Commonwealth Consolidated Acts Commonwealth Consolidated Acts(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:
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
