Commonwealth Numbered Acts

INCOME TAX ASSESSMENT ACT 1997 No. 38 of 1997 - SECT 165.55

(1) The company's deductions for the income year are attributed to periods in
the income year as follows.

(2) The following deductions are attributed to each period in proportion to
the length of the period:

   (a)  deductions for depreciation; See sections 54 and following of the
        Income Tax Assessment Act 1936.

   (b)  deductions for *exploration or prospecting expenditure, or

*allowable capital expenditure, in connection with mining or quarrying, if the
company has elected that the deductions not be limited by the *available
assessable income; See Division 330.

   (c)  deductions for expenditure, deductions for which are spread over 2 or
        more income years, but not:

        (i)    deductions for *exploration or prospecting expenditure, or
               capital expenditure, in connection with mining or quarrying; or
               See Division 330.

        (ii)   *full year deductions (see subsection (5));

   (d)  deductions for expenditure of capital monies in connection with an
        Australian film. See section 124ZAFA of the
        Income Tax Assessment Act 1936.

(3) All other deductions (except *full year deductions) are attributed to
periods as if each period were an income year.

(4) *Full year deductions are not attributed to any of the periods. They are
brought in at a later stage of the process of calculating the company's
taxable income for the income year.

(5) These are full year deductions:

   (a)  deductions allowable for bad debts under Division 8 (which is about
        deductions);

   (b)  deductions allowable for bad debts under section 63 of the
        Income Tax Assessment Act 1936 or for losses on debt/equity swaps
        under section 63E of that Act;

   (c)  deductions, so far as they are allowable under Division 8 (which is
        about deductions) because Subdivision H (Period of deductibility of
        certain advance expenditure) of Division 3 of Part III of the Income 
        Tax Assessment Act 1936 applies to the company in relation to the
        income year;

   (d)  deductions allowable under section 78 (Deductions for gifts, pensions
        etc.) or 78B (Promoters recoupment tax) of the Income Tax  Assessment
        Act 1936 ;

   (e)  if the company is a *leasing company, deductions allowable under:

        (i)    Subdivision B (Development Allowance) of Division 3 of Part III
               of the Income Tax Assessment Act 1936; or

        (ii)   Part XII of the Income Tax Assessment Act 1936, in respect of
               an item of drought mitigation property;

   (f)  deductions for *tax losses of earlier income years; See Division 36.

   (g)  deductions for *allowable capital expenditure in connection with
        mining or quarrying, except so far as the company has elected that the
        deductions not be limited by the *available assessable income; See
        Division 330.

   (h)  deductions for *exploration or prospecting expenditure in connection
        with mining or quarrying, except so far as the company has elected
        that the deductions not be limited by the *available assessable
        income; See Division 330.

   (i)  deductions for Income Equalisation Deposits. See Division 16C of Part
        III of the Income Tax Assessment Act 1936.

(6) However, a deduction for the balance of capital expenditure is not a *full
year deduction if the deduction results from the disposal, loss, lapse,
termination of use or destruction of the property. See subsection 330-485(2).