Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (NO. 6) 1999 NO. 54, 1999 - SCHEDULE 1--Spectrum

1 Section 375-880 (link note)

Repeal the link note, substitute:

[The next Division is Division 380.]

Division 380--Spectrum licences under the Radiocommunications Act Table of Subdivisions

Guide to Division 380

380-A Deductions for capital expenditure on spectrum licences

380-B Partial realisation of spectrum licences

380-C Replacement of spectrum licences

380-D Balancing adjustments

380-E Application of the Common rules

380-F Adjustments affecting your deductions under this Division

Guide to Division 380 380-5 What this Division is about This Division creates a capital allowance for expenditure incurred in obtaining a spectrum licence that you use for the purpose of producing assessable income.

Note 1: In some cases, you get a deduction even if you obtained the spectrum licence for nothing.

Note 2: Division 40 sets out an overview of capital allowances. Division 41 sets out the Common rules that can affect capital allowances (see also Subdivision 380-E).

In certain cases, an amount is included in your assessable income to reverse the effect of past deductions.

Subdivision 380-A--Deductions for capital expenditure on spectrum licences Table of sections

380-10 When can you deduct your expenditure?

380-15 How much can you deduct?

380-20 What is your unrecouped expenditure ?

380-25 What is your expenditure ?

380-10 When can you deduct your expenditure? (1) You can deduct an amount for the ^* current year for your ^* expenditure incurred in obtaining a ^* spectrum licence if you used the spectrum licence in that year for the ^* purpose of producing assessable income.

(2) However, you cannot deduct an amount under this section if, in the ^* current year or an earlier income year:

(a) you ceased to hold the ^* spectrum licence when it was ^* replaced by another spectrum licence that you held after the replacement; or

(b) a ^* balancing adjustment event happened at a time when you held the ^* spectrum licence.

Note 1: For the replacement of spectrum licences, see Subdivision 380-C. If some or all of the spectrum licence was replaced in the current year, you may be able to deduct an amount under that Subdivision whether or not you ceased to hold the spectrum licence when that happened.

Note 2: If a balancing adjustment event happened in the current year, you may be able to deduct an amount because of the balancing adjustment that you must make: see Subdivision 380-D.

Note 3: You can deduct an amount under this section even if you have assigned part of the spectrum licence, or part of it is resumed by the ACA. The effect of such partial realisations is set out in Subdivision 380-B.

Note 4: Once you have a deduction under this section, an amount may be included in your assessable income under Subdivision 380-B, 380-C or 380-D.

How much you can deduct

Step 1 . Divide your ^* unrecouped expenditure on the ^* spectrum licence at the end of the current year by the number of income years from the start of the current year to the end of the income year in which the spectrum licence expires.

Step 2 . Work out the number of days in the current year on which you used the spectrum licence for the ^* purpose of producing assessable income.

Step 3. Divide the result in step 2 by the number of days in the current year.

Step 4 . Multiply the results in steps 1 and 3. This is the amount that you can deduct for the current year under section 380-10.

380-20 What is your unrecouped expenditure? (1) Your unrecouped expenditure on a ^* spectrum licence starts as your ^* expenditure incurred in obtaining the spectrum licence, but is reduced over time. (It can also be increased later.)

(2) Immediately after the end of an income year, it is reduced by the amount you can deduct under section 380-10 for the ^* expenditure for that income year.

(3) The table shows the other provisions that reduce or increase your unrecouped expenditure.

Reducing or increasing unrecouped expenditure
Item	For this situation:	See:
1	A partial realisation of the spectrum licence may reduce it	Subdivision 380-B
2	A replacement of some or all of the spectrum licence may reduce it	Subdivision 380-C
3	A balancing adjustment reduces it to nil	Subdivision 380-D
4	A variation of the spectrum licence to increase the part of the spectrum specified may increase it	Section 380-105

380-25 What is your expenditure? (1) Your expenditure incurred in obtaining a ^* spectrum licence is worked out using the table. If more than one case in the table applies, use the expenditure in the last applicable case. (It does not matter whether an event described happened in the ^* current year or earlier.)

(2) However, your expenditure does not include an amount that you have deducted or can deduct, or that has been or will be taken into account in working out an amount you have deducted or can deduct:

(a) under this Division in respect of another ^* spectrum licence; or

(b) under another Division of this Act.

Your expenditure on the spectrum licence
Case	If you hold the spectrum licence at the end of the current year because:	Your expenditure on the spectrum licence is:	But it may be adjusted by:
1	the spectrum licence was originally issued to you	the capital expenditure you incurred in obtaining the spectrum licence	Common rule 2 (non-arm's length transactions: see section 380-95)
2	the spectrum licence was originally issued to you because some or all of another spectrum licence, that you held but had never used for the * purpose of producing assessable income, was resumed by the * ACA under Division 6 of Part 3.2 of the Radiocommunications Act 1992	so much of the difference between: (a) the capital expenditure you incurred in obtaining the other spectrum licence; and (b) the amount of compensation paid to you under section 93 of that Act in respect of the resumption; as is reasonably attributable to the * part of the * spectrum specified in the spectrum licence	not applicable
3	it is a * new spectrum licence originally issued to you to * replace some or all of an * old spectrum licence (see also Subdivision 380-C)	the sum of: (a) the capital expenditure (if any) you incurred in obtaining the * new spectrum licence; and (b) if subsection 380-65(3) applies to the old spectrum licence--the amount worked out in that subsection reduced by the amount (if any) you can deduct under subsection 380-65(6)	not applicable
4	the spectrum licence was assigned to you	the capital expenditure you incurred in obtaining the spectrum licence	section 380-110 (non-arm's length transactions)
5	the spectrum licence was assigned to you with other property and no separate consideration was allocated to the spectrum licence	so much of the capital expenditure you incurred in obtaining the spectrum licence with the other property as is reasonably attributable to the spectrum licence	section 380-110 (non-arm's length transactions)
6	the spectrum licence was assigned to you by an entity for no consideration	the sum of that entity's * unrecouped expenditure on the spectrum licence, just before the assignment took effect and the capital expenditure (if any) you incurred in obtaining the spectrum licence	section 380-115 (assignment of part of a spectrum licence)
7	the spectrum licence was assigned to you for no consideration by an entity that: (a) used the spectrum licence while it held it, but never for the * purpose of producing assessable income; or (b) never used the item while it held it, but if it had, would never have used it for the * purpose of producing assessable income	a nil amount	not applicable
8	a * balancing adjustment event happened that is covered by item 3 (about partial changes of ownership) in the table in subsection 380-80(3)	the spectrum licence's market value at the time of the event	not applicable
9	a * balancing adjustment event happened to which Common rule 1 applies (see section 380-100)	the transferor's * unrecouped expenditure on the spectrum licence just before the event	not applicable

Subdivision 380-B--Partial realisation of spectrum licences Guide to Subdivision 380-B 380-30 What this Subdivision is about If you partially realise a spectrum licence, the amount arising reduces your unrecouped expenditure on the spectrum licence, and therefore reduces your future deductions.

However, the replacement of some or all of your spectrum licence with another spectrum licence that you hold is not a partial realisation. Instead, Subdivision 380-C applies.

Depending on how much the amount arising is, an amount may also be included in your assessable income (to reverse the effect of past deductions).

Note: The full realisation of a spectrum licence may be a balancing adjustment event (see Subdivision 380-D).

Table of sections

Operative provisions

380-35 Amount arising from the partial realisation

380-40 What are the effects of the partial realisation?

380-45 Spectrum licence after the partial realisation

[This is the end of the Guide.]

Operative provisions 380-35 Amount arising from the partial realisation (1) A partial realisation of a ^* spectrum licence is an event described in column 2 of an item in the table.

(2) However, the ^* replacement of some or all of a ^* spectrum licence with another spectrum licence that you hold after the replacement is not a partial realisation of the first-mentioned spectrum licence. Instead, Subdivision 380-C applies.

(3) The amount arising from the partial realisation is the amount in column 3 of the applicable item in the table. (If more than one item applies, use the amount in the last applicable item.)

(4) However, the amount arising from the ^* partial realisation does not include any amount that is ^* ordinary income.

Partial realisation of a spectrum licence
Item	Event that is a partial realisation	Amount arising from it
1	you assign part of the spectrum licence	the amount (if any) paid to you for the part less your expenses reasonably attributable to the assignment
2	you assign part of the spectrum licence with other property, and no separate consideration is allocated to the part	the portion of the consideration that is reasonably attributable to the part, less the same portion of your expenses reasonably attributable to the assignment
3	you assign part of the spectrum licence for no consideration	so much of your * unrecouped expenditure on the spectrum licence as is reasonably attributable to the part
4	you assign part of the spectrum licence to an entity with which you are not dealing at * arm's length, for no consideration or for less than the part's market value at the time of the assignment	the greater of: * so much of your * unrecouped expenditure on the spectrum licence as is reasonably attributable to the part; and * the part's market value at the time of the assignment
5	part of the spectrum licence is resumed under Division 6 of Part 3.2 of the Radiocommunications Act 1992	the amount of compensation paid to you under section 93 of that Act

380-40 What are the effects of the partial realisation? (1) You work out the effects of a ^* partial realisation by comparing:

(a) the ^* amount arising from the partial realisation; and

(b) your ^* unrecouped expenditure on the ^* spectrum licence just before the partial realisation.

(3) On the other hand, if the ^* amount arising from the ^* partial realisation exceeds your ^* unrecouped expenditure, then:

(a) your unrecouped expenditure is reduced to nil (if it is not nil already) at the time of the partial realisation; and

(b) the excess is included in your assessable income for the income year of the partial realisation.

* the total of each amount (if any) you can deduct or have deducted for the ^* spectrum licence for the ^* current year or an earlier income year under this Division;

* the total of each amount (if any) included in your assessable income for an income year, in respect of the spectrum licence, under this Division.

Note: An amount may be included in your assessable income under this section (because of a previous partial realisation), under section 380-70 (because of a replacement) or under section 380-85 (because of a balancing adjustment event).

Subdivision 380-C--Replacement of spectrum licences Guide to Subdivision 380-C 380-50 What this Subdivision is about If some or all of your spectrum licence (whether or not you still hold it) is replaced by another spectrum licence that you hold after the replacement, your unrecouped expenditure on the first-mentioned spectrum licence is reduced.

You may be entitled to deduct an amount in respect of that spectrum licence, or be required to include an amount in your assessable income (to reverse the effect of past deductions).

Table of sections

Operative provisions

380-55 Application of Subdivision

380-60 Amount arising from the replacement

380-65 Effect if the amount arising does not exceed your unrecouped expenditure

380-70 Effect if the amount arising exceeds your unrecouped expenditure

380-75 Old spectrum licence varied because of the replacement

[This is the end of the Guide.]

Operative provisions 380-55 Application of Subdivision (1) This Subdivision applies if some or all of a ^* spectrum licence (the old spectrum licence ) is ^* replaced in the ^* current year by another spectrum licence (the new spectrum licence ).

Note 1: The new spectrum licence is treated in the same way as any other spectrum licence. If it was issued to you at the time of the replacement, Case 3 in the table in subsection 380-25(2) tells you what your expenditure is. But, if you held it before the replacement, your unrecouped expenditure may be adjusted by section 380-105.

Note 2: The consequences may differ depending on whether you continue to hold the old spectrum licence.

(a) you held the old spectrum licence when some or all of it was assigned or resumed under Division 5 or 6 of Part 3.2 of the Radiocommunications Act 1992 ; and

(b) you held the new spectrum licence when any of the ^* part of the ^* spectrum that was, just before the assignment or resumption, specified in the old spectrum licence is first specified in the new spectrum licence; and

(c) none of that part of the spectrum was specified in any other spectrum licence in the interim; and

(d) you used the old spectrum licence in the ^* current year or an earlier income year for the ^* purpose of producing assessable income.

Note: The amount arising does not include any ordinary income (see subsection (3)).

(3) However, the amount arising from the ^* replacement (under subsection (1) or (2)) does not include any amount that is ^* ordinary income.

Amount arising when partly assigned
Item	You assigned part of the old spectrum licence:	Amount arising from the replacement
1	for consideration	the amount (if any) paid to you for the part less your expenses reasonably attributable to the assignment
2	with other property and no separate consideration was allocated to the part	the portion of the consideration that is reasonably attributable to the part, less the same portion of your expenses reasonably attributable to the assignment
3	for no consideration	so much of your * unrecouped expenditure on the old spectrum licence as is reasonably attributable to the part
4	to an entity with which you are not dealing at * arm's length, for no consideration or for less than the part's market value at the time of the assignment	the greater of: * so much of your * unrecouped expenditure on the old spectrum licence as is reasonably attributable to the part; and * the part's market value at the time of the assignment

380-65 Effect if the amount arising does not exceed your unrecouped expenditure (1) This section sets out the effect of ^* replacing some or all of an ^* old spectrum licence if the ^* amount arising from the replacement does not exceed your ^* unrecouped expenditure on the old spectrum licence just before the replacement.

(2) Your ^* unrecouped expenditure is reduced by the ^* amount arising from the ^* replacement when the replacement happens.

(3) Work out how much of your remaining ^* unrecouped expenditure on the ^* old spectrum licence is reasonably attributable to the ^* part of the ^* spectrum specified in the ^* new spectrum licence.

Note: This amount is also used to work out your expenditure on the new spectrum licence. See Case 3 in the table in subsection 380-25(2).

(5) On the other hand, if you no longer hold the ^* old spectrum licence after the ^* replacement, your ^* unrecouped expenditure is further reduced to nil (if it is not nil already) just after the replacement.

(6) Whether or not you continue to hold the ^* old spectrum licence after the ^* replacement, if you used it in the ^* current year before that happened for the ^* purpose of producing assessable income, you can deduct for the current year the amount worked out as follows.

How much you can deduct

Step 1. Divide the amount in subsection (3) by the number of income years from the start of the current year to the end of the income year in which the old spectrum licence expires or would have expired if it hadn't been replaced.

Step 2. Work out the number of days in the current year before the replacement on which you used the old spectrum licence for the purpose of producing assessable income.

Step 3. Divide the result in step 2 by the number of days in the current year.

Step 4. Multiply the results in steps 1 and 3. This is the amount you can deduct under this section.

Note: You may also be able to deduct an amount for the current year under section 380-10 if you continue to hold the old spectrum licence after the replacement.

(2) Your ^* unrecouped expenditure is reduced to nil (if it is not nil already) when the ^* replacement happens, and the excess is included in your assessable income for the income year in which that happens.

(3) However, the amount included in your assessable income cannot exceed:

* the total of each amount (if any) you can deduct or have deducted for the ^* old spectrum licence for the ^* current year or an earlier income year under this Division;

* the total of each amount (if any) included in your assessable income for an income year, in respect of the old spectrum licence, under this Division.

Note: An amount may be included in your assessable income under this section (because of a previous replacement), under section 380-40 (because of a partial realisation) or under section 380-85 (because of a balancing adjustment event).

Subdivision 380-D--Balancing adjustments Table of sections

380-80 When a balancing adjustment is required

380-85 How to do the balancing adjustment

380-90 Meaning of termination value

380-80 When a balancing adjustment is required (1) A balancing adjustment is required if:

(a) you have incurred ^* expenditure in obtaining a ^* spectrum licence; and

(b) you have ever used the spectrum licence for the ^* purpose of producing assessable income; and

(c) a ^* balancing adjustment event happens in the ^* current year at a time when you hold the spectrum licence.

(a) some or all of the ^* spectrum licence is ^* replaced by another spectrum licence that you hold after the replacement (Subdivision 380-C applies instead); or

(b) roll-over relief is available under Common rule 1 (see Subdivision 380-E).

Balancing adjustment events
Item	Event
1	You assign the * spectrum licence under Division 5 of Part 3.2 of the Radiocommunications Act 1992 (except by a * partial realisation)
2	The spectrum licence ceases to exist because it expires, is cancelled, or is resumed by the * ACA
3	Another entity becomes the licensee, but an entity that was the licensee (alone or with others) immediately beforehand still has an interest in the spectrum licence immediately afterwards

380-85 How to do the balancing adjustment (1) You make the adjustment by comparing:

(a) the ^* spectrum licence's ^* termination value; and

(b) your ^* unrecouped expenditure on the spectrum licence just before the ^* balancing adjustment event.

* the total of the amounts (if any) you have deducted or can deduct for earlier income years under this Division for the ^* spectrum licence;

* the total of each amount (if any) included in your assessable income for an income year, in respect of the spectrum licence, under this Division.

Note 1: An amount may be included in your assessable income under section 380-40 (because of a partial realisation) or under section 380-70 (because of a replacement).

Note 2: If roll-over relief under Common rule 1 has previously applied to the spectrum licence: see section 41-40 and subsections 380-100(3) and (4).

Note 3: Subsection (4) of this section reduces your unrecouped expenditure to nil at the time of the balancing adjustment event.

How much you can deduct

Step 1. Subtract the termination value from your unrecouped expenditure.

Step 2. Work out the number of days in the current year before the ^* balancing adjustment event on which you used the spectrum licence for the purpose of producing assessable income.

Step 3. Divide that number by the number of days in the current year before the ^* balancing adjustment event.

Step 4. Multiply the results in steps 1 and 3. This is the amount you can deduct under this section.

(4) Your ^* unrecouped expenditure is reduced to nil (if it is not nil already) at the time of the ^* balancing adjustment event (even if the ^* termination value equals your unrecouped expenditure).

Note: If the termination value equals your unrecouped expenditure, the balancing adjustment has no effect on your assessable income or deductions.

(2) However, the termination value is reduced if:

(a) the ^* balancing adjustment event is an assignment or resumption of the ^* spectrum licence; and

(b) some or all of what you receive for the assignment or resumption is ^* ordinary income.

Termination value of a spectrum licence
Case	In this situation:	The termination value is:
1	you assign the spectrum licence	the consideration less your expenses reasonably attributable to the assignment
2	you assign the spectrum licence with other property, and no separate consideration is allocated to the spectrum licence	the part of the consideration that is reasonably attributable to the spectrum licence, less the same part of your expenses reasonably attributable to the assignment
3	you assign the spectrum licence to another entity for no consideration	your * unrecouped expenditure on the spectrum licence just before the * balancing adjustment event
4	you assign the spectrum licence to an entity with which you are not dealing at * arm's length, for no consideration or for less than the spectrum licence's market value at the time of the * balancing adjustment event	the greater of: * your * unrecouped expenditure on the spectrum licence just before the * balancing adjustment event; and * its market value at the time of the balancing adjustment event
5	the spectrum licence ceases to exist because it expires or is cancelled	a nil amount
6	the spectrum licence ceases to exist because it is resumed by the * ACA under Division 6 of Part 3.2 of the Radiocommunications Act 1992	the amount of compensation paid to you under section 93 of that Act
7	the balancing adjustment is required because of item 3 (about partial changes of ownership) in the table in subsection 380-80(3)	the spectrum licence's market value at the time of the * balancing adjustment event

Note: If Case 7 applies and the parties jointly elect for roll-over relief under subsection 380-100(2), a balancing adjustment is not required.

380-95 Application of Common rules in Division 41

380-100 Common rule 1 (roll-over relief for related entities)

380-95 Application of Common rules in Division 41 These Common rules apply to your ^* expenditure incurred in obtaining a ^* spectrum licence:

(a) Common rule 1 (roll-over relief for related entities), but with the qualifications and modifications set out in section 380-100;

(b) Common rule 2 (non-arm's length transactions), but only if that expenditure is worked out using Case 1 in the table in subsection 380-25(2).

Note: Non-arm's length transactions are also dealt with in section 380-110.

(1) Common rule 1 does not apply to a ^* partial realisation, or to a ^* replacement, of a ^* spectrum licence.

(2) Roll-over relief is also available if:

(a) a ^* balancing adjustment event happens that is covered by item 3 (about partial changes in interests) in the table in subsection 380-80(3); and

(b) the entity or entities that held the ^* spectrum licence just before the change (the transferor ) and the entity or entities that held the ^* spectrum licence just after the change (the transferee ) jointly elect for roll-over relief.

Note: For the conditions relating to the election, see section 41-55.

(3) Disregard subsection 41-40(3) (about the transferee being taken to have incurred the transferor's expenditure).

Note: This is because the transferee's expenditure on the spectrum licence is dealt with in the table in subsection 380-25(2) and is based on the transferor's unrecouped expenditure immediately before the roll-over event.

(a) the total of each amount (if any) that section 380-40 or 380-70 has included in the transferor's assessable income for an income year (because of a ^* partial realisation, or ^* replacement, of the ^* spectrum licence); or

(b) if there have been 2 or more prior applications of Common rule 1--the total of each amount (if any) that section 380-40 or 380-70 has included in the assessable income of any of the transferors for an income year in respect of the spectrum licence;

(5) The obligation in subsection 41-50(4) applies to the transferee as if the period for keeping the notice referred to in that subsection were until the end of 5 years after the next ^* balancing adjustment event occurs for the ^* spectrum licence.

(6) The obligation in subsection 41-55(5) applies to the transferee as if the period for keeping the election referred to in that subsection or a copy of it were until the end of 5 years after the next ^* balancing adjustment event occurs for the ^* spectrum licence.

Subdivision 380-F--Adjustments affecting your deductions under this Division Table of sections

Increasing your unrecouped expenditure

380-105 Variation of spectrum licence to increase spectrum

Adjusting your expenditure on the spectrum licence

380-110 Spectrum licence acquired in a non-arm's length transaction

380-115 Assignment of part of a spectrum licence for no consideration

Increasing your unrecouped expenditure 380-105 Variation of spectrum licence to increase spectrum (1) This section applies if a ^* spectrum licence is varied to increase the ^* part of the ^* spectrum specified in it.

(2) Your ^* unrecouped expenditure on the varied ^* spectrum licence is increased, at the time of the variation, by:

(a) the amount of capital expenditure you incurred in obtaining the additional part of the ^* spectrum; or

(b) if the spectrum licence is varied to ^* replace some or all of an ^* old spectrum licence--the amount in subsection 380-65(3) if that subsection applies to the old spectrum licence, reduced by the amount (if any) you can deduct under subsection 380-65(6).

Note: If subsection 380-65(3) does not apply to the old spectrum licence, your unrecouped expenditure is not increased at all.

(a) an entity assigned the additional ^* part of the ^* spectrum to you and you were not dealing with each other at ^* arm's length; and

(b) the consideration for the assignment is greater than the additional part's market value when it was assigned to you;

Adjusting your expenditure on the spectrum licence 380-110 Spectrum licence acquired in a non-arms length transaction (1) Your ^* expenditure incurred in obtaining a ^* spectrum licence may be adjusted as set out in this section if:

(a) your expenditure would otherwise be worked out using Case 4 or 5 in the table in subsection 380-25(2); and

(b) you and the entity that assigned to you the spectrum licence did not deal with each other at ^* arm's length.

(a) that entity's ^* unrecouped expenditure just before the assignment; and

(b) the spectrum licence's market value when it was assigned to you.

(a) so much of that entity's ^* unrecouped expenditure just before the assignment as is reasonably attributable to the part assigned to you; and

(b) the part's market value when it was assigned to you.

380-115 Assignment of part of a spectrum licence for no consideration If:

(a) you would otherwise work out your ^* expenditure incurred in obtaining a ^* spectrum licence under Case 6 in the table in subsection 380-25(2); and

(b) you hold the spectrum licence as a result of an entity assigning to you only part of a spectrum licence held by the entity;

[The next Division is Division 385.]

Part 2--Consequential amendments

Income Tax Assessment Act 1936

2 Subsection 6(1) (after paragraph (db) of the definition of royalty )

Insert:

(dc) the use of, or the right to use, some or all of the part of the spectrum (within the meaning of the Radiocommunications Act 1992 ) specified in a spectrum licence issued under that Act;

Omit "or" (last occurring).

4 Subsection 6(1) (after subparagraph (f)(iib) of the definition of royalty )

Insert:

(iic) the use of, or the granting of the right to use, some or all of such part of the spectrum specified in a spectrum licence as is mentioned in paragraph (dc); or

Insert:

eligible spectrum licence means a spectrum licence, within the meaning of Division 380 of the Income Tax Assessment Act 1997 , in relation to which there has been incurred capital expenditure specified in Subdivision 380-A of that Act.

6 Subsection 159GE(1) (definition of eligible capital expenditure property )

Omit all the words after "Division 10AAA property", substitute ", Division 10C or 10D property or eligible spectrum licences".

7 Subsection 159GE(1) (paragraph (c) of the definition of eligible property )

Omit "or".

8 Subsection 159GE(1) (at the end of the definition of eligible property )

Add:

; or (e) eligible spectrum licences.

Add:

(6) In this Division, a reference to the residual amount at a particular time in relation to an amount of expenditure because of which an item of property is an eligible spectrum licence is a reference to the amount of unrecouped expenditure (within the meaning of section 380-20 of the Income Tax Assessment Act 1997 ) on that licence at that time.

10 At the end of section 159GJ

Add:

(5) If this Division applies in relation to an item of property that is an eligible spectrum licence:

(a) an amount cannot be deducted under Division 380 of the Income Tax Assessment Act 1997 in relation to any amount of expenditure (other than expenditure incurred after the application period) by reason of which the item is an eligible spectrum licence for any year of income in which any of the application period occurs; and

(b) the residual amount at any time after the application period (but before the start of a later application period) in relation to an amount of expenditure (other than expenditure incurred after the application period) because of which the item is an eligible spectrum licence is an amount equal to:

* the amount that, if not for this paragraph, would be the residual amount at that time in relation to the amount of expenditure under subsection 159GF(6);

reduced by:

* an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period and any prior application period; and

(c) for the purposes of applying Division 380 of the Income Tax Assessment Act 1997 in relation to an amount of expenditure (other than expenditure incurred after the application period) because of which the item is an eligible spectrum licence at any time after the application period, a deduction under that Division is taken to have been allowed, for the amount of expenditure, of an amount equal to the total notional principal in relation to the amount of expenditure in relation to the application period.

Add:

Expenditure incurred in obtaining a spectrum licence to produce assessable income

Division 380 of the Income Tax Assessment Act 1997

12 Subsection 57-85(3) of Schedule 2D (before table item 15)

Insert:

14B

Spectrum licences

Subdivision 380-A

13 Subsection 57-110(2) of Schedule 2D (after table item 8)

Insert:

8A

Spectrum licences

Subdivisions 380-B, 380-C and 380-D

Subdivision 380-A

Income Tax Assessment Act 1997

14 Section 10-5 (after table item headed "software")

Insert:

spectrum licences
amount arising from partial realisation of		Subdivision 380-B
amount arising from replacement of		Subdivision 380-C
balancing adjustment relating to		Subdivision 380-D

15 Section 12-5 (table item headed "balancing adjustment")

After " research & development, ", insert " spectrum licences, ".

16 Section 12-5 (before table item headed "superannuation")

Insert:

spectrum licences
amount arising from replacement of		Subdivision 380-C
balancing adjustment relating to		Subdivision 380-D
capital allowance for expenditure incurred in obtaining		Subdivision 380-A

17 Section 20-30 (after table item 1.12)

Insert:

1.12A

Subdivisions 380-A and 380-C

capital expenditure incurred in obtaining a spectrum licence

18 Section 40-30 (after table item dealing with "software")

Insert:

Spectrum licences	Capital expenditure incurred in obtaining a spectrum licence to produce assessable income	Any entity	The duration of the licence	Balancing adjustment required	Division 380

19 Section 41-5 (after table item dealing with "Software--other")

Insert:

Spectrum licences

Applies as modified by section 380-100

Applies as modified by section 380-95

Does not apply

Does not apply

20 Subsection 41-23(1) (at the end of the table)

Add:

6.1

Spectrum licences

the transferor and transferee jointly elect for it

Subsection 380-100(2)

21 Subsection 995- 1(1)

Insert:

ACA has the meaning given by section 5 of the Radiocommunications Act 1992 .

22 Subsection 995- 1(1) (definition of amount arising )

Repeal the definition, substitute:

amount arising :

(a) from a ^* partial realisation of an item of ^* intellectual property--has the meaning given by section 373-45; and

(b) from a ^* partial realisation of a ^* spectrum licence--has the meaning given by section 380-35; and

(c) from a ^* replacement of some or all of a ^* spectrum licence--has the meaning given by section 380-60.

Add:

3

Spectrum licences

subsection 380-80(3)

24 Subsection 995- 1(1) (definition of expenditure )

Repeal the definition, substitute:

expenditure :

(a) on an item of ^* intellectual property--has the meaning given by section 373-30; and

(b) incurred in obtaining a ^* spectrum licence--has the meaning given by section 380-25.

Insert:

new spectrum licence has the meaning given by subsection 380-55(1).

26 Subsection 995- 1(1)

Insert:

old spectrum licence has the meaning given by subsection 380-55(1).

27 Subsection 995- 1(1) (definition of partial realisation )

Repeal the definition, substitute:

partial realisation :

(a) of an item of ^* intellectual property--has the meaning given by section 373-45; and

(b) of a ^* spectrum licence--has the meaning given by section 380-35.

Insert:

part of the ^* spectrum specified in a ^* spectrum licence has the meaning given by section 5 of the Radiocommunications Act 1992 .

29 Subsection 995- 1(1)

Insert:

replace some or all of a spectrum licence has the meaning given by subsection 380-55(2).

30 Subsection 995- 1(1)

Insert:

spectrum has the meaning given by section 5 of the Radiocommunications Act 1992 .

31 Subsection 995- 1(1)

Insert:

spectrum licence has the meaning given by section 5 of the Radiocommunications Act 1992 .

32 Subsection 995- 1(1) (after table item 3 in the definition of termination value )

Insert:

3A

Spectrum licences

section 380-90

33 Subsection 995- 1(1) (at the end of the table in the definition of unrecouped expenditure )

Add:

3

Spectrum licences

section 380-20

Part 3--International Tax Agreements Act 1953

34 After subsection 3(11)

Insert:

(11A) If:

(a) the licensee of a spectrum licence (within the meaning of the Radiocommunications Act 1992 ), or a person authorised under section 68 of that Act by the licensee, derives income from operating radiocommunications devices (within the meaning of that Act) under the licence or from authorising others to do so; and

(b) the licensee or authorised person is a resident of a country (other than Australia), or a territory (other than an Australian-controlled territory), to whose residents an agreement applies; and

(c) under the agreement, the income is to be dealt with in accordance with the business profits article of the agreement referred to in paragraph 3(11)(b);

(d) the licensee or authorised person is taken to carry on a business, through a permanent establishment, in Australia; and

(e) the income is taken to be attributable to that permanent establishment.

Omit "subsection (11)", substitute "subsections (11) and (11A)".

Part 4--Application

36 Application

The amendments made by this Schedule apply to spectrum licences obtained on or after 11 March 1998.