Income Tax Assessment Act 1936

1 Short title

6 Interpretation

6AB Foreign income and foreign tax

6B Income beneficially derived

6BA Taxation treatment of certain shares

6C Source of royalty income derived by a non‑resident

6CA Source of natural resource income derived by a non‑resident

6D Some tax offsets under the 1997 Assessment Act are treated as credits

6F Dual resident investment company

6H Recognised small credit unions, recognised medium credit unions and recognised large credit unions

7B Application of the Criminal Code

Part II—Administration

8 Commissioner

14 Annual report

Part III—Liability to taxation

Division 1—General

18 Accounting period

18A Accounting periods for VCLPs, ESVCLPs, AFOFs and VCMPs

21 Where consideration not in cash

21A Non‑cash business benefits

23AA Income of persons connected with certain projects of United States Government

23AB Income of certain persons serving with an armed force under the control of the United Nations

23AD Exemption of pay and allowances of Defence Force members performing certain overseas duty

23AF Exemption of certain income derived in respect of approved overseas projects

23AG Exemption of income earned in overseas employment

23AH Foreign branch income of Australian companies not assessable

23AI Amounts paid out of attributed income not assessable

23AK Amounts paid out of attributed foreign investment fund income not assessable

23B Reduction of disposal consideration if FIF attributed income not distributed

23G Exemption of interest received by credit unions

23K Substitution of certain securities

23L Certain benefits in the nature of income not assessable

Division 1AB—Certain State/Territory bodies exempt from income tax

Subdivision A—Exemption for certain State/Territory bodies

24AK Key principle

24AL Diagram—guide to work out if body is exempt under this Division

24AM Certain STBs exempt from tax

24AN Certain STBs not exempt from tax under this Division

24AO First way in which a body can be an STB

24AP Second way in which a body can be an STB

24AQ Third way in which a body can be an STB

24AR Fourth way in which a body can be an STB

24AS Fifth way in which a body can be an STB

24AT What do excluded STB, government entity and Territory mean?

24AU Governor, Minister and Department Head taken to be a government entity

24AV Regulations prescribing excluded STBs

Subdivision B—Body ceasing to be an STB

24AW Body ceasing to be an STB

24AX Special provisions relating to capital gains and losses

24AY Losses from STB years not carried forward

24AYA Effect of unfunded superannuation liabilities

24AZ Meaning of period and prescribed excluded STB

Division 2—Income

Subdivision A—Assessable income generally

25A Assessable income to include certain profits

26AB Assessable income—premium for lease

26AF Assessable income to include value of benefits received from or in connection with former paragraph 23(ja) funds or former section 23FB funds

26AFA Assessable income to include value of certain benefits received from or in connection with former section 23F funds

26AG Certain film proceeds included in assessable income

26AH Bonuses and other amounts received in respect of certain short‑term life assurance policies

26AJ Investment‑related lottery winnings to be included in assessable income

26BB Assessability of gain on disposal or redemption of traditional securities

26BC Securities lending arrangements

26E Income from RSAs

Subdivision AA—Non‑superannuation annuities etc.

27H Assessable income to include annuities and superannuation pensions

Subdivision D—Dividends

43A Subdivision has effect subject to provisions of Division 216 of the Income Tax Assessment Act 1997

43B Application of Subdivision to non‑share dividends

44 Dividends

45 Streaming of bonus shares and unfranked dividends

45A Streaming of dividends and capital benefits

45B Schemes to provide certain benefits

45BA Effect of determinations under section 45B for demerger benefits

45C Effect of determinations under sections 45A and 45B for capital benefits

45D Determinations under sections 45A, 45B and 45C

46FA Deduction for dividends on‑paid to non‑resident owner

46FB Unfranked non‑portfolio dividend account

47 Distributions by liquidator

47A Distribution benefits—CFCs

Division 3—Deductions

Subdivision A—General

51AAA Deductions not allowable in certain circumstances

51AD Deductions not allowable in respect of property used under certain leveraged arrangements

51AEA Meal entertainment—election under section 37AA of Fringe Benefits Tax Assessment Act 1986 to use 50/50 split method

51AEB Meal entertainment—election under section 37CA of Fringe Benefits Tax Assessment Act 1986 to use the 12 week register method

51AEC Entertainment facility—election under section 152B of Fringe Benefits Tax Assessment Act 1986 to use 50/50 split method

51AF Car expenses incurred by employee

51AGA No deduction to employee for certain car parking expenses

51AH Deductions not allowable where expenses incurred by employee are reimbursed

51AJ Deductions not allowable for private component of contributions for fringe benefits etc.

51AK Agreements for the provision of non‑deductible non‑cash business benefits

52 Loss on property acquired for profit‑making

52A Certain amounts disregarded in ascertaining taxable income

63 Bad debts

63D Bad debts etc. of money‑lenders not allowable deductions where attributable to listed country or unlisted country branches

63E Debt/equity swaps

63F Limit on deductions where debt write offs and debt/equity swaps occur

63G Bad debts etc. of trust not allowable in certain circumstances

65 Payments to associated persons and relatives

70B Deduction for loss on disposal or redemption of traditional securities

73A Expenditure on scientific research

73AA Section 73A roll‑over relief in the case of certain CGT roll‑overs

78A Certain gifts not to be allowable deductions

An Act to consolidate and amend the law relating to the imposition assessment and collection of a tax upon incomes

Part I—Preliminary

1  Short title

  This Act may be cited as the Income Tax Assessment Act 1936.

6  Interpretation

 (1AA) So far as a provision of the Income Tax Assessment Act 1936 gives an expression a particular meaning, the provision does not also have effect for the purposes of the Income Tax Assessment Act 1997 (the 1997 Act), or for the purposes of Schedule 1 to the Taxation Administration Act 1953, except as provided in the 1997 Act or in that Schedule.

 (1) In this Act, unless the contrary intention appears:

100% subsidiary has the same meaning as in the Income Tax Assessment Act 1997.

adjusted fringe benefits total, of a taxpayer for a year of income, has the meaning given by clause 4 of Schedule 3 to the A New Tax System (Family Assistance) Act 1999.

adjusted taxable income for rebates means adjusted taxable income (within the meaning of the A New Tax System (Family Assistance) Act 1999, disregarding clauses 3 and 3A of Schedule 3 to that Act).

AFOF means an Australian venture capital fund of funds within the meaning of subsection 118‑410(3) of the Income Tax Assessment Act 1997.

agent: this Act applies to some entities (within the meaning of the Income Tax Assessment Act 1997) that are not agents in the same way as it applies to agents: see section 960‑105 of the Income Tax Assessment Act 1997.

allowable deduction has the same meaning as deduction has in the Income Tax Assessment Act 1997.

AMIT (short for attribution managed investment trust) has the same meaning as in the Income Tax Assessment Act 1997.

amount paid‑up on a share means the amount (if any), including any premium, paid on that share.

amount unpaid on a share means the amount (if any) unpaid on that share.

apportionable deductions has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

approved form has the meaning given by section 388‑50 in Schedule 1 to the Taxation Administration Act 1953.

approved stock exchange has the same meaning as in the Income Tax Assessment Act 1997.

assessable income has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

assessment means:

 (a) the ascertainment:

 (i) of the amount of taxable income (or that there is no taxable income); and

 (ii) of the tax payable on that taxable income (or that no tax is payable); and

 (iii) of the total of a taxpayer’s tax offset refunds for a year of income (or that the taxpayer can get no such refunds for the year of income); or

Note 1: A taxpayer does not have a taxable income if the taxpayer’s deductions equal or exceed the taxpayer’s assessable income: see subsection 4‑15(1) of the Income Tax Assessment Act 1997.

Note 2: A taxpayer may have no tax payable on an amount of taxable income if that income is below the tax‑free threshold or if the taxpayer’s tax offsets reduce the taxpayer’s basic income tax liability to nil.

 (c) for a taxpayer that is the trustee of a unit trust that is a public trading trust (within the meaning of section 102R)—the ascertainment:

 (i) of the net income of the trust (within the meaning of section 102M) (or that there is no net income); and

 (ii) of the tax payable on that net income (or that no tax is payable); and

 (iii) of the total of a taxpayer’s tax offset refunds for a year of income (or that the taxpayer can get no such refunds for the year of income); or

 (d) for a taxpayer that is the trustee of a trust estate (other than a trustee to which paragraph (b) or (c) applies or the trustee of a complying superannuation fund, a non‑complying superannuation fund, a complying approved deposit fund, a non‑complying approved deposit fund or a pooled superannuation trust)—the ascertainment:

 (i) of so much of the net income of the trust estate as is net income in respect of which the trustee is liable to pay tax (or that there is no net income in respect of which the trustee is so liable); and

 (ii) of the tax payable on that net income (or that no tax is payable); and

 (iii) of the total of a taxpayer’s tax offset refunds for a year of income (or that the taxpayer can get no such refunds for the year of income); or

 (e) the ascertainment of the amount of interest payable under section 102AAM (about distributions from non‑resident trust estates); or

 (h) the ascertainment of the amount of income tax payable on the no‑TFN contributions income as defined by section 295‑610 of the Income Tax Assessment Act 1997 (or that no tax is payable); or

 (j) the ascertainment of the amount payable (or that no amount is payable) under the following:

 (i) subsection 276‑105(2) of the Income Tax Assessment Act 1997 (AMIT trustee taxed on amounts attributed to foreign resident members);

 (ii) subsection 276‑340(2) of that Act (AMIT trustee taxed on trust component deficit of character relating to tax offset);

 (iii) subsection 276‑405(2) of that Act (AMIT trustee taxed on shortfall in determined member components of character relating to assessable income);

 (iv) subsection 276‑410(2) of that Act (AMIT trustee taxed on excess in determined member components of character relating to tax offset);

 (v) subsection 276‑415(2) of that Act (AMIT trustee taxed on amounts of determined trust component that are not reflected in member components);

 (vi) subsection 276‑420(2) of that Act (AMIT trustee taxed on amounts of under of character relating to assessable income not properly carried forward);

 (vii) subsection 276‑425(2) of that Act (AMIT trustee taxed on amounts of over of character relating to tax offset not properly carried forward); or

 (k) the ascertainment of the amount payable under subsection 177P(1) (diverted profits tax).

attribution managed investment trust: see AMIT.

Australia has the same meaning as in the Income Tax Assessment Act 1997.

Australian superannuation fund has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

bank or banker includes, but is not limited to, a body corporate that is an ADI (authorised deposit‑taking institution) for the purposes of the Banking Act 1959.

base interest rate has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

basic income tax liability has the meaning given by section 4‑10 of the Income Tax Assessment Act 1997.

business has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

capital gain has the same meaning as in the Income Tax Assessment Act 1997.

capital loss has the same meaning as in the Income Tax Assessment Act 1997.

capital proceeds has the same meaning as in the Income Tax Assessment Act 1997.

CGT asset has the same meaning as in the Income Tax Assessment Act 1997.

CGT event has the same meaning as in the Income Tax Assessment Act 1997.

Chief Executive Centrelink has the same meaning as in the Human Services (Centrelink) Act 1997.

child has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

Commissioner means the Commissioner of Taxation.

Commonwealth education or training payment has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

company has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

complying approved deposit fund has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

complying superannuation fund has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

consolidated group has the same meaning as in the Income Tax Assessment Act 1997.

constituent document, in relation to a company, means the memorandum and articles of association of the company, or any rules or other document constituting the company or governing its activities.

corporate limited partnership has the meaning given by section 94D.

corporate tax entity has the same meaning as in the Income Tax Assessment Act 1997.

corporate tax rate has the same meaning as in the Income Tax Assessment Act 1997.

cost base of a CGT asset has the same meaning as in the Income Tax Assessment Act 1997.

creditable acquisition has the meaning given by section 195‑1 of the GST Act.

debenture, in relation to a company, includes debenture stock, bonds, notes and any other securities of the company, whether constituting a charge on the assets of the company or not.

debt interest has the same meaning as in the Income Tax Assessment Act 1997.

deductible gift recipient has the meaning given by the Income Tax Assessment Act 1997.

demerged entity has the meaning given by section 125‑70 of the Income Tax Assessment Act 1997.

demerger has the meaning given by section 125‑70 of the Income Tax Assessment Act 1997.

demerger allocation means:

 (a) the total market value of the allocation represented by the ownership interests issued by the demerged entity in itself under a demerger to the owners of ownership interests in the head entity of the demerger group; or

 (b) the total market value of the allocation represented by the ownership interests disposed of by a member of a demerger group under a demerger to the owners of ownership interests in the head entity; or

 (c) the total of both of those market values.

demerger dividend means that part of a demerger allocation that is assessable as a dividend under subsection 44(1) or that would be so assessable apart from subsections 44(3) and (4).

demerger group has the meaning given by section 125‑65 of the Income Tax Assessment Act 1997.

demerger subsidiary has the meaning given by section 125‑65 of the Income Tax Assessment Act 1997.

demerging entity has the meaning given by section 125‑70 of the Income Tax Assessment Act 1997.

depreciating asset has the same meaning as in the Income Tax Assessment Act 1997.

Deputy Commissioner means a Deputy Commissioner of Taxation.

distribution, when used in a franking context, has the same meaning as in the Income Tax Assessment Act 1997.

diverted profits tax has the meaning given by the Income Tax Assessment Act 1997.

dividend includes:

 (a) any distribution made by a company to any of its shareholders, whether in money or other property; and

 (b) any amount credited by a company to any of its shareholders as shareholders;

 (d) moneys paid or credited by a company to a shareholder or any other property distributed by a company to shareholders (not being moneys or other property to which this paragraph, by reason of subsection (4), does not apply or moneys paid or credited, or property distributed for the redemption or cancellation of a redeemable preference share), where the amount of the moneys paid or credited, or the amount of the value of the property, is debited against an amount standing to the credit of the share capital account of the company; or

 (e) moneys paid or credited, or property distributed, by a company for the redemption or cancellation of a redeemable preference share if:

 (i) the company gives the holder of the share a notice when it redeems or cancels the share; and

 (ii) the notice specifies the amount paid‑up on the share immediately before the cancellation or redemption; and

 (iii) the amount is debited to the company’s share capital account;

  except to the extent that the amount of those moneys or the value of that property, as the case may be, is greater than the amount specified in the notice as the amount paid‑up on the share; or

 (f) a reversionary bonus on a life assurance policy.

Note: Subsection (4) sets out when paragraph (d) of this definition does not apply.

Division 230 financial arrangement has the same meaning as in the Income Tax Assessment Act 1997.

dual resident investment company has the meaning given by section 6F.

dwelling has the meaning given by the Income Tax Assessment Act 1997.

eligible taxable income has the meaning given by section 102AD.

Employment Secretary has the meaning given by the Income Tax Assessment Act 1997.

employment termination payment has the same meaning as in the Income Tax Assessment Act 1997.

equity holder has the same meaning as in the Income Tax Assessment Act 1997.

equity interest has the same meaning as in the Income Tax Assessment Act 1997.

ESVCLP means an early stage venture capital limited partnership within the meaning of subsection 118‑407(4) of the Income Tax Assessment Act 1997.

exempt entity has the same meaning as in the Income Tax Assessment Act 1997.

exempt income has the meaning given by section 6‑20 of the Income Tax Assessment Act 1997.

exploration credit has the same meaning as in the Income Tax Assessment Act 1997.

Families Secretary has the meaning given by the Income Tax Assessment Act 1997.

farm management deposit has the meaning given by the Income Tax Assessment Act 1997.

FMD provider has the meaning given by the Income Tax Assessment Act 1997.

foreign superannuation fund has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

foreign tax has the meaning given by section 6AB.

frankable distribution has the same meaning as in the Income Tax Assessment Act 1997.

franked part of a distribution has the same meaning as in the Income Tax Assessment Act 1997.

franking credit has the same meaning as in the Income Tax Assessment Act 1997.

franking debit has the same meaning as in the Income Tax Assessment Act 1997.

franking deficit tax has the same meaning as in the Income Tax Assessment Act 1997.

franking surplus has the same meaning as in the Income Tax Assessment Act 1997.

franks with an exempting credit has the same meaning as in the Income Tax Assessment Act 1997.

friendly society has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

friendly society dispensary has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

fringe benefit has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

full self‑assessment taxpayer, for a year of income (the current year), means any of the following:

 (a) a company;

 (c) the trustee of a trust that is a public trading trust in relation to the current year for the purposes of Division 6C of Part III;

 (d) the trustee of a complying approved deposit fund or a non‑complying approved deposit fund in relation to the current year;

 (e) the trustee of a complying superannuation fund or a non‑complying superannuation fund in relation to the current year;

 (f) the trustee of a pooled superannuation trust in relation to the current year.

Note: A corporate limited partnership is taken to be a company under section 94J, so it will fall within paragraph (a) of this definition.

fund payment has the same meaning as in the Income Tax Assessment Act 1997.

general insurance company has the same meaning as in the Income Tax Assessment Act 1997.

general insurance policy has the same meaning as in the Income Tax Assessment Act 1997.

general interest charge means the charge worked out under Part IIA of the Taxation Administration Act 1953.

general partner has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

GST Act means the A New Tax System (Goods and Services Tax) Act 1999.

head company of a consolidated group or a MEC group has the same meaning as in the Income Tax Assessment Act 1997.

head entity of a demerger group has the meaning given by section 125‑65 of the Income Tax Assessment Act 1997.

Health Minister has the meaning given by the Income Tax Assessment Act 1997.

hold, in relation to an RSA, has the same meaning as in the Retirement Savings Accounts Act 1997.

holder, in relation to an RSA, has the same meaning as in the Retirement Savings Accounts Act 1997.

income from personal exertion or income derived from personal exertion means income consisting of earnings, salaries, wages, commissions, fees, bonuses, pensions, superannuation allowances, retiring allowances and retiring gratuities, allowances and gratuities received in the capacity of employee or in relation to any services rendered, the proceeds of any business carried on by the taxpayer either alone or as a partner with any other person, any amount received as a bounty or subsidy in carrying on a business, any amount that is included in the assessable income of the taxpayer by reason of section 393‑10 of the Income Tax Assessment Act 1997, the income from any property where that income forms part of the emoluments of any office or employment of profit held by the taxpayer, and any profit arising from the sale by the taxpayer of any property acquired by the taxpayer for the purpose of profit‑making by sale or from the carrying on or carrying out of any profit‑making undertaking or scheme, but does not include:

 (a) interest, unless the taxpayer’s principal business consists of the lending of money, or unless the interest is received in respect of a debt due to the taxpayer for goods supplied or services rendered by the taxpayer in the course of the taxpayer’s business; or

 (b) rents, dividends or non‑share dividends.

income from property or income derived from property means all income not being income from personal exertion.

income tax means income tax imposed as such by any Act, as assessed under this Act, but, except in section 260, does not include mining withholding tax or withholding tax.

Indigenous land has the same meaning as in the Income Tax Assessment Act 1997.

Indigenous person has the same meaning as in the Income Tax Assessment Act 1997.

industrial, commercial or scientific equipment means industrial, commercial or scientific equipment to the extent that an amount paid or credited as consideration for the use of the equipment, or for the right to use the equipment, is not rent from land (including rent from an interest in land or rent from fixtures on land).

insurance business has the same meaning as in the Insurance Act 1973.

insurance funds, in relation to a company, means all the Australian statutory funds of the company and all other funds maintained by the company in respect of the life assurance business of the company.

interest income, in relation to a taxpayer, means income consisting of interest, or a payment in the nature of interest, in respect of:

 (a) money lent, advanced or deposited; or

 (b) credit given; or

 (c) any other form of debt or liability;

whether security is given or not, other than:

 (d) an amount to the extent to which it is a return on an equity interest in a company; or

 (e) interest derived by the taxpayer from a transaction directly related to the active conduct of a trade or business; or

 (f) interest derived by the taxpayer from carrying on a banking business or any other business whose income is principally derived from the lending of money; or

 (g) interest received by the taxpayer during a year of income from a foreign company, where:

 (i) at any time during the year of income, the taxpayer had (or would have had, if the taxpayer were a company and a resident), a voting interest, within the meaning of section 334A, amounting to at least 10% of the voting power, within the meaning of that section, in that company; and

 (ii) during the year of income or the preceding year of income, the company has not derived an amount of interest income exceeding 10% of the total profits derived by the company during the same year.

junior minerals exploration incentive tax offset means a tax offset under Subdivision 418‑B of the Income Tax Assessment Act 1997.

life assurance company has the meaning given to life insurance company by the Income Tax Assessment Act 1997.

life assurance policy has the meaning given to life insurance policy by the Income Tax Assessment Act 1997.

life assurance premium has the meaning given to life insurance premium by the Income Tax Assessment Act 1997.

limited partner has the same meaning as in the Income Tax Assessment Act 1997.

limited partnership has the same meaning as in the Income Tax Assessment Act 1997.

liquidator means the person who, whether or not appointed as liquidator, is the person required by law to carry out the winding‑up of a company.

listed public company has the same meaning as in the Income Tax Assessment Act 1997.

Note: For the meaning of listed public company in Schedule 2F to this Act, see section 272‑135 in that Schedule.

loss carry back tax offset has the same meaning as in the Income Tax Assessment Act 1997.

loss year has the same meaning as in the Income Tax Assessment Act 1997.

managed investment trust has the same meaning as in the Income Tax Assessment Act 1997.

MEC group has the same meaning as in the Income Tax Assessment Act 1997.

Medicare levy means Medicare levy imposed as such by any Act as assessed under this Act.

Medicare levy (fringe benefits) surcharge has the meaning given by the Income Tax Assessment Act 1997.

member of a consolidated group or MEC group has the same meaning as in the Income Tax Assessment Act 1997.

member of a family tax benefit (Part B) family without shared care: a taxpayer is a member of a family tax benefit (Part B) family without shared care if:

 (a) the taxpayer, or the taxpayer’s spouse while being the taxpayer’s partner (within the meaning of the A New Tax System (Family Assistance) Act 1999), is eligible for family tax benefit at the Part B rate (within the meaning of that Act); and

 (b) clause 31 of Schedule 1 to that Act does not apply in respect of the Part B rate.

minerals has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

mining withholding tax means income tax payable in accordance with section 128V.

mortgage includes any charge, lien or encumbrance to secure the repayment of money.

mutual life assurance company means a life assurance company the profits of which are divisible only among the policy holders.

natural resource has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

net capital gain has the same meaning as in the Income Tax Assessment Act 1997.

net capital loss has the same meaning as in the Income Tax Assessment Act 1997.

net GST has the meaning given by section 995‑1 of the Income Tax Assessment Act 1997.

net input tax credit has the meaning given by section 995‑1 of the Income Tax Assessment Act 1997.

non‑assessable non‑exempt income has the meaning given by the Income Tax Assessment Act 1997.

non‑complying approved deposit fund has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

non‑complying superannuation fund has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

non‑entity joint venture has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

non‑equity share has the same meaning as in the Income Tax Assessment Act 1997.

non‑resident means a person who is not a resident of Australia.

non‑share capital account has the same meaning as in the Income Tax Assessment Act 1997.

non‑share capital return has the same meaning as in the Income Tax Assessment Act 1997.

non‑share distribution has the same meaning as in the Income Tax Assessment Act 1997.

non‑share dividend has the same meaning as in the Income Tax Assessment Act 1997.

non‑share equity interest has the same meaning as in the Income Tax Assessment Act 1997.

once‑only deduction: a deduction in a year of income in respect of a percentage of expenditure is a once‑only deduction, in relation to the expenditure, if no deduction is allowable in respect of a percentage of the expenditure in any other year of income.

ordinary class has the same meaning as in the Income Tax Assessment Act 1997.

ordinary income has the same meaning as in the Income Tax Assessment Act 1997.

over‑franking tax has the same meaning as in the Income Tax Assessment Act 1997.

owner of a farm management deposit has the meaning given by the Income Tax Assessment Act 1997.

ownership interest has the meaning given by section 125‑60 of the Income Tax Assessment Act 1997.

paid in relation to dividends or non‑share dividends includes credited or distributed.

paid‑up share capital has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

parent has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

partnership has the same meaning as in the Income Tax Assessment Act 1997.

part of a distribution that is franked with an exempting credit has the same meaning as in the Income Tax Assessment Act 1997.

part of a distribution that is franked with a venture capital credit has the same meaning as in the Income Tax Assessment Act 1997.

passive commodity gain, in relation to a taxpayer, in relation to a year of income, means a gain realised by the taxpayer in a year of income from disposing of a forward contract or a futures contract, or a right or option in respect of a forward contract or a futures contract, in respect of any thing (a commodity):

 (a) that is capable of delivery under an agreement for its delivery; and

 (b) that is not an instrument creating or evidencing a chose in action;

unless the contract, right or option relates to the carrying on by the taxpayer of a business:

 (c) of producing or processing the commodity; or

 (d) that involves the use of the commodity as a raw material in a production process.

passive income, in relation to a taxpayer, in relation to a year of income means:

 (a) dividends (within the meaning of this section) and non‑share dividends paid to the taxpayer in the year of income; or

 (b) unit trust dividends (within the meaning of Division 6C) paid to the taxpayer in the year of income; or

 (c) a distribution made to the taxpayer in the year of income that is taken to be a dividend because of section 47; or

 (d) an amount that is taken to be a dividend paid to the taxpayer in the year of income because of section 47A or 108 or Division 7A of Part III; or

 (e) interest income derived by the taxpayer in the year of income; or

 (f) annuities derived by the taxpayer in the year of income; or

 (g) income derived by the taxpayer by way of rent (within the meaning of Part X) in the year of income; or

 (h) royalties derived by the taxpayer in the year of income; or

 (i) an amount derived by the taxpayer in the year of income as consideration for the assignment, in whole or in part, of any copyright, patent, design, trade mark or other like property or right; or

 (j) profits of a capital nature that accrued to the taxpayer in the year of income; or

 (k) passive commodity gains that accrued to the taxpayer in the year of income; or

 (l) an amount included in the assessable income of the taxpayer of the year of income under section 102AAZD, 456, 457 or 459A;

 (m) an amount that arose from an asset necessarily held by the taxpayer in connection with an insurance business actively carried on by the taxpayer; or

 (n) an amount included in the taxpayer’s assessable income under Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes).

PDF (pooled development fund) means a company that is a PDF within the meaning of the Pooled Development Funds Act 1992, but does not include such a company in the capacity of a trustee.

PDF component, in relation to a company that becomes a PDF during the year of income and is still a PDF at the end of the year of income, means:

 (a) in a case where the amount that, if:

 (i) the period beginning at the start of the year of income and ending immediately before the company becomes a PDF were a year of income of the company; and

 (ii) the period (the PDF notional year) beginning when the company becomes a PDF and ending at the end of the year of income were a year of income of the company; and

 (iii) paragraph (c) of the definition of taxable income were omitted;

  would be the company’s taxable income of the PDF notional year is $1 or more—that amount; or

 (b) otherwise—a nil amount.

permanent establishment, in relation to a person (including the Commonwealth, a State or an authority of the Commonwealth or a State), means a place at or through which the person carries on any business and, without limiting the generality of the foregoing, includes:

 (a) a place where the person is carrying on business through an agent;

 (b) a place where the person has, is using or is installing substantial equipment or substantial machinery;

 (c) a place where the person is engaged in a construction project; and

 (d) where the person is engaged in selling goods manufactured, assembled, processed, packed or distributed by another person for, or at or to the order of, the first‑mentioned person and either of those persons participates in the management, control or capital of the other person or another person participates in the management, control or capital of both of those persons—the place where the goods are manufactured, assembled, processed, packed or distributed;

 (e) a place where the person is engaged in business dealings through a bona fide commission agent or broker who, in relation to those dealings, acts in the ordinary course of his or her business as a commission agent or broker and does not receive remuneration otherwise than at a rate customary in relation to dealings of that kind, not being a place where the person otherwise carries on business;

 (f) a place where the person is carrying on business through an agent:

 (i) who does not have, or does not habitually exercise, a general authority to negotiate and conclude contracts on behalf of the person; or

 (ii) whose authority extends to filling orders on behalf of the person from a stock of goods or merchandise situated in the country where the place is located, but who does not regularly exercise that authority;

  not being a place where the person otherwise carries on business; or

 (g) a place of business maintained by the person solely for the purpose of purchasing goods or merchandise.

Note: Subsection (6) treats a person as carrying on, at or through a permanent establishment that is a place described in paragraph (d) of this definition, the business of selling the goods manufactured, assembled, processed, packed or distributed by the other person as described in that paragraph.

person has the same meaning as in the Income Tax Assessment Act 1997.

pooled superannuation trust has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

post FIF abolition credit means a post FIF abolition credit arising under:

 (a) subsection 23AK(6); and

 (b) subsection 717‑220(2) of the Income Tax Assessment Act 1997; and

 (c) subsection 717‑255(2) of that Act.

post FIF abolition debit means a post FIF abolition debit arising under:

 (a) subsection 23AK(2); and

 (b) subsection 23B(1); and

 (c) subsection 717‑220(3) of the Income Tax Assessment Act 1997; and

 (d) subsection 717‑255(3) of that Act.

post FIF abolition surplus has the meaning given by section 23AK.

prescribed dual resident means a company that satisfies either of the following conditions:

 (a) the first condition is that:

 (i) the company is a resident of Australia within the meaning of subsection 6(1); and

 (ii) there is an agreement (within the meaning of the International Tax Agreements Act 1953) in force in respect of a foreign country; and

 (iii) the agreement contains a provision that is expressed to apply where, apart from the provision, the company would, for the purposes of the agreement, be both a resident of Australia and a resident of the foreign country; and

 (iv) that provision has the effect that the company is, for the purposes of the agreement, a resident solely of the foreign country;

 (b) the alternative condition is that the company:

 (i) is a resident of Australia within the meaning of subsection 6(1) for no other reason than that it carries on business in Australia and has its central management and control in Australia; and

 (ii) it is also a resident of another country; and

 (iii) its central management and control is in another country.

primary production business has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

principal beneficiary of a special disability trust has the same meaning as in the Income Tax Assessment Act 1997.

private company, in relation to a year of income, means a company that is a private company in relation to that year of income for the purposes of Division 7 of Part III.

proclaimed superannuation standards day means 1 July 1990.

provider, in relation to an RSA, has the same meaning as in the Retirement Savings Accounts Act 1997.

prudential standards has the same meaning as in the Income Tax Assessment Act 1997.

rebatable benefit has the meaning given by subsection 160AAA(1).

rebate income of an individual for a year of income is the sum of:

 (a) the individual’s taxable income for the year of income, disregarding the individual’s assessable FHSS released amount (within the meaning of the Income Tax Assessment Act 1997) for the year of income; and

 (b) the individual’s reportable superannuation contributions for the year of income; and

 (c) the individual’s total net investment loss for the year of income; and

 (d) the individual’s adjusted fringe benefits total for the year of income.

recognised large credit union has the meaning given by section 6H.

recognised medium credit union has the meaning given by section 6H.

recognised small credit union has the meaning given by section 6H.

reduced cost base of a CGT asset has the same meaning as in the Income Tax Assessment Act 1997.

relative has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

reportable superannuation contributions has the same meaning as in the Income Tax Assessment Act 1997.

resident or resident of Australia means:

 (a) a person, other than a company, who resides in Australia and includes a person:

 (i) whose domicile is in Australia, unless the Commissioner is satisfied that the person’s permanent place of abode is outside Australia;

 (ii) who has actually been in Australia, continuously or intermittently, during more than one‑half of the year of income, unless the Commissioner is satisfied that the person’s usual place of abode is outside Australia and that the person does not intend to take up residence in Australia; or

 (iii) who is:

 (A) a member of the superannuation scheme established by deed under the Superannuation Act 1990; or

 (B) an eligible employee for the purposes of the Superannuation Act 1976; or

 (C) the spouse, or a child under 16, of a person covered by sub‑subparagraph (A) or (B); and

 (b) a company which is incorporated in Australia, or which, not being incorporated in Australia, carries on business in Australia, and has either its central management and control in Australia, or its voting power controlled by shareholders who are residents of Australia.

resident trust for CGT purposes has the same meaning as in the Income Tax Assessment Act 1997.

return on a debt interest or equity interest has the same meaning as in the Income Tax Assessment Act 1997.

return of income means a return of income, or of profits or gains of a capital nature, or of both income and such profits or gains.

royalty or royalties includes any amount paid or credited, however described or computed, and whether the payment or credit is periodical or not, to the extent to which it is paid or credited, as the case may be, as consideration for:

 (a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trade mark, or other like property or right;

 (b) the use of, or the right to use, any industrial, commercial or scientific equipment;

 (c) the supply of scientific, technical, industrial or commercial knowledge or information;

 (d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in paragraph (a), any such equipment as is mentioned in paragraph (b) or any such knowledge or information as is mentioned in paragraph (c);

 (da) the reception of, or the right to receive, visual images or sounds, or both, transmitted to the public by:

 (i) satellite; or

 (ii) cable, optic fibre or similar technology;

 (db) the use in connection with television broadcasting or radio broadcasting, or the right to use in connection with television broadcasting or radio broadcasting, visual images or sounds, or both, transmitted by:

 (i) satellite; or

 (ii) cable, optic fibre or similar technology;

 (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;

 (e) the use of, or the right to use:

 (i) motion picture films;

 (ii) films or video tapes for use in connexion with television; or

 (iii) tapes for use in connexion with radio broadcasting; or

 (f) a total or partial forbearance in respect of:

 (i) the use of, or the granting of the right to use, any such property or right as is mentioned in paragraph (a) or any such equipment as is mentioned in paragraph (b);

 (ii) the supply of any such knowledge or information as is mentioned in paragraph (c) or of any such assistance as is mentioned in paragraph (d);

 (iia) the reception of, or the granting of the right to receive, any such visual images or sounds as are mentioned in paragraph (da);

 (iib) the use of, or the granting of the right to use, any such visual images or sounds as are mentioned in paragraph (db);

 (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

 (iii) the use of, or the granting of the right to use, any such property as is mentioned in paragraph (e).

RSA has the same meaning as in the Income Tax Assessment Act 1997.

Note: That Act defines RSA as having the meaning given by the Retirement Savings Accounts Act 1997.

RSA provider has the same meaning as in the Income Tax Assessment Act 1997.

Note: That Act defines RSA provider as having the same meaning as in the Retirement Savings Accounts Act 1997.

Second Commissioner means a Second Commissioner of Taxation.

share in a company has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

share capital account has the same meaning as in the Income Tax Assessment Act 1997.

shareholder includes member or stockholder.

shareholders’ funds has the same meaning as in the Life Insurance Act 1995.

shortfall interest charge means the charge worked out under Division 280 in Schedule 1 to the Taxation Administration Act 1953.

small business entity has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

social security law has the meaning given by the Social Security Act 1991.

special disability trust has the same meaning as in the Income Tax Assessment Act 1997.

spouse has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

statutory income has the meaning given by the Income Tax Assessment Act 1997.

Student Assistance Secretary has the meaning given by the Income Tax Assessment Act 1997.

subsidiary member of a consolidated group or a MEC group has the same meaning as in the Income Tax Assessment Act 1997.

superannuation benefits means individual personal benefits, pensions or retiring allowances.

superannuation fund means:

 (a) a scheme for the payment of superannuation benefits upon retirement or death; or

 (b) a superannuation fund within the definition of superannuation fund in section 10 of the Superannuation Industry (Supervision) Act 1993.

superannuation fund for foreign residents has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.

superannuation lump sum has the same meaning as in the Income Tax Assessment Act 1997.

tainted, in relation to a company’s share capital account, has the same meaning as in the Income Tax Assessment Act 1997.

tax means income tax imposed as such by any Act, as assessed under this Act, but does not include mining withholding tax or withholding tax.

taxable Australian property has the same meaning as in the Income Tax Assessment Act 1997.

taxable income has the same meaning as in  the Income Tax Assessment Act 1997.

taxable supply has the meaning given by section 195‑1 of the GST Act.

tax cost is set has the same meaning as in the Income Tax Assessment Act 1997.

tax loss has the same meaning as in the Income Tax Assessment Act 1997.

tax offset refund has the meaning given by the Income Tax Assessment Act 1997.

taxpayer means a person deriving income or deriving profits or gains of a capital nature.

this Act includes:

 (a) the Income Tax Assessment Act 1997; and

 (b) Part IVC of the Taxation Administration Act 1953, so far as that Part relates to:

 (i) this Act or the Income Tax Assessment Act 1997; or

 (ii) Schedule 1 to the Taxation Administration Act 1953; and

 (c) Schedule 1 to the Taxation Administration Act 1953.

Note: Subsection (1AA) of this section prevents definitions in the Income Tax Assessment Act 1936 from affecting the interpretation of the Income Tax Assessment Act 1997.

total net investment loss has the same meaning as in the Income Tax Assessment Act 1997.

trading stock has the meaning given by section 70‑10 of the Income Tax Assessment Act 1997.

Tribunal means the Administrative Review Tribunal.

trustee in addition to every person appointed or constituted trustee by act of parties, by order, or declaration of a court, or by operation of law, includes:

 (a) an executor or administrator, guardian, committee, receiver, or liquidator; and

 (b) every person having or taking upon himself the administration or control of income affected by any express or implied trust, or acting in any fiduciary capacity, or having the possession, control or management of the income of a person under any legal or other disability;

unfranked part of a distribution has the same meaning as in the Income Tax Assessment Act 1997.

VCLP means a venture capital limited partnership within the meaning of subsection 118‑405(2) of the Income Tax Assessment Act 1997.

VCMP means a venture capital management partnership.

venture capital deficit tax has the same meaning as in the Income Tax Assessment Act 1997.

venture capital management partnership has the meaning given by subsection 94D(3).

Veterans’ Affairs Secretary means the Secretary of the Department administered by the Minister administering the Veterans’ Entitlements Act 1986.

withholding tax has the same meaning as in the Income Tax Assessment Act 1997.

work and income support related withholding payments and benefits means:

 (a) payments from which an amount:

 (i) must be withheld under a provision of Subdivision 12‑B (other than section 12‑55), 12‑C or 12‑D or Division 13 in Schedule 1 to the Taxation Administration Act 1953 (even if the amount is not withheld); or

 (ii) would be required to be withheld under a provision mentioned in subparagraph (i) (other than section 12‑55) apart from subsection 12‑1(1A) in Schedule 1 to that Act; and

 (b) amounts included in a person’s assessable income under section 86‑15 of the Income Tax Assessment Act 1997 in respect of which an amount must be paid under Division 13 in Schedule 1 to the Taxation Administration Act 1953 (even if the amount is not paid); and

 (c) non‑cash benefits in relation to which the provider of the benefit must pay an amount to the Commissioner under Division 14 in Schedule 1 to the Taxation Administration Act 1953 (even if the amount is not paid).

Note: The payments covered by paragraph (a) are: payments to employees and company directors, payments to office holders, return to work payments, payments under labour hire arrangements, payments of annuities, superannuation benefits, payments for termination of employment, payments for unused leave, benefit payments, compensation payments and payments specified by regulations.

year of income means an income year as defined in subsection 995‑1(1) of the Income Tax Assessment Act 1997.

year of tax means the financial year for which income tax is levied.

 (1A) Unless the contrary intention appears, a reference in this Act to a failure to do an act or thing includes a reference to a refusal to do the act or thing.

 (2AA) A reference in this Act to an accounting period adopted in lieu of a year of income includes a reference to an accounting period:

 (a) that commences or ends under section 18A; and

 (b) that would, but for that section, form part of an accounting period so adopted.

 (2AB) The Commissioner may, by legislative instrument, make a determination modifying the operation of one or more provisions of this Act in relation to limited partnerships whose accounting periods commence or end under section 18A of the Income Tax Assessment Act 1936.

 (2AC) A determination can only be made under subsection (2AB) in order to take account of the fact that such accounting periods are of less than 12 months’ duration.

 (3) The express references in this Act to companies do not imply that references to persons do not include references to companies.

 (4) Paragraph (d) of the definition of dividend in subsection (1) does not apply if, under an arrangement:

 (a) a person pays or credits any money or gives property to the company and the company credits its share capital account with the amount of the money or the value of the property; and

 (b) the company pays or credits any money, or distributes property to another person, and debits its share capital account with the amount of the money or the value of the property so paid, credited or distributed.

 (6) Where a place is, by virtue of paragraph (d) of the definition of permanent establishment in subsection (1), a permanent establishment of a person, the person shall, for the purposes of this Act, be deemed to be carrying on at or through that permanent establishment the business of selling the goods manufactured, assembled, processed, packed or distributed by the other person at the place that is that permanent establishment.

6AB  Foreign income and foreign tax

 (1) A reference in this Act to foreign income is a reference to income (including superannuation lump sums and employment termination payments) derived from sources in a foreign country or foreign countries, and includes a reference to an amount included in assessable income under section 102AAZD, 456, 457 or 459A of this Act, or section 305‑70 of the Income Tax Assessment Act 1997.

 (1C) A reference in this Act to foreign income includes a reference to an amount included in assessable income under:

 (a) Division 301 of the Income Tax Assessment Act 1997 in its application under section 301‑5 of the Income Tax (Transitional Provisions) Act 1997; or

 (b) Division 302 of the Income Tax Assessment Act 1997 in its application under section 302‑5 of the Income Tax (Transitional Provisions) Act 1997.

 (2) A reference in this Act to foreign tax is a reference to tax imposed by a law of a foreign country, being:

 (a) tax upon income; or

 (b) tax upon profits or gains, whether of an income or capital nature; or

 (c) any other tax, being a tax that is subject to an agreement having the force of law under the International Tax Agreements Act 1953;

but does not include a unitary tax or a credit absorption tax.

 (5B) This section applies to a non‑share dividend in the same way as it applies to a dividend.

credit absorption tax means a tax imposed by a law of a foreign country to the extent that the tax would not have been payable if the taxpayer concerned or another taxpayer had not been entitled to an offset in respect of the tax under Division 770 of the Income Tax Assessment Act 1997.

law, in relation to a foreign country, means a law of that country, or of any part of, or place in, that country.

unitary tax means tax imposed by a law of a foreign country, being a law which, for the purposes of taxing income, profits or gains of a company derived from sources within that country, takes into account, or is entitled to take into account, income, losses, outgoings or assets of the company (or of a company that for the purposes of that law is treated as being associated with the company) derived, incurred or situated outside that country, but does not include tax imposed by that law if that law only takes those matters into account:

 (a) if such an associated company is a resident for the purposes of that law; or

 (b) for the purposes of granting any form of relief in relation to tax imposed on dividends received by one company from another company.

6B  Income beneficially derived

 (1) For the purposes of this Act, an amount of income derived by a person, not being a dividend paid by a company to the person as a shareholder in the company, shall be deemed to be attributable to a dividend:

 (a) if the person derived the amount of income by reason of being the beneficial owner of the share in respect of which the dividend was paid; or

 (b) if the person derived the amount of income as a beneficiary in a trust estate and the amount of income can be attributed, directly or indirectly, to the dividend or to an amount that is deemed, by any application or successive applications of this subsection, to be an amount of income attributable to the dividend.

 (1A) For the purposes of this Act, an amount of income derived by a person, being income other than passive income, is to be taken to be income attributable to passive income:

 (a) if the person derived the amount of income by reason of being beneficially entitled to an amount representing passive income; or

 (b) if the person derived the amount of income as a beneficiary in a trust estate and the amount of income can be attributed, directly or indirectly, to passive income or to an amount that is taken, by any application or successive applications of this subsection, to be an amount of income attributable to passive income.

 (2) For the purposes of this Act, an amount of income derived by a person, being income other than interest income, shall be deemed to be income attributable to interest income:

 (a) if the person derived the amount of income by reason of being beneficially entitled to an amount representing interest income; or

 (b) if the person derived the amount of income as a beneficiary in a trust estate and the amount of income can be attributed, directly or indirectly, to interest income or to an amount that is deemed, by any application or successive applications of this subsection, to be an amount of income attributable to interest income.

 (2A) For the purposes of this Act, an amount of income derived by a person shall be deemed to be income derived from a particular source:

 (a) except where paragraph (b) applies:

 (i) if the person derived the amount of income by reason of being beneficially entitled to an amount that is derived from that source; or

 (ii) if the person derived the amount of income as a beneficiary in a trust estate and the amount of income can be attributed, directly or indirectly, to income derived from that source or to an amount that is deemed, by any other application or applications of this subsection, to be an amount that is income derived from that source; or

 (b) if the income so derived is, by virtue of subsection (1), (1A) or (2), attributable to a dividend, passive income or interest income derived from that source.

 (3) Where a beneficiary in a trust estate is presently entitled to income of the trust estate, that income shall, for the purposes of this section, be deemed to be an amount of income derived by the person.

 (4) This section:

6BA  Taxation treatment of certain shares

 (1) This section applies if a shareholder holds shares in a company (the original shares) and the company issues other shares (the bonus shares) in respect of the original shares.

 (2) If the bonus shares are a dividend, or taken to be a dividend (including as a result of section 45C), the consideration for the acquisition of the shares for the purposes of this Act is so much of the dividend as is:

 (a) included in the taxpayer’s assessable income; and

 (b) is not rebatable under section 46A.

 (3) If the bonus shares are issued for no consideration and are not a dividend or taken to be a dividend, then for the purposes of this Act, in determining:

 (a) the value of such of the original shares and bonus shares as the taxpayer elects under section 70‑45 of the Income Tax Assessment Act 1997 to value at cost; and

 (b) where any of the original shares or any of the bonus shares are not articles of trading stock of the taxpayer:

 (i) the amount or value of the consideration paid in respect of the acquisition of any of those shares for the purposes of Part 3‑1 or 3‑3 of the Income Tax Assessment Act 1997; or

 (ii) the amount of any profit or loss arising on the sale or disposal of any of those shares;

any amounts paid or payable by the taxpayer in respect of the original shares (whether on purchase of the shares, on application for or allotment of the shares, to meet calls or otherwise) shall be deemed to have been paid or to be payable by the taxpayer in respect of the original shares and the bonus shares in such proportions as the Commissioner considers appropriate in the circumstances.

 (4) A company issues shares for no consideration if:

 (a) it credits its capital account with profits in connection with the issue of the shares; or

 (b) it credits its capital account with the amount of any dividend to a shareholder and the shareholder does not have a choice whether to be paid the dividend or to be issued with the shares.

This subsection does not limit the generality of subsection (3).

Note: A company that makes a credit covered by paragraph (a) or (b) will have a tainted share capital account.

 (5) Subject to subsection (6), if a shareholder has a choice whether to be paid a dividend or to be issued shares and the shareholder chooses to be issued with shares:

 (a) the dividend is taken to be credited to the shareholder; and

 (b) the dividend is taken to have been paid out of profits; and

 (c) subsections (2) and (3) apply in working out the consideration for the acquisition of the shares for the purposes of this Act.

However, the share capital account of the company does not become a tainted share capital account as a result of the crediting of the dividend to the share capital account.

 (6) Subsection (5) does not apply if:

 (a) a shareholder in a listed public company has a choice whether to be paid a dividend (other than a minimally franked dividend within the meaning of subsection 45(3)) or to be issued shares and the shareholder chooses to be issued with shares; and

 (b) the company does not credit the share capital account in connection with the issue of those shares.

Note: If subsection (5) does not apply because of this subsection, subsection (3) will apply.

 (7) This section (other than subsection (6)):

6C  Source of royalty income derived by a non‑resident

 (1) This section applies to income that is derived on or after 1 July 1968 by a non‑resident and consists of royalty that:

 (a) is paid or credited to the non‑resident by the Commonwealth, by a State, by an authority of the Commonwealth or of a State or by a person who is, or by persons at least one of whom is, a resident and is not an outgoing wholly incurred by the Commonwealth, the State, the authority or that person or those persons in carrying on business in a country outside Australia at or through a permanent establishment of the Commonwealth, the State, the authority or that person or those persons in that country; or

 (b) is paid or credited to the non‑resident by a person who is, or by persons each of whom is, a non‑resident and is, or is in part, an outgoing incurred by that person or those persons in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia.

 (1A) For the purposes of Division 5 and Division 6 of Part III, but subject to subsections (3) and (4), income to which this section applies shall be deemed to be attributable to sources in Australia.

 (2) For the purposes of sections 6‑5 and 6‑10 of the Income Tax Assessment Act 1997, but subject to subsections (3) and (4), income to which this section applies shall be deemed to have been derived from a source in Australia.

 (a) income to which this section applies is paid or credited to the non‑resident by whom it is derived by the Commonwealth, by a State, by an authority of the Commonwealth or of a State or by a person who is, or by persons at least one of whom is, a resident; and

 (b) the royalty of which the income consists is, in part, an outgoing incurred by the Commonwealth, the State, the authority or that person or those persons in carrying on business in a country outside Australia at or through a permanent establishment of the Commonwealth, the State, the authority or that person or those persons in that country;

subsection (2) has effect in relation to so much only of the income as is attributable to so much of the royalty as is not an outgoing so incurred.

 (a) income to which this section applies is paid or credited to the non‑resident by whom it is derived by a person who, or by persons each of whom, is a non‑resident; and

 (b) the royalty of which the income consists is, in part only, an outgoing incurred by the person or persons by whom it is paid or credited in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia;

subsection (2) has effect in relation to so much only of the income as is attributable to so much of the royalty as is an outgoing so incurred.

 (5) In subsection (6), a reference to a relevant person is a reference to the Commonwealth, a State, an authority of the Commonwealth or of a State or a person who is, or persons at least 1 of whom is, a resident.

 (6) For the purposes of paragraphs (1)(a) and (3)(b), where:

 (a) royalty is paid or credited, after the commencement of this subsection, to a non‑resident by a relevant person carrying on business in a country outside Australia; and

 (b) the royalty or a part of the royalty:

 (i) is incurred by the relevant person in gaining or producing income that is derived by the relevant person otherwise than in carrying on business in a country outside Australia at or through a permanent establishment of the relevant person in that country or is incurred by the relevant person for the purpose of gaining or producing income to be so derived; or

 (ii) is incurred by the relevant person in carrying on business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the relevant person otherwise than in so carrying on business at or through a permanent establishment of the relevant person in a country outside Australia;

the royalty or the part of the royalty, as the case may be, is not an outgoing incurred by the relevant person in carrying on business in a country outside Australia at or through a permanent establishment of the relevant person in that country.

 (7) For the purposes of paragraphs (1)(b) and (4)(b), where:

 (a) royalty is paid or credited, after the commencement of this subsection, to a non‑resident by another person or other persons (in this subsection referred to as the payer), being:

 (i) another person who is carrying on business in Australia and is a non‑resident; or

 (ii) other persons who are carrying on business in Australia and each of whom is a non‑resident; and

 (b) the royalty or a part of the royalty:

 (i) is incurred by the payer in gaining or producing income that is derived by the payer in carrying on business in Australia at or through a permanent establishment of the payer in Australia or is incurred by the payer for the purpose of gaining or producing income to be so derived; or

 (ii) is incurred by the payer in carrying on a business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the payer in so carrying on business at or through a permanent establishment of the payer in Australia;

the royalty or the part of the royalty, as the case may be, is an outgoing incurred by the payer in carrying on business in Australia at or through a permanent establishment of the payer in Australia.

6CA  Source of natural resource income derived by a non‑resident

double tax agreement means an agreement within the meaning of the International Tax Agreements Act 1953.

natural resource income means income that:

 (a) is derived by a non‑resident; and

 (b) is calculated, in whole or in part, by reference to the value or quantity of natural resources produced, recovered or produced and recovered, in Australia after 7 April 1986;

 (c) income that consists of royalty; or

 (d) income where:

 (i) on 7 April 1986, the non‑resident had a continuing entitlement to receive the income;

 (ii) the income was derived by the non‑resident pursuant to that continuing entitlement;

 (iii) the non‑resident was, at 5 o’clock in the afternoon, by standard time in the Australian Capital Territory on 7 April 1986, a resident, within the meaning of a double tax agreement, of a foreign country in respect of which the double tax agreement was in force;

 (iv) before 8 April 1986, the Commissioner had given a statement in writing to the effect that income tax would be levied on 50% of income included in a specified class of income; and

 (v) the income is included in that class of income.

 (2) For the purposes of Divisions 5 and 6 of Part III, natural resource income shall be deemed to be attributable to sources in Australia.

 (3) For the purposes of section 255 of this Act and sections 6‑5 and 6‑10 of the Income Tax Assessment Act 1997, natural resource income shall be deemed to have been derived from a source in Australia.

6D  Some tax offsets under the 1997 Assessment Act are treated as credits

  A tax offset under a provision of the Income Tax Assessment Act 1997 that corresponds to a provision of this Act that provides for a credit is taken to be a credit for the purposes of this Act.

Note: All other tax offsets under the Income Tax Assessment Act 1997 are treated as rebates: see section 160ADA.

6F  Dual resident investment company

 (1) For the purposes of this Act, a company (other than a company in the capacity of trustee) is a dual resident investment company in relation to a year of income if:

 (a) at any time during the year of income the company is a resident of Australia; and

 (b) the company is liable to tax in a foreign country in respect of some or all of the income or profits of the company of the year of income (or would be so liable if the company derived income or profits) because:

 (i) the company is treated as a resident of that country for the purposes of the relevant law of that country; or

 (ii) the company is treated as domiciled in that country for the purposes of the relevant law of that country; or

 (iii) the company’s management and control is treated as being located in that country for the purposes of the relevant law of that country; and

 (c) at any time during the year of income when the company was in existence:

 (i) the company was not carrying on business with a reasonable view to profit; or

 (ii) a substantial purpose of the company (whether or not stated in its constituent document) was to acquire or hold shares, securities or other investments in related companies (whether directly or indirectly through one or more companies, partnerships or trusts).

 (2) For the purposes of this section, companies are related to each other if they are controlled (as defined by subsection (3)) by the same person, either alone or together with associates (whether or not the same associates are involved in relation to each company).

 (3) For the purposes of this section, a person, either alone or together with associates, controls a company if:

 (a) the person, either alone or together with associates:

 (i) controls or is capable of controlling, either directly or through one or more interposed companies, partnerships or trusts, at least 50% of the maximum number of votes that might be cast at a general meeting of the company; or

 (ii) is beneficially entitled to receive, directly or indirectly, at least 50% of any dividends that are or might be paid, or of any distribution of capital that is or may be made, by the company; or

 (iii) is capable, under a scheme, of gaining such control or such an entitlement; or

 (b) the company or its directors are accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the person, either alone or together with associates.

 (4) Section 159GZH applies for the purposes of this section in determining the beneficial entitlement of a person to receive indirectly the whole or a particular fraction of a dividend that is, or might be, paid by a company or of a distribution of capital of a company.

associate has the same meaning as in section 318.

scheme means:

 (a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

 (b) any scheme, plan, proposal, action, course of action or course of conduct, whether there are 2 or more parties or only one party involved.

6H  Recognised small credit unions, recognised medium credit unions and recognised large credit unions

Recognised small credit union in relation to a year of income

 (1) For the purposes of this Act, a credit union is a recognised small credit union in relation to a year of income if:

 (a) both:

 (i) the year of income is the 1994‑95 year of income; and

 (ii) either:

 (A) the credit union is not a designated credit union; or

 (B) the credit union’s notional taxable income of the year of income is less than $50,000; or

 (b) both:

 (i) the year of income is the 1995‑96 year of income or a later year of income; and

 (ii) the credit union’s notional taxable income of the year of income is less than $50,000.

Recognised medium credit union in relation to a year of income

 (2) For the purposes of this Act, a credit union is a recognised medium credit union in relation to a year of income if:

 (a) the year of income is the 1994‑95 year of income or a later year of income; and

 (b) the credit union is not a recognised small credit union in relation to the year of income; and

 (c) the credit union’s notional taxable income of the year of income is less than $150,000.

Recognised large credit union in relation to a year of income

 (3) For the purposes of this Act, a credit union is a recognised large credit union in relation to a year of income if:

 (a) the year of income is the 1994‑95 year of income or a later year of income; and

 (b) the credit union is neither:

 (i) a recognised small credit union in relation to the year of income; nor

 (ii) a recognised medium credit union in relation to the year of income.

Designated credit union

 (4) For the purposes of this section, a credit union is a designated credit union if:

 (a) it was in existence on 1 July 1993; and

 (b) assuming that its accounts for the last accounting period that ended before 1 July 1993 had been prepared in accordance with generally accepted accounting principles—the amount that would have been shown in those accounts as the gross value of its assets as at the end of that accounting period is more than $30 million.

Notional taxable income

 (5) For the purposes of this section, the notional taxable income of a credit union of a year of income is the amount that would be its taxable income of the year of income if:

 (a) section 23G did not apply to income derived by it in the 1994‑95 year of income or any later year of income; and

 (b) Division 9 of Part III had not been enacted.

accounting period, in relation to a credit union, means a period at the end of which the balance of its accounts is struck.

accounts, in relation to a credit union, means accounts prepared for the purposes of reporting annually to the shareholders in the credit union.

credit union means a credit union as defined in section 23G, except a life assurance company.

7B  Application of the Criminal Code

  Chapter 2 of the Criminal Code applies to all offences against this Act.

Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Part II—Administration

8  Commissioner

  The Commissioner shall have the general administration of this Act.

Note: An effect of this provision is that people who acquire information under this Act are subject to the confidentiality obligations and exceptions in Division 355 in Schedule 1 to the Taxation Administration Act 1953.

14  Annual report

 (1) The Commissioner shall, as soon as practicable after 30 June in each year, prepare and furnish to the Minister a report on the working of this Act, including any breaches or evasions of this Act of which the Commissioner has notice.

 (2) The Minister shall cause a copy of a report furnished to him or her under subsection (1) to be laid before each House of the Parliament within 15 sitting days of that House after the day on which he or she receives the report.

 (3) For the purposes of section 34C of the Acts Interpretation Act 1901, a report that is required by subsection (1) to be furnished as soon as practicable after 30 June in a year shall be taken to be a periodic report relating to the working of this Act during the year ending on that 30 June.

Part III—Liability to taxation

Division 1—General

18  Accounting period

  Any person may, with the leave of the Commissioner, adopt an accounting period being the 12 months ending on some date other than 30 June. For the purposes of this Act, the person’s accounting period in each succeeding year shall end on the corresponding date of that year, unless:

 (a) with the leave of the Commissioner some other date is adopted; or

 (b) the accounting period ends earlier under section 18A.

18A  Accounting periods for VCLPs, ESVCLPs, AFOFs and VCMPs

 (1) If a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP on a particular day:

 (a) the accounting period during which that day occurs (the first accounting period) is taken to have ended immediately before that day; and

 (b) another accounting period is taken to have commenced at the beginning of that day.

The other accounting period ends on the day on which the first accounting period would have ended if this section did not apply.

Example: A partnership whose accounting periods ended on 30 June becomes a VCLP, an ESVCLP on 1 October 2002, and ceases to be a VCLP, an ESVCLP on 1 April 2003.

 The effect of becoming a VCLP, an ESVCLP: the accounting period that commenced on 1 July 2002 is taken under this section to end on 30 September 2002, and a second accounting period commences on 1 October 2002. The second accounting period is scheduled to end on 30 June 2003.

 The effect of ceasing to be a VCLP, an ESVCLP: the second accounting period is now taken under this section to end on 31 March 2003, and a third accounting period commences on 1 April 2003. The third accounting period is to end on 30 June 2003.

 (2) This section does not apply in relation to a partnership becoming, or ceasing to be, a VCLP, an ESVCLP, an AFOF or a VCMP on the day on which an accounting period commences.

21  Where consideration not in cash

 (1) Where, upon any transaction, any consideration is paid or given otherwise than in cash, the money value of that consideration shall, for the purposes of this Act, be deemed to have been paid or given.

 (2) This section has effect subject to section 21A.