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INCOME TAX ASSESSMENT ACT 1936 - SECT 92A

Deductions in respect of outstanding subsection 92(2AA) amounts

             (1)  If:

                     (a)  the partner is a limited partner in a partnership; and

                     (b)  the partnership is a VCLP, an ESVCLP, an AFOF or a VCMP during the year of income; and

                     (c)  the amount allowable under subsection 92(2) as a deduction to the partner for partnership losses incurred by the partnership in the year of income is not reduced because of subsection 92(2AA); and

                     (d)  the partner has an outstanding subsection 92(2AA) amount for the year of income;

there is allowable as a deduction to the partnership an amount worked out as follows:

Method statement

Step 1.   Subtract the amount allowable under subsection 92(2) as a deduction to the partner for partnership losses incurred by the partnership in the year of income from the amount worked out using the method statement in subsection 92(2AA).

Step 2.   If the amount worked out under step 1 is greater than or equal to the outstanding subsection 92(2AA) amount for the year of income, the amount of the deduction allowable under this section is the outstanding subsection 92(2AA) amount.

Step 3.   If the amount worked out under step 1 is less than the outstanding subsection 92(2AA) amount for the year of income, the amount of the deduction allowable under this section is the amount worked out under step 1.

             (2)  The partner has an outstanding subsection 92(2AA) amount for a year of income if:

                     (a)  an amount allowable under subsection 92(2) as a deduction to the partner for partnership losses incurred by the partnership in a previous year of income was reduced because of subsection 92(2AA); and

                     (b)  the difference between:

                              (i)  the sum of all reductions made under subsection 92(2AA) to amounts allowable under subsection 92(2) as deductions to the partner for partnership losses incurred by the partnership in previous years of income; and

                             (ii)  the sum of all amounts allowable under this section, in respect of previous years of income, as deductions to the partner in relation to those reductions;

                            is greater than zero.

The amount of that difference is the partner's outstanding subsection 92(2AA) amount for the year of income.

             (3)  To avoid doubt, a partner's outstanding subsection 92(2AA) amount for a year of income cannot form part of a tax loss for the purposes of Division 36 or 160 of the Income Tax Assessment Act 1997 .



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