are held by depository entities.
This Division modifies the way conditions relating to this Part apply to companies whose shares:
(a) do not all carry the same rights to dividends or capital distributions; or
(b) do not all carry the same voting rights, or do not carry all of the voting rights in the company.
If a condition of the continuity of ownership test cannot be worked out for a company:
(a) because of its unequal share structure; or
(b) because of a holding company's unequal share structure;
an entity can choose to reconsider that condition in up to 3 ways.
The first way involves disregarding debt interests.
The second way involves disregarding debt interests and secondary share classes.
The third way involves disregarding those shares, and treating the remaining shares as carrying certain percentages of the rights to receive dividends and capital distributions.
The second way can only be tried after the first way, while the third way can only be tried after the second way.
Companies whose shares:
(a) do not all carry the same voting rights; or
(b) do not carry all of the voting rights in the company;
may test the possession of voting rights similarly to companies whose shares are all of a single class with the same rights.
Method statement
Step 1. Add together the * income company's assessable income and * net exempt income (if any) for the * deduction year.
Step 2. Subtract the * income company's deductions for the * deduction year, except deductions for amounts of * tax losses transferred to the income company (by the * loss company or any other company).
Step 3. Subtract the * income company's deductions for the * deduction year for amounts of * tax losses transferred to the income company (by the * loss company or any other company) by agreements made before the agreement by which the first amount is transferred.
Method statement
Step 1. Add together the * income company's * net assessable film income and * net exempt film income (if any) for the * deduction year.
Step 2. Subtract the * income company's deductions for the * deduction year for amounts of * film losses transferred to the income company (by the * loss company or any other company) by agreements made before the agreement by which the first amount is transferred.
Method statement
Step 1. Identify each * bundle of losses that, on the assumption in subsection 170 - 42(2) or (4) (as appropriate), would have included the * tax loss or * film loss (as appropriate).
Note 1: There will be 2 or more bundles of losses identified if both of the conditions in subsections 170 - 42(2) and (4) are met.
Note 2: There will be more than 1 bundle of losses identified on the basis of the assumption in paragraph 170 - 42(4) if the conditions in subsections 170 - 30(1) and (2) are met in relation to the loss company and the income company because of multiple applications of section 170 - 33 each involving a different first link company.
Step 2. For each * bundle identified, work out how much of the * tax loss or * film loss (as appropriate) the * income company would have been able to deduct in the * deduction year assuming that:
(a) the loss could have been deducted in that year only after the deduction in that year of any other losses of that * sort that would have been included in the bundle, other than losses (the transferable losses ) that could be transferred from the * loss company to the income company for that year; and
(b) if the bundle would have included 2 or more transferable losses of that sort--those losses could have been deducted only in the order in which the loss company incurred them.
Note 1: If the assumption in subsection 170 - 42(2) is relevant to the bundle, it would have included losses incurred by the income company and transferred (or taken to be transferred) to the company (from itself) under Subdivision 707 - A.
Note 2: If the assumption in paragraph 170 - 42(4) is relevant to the bundle, it would have included losses actually incurred by the first link company and transferred (by one or more transfers under Subdivision 707 - A) to the income company.
Step 3. Total every result of step 2 for the * tax loss or * film loss (as appropriate).
Method statement
Step 1. Work out what, apart from the operation of this section, would have been the gain company's * net capital gain for the application year.
Step 2. Subtract each amount that:
(a) the gain company can apply under section 170 - 115 in working out its * net capital gain for the application year; and
(b) was transferred to the gain company (by the loss company or any other company) by an agreement made before the agreement by which the first amount is transferred.
Method statement
Step 1. Identify each * bundle of losses that, on the assumption in subsection 170 - 142(2) or (4) (as appropriate), would have included the * net capital loss.
Note 1: There will be 2 or more bundles of losses identified if both of the conditions in subsections 170 - 142(2) and (4) are met.
Note 2: There will be more than 1 bundle of losses identified on the basis of the assumption in paragraph 170 - 142(4) if the conditions in subsections 170 - 130(1) and (2) are met in relation to the loss company and the gain company because of multiple applications of section 170 - 133 each involving a different first link company.
Step 2. For each * bundle identified, work out how much of the * net capital loss the gain company would have been able to apply in working out its * net capital gain for the application year assuming that:
(a) the loss could have been applied in that year only after the application in that year of any other losses of that * sort that would have been included in the bundle, other than losses (the transferable losses ) that could be transferred from the * loss company to the gain company for that year; and
(b) if the bundle would have included 2 or more transferable losses of that sort--those losses could have been applied only in the order in which the loss company made them.
Note 1: If the assumption in subsection 170 - 142(2) is relevant to the bundle, it would have included losses made by the gain company and transferred (or taken to be transferred) to the company (from itself) under Subdivision 707 - A.
Note 2: If the assumption in paragraph 170 - 142(4) is relevant to the bundle, it would have included losses actually made by the first link company and transferred (by one or more transfers under Subdivision 707 - A) to the gain company.
Step 3. Total every result of step 2 for the * net capital loss.
(a) the cost base and reduced cost base of direct and indirect equity interests held by group companies in the loss company, or in the income company or gain company; and
(b) the reduced cost base of direct and indirect debt interest held by group companies in the loss company; and
(c) the cost base and reduced cost base of direct and indirect debt interests held by group companies in the income company or gain company.
(a) is a company that is also a member of the linked group; or
(b) is a connected entity of the originating company or an * associate of such a connected entity;
The Commissioner can reverse the effect of schemes that, in order to avoid tax, bring together in the same company:
ï· assessable income; and
ï· tax losses, current year deductions, or deductions for bad debts, that apart from the scheme would not be fully used.
This Subdivision contains rules about the income tax treatment of:
ï· pooled development funds (PDFs)
ï· shares in PDFs.
This Subdivision contains rules about the income tax treatment of limited partnerships that become, or cease to be, venture capital limited partnerships, early stage venture capital limited partnerships, Australian venture capital funds of funds or venture capital management partnerships.
It also allows the Commissioner to determine how to take account of limited partnerships having income years of less than 12 months when they become, or cease to be, venture capital limited partnerships, early stage venture capital limited partnerships, Australian venture capital funds of funds or venture capital management partnerships.
The business, assets and liabilities of each sub - fund of a CCIV are taken to constitute the trust estate of a separate trust (a CCIV sub - fund trust), of which the CCIV is the trustee and the members of the sub - fund are the beneficiaries.
This Subdivision sets out further rules to facilitate the CCIV, and the sub - fund and its members, being taxed on this basis, including:
• modifications of the rules for determining whether the CCIV sub - fund trust is a managed investment trust (under Division 275) and an attribution managed investment trust (under Division 276); and
Note: These modifications also affect whether the trust is a withholding MIT under Subdivision 12 - H in Schedule 1 to the Taxation Administration Act 1953 .
• rules to support the application of Division 6 or 6C of Part III of the Income Tax Assessment Act 1936 , to the extent that Division applies to the trust; and
• rules to support the application to the trust of relevant rules about trust losses and capital gains.
(a) applies to certain amounts transferred to a company's share capital account (see Subdivision 197 - A); and
(b) provides for a franking debit to arise if such an amount is transferred to the share capital account (see Subdivision 197 - B); and
(c) provides for the tainting of the share capital account if such an amount is transferred, for how the account may be untainted, and for consequences that flow from untainting the account (see Subdivision 197 - C).
Income Tax Assessment Act 1997
No. 38, 1997
Compilation No. 248
Compilation date: 1 January 2024
Includes amendments: Act No. 40, 2023, Act No. 61, 2023, Act No. 69, 2023, Act No. 101, 2023 and Act No. 103, 2023
Registered: 15 January 2024
This compilation is in 12 volumes
Volume 1: sections 1 - 1 to 36 12 pt">- 55
Volume 2: sections 40 - 1 to 67 - 30
Volume 3: sections 70 - 1 to 121 12 pt">- 35
Volume 4: sections 122 - 1 to 197 12 pt">- 85
Volume 5: sections 200 - 1 to 253 - 15
Volume 6: sections 275 - 1 to 313 12 pt">- 85
Volume 7: sections 315 - 1 to 420 - 70
Volume 8: sections 615 - 1 to 721 - 40
Volume 9: sections 723 - 1 to 880 12p t">- 205
Volume 10: sections 900 - 1 to 995 - 1
Volume 11: Endnotes 1 to 3
Volume 12: Endnote 4
Each volume has its own contents
This compilation
This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 1 January 2024 (the compilation date ).
The notes at the end of this compilation (the endnotes ) include information about amending laws and the amendment history of provisions of the compiled law.
Uncommenced amendments
The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the Register for the compiled law.
Application, saving and transitional provisions for provisions and amendments
If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.
Editorial changes
For more information about any editorial changes made in this compilation, see the endnotes.
Modifications
If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the Register for the compiled law.
Self - repealing provisions
If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.
Chapter 3--Specialist liability rules
Part 3 - 6--The imputation system
Division 200--Guide to Part 3 - 6
Guide to Division 200 1
200 - 1 What this Division is about
200 - 5 The imputation system
200 - 10 Franking a distribution
200 - 15 The franking account
200 - 20 How a distribution is franked
200 - 25 A corporate tax entity must not give its members credit for more tax than the entity has paid
200 - 35 Effect of receiving a franked distribution
200 - 40 An Australian corporate tax entity can pass the benefit of having received a franked distribution on to its members
200 - 45 Special rules for franking by some entities
Division 201--Objects and application of Part 3 - 6
201 - 5 Application of this Part
Division 202--Franking a distribution
Subdivision 202 - A--Franking a distribution
Guide to Subdivision 202 - A
202 - 1 What this Subdivision is about
202 - 5 Franking a distribution
Subdivision 202 - B--Who can frank a distribution?
Guide to Subdivision 202 - B
202 - 10 What this Subdivision is about
202 - 20 Residency requirement when making a distribution
Subdivision 202 - C--Which distributions can be franked?
Guide to Subdivision 202 - C
202 - 25 What this Subdivision is about
202 - 30 Frankable distributions
202 - 40 Frankable distributions
202 - 45 Unfrankable distributions
202 - 47 Distributions of certain ADI profits following restructure
Subdivision 202 - D--Amount of the franking credit on a distribution
Guide to Subdivision 202 - D
202 - 50 What this Subdivision is about
202 - 55 What is the maximum franking credit for a frankable distribution?
202 - 60 Amount of the franking credit on a distribution
202 - 65 Where the franking credit stated in the distribution statement exceeds the maximum franking credit for the distribution
Subdivision 202 - E--Distribution statements
Guide to Subdivision 202 - E
202 - 70 What this Subdivision is about
202 - 75 Obligation to give a distribution statement
202 - 80 Distribution statement
202 - 85 Changing the franking credit on a distribution by amending the distribution statement
Guide to Division 203 18
203 - 1 What this Division is about
203 - 10 Benchmark franking percentage
203 - 20 Application of the benchmark rule
203 - 30 Setting a benchmark franking percentage
203 - 35 Franking percentage
203 - 40 Franking periods--where the entity is not a private company
203 - 45 Franking period--private companies
203 - 50 Consequences of breaching the benchmark rule
203 - 55 Commissioner's powers to permit a departure from the benchmark rule
Division 204--Anti - streaming rules
Subdivision 204 - A--Objects and application
Subdivision 204 - B--Linked distributions
Guide to Subdivision 204 - B
204 - 10 What this Subdivision is about
Subdivision 204 - C--Substituting tax - exempt bonus share for franked distributions
Guide to Subdivision 204 - C
204 - 20 What this Subdivision is about
204 - 25 Substituting tax - exempt bonus shares for franked distributions
Subdivision 204 - D--Streaming distributions
Guide to Subdivision 204 - D
204 - 26 What this Subdivision is about
204 - 30 Streaming distributions
204 - 35 When does a franking debit arise if the Commissioner makes a determination under paragraph 204 - 30(3)(a)
204 - 40 Amount of the franking debit
204 - 41 Amount of the exempting debit
204 - 45 Effect of a determination about distributions to favoured members
204 - 50 Assessment and notice of determination
204 - 55 Right to review where a determination made
Subdivision 204 - E--Disclosure requirements
Guide to Subdivision 204 - E
204 - 65 What this Subdivision is about
204 - 70 Application of this Subdivision
204 - 75 Notice to the Commissioner
204 - 80 Commissioner may require information where the Commissioner suspects streaming
Division 205--Franking accounts, franking deficit tax liabilities and the related tax offset
Guide to Division 205 43
205 - 1 What this Division is about
205 - 5 Franking accounts, franking deficit tax liabilities and the related tax offset
205 - 10 Each entity that is or has been a corporate tax entity has a franking account
205 - 15 Franking credits
205 - 20 Paying a PAYG instalment, income tax or diverted profits tax
205 - 25 Residency requirement for an event giving rise to a franking credit or franking debit
205 - 30 Franking debits
205 - 35 Refund of income tax or diverted profits tax
205 - 40 Franking surplus and deficit
205 - 45 Franking deficit tax
205 - 50 Deferring franking deficit
205 - 70 Tax offset arising from franking deficit tax liabilities
Division 207--Effect of receiving a franked distribution
Guide to Division 207 67
207 - 5 Overview
Subdivision 207 - A--Effect of receiving a franked distribution generally
Guide to Subdivision 207 - A
207 - 10 What this Subdivision is about
207 - 15 Applying the general rule
207 - 20 General rule--gross - up and tax offset
Subdivision 207 - B--Franked distribution received through certain partnerships and trustees
Guide to Subdivision 207 - B
207 - 25 What this Subdivision is about
Gross - up and tax offset
207 - 30 Applying this Subdivision
207 - 35 Gross - up--distribution made to, or flows indirectly through, a partnership or trustee
207 - 37 Attributable franked distribution--trusts
207 - 45 Tax offset--distribution flows indirectly to an entity
207 - 50 When a franked distribution flows indirectly to or through an entity
207 - 55 Share of a franked distribution
207 - 57 Share of the franking credit on a franked distribution
207 - 58 Specifically entitled to an amount of a franked distribution
207 - 59 Franked distributions within class treated as single franked distribution
Subdivision 207 - C--Residency requirements for the general rule
Guide to Subdivision 207 - C
207 - 60 What this Subdivision is about
207 - 65 Satisfying the residency requirement
207 - 70 Gross - up and tax offset under section 207 - 20
207 - 75 Residency requirement
Subdivision 207 - D--No gross - up or tax offset where distribution would not be taxed
Guide to Subdivision 207 - D
207 - 80 What this Subdivision is about
207 - 85 Applying this Subdivision
207 - 90 Distribution that is made to an entity
207 - 95 Distribution that flows indirectly to an entity
Subdivision 207 - E--Exceptions to the rules in Subdivision 207 - D
Guide to Subdivision 207 - E
207 - 105 What this Subdivision is about
207 - 110 Effect of non - assessable income on gross up and tax offset
207 - 115 Which exempt institutions are eligible for a refund?
207 - 117 Residency requirement
207 - 119 Entity not treated as exempt institution eligible for refund in certain circumstances
207 - 120 Entity may be ineligible because of a distribution event
207 - 122 Entity may be ineligible if distribution is in the form of property other than money
207 - 124 Entity may be ineligible if other money or property also acquired
207 - 126 Entity may be ineligible if distributions do not match trust share amounts
207 - 130 Controller's liability
207 - 132 Treatment of benefits provided by an entity to a controller
207 - 134 Entity's present entitlement disregarded in certain circumstances
207 - 136 Review of certain decisions
Subdivision 207 - F--No gross - up or tax offset where the imputation system has been manipulated
Guide to Subdivision 207 - F
207 - 140 What this Subdivision is about
207 - 145 Distribution that is made to an entity
207 - 150 Distribution that flows indirectly to an entity
207 - 155 When is a distribution made as part of a dividend stripping operation?
207 - 157 Distribution washing
207 - 158 Distributions entitled to a foreign income tax deduction
207 - 159 Distributions funded by capital raising
207 - 160 Distribution that is treated as an interest payment
Division 208--Exempting entities and former exempting entities
Guide to Division 208 121
208 - 5 What is an exempting entity?
208 - 10 Former exempting entities
208 - 15 Distributions by exempting entities and former exempting entities
Subdivision 208 - A--What are exempting entities and former exempting entities?
208 - 25 Effective ownership of entity by prescribed persons
208 - 30 Accountable membership interests
208 - 35 Accountable partial interests
208 - 40 Prescribed persons
208 - 45 Persons who are taken to be prescribed persons
208 - 50 Former exempting companies
Subdivision 208 - B--Franking with an exempting credit
Guide to Subdivision 208 - B
208 - 55 What this Subdivision is about
208 - 60 Franking with an exempting credit
Subdivision 208 - C--Amount of the exempting credit on a distribution
Guide to Subdivision 208 - C
208 - 65 What this Subdivision is about
208 - 70 Amount of the exempting credit on a distribution
Subdivision 208 - D--Distribution statements
Guide to Subdivision 208 - D
208 - 75 Guide to Subdivision 208 - D
208 - 80 Additional information to be included by a former exempting entity or exempting entity
Subdivision 208 - E--Distributions to be franked with exempting credits to the same extent
Guide to Subdivision 208 - E
208 - 85 What this Subdivision is about
208 - 90 All frankable distributions made within a franking period must be franked to the same extent with an exempting credit
208 - 100 Consequences of breaching the rule in section 208 - 90
Subdivision 208 - F--Exempting accounts and franking accounts of exempting entities and former exempting entities
Guide to Subdivision 208 - F
208 - 105 What this Subdivision is about
208 - 125 Exempting surplus and deficit
208 - 130 Franking credits arising because of status as exempting entity or former exempting entity
208 - 135 Relationships that will give rise to a franking credit under item 5 of the table in section 208 - 130
208 - 140 Membership of the same effectively wholly - owned group
208 - 145 Franking debits arising because of status as exempting entity or former exempting entity
208 - 150 Residency requirement
208 - 155 Eligible continuing substantial member
208 - 160 Distributions that are affected by a manipulation of the imputation system
208 - 165 Amount of the exempting credit or franking credit arising because of a distribution franked with an exempting credit
208 - 170 Where a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 affects part of the distribution
208 - 175 When does a distribution franked with an exempting credit flow indirectly to an entity?
208 - 180 What is an entity's share of the exempting credit on a distribution?
208 - 185 Minister may convert exempting surplus to franking credit of former exempting entity previously owned by the Commonwealth
Subdivision 208 - G--Tax effects of distributions by exempting entities
Guide to Subdivision 208 - G
208 - 190 What this Subdivision is about
208 - 195 Division 207 does not generally apply
208 - 200 Distributions to exempting entities
208 - 205 Distributions to employees acquiring shares under eligible employee share schemes
208 - 215 Eligible employee share schemes
Subdivision 208 - H--Tax effect of a distribution franked with an exempting credit
Guide to Subdivision 208 - H
208 - 220 What this Subdivision is about
208 - 225 Division 207 does not generally apply
208 - 230 Distributions to exempting entities and former exempting entities
208 - 235 Distributions to employees acquiring shares under eligible employee share schemes
208 - 240 Distributions to certain individuals
Division 210--Venture capital franking
Guide to Division 210 169
210 - 1 Purpose of venture capital franking
210 - 10 What is a venture capital credit?
210 - 15 What does the PDF have to do to distribute the credits?
210 - 20 Limits on venture capital franking
Subdivision 210 - A--Franking a distribution with a venture capital credit
Guide to Subdivision 210 - A
210 - 25 What this Subdivision is about
210 - 30 Franking a distribution with a venture capital credit
Subdivision 210 - B--Participating PDFs
Guide to Subdivision 210 - B
210 - 35 What this Subdivision is about
210 - 40 What is a participating PDF
Subdivision 210 - C--Distributions that are frankable with a venture capital credit
Guide to Subdivision 210 - C
210 - 45 What this Subdivision is about
210 - 50 Which distributions can be franked with a venture capital credit?
Subdivision 210 - D--Amount of the venture capital credit on a distribution
Guide to Subdivision 210 - D
210 - 55 What this Subdivision is about
210 - 60 Amount of the venture capital credit on a distribution
Subdivision 210 - E--Distribution statements
Guide to Subdivision 210 - E
210 - 65 What this Subdivision is about
210 - 70 Additional information to be included when a distribution is franked with a venture capital credit
Subdivision 210 - F--Rules affecting the allocation of venture capital credits
Guide to Subdivision 210 - F
210 - 75 What this Subdivision is about
210 - 80 Draining the venture capital surplus when a distribution frankable with venture capital credits is made
210 - 81 Distributions to be franked with venture capital credits to the same extent
210 - 82 Consequences of breaching the rule in section 210 - 81
Subdivision 210 - G--Venture capital sub - account
Guide to Subdivision 210 - G
210 - 85 What this Subdivision is about
210 - 90 The venture capital sub - account
210 - 95 Venture capital deficit tax
210 - 100 Venture capital sub - account
210 - 105 Venture capital credits
210 - 110 Determining the extent to which a franking credit is reasonably attributable to a particular payment of tax
210 - 115 Participating PDF may elect to have venture capital credits arise on its assessment day
210 - 120 Venture capital debits
210 - 125 Venture capital debit where CGT limit is exceeded
210 - 130 Venture capital surplus and deficit
210 - 135 Venture capital deficit tax
210 - 140 Effect of a liability to pay venture capital deficit tax on franking deficit tax
210 - 145 Effect of a liability to pay venture capital deficit tax on the franking account
210 - 150 Deferring venture capital deficit
Subdivision 210 - H--Effect of receiving a distribution franked with a venture capital credit
Guide to Subdivision 210 - H
210 - 155 What this Subdivision is about
210 - 160 The significance of a venture capital credit
210 - 165 Recipients for whom the venture capital credit is not significant
210 - 170 Tax offset for certain recipients of distributions franked with venture capital credits
210 - 175 Amount of the tax offset
210 - 180 Application of Division 207 where the recipient is entitled to a tax offset under section 210 - 170
Division 214--Administering the imputation system
Guide to Division 214 191
Subdivision 214 - A--Franking returns
Guide to Subdivision 214 - A
214 - 10 What this Subdivision is about
214 - 15 Requirement to give franking return--general
214 - 20 Notice to a specific corporate tax entity
214 - 25 Content and form of a franking return
214 - 30 Franking account balance
214 - 35 Venture capital sub - account balance
214 - 40 Meaning of franking tax
214 - 45 Effect of a refund on franking returns
Subdivision 214 - B--Franking assessments
Guide to Subdivision 214 - B
214 - 55 What this Subdivision is about
214 - 60 Commissioner may make a franking assessment
214 - 65 Commissioner taken to have made a franking assessment on first return
214 - 70 Part - year assessment
214 - 75 Validity of assessment
Subdivision 214 - C--Amending franking assessments
Guide to Subdivision 214 - C
214 - 90 What this Subdivision is about
214 - 95 Amendments within 3 years of the original assessment
214 - 100 Amended assessments are treated as franking assessments
214 - 105 Further return as a result of a refund affecting a franking deficit tax liability
214 - 110 Later amendments--on request
214 - 115 Later amendments--failure to make proper disclosure
214 - 120 Later amendments--fraud or evasion
214 - 125 Further amendment of an amended particular
214 - 135 Amendment on review etc.
214 - 140 Notice of amendments
Subdivision 214 - D--Collection and recovery
Guide to Subdivision 214 - D
214 - 145 What this Subdivision is about
214 - 150 Due date for payment of franking tax
214 - 155 General interest charge
214 - 160 Refunds of amounts overpaid
Guide to Subdivision 214 - E
214 - 170 What this Subdivision is about
Division 215--Consequences of the debt/equity rules
Subdivision 215 - A--Application of the imputation system to non - share equity interests
215 - 1 Application of the imputation system to non - share equity interests
Subdivision 215 - B--Non - share dividends that are unfrankable to some extent
Guide to Subdivision 215 - B
215 - 5 What this Subdivision is about
215 - 10 Certain non - share dividends by ADIs unfrankable
215 - 15 Non - share dividends are unfrankable if profits are unavailable
215 - 20 Working out the available frankable profits
215 - 25 Anticipating available frankable profits
Division 216--Cum dividend sales and securities lending arrangements
Subdivision 216 - A--Circumstances where a distribution to a member of a corporate tax entity is treated as having been made to someone else
216 - 1 When a distribution made to a member of a corporate tax entity is treated as having been made to someone else
216 - 5 First situation (cum dividend sales)
216 - 10 Second situation (securities lending arrangements)
216 - 15 Distribution closing time
Subdivision 216 - B--Statements to be made where there is a cum dividend sale or securities lending arrangement
216 - 20 Cum dividend sale--statement by securities dealer
216 - 25 Cum dividend sale--statement by party
216 - 30 Securities lending arrangements--statement by borrower
Division 218--Application of imputation rules to co - operative companies
218 - 5 Application of imputation rules to co - operative companies
Division 219--Imputation for life insurance companies
Guide to Division 219 220
219 - 1 What this Division is about
Subdivision 219 - A--Application of imputation rules to life insurance companies
219 - 10 Application of imputation rules to life insurance companies
Subdivision 219 - B--Franking accounts of life insurance companies
219 - 15 Franking credits
219 - 30 Franking debits
219 - 40 Residency requirement
219 - 50 Amount attributable to shareholders' share of income tax liability
219 - 55 Adjustment resulting from an amended assessment
219 - 70 Tax offset under section 205 - 70
219 - 75 Working out franking credits and franking debits where a tax offset under section 205 - 70 is applied
Division 220--Imputation for NZ resident companies and related companies
Guide to Division 220 237
220 - 1 What this Division is about
Subdivision 220 - A--Objects of this Division
220 - 20 What is an NZ resident ?
Subdivision 220 - B--NZ company treated as Australian resident for imputation system if company chooses
220 - 25 Application of provisions of Part 3 - 6 outside this Division
220 - 30 What is an NZ franking company ?
220 - 35 Making an NZ franking choice
220 - 40 When is an NZ franking choice in force?
220 - 45 Revoking an NZ franking choice
220 - 50 Cancelling an NZ franking choice
Subdivision 220 - C--Modifications of other Divisions of this Part
Franking NZ franking companies' distributions
220 - 100 Residency requirement for franking
220 - 105 Unfrankable distributions by NZ franking companies
220 - 110 Maximum franking credit under section 202 - 60
NZ franking companies' franking accounts etc.
220 - 205 Franking credit for payment of NZ franking company's withholding tax liability
220 - 210 Effect of franked distribution to NZ franking company or flowing indirectly to NZ franking company
220 - 215 Effect on franking account if NZ franking choice ceases to be in force
Franking accounts of NZ franking company and some of its 100% subsidiaries
220 - 300 NZ franking company's franking account affected by franking accounts of some of its 100% subsidiaries
Effect of NZ franking company making distribution that is non - assessable and non - exempt
220 - 350 Providing for a franking credit to arise
Effects of supplementary dividend from NZ franking company
220 - 400 Gross - up and tax offset for distribution from NZ franking company reduced by supplementary dividend
220 - 405 Franked distribution and supplementary dividend flowing indirectly
220 - 410 Franking credit reduced if tax offset reduced
Rules about exempting entities
220 - 500 Publicly listed post - choice NZ franking company and its 100% subsidiaries are not exempting entities
220 - 505 Post - choice NZ franking company is not automatically prescribed person
220 - 510 Parent company's status as prescribed person sets status of all other members of same wholly - owned group
NZ franking companies' exempting accounts
220 - 605 Effect on exempting account if NZ franking choice ceases to be in force
Tax effect of distribution franked by NZ franking company with an exempting credit
220 - 700 Tax effect of distribution franked by NZ franking company with an exempting credit
Joint and several liability for NZ resident company's unmet franking liabilities
220 - 800 Joint and several liability for NZ resident company's franking tax etc.
Part 3 - 10--Financial transactions
Division 230--Taxation of financial arrangements
Guide to Division 230 262
230 - 1 What this Division is about
230 - 5 Scope of this Division
Subdivision 230 - A--Core rules
230 - 10 Objects of this Division
Tax treatment of gains and losses from financial arrangements
230 - 15 Gains are assessable and losses deductible
230 - 20 Gain or loss to be taken into account only once under this Act
230 - 25 Associated financial benefits to be taken into account only once under this Act
230 - 30 Treatment of gains and losses related to exempt income and non - assessable non - exempt income
230 - 35 Treatment of gains and losses of private or domestic nature
Method to be applied to take account of gain or loss
230 - 40 Methods for taking gain or loss into account
230 - 45 Financial arrangement
230 - 50 Financial arrangement (equity interest or right or obligation in relation to equity interest)
230 - 55 Rights, obligations and arrangements (grouping and disaggregation rules)
230 - 60 When financial benefit provided or received under financial arrangement
230 - 65 Amount of financial benefit relating to more than one financial arrangement etc.
230 - 70 Apportionment when financial benefit received or right ceases
230 - 75 Apportionment when financial benefit provided or obligation ceases
230 - 80 Consistency in working out gains or losses (integrity measure)
230 - 85 Rights and obligations include contingent rights and obligations
Subdivision 230 - B--The accruals/realisation methods
Guide to Subdivision 230 - B
230 - 90 What this Subdivision is about
230 - 95 Objects of this Subdivision
When accruals method or realisation method applies
230 - 100 When accruals method or realisation method applies
230 - 105 Sufficiently certain overall gain or loss
230 - 110 Sufficiently certain gain or loss from particular event
230 - 115 Sufficiently certain financial benefits
230 - 120 Financial arrangements with notional principal
230 - 125 Overview of the accruals method
230 - 130 Applying accruals method to work out period over which gain or loss is to be spread
230 - 135 How gain or loss is spread
230 - 140 Method of spreading gain or loss--effective interest method
230 - 145 Application of effective interest method where differing income and accounting years
230 - 150 Election for portfolio treatment of fees
230 - 155 Election for portfolio treatment of fees where differing income and accounting years
230 - 160 Portfolio treatment of fees
230 - 165 Portfolio treatment of premiums and discounts for acquiring portfolio
230 - 170 Allocating gain or loss to income years
230 - 172 Applying accruals method to loss resulting from impairment
230 - 175 Running balancing adjustments
Reassessment and re - estimation
230 - 192 Re - estimation--impairments and reversals
230 - 195 Balancing adjustment if rate of return maintained on re - estimation
230 - 200 Re - estimation if balancing adjustment on partial disposal
Subdivision 230 - C--Fair value method
230 - 205 Objects of this Subdivision
230 - 210 Fair value election
230 - 215 Fair value election where differing income and accounting years
230 - 220 Financial arrangements to which fair value election applies
230 - 225 Financial arrangements to which election does not apply
230 - 230 Applying fair value method to gains and losses
230 - 235 Splitting financial arrangements into 2 financial arrangements
230 - 240 When election ceases to apply
230 - 245 Balancing adjustment if election ceases to apply
Subdivision 230 - D--Foreign exchange retranslation method
230 - 250 Objects of this Subdivision
230 - 255 Foreign exchange retranslation election
230 - 260 Foreign exchange retranslation election where differing income and accounting years
230 - 265 Financial arrangements to which general election applies
230 - 270 Financial arrangements to which general election does not apply
230 - 275 Balancing adjustment for election in relation to qualifying forex accounts
230 - 280 Applying foreign exchange retranslation method to gains and losses
230 - 285 When election ceases to apply
230 - 290 Balancing adjustment if election ceases to apply
Subdivision 230 - E--Hedging financial arrangements method
230 - 295 Objects of this Subdivision
230 - 300 Applying hedging financial arrangement method to gains and losses
230 - 305 Table of events and allocation rules
230 - 310 Aligning tax classification of gain or loss from hedging financial arrangement with tax classification of hedged item
230 - 315 Hedging financial arrangement election
230 - 320 Hedging financial arrangement election where differing income and accounting years
230 - 325 Hedging financial arrangements to which election applies
230 - 330 Hedging financial arrangements to which election does not apply
230 - 335 Hedging financial arrangement and hedged item
230 - 340 Generally whole arrangement must be hedging financial arrangement
230 - 345 Requirements not satisfied because of honest mistake or inadvertence
230 - 350 Derivative financial arrangement and foreign currency hedge
230 - 355 Recording requirements
230 - 360 Determining basis for allocating gain or loss
230 - 365 Effectiveness of the hedge
230 - 370 When election ceases to apply
230 - 375 Balancing adjustment if election ceases to apply
230 - 380 Commissioner may determine that requirement met
230 - 385 Consequences of failure to meet requirements
Subdivision 230 - F--Reliance on financial reports
230 - 390 Objects of this Subdivision
230 - 395 Election to rely on financial reports
230 - 400 Financial reports election where differing income and accounting years
230 - 405 Commissioner discretion to waive requirements in paragraphs 230 - 395(2)(c) and (e)
230 - 410 Financial arrangements to which the election applies
230 - 415 Financial arrangements not covered by election
230 - 420 Effect of election to rely on financial reports
230 - 425 When election ceases to apply
230 - 430 Balancing adjustment if election ceases to apply
Subdivision 230 - G--Balancing adjustment on ceasing to have a financial arrangement
230 - 435 When balancing adjustment made
230 - 445 Balancing adjustment
Subdivision 230 - H--Exceptions
230 - 450 Short - term arrangements where non - money amount involved
230 - 455 Certain taxpayers where no significant deferral
230 - 460 Various rights and/or obligations
230 - 465 Ceasing to have a financial arrangement in certain circumstances
230 - 470 Forgiveness of commercial debts
230 - 475 Clarifying exceptions
230 - 480 Treatment of gains in form of franked distribution etc.
230 - 481 Registered emissions units
Subdivision 230 - I--Other provisions
230 - 485 Effect of change of residence--rules for particular methods
230 - 490 Effect of change of residence--disposal and reacquisition etc. after ceasing to be Australian resident where no further recognised gains or losses from arrangement
230 - 495 Effect of change of accounting principles or standards
230 - 500 Comparable foreign accounting and auditing standards
230 - 505 Financial arrangement as consideration for provision or acquisition of a thing
230 - 510 Non - arm's length dealings in relation to financial arrangement
230 - 515 Arm's length dealings in relation to financial arrangement--adjustment to gain or loss in certain situations
230 - 520 Disregard gains or losses covered by value shifting regime
230 - 522 Adjusting a gain or loss that gives rise to a hybrid mismatch
230 - 525 Consolidated financial reports
230 - 527 Elections--reporting documents of foreign ADIs
Subdivision 230 - J--Additional operation of Division
230 - 530 Additional operation of Division
Division 235--Particular financial transactions
Guide to Division 235 414
235 - 1 What this Division is about
Subdivision 235 - I--Instalment trusts
Guide to Subdivision 235 - I
235 - 805 What this Subdivision is about
235 - 810 Object of this Subdivision
235 - 815 Application of Subdivision
235 - 820 Look - through treatment for instalment trusts
235 - 825 Meaning of instalment trust and instalment trust asset
235 - 830 What trusts are covered--instalment trust arrangements
235 - 835 Requirement for underlying investments to be listed or widely held
235 - 840 What trusts are covered--limited recourse borrowings by regulated superannuation funds
235 - 845 Interactions with other provisions
Division 240--Arrangements treated as a sale and loan
Guide to Division 240 421
240 - 1 What this Division is about
240 - 3 How the recharacterisation affects the notional seller
240 - 7 How the recharacterisation affects the notional buyer
Subdivision 240 - A--Application and scope of Division
240 - 10 Application of this Division
Subdivision 240 - B--The notional sale and notional loan
240 - 17 Who is the notional seller and the notional buyer?
240 - 20 Notional sale of property by notional seller and notional acquisition of property by notional buyer
240 - 25 Notional loan by notional seller to notional buyer
Subdivision 240 - C--Amounts to be included in notional seller's assessable income
Guide to Subdivision 240 - C
240 - 30 What this Subdivision is about
240 - 35 Amounts to be included in notional seller's assessable income
240 - 40 Arrangement payments not to be included in notional seller's assessable income
Subdivision 240 - D--Deductions allowable to notional buyer
Guide to Subdivision 240 - D
240 - 45 What this Subdivision is about
240 - 50 Extent to which deductions are allowable to notional buyer
240 - 55 Arrangement payments not to be deductions
Subdivision 240 - E--Notional interest and arrangement payments
240 - 60 Notional interest
240 - 65 Arrangement payments
240 - 70 Arrangement payment periods
Subdivision 240 - F--The end of the arrangement
240 - 75 When is the end of the arrangement?
240 - 80 What happens if the arrangement is extended or renewed
240 - 85 What happens if an amount is paid by or on behalf of the notional buyer to acquire the property
240 - 90 What happens if the notional buyer ceases to have the right to use the property
Subdivision 240 - G--Adjustments if total amount assessed to notional seller differs from amount of interest
Guide to Subdivision 240 - G
240 - 100 What this Subdivision is about
240 - 105 Adjustments for notional seller
240 - 110 Adjustments for notional buyer
Subdivision 240 - H--Application of Division 16E to certain arrangements
240 - 112 Division 16E applies to certain arrangements
Subdivision 240 - I--Provisions applying to hire purchase agreements
240 - 115 Another person, or no person taken to own property in certain cases
Division 242--Leases of luxury cars
Guide to Division 242 441
242 - 1 What this Division is about
Subdivision 242 - A--Notional sale and loan
Guide to Subdivision 242 - A
242 - 5 What this Subdivision is about
242 - 15 Notional sale and acquisition
242 - 20 Consideration for notional sale, and cost, of car
242 - 25 Notional loan by lessor to lessee
Subdivision 242 - B--Amount to be included in lessor's assessable income
Guide to Subdivision 242 - B
242 - 30 What this Subdivision is about
242 - 35 Amount to be included in lessor's assessable income
242 - 40 Treatment of lease payments
Subdivision 242 - C--Deductions allowable to lessee
Guide to Subdivision 242 - C
242 - 45 What this Subdivision is about
242 - 50 Extent to which deductions are allowable to lessee
242 - 55 Lease payments not deductible
Subdivision 242 - D--Adjustments if total amount assessed to lessor differs from amount of interest
Guide to Subdivision 242 - D
242 - 60 What this Subdivision is about
242 - 65 Adjustments for lessor
242 - 70 Adjustments for lessee
Subdivision 242 - E--Extension, renewal and final ending of the lease
Guide to Subdivision 242 - E
242 - 75 What this Subdivision is about
242 - 80 What happens if the term of the lease is extended or the lease is renewed
242 - 85 What happens if an amount is paid by the lessee to acquire the car
242 - 90 What happens if the lessee stops having the right to use the car
Division 243--Limited recourse debt
Guide to Division 243 456
243 - 10 What this Division is about
Subdivision 243 - A--Circumstances in which Division operates
243 - 15 When does this Division apply?
243 - 20 What is limited recourse debt?
243 - 25 When is a debt arrangement terminated?
243 - 30 What is the financed property and the debt property?
Subdivision 243 - B--Working out the excessive deductions
243 - 35 Working out the excessive deductions
Subdivision 243 - C--Amounts included in assessable income and deductions
243 - 40 Amount included in debtor's assessable income
243 - 45 Deduction for later payments in respect of debt
243 - 50 Deduction for payments for replacement debt
243 - 55 Effect of Division on later capital allowance deductions
243 - 57 Effect of Division on later capital allowance balancing adjustments
243 - 58 Adjustment where debt only partially used for expenditure
Subdivision 243 - D--Special provisions
243 - 60 Application of Division to partnerships
243 - 65 Application where partner reduces liability
243 - 70 Application of Division to companies ceasing to be 100% subsidiary
243 - 75 Application of Division where debt forgiveness rules also apply
Division 245--Forgiveness of commercial debts
Guide to Division 245 473
245 - 1 What this Division is about
245 - 2 Simplified outline of this Division
Subdivision 245 - A--Debts to which operative rules apply
Guide to Subdivision 245 - A
245 - 5 What this Subdivision is about
245 - 15 Non - equity shares
245 - 20 Parts of debts
Subdivision 245 - B--What constitutes forgiveness of a debt
Guide to Subdivision 245 - B
245 - 30 What this Subdivision is about
245 - 35 What constitutes forgiveness of a debt
245 - 36 What constitutes forgiveness of a debt if the debt is assigned
245 - 37 What constitutes forgiveness of a debt if a subscription for shares enables payment of the debt
245 - 40 Forgivenesses to which operative rules do not apply
245 - 45 Application of operative rules if forgiveness involves an arrangement
Subdivision 245 - C--Calculation of gross forgiven amount of a debt
Guide to Subdivision 245 - C
245 - 48 What this Subdivision is about
Working out the value of a debt
245 - 50 Extent of forgiveness if consideration is given
245 - 55 General rule for working out the value of a debt
245 - 60 Special rule for working out the value of a non - recourse debt
245 - 61 Special rule for working out the value of a previously assigned debt
Working out if an amount is offset against the value of the debt
245 - 65 Amount offset against amount of debt
Working out the gross forgiven amount
245 - 75 Gross forgiven amount of a debt
245 - 77 Gross forgiven amount shared between debtors
Subdivision 245 - D--Calculation of net forgiven amount of a debt
Guide to Subdivision 245 - D
245 - 80 What this Subdivision is about
245 - 85 Reduction of gross forgiven amount
245 - 90 Agreement between companies under common ownership for creditor to forgo capital loss or deduction
Subdivision 245 - E--Application of net forgiven amounts
Guide to Subdivision 245 - E
245 - 95 What this Subdivision is about
245 - 100 Subdivision not to apply to calculation of attributable income
245 - 105 How total net forgiven amount is applied
Reduction of tax losses
245 - 115 Total net forgiven amount is applied in reduction of tax losses
245 - 120 Allocation of total net forgiven amount in respect of tax losses
Reduction of net capital losses
245 - 130 Remaining total net forgiven amount is applied in reduction of net capital losses
245 - 135 Allocation of remaining total net forgiven amount in respect of net capital losses
245 - 145 Remaining total net forgiven amount is applied in reduction of expenditure
245 - 150 Allocation of remaining total net forgiven amount in respect of expenditures
245 - 155 How expenditure is reduced--straight line deductions
245 - 157 How expenditure is reduced--diminishing balance deductions
245 - 160 Amount applied in reduction of expenditure included in assessable income in certain circumstances
Reduction of cost bases of assets
245 - 175 Remaining total net forgiven amount is applied in reduction of cost bases of CGT assets
245 - 180 Allocation of remaining total net forgiven amount among relevant cost bases of CGT assets
245 - 185 Relevant cost bases of investments in associated entities are reduced last
245 - 190 Reduction of the relevant cost bases of a CGT asset
Unapplied total net forgiven amount
245 - 195 No further consequences if there is any remaining unapplied total net forgiven amount
Subdivision 245 - F--Special rules relating to partnerships
Guide to Subdivision 245 - F
245 - 200 What this Subdivision is about
245 - 215 Unapplied total net forgiven amount of a partnership is transferred to partners
Subdivision 245 - G--Record keeping
245 - 265 Keeping and retaining records
Division 247--Capital protected borrowings
Guide to Division 247 506
247 - 1 What this Division is about
247 - 10 What capital protected borrowing and capital protection are
247 - 15 Application of this Division
247 - 20 Treating capital protection as a put option
247 - 25 Number of put options
247 - 30 Exercise or expiry of option
Division 250--Assets put to tax preferred use
Guide to Division 250 512
250 - 1 What this Division is about
Subdivision 250 - B--When this Division applies to you and an asset
Overall test
250 - 10 When this Division applies to you and an asset
250 - 20 First exclusion--small business entities
250 - 25 Second exclusion--financial benefits under minimum value limit
250 - 30 Third exclusion--certain short term or low value arrangements
250 - 35 Exceptions to section 250 - 30
250 - 40 Fourth exclusion--sum of present values of financial benefits less than amount otherwise assessable
250 - 45 Fifth exclusion--Commissioner determination
Tax preferred use of asset
250 - 55 Tax preferred end user
250 - 60 Tax preferred use of an asset
250 - 65 Arrangement period for tax preferred use
250 - 70 New tax preferred use at end of arrangement period if tax preferred use continues
250 - 75 What constitutes a separate asset for the purposes of this Division
250 - 80 Treatment of particular arrangements in the same way as leases
Financial benefits in relation to tax preferred use
250 - 85 Financial benefits in relation to tax preferred use of an asset
250 - 90 Financial benefit provided directly or indirectly
250 - 95 Expected financial benefits in relation to an asset put to tax preferred use
250 - 100 Present value of financial benefit that has already been provided
Discount rate to be used in working out present values
250 - 105 Discount rate to be used in working out present values
250 - 110 Predominant economic interest
250 - 115 Limited recourse debt test
250 - 120 Right to acquire asset test
250 - 125 Effectively non - cancellable, long term arrangement test
250 - 130 Meaning of effectively non - cancellable arrangement
250 - 135 Level of expected financial benefits test
250 - 140 When to retest predominant economic interest under section 250 - 135
Subdivision 250 - C--Denial of, or reduction in, capital allowance deductions
250 - 145 Denial of capital allowance deductions
Subdivision 250 - D--Deemed loan treatment of financial benefits provided for tax preferred use
250 - 155 Arrangement treated as loan
250 - 160 Financial benefits that are subject to deemed loan treatment
250 - 180 End value of asset
250 - 185 Financial benefits subject to deemed loan treatment not assessed
Subdivision 250 - E--Taxation of deemed loan
Guide to Subdivision 250 - E
250 - 190 What this Subdivision is about
Application and objects of Subdivision
250 - 195 Application of Subdivision
250 - 200 Objects of this Subdivision
Tax treatment of gains and losses from financial arrangements
250 - 205 Gains are assessable and losses deductible
250 - 210 Gain or loss to be taken into account only once under this Act
Method to be applied to take account of gain or loss
250 - 215 Methods for taking gain or loss into account
250 - 220 Consistency in working out gains or losses (integrity measure)
250 - 225 Rights and obligations include contingent rights and obligations
250 - 230 Application of accruals method
250 - 235 Overview of the accruals method
250 - 240 Applying accruals method to work out period over which gain or loss is to be spread
250 - 245 How gain or loss is spread
250 - 250 Allocating gain or loss to income years
250 - 255 When to re - estimate
250 - 260 Re - estimation if balancing adjustment on partial disposal
250 - 265 When balancing adjustment made
250 - 270 Exception for subsidiary member leaving consolidated group
250 - 275 Balancing adjustment
250 - 280 Financial arrangement received or provided as consideration
Subdivision 250 - F--Treatment of asset when Division ceases to apply to the asset
250 - 285 Treatment of asset after Division ceases to apply to the asset
250 - 290 Balancing adjustment under Subdivision 40 - D in some circumstances
Subdivision 250 - G--Objections against determinations and decisions by the Commissioner
250 - 295 Objections against determinations and decisions by the Commissioner
Division 253--Financial claims scheme for account - holders with insolvent ADIs
Subdivision 253 - A--Tax treatment of entitlements under financial claims scheme
Guide to Subdivision 253 - A
253 - 1 What this Subdivision is about
253 - 5 Payment of entitlement under financial claims scheme treated as payment from ADI
253 - 10 Disposal of rights against ADI to APRA and meeting of financial claims scheme entitlement have no CGT effects
253 - 15 Cost base of financial claims scheme entitlement and any remaining part of account that gave rise to entitlement