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INCOME TAX ASSESSMENT ACT 1997 - SECT 721.40

TSA liability and group liability are linked

  (1)   The liability of a TSA contributing member under subsection   721 - 30(2) (the TSA liability ) is separate and distinct for all purposes from the group liability to which it relates (the linked group liability ). For example, the Commissioner may take proceedings to recover the unpaid amount of the TSA liability, proceedings to recover the unpaid amount of the linked group liability, or both.

Note:   The TSA contributing member will not be jointly and severally liable for the linked group liability under section   721 - 15 (see subsection   721 - 15(3)). However, the head company of the group remains liable for the linked group liability.

Payment or discharge of TSA liability

  (2)   If an amount is paid or applied at a particular time towards discharging the TSA liability, the linked group liability is discharged at that time to the extent of the same amount.

Payment or discharge of linked group liability

  (3)   If:

  (a)   an amount is paid or applied at a particular time towards discharging the linked group liability; and

  (b)   as a result, the amount unpaid on the TSA liability at that time (apart from this section) exceeds the amount unpaid on the linked group liability at that time;

the TSA liability is discharged at that time to the extent of the excess.

  (4)   Subsections   (2) and (3) operate in relation to a liability under a judgment (the judgment liability ):

  (a)   if the judgment liability is for the entire amount unpaid on the TSA liability--as if the judgment liability were the TSA liability; and

  (b)   if the judgment liability is for the entire amount unpaid on the linked group liability--as if the judgment liability were the linked group liability.

  (5)   This section does not discharge a liability to a greater extent than the amount of the liability.

Some items of assessable income, and some deductions, are in effect spread over 2 or more income years. This Division apportions the assessable income or deduction for each of those income years among periods within the income year when an entity is, or is not, a subsidiary member of a consolidated group.

This Division also apportions in a similar way some items of assessable income, and some deductions, for a single income year.

A MEC group and a potential MEC group each consist of certain Australian - resident entities that are wholly - owned subsidiaries of a foreign top company.

A company that is a first - tier subsidiary of the top company is a tier - 1 company.

A MEC group cannot be formed unless there are at least 2 tier - 1 companies of the top company that are eligible to be members of the group.

A MEC group becomes consolidated at a time chosen by the eligible tier - 1 companies.

One of the eligible tier - 1 companies becomes the head company of the group.

The remaining members of the group are the subsidiary members.

  (a)   rules about maintaining the same ownership to be able to utilise a loss; and

  (b)   rules for working out how much of a loss can be utilised by reference to bundles of losses and their available fractions.

 

Commonwealth Coat of Arms of Australia

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; font-weight:bold">- 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

About this compilation

This compilation

This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 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.

 

 

 

Contents

Chapter   3--Specialist liability rules

Part   3 - 95--Value shifting

Division   723--Direct value shifting by creating right over non - depreciating asset

Subdivision   723 - A--Reduction in loss from realising non - depreciating asset

723 - 1   Object

723 - 10   Reduction in loss from realising non - depreciating asset over which right has been created

723 - 15   Reduction in loss from realising non - depreciating asset at the same time as right is created over it

723 - 20   Exceptions

723 - 25   Realisation event that is only a partial realisation

723 - 35   Multiple rights created to take advantage of the $50,000 threshold

723 - 40   Application to CGT asset that is also trading stock or revenue asset

723 - 50   Effects if right created over underlying asset is also trading stock or a revenue asset

Subdivision   723 - B--Reducing reduced cost base of interests in entity that acquires non - depreciating asset under roll - over

723 - 105   Reduced cost base of interest reduced when interest realised at a loss

723 - 110   Direct and indirect roll - over replacement for underlying asset

Division   725--Direct value shifting affecting interests in companies and trusts

Guide to Division   725   11

725 - 1   What this Division is about

Subdivision   725 - A--Scope of the direct value shifting rules

725 - 45   Main object

725 - 50   When a direct value shift has consequences under this Division

725 - 55   Controlling entity test

725 - 65   Cause of the value shift

725 - 70   Consequences for down interest only if there is a material decrease in its market value

725 - 80   Who is an affected owner of a down interest?

725 - 85   Who is an affected owner of an up interest?

725 - 90   Direct value shift that will be reversed

725 - 95   Direct value shift resulting from reversal

Subdivision   725 - B--What is a direct value shift

725 - 145   When there is a direct value shift

725 - 150   Issue of equity or loan interests at a discount

725 - 155   Meaning of down interests , decrease time , up interests and increase time

725 - 160   What is the nature of a direct value shift?

725 - 165   If market value decrease or increase is only partly attributable to the scheme

Subdivision   725 - C--Consequences of a direct value shift

General  

725 - 205   Consequences depend on character of down interests and up interests

725 - 210   Consequences for down interests depend on pre - shift gains and losses

Special cases  

725 - 220   Neutral direct value shifts

725 - 225   Issue of bonus shares or units

725 - 230   Off - market buy - backs

Subdivision   725 - D--Consequences for down interest or up interest as CGT asset

725 - 240   CGT consequences; meaning of adjustable value

725 - 245   Table of taxing events generating a gain for interests as CGT assets

725 - 250   Table of consequences for adjustable values of interests as CGT assets

725 - 255   Multiple CGT consequences for the same down interest or up interest

Subdivision   725 - E--Consequences for down interest or up interest as trading stock or a revenue asset

725 - 310   Consequences for down interest or up interest as trading stock

725 - 315   Adjustable value of trading stock

725 - 320   Consequences for down interest or up interest as a revenue asset

725 - 325   Adjustable value of revenue asset

725 - 335   How to work out those consequences

725 - 340   Multiple trading stock or revenue asset consequences for the same down interest or up interest

Subdivision   725 - F--Value adjustments and taxed gains

725 - 365   Decreases in adjustable values of down interests (with pre - shift gains), and taxing events generating a gain

725 - 370   Uplifts in adjustable values of up interests under certain table items

725 - 375   Uplifts in adjustable values of up interests under other table items

725 - 380   Decreases in adjustable value of down interests (with pre - shift losses)

Division   727--Indirect value shifting affecting interests in companies and trusts, and arising from non - arm's length dealings

Guide to Division   727   47

727 - 1   What this Division is about

727 - 5   What is an indirect value shift?

727 - 10   How does this Division deal with indirect value shifts?

727 - 15   When does an indirect value shift have consequences under this Division?

727 - 25   Effect of this Division on realisations at a loss that occur before the nature or extent of an indirect value shift can be fully determined

Subdivision   727 - A--Scope of the indirect value shifting rules

727 - 95   Main object

727 - 100   When an indirect value shift has consequences under this Division

727 - 105   Ultimate controller test

727 - 110   Common - ownership nexus test (if both losing and gaining entities are closely held)

727 - 125   No consequences if losing entity is a complying superannuation entity etc.

Subdivision   727 - B--What is an indirect value shift

727 - 150   How to determine whether a scheme results in an indirect value shift

727 - 155   Providing economic benefits

727 - 160   When an economic benefit is provided in connection with a scheme

727 - 165   Preventing double - counting of economic benefits

Subdivision   727 - C--Exclusions

Guide to Subdivision   727 - C

727 - 200   What this Subdivision is about

General  

727 - 215   Amount does not exceed $50,000

727 - 220   Disposal of asset at cost, or at undervalue if full value is not reflected in adjustable values of equity or loan interests in the losing entity

Indirect value shifts involving services

727 - 230   Services provided by losing entity to gaining entity for at least their direct cost

727 - 235   Services provided by gaining entity to losing entity for no more than a commercially realistic price

727 - 240   What services certain provisions apply to

727 - 245   How to work out certain amounts for the purposes of sections   727 - 230 and 727 - 235

Anti - overlap provisions

727 - 250   Distribution by an entity to a member or beneficiary

Miscellaneous  

727 - 260   Shift down a wholly - owned chain of entities

Subdivision   727 - D--Working out the market value of economic benefits

727 - 300   What the rules in this Subdivision are for

727 - 315   Transfer, for its adjustable value, of depreciating asset acquired for less than $1,500,000

Subdivision   727 - E--Key concepts

Ultimate controller

727 - 350   Ultimate controller

727 - 355   Control (for value shifting purposes) of a company

727 - 360   Control (for value shifting purposes) of a fixed trust

727 - 365   Control (for value shifting purposes) of a non - fixed trust

727 - 370   Preventing double counting for percentage stake tests

727 - 375   Tests in this Subdivision are exhaustive

Common - ownership nexus and ultimate stake of a particular percentage

727 - 400   When 2 entities have a common - ownership nexus within a period

727 - 405   Ultimate stake of a particular percentage in a company

727 - 410   Ultimate stake of a particular percentage in a fixed trust

727 - 415   Rules for tracing

Subdivision   727 - F--Consequences of an indirect value shift

Guide to Subdivision   727 - F

727 - 450   What this Subdivision is about

Operative provisions

727 - 455   Consequences of the indirect value shift

Affected interests

727 - 460   Affected interests in the losing entity

727 - 465   Affected interests in the gaining entity

727 - 470   Exceptions

727 - 520   Equity or loan interest and related terms

727 - 525   Indirect equity or loan interest

Affected owners

727 - 530   Who are the affected owners

Choices about method to be used

727 - 550   Choosing the adjustable value method

727 - 555   Giving other affected owners information about the choice

Subdivision   727 - G--The realisation time method

727 - 600   What this Subdivision is about

Operative provisions

727 - 610   Consequences of indirect value shift

727 - 615   Reduction of loss on realisation event for affected interest in losing entity

727 - 620   Reduction of gain on realisation event for affected interest in gaining entity

727 - 625   Total gain reductions not to exceed total loss reductions

727 - 630   How cap in section   727 - 625 applies if affected interest is also trading stock or a revenue asset

727 - 635   Splitting an equity or loan interest

727 - 640   Merging equity or loan interests

727 - 645   Effect of CGT roll - over

Further exclusion for certain 95% services indirect value shifts if realisation time method must be used

727 - 700   When 95% services indirect value shift is excluded

95% services indirect value shifts that are not excluded

727 - 705   Another provision of the income tax law affects amount related to services by at least $100,000

727 - 710   Ongoing or recent service arrangement reduces value of losing entity by at least $100,000

727 - 715   Service arrangements reduce value of losing entity that is a group service provider by at least $500,000

727 - 720   Abnormal service arrangement reduces value of losing entity that is not a group service provider by at least $500,000

727 - 725   Meaning of predominantly - services indirect value shift

Subdivision   727 - H--The adjustable value method

Guide to Subdivision   727 - H

727 - 750   What this Subdivision is about

727 - 755   Consequences of indirect value shift

Reductions of adjustable value

727 - 770   Reduction under the adjustable value method

727 - 775   Has there been a disaggregated attributable decrease?

727 - 780   Working out the reduction on a loss - focussed basis

Uplifts of adjustable value

727 - 800   Uplift under the attributable increase method

727 - 805   Has there been a disaggregated attributable increase?

727 - 810   Scaling - down formula

Consequences of the method for various kinds of assets

727 - 830   CGT assets

727 - 835   Trading stock

727 - 840   Revenue assets

Subdivision   727 - K--Reduction of loss on equity or loan interests realised before the IVS time

727 - 850   Consequences of scheme under this Subdivision

727 - 855   Presumed indirect value shift

727 - 860   Conditions about the prospective gaining entity

727 - 865   How other provisions of this Division apply to support this Subdivision

727 - 870   Effect of CGT roll - over

727 - 875   Application to CGT asset that is also trading stock or revenue asset

Subdivision   727 - L--Indirect value shift resulting from a direct value shift

727 - 905   How this Subdivision affects the rest of this Division

727 - 910   Treatment of value shifted under the direct value shift

Chapter   4--International aspects of income tax

Part   4 - 5--General

Division   764--Source rules

Guide to Division   764   126

764 - 1   What this Division is about

Subdivision   764 - A--Source rules

764 - 5   Source rule for international tax agreements

Division   768--Foreign non - assessable income and gains

Subdivision   768 - A--Returns on foreign investment

Guide to Subdivision   768 - A

768 - 1   What this Subdivision is about

Foreign equity distributions on participation interests

768 - 5   Foreign equity distributions on participation interests

768 - 7   Foreign equity distributions entitled to a foreign income tax deduction

768 - 10   Meaning of foreign equity distribution

768 - 15   Participation test--minimum 10% participation

Subdivision   768 - B--Some items of income that are exempt from income tax

768 - 100   Foreign government officials in Australia

768 - 105   Compensation arising out of Second World War

768 - 110   Foreign residents deriving income from certain activities in Australia's exclusive economic zone or on or above Australia's continental shelf

Subdivision   768 - G--Reduction in capital gains and losses arising from CGT events in relation to certain voting interests in active foreign companies

Guide to Subdivision   768 - G

768 - 500   What this Subdivision is about

Operative provisions

768 - 505   Reducing a capital gain or loss from certain CGT events in relation to certain voting interests

Active foreign business asset percentage

768 - 510   Active foreign business asset percentage

768 - 515   Choices to apply market value method or book value method

768 - 520   Market value method--choice made under subsection   768 - 515(1)

768 - 525   Book value method--choice made under subsection   768 - 515(2)

768 - 530   Active foreign business asset percentage--modifications for foreign life insurance companies and foreign general insurance companies

768 - 533   Foreign company that is a FIF using CFC calculation method--treatment as AFI subsidiary under this Subdivision

768 - 535   Modified rules for foreign wholly - owned groups

Types of assets of a foreign company

768 - 540   Active foreign business assets of a foreign company

768 - 545   Assets included in the total assets of a foreign company

Voting percentages in a company

768 - 550   Direct voting percentage in a company

768 - 555   Indirect voting percentage in a company

768 - 560   Total voting percentage in a company

Subdivision   768 - R--Temporary residents

Guide to Subdivision   768 - R

768 - 900   What this Subdivision is about

Operative provisions

768 - 905   Objects

768 - 910   Income derived by temporary resident

768 - 915   Certain capital gains and capital losses of temporary resident to be disregarded

768 - 950   Individual becoming an Australian resident

768 - 955   Temporary resident who ceases to be temporary resident but remains an Australian resident

768 - 960   Temporary resident not attributable taxpayer for purposes of controlled foreign companies rules

768 - 970   Modification of rules for accruals system of taxation of certain non - resident trust estates

768 - 980   Interest paid by temporary resident

Division   770--Foreign income tax offsets

Guide to Division   770   162

770 - 1   What this Division is about

770 - 5   Object

Subdivision   770 - A--Entitlement rules for foreign income tax offsets

Basic entitlement rule for foreign income tax offset

770 - 10   Entitlement to foreign income tax offset

770 - 15   Meaning of foreign income tax , credit absorption tax and unitary tax

Subdivision   770 - B--Amount of foreign income tax offset

Guide to Subdivision   770 - B

770 - 65   What this Subdivision is about

Operative provisions

770 - 70   Amount of foreign income tax offset

770 - 75   Foreign income tax offset limit

770 - 80   Increase in offset limit for tax paid on amounts to which section   23AI or 23AK of the Income Tax Assessment Act 1936 apply

Subdivision   770 - C--Rules about payment of foreign income tax

Rules about when foreign tax is paid

770 - 130   When foreign income tax is considered paid--taxes paid by someone else

770 - 135   Foreign income tax paid by CFCs on attributed amounts

Rules about when foreign tax is considered not paid

770 - 140   When foreign income tax is considered not paid--anti - avoidance rule

Subdivision   770 - D--Administration

770 - 190   Amendment of assessments

Division   775--Foreign currency gains and losses

Guide to Division   775   174

775 - 5   What this Division is about

Subdivision   775 - A--Objects of this Division

775 - 10   Objects of this Division

Subdivision   775 - B--Realisation of forex gains or losses

775 - 15   Forex realisation gains are assessable

775 - 20   Certain forex realisation gains are exempt income

775 - 25   Certain forex realisation gains are non - assessable non - exempt income

775 - 27   Certain forex realisation gains are non - assessable non - exempt income

775 - 30   Forex realisation losses are deductible

775 - 35   Certain forex realisation losses are disregarded

775 - 40   Disposal of foreign currency or right to receive foreign currency--forex realisation event 1

775 - 45   Ceasing to have a right to receive foreign currency--forex realisation event 2

775 - 50   Ceasing to have an obligation to receive foreign currency--forex realisation event 3

775 - 55   Ceasing to have an obligation to pay foreign currency--forex realisation event 4

775 - 60   Ceasing to have a right to pay foreign currency--forex realisation event 5

775 - 65   Only one forex realisation event to be counted

775 - 70   Tax consequences of certain short - term forex realisation gains

775 - 75   Tax consequences of certain short - term forex realisation losses

775 - 80   You may choose not to have sections   775 - 70 and 775 - 75 apply to you

775 - 85   Forex cost base of a right to receive foreign currency

775 - 90   Forex entitlement base of a right to pay foreign currency

775 - 95   Proceeds of assuming an obligation to pay foreign currency

775 - 100   Net costs of assuming an obligation to receive foreign currency

775 - 105   Currency exchange rate effect

775 - 110   Constructive receipts and payments

775 - 115   Economic set - off to be treated as legal set - off

775 - 120   Non - arm's length transactions

775 - 125   CGT consequences of the acquisition of foreign currency as a result of forex realisation event 2 or 3

775 - 130   Certain deductions not allowable

775 - 135   Right to receive or pay foreign currency

775 - 140   Obligation to pay or receive foreign currency

775 - 145   Application of forex realisation events to currency and fungible rights and obligations

775 - 150   Transitional election

775 - 155   Applicable commencement date

775 - 160   Exception--event happens before the applicable commencement date

775 - 165   Exception--currency or right acquired, or obligation incurred, before the applicable commencement date

775 - 168   Exception--disposal or redemption of traditional securities

775 - 175   Application to things happening before commencement

Subdivision   775 - C--Roll - over relief for facility agreements

Guide to Subdivision   775 - C

775 - 180   What this Subdivision is about

Operative provisions

775 - 185   What is a facility agreement ?

775 - 190   What is an eligible security ?

775 - 195   You may choose roll - over relief for a facility agreement

775 - 200   Forex realisation event 4 does not apply

775 - 205   What is a roll - over ?

775 - 210   Notional loan

775 - 215   Discharge of obligation to pay the principal amount of a notional loan under a facility agreement--forex realisation event 6

775 - 220   Material variation of a facility agreement--forex realisation event 7

Subdivision   775 - D--Qualifying forex accounts that pass the limited balance test

Guide to Subdivision   775 - D

775 - 225   What this Subdivision is about

Operative provisions

775 - 230   Election to have this Subdivision apply to one or more qualifying forex accounts

775 - 235   Variation of election

775 - 240   Withdrawal of election

775 - 245   When does a qualifying forex account pass the limited balance test ?

775 - 250   Tax consequences of passing the limited balance test

775 - 255   Notional realisation when qualifying forex account starts to pass the limited balance test

775 - 260   Modification of tax recognition time

Subdivision   775 - E--Retranslation for qualifying forex accounts

Guide to Subdivision   775 - E

775 - 265   What this Subdivision is about

Operative provisions

775 - 270   You may choose retranslation for a qualifying forex account

775 - 275   Withdrawal of choice

775 - 280   Tax consequences of choosing retranslation for an account

775 - 285   Retranslation of gains and losses relating to a qualifying forex account--forex realisation event 8

Subdivision   775 - F--Retranslation under foreign exchange retranslation election under Subdivision   230 - D

Guide to Subdivision   775 - F

775 - 290   What this Subdivision is about

775 - 295   When this Subdivision applies

775 - 300   Tax consequences of choosing retranslation for arrangement

775 - 305   Retranslation of gains and losses relating to arrangement to which foreign exchange retranslation election applies--forex realisation event 9

775 - 310   When election ceases to apply to arrangement

775 - 315   Balancing adjustment when election ceases to apply to arrangement

Division   802--Foreign residents' income with an underlying foreign source

Subdivision   802 - A--Conduit foreign income

Guide to Subdivision   802 - A

802 - 5   What this Subdivision is about

Operative provisions

802 - 10   Objects

802 - 15   Foreign residents--exempting CFI from Australian tax

802 - 17   Trust estates and foreign resident beneficiaries--exempting CFI from Australian tax

802 - 20   Distributions between Australian corporate tax entities--non - assessable non - exempt income

802 - 25   Conduit foreign income of an Australian corporate tax entity

802 - 30   Foreign source income amounts

802 - 35   Capital gains and losses

802 - 40   Effect of foreign income tax offset on conduit foreign income

802 - 45   Previous declarations of conduit foreign income

802 - 50   Receipt of an unfranked distribution from another Australian corporate tax entity

802 - 55   No double benefits

802 - 60   No streaming of distributions

Division   815--Cross - border transfer pricing

Subdivision   815 - A--Treaty - equivalent cross - border transfer pricing rules

Guide to Subdivision   815 - A

815 - 1   What this Subdivision is about

Operative provisions

815 - 5   Object

815 - 10   Transfer pricing benefit may be negated

815 - 15   When an entity gets a transfer pricing benefit

815 - 20   Cross - border transfer pricing guidance

815 - 25   Modified transfer pricing benefit for thin capitalisation

815 - 30   Determinations negating transfer pricing benefit

815 - 35   Consequential adjustments

815 - 40   No double taxation

Subdivision   815 - B--Arm's length principle for cross - border conditions between entities

Guide to Subdivision   815 - B

815 - 101   What this Subdivision is about

Operative provisions

815 - 105   Object

815 - 110   Operation of Subdivision

815 - 115   Substitution of arm's length conditions

815 - 120   When an entity gets a transfer pricing benefit

815 - 125   Meaning of arm's length conditions

815 - 130   Relevance of actual commercial or financial relations

815 - 135   Guidance

815 - 140   Modification for thin capitalisation

815 - 145   Consequential adjustments

815 - 150   Amendment of assessments

Subdivision   815 - C--Arm's length principle for permanent establishments

Guide to Subdivision   815 - C

815 - 201   What this Subdivision is about

Operative provisions

815 - 205   Object

815 - 210   Operation of Subdivision

815 - 215   Substitution of arm's length profits

815 - 220   When an entity gets a transfer pricing benefit

815 - 225   Meaning of arm's length profits

815 - 230   Source rules for certain arm's length profits

815 - 235   Guidance

815 - 240   Amendment of assessments

Subdivision   815 - D--Special rules for trusts and partnerships

Guide to Subdivision   815 - D

815 - 301   What this Subdivision is about

Operative provisions

815 - 305   Special rule for trusts

815 - 310   Special rules for partnerships

Subdivision   815 - E--Reporting obligations for country by country reporting entities

Guide to Subdivision   815 - E

815 - 350   What this Subdivision is about

Operative provisions

815 - 355   Requirement to give statements

815 - 360   Replacement reporting periods

815 - 365   Exemptions

815 - 370   Meaning of country by country reporting entity (or CBC reporting entity )

815 - 375   Meaning of country by country reporting parent (or CBC reporting parent )

815 - 380   Meaning of country by country reporting group (or CBC reporting group )

Division   820--Thin capitalisation rules

Guide to Division   820   296

820 - 1   What this Division is about

820 - 5   Does this Division apply to an entity?

820 - 10   Map of Division

Subdivision   820 - A--Preliminary

820 - 30   Object of Division

820 - 32   Exemption for private or domestic assets and non - debt liabilities

820 - 35   Application--$2 million threshold

820 - 37   Application--assets threshold

820 - 39   Exemption of certain special purpose entities

820 - 40   Meaning of debt deduction

Subdivision   820 - B--Thin capitalisation rules for outward investing entities (non - ADI)

Guide to Subdivision   820 - B

820 - 65   What this Subdivision is about

Operative provisions

820 - 85   Thin capitalisation rule for outward investing entities (non - ADI)

820 - 90   Maximum allowable debt

820 - 95   Safe harbour debt amount--outward investor (general)

820 - 100   Safe harbour debt amount--outward investor (financial)

820 - 105   Arm's length debt amount

820 - 110   Worldwide gearing debt amount--outward investor that is not also an inward investment vehicle

820 - 111   Worldwide gearing debt amount--outward investor that is also an inward investment vehicle

820 - 115   Amount of debt deduction disallowed

820 - 120   Application to part year periods

Subdivision   820 - C--Thin capitalisation rules for inward investing entities (non - ADI)

Guide to Subdivision   820 - C

820 - 180   What this Subdivision is about

Operative provisions

820 - 185   Thin capitalisation rule for inward investing entities (non - ADI)

820 - 190   Maximum allowable debt

820 - 195   Safe harbour debt amount--inward investment vehicle (general)

820 - 200   Safe harbour debt amount--inward investment vehicle (financial)

820 - 205   Safe harbour debt amount--inward investor (general)

820 - 210   Safe harbour debt amount--inward investor (financial)

820 - 215   Arm's length debt amount

820 - 216   Worldwide gearing debt amount--inward investment vehicle (general)

820 - 217   Worldwide gearing debt amount--inward investment vehicle (financial)

820 - 218   Worldwide gearing debt amount--inward investor (general)

820 - 219   Worldwide gearing debt amount--inward investor (financial)

820 - 220   Amount of debt deduction disallowed

820 - 225   Application to part year periods

Subdivision   820 - D--Thin capitalisation rules for outward investing entities (ADI)

Guide to Subdivision   820 - D

820 - 295   What this Subdivision is about

Operative provisions

820 - 300   Thin capitalisation rule for outward investing entities (ADI)

820 - 305   Minimum capital amount

820 - 310   Safe harbour capital amount

820 - 315   Arm's length capital amount

820 - 320   Worldwide capital amount

820 - 325   Amount of debt deduction disallowed

820 - 330   Application to part year periods

Subdivision   820 - E--Thin capitalisation rules for inward investing entities (ADI)

Guide to Subdivision   820 - E

820 - 390   What this Subdivision is about

Operative provisions

820 - 395   Thin capitalisation rule for inward investing entities (ADI)

820 - 400   Minimum capital amount

820 - 405   Safe harbour capital amount

820 - 410   Arm's length capital amount

820 - 415   Amount of debt deduction disallowed

820 - 420   Application to part year periods

Subdivision   820 - EA--Some financial entities may choose to be treated as ADIs

820 - 430   When choice can be made, and what effect it has

820 - 435   Conditions

820 - 440   Revocation of choice

820 - 445   How this Subdivision interacts with Subdivision   820 - FA

Subdivision   820 - FA--How the thin capitalisation rules apply to consolidated groups and MEC groups

Guide to Subdivision   820 - FA

820 - 579   What this Subdivision is about

Operative provisions

820 - 581   How this Division applies to head company for income year in which group comes into existence or ceases to exist

820 - 583   Classification of head company

820 - 584   Exempt special purpose entities treated as not being member of group

820 - 585   Exemption for consolidated group headed by foreign - controlled Australian ADI or its holding company

820 - 587   Additional application of Subdivision   820 - D to MEC group that includes foreign - controlled Australian ADI

820 - 588   Choice to treat specialist credit card institutions as being financial entities and not ADIs

820 - 589   How Subdivision   820 - D applies to a MEC group

Subdivision   820 - FB--Grouping branches of foreign banks and foreign financial entities with a consolidated group, MEC group or single Australian resident company

Guide to Subdivision   820 - FB

820 - 595   What this Subdivision is about

Choice to group with branches of foreign banks and foreign financial entities

820 - 597   Choice by head company of consolidated group or MEC group

820 - 599   Choice by Australian resident company outside consolidatable group and MEC group

Effect of choice  

820 - 601   Application

820 - 603   General

820 - 605   Effect on establishment entity if certain debt deductions disallowed

820 - 607   Effect on test periods under this Division

820 - 609   Effect on classification of head company or single company

820 - 610   Choice not to be outward investing entity (ADI) or inward investing entity (ADI)

820 - 611   Values to be based on what would be in consolidated accounts for group

820 - 613   How Subdivision   820 - D applies

820 - 615   How Subdivision   820 - E applies

Subdivision   820 - G--Calculating the average values

Guide to Subdivision   820 - G

820 - 625   What this Subdivision is about

How to calculate the average values

820 - 630   Methods of calculating average values

820 - 635   The opening and closing balances method

820 - 640   The 3 measurement days method

820 - 645   The frequent measurement method

Special rules about values and valuation

820 - 675   Amount to be expressed in Australian currency

820 - 680   Valuation of assets, liabilities and equity capital

820 - 682   Recognition of assets and liabilities--modifying application of accounting standards

820 - 685   Valuation of debt capital

820 - 690   Commissioner's power

Subdivision   820 - H--Control of entities

Guide to Subdivision   820 - H

820 - 740   What this Subdivision is about

Australian controller of a foreign entity

820 - 745   What is an Australian controlled foreign entity?

820 - 750   What is an Australian controller of a controlled foreign company?

820 - 755   What is an Australian controller of a controlled foreign trust?

820 - 760   What is an Australian controller of a controlled foreign corporate limited partnership?

Foreign controlled Australian entity

820 - 780   What is a foreign controlled Australian entity?

820 - 785   What is a foreign controlled Australian company?

820 - 790   What is a foreign controlled Australian trust?

820 - 795   What is a foreign controlled Australian partnership?

Thin capitalisation control interest

820 - 815   General rule about thin capitalisation control interest in a company, trust or partnership

820 - 820   Special rules about calculating TC control interest held by an entity

820 - 825   Special rules about calculating TC control interests held by a group of entities

820 - 830   Special rules about determining percentage of TC control interest

820 - 835   Commissioner's power

TC direct control interest, TC indirect control interest and TC control tracing interest

820 - 855   TC direct control interest in a company

820 - 860   TC direct control interest in a trust

820 - 865   TC direct control interest in a partnership

820 - 870   TC indirect control interest in a company, trust or partnership

820 - 875   TC control tracing interest in a company, trust or partnership

Subdivision   820 - HA--Controlled foreign entity debt and controlled foreign entity equity

Guide to Subdivision   820 - HA

820 - 880   What this Subdivision is about

820 - 881   Application

820 - 885   What is controlled foreign entity debt ?

820 - 890   What is controlled foreign entity equity ?

Subdivision   820 - I--Associate entities

Guide to Subdivision   820 - I

820 - 900   What this Subdivision is about

820 - 905   Associate entity

820 - 910   Associate entity debt

820 - 915   Associate entity equity

820 - 920   Associate entity excess amount

Subdivision   820 - J--Equity interest in a trust or partnership

Guide to Subdivision   820 - J

820 - 925   What this Subdivision is about

820 - 930   Equity interest in a trust or partnership

Subdivision   820 - JA--Worldwide debt and equity concepts

Guide to Subdivision   820 - JA

820 - 931   What this Subdivision is about

Operative provisions

820 - 932   Worldwide debt and worldwide equity

820 - 933   Statement worldwide debt, statement worldwide equity and statement worldwide assets

820 - 935   Meaning of audited consolidated financial statements

Subdivision   820 - K--Zero - capital amount

Guide to Subdivision   820 - K

820 - 940   What this Subdivision is about

820 - 942   How to work out the zero - capital amount

Subdivision   820 - KA--Cost - free debt capital and excluded equity interests

Guide to Subdivision   820 - KA

820 - 945   What this Subdivision is about

820 - 946   Cost - free debt capital and excluded equity interest

Subdivision   820 - L--Record keeping requirements

Guide to Subdivision   820 - L

820 - 950   What this Subdivision is about

Records about Australian permanent establishments

820 - 960   Records about Australian permanent establishments

820 - 962   Records about Australian permanent establishments--exemptions from Australian accounting standards

820 - 965   Review of Commissioner's decision

Records about arm's length amounts

820 - 980   Records about arm's length debt amount and arm's length capital amount

Offences committed by certain entities

820 - 990   Offences--treatment of partnerships

820 - 995   Offences--treatment of unincorporated companies

Division   830--Foreign hybrids

Guide to Division   830   467

830 - 1   What this Division is about

Subdivision   830 - A--Meaning of "foreign hybrid"

830 - 5   Foreign hybrid

830 - 10   Foreign hybrid limited partnership

830 - 15   Foreign hybrid company

Subdivision   830 - B--Extension of normal partnership provisions to foreign hybrid companies

830 - 20   Treatment of company as a partnership

830 - 25   Partners are the shareholders in the company

830 - 30   Individual interest of a partner in net income etc. equals percentage of notional distribution of company's profits

830 - 35   Partner's interest in assets

830 - 40   Control and disposal of share in partnership income

Subdivision   830 - C--Special rules applicable while an entity is a foreign hybrid

830 - 45   Partner's revenue and net capital losses from foreign hybrid not to exceed partner's loss exposure amount

830 - 50   Deduction etc. where partner's foreign hybrid revenue loss amount and foreign hybrid net capital loss amount are less than partner's loss exposure amount

830 - 55   Meaning of foreign hybrid net capital loss amount

830 - 60   Meaning of loss exposure amount

830 - 65   Meaning of outstanding foreign hybrid revenue loss amount

830 - 70   Meaning of outstanding foreign hybrid net capital loss amount

830 - 75   Extended meaning of subject to foreign tax

Subdivision   830 - D--Special rules applicable when an entity becomes or ceases to be a foreign hybrid

830 - 80   Setting the tax cost of partners' interests in the assets of an entity that becomes a foreign hybrid

830 - 85   Setting the tax cost of assets of an entity when it ceases to be a foreign hybrid

830 - 90   What the expression tax cost is set means

830 - 95   What the expression tax cost setting amount means

830 - 100   What the expression tax cost means

830 - 105   What the expression asset - based income tax regime means

830 - 110   No disposal of assets etc. on entity becoming or ceasing to be a foreign hybrid

830 - 115   Tax losses cannot be transferred to a foreign hybrid

830 - 120   End of CFC's last statutory accounting period

830 - 125   How long interest in asset, or asset, held

Division   832--Hybrid mismatch rules

Guide to Division   832   493

832 - 1   What this Division is about

Subdivision   832 - A--Preliminary

Guide to Subdivision   832 - A

832 - 5   What this Subdivision is about

Operative provisions

832 - 10   Entitlement to receive payment

832 - 15   Entitlement to receive non - cash benefits

832 - 20   Losses that arise from payments or parts of payments

832 - 25   Recipients and payers of a payment

832 - 30   How this Division applies to entities

832 - 35   Single entity rule otherwise not disregarded

832 - 40   Schemes outside Australia

832 - 45   Relationship between this Division and other charging provisions in this Act

832 - 50   Relationship between this Division and Division   820

832 - 55   Division does not affect foreign residence rules

832 - 60   Valuation of trading stock affected by hybrid mismatch rules

Subdivision   832 - B--Concepts relating to mismatches

Guide to Subdivision   832 - B

832 - 100   What this Subdivision is about

Operative provisions

832 - 105   When a payment gives rise to a deduction/non - inclusion mismatch

832 - 110   When a payment gives rise to a deduction/deduction mismatch

832 - 115   Disregard effect of Division in determining deductions

832 - 120   Meaning of foreign income tax deduction

832 - 125   Meaning of subject to Australian income tax

832 - 130   Meaning of subject to foreign income tax

832 - 135   Safe harbour for translation rates

Subdivision   832 - C--Hybrid financial instrument mismatch

Guide to Subdivision   832 - C

832 - 175   What this Subdivision is about

Operative provisions

832 - 180   Deduction not allowable--Australian primary response

832 - 185   Inclusion in assessable income--Australian secondary response

832 - 190   Exception where entity not a party to the structured arrangement

832 - 195   When a hybrid financial instrument mismatch is an offshore hybrid mismatch

832 - 200   When a payment gives rise to a hybrid financial instrument mismatch

832 - 205   Meaning of Division   832 control group

832 - 210   Meaning of structured arrangement

832 - 215   Hybrid mismatch

832 - 220   Hybrid requirement--payments under financial instruments

832 - 225   Hybrid requirement--payments under transfers of certain financial instruments

832 - 230   Hybrid mismatch--integrity rule for substitute payments

832 - 235   Extended operation of this Subdivision in relation to concessional foreign taxes

832 - 240   Adjustment if hybrid financial instrument payment is income in a later year

Subdivision   832 - D--Hybrid payer mismatch

Guide to Subdivision   832 - D

832 - 280   What this Subdivision is about

Operative provisions

832 - 285   Deduction not allowable--Australian primary response

832 - 290   Inclusion in assessable income--Australian secondary response

832 - 295   Exception where entity not a party to the structured arrangement

832 - 300   When a hybrid payer mismatch is an offshore hybrid mismatch

832 - 305   When a payment gives rise to a hybrid payer mismatch

832 - 310   Hybrid mismatch

832 - 315   Hybrid requirement--assume payment was made to same recipient but by an ungrouped payer

832 - 320   Hybrid payer

832 - 325   Meaning of liable entity

832 - 330   Neutralising amount

832 - 335   Adjustment if hybrid payer has dual inclusion income in a later year

Subdivision   832 - E--Reverse hybrid mismatch

Guide to Subdivision   832 - E

832 - 375   What this Subdivision is about

Operative provisions

832 - 380   Deduction not allowable--Australian primary response

832 - 385   Exception where entity not a party to the structured arrangement

832 - 390   When a reverse hybrid mismatch is an offshore hybrid mismatch

832 - 395   When a payment gives rise to a reverse hybrid mismatch

832 - 400   Hybrid mismatch

832 - 405   Hybrid requirement--assume payment was made to an investor

832 - 410   Reverse hybrid

Subdivision   832 - F--Branch hybrid mismatch

Guide to Subdivision   832 - F

832 - 450   What this Subdivision is about

Operative provisions

832 - 455   Deduction not allowable

832 - 460   Exception where entity not a party to the structured arrangement

832 - 465   When a branch hybrid mismatch is an offshore hybrid mismatch

832 - 470   Branch hybrid mismatch

832 - 475   Hybrid mismatch

832 - 480   Hybrid requirement--payment made directly or indirectly to a branch hybrid

832 - 485   Branch hybrid

Subdivision   832 - G--Deducting hybrid mismatch

Guide to Subdivision   832 - G

832 - 525   What this Subdivision is about

Operative provisions

832 - 530   Deduction not allowable

832 - 535   Additional requirements for secondary response

832 - 540   When a deducting hybrid mismatch is an offshore hybrid mismatch

832 - 545   When an amount gives rise to a deducting hybrid mismatch

832 - 550   Deducting hybrid

832 - 555   Identifying a secondary response country

832 - 560   Neutralising amount

832 - 565   Adjustment if deducting hybrid has dual inclusion income in a later year

Subdivision   832 - H--Imported hybrid mismatch

Guide to Subdivision   832 - H

832 - 605   What this Subdivision is about

Operative provisions

832 - 610   Deduction not allowable

832 - 615   When a payment gives rise to an imported hybrid mismatch

832 - 620   Hybrid mismatch

832 - 625   Meaning of importing payment

832 - 630   Working out the amount of the imported hybrid mismatch

832 - 635   Carry forward of residual offshore hybrid mismatches

Subdivision   832 - I--Dual inclusion income

Guide to Subdivision   832 - I

832 - 675   What this Subdivision is about

Operative provisions

832 - 680   Dual inclusion income, and when an entity is eligible to apply it

Subdivision   832 - J--Integrity rule

832 - 720   What this Subdivision is about

Operative provisions

832 - 725   Payments made to interposed foreign entity (integrity measure)--denial of deduction

832 - 730   Back to back arrangements, etc.

832 - 735   Determination may specify kinds of scheme and circumstances where no denial of deduction

Subdivision   832 - K--Modifications for Division   230 (about taxation of financial arrangements)

Guide to Subdivision   832 - K

832 - 775   What this Subdivision is about

Operative provisions

832 - 780   Section   832 - 20 applies to Division   230 losses

832 - 785   Adjusting Division   230 loss

832 - 790   Modifications relating to Division   230 gains and losses

Division   840--Withholding taxes

Guide to Division   840   572

840 - 1   What this Division is about

Subdivision   840 - M--Managed investment trust withholding tax

Guide to Subdivision   840 - M

840 - 800   What this Subdivision is about

Operative provisions

840 - 805   Liability for managed investment trust withholding tax

840 - 810   When managed investment trust withholding tax is payable

840 - 815   Certain income is non - assessable non - exempt income

840 - 820   Agency rules

Subdivision   840 - S--Labour mobility program withholding tax

Guide to Subdivision   840 - S

840 - 900   What this Subdivision is about

Operative provisions

840 - 905   Liability for labour mobility program withholding tax

840 - 906   Covered labour mobility programs

840 - 910   When labour mobility program withholding tax is payable

840 - 915   Certain income is non - assessable non - exempt income

840 - 920   Overpayment of labour mobility program withholding tax

Division   842--Exempt Australian source income and gains of foreign residents

Subdivision   842 - B--Some items of Australian source income of foreign residents that are exempt from income tax

Guide to Subdivision   842 - B

842 - 100   What this Subdivision is about

842 - 105   Amounts of Australian source ordinary income and statutory income that are exempt

Subdivision   842 - I--Investment manager regime

Guide to Subdivision   842 - I

842 - 200   What this Subdivision is about

Object of this Subdivision

842 - 205   Object of this Subdivision

IMR concessions

842 - 210   IMR concessions apply only to foreign residents etc.

842 - 215   IMR concessions

842 - 220   Meaning of IMR entity

842 - 225   Meaning of IMR financial arrangement

IMR widely held entities

842 - 230   Meaning of IMR widely held entity

842 - 235   Rules for determining total participation interests for the purposes of the widely held test

842 - 240   Extended meaning of IMR widely held entity --temporary circumstances outside entity's control

Independent Australian fund managers

842 - 245   Meaning of independent Australian fund manager

842 - 250   Reductions in IMR concessions if independent Australian fund manager entitled to substantial share of IMR entity's income

Division   855--Capital gains and foreign residents

Guide to Division   855   602

855 - 1   What this Division is about

Subdivision   855 - A--Disregarding a capital gain or loss by foreign residents

855 - 5   Objects of this Subdivision

855 - 10   Disregarding a capital gain or loss from CGT events

855 - 15   When an asset is taxable Australian property

855 - 16   Meaning of permanent establishment article

855 - 20   Taxable Australian real property

855 - 25   Indirect Australian real property interests

855 - 30   Principal asset test

855 - 32   Disregard market value of duplicated non - TARP assets

855 - 35   Reducing a capital gain or loss from a business asset--Australian permanent establishments

855 - 40   Capital gains and losses of foreign residents through fixed trusts

Subdivision   855 - B--Becoming an Australian resident

855 - 45   Individual or company becomes an Australian resident

855 - 50   Trust becomes a resident trust

855 - 55   CFC becomes an Australian resident

Division   880--Sovereign entities and activities

Subdivision   880 - A--Basic concepts

Guide to Subdivision   880 - A

880 - 10   What this Subdivision is about

Operative provisions

880 - 15   Meaning of sovereign entity

880 - 20   Meaning of sovereign entity group

Subdivision   880 - B--Basic tax treatment of sovereign entities

Guide to Subdivision   880 - B

880 - 50   What this Subdivision is about

Operative provisions

880 - 55   Sovereign entity liable to pay tax

880 - 60   Bodies politic of foreign countries and foreign government agencies treated as foreign residents

Subdivision   880 - C--Sovereign immunity

Guide to Subdivision   880 - C

880 - 100   What this Subdivision is about

Operative provisions

880 - 105   Sovereign entity's income from membership interest etc. in trust or company--non - assessable non - exempt income

880 - 110   Sovereign entity's deduction from membership interest etc.--loss not deductible

880 - 115   Sovereign entity's capital gain from membership interest etc.--gain disregarded

880 - 120   Sovereign entity's capital loss from membership interest etc. in trust or company--loss disregarded

880 - 125   Covered sovereign entities

880 - 130   Meaning of public non - financial entity and public financial entity

Subdivision   880 - D--Consular activities

Guide to Subdivision   880 - D

880 - 200   What this Subdivision is about

Operative provisions

880 - 205   Income from consular functions--non - assessable non - exempt income

 

Table of Subdivisions

723 - A   Reduction in loss from realising non - depreciating asset

723 - B   Reducing reduced cost base of interests in entity that acquires non - depreciating asset under roll - over

Table of sections

723 - 1   Object

723 - 10   Reduction in loss from realising non - depreciating asset over which right has been created

723 - 15   Reduction in loss from realising non - depreciating asset at the same time as right is created over it

723 - 20   Exceptions

723 - 25   Realisation event that is only a partial realisation

723 - 35   Multiple rights created to take advantage of the $50,000 threshold

723 - 40   Application to CGT asset that is also trading stock or revenue asset

723 - 50   Effects if right created over underlying asset is also trading stock or a revenue asset


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