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INCOME TAX ASSESSMENT ACT 1997 - SECT 36.55

Converting excess franking offsets into tax loss

Excess franking offsets

             (1)  An entity that is a * corporate tax entity at any time during an income year has an amount of excess franking offsets for that year if:

                     (a)  the total amount of * tax offsets to which the entity is entitled for that year under Division 207 and Subdivision 210-H (except those that are subject to the refundable tax offset rules because of section 67- 25);

exceeds:

                     (b)  the amount of income tax that the entity would have to pay on its taxable income for that year if:

                              (i)  it did not have those tax offsets; and

                             (ii)  it did not have any tax offsets that are subject to the tax offset carry forward rules or the refundable tax offset rules; and

                            (iii)  it did not have any tax offset under section 205-70;

                            but had all its other tax offsets.

The excess is the amount of excess franking offsets .

Note:          Division 65 sets out the tax offset carry forward rules. Division 67 sets out which tax offsets are subject to the refundable tax offset rules.

Example:    For the 2017-18 income year, Company E (which is not a base rate entity) has:

*       assessable income of $200 (franked distribution of $140 and franking credit of $60); and

*       $100 of deductions that are allowable.

                   The tax offset of $60 from the franking credit is not stated in Division 67 to be subject to the refundable tax offset rules.

                   Disregarding the tax offset of $60 from the franking credit, the amount of income tax that Company E would have to pay is $30:

                   Start formula open bracket open bracket $140 plus $60 close bracket minus $100 close bracket times 30% end formula

                   This amount is $30 less than the tax offset of $60. Company E therefore has an amount of excess franking offsets of $30 for that year.

How to work out the amount of the tax loss

             (2)  For the purposes of this Act, if:

                     (a)  an entity has an amount of * excess franking offsets for an income year; and

                     (b)  the result of applying the following method statement is a positive amount;

then:

                     (c)  the entity is taken to have a * tax loss for that year equal to that positive amount (instead of an amount of tax loss worked out under section 36-10, 165-70, 175- 35 or 701-30); and

                     (d)  that year is taken to be a * loss year for the entity if the entity would not otherwise have a tax loss for that year.

Method statement

Step 1.    Work out the amount (if any) that would have been the entity's * tax loss for that year under section 36-10, 165-70, 175- 35 or 701-30 if the entity's * net exempt income for that year (if any) were disregarded.

                   Note:             See section 36-20 for the calculation of net exempt income.

Step 2.    Divide the amount of * excess franking offsets by the entity's * corporate tax rate for imputation purposes for that year.

Step 3.    Add the results of steps 1 and 2.

Step 4.    Reduce the result of step 3 by the entity's * net exempt income for that year (if any).

              The result of this step is taken to be the entity's * tax loss for that year. However, if the result of this step is nil or a negative amount, the company does not have any tax loss for that year.

Example:    Assume that company E did not derive any exempt income for the 2017-2018 income year and that it would not otherwise have any tax loss for that year under section 36-10, 165-70, 175- 35 or 701-30.

                   Applying the method statement, the amount of excess franking offsets of $30 generates a tax loss of $100 for that year, which can be deducted in a later income year under section 36-15 or 36- 17.


 

Contents

Chapter 2--Liability rules of general application                       1

Part 2-10--Capital allowances: rules about deductibility of capital expenditure                1

Division 40--Capital allowances                                                                             1

Guide to Division 40                                                                                                  2

40-1....................... What this Division is about................................................. 2

40-10..................... Simplified outline of this Division...................................... 2

Subdivision 40-A--Objects of Division                                                                  5

40-15..................... Objects of Division............................................................. 5

Subdivision 40-B--Core provisions                                                                       6

Guide to Subdivision 40-B                                                                                         6

40-20..................... What this Subdivision is about........................................... 6

Operative provisions                                                                                                  7

40-25..................... Deducting amounts for depreciating assets......................... 7

40-27..................... Further reduction of deduction for second-hand assets in residential property         9

40-30..................... What a depreciating asset is............................................. 11

40-35..................... Jointly held depreciating assets......................................... 13

40-40..................... Meaning of hold a depreciating asset................................ 13

40-45..................... Assets to which this Division does not apply................... 16

40-50..................... Assets for which you deduct under another Subdivision.. 17

40-53..................... Alterations etc. to certain depreciating assets.................... 17

40-55..................... Use of the "cents per kilometre" car expense deduction method              18

40-60..................... When a depreciating asset starts to decline in value.......... 18

40-65..................... Choice of methods to work out the decline in value.......... 19

40-70..................... Diminishing value method................................................ 21

40-72..................... Diminishing value method for post-9 May 2006 assets.... 22

40-75..................... Prime cost method............................................................ 23

40-80..................... When you can deduct the asset's cost............................... 25

40-82..................... Assets costing less than $150,000--medium sized businesses--assets first acquired between 2 April 2019 and 31 December 2020..................................................... 28

40-85..................... Meaning of adjustable value and opening adjustable value of a depreciating asset 33

40-90..................... Debt forgiveness............................................................... 34

40-95..................... Choice of determining effective life.................................. 34

40-100................... Commissioner's determination of effective life................. 42

40-102................... Capped life of certain depreciating assets.......................... 43

40-103................... Effective life and remaining effective life of certain vessels 46

40-105................... Self-assessing effective life............................................... 47

40-110................... Recalculating effective life................................................ 49

40-115................... Splitting a depreciating asset............................................. 51

40-120................... Replacement spectrum licences......................................... 51

40-125................... Merging depreciating assets.............................................. 52

40-130................... Choices............................................................................. 53

40-135................... Certain anti-avoidance provisions..................................... 53

40-140................... Getting tax information from associates............................ 53

Subdivision 40-C--Cost                                                                                           55

Guide to Subdivision 40-C                                                                                       55

40-170................... What this Subdivision is about......................................... 55

Operative provisions                                                                                                55

40-175................... Cost.................................................................................. 55

40-180................... First element of cost.......................................................... 56

40-185................... Amount you are taken to have paid to hold a depreciating asset or to receive a benefit            59

40-190................... Second element of cost..................................................... 61

40-195................... Apportionment of cost...................................................... 62

40-200................... Exclusion from cost.......................................................... 62

40-205................... Cost of a split depreciating asset....................................... 63

40-210................... Cost of merged depreciating assets................................... 63

40-215................... Adjustment: double deduction.......................................... 63

40-220................... Cost reduced by amounts not of a capital nature............... 64

40-222................... Cost reduced by water infrastructure improvement expenditure               64

40-225................... Adjustment: acquiring a car at a discount.......................... 64

40-230................... Adjustment: car limit......................................................... 65

40-235................... Adjustment: National Disability Insurance Scheme costs. 65

Subdivision 40-D--Balancing adjustments                                                         66

Guide to Subdivision 40-D                                                                                       66

40-280................... What this Subdivision is about......................................... 66

Operative provisions                                                                                                67

40-285................... Balancing adjustments...................................................... 67

40-290................... Reduction for non-taxable use.......................................... 69

40-291................... Reduction for second-hand assets used in residential property                70

40-292................... Adjustments--assets used for both general tax purposes and R&D activities         71

40-293................... Adjustments--partnership assets used for both general tax purposes and R&D activities       72

40-295................... Meaning of balancing adjustment event ........................... 73

40-300................... Meaning of termination value ........................................... 75

40-305................... Amount you are taken to have received under a balancing adjustment event            78

40-310................... Apportionment of termination value................................. 79

40-320................... Car to which section 40- 225 applies................................. 79

40-325................... Adjustment: car limit......................................................... 79

40-335................... Deduction for in-house software where you will never use it  80

40-340................... Roll-over relief.................................................................. 80

40-345................... What the roll-over relief is................................................ 83

40-350................... Additional consequences.................................................. 83

40-360................... Notice to allow transferee to work out how this Division applies            84

40-362................... Roll-over relief for holders of vessels covered by certificates under the Shipping Reform (Tax Incentives) Act 2012 .................................................................................. 85

40-363................... Roll-over relief for interest realignment arrangements...... 86

40-364................... Interest realignment adjustments....................................... 89

40-365................... Involuntary disposals........................................................ 91

40-370................... Balancing adjustments where there has been use of different car expense methods 93

Subdivision 40-E--Low-value and software development pools                  95

Guide to Subdivision 40-E                                                                                       95

40-420................... What this Subdivision is about......................................... 95

Operative provisions                                                                                                95

40-425................... Allocating assets to a low-value pool................................ 95

40-430................... Rules for assets in low-value pools.................................. 97

40-435................... Private or exempt use of assets......................................... 98

40-440................... How you work out the decline in value of assets in low-value pools       98

40-445................... Balancing adjustment events........................................... 100

40-450................... Software development pools........................................... 100

40-455................... How to work out your deduction.................................... 100

40-460................... Your assessable income includes consideration for pooled software       101

Subdivision 40-F--Primary production depreciating assets                       101

Guide to Subdivision 40-F                                                                                     101

40-510................... What this Subdivision is about....................................... 101

Operative provisions                                                                                              102

40-515................... Water facilities, horticultural plants, fodder storage assets and fencing assets          102

40-520................... Meaning of water facility , horticultural plant , fodder storage asset and fencing asset             104

40-525................... Conditions...................................................................... 105

40-530................... When declines in value start............................................ 107

40-535................... Meaning of horticulture and commercial horticulture .... 107

40-540................... How you work out the decline in value for water facilities 108

40-545................... How you work out the decline in value for horticultural plants                108

40-548................... How you work out the decline in value for fodder storage assets            109

40-551................... How you work out the decline in value for fencing assets 110

40-555................... Amounts you cannot deduct........................................... 110

40-560................... Non-arm's length transactions........................................ 111

40-565................... Extra deduction for destruction of a horticultural plant... 112

40-570................... How this Subdivision applies to partners and partnerships 113

40-575................... Getting tax information if you acquire a horticultural plant 113

Subdivision 40-G--Capital expenditure of primary producers and other landholders                114

Guide to Subdivision 40-G                                                                                    114

40-625................... What this Subdivision is about....................................... 114

Operative provisions                                                                                              115

40-630................... Landcare operations........................................................ 115

40-635................... Meaning of landcare operation ...................................... 117

40-640................... Meaning of approved management plan ........................ 118

40-645................... Electricity and telephone lines......................................... 119

40-650................... Amounts you cannot deduct under this Subdivision....... 120

40-655................... Meaning of connecting power to land or upgrading the connection and metering point          121

40-660................... Non-arm's length transactions........................................ 123

40-665................... How this Subdivision applies to partners and partnerships 123

40-670................... Approval of persons as farm consultants........................ 123

40-675................... Review of decisions relating to approvals....................... 124

Subdivision 40-H--Capital expenditure that is immediately deductible 124

Guide to Subdivision 40-H                                                                                    124

40-725................... What this Subdivision is about....................................... 124

Operative provisions                                                                                              125

40-730................... Deduction for expenditure on exploration or prospecting 125

40-735................... Deduction for expenditure on mining site rehabilitation.. 127

40-740................... Meaning of ancillary mining activities and mining building site               128

40-745................... No deduction for certain expenditure.............................. 129

40-750................... Deduction for payments of petroleum resource rent tax.. 129

40-755................... Environmental protection activities................................. 130

40-760................... Limits on deductions from environmental protection activities 131

40-765................... Non-arm's length transactions........................................ 132

Subdivision 40-I--Capital expenditure that is deductible over time          132

Guide to Subdivision 40-I                                                                                      132

40-825................... What this Subdivision is about....................................... 132

Operative provisions                                                                                              133

40-830................... Project pools................................................................... 133

40-832................... Project pools for post-9 May 2006 projects.................... 135

40-835................... Reduction of deduction................................................... 135

40-840................... Meaning of project amount ............................................ 136

40-845................... Project life....................................................................... 137

40-855................... When you start to deduct amounts for a project pool...... 137

40-860................... Meaning of mining capital expenditure .......................... 137

40-865................... Meaning of transport capital expenditure ...................... 139

40-870................... Meaning of transport facility .......................................... 140

40-875................... Meaning of processed minerals and minerals treatment 140

40-880................... Business related costs..................................................... 141

40-885................... Non-arm's length transactions........................................ 145

Subdivision 40-J--Capital expenditure for the establishment of trees in carbon sink forests    145

Guide to Subdivision 40-J                                                                                     145

40-1000................. What this Subdivision is about....................................... 145

Operative provisions                                                                                              146

40-1005................. Deduction for expenditure for establishing trees in carbon sink forests   146

40-1010................. Expenditure for establishing trees in carbon sink forests 148

40-1015................. Carbon sequestration by trees........................................ 150

40-1020................. Certain expenditure disregarded...................................... 150

40-1025................. Non-arm's length transactions........................................ 151

40-1030................. Extra deduction for destruction of trees in carbon sink forest  151

40-1035................. Getting information if you acquire a carbon sink forest.. 152

Subdivision 40-K--Farm-in farm-out arrangements                                    154

Guide to Subdivision 40-K                                                                                    154

40-1095................. What this Subdivision is about....................................... 154

Farm-in farm-out arrangements and exploration benefits                          154

40-1100................. Meaning of farm-in farm-out arrangement and exploration benefit         154

Consequences for transferors                                                                              156

40-1105................. Treatment of certain exploration benefits received under farm-in farm-out arrangements        156

40-1110................. Cost of split interests resulting from farm-in farm-out arrangements       157

40-1115................. Deductions relating to receipt of exploration benefits..... 157

40-1120................. Cost base and reduced cost base of exploration benefits etc. 158

40-1125................. Effect of exploration benefits on the cost of mining, quarrying or prospecting information     158

Consequences for transferees                                                                               159

40-1130................. Consequences of certain exploration benefits provided under farm-in farm-out arrangements                159

Division 41--Additional deduction for certain new business investment               160

Guide to Division 41                                                                                              160

41-1....................... What this Division is about............................................. 160

Operative provisions                                                                                              161

41-5....................... Object of Division.......................................................... 161

41-10..................... Entitlement to deduction for investment.......................... 161

41-15..................... Amount of deduction...................................................... 162

41-20..................... Recognised new investment amount............................... 164

41-25..................... Investment commitment time.......................................... 165

41-30..................... First use time.................................................................. 167

41-35..................... New investment threshold.............................................. 167

Division 43--Deductions for capital works                                                   168

Guide to Division 43                                                                                              168

43-1....................... What this Division is about............................................. 168

43-2....................... Key concepts used in this Division................................. 168

Subdivision 43-A--Key operative provisions                                                  170

Guide to Subdivision 43-A                                                                                     170

43-5....................... What this Subdivision is about....................................... 170

Operative provisions                                                                                              170

43-10..................... Deductions for capital works.......................................... 170

43-15..................... Amount you can deduct.................................................. 171

43-20..................... Capital works to which this Division applies.................. 171

43-25..................... Rate of deduction............................................................ 173

43-30..................... No deduction until construction is complete................... 173

43-35..................... Requirement for registration under the Industry Research and Development Act    173

43-40..................... Deduction for destruction of capital works..................... 174

43-45..................... Certain anti-avoidance provisions................................... 174

43-50..................... Links and signposts to other parts of the Act.................. 175

43-55..................... Anti-avoidance--arrangement etc. with tax-exempt entity 176

Subdivision 43-B--Establishing the deduction base                                       177

Guide to Subdivision 43-B                                                                                     177

43-60..................... What this Subdivision is about....................................... 177

43-65..................... Explanatory material....................................................... 177

Operative provisions                                                                                              178

43-70..................... What is construction expenditure?.................................. 178

43-72..................... Meaning of forestry road , timber operation and timber mill building      180

43-75..................... Construction expenditure area......................................... 180

43-80..................... When capital works begin............................................... 182

43-85..................... Pools of construction expenditure................................... 183

43-90..................... Table of intended use at time of completion of construction 183

43-95..................... Meaning of hotel building and apartment building ......... 186

43-100................... Certificates by Industry Innovation and Science Australia 187

Subdivision 43-C--Your area and your construction expenditure            187

Guide to Subdivision 43-C                                                                                     187

43-105................... What this Subdivision is about....................................... 187

43-110................... Explanatory material....................................................... 188

Operative provisions                                                                                              188

43-115................... Your area and your construction expenditure--owners.. 188

43-120................... Your area and your construction expenditure--lessees and quasi-ownership right holders     188

43-125................... Lessees' or right holders' pools can revert to owner...... 189

43-130................... Identifying your area on acquisition or disposal............. 190

Subdivision 43-D--Deductible uses of capital works                                     190

Guide to Subdivision 43-D                                                                                     190

43-135................... What this Subdivision is about....................................... 190

Operative provisions                                                                                              191

43-140................... Using your area in a deductible way............................... 191

43-145................... Using your area in the 4% manner.................................. 193

43-150................... Meaning of industrial activities ...................................... 197

Subdivision 43-E--Special rules about uses                                                     199

Guide to Subdivision 43-E                                                                                     199

43-155................... What this Subdivision is about....................................... 199

Operative provisions                                                                                              200

43-160................... Your area is used for a purpose if it is maintained ready for use for the purpose     200

43-165................... Temporary cessation of use............................................ 200

43-170................... Own use--capital works other than hotel and apartment buildings          201

43-175................... Own use--hotel and apartment buildings....................... 201

43-180................... Special rules for hotel and apartment buildings............... 202

43-185................... Residential or display use............................................... 203

43-190................... Use of facilities not commonly provided, and of certain buildings used to operate a hotel, motel or guest house........................................................................................ 204

43-195................... Use for R&D activities must be in connection with a business                205

Subdivision 43-F--Calculation of deduction                                                   205

Guide to Subdivision 43-F                                                                                     205

43-200................... What this Subdivision is about....................................... 205

43-205................... Explanatory material....................................................... 206

Operative provisions                                                                                              207

43-210................... Deduction for capital works begun after 26 February 1992 207

43-215................... Deduction for capital works begun before 27 February 1992  209

43-220................... Capital works taken to have begun earlier for certain purposes                210

Subdivision 43-G--Undeducted construction expenditure                           211

Guide to Subdivision 43-G                                                                                    211

43-225................... What this Subdivision is about....................................... 211

Operative provisions                                                                                              212

43-230................... Calculating undeducted construction expenditure--common step            212

43-235................... Post-26 February 1992 undeducted construction expenditure  212

43-240................... Pre-27 February 1992 undeducted construction expenditure 213

Subdivision 43-H--Balancing deduction on destruction of capital works 214

Guide to Subdivision 43-H                                                                                    214

43-245................... What this Subdivision is about....................................... 214

Operative provisions                                                                                              215

43-250................... The amount of the balancing deduction........................... 215

43-255................... Amounts received or receivable...................................... 215

43-260................... Apportioning amounts received for destruction.............. 216

Division 45--Disposal of leases and leased plant                                        217

Guide to Division 45                                                                                              217

45-1....................... What this Division is about............................................. 217

Operative provisions                                                                                              218

45-5....................... Disposal of leased plant or lease..................................... 218

45-10..................... Disposal of interest in partnership.................................. 220

45-15..................... Disposal of shares in 100% subsidiary that leases plant. 222

45-20..................... Disposal of shares in 100% subsidiary that leases plant in partnership    223

45-25..................... Group members liable to pay outstanding tax................. 224

45-30..................... Reduction for certain plant acquired before 21.9.99........ 225

45-35..................... Limit on amount included for plant for which there is a CGT exemption 226

45-40..................... Meaning of plant and written down value ....................... 226

Part 2-15--Non-assessable income                                                                           229

Division 50--Exempt entities                                                                                 229

Subdivision 50-A--Various exempt entities                                                     229

50-1....................... Entities whose ordinary income and statutory income is exempt              230

50-5....................... Charity, education and science........................................ 230

50-10..................... Community service......................................................... 231

50-15..................... Employees and employers.............................................. 231

50-25..................... Government.................................................................... 232

50-30..................... Health............................................................................. 233

50-35..................... Mining............................................................................ 233

50-40..................... Primary and secondary resources, and tourism............... 233

50-45..................... Sports, culture and recreation.......................................... 235

50-47..................... Special condition for all items......................................... 237

50-50..................... Special conditions for item 1.1........................................ 237

50-52..................... Special condition for item 1.1......................................... 238

50-55..................... Special conditions for items 1.3, 1.4, 6.1 and 6.2........... 238

50-65..................... Special conditions for item 1.6........................................ 238

50-70..................... Special conditions for items 1.7, 2.1, 9.1 and 9.2........... 239

50-72..................... Special condition for item 4.1......................................... 240

50-75..................... Certain distributions may be made overseas................... 240

Subdivision 50-B--Endorsing charitable entities as exempt from income tax               241

Guide to Subdivision 50-B                                                                                     241

50-100................... What this Subdivision is about....................................... 241

Endorsing charitable entities as exempt from income tax                           241

50-105................... Endorsement by Commissioner...................................... 241

50-110................... Entitlement to endorsement............................................. 242

Division 51--Exempt amounts                                                                              243

51-1....................... Amounts of ordinary income and statutory income that are exempt         243

51-5....................... Defence........................................................................... 244

51-10..................... Education and training.................................................... 246

51-30..................... Welfare........................................................................... 249

51-32..................... Compensation payments for loss of tax exempt payments 251

51-33..................... Compensation payments for loss of pay and/or allowances as a Defence reservist  252

51-35..................... Payments to a full-time student at a school, college or university             253

51-40..................... Payments to a secondary student.................................... 254

51-42..................... Bonuses for early completion of an apprenticeship......... 254

51-43..................... Income collected or derived by copyright collecting society 254

51-45..................... Income collected or derived by resale royalty collecting society               255

51-50..................... Maintenance payments to a spouse or child.................... 256

51-52..................... Income derived from eligible venture capital investments by ESVCLPs  257

51-54..................... Gain or profit from disposal of eligible venture capital investments         259

51-55..................... Gain or profit from disposal of venture capital equity..... 260

51-57..................... Interest on judgment debt relating to personal injury...... 260

51-60..................... Prime Minister's Prizes.................................................. 261

51-100................... Shipping......................................................................... 262

51-105................... Shipping activities ........................................................... 262

51-110................... Core shipping activities .................................................. 263

51-115................... Incidental shipping activities ........................................... 264

51-120................... Interest on unclaimed money and property..................... 264

51-125................... 2018 storms--relief payments........................................ 265

Division 52--Certain pensions, benefits and allowances are exempt from income tax 266

Guide to Division 52                                                                                              266

52-1....................... What this Division is about............................................. 266

Subdivision 52-A--Exempt payments under the Social Security Act 1991 267

Guide to Subdivision 52-A                                                                                     267

52-5....................... What this Subdivision is about....................................... 267

Operative provisions                                                                                              268

52-10..................... How much of a social security payment is exempt?........ 268

52-15..................... Supplementary amounts of payments............................. 282

52-20..................... Tax-free amount of an ordinary payment after the death of your partner  285

52-25..................... Tax-free amount of certain bereavement lump sum payments  287

52-30..................... Tax-free amount of certain other bereavement lump sum payments         289

52-35..................... Tax-free amount of a lump sum payment made because of the death of a person you are caring for       290

52-40..................... Provisions of the Social Security Act 1991 under which payments are made           291

Subdivision 52-B--Exempt payments under the Veterans' Entitlements Act 1986        295

Guide to Subdivision 52-B                                                                                     295

52-60..................... What this Subdivision is about....................................... 295

Operative provisions                                                                                              295

52-65..................... How much of a veterans' affairs payment is exempt?..... 295

52-70..................... Supplementary amounts of payments............................. 301

52-75..................... Provisions of the Veterans' Entitlements Act 1986 under which payments are made               301

Subdivision 52-C--Exempt payments made because of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986                                 304

Guide to Subdivision 52-C                                                                                     304

52-100................... What this Subdivision is about....................................... 304

Operative provisions                                                                                              304

52-105................... Supplementary amount of a payment made under the Repatriation Act 1920 is exempt           304

52-110................... Other exempt payments.................................................. 306

Subdivision 52-CA--Exempt payments under the Military Rehabilitation and Compensation Act 2004                306

Guide to Subdivision 52-CA                                                                                  306

52-112................... What this Subdivision is about....................................... 306

Operative provisions                                                                                              307

52-114................... How much of a payment under the Military Rehabilitation and Compensation Act is exempt?               307

Subdivision 52-CB--Exempt payments under the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006 310

52-117................... Payments of travelling expenses and pharmaceutical supplement are exempt          310

Subdivision 52-CC--Exempt payments under the Treatment Benefits (Special Access) Act 2019             311

52-120................... Payments of travelling expenses and pharmaceutical supplement are exempt          311

Subdivision 52-E--Exempt payments under the ABSTUDY scheme         311

Guide to Subdivision 52-E                                                                                     311

52-130................... What this Subdivision is about....................................... 311

Operative provisions                                                                                              312

52-131................... Payments under ABSTUDY scheme............................. 312

52-132................... Supplementary amount of payment................................. 314

52-133................... Tax-free amount of ordinary payment on death of partner if no bereavement payment payable               315

52-134................... Tax-free amount if you receive a bereavement lump sum payment          316

Subdivision 52-F--Exemption of Commonwealth education or training payments      317

52-140................... Supplementary amount of a Commonwealth education or training payment is exempt            317

52-145................... Meaning of Commonwealth education or training payment 319

Subdivision 52-G--Exempt payments under the A New Tax System (Family Assistance) (Administration) Act 1999                                                                                                        320

52-150................... Family assistance payments are exempt.......................... 320

Subdivision 52-H--Other exempt payments                                                    320

52-160................... Economic security strategy payments are exempt........... 320

52-162................... ETR payments are exempt.............................................. 320

52-165................... Household stimulus payments are exempt...................... 320

52-170................... Outer Regional and Remote payments under the Helping Children with Autism package are exempt     321

52-172................... Outer Regional and Remote payments under the Better Start for Children with Disability initiative are exempt........................................................................................ 321

52-175................... Continence aids payments are exempt............................. 321

52-180................... National Disability Insurance Scheme amounts are exempt 321

52-185................... Acute support packages are exempt................................ 321

Division 53--Various exempt payments                                                          322

Guide to Division 53                                                                                              322

53-1....................... What this Division is about............................................. 322

Operative provisions                                                                                              322

53-10..................... Exemption of various types of payments........................ 322

53-20..................... Exemption of similar Australian and United Kingdom veterans' payments             324

53-25..................... Coronavirus economic response payment....................... 324

53-30..................... Territories Stolen Generations Redress Scheme payments are exempt     324

Division 54--Exemption for certain payments made under structured settlements and structured orders                                                                                                                     325

Guide to Division 54                                                                                              325

54-1....................... What this Division is about............................................. 325

Subdivision 54-A--Definitions                                                                             325

Operative provisions                                                                                              326

54-5....................... Definitions...................................................................... 326

54-10..................... Meaning of structured settlement and structured order . 326

Subdivision 54-B--Tax exemption for personal injury annuities              329

Operative provisions                                                                                              329

54-15..................... Personal injury annuity exemption for injured person.... 329

54-20..................... Lump sum compensation etc. would not have been assessable                329

54-25..................... Requirements of the annuity instrument.......................... 330

54-30..................... Requirements for payments of the annuity...................... 330

54-35..................... Payments during the guarantee period on the death of the injured person                331

54-40..................... Requirement for minimum monthly level of support...... 333

Subdivision 54-C--Tax exemption for personal injury lump sums           335

Operative provisions                                                                                              335

54-45..................... Personal injury lump sum exemption for injured person 335

54-50..................... Lump sum compensation would not have been assessable 336

54-55..................... Requirements of the instrument under which the lump sum is paid         336

54-60..................... Requirements for payments of the lump sum.................. 336

Subdivision 54-D--Miscellaneous                                                                       337

Operative provisions                                                                                              338

54-65..................... Exemption for certain payments to reversionary beneficiaries  338

54-70..................... Special provisions about trusts....................................... 338

54-75..................... Minister to arrange for review and report....................... 339

Division 55--Payments that are not exempt from income tax            341

Guide to Division 55                                                                                              341

55-1....................... What this Division is about............................................. 341

Operative provisions                                                                                              341

55-5....................... Occupational superannuation payments.......................... 341

55-10..................... Education entry payments............................................... 342

Division 58--Capital allowances for depreciating assets previously owned by an exempt entity            343

Guide to Division 58                                                                                              343

58-1....................... What this Division is about............................................. 343

Subdivision 58-A--Application                                                                           344

58-5....................... Application of Division.................................................. 344

58-10..................... When an asset is acquired in connection with the acquisition of a business             345

Subdivision 58-B--Calculating decline in value of privatised assets under Division 40              347

58-60..................... Purpose of rules in this Subdivision............................... 347

58-65..................... Choice of method to work out cost of privatised asset.... 347

58-70..................... Application of Division 40............................................. 348

58-75..................... Meaning of notional written down value ........................ 349

58-80..................... Meaning of undeducted pre-existing audited book value 351

58-85..................... Pre-existing audited book value of depreciating asset..... 352

58-90..................... Method and effective life for transition entity................. 353

Division 59--Particular amounts of non-assessable non-exempt income              354

Guide to Division 59                                                                                              354

59-1....................... What this Division is about............................................. 354

Operative provisions                                                                                              355

59-10..................... Compensation under firearms surrender arrangements... 355

59-15..................... Mining payments............................................................ 355

59-20..................... Taxable amounts relating to franchise fees windfall tax.. 356

59-25..................... Taxable amounts relating to Commonwealth places windfall tax             356

59-30..................... Amounts you must repay................................................ 356

59-35..................... Amounts that would be mutual receipts but for prohibition on distributions to members or issue of MCIs........................................................................................ 357

59-40..................... Issue of rights................................................................. 357

59-50..................... Native title benefits......................................................... 358

59-55..................... 2019-20 bushfires--payments for volunteer work with fire services      360

59-60..................... 2019-20 bushfires--disaster relief payments and non-cash benefits        360

59-65..................... Water infrastructure improvement payments................... 361

59-67..................... Meaning of SRWUIP program , SRWUIP payment , direct SRWUIP payment and indirect SRWUIP payment ........................................................................................ 363

59-70..................... List of SRWUIP programs............................................. 364

59-75..................... Commissioner to be kept informed................................. 365

59-80..................... Amending assessments................................................... 365

59-85..................... 2019 floods--recovery grants for small businesses, primary producers and non-profit organisations    366

59-86..................... 2019 floods--on-farm grant program for primary producers  366

59-90..................... Cash flow boost.............................................................. 367

59-95..................... Coronavirus economic response payment....................... 367

59-96..................... COVID-19 disaster payment.......................................... 367

59-97..................... State and Territory grants to small business relating to the recovery from the coronavirus known as COVID-19..................................................................... 367

59-98..................... Commonwealth small business support payments relating to the coronavirus known as COVID-19     369

59-99..................... 2021 floods and storms--recovery grants...................... 370

59-100................... Refund of large-scale generation shortfall charge........... 370

59-105................... Cyclone Seroja--recovery grants................................... 370

Part 2-20--Tax offsets                                                                                                     371

Division 61--Generally applicable tax offsets                                             371

Subdivision 61-A--Dependant (invalid and carer) tax offset                      371

Guide to Subdivision 61-A                                                                                     371

61-1....................... What this Subdivision is about....................................... 371

Object of this Subdivision                                                                                      372

61-5....................... Object of this Subdivision.............................................. 372

Entitlement to the dependant (invalid and carer) tax offset                         372

61-10..................... Who is entitled to the tax offset....................................... 372

61-15..................... Cases involving more than one spouse........................... 374

61-20..................... Exceeding the income limit for family tax benefit (Part B) 374

61-25..................... Eligibility for family tax benefit (Part B) without shared care  375

Amount of the dependant (invalid and carer) tax offset                                376

61-30..................... Amount of the dependant (invalid and carer) tax offset.. 376

61-35..................... Families with shared care percentages............................ 376

61-40..................... Reduced amounts of dependant (invalid and carer) tax offset  377

61-45..................... Reductions to take account of the other individual's income 378

Subdivision 61-D--Low Income tax offset                                                       379

Guide to Subdivision 61-D                                                                                     379

61-100................... What this Subdivision is about....................................... 379

Operative provisions                                                                                              379

61-110................... Entitlement to the Low Income tax offset........................ 379

61-115................... Amount of the Low Income tax offset............................ 380

Subdivision 61-G--Private health insurance offset complementary to Part 2-2 of the Private Health Insurance Act 2007                                                                                               382

Guide to Subdivision 61-G                                                                                    382

61-200................... What this Subdivision is about....................................... 382

Operative provisions                                                                                              382

61-205................... Entitlement to the private health insurance tax offset....... 382

61-210................... Amount of the private health insurance tax offset........... 383

61-215................... Reallocation of the private health insurance tax offset between spouses  384

Subdivision 61-L--Tax offset for Medicare levy surcharge (lump sum payments in arrears) 385

Guide to Subdivision 61-L                                                                                     385

61-575................... What this Subdivision is about....................................... 385

Operative provisions                                                                                              386

61-580................... Entitlement to a tax offset................................................ 386

61-585................... The amount of a tax offset.............................................. 388

61-590................... Definition of MLS lump sums ........................................ 389

Subdivision 61-N--Seafarer tax offset                                                              389

Guide to Subdivision 61-N                                                                                     389

61-695................... What this Subdivision is about....................................... 389

Operative provisions                                                                                              390

61-700................... Object of this Subdivision.............................................. 390

61-705................... Who is entitled to the seafarer tax offset......................... 390

61-710................... Amount of the seafarer tax offset.................................... 392

Subdivision 61-P--ESVCLP tax offset                                                              393

Guide to Subdivision 61-P                                                                                     393

61-750................... What this Subdivision is about....................................... 393

Operative provisions                                                                                              393

61-755................... Object of this Subdivision.............................................. 393

61-760................... Who is entitled to the ESVCLP tax offset....................... 393

61-765................... Amount of the ESVCLP tax offset--general case.......... 394

61-770................... Amount of the ESVCLP tax offset--members of trusts or partnerships 396

61-775................... Amount of the ESVCLP tax offset--trustees................. 397

Division 63--Common rules for tax offsets                                                   398

Guide to Division 63                                                                                              398

63-1....................... What this Division is about............................................. 398

63-10..................... Priority rules................................................................... 398

Division 65--Tax offset carry forward rules                                               401

Guide to Division 65                                                                                              401

65-10..................... What this Division is about............................................. 401

Operative provisions                                                                                              401

65-30..................... Amount carried forward................................................. 401

65-35..................... How to apply carried forward tax offsets....................... 402

65-40..................... When a company cannot apply a tax offset..................... 403

65-50..................... Effect of bankruptcy....................................................... 403

65-55..................... Deduction for amounts paid for debts incurred before bankruptcy          404

Division 67--Refundable tax offset rules                                                        406

Guide to Division 67                                                                                              406

67-10..................... What this Division is about............................................. 406

Operative provisions                                                                                              406

67-20..................... Which tax offsets this Division applies to....................... 406

67-23..................... Refundable tax offsets.................................................... 406

67-25..................... Refundable tax offsets--franked distributions................ 408

67-30..................... Refundable tax offsets--R&D........................................ 410


Table of Subdivisions

             Guide to Division 40

40-A     Objects of Division

40-B      Core provisions

40-C      Cost

40-D     Balancing adjustments

40-E      Low-value and software development pools

40-F      Primary production depreciating assets

40-G     Capital expenditure of primary producers and other landholders

40-H     Capital expenditure that is immediately deductible

40-I       Capital expenditure that is deductible over time

40-J       Capital expenditure for the establishment of trees in carbon sink forests

40-K     Farm-in farm-out arrangements


Guide to Division 40



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